Annual Report 2017

PROFILE
KOEI TECMO HOLDINGS CO., LTD. is an entity that was born as a result of a merger between two
companies, Koei and Tecmo. Both companies have roots in different fields of entertainment, with
Koei starting out in PC software development and Tecmo in business related to amusement facilities . Even though both companies have been around for half a century in the same industry, they
have cultivated different cultures and different expertise.
By unifying these differences, Koei Tecmo will vigorously continue its work in the spirit of “Creativity and Contribution” to deliver even newer and higher quality entertainment content that isable to enrich the hearts of users world-wide.

CONTENTS
Profile............................................................. 1
Top Message................................................. 2
Financial Information................................... 3
Corporate Data............................................... 27

1

TOP MESSAGE

ChairmanKeiko Erikawa
President & CEO

Yoichi Erikawa
In the game industry, with the launch of new consoles, the Japanese home video game market has surpassed the previous
year in hardware and software sales for the first time in 9 years. The digital sales, including downloadable content andmobile games, are expanding as well.
Under our management policy of “IP Creation and Expansion”, we have shifted our organization structure to a Brand
based orientation and acted to enhance the value of the entire Koei-Tecmo group by utilizing the features of each brand. In
the entertainment segment, “Nioh” shipped over 1 million copies worldwide and succeeded in launching this new IP as a
global strategic title. Also, ”DISSIDIA FINAL FANTASY OPERA OMNIA”, a smartphone game developed in collaboration
with SQUARE ENIX, is off to a good start.
Although we have had these hit titles, some other of our game releases have been postponed for quality improvement
purposes. As a result, net sales and operating profit have decreased from the previous year, but net income has increased forthe seventh consecutive year since the merger of Koei and Tecmo.
In FY 2017, we will use what we have learned from FY 2016 and work to restore trust in our Koei-Tecmo Group throughthe strict control of quality, delivery dates, and costs in order to once again set our sights on achieving a new record in profit.
Furthermore, we will establish our new "midas" brand and work to create new IPs for the smartphone game market.
This year marks an important milestone for our group: the anniversary of “Tecmo”, ”ω-Force”, and the “Atelier” series.
For the celebration of the 50th anniversary of “Tecmo”, we plan to release the VR arcade game machine “VR SENSE”
equipped with the latest technology. In commemoration of the 20th anniversary of ”ω-Force”, we will launch “DYNASTYWARRIORS 9”. To mark the 20th anniversary of the “Atelier” series, we have announced a “Special live” event. This year
we have planned these and various other plans to provide fun and enjoyment for our fans. We hope to make this a truly
memorable year.
We thank you for your support and ask for your continued cooperation in our present and future endeavors.

2

KOEI TECMO HOLDINGS CO.,LTD. AND CONSOLIDATED SUBSIDIARIESCONSOLIDATED BALANCE SHEETSAS OF MARCH 31

Millions of yen

ASSETS
Current assets:
Cash and time deposits (Notes 3 and 5)
Notes and accounts receivable (Note 5)
Marketable securities (Notes 3, 5, and 8)
Merchandise and Finished goods
Work in process
Raw materials
Deferred tax assets (Note 11)
Other current assets
Allowance for bad debts (Note 5)
Total current assets
Property and equipment: (Note 4)
Buildings and structures, net (Notes 6 and 12)
Land (Notes 6 and 12)
Other
Total property and equipment
Intangible assets:
Goodwill
Other
Total Intangible assets
Investments and other assets:
Investment securities (Notes 5 and 8)
Deferred tax assets (Note 11)
Other
Total investments and other assets
Total assets
The accompanying notes are an integral part of these statements.

3

Thousands of U.S. dollars

2017

2016

¥ 11,868
8,168
1,871
96
4
42
939
3,721
(23)
26,689¥ 12,258
10,962
745
156
47
42
791
2,445
(20)
27,430$ 105,789
72,806
16,684
856
43
381
8,370
33,168(206)
237,894

10,993
14,615517
26,126

12,0296,201
625
18,856

97,987130,274
4,616
232,878

208
208

290
141
432

1,858
1,858

65,484142
809
66,436¥ 119,461

62,1201,301
785
64,207¥ 110,925

583,691
1,273
7,217
592,182$ 1,064,813

2017

Millions of yen

LIABILITIESCurrent liabilities:
Notes and accounts payable – trade
Accounts payable – other
Income taxes payable
Accrued bonuses to employees
Accrued bonuses to directors
Allowance for sales returns
Allowance for sales discountAllowance for customer‐discount points
Deferred tax liabilities (Note 11)
Other current liabilities
Total current liabilities

2016

¥ 487
4,244
2,566
949
242
0
255
21
0
2,691
11,460¥ 2,243
1,234
2,900
1,007
234
9
240
19
0
2,695
10,584$ 4,349
37,83522,876
8,464
2,165
1
2,273
188
2
23,993102,150

Long-term liabilities:
Liability for retirement benefits (Note 10)
Deferred tax liabilities (Note 11)
Other long-term liabilities
Total long-term liabilities
Total liabilities

295
326
861
1,484
12,944

380
526
728
1,634
12,219

2,638
2,913
7,681
13,232
115,3822017

NET ASSETS (Note 13)
Shareholders' equity:
Common stock
Authorized: 350,000,000 shares in 2017 and 2016
Issued: 107,723,374 shares in 2017 and 2016
Capital surplus
Retained earnings
Treasury stock: 2,229,512 shares at March 31, 2017 and
2,543,822 shares at March 31, 2016
Total shareholders' equity

15,00015,000133,701

25,937
66,159(1,456)105,639

25,69960,003(1,657)
99,045

231,189589,705(12,982)
941,614

Accumulated other comprehensive income:Unrealized gains or losses on securities (Note 8)
Unrealized losses on revaluation of the land (Note 12)
Foreign currency translation adjustments
Accumulated adjustments for retirement benefits (Note 10)
Total accumulated other comprehensive income

3,130(3,115)
697
(90)
622

1,009
(3,115)
1,636
(54)
(523)

27,904(27,765)
6,213
(802)
5,549

254
106,516¥ 119,461

184
98,706¥ 110,925

2,266
949,430$ 1,064,813

Share subscription rights (Note 14):
Total net assets
Total liabilities and net assets
The accompanying notes are an integral part of these statements.

4

Thousands of U.S. dollars

2017

KOEI TECMO HOLDINGS CO.,LTD. AND CONSOLIDATED SUBSIDIARIESCONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED MARCH 31

Millions of yen

Thousands of U.S. dollars

2017$ 330,1042017¥ 37,0342016¥ 38,332

Cost of sales
Gross profit

19,823
17,211

19,40718,924

176,692
153,412Selling, general and administrative expenses (Note 9)
Operating income（Note 19）

8,429
8,781

7,855
11,06975,13978,272Other income (expenses):
Interest income
Dividend income
Gain on sales of investment securities (Note 8)
Gain on redemption of securities (Notes 2 and 8)
Loss on valuation of securities (Note 8)
Loss on sales of investment securities (Note 8)
Loss on redemption of securities (Note 8)
Foreign exchange loss, net
Loss on impairment of fixed assets (Note 16)
Other, net
Income before income taxes

1,797
1,349
3,848
168
(378)
(255)
(33)
(355)
288
15,211

1,639
3,377
1,488
1,095
(2,560)
(184)
(135)
(349)
(181)
315
15,57316,01812,032
34,2991,503(3,372)(2,275)(299)(3,165)
2,573
135,587

3,681
(94)
3,587
11,624
11,624

4,624
93
4,718
10,855
10,85532,811(839)
31,972
103,614103,614

Net sales（Note 19）

Income taxes (Note 11):
Current
Deferred
Net income
Net income attributable to owners of parent:

Per share (Note 1):
Net income – Basic– Diluted
Cash dividends
The accompanying notes are an integral part of these statements.

Yen¥ 110.46
110.1456.00¥ 103.27
102.94
52.00

U.S. dollars$ 0.980.98
0.49

KOEI TECMO HOLDINGS CO.,LTD. AND CONSOLIDATED SUBSIDIARIESCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED MARCH 31

Millions of yen

2016¥ 10,855

Other comprehensive income (Note 18)
Unrealized gains or losses on securities
Foreign currency translation adjustments
Adjustments for retirement benefits (Note 10)

2,121
(939)
(35)

(6,589)(1,006)(585)

18,909(8,370)(319)

Total other comprehensive income

1,146(8,181)

10,21912,771

2,674

113,833¥ 12,771¥2,674$ 113,833

Net income:Comprehensive income :Comprehensive income attributable to owners of parent:
The accompanying notes are an integral part of these statements.

5

Thousands of U.S. dollars

2017¥ 11,624

2017$ 103,614

KOEI TECMO HOLDINGS CO.,LTD. AND CONSOLIDATED SUBSIDIARIESCONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSFOR THE YEARS ENDED MARCH 31

Millions of yen
Commonstock¥ 15,000

Balance at April 1, 2015
Cash dividends paid
Net income
attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stock
Transfer of loss on disposal oftreasury stockReversal of losses onrevaluation of the land
Net changes of items otherthan shareholder’s equity
Total changes of items
during period
Balance at March 31,¥ 15,000and April 1, 2016
Cash dividends paid
Net income
attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stock
Transfer of loss on disposal oftreasury stockReversal of losses onrevaluation of the land
Net changes of items otherthan shareholder’s equity
Total changes of items
during period¥ 15,000
Balance at March 31, 2017

Capitalsurplus¥ 25,699

Unrealized
gains orRetained Treasury losses on
stock securities
earnings¥ 53,955 (¥ 1,735) ¥ 7,598(4,814)

Unrealized
Foreign Accumulated
losses on
currency adjustments
Sharerevaluation translation for retirement subscriptionof the land adjustments
benefits
rights Net assets(¥ 3,099)¥ 531¥ 2,642¥ 80 ¥ 100,672(4,814)

10,855
(13)
91

(7)
7

¥ 25,699

10,855
(13)
84

(7)

-

15

15

6,048

77

¥ 60,003 (¥ 1,657)(6,589)(15)(1,006)

(585)

103

(8,092)(6,589)(15)(1,006)

(585)

103

(1,966)¥ 1,009 (¥ 3,115)¥ 1,636(¥ 54)¥ 184¥ 98,706(5,469)(5,469)

11,624

11,624
(6)
207

238

(6)
445
-

238
¥ 25,937

6,155

200

¥ 66,159 (¥ 1,456)

2,121

-

(939)

(35)

69

1,216

2,121

-

(939)

(35)

69

7,810

¥ 3,130 (¥ 3,115)¥ 697(¥ 90)¥ 254 ¥ 106,516

Thousands of U.S. dollars
CommonCapital Retained Treasurystock
earnings
surplusstock$ 133,701 $ 229,067 $ 534,841 ($ 14,772)(48,750)

Balance at April 1, 2016
Cash dividends paid
Net income
103,614attributable to owners of parent
Purchase of treasury stock(56)
Disposal of treasury stock
1,847
2,122
Transfer of loss on disposal oftreasury stockReversal of losses onrevaluation of the land
Net changes of items otherthan shareholder’s equity
Total changes of
54,863
1,790
2,122
items during period
Balance at March 31, 2017
$ 133,701 $ 231,189 $ 589,705 ($ 12,982)
The accompanying notes are an integral part of these statements.

6

Unrealized Unrealized
Foreign AccumulatedSharegains or losses oncurrency adjustments
losses on revaluation translation for retirement subscription
rights Net assets
benefits
securities of the land adjustments$ 1,644 $ 879,812$ 8,995 ($ 27,765) $ 14,584($ 483)(48,750)
103,614(56)
3,969
18,909-(8,370)

(319)

622

10,841

18,909-(8,370)

(319)

622

69,618$ 27,904 ($ 27,765)$ 6,213($ 802)$ 2,266 $ 949,430

KOEI TECMO HOLDINGS CO.,LTD. AND CONSOLIDATED SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWSFOR THE YEARS ENDED MARCH 31

Millions of yen

Cash flows from operating activities:
Income before income taxes
Depreciation and amortization
Loss on impairment of fixed assets
Amortization of goodwill
Increase (decrease) in allowance for bad debts
Increase (decrease) in accrued bonuses to directors
Increase (decrease) in accrued bonuses to employees
Interest and dividend income
Loss on valuation of securities
Gain on sales of investment securities
Gain on redemption of securities
Gain on sales of property and equipment
Foreign exchange losses (gains)
Decrease(increase) in notes and accounts receivable
Decrease(increase) in inventories
Increase (decrease) in notes and accounts payable
Other, net
Sub totalInterest and dividend income received
Interest paid
Income taxes refund
Income taxes paid
Net cash provided by operating activities
Cash flows from investing activities:
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchase of short-term and long-term securities
Proceeds from sales and redemption of short-term andlong-term securities
Purchase of property and equipment
Purchase of intangible fixed assets
Proceeds from sales of property and equipment
Proceeds from collection of guarantee deposits
Payment of investment in capital of subsidiary
Other, net
Net cash used in investing activities
Cash flows from financing activities:
Proceed from short-term borrowing
Repayment of short-term borrowing
Proceeds from disposal of treasury stock
Purchase of treasury stock
Cash dividends paid
Net cash used in financing activities
Effect of exchange rate changes on cash andcash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year (Note 3)
The accompanying notes are an integral part of these statements.

7

Thousands of U.S. dollars

2017

2016

2017

¥ 15,211
714
290
1
8
(50)
(3,147)378(3,592)
(134)
(2)
301
2,761
103
(1,731)595
11,707
2,618
(0)
940
(5,375)9,890¥ 15,573
846
181
387
15
(24)
(8)
(5,017)2,560(1,303)
(959)
(15)
338
(1,290)
27
(52)
(177)
11,082
4,463
(0)
920
(5,529)10,935$ 135,587
6,370
2,588
12
78
(451)
(28,050)
3,372(32,023)(1,203)(19)
2,687
24,617918(15,436)
5,303
104,351
23,340(0)8,380(47,911)
88,159(45)
810(12,275)(1,526)
1,258(24,027)

(409)
7,221
(109,419)

16,326

18,494

145,528(8,644)
(65)
6
(52)
5
(3,935)

(500)
(58)
172
7
41
(6,138)(77,056)
(582)
59
(467)
51
(35,075)

1,000(1,000)383(6)(5,460)(5,082)73(14)(4,806)(4,746)

