Providing Dreams and Excitement SEGA SAMMY HOLDINGS INC. SEGA CORPORATION Sammy Corporation Shiodome Sumitomo Building, 21F 1-2-12 Haneda, Ohta-ku, Tokyo 144-8531 Sunshine 60 Building, 29F to People Throughout the World Overview of 1-9-2 Higashi Shimbashi, Minato-ku, Tokyo ●SEGA develops, manufactures and sells 3-1-1 Higashi-Ikebukuro, Toshima-ku, Tokyo Companies 105-0021 game machines for amusement use; 170-6029 ●As the holding company of a group of develops and operates amusement ●Sammy develops, manufactures and sells In October 2004, SEGA CORPORATION and Sammy Corporation merged their business resources in order to maximize their entertainment companies, SEGA SAMMY centers; and develops and home video pachinko and pachislot game machines. HOLDINGS INC. manages the Group and game software. corporate value and establish a solid standing for themselves as world-class entertainment companies. Thus, the SEGA conducts supportive activities. SAMMY Group was born. By improving its relationships of trust with stakeholders, the Group aims to achieve its own and Types of society’s continued development. This year, moreover, it is issuing its first CSR report. Business

Amusement Center Operation Business Pachislot and Pachinko Business Development and operation of Development, manufacture and amusement centers. distribution of pachinko machines, Amusement Pachislot and pachislot machines, and peripheral Center Operation Pachinko equipment. Business Business SEGA SAMMY HOLDINGS INC.

Sammy Corporation SEGA CORPORATION Amusement ■ SEGA SAMMY Group Companies List Machine Sales Other Businesses Business ●JAPAN ●Overseas

SEGA CORPORATION Sega Holdings U.S.A., Inc. Amusement Machine Sales Business Sammy Corporation Sega Amusements U.S.A., Inc. Other Businesses Sammy Networks, Co., Ltd. Sega Amusement Works, LLC Development, manufacture and Planning, design, supervising, and SEGA TOYS CO., LTD. Sega Enterprises, Inc. (U.S.A.) distribution of games machines for construction of commercial facilities, etc. amusement centers. Consumer TMS ENTERTAINMENT, LTD. Sega Entertainment U.S.A., Inc. Business NISSHO INTER LIFE CO., LTD. Sega of America, Inc. IT Communications Co., Ltd. Secret Level, Inc. eAddress Corporation Sega Holdings Europe Ltd. WAVEMASTER, INC. Sega Europe Ltd. Consumer Business SI ELECTRONICS, LTD. Sega Amusements Europe Ltd. OASIS PARK Co., Ltd. Sega Benelux B.V. Design, production and distribution of game GINZA Corporation Sega France S.A. software, toys, animation, and content for mobile phones. GINZAHANBAI Corporation Sega Germany G.m.b.H Sammy Systems Corporation Sega Publishing Europe Ltd. Sammy Design Co., Ltd. Sports Interactive Ltd. Sammy Rental Services Co., Ltd. The Creative Assembly International Ltd. XYZ CINEMAS CO., LTD. The Creative Assembly Ltd. Financial SEGA SAMMY ASSET MANAGEMENT INC. Sega (Shanghai) Software Co., Limited Affairs SEGA SAMMY HOLDINGS INC. (consolidated) (unit: ¥1 mil.) SEGA SAMMY GOLF ENTERTAINMENT INC. Sega Networks (China) Co., Ltd. SEGA SAMMY MEDIA INC. Sega Shanghai Co., Ltd. Period ended 3/05 Period ended 3/06 Period ended 3/07 SEGA TOYS PLUS CO., LTD. Shanghai New World Sega Recreation Co., Ltd. SEGA Bee LINK Co., LTD. Sega Amusements Singapore Pte. Ltd. Net sales 515,668 553,240 528,238 SEGA MUSIC NETWORKS Co., Ltd. Sega Amusements Taiwan Ltd. Ordinary income 104,432 119,500 81,287 SEGA LOGISTICS SERVICE CO., LTD. Sega Korea, Ltd. Total assets 438,991 522,914 549,940 TAIYO CO., LTD SEGA TOYS (HK) CO., LTD. DARTSLIVE Co., Ltd. Sammy NetWorks Asia Pacific Ltd. Equity ratio 59.0 60.6 61.5 Telecom Animation Film Co., Ltd. Sammy NetWorks Beijing Co., Ltd. Number of employees 5,407 6,416 7,734 TOMS PHOTO CO., LTD. Guangzhou Huachuang Information Technology Co., Ltd. TMS MUSIC, CO., LTD. TMS MUSIC (UK) LIMITED ※For the period ended 3/05, the business year was October 1, 2004 - March 31, 2005, but the financial data was considered as starting from April 1, 2004. Japan Multimedia Services Corporation TMS MUSIC (HK) LIMITED ※For details on financial indicators, please see our annual reports or SEGA SAMMY HOLDINGS INC’s Media-Trust Co., Ltd. website (http://www.segasammy.co.jp/english/ir/index.jsp). REALUS INC. (As of July 31st, 2007) RECIPE Ltd. RemArt Co., Ltd. RODEO Co., Ltd.

SEGA SAMMY GROUP CSR REPORT 2007 1 CONTENTS Group Management Philosophy By providing entertainment filled with dreams and excitement to people throughout the Message from the Top 4 ■ world, we will strive to enrich our society and culture. Business Activities that Provide Dreams and Excitement ① SEGA ：Entertainment that All Generations Can Enjoy 6 ■ Business Activities that Provide Dreams and Excitement Sammy Giving Pachinko and Pachislot a Friendly Aura 8 CSR Charter ② ： ■ Activities as a Corporate Citizen ①：Edutainment ── Creating a New Type of Education 10 ■ Regarding the Creation of the Group CSR Charter Activities as a Corporate Citizen ②：Providing Dreams and Excitement Through Sports 12 ■ We have established the following CSR Charter as we regard the fulfillment of corporate social responsibility (CSR) as one of our most Corporate Governance 14 ■ important management objectives. As a responsible corporate citizen, we will comply with all relevant laws, regulations and social norms and further deepen the relationship with our stakeholders. Through these efforts, we believe we can provide sound management of our CSR Management 16 ■ Group and fulfill our responsibilities to society. This CSR Charter provides guidelines for our business operations. Relations with Stakeholders ■ With Customers We will bear in mind the current needs and interests of our customers in our effort to provide entertainment filled with dreams and Together with Customers excitement. Improvement of Customer Satisfaction 20 ■ Disclosing Information About Products and Services / Marketing 22 ■ With Partners Business Efforts / Efforts to Protect Personal Information 23 ■ We will maintain fair and impartial relationships with our suppliers and work together as partners in providing entertainment Together with Business Partners filled with dreams and excitement. Fair Selection 24 ■ Equitable Relations 25 ■ With Shareholders and Investors We will view our business with a global perspective in our efforts to ensure sustained growth and to maximize enterprise value. Together with Shareholders and Investors Additionally, we will enhance management transparency and meet the expectations of our shareholders and society through fair and timely Accurate, Fair and Prompt Disclosure of Information 26 ■ disclosure and appropriate returns in profits. Distribution of Profit and Preventing Insider Trading 27 ■ With Employees Our employees bring to us creativity and a spirit of challenge. They are our most cherished assets and the fuel to our growth. Together with Employees We will cultivate a corporate culture which allows them to fully exploit their talents and enables us to grow together with our employees. SEGA Career Paths / Diversity / Health and Safety 28 ■ Sammy Career Paths / Work-Life Balance / Diversity / Health and Safety 30 ■ With Society As corporate citizens, we will contribute to society not only by prospering in business but also by proactively supporting both the Together with Society (Social Contributions) development of cultural activities including art and sport and the preservation of the global environment. Support for Sports, the Arts, and Other Cultural Activities 32 ■ Support for Social Contribution Activities / Social Responsibility (Donation Activities) 34 ■ Social Contribution Activities that Make Use of Our Business Activities / Efforts of Group Companies 35 ■ (Environment)

Observance of Environmental Laws and Regulations / Effective Use of Resources and Energy 36 ■ Editorial Policy Conducting of Environmental Education / Support for Environmental Protection Activities 39 ■ Third Party’s Opinion 40 ■ This is the first CSR report to be issued by the SEGA SAMMY In addition, we have used as many photographs and illustrations as

Group. In order to make it easy to read and easy to understand for possible and otherwise given importance to the report’s Guidelines Used as Reference for This Report Abbreviations Used in This Report our various stakeholders, in preparing it we carried out the appearance. Furthermore, we kept down the number of pages in 《GRI “Sustainability Reporting Guidelines 2006”》 In this report, SEGA SAMMY HOLDINGS INC. is referred to as “Company”; SEGA ※GRI (Global Reporting Initiative) is a non-profit organization that has created, and is working to CORPORATION, as “SEGA”; and Sammy Corporation, as “Sammy.” measures listed below. The performance information presented is the report and posted the report on our website, thus giving disseminate, sustainability reporting guidelines that can be used worldwide. Relationship to Annual Reports Disclaimer mainly from fiscal 2007. consideration to the environment by not issuing the report on paper. This report contains not only past and current facts about the SEGA SAMMY Group, but Basically, an annual report presents financial information while a CSR report presents non- also forecasts and predictions about social conditions, and business plans and results as financial information. For detailed financial information not presented in this CSR report, please 1. Using the framework of our CSR Charter, we presented In order to continue to reflect the spirit of CSR in its operations, the of the day of issue. These forecasts and predictions are suppositions or judgments based see our annual reports or visit Company’s website at on information available at the time of this writing. Should the underlying conditions information separately for each type of stakeholder. SEGA SAMMY Group will exchange opinions with its various http://www.segasammy.co.jp/english/ir/index.jsp. change, future social conditions and business results could vary from the predictions and 2. To promote understanding of the SEGA SAMMY Group, we stakeholders as it steadily endeavors to improve its performance Scope of Report forecast. Readers are requested to please understand this. Period: April 1, 2006 - March 31, 2007 (fiscal 2007) featured an overview of the Group’s business activities. and become an ever better corporate citizen. We hope that you will ※This report includes certain information from the period just before its time of issue, and certain information about activities from fiscal 2007. 3. To substantiate the report’s objectivity, we included the opinions favor us with your candid opinions, including through the attached Organizations covered: SEGA SAMMY HOLDINGS INC., SEGA CORPORATION, Sammy Corporation, of a qualified third party about the Group’s CSR activities. questionnaire. ※ Information about the activities of certain other Group Companies is also included. Time of issue: August 2007 (the first report) Next report: August 2008

2 SEGA SAMMY GROUP CSR REPORT 2007 SEGA SAMMY GROUP CSR REPORT 2007 3 Message from the Top

The SEGA SAMMY Group is Committed to Fulfilling its Social Responsibilities.

────────────────────────── ────────────────────────── is indispensable for building deeper relationships of trust with our A New Start with the Birth of the Group A Group Perceived to be Indispensable to the World various stakeholders, and could even be called the starting point of ────────────────────────── through its Entertainment those relationships. As guidelines for the behavior of employees, we The SEGA SAMMY Group was born with the establishment of ────────────────────────── have established a Group CSR Charter and a Group Code of SEGA SAMMY HOLDINGS INC. in October 2004. It was launched This world is by no means all pleasure and fun. It also contains Conduct, and are aiming to achieve CSR activities that have a ト with the aim of using SEGA’s and Sammy’s brand power, technical much sadness and hardship. That, I believe, is why entertainment is sense of consistency. Moreover, we regularly carry out detailed ッ プ development skills, and know-how to build, on both companies’ a necessity to society. Accordingly, the SEGA SAMMY Group seeks measures intended to infuse the spirit of CSR into the heart of each コ ミ business foundations, the “World’s Number One Comprehensive to use its advanced technology and know-how to provide as many Group employee. ッ ト Entertainment Company.” people as possible with high-quality entertainment and thereby ────────────────────────── メ ン Since their founding, SEGA and Sammy have continued to furnish contribute to creating a brighter world. Furthering Communication with Stakeholders ト society with happiness and enjoyment while sustaining a large part SEGA, which consists of an amusement machine sales business, ────────────────────────── of Japan’s entertainment industry. Having inherited the enduring an amusement center operations business, and a consumer This is the SEGA SAMMY Group’s first CSR report. By issuing it we corporate cultures of both companies, the Group established its business, provides diverse types of entertainment - mainly home wish to inform you of our CSR activities but, that is not our only management philosophy- “We will contribute to realizing a rich video games and games for amusement centers - on a global purpose. We also intend to review and further improve our CSR society, and to creating culture, by providing entertainment scale. In the future, by offering new kinds of enjoyment based on a activities as we deepen our communication with you. We are brimming with dreams and excitement to people throughout the media mix comprising the Internet, mobile phones and more, I determined to be a company that meets your expectations, moves world.” believe SEGA will further expand the field of entertainment. forward together with you, and acts responsibly in all regards. ────────────────────────── Sammy, which conducts a Pachislot and Pachinko business, keenly Your continued support has and always will be valued deeply by us. Management Infused with the Spirit of CSR feels its responsibility as the leading company in the industry. So ────────────────────────── that a wide range of generations can readily enjoy pachinko and Chairman of the Board and Chief Executive Officer, With the establishment of SEGA SAMMY HOLDINGS INC., the pachislot, Sammy has begun a “Renaissance Project,” for which SEGA SAMMY HOLDINGS INC. SEGA SAMMY Group has assumed a greater social responsibility goals range from developing a diversity of game machines to than the individual companies had previously. I feel that the focus of improving the environment in pachinko and pachislot halls. our stakeholders - roughly 100,000 shareholders, numerous I also believe that “Edutainment” (Education ＋ Entertainment), customers and business partners, and approximately 8,000 which enables learning through playing, will become an important employees - has become completely different than before, and that pillar of the entertainment industry and also has significant society’s expectations have become immense. At the same time, I meanings in a CSR context. keenly feel that actively fulfilling our social responsibility as a To provide dreams and excitement through our business of corporate citizen is absolutely indispensable for business, and furnishing the world with entertainment, and to thus be a Group of without our doing so would make our sustained growth impossible. companies that is always an integral part of society - that is the Since the time of its founding, the SEGA SAMMY Group has purpose of the SEGA SAMMY Group’s CSR activities. To achieve naturally observed all laws, regulations and social norms, and it has this, we will create new types of entertainment through a also worked to prevent irregularities by precisely managing risk and ceaselessly challenging spirit. strengthened its efforts to improve safety. Having incorporated the ────────────────────────── spirit of CSR into our management early on, and guided by the SEGA SAMMY Group’s CSR - Deeply Rooted in the ideals of being constantly mindful of stakeholders and attempting to Heart of Each Employee achieve harmony, we seek to realize the Group’s continuous ────────────────────────── creation of value and the continued enrichment of society. For the SEGA SAMMY Group’s CSR activities, what is most important, I believe, is that all Group employees understand CSR and always work with such awareness, enabling us to effectively fulfill our responsibility to society. Moreover, daily dedication to CSR

4 SEGA SAMMY GROUP CSR REPORT 2007 SEGA SAMMY GROUP CSR REPORT 2007 5 Business Activities that Provide Dreams and Excitement ① SEGA Connections Between People - SEGA’s manufacturing business began in 1960 with the “SEGA 1000” jukebox. SEGA has since grown into a general entertainment company active in a wide range of fields, including home video game software business-use game machines, amusement centers, video content, networked games and more. Since the inception of the SEGA SAMMY Group, moreover, it has promoted various developments through synergies among Group Companies. Entertainment that In an age where games, together with amusement, have given rise to a new Japanese culture that boasts worldwide popularity and where the creation of next-generation content through such innovative means as IT is being demanded, SEGA is always undertaking new challenges. These include creating literally borderless connections between people through entertainment, and furnishing entertainment to all generations, from children to All Generations Can Enjoy seniors. To provide people’s hearts with greater happiness and society with greater richness, SEGA will continue to undertake new challenges.

Consumer Business Creation of Kid’s Market Recently, such games as “The King of Beetles:“MUSHIKING”” and “OSHAREMAJO

Responsibility as a Software Publisher SEGA official website: LOVE AND BERRY,” and “DINOSAUR KING” have introduced the fun of collecting cards mushiking.com SEGA entered this market at the dawn of the age of home video game machines. By into arcade games. This new market created by SEGA has gained enormous popularity undertaking various challenges, it has provided customers with new types of among children and families. The King of Beetles : entertainment, leading the market in the process. In fiscal 2007, it sold more than 20 “MUSHIKING” - The Road to the Greatest Champion 2 million units of home video game software worldwide. As a software publisher, it has SEGA official website: Amusement Machine Sales Business osharemajo.com achieved top tier results in Japan. Serving a wide range of customers, it provides everything from titles for toddlers and families to full-scale titles and, as a recent trend, practical and As the Leader of the Industry educational titles. The pleasure that SEGA provides thus covers a broad range of the “Hang-On,” the world’s first game in which the player truly experienced interactively; market. It has established a solid standing for itself as a comprehensive publisher. “UFO Catcher,” a prize-winning machine that became a social phenomenon; “Virtua

SEGA has also put effort into online content since early on. It offers and provides the OSHAREMAJO LOVE AND BERRY The King of Beetles : Fighter,” the world’s first 3D Computer Graphics fighting game - SEGA’s arcade games market with an abundance of content - PC network titles, mobile content, etc. - able to OSHAREMAJO LOVE AND SEGA official website: “MUSHIKING” have led the amusement industry in every age. The “Sangokushi Taisen” series of BERRY - DS Collection SONIC CAFE meet the needs of all kinds of customers. network-based trading card games has also won much acclaim; and “Ami-Gyo,” a new In the future, SEGA, by contining to develop content tailored to the different regional variation of medal game, and “Initial D ARCADE STAGE 4,” the latest addition to a characteristics of Japan, Europe, and the United States, will realize further growth of this popular race game series, have each created a sensation. SEGA is determined to ensure business and strengthen SEGA’s international competitiveness as a global publisher. SEGA official website: that its position of leading the industry with such innovative products will remain VF.Net unchanged into the future. Virtua Fighter 5 Cultivating Characters SEGA has an abundance of characters, including “Sonic the Hedgehog,” “The King of Offering a New Way of Playing Sonic and the Secret Rings Beetles:“MUSHIKING”,” “OSHAREMAJO LOVE AND BERRY,” and “Ryu ga Gotoku.” In Using cutting-edge technology, SEGA has created, in its latest arcade games, a platform addition to further developing these existing characters, SEGA plans to create new that allows a new type of play. By connecting amusement centers throughout Japan with Ami-Gyo characters. By conducting diverse development efforts in its character-centered special terminals, this new networking technology, ALL.Net, enables real-time contests to Ryu ga Gotoku 2 business, SEGA seeks to promote the creation of synergy among the Group’s various be held online. SEGA has opened up ALL.Net to other companies in the industry, so as businesses and enhance its own ability as a content provider. Original sound tracks to create an environment in which as many people as possible can experience this new for Ryu ga Gotoku and Ryu ga Gotoku 2 type of arcade game play that uses a network. A link-up with mobile phones is also being Amusement Center Operation Business created, and new ways of enjoying play - customizing of characters, perusing of national rankings, etc. - that transcend the ways possible with previous games are being Offering Play Space for All Generations produced one after another. SEGA operates approximately 430 amusement centers throughout Japan. These are diverse and enjoyed by all generations. They vary with location, ranging from urban types The ALL.Net platform, a network that to suburban types, and with type, including indoor theme parks, large multiplex connects players playing in amusement SEGA UFO CATCHER ７ commercial facilities and a new type of amusement space that makes further use of centers throughout SEGA’s intellectual property, thus enabling SEGA to cater to a broad range of needs and Japan. tastes. Using the know-how that it has gained over the years in developing and operating amusement space, SEGA intends to create more new markets in the future. TOKYO JOYPOLIS Virtua Fighter 5

Actively Expanding into New Technologies SEGA WORLD DREAM FACTORY Since mobile phones first began to become popular, SEGA has been operating at its amusement centers, “SEGA Mobile Friends,” a point service that you can receive by using your mobile phone as a membership card. It has also been actively conducting

measures aimed at the future of amusement centers. For example, it has been SEGA Mobile Friends Initial D ARCADE STAGE 4 A point service that uses mobile phone. ©SEGA pioneering the use of electronic money as represented by Edy, and thus already created ©Shuichi shigeno/KODANSHA All Rights Sangokushi Taisen 2 ©SEGA Reserved. a completely cashless environment in certain of its amusement centers. Manufactured and produced by SEGA under license from Kodansha Ltd. ©SEGA All manufacturers, cars, names, brands and associated SEGA SAMMY GROUP CSR REPORT 2007 imagery featured in this game are trademarks and/or SEGA SAMMY GROUP CSR REPORT 2007 6 copyrighted materials of their respective owners. 7 All rights reserved Business Activities that Provide Dreams and Excitement ② Sammy

In the 14th-16th centuries, a large-scale movement of cultural renewal, the Renaissance, took place throughout Western Europe, especially in Italy. Various new technologies were invented while, at the same time, in the arts, the virtues of Europe’s ancient culture were considered Giving Pachinko and Pachislot anew. As a result, the culture of Western Europe, which had previously stagnated for centuries, underwent enormous change. A similar wind has now begun to blow in the pachinko and pachislot industry. Recently, the player population has decreased; viewing this situation as a new turning point, Sammy believes that what is now important is how to create new enjoyment and pleasure. Current issues, the future of the a Friendly Aura industry, the expectations of old and new players are all important matters to be dealt with, and with this the Renaissