1/14 I'd Like to Provide You Now with Our Briefing on the Results Achieved
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Outline of Results Briefing by SQUARE ENIX HOLDINGS held on August 7, 2009 I’d like to provide you now with our briefing on the results achieved by Square Enix Holdings for the first Results Briefing Session quarter of the fiscal year ending March 31, 2010. First Quarter of the Fiscal Year Ending March 31, 2010 August 7, 2009 1 SQUARE ENIX HOLDINGS CO., LTD. Statements made in this document with respect to SQUARE ENIX HOLDINGS CO., LTD. and its consolidated subsidiar about the future performance of SQUARE ENIX GROUP. These statements are based on management's assumptions and beliefs in light of information available to it at the time t should not assume that statements made in this document will remain accurate or operative at a later time. A number of factors could cause actual results to be materially different from and worse than those discussed in forward 1. changes in economic conditions affecting our operations; 2. fluctuations in currency exchange rates, particularly with respect to the value of the Japanese yen, the U.S. dollar and the Euro; 3. SQUARE ENIX GROUP’s ability to continue to win acceptance of our products and services, which are offered in highly competitive markets characterized by the continuous introduction of new products and services, rapid developments in technology, and subjective and changing consumer preferences; 4. SQUARE ENIX GROUP’s ability to expand international success with a focus on our businesses; and 5. regulatory developments and changes and our ability to respond and adapt to those changes. The forward-looking statements regarding earnings contained in these materials were valid at the time these materials were including forecasts or projections, whether as a result of new information, subsequent events or otherwise. The financial information presented in this document is prepared according to generally accepted accounting principles in Ja 2 SQUARE ENIX HOLDINGS CO., LTD. Continuous Progress in Operating Income My name is Yoichi Wada, and I am the president of Operating Income by Quarter (Billions of Yen) 30 Square Enix Holdings. 0.6 25 6.3 Second-Half 20 3.6 Projection 12.5 In the first quarter, we posted: 19.9 Q4 15 9.4 10.5 8.2 Q3 9.1 3.4 10 First-Half Q2 5.4 Projection Q1 Net sales of 29,399 million yen, 7.7 6.5 5.9 11.9 5 2.4 3.8 1.7 3.5 2.1 2.7 4.3 3.5 Operating income of 594 million yen, 0 0.7 0.4 (0.5) 0.6 04.3 05.3 06.3 07.3 08.3 09.3 10.3E △5 Ordinary income of 1,529 million yen, and 3 SQUARE ENIX HOLDINGS CO., LTD. A net loss of 1,672 million yen. The slide you can see here shows changes in operating income since the first fiscal year following the merger of Square and Enix. In the previous results briefing session, we said that we 1/14 The plans, forecasts, strategies and ideas described in this material are descriptions of forecasts of future results. These descriptions rely on information available as of the date of production of this material and are based on assumptions and judgment made by the Company’s management. Readers are advised not to rely solely on these forecasts. Readers should also not assume that these forecasts are accurate or valid information, even after the date of public release. There are many factors that may cause actual results to vary considerably from the forecasts, and in some cases actual results may be inferior to forecasts. The information on the future forecasts described in this material is current as of August 7, 2009. The company is not obliged to update or correct forecasts concerning the Company’s future results, including forecasts or outlook, if new information becomes available and/or events occur after August 7, 2009. Outline of Results Briefing by SQUARE ENIX HOLDINGS held on August 7, 2009 forecasted to post operating income of 25 billion yen in the fiscal year ending March 31, 2010, distributed equally over the first half and second half. Operating income at the end of the first quarter was almost on a par with our plan. Operating income was a little less than 600 million yen, and ordinary income was slightly more than 1.5 billion yen. In fact, we expected to post an operating loss in the first quarter, given that the release of most of the titles in the Games segment during the first half will be in the second quarter. However, the Company outperformed expectations in other segments, which explains the results above. We are now already one month into the second quarter, and results are almost in line with expectations. Q1 Results and Full-year Projections of Operating Income by Segment This slide shows full-year projections for operating Q1 results Full-year projection (Billions of Yen) -0.99 percent complete - income by segment, and the progress of each at the end Games 25 0.08 percent complete of the first quarter. Amusement Adverse market condition continues 3.2 2% 1.14 percent complete Comic book sales remain strong Publication 45 % Game-strategy book of major titles 2.5 planned for Q2 percent complete In the Games segment, we posted an operating loss of Mobile Phone Content 1.16 Ahead of projection 4.5 26 % percent complete Merchandising 1.13 % CG animated film contributed in Q1 990 million yen, compared with planned full-year 0.8 141 Exceeded full-year projection percent complete Eliminations -1.92 % Being streamlined operating income of 25.0 billion yen. This loss was -11 or Unallocated 18 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9 10 offset by results in other segments. 4 SQUARE ENIX HOLDINGS CO., LTD. The Amusement segment includes the facility operation business and arcade machine business of TAITO Corporation and the arcade machine business of Square Enix. This segment continued to face a difficult market environment. In the Publication segment, we posted operating income of 1.14 billion yen in the first quarter, compared to a full-year plan of 2.5 billion yen. This means we have already achieved 45% of our plan. In the previous results briefing, we told you that the Publication segment was growing steadily. This is mostly attributable to our comics, which are benefiting from the creation of associated TV animations. We did feel, however, that it would be unreasonable to assume in the planning phase at the outset of the fiscal year that these animations would be a hit every time, so we moderated our forecasts using a probability of the animations succeeding. 2/14 The plans, forecasts, strategies and ideas described in this material are descriptions of forecasts of future results. These descriptions rely on information available as of the date of production of this material and are based on assumptions and judgment made by the Company’s management. Readers are advised not to rely solely on these forecasts. Readers should also not assume that these forecasts are accurate or valid information, even after the date of public release. There are many factors that may cause actual results to vary considerably from the forecasts, and in some cases actual results may be inferior to forecasts. The information on the future forecasts described in this material is current as of August 7, 2009. The company is not obliged to update or correct forecasts concerning the Company’s future results, including forecasts or outlook, if new information becomes available and/or events occur after August 7, 2009. Outline of Results Briefing by SQUARE ENIX HOLDINGS held on August 7, 2009 As it turned out, all comic book series that were turned into animations posted growth and significant profitability in the first quarter. We hope that this trend will continue into the second and subsequent quarters. Incidentally, in the second quarter, we plan to publish a strategy guide for DRAGON QUEST IX. The Mobile Phone Content segment, which posted record profits in the preceding fiscal year, made a fairly good start to the current term. In the Merchandising segment, FINAL FANTASY VII ADVENT CHILDREN COMPLETE was launched on Blu-ray Disc in the first quarter, along with character goods and other products. Our initial plan wasn’t particularly aggressive, but the Blu-Ray sold well, and this bolstered profits. As a result, we exceeded our plan for the fiscal year by 40%. The Eliminations or Unallocated figure shows that streamlining was progressing as planned. So although we anticipated that we might post an operating loss because of the loss in the Games segment, the result from the Games segment was more than offset by strong progress in other segments during the first quarter. DRAGON QUEST IX Made a Solid Start DRAGON QUEST IX, which was launched in July, has Analysis of multi-million DS titles Sales patterns of PS2 and DS titles (Sell-through) (Million units) First month sales =100% made a very strong start. 260% DRAGON QUEST MONSTERS: JOKER (DS original) DRAGON QUEST IX 3.2 as of July 26 240% July 11, 2009 Shipped over 3.5 million as of Aug. 5 Sold through 3.39 million as of Aug. 2 220% 200% As we announced previously, we have shipped 3.5 Pokémon Diamond/Pearl 1.59 1.9 2.23 September 28, 2006 180% New Super Mario Bros. 0.9 1.62 2.88 million units. In comparison, sell-through unit sales May 25, 2006 160% DRAGON QUEST VIII (PS2 original) Animal Crossing0.33 1.4 3.23 140% November 23, 2005 were 3.38 million units as of August 2, which means 120% Mario Cart DS 0.84 2.22 December 8, 2009 0.29 100% that almost all units shipped have been sold.