8,913(8,913)
3,419(58)(48,668)(45,306)(397)
474
11,270¥ 11,745

(655)
(604)
11,874¥ 11,270(3,547)
4,230
100,458$ 104,689

KOEI TECMO HOLDINGS CO.,LTD. AND CONSOLIDATED SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. Summary of significant accounting policies:(1) Basis of presentation of consolidated financial statements The accompanying consolidated financial statements of KOEI TECMO HOLDINGS CO., LTD. (“the Company”) have been prepared inaccordance with the provisions set forth in the Financial Instruments and Exchange Act of Japan and its related accounting regulations, andin conformity with accounting principles generally accepted in Japan (“Japanese GAAP”), which are different in certain respects as toapplication and disclosure requirements of International Financial Reporting Standards.
The accounts of consolidated overseas subsidiaries for the years ended March 31, 2017 and 2016 are prepared in accordance with either
International Financial Reporting Standards or U.S. generally accepted accounting principles, with adjustments for the specified four items asapplicable. The accompanying consolidated financial statements have been restructured and translated into English from the consolidated
financial statements of the Company prepared in accordance with Japanese GAAP and filed with the appropriate Local Finance Bureau of the
Ministry of Finance as required by the Financial Instruments and Exchange Act of Japan. Some supplementary information included in thestatutory Japanese language consolidated financial statements, but not considered necessary for fair presentation, is not presented in theaccompanying consolidated financial statements.
As permitted by the Financial Instruments and Exchange Act of Japan, amounts of less than one million yen have been omitted. Consequently, the totals shown in the accompanying consolidated financial statements (both in yen and U.S. dollars) do not necessarily agree withthe sum of the individual amounts. Certain amounts in the prior year’s financial statements have been reclassified to conform to the current
year’s presentation.
The translations of the Japanese yen amounts into U.S. dollars are included solely for the convenience of readers outside Japan, using theprevailing exchange rate at March 31, 2017, which was ¥112.19 to U.S. $1. The convenience translations should not be construed as
representations that the Japanese yen amounts have been, could have been, or could in the future be, converted into U.S. dollars at this or any
other rate of exchange.
(2) Basis of consolidation and investments in affiliated companies The consolidated financial statements include the accounts of the Company and its subsidiaries, including KOEI TECMO GAMES CO.,LTD., KOEI TECMO NET CO., LTD., KOEI TECMO WAVE CO., LTD., CWS Brains, LTD., KOEI TECMO CAPITAL CO., LTD., KOEITECMO AMERICA Corporation, KOEI TECMO EUROPE LIMITED, KOEI TECMO TAIWAN CO., Ltd., KOEI TECMO TIANJINSOFTWARE CO., LTD., KOEI TECMO BEIJING SOFTWARE CO., LTD., KOEI TECMO SINGAPORE Pte. Ltd., and KOEI TECMOLIV CO., LTD. Some small-scale subsidiaries whose total assets, net sales, net income or loss, retained earnings or other items would haveno material effect on the financial statements have not been consolidated. All significant intercompany transactions and accounts have been
eliminated in consolidation.
TECMO KOEI CANADA Inc., which was consolidated subsidiaries in the previous fiscal year, was liquidated during the fiscal year and is
excluded from the scope of consolidation．
(3) Translation of foreign currency All the assets and liabilities of foreign subsidiaries are translated into Japanese yen at the appropriate year-end rate and all income andexpense accounts are translated at the average rate of exchange for the year. The translation of net assets is made using historical rates. The
resulting translation differences are presented as “Foreign Currency Translation Adjustments” in the accompanying consolidated balance
sheets.
Foreign currency receivables and payables are translated at year-end rates and the resulting translation gains and losses are included inincome currently.
(4) Cash equivalents For the purpose of the consolidated statements of cash flows, the Company and its consolidated subsidiaries have classified time deposits
and other highly liquid investments as cash equivalents if the original maturities of such investments are three months or less.
(5) Financial instruments (a) Derivatives
All derivatives are stated at fair value, with changes in fair value being included in the net profit or loss for the period in which they arise.
(b) Marketable securities and investment securities
Trading securities, held for the purpose of generating profits on short-term differences in prices, are stated at fair value, with changes infair value being included in the net profit or loss for the period in which they arise.
Held-to-maturity securities are stated at amortized cost method (straight line method).
Other securities for which market quotations are available are stated at fair value. Net unrealized gains or losses on these securities arereported as a separate component of net assets, net of applicable taxes.
Other securities for which market quotations are not available are stated at cost or at amortized cost, except as stated in the following
paragraph:
In cases where the fair value of equity securities issued by unconsolidated subsidiaries, or other securities has declined significantly andsuch impairment in value is not deemed temporary, those securities are reduced to fair value and the resulting losses are included in the net
profit or loss for the period.
The net amount of equity included in the Company’s financial statements from investment partnerships and similar investments, iscalculated based on the relevant financial statements for the partnership available as of the reporting date.

8(6) Inventories Inventories of the Company and its consolidated subsidiaries are determined using the moving-average method for merchandise,finished goods and raw materials and the specific identification method for work-in-process (unless market value of inventories
declines significantly and is not expected to recover to cost, in such cases costs are reduced to net realizable values).
(7) Property and equipment Declining balance method is used, except for straight line method for buildings (excluding facilities attached to buildings), which wereacquired since April 1, 1998 and facilities attached to buildings and structures, which were acquired since April 1, 2016.
The property and equipment held by foreign consolidated subsidiaries is being depreciated by the straight-line basis, based on the estimateduseful lives of the assets.
The range of useful lives for “Buildings and structures” is principally from 3 to 50 years.
(8) Intangible assets The cost of software for sale, other than that related to R&D activities, is capitalized and amortized in the proportion of revenue for theperiod to total estimated ultimate revenue. The costs related to R&D activities are expensed as incurred.
Software costs for internal use are capitalized and amortized over their estimated useful lives on a straight-line basis.
Goodwill is amortized over its estimated useful lives on a straight-line basis. When the amounts are immaterial, the goodwill is amortized as
incurred.
(9) Accrued bonuses to employees Accrued bonuses are stated at the estimated amount of the bonuses to be paid to employees based on their services provided during the
fiscal year.
(10) Accrued bonuses to directors Accrued bonuses are stated at the estimated amount of the bonuses to be paid to directors based on their services for the current fiscal year.
The accounting standard requires that directors' bonuses be accounted for as an expense of the accounting period in which such bonuses
were accrued.
(11) Allowance for bad debts An allowance for bad debts is established at an amount considered to be appropriate based primarily on the past credit loss experience of the Company and its consolidated subsidiaries, plus an additional amount deemed necessary to cover possible losses estimatedon an individual account basis.
(12) Allowance for sales returns An allowance for sales returns is provided for losses due to the return of products at an amount calculated based on historical experience.
(13) Allowance for sales discount An allowance for sales discount is provided for the losses incurred on sales discount of products.
(14) Allowance for customer-discount points An allowance for customer-discount points is provided for the accumulation of points granted to online shopping users. The amount ofallowance is determined based on the past usage of points.
(15) Finance leases For finance lease transactions other than those which transfer ownership to the lessee, the straight-line method is adopted with a residual
value of zero, with the lease period deemed equal to the service life of the asset.
(16) Income taxes Provision is currently made for the income taxes applicable to all revenue and expense items reported in income tax returns on the basis ofwhen such items are taxable or deductible. The asset and liability approach is used to recognize deferred tax assets and liabilities for the
expected future tax consequences of temporary differences between the financial statement carrying amounts and the tax bases of assets andliabilities.
(17) Retirement benefits (a) Method for attributing projected benefits to periods
The retirement benefit obligation is calculated by attributing projected benefits to periods until the end of the current fiscal year on abenefit formula basis.
(b) Amortization of prior service cost and actuarial gain or loss
Prior service cost is amortized on a straight-line basis over certain periods (from 9 to 12 years), which are shorter than the averageremaining years of service of the eligible employees. Net actuarial gain or loss is amortized from the following year on a straight-line
basis over certain periods (from 9 to 12 years), which are shorter than the average remaining years of service of the eligible employees.

9(18) Practical solution on unification of accounting policies applied to foreign subsidiaries for consolidated financial statements The Company has applied “Practical solution on unification of accounting policies applied to foreign subsidiaries for consolidated financial
statements” (ASBJ Practical Issues Task Force No. 18, March 26, 2015), and necessary modifications have been made for consolidation.
(19) Net income per share Basic net income per share of common stock (“Basic EPS”) is computed based on the weighted average number of shares of common stock
outstanding during each year. Diluted net income per share of common stock (“Diluted EPS”) further assumes the dilutive effect of warrants.
The basic information for net income per share computations for the years ended March 31, 2017 and 2016 was as follows:

For the year ended March 31, 2017
Basic EPS
Net income
Other
Net income attributable to owners of parent
Effect of Diluted stock shareholders
Warrants
Diluted EPS
Net income attributable to owners of parent

Millions of yen

Thousands of U.S. dollars

Net income

Thousands of shares
Weighted average number of shares

Yen¥ 110.46$ 0.98¥ 110.14$ 0.98¥ 11,624¥ 11,624$ 103,614$ 103,614

105,237--302¥ 11,624$ 103,614

105,539

For the year ended March 31, 2016
Basic EPS
Net income
Other
Net income attributable to owners of parent
Effect of Diluted stock shareholders
Warrants

Millions of yen

Net income

Thousands of shares
Weighted average number of shares¥ 10,855¥ 10,855

105,116

U.S. dollars

EPS

Yen

EPS

¥ 103.27

341-

Diluted EPS
Net income attributable to owners of parent¥ 10,855
105,457¥ 102.94
The Company implemented a one point two-for-one stock split on October 1, 2015. Basic EPS and Diluted EPS are calculated by assuming
this stock split was executed at the beginning of the fiscal year ended March 31, 2016.

2. Change in accounting policies:

Due to amendments to the Japanese Corporation Tax Act, the Company and its domestic subsidiaries adopted “Practical Solution on achange in depreciation method due to Tax Reform 2016” (Practice Issue Task Force No.32, June 17, 2016 (hereinafter, “PITF No.32”)) fromthe current fiscal year and changed the depreciation method for facilities attached to buildings and structures, which were acquired sinceApril 1, 2016, from the declining balance method to the straight line method.
The effect on profit-and-loss during the period as a result of this change is immaterial.

3. Cash flow information:

Reconciliation of cash and cash equivalents
Cash and time deposits at March 31, 2017 and 2016 reconciled to cash and cash equivalents were as follows:
Millions of yen

Cash and time deposits
Time deposits with maturity over three months
Total cash and cash equivalents

2017¥ 11,868(123)¥ 11,745

2016¥ 12,258(987)¥ 11,270

Thousands of U.S. dollars

2017$ 105,789(1,100)$ 104,689

4. Accumulated depreciation of property and equipment:

Accumulated depreciation of property and equipment as of March 31, 2017 and 2016 were as follows:
Millions of yen

Accumulated depreciation of property and equipment

10

2017
¥ 11,019

2016¥ 10,666

Thousands of U.S. dollars

2017$ 98,224

5. Financial instruments:(1) Qualitative information on financial instruments(a) Policies for using financial instruments
The Company and its consolidated subsidiaries procure funds that are required for the planning of capital investment, and short-term
operating funds through bank loans. The surplus funds are invested in the compound financial products that build in the stocks, the debenture, and derivatives aiming to operate it by a high yield.
Derivatives that the Company uses are only the compound financial products that build in derivatives.
(b) Details of financial instruments used and the exposures to risk and how they arise
Notes and accounts receivable are exposed to the credit risks in relation to customers. Some of them are denominated in foreign currencies, which consequently expose the Company and its subsidiaries to the risks of exchange rate fluctuations.
Marketable securities and investment securities, which consist of principally equity securities and debt securities, are exposed to the riskof market price fluctuations.
The investments in the compound financial instruments that build in derivatives have the risk of the bond market price and the exchange
rate fluctuations.
These investments are executed with credit worthy financial institutions. Given their creditworthiness, management does not expect any
counterparty to fail to meet its obligations.
(c) Policies and processes for managing the risk
① Credit risk management (counterparty risk)
The Company and its consolidated subsidiaries have established internal procedures for receivables under which the related divisions
are primarily responsible for periodically monitoring counterparty status. The department manages amounts and settlement dates bycounterparty and works to quickly identify and mitigate payment risk that may result from situations including deterioration of thefinancial condition of counterparties.
② Market risk management (risk of exchange rate and interest rate fluctuations)

Any investments to compound financial instruments that include stocks, bonds, and derivatives as their components are managed withthe established policies and within the specified limit on the amounts of investments allowed. In addition, the Company clearly
separates its transaction division and management division in their functions with the view to securely managing its assets. The
Company's management division confirms transactions, manages its current position, and ensures that all derivative transactions are
executed with the established policies so that its internal control functions properly. The Company periodically provides administrative
reports on the status of its position, including market value, to the financial director and treasurer.
Regarding marketable securities and investment securities, the Company periodically examines the financial condition of the issuingentities. The Company also regularly reviews the status of its holdings of bonds, not including those held to maturity, taking into
consideration its relationships with corporate business holders.
③ Management of liquidity risk associated with funds procurement (payment default risk)

The Company and its consolidated subsidiaries manage liquidity risk by creating and updating a capital deployment plan based onreports from each division.
(d) Fair values of financial instruments
Fair values of financial instruments include the values based on market prices, and the values deemed as market prices are reasonably
estimated by the reasonable estimate when market prices are not available. Since certain assumptions and others are adopted for estimating such values, they may differ when adopting different assumptions and others.

11(2) Fair values of financial information
Fair values of financial instruments as of March 31, 2017 and 2016 were summarized as follows:
The financial instruments whose fair values were not available were not included below and were summarized in (b).
(a) Fair values of financial instruments

Cash and time deposits
Notes and accounts receivable
Allowance for bad debts*
Marketable and investment securities
Other securities
Assets Total

Cash and time deposits
Notes and accounts receivable
Allowance for bad debts*
Marketable and investment securities
Other securities
Assets Total

Cash and time deposits
Notes and accounts receivable
Allowance for bad debts*
Marketable and investment securities
Other securities
Assets Total

Acquisition Amount¥ 11,868
8,168
(21)
8,146

Millions of yen
March 31, 2017

Estimated fair value¥ 11,868

Difference
-

8,146

-

63,926¥ 83,941-

63,926¥ 83,941

Book value¥ 12,258
10,962(20)
10,942Millions of yen
March 31, 2016

Estimated fair valu
¥ 12,258

Difference-

10,942-

59,685¥ 83,066-

59,865¥ 83,066

Book value$ 105,789
72,806(193)
72,613Thousands of U.S.dollars
March 31, 2017

Estimated fair value$ 105,789

Difference-

72,613-569,803$ 748,206-

569,803$ 748,206* The amounts for probable losses calculated by applying a percentage based on collection experience to the remaining accounts areincluded.
Note: Fair values of financial instruments, and matters pertaining to securities and derivative transactions
AssetsCash and time deposits, and Notes and accounts receivable:
The book values approximate the fair values because of short-term maturities of these instruments.
Marketable and investment securities:
The fair value is based on the market prices or the prices quoted by financial institutions.
These securities are described in the Note on "8. Marketable securities and investment securities".
(b) Financial instruments whose fair values were difficult to measure
The financial instruments for which the fair values were not available as of March 31, 2017 and 2016 were summarized as follows:
Millions of yen

Stocks of subsidiaries and affiliates
Non-listed equity securities
Other
Total

2017
¥ 20
110
3,298
¥ 3,429

2016
¥ 20
121
2,859
¥ 3,000

Thousands of U.S. dollars

2017
$ 178
989
29,404$ 30,572

It is difficult to measure the fair value of these financial instruments because market prices are not available and it is not efficient tocalculate future cash flow. Therefore, these financial instruments were not included in the marketable and investment securities describedin (a).

12

(c) Maturities of financial instruments
The maturities of the financial instruments at March 31, 2017 and 2016 were as follows:

Within 1 year

Cash and time deposits
Notes and accounts receivable
Marketable and investment securities
Other securities(1)Government bonds and local government bonds(2)Bonds(3)OtherTotal¥ 1,801
8,168
516
1,402
¥ 11,888

Within 1 year

Cash and time deposits
Notes and accounts receivable
Marketable and investment securities
Other securities(1)Government bonds and local government bonds(2)Bonds(3)OtherTotal¥ 3,347
10,96256729¥ 15,096

Within 1 year

Cash and time deposits
Notes and accounts receivable
Marketable and investment securities
Other securities(1)Government bonds and local government bonds(2)Bonds(3)OtherTotal

13$ 16,055
72,806
4,601
12,504$ 105,967

Millions of yen
At March 31, 2017
Over 1 year
Over 5 years
within 5 years
within 10 years

Over 10 years

-

-

-

1,959
710
¥ 2,669

4,428
3,797
¥ 8,225

7,164
6,175
¥ 13,339

Millions of yen
At March 31, 2016
Over 1 year
Over 5 years
within 5 years
within 10 years

Over 10 years

-

-

-

932
2,430
¥ 3,362

5,992
4,513
628
¥ 11,135

6,669
6,039
¥ 12,709

Thousands of U.S. dollars
At March 31, 2017
Over 1 year
Over 5 years
within 5 years
within 10 years

Over 10 years

-

-

-

17,462
6,333$ 23,796

39,471
33,849$ 73,320

63,86055,043$ 118,903

6. Rental property:

The Company and its consolidated subsidiaries own buildings (including land) for leasing in Kanagawa prefecture, other domestic areas,
and foreign countries. The rental income included in net sales was ¥280 million ($2,503 thousand) and ¥380 million for the years ended
March 31, 2017 and 2016, respectively.
Information about fair value of rental property included in the consolidated financial statements at March 31, 2017 and 2016 was as follows:

Millions of yen
Thousands of U.S dollars

Millions of yen

March 31, 2016
¥ 10,773$ 96,030

March 31, 2015
¥ 11,054

At March 31, 2017
Book value (net of depreciation)

Increase¥ 4,927$ 43,917

March 31, 2017
¥ 15,700$ 139,948

At March 31, 2016
Book value (net of depreciation)

Decrease¥ 280

March 31, 2016
¥ 10,773

Fair value

March 31, 2017
¥ 16,621$ 148,157

Fair value

March 31, 2016
¥ 11,368

Book values recorded in the consolidated balance sheets present acquisition cost, net of accumulated depreciation and impairment loss.
Note: The fair value for domestic rental properties was calculated by the Company and its consolidated subsidiaries based on the Real EstateAppraisal Standard. Locally appraised value was used for the fair value of overseas rental properties.

7. Lease:

The future minimum lease receipts for only non-cancelable operating lease contracts as of March 31, 2017 and 2016 were as follows:
Millions of yen

2017
¥ 204
994
¥ 1,198

Due within one year
Due after one year
Total

2016
¥ 236
1,385
¥ 1,622

Thousands of U.S. dollars

2017$ 1,8218,865$ 10,686

8. Marketable securities and investment securities:

Comparisons of the acquisition costs and fair values of “Other securities for which market quotations are available” at March 31, 2017 and 2016
were as follows:

Acquisition cost
Other securities for which market prices are available ¥ 36,025(1)Equity securities
20,989(2)Debt securities
2,495(3)Other¥ 59,510
Total

Other securities for which market prices are available (1)Equity securities(2)Debt securities(3)OtherTotal

14

Millions of yen
At March 31, 2017

Gross unrealized gains

Gross unrealized losses

Fair value¥ 6,128
1,232
1,328¥ 8,688¥ 1,144
3,109
19¥ 4,273¥ 41,009
19,112
3,804¥ 63,926

Millions of yen
At March 31, 2016

Acquisition cost

Gross unrealized gains

Gross unrealized losses

Fair value¥ 31,294
21,456
5,733¥ 58,484¥ 3,460
1,184
2,105¥ 6,750¥ 2,374
2,986
8¥ 5,369¥ 32,380
19,654
7,830¥ 59,865

Other securities for which market prices areavailable (1)Equity securities(2)Debt securities(3)Other
Total

Thousands of U.S. dollars
At March 31, 2017

Acquisition cost

Gross unrealized gains

Gross unrealized losses

Fair value$ 321,110
187,089
22,243$ 530,443$ 54,624
10,986
11,837$ 77,448$ 10,197
27,717174$ 38,089$365,537
170,358
33,907$ 569,803

Impairment loss of ¥378 million ($3,372 thousand) and ¥2,560 million was recognized for the years ended March 31, 2017 and 2016,
respectively.
Available-for-sale securities sold for the years ended March 31, 2017 and 2016 were as follows:
Millions of yen

Sales amountGross realized gains
Gross realized losses

2017¥ 14,324
3,962
255

2016
¥ 11,222
1,488
184

Thousands of U.S. dollars

2017$ 127,683
35,3202,279

9. Research and development expenses:

Research and development expenses included in selling, general and administrative expenses for the years ended March 31, 2017 and 2016 was¥728 million ($6,495 thousand) and ¥650 million, respectively.

10. Retirement benefit plan:

For the year ended March 31, 2017
(1) Outline
The Company and its consolidated domestic subsidiaries have a defined benefit corporate pension plan. One of the foreign consolidated subsidiaries has adopted a defined contribution plan.
(2) Defined benefit plan(a) The reconciliation of defined benefit plans are as follows:
Millions of yen

Retirement benefit obligation at the beginning of the period
Service cost
Interest cost
Actuarial loss
Benefits paid
Other
Retirement benefit obligation at the end of the period(b) The reconciliation of plan assets at fair value are as follows:
Plan assets at fair value at the beginning of the period
Expected return on plan assets
Actuarial gain(loss)
Contributions by the employer
Retirement benefits paid
Other
Plan assets at fair value at the end of the period

15

2017
¥ 4,572
392
22
16
(92)
42
¥ 4,954

Millions of yen

2017¥ 4,191
188
(19)
373
(92)
16
¥ 4,6582016¥ 3,837
333
49
463
(111)
¥ 4,5722016¥ 4,108
184
(346)
356
(111)
¥ 4,191

Thousands of U.S. dollars

2017$ 40,756
3,500
203
150
(826)
376
$ 44,160

Thousands of U.S. dollars

2017$ 37,364
1,681
(171)
3,330
(826)
144
$ 41,522

(c) The reconciliation of related to Retirement benefit obligation and Plan assets at fair value at the end of the period and defined
benefit liability and defined asset recorded on the consolidated balance sheets are as follows:
Millions of yen

Retirement benefit obligations of the funding plan
Plan assets at fair value
Retirement benefit obligations of the non-funding plan
Net amount of liabilities and assets recognized in the consolidated balance sheets
Liability for retirement benefits
Asset for retirement benefits
Net amount of liabilities and assets recognized in the consolidated balance sheets(d) Retirement benefit expenses and their breakdown:
Service cost
Interest cost
Expected return on plan assets
Amortization of actuarial differences
Amortization of prior service costs
Other
Retirement benefit expenses

2017¥ 4,954(4,658)
295
295
295
¥ 295

2016
¥ 4,572(4,191)
380
380
380
¥ 380

Millions of yen

2017
¥ 392
22
(188)
(25)
10
24
¥ 235

2016
¥ 333
49
(184)
(72)
10
¥ 136

Thousands of U.S. dollars

2017$ 44,160(41,522)
2,638
2,638
2,638
$ 2,638

Thousands of U.S. dollars

2017$ 3,500
203(1,681)
(228)
92
214
$ 2,099(e) The breakdown of prior service cost and actuarial gain recognized in other comprehensive income before deduction of tax benefit
is as follows:
Millions of yen

Prior service costs
Actuarial gain(loss)
Total

2017
¥ 10
(61)
¥ (51)

2016
¥ 10
(882)
¥ (872)Thousands of U.S. dollars

2017
$ 92
(552)
$ (459)(f) The breakdown of prior service cost and actuarial gain recognized in accumulated other comprehensive income before deductionof tax benefit is as follows:
Millions of yen

Unrecognized prior service cost
Unrecognized actuarial gain
Total(g) The breakdown of plan assets by major category is as follows:
Bonds
Equities
Other
Total

2017
¥ 142
(11)
¥ 131

2016
¥ 153
(73)
¥ 79

2017
47.4%
50.0
2.6
100.0

Thousands of U.S. dollars

2017$ 1,274(105)$ 1,168

2016
47.1%
49.1
3.8
100.0

The expected long-term rate of return on plan assets is determined as a result of consideration of both the portfolio allocation at present andin the future, and long-term rate expected to earn the profit from multiple plan assets at present and in the future.
(h) The assumptions used in accounting for the above plans are as follows:
Discount rate
Expected rate of return on plan assets

2017
0.5%
4.5%

2016
0.5%
4.5%

(3) Defined contribution plan
The required contributions to the defined contribution plans of one of the foreign consolidated subsidiaries are ¥2 million ($17thousand) and ¥3 million for the years ended March 31, 2017 and 2016, respectively.
1611. Income taxes:
The reconciliation of differences between the statutory tax rate and the effective tax rate for the year ended March 31, 2017 and 2016 wereas follows:
Statutory tax rate
Increase (decrease) in taxes resulting from:
Permanent difference of exclusion from expenses
Permanent difference of exclusion from gross revenue
Amortization of goodwill
Special tax credit for research and development expenses and otherTax rate difference in certain subsidiaries
Valuation allowance
Adjustment on deferred tax assets due to change in income tax rate
Reserved profit of foreign subsidiaries
Other, net
Effective tax rate

2017
30.8%

2016
33.0%

0.7
(0.2)
0.6
(6.0)
(0.3)
(0.3)
(1.9)
(0.3)
23.1%

0.7
(0.1)
0.8
(6.0)
(0.8)
(0.9)
0.6
3.0
(0.0)
30.3%

The significant components of deferred tax assets and liabilities included in the balance sheets were as follows:
Millions of yen

Deferred tax :(1) Current assets
Tax loss carryforwards
Accrued bonuses to employees
Unrealized loss on inventory valuation
Provision for enterprise tax
Allowance for sales discountUnrealized losses on securities
Other
Valuation allowance
Offset to deferred tax liabilities (current)
Net deferred tax current assets

2016

¥ 31
260
55
188
88
220
103
(10)
(0)
¥ 939

¥ 29
282
87
257
77
65
(8)
¥ 791

$ 278
2,321
496
1,683
791
1,966
921
(91)
(0)
$ 8,370(2) Non-current assets
Loss on investment securities
Tax loss carryforwards
Software development expense depreciation
Impairment loss on fixed assets
Net defined benefit liability
Revaluation reserve for land
Other
Valuation allowance
Offset to deferred tax liabilities (non-current)
Net deferred tax non-current assets

¥ 680
88
194
52
99
948
295
(1,176)(1,040)
¥ 142

¥ 957
262
137
57
131
948
267
(1,191)(270)¥ 1,301$ 6,065
793
1,735
469
886
8,454
2,631
(10,490)(9,272)$ 1,273

Millions of yen

Deferred tax :(1) Current liabilities
Unrealized gains on securities
Offset to deferred tax assets (current)
Net deferred tax current liabilities(2) Non-current liabilities
Unrealized losses on securities
Reserved profit of foreign subsidiaries
Other
Offset to deferred tax assets (non-current)
Net deferred tax non-current liabilities

17

Thousands of U.S. dollars

2017

2017

Thousands of U.S. dollars

2017

2016

¥ (0)
0
¥ (0)

¥ (8)
8
¥ (0)

$ (0)
0
$ (2)

¥ (1,122)
(198)
(45)
1,040
¥ (326)¥ (266)
(472)
(56)
270
¥ (526)$ (10,008)(1,767)(409)
9,272$ (2,913)

2017

Additional information(Application of Revised Implementation Guidance on Recoverability of Deferred Tax Assets)
The Company and its domestic subsidiaries adopted“Revised Implementation Guidance on Recoverability of Deferred Tax
Assets”(ASBJ Guidance No. 26, March 28, 2016) from the current fiscal year.

12. Assets pledged and revaluation of the land:(1) Assets pledged
Buildings and structures
Land
Total

Millions of yen

2017
¥ 252
306
¥ 558

2016
¥ 258
306
¥ 564

Thousands of U.S. dollars

2017$ 2,253
2,727$ 4,981(2) Revaluation of the land
The subsidiary, KOEI TECMO LIV CO., LTD., revalued land for its business in accordance with the Land Revaluation Law. The
Company recorded the entire difference between the carrying amount and revalued amount as unrealized losses on revaluation of theland as a separate component of net assets.
Revaluation of land was performed by making a reasonable adjustment to the land based on the market value estimated in accordance with relevant provisions of the Land Revaluation Law.
Date of revaluation: March 31, 2000.
Fair value of the revalued land as of March 31, 2017 are ¥149 million ($1,336 thousand) and ¥290 million less than the book value
as of March 31, 2017 and 2016,respectively.

13. Net assets:
Under Japanese laws and regulations, the entire amount paid for new shares is required to be designated as common stock. However,a company may, by a resolution of the Board of Directors, designate an amount not exceeding one-half of the price of the new sharesas additional paid-in capital, which is included in capital surplus.
Under the Japanese Corporate Law (“the Law”), in cases where a dividend distribution of surplus is made, the smaller of an amountequal to 10% of the dividend or the excess, if any, of 25% of common stock over the total of additional paid-in capital and legal
earnings reserve must be set aside as additional paid-in capital or legal earnings reserve. Legal earnings reserve is included in retained
earnings in the accompanying consolidated balance sheets.
Under the Law, legal earning reserve and additional paid-in capital could be used to eliminate or reduce a deficit or could becapitalized by resolution of the shareholders’ meeting.
Additional paid-in capital and legal earnings reserve may not be distributed as dividends. However, all additional paid-in capital andall legal earnings reserve may be transferred to other capital surplus and retained earnings, respectively, which are potentiallyavailable for dividends.
The maximum amount that the Company can distribute as dividends is calculated based on the non-consolidated financial statementsof the Company in accordance with the Law.
At the annual shareholders’ meeting held on June 21, 2017, the shareholders resolved cash dividends amounting to ¥5,907 million($52,657 thousand). Such appropriations have not been accrued in the consolidated financial statements as of March 31, 2017. Suchappropriations will be recognized in the period when they are resolved.
Note: The Company implemented a one point two-for-one stock split on October 1, 2015. Number of increase in shares by stock split
is as follows:(1)Total number of issued shares before stock split
89,769,479 shares(2)Number of increase in shares by stock split
17,953,895 shares(3)Total number of issued shares after stock split
107,723,374 shares(4)Total number of authorized shares before stock split
350,000,000 shares18

14. Share subscription rights:
The summarized contents of share subscription rights as of March 31, 2017 are as follows:
Date of the annual shareholders' meeting
Position and number of grantee

Date of grantClass and number of stock
Exercised period

Share subscription rights #6
June 26, 2012

Share subscription rights #7
June 25, 2014

Share subscription rights #8
June 22, 2016

6 directors and24 employees of theCompany and349 executive officer or
employees of thesubsidiaries

7 directors and21 employees of theCompany and
380 executive officer or
employees of thesubsidiaries

9 directors and
17 employees of theCompany and394 executive officer or
employees of thesubsidiaries

October 22, 2012

September 22, 2014

September 26, 2016

Common Stock871,560

Common Stock960,840

Common Stock833,200

From October 23, 2014
to October 20, 2017

From September 23, 2016
to September 20, 2019

From September 27, 2018
to September 24, 2021

The Company implemented a one point two-for-one stock split on October 1, 2015. Number of stock is adjusted amounts after the stock split.
The following table summarizes scale and movement of share subscription rights as of March 31, 2017
Non‐exercisable (number of shares)
Outstanding at April 1, 2016
GrantedForfeited
VestedOutstanding at March 31, 2017
Exercisable (number of shares)
Outstanding at April 1, 2016
VestedExercised
Forfeited
Outstanding at March 31, 2017
Exercise price

Average stock price at exercise
Fair value price at grant date

Share subscription rights #6

Share subscription rights #7

Share subscription rights #8-

945,360
12,120933,240-

833,200
13,700819,500

163,680
88,56075,120¥ 547$ 4.87¥ 2,035$ 18.13¥ 74$ 0.65933,240
228,960
4,320
699,960¥ 1,468$ 13.08¥ 2,085$ 18.58¥ 290$ 2.58¥ 2,001$ 17.83¥ 384$ 3.42The Company implemented a one point two-for-one stock split on October 1, 2015. Exercise price is adjusted amounts after the stock split. Averagestock price at exercise has been calculated by assuming this stock split was executed at the beginning of the fiscal year ended March 31, 2016.

15. Asset retirement obligations:(1) Summary of applicable asset retirement obligations include the duty of restoration arising from contractual requirements set forthin real estate leases for amusement facility arcades.
(2) Instead of posting liabilities for asset retirement obligations, the Company and its consolidated subsidiaries use the method of
estimating the reasonable amount that cannot be finally recovered from the deposit related to a real estate lease contract and posting
the part of that amount belonging to the current term under costs.
(3) Changes to aggregate asset retirement obligations applicable to the fiscal years ended March 31, 2017 and 2016 were as follows:
Millions of yen

Beginning balance
Expense belonging to the burden of thisconsolidated fiscal year
Decrease due to fulfillment of asset retirement
obligations
Ending balance
19

Thousands of U.S. dollars

2017

2017

2016
¥ 73

$ 563

3

4

31

(12)

(15)

(111)

¥ 54

¥ 63

$ 483

¥ 63

16. Loss on impairment of fixed assets:
In the fiscal year ended March 31, 2016, the Company and its consolidated subsidiaries recorded losses on impairment of fixed
assets for the following asset groups.
Use

Idle asset
Amusement facilities
Total

Type of assets
Land and buildings,etc
Buildings,etc

Millions of yen

Thousands of U.S. dollars

¥ 123
58
¥ 181

$ 1,096515$ 1,611

2016

2016

RegionChiba
Osaka, etc.

The grouping of assets is based on the minimum unit that independently generates cash inflow.
In the fiscal year ended March 31, 2016, as to idle assets, the amount of ¥123 million ($1,096 thousand) is recorded as “Loss on
impairment of fixed assets” in “Other income (expenses)”, due to decline of their fair value. As to amusement facilities which havecontinuously resulted in operating losses, the amount of ¥58 million ($515 thousand) is recorded as “Loss on impairment of fixed
assets” in “Other income (expenses) “ as well.
The recoverable value of the idle assets is the net sale value. It is estimated by appraisal values based on the assessment values ofproperty tax. The recoverable value of the amusement facilities is the value in use. It is valued as zero, as its discounted future cash
flows are negative.

17. Related party transactions:(1) Related party transactions between the Company and its related parties.
Principal transactions between the Company’s consolidated subsidiaries and its related parties are as follows
For the year ended March 31, 2017
Type

Name

Location

Capital orinvestments

Business or
profession

Voting rights
held(%)

Relationshipwith therelated parties

Transactions(Note2)

AmountAccount
nameBalance

Executive

Keiko
Erikawa--

Executive
Chairman

2.09[4.64](Note1)-The exerciseof stock
option¥ 10 million($ 89 thousand)--Executive

YoichiErikawa--

Executive
President

2.16[4.57](Note1)-The exerciseof stock
option¥ 11 million($ 98 thousand)--Executive

Masao
Tejima--Director--

The exerciseof stock
option¥ 11 million($ 98 thousand)--Note 1: The figures contained in parentheses represent the ownership ratio of the voting right which close persons or assentors have.
Note 2: The exercise of stock options granted by resolution at the Board of Director's meeting held on September 1 ,2014.
Note 3: The amount is calculated by multiplying the number of shares issued as a result of exercise of the option by the amount paid.
(2) Related party transactions between the Company’s consolidated subsidiaries and its related parties.
Principal transactions between the Company’s consolidated subsidiaries and its related parties are as follows:20

For the year ended March 31, 2017
Type

Name

Company
with a majorityof theKankyovoting rights
kagaku Co.,Ltd
held by an(Note 1)
executive or
close relative

Company
with a majorityof thevoting rights
held by an
executive or
close relative

MY Property
Co.,Ltd(Note 4)Company
with a majorityof thevoting rights
held by an
executive or
close relative

AK Fortune
Co., Ltd(Note 4)

Location

Chiyodaku,
tokyo

Capital orinvestments¥ 40 million($ 356 thousand)¥ 14 million
Yokohamashi,($ 124 thousand)Kanagawa¥ 14 million
Yokohamashi,($ 124 thousand)Kanagawa

Business or
profession

Voting rights
held(%)

Real estateleasing

Relationshipwith therelated parties--

Account
nameDeposit

Balance¥ 146 million($ 1,306
thousand)Real estateleasing(Note 2)

¥ 151 million($ 1,350
thousand)

Pledge ofcollateral

Pledge ofcollateral(Note 3)¥ 558 million($ 4,981
thousand)--Election of

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Joint acquisition
Joint acquisitionof fixed assetsof fixed assets(Note 5)
Election ofReal estateleasingAmountReal estateleasing
7.43

Real estateleasing

Transactions-

Joint acquisition
Joint acquisitionof fixed assetsof fixed assets(Note 5)
Election of-

Prepaid
expense¥ 12 million($ 112
thousand)

Note 1: Yasuharu Kakihara, who is a director & advisor of the Company, and his close relatives own 100 percent of the voting rights.
Note 2: The subsidiary, KOEI TECMO GAMES CO., LTD., leases a joint ownership building of the related party, Kankyokagaku Co.,
Ltd, and the subsidiary, KOEI TECMO LIV CO., LTD.,.
The lease fee and other transaction terms are determined by price negotiations based on the current status of transactions in theneighborhood.
Note 3: A Land and building which the subsidiary, KOEI TECMO LIV CO., LTD., owns are pledged as collateral for the borrowing
the related party, Kankyokagaku Co., Ltd, required for a construction expense.
The amount is equal to book value of the land and building which our subsidiary, KOEI TECMO LIV CO., LTD., owns.
Note 4: Yoichi Erikawa, who is a President & CEO of the Company, and his close relatives own 100 percent of the voting rights.
Note 5: The subsidiary, KOEI TECMO GAMES CO., LTD.,(hereinafter, “KTG”) and MY Property Co., Ltd. and AK Fortune Co., Ltd(hereinafter, “these two companies”) have jointly acquired land of 8,670 square meters and the acquisition ratio of KTG in the land is7,437 / 8,670 square meters valued at 8,324 million yen. They are also jointly planning to build composite facilities includes a newhead office of KTG on the land.
Unit purchase price acquired by KTG was equal to the price acquired by these two companies. In addition, KTG have obtained an
opinion by outside experts that the setting of the acquisition ratio in the land is appropriate. Note that there are no credits or debts as aresult of the acquisition of the land and the composite facilities between KTG and these two companies and they have no plans toincrease amount of them.
Notes for the parent company and important affiliated companies(1) Information on the parent company
KOYU HOLDINGS CO., LTD. (as an unlisted company)(2) Condensed financial statements for the important affiliated companies
Not applicable
For the year ended March 31, 2016
Type

Company
with a majorityof thevoting rights
held by an
executive or
close relative

21

Name

KankyokagakuCo.,Ltd(Note 1)

Location

Chiyodaku,
tokyo

Capital orinvestments¥ 40 million

Business or
profession

Real estateleasing

Voting rights
held(%)

7.45

Relationshipwith the related parties

Transactions

AmountReal estateleasing

Real estateleasing(Note 2)

¥ 152 million

Pledge ofcollateral

Pledge ofcollateral(Note 3)¥ 564 million

Election of

Account
nameDeposit
Prepaid
expenseBalance¥ 146 million¥ 12 million

Note 1: Yasuharu Kakihara, who is a director & advisor of the Company, and his close relatives own 100 percent of the voting rights.
Note 2: The subsidiary, KOEI TECMO GAMES CO., LTD., leases a joint ownership building of the related party, Kankyokagaku
Co.,Ltd, and the subsidiary, KOEI TECMO LIV CO., LTD.,.
The lease fee and other transaction terms are determined by price negotiations based on the current status of transactions in theneighborhood.
Note 3: A Land and building which the subsidiary, KOEI TECMO LIV CO., LTD., owns are pledged as collateral for the borrowing
the related party, Kankyokagaku Co.,Ltd, required for a construction expense.
The amount is equal to book value of the land and building which our subsidiary, KOEI TECMO LIV CO., LTD., owns.
Notes for the parent company and important affiliated companies(1) Information on the parent company
KOYU CO., LTD. (as an unlisted company)(2) Condensed financial statements for the important affiliated companies
Not applicable

18. Comprehensive income:The components of other comprehensive income including reclassification adjustments and income tax effect were as follows.
Millions of yen

Unrealized gains or losses on securities:
Increase during the year
Reclassification adjustments
Amount before income tax effect
Income tax effectTotal unrealized gains on securities
Foreign currency translation adjustments:
Increase during the year
RecyclingTax effect
Adjustments for retirement benefits:
Increase during the year
Reclassification adjustments
Amount before income tax effect
Income tax effectTotal changes in adjustments for retirement benefits
Total other comprehensive income

22

Thousands of U.S. dollars

2017

2016

2017

¥ 6,490(3,436)
3,054
(932)
2,121

¥ (10,034)
297(9,737)
3,147(6,589)$ 57,854(30,632)
27,222(8,313)18,909

(886)
(55)
2
(939)

(1,006)(1,006)(7,898)(490)
18(8,370)

(36)
(15)
(51)
15
(35)

(809)
(62)
(872)
287
(585)

(321)
(138)
(459)
140
(319)

¥ 1,146¥ (8,181)$ 10,219

19. Segment information:(1) Outline of reportable segment
Reportable segments, the Company reports are the business unit for which the Company is able to obtain individual financial
information separately in order for the board of directors to conduct periodic investigation to determine the distribution ofmanagement resource and evaluate their business performance.
The Company operates principally in the following reportable segments:(a) Entertainment: Development and sale of entertainment contents(b) SP: Entrusted development of commercial amusement.
(c) Amusement Facilities: Management of amusement arcade.
(d) Real estate: Operation and management of real estate for leasing.
(2) Method of calculating sales and income (loss), and other items by reportable segment
Income (loss) of the reportable segment is operating income. Transfers among segments are based on market prices.
(3) Information on sales and income (loss), and other items by reportable segment

I. Net sales and segment income:Net sales(1) Net sales to outside customers(2) Inter-segment net sales
Total
Segment income
II. Other items:
Depreciation and amortization

I. Net sales and segment income:Net sales(1) Net sales to outside customers(2) Inter-segment net sales
Total
Segment income
II. Other items:
Depreciation and amortization

23

Millions of yen
For the year ended March 31, 2017
Reportable segment

Enter
tainment

SP

Amusement
Facilities

Realestate

Sub
Total

Other

Total

¥ 32,749
275
33,025¥ 7,815¥ 1,991
1
1,992
¥ 736

¥ 1,266
1,266
¥ 27

¥ 788
788
¥ 248

¥ 36,796
276
37,073¥ 8,827

¥ 237
99
336
¥ 243

¥ 37,034
376
37,410¥ 9,071

¥ 344

¥ 2

¥ 86

¥ 239

¥ 673

¥ 40

¥ 714

Millions of yen
For the year ended March 31, 2016
Reportable segment

Enter
tainment

SP

Amusement
Facilities

Realestate

Sub
Total

Other

Total

¥ 34,395
318
34,713¥ 10,419¥ 1,786
1
1,788
¥ 755

¥ 1,286
1,286
¥ 63

¥ 830
830
¥ 322

¥ 38,299
319
38,618¥ 11,560

¥ 33
103
137
¥ 42

¥ 38,332
423
38,755¥ 11,602

¥ 429

¥2

¥ 119

¥ 269

¥ 821

¥ 24

¥ 846

I. Net sales and segment income:Net sales(1) Net sales to outside customers(2) Inter-segment net sales
Total
Segment income
II. Other items:
Depreciation and amortization

Thousands of U.S. dollars
For the year ended March 31, 2017
Reportable segment

Enter
tainment

SP

Amusement
Facilities

Realestate

Sub
Total

Other

Total

$ 291,914
2,456
294,371$ 69,667$ 17,748
11
17,759$ 6,565$ 11,291
11,291$ 240$ 7,031
7,031$ 2,213$ 327,986
2,467
330,454$ 78,687$ 2,118884
3,002$ 2,173$ 330,104
3,352
333,456$ 253,808$ 3,070

$ 20

$ 775

$ 2,138$ 6,005$ 365$ 6,370

Note 1: “Other” is an operating segment not included in reportable segment, venture capital, etc.
Note 2: The Company’s administrative expenses for the Company’s indirect departments which do not belong to the reportable segment
are allocated to each reportable segment in accordance with reasonable allocation standards.
(4) Reconciliation between the reportable segments above and the corresponding amount reported in the consolidated financial statements
was as follows:(a) Reconciliation of net sales
Reportable segment Total
Sales of Other segment
Elimination of intersegment transactions
Total(b) Reconciliation of segment income
Business segment reported Total
Profit of Other segment
Amortization of goodwill
Transfer to non operating profit
Total

Millions of yen

2017¥ 37,073
336(376)¥ 37,034

Millions of yen

2017¥ 8,827243(290)¥ 8,781Note: For management reporting purposes, goodwill and assets are not allocated to the segments.

2016¥ 38,618
137(423)¥ 38,332

2016¥ 11,560
42
(387)
(145)
¥ 11,069

Thousands of U.S. dollars

2017$ 33,054
3,302(3,352)$ 330,104

Thousands of U.S. dollars

2017$ 78,687
2,173(2,588)$ 78,272(5) Items related to change in reportable segments, etc.
As of April 1, 2016, the Company has reorganized the structure in order to maximize Brand and IP value and enhance the corporate
value of its entire group. Due to the reorganization, we will change our reportable segments from “Game Software,” “Online & Mobile,”“Media & Rights,” “SP”, “Amusement Facilities,” and “Real Estate” to “Entertainment,” “SP,” “Amusement Facilities,” and “RealEstate” from this fiscal year.
Segment information for the previous fiscal year has been adjusted to reflect this change in reportable segments.

24

(Segment related information)
Information by country or region
The following tables present sales and assets information by geographic area for the years ended March 31, 2017 and 2016.
(1) Sales

Millions of yen
For the year ended March 31, 2017

Japan
Net sales to outside customers:¥ 27,089

North
America¥ 4,411

EuropeAsia, etc.

¥ 2,159¥ 3,374

Millions of yen
For the year ended March 31, 2016

Japan
Net sales to outside customers:¥ 28,582

North
America¥ 3,408

EuropeAsia, etc.

¥ 2,108¥ 4,233

Thousands of U.S. dollars
For the year ended March 31, 2017

Japan
Net sales to outside customers:$ 241,458

North
America$ 39,320

Note: The sales amounts are classified by country or region where customers are located.
(2) Tangible fixed assets
Millions of yen
For the year ended March 31, 2017

Japan

Asia

UK

Other

¥ 21,977¥ 1,493¥ 2,654¥ 0Millions of yen
For the year ended March 31, 2016

Japan

Asia

UK

Other

¥ 13,979¥ 1,697¥ 3,178¥0

Thousands of U.S. dollars
For the year ended March 31, 2017

25

Japan

Asia

UK

Other

$ 195,898$ 13,315$ 23,659$4

Consolidated
Total¥ 26,126

Consolidated
Total¥ 18,856

Consolidated
Total$ 232,878

EuropeAsia, etc.

$ 19,246$ 30,079

Consolidated
Total¥ 37,034

Consolidated
Total¥ 38,332

Consolidated
Total$ 330,104

26

BOARD OF DIRECTORS AND
AUDIT & SUPERVISORY
BOARD MEMBERSCORPORATE DATA

Chairman

KOEI TECMO HOLDINGS CO., LTD.

Keiko Erikawa*
President & CEO

Yoichi Erikawa*Director

Hisashi Koinuma
Director

Kazuyoshi Sakaguchi
Director

Mei Erikawa
Director & Advisor

Yasuharu Kakihara
Director(Outside)

Masao Tejima
Director(Outside)

Hiroshi Kobayashi
Audit & Supervisory Board Member (Full-time)

Seinosuke Fukui
Audit & Supervisory Board Member (Full-time, Outside)

Masaki Kimura
Audit & Supervisory Board Member

Satoru Morishima
Audit & Supervisory Board Member (Outside)

Toshikazu Kitamura
Senior Executive Officer & CFO

Kenjiro Asano
Executive Officers

Takeshi Hara
*Representative Director（As of June 21, 2017）

Head Office
1-18-12 Minowa-cho, Kouhoku-ku,
Yokohama, Kanagawa 223-8503 Japan
Tel : +81-45-562-8111
http://www.koeitecmo.co.jp/

Date Established :April 1, 2009

Paid-in Capital :¥15 Billion ( As of March 31, 2017)

Number of Employees :1,654(As of March 31, 2017: Consolidated Basis)

Account Settlement :March 31Transfer Agent of Common Stock :Sumitomo Mitsui Trust Bank, Limited
1-4-1, Marunouchi, Chiyoda-ku, Tokyo
100-8233 Japan

Independent Auditor :KPMG AZSA LLC

MAJOR SUBSIDIARIESKOEI TECMO GAMES CO., LTD.
1-18-12 Minowa-cho, Kouhoku-ku,
Yokohama, Kanagawa 223-8503 Japan
Tel : +81-45-561-6888
https://www.gamecity.ne.jp/

KOEI TECMO WAVE CO., LTD.
KUDANMEIZENDO Bldg.
4-1-34 Kudankita, Chiyoda-ku,
Tokyo 102-0073 Japan
Tel : +81-3-3222-8333
http://www.wave.koeitecmo.co.jp/

KOEI TECMO NET CO., LTD.
1-23-3 Minowa-cho, Kouhoku-ku,
Yokohama, Kanagawa 223-8527 Japan
Tel : +81-45-565-3123
https://shop.gamecity.ne.jp/

CWS Brains, LTD.
KUDANMEIZENDO Bldg.
4-1-34 Kudankita, Chiyoda-ku,
Tokyo 102-8230 Japan
Tel : +81-3-3222-7605
http://web.ultra-soccer.jp/

27

KOEI TECMOAMERICA Corporation1818 GILBRETH RD. Suite 211,BURLINGAME, California 94010 U.S.A
Tel : +1-650-692-9080
http://www.koeitecmoamerica.com/

KOEI TECMO EUROPE LIMITED
Unit 209A The Spirella Building, Bridge
Road, Letchworth Garden City,
Hertfordshire, SG6 4ET, UK
Tel : +44-1462-476130
http://www.koeitecmoeurope.com/

KOEI TECMO TAIWAN CO., LTD.
11F, No.323, Fu-Hsing S.Road, Sec. 1,
Daan Chiu, Taipei 106, Taiwan
Tel : +886-2-2325-0111
http://www.gamecity.com.tw/

KOEI TECMO SINGAPORE Pte. Ltd.
8 Kallang Avenue, Aperia tower1,#12-01/04, Singapore 339509
Tel : +65-6220-7581
http://www.koeitecmo.com.sg/

KOEI TECMO TIANJINSOFTWARE CO., LTD.
21〜22F, Global Center, No.309 Nanjin Road,
Nankai District, Tianjin , P.R.China
Tel : +86-22-8328-0781
http://www.gamecity.net.cn/

KOEI TECMO BEIJINGSOFTWARE CO., LTD.
RM.701 Beijing Inn
No.6 South ZhuGan HuTong,
Chaoyang men Nei, Dongcheng District,
Beijing China
Tel :+86-10-6588-3571
http://www.gamecity.net.cn/

KOEI TECMO SOFTWAREVIETNAM CO., LTD.
12th,12Ath Floor, Ladeco Building, No.266,
Doi Can Street, Lieu Giai Ward, Ba Dinh
District, Hanoi, Vietnam
Tel : +84-4-3232-1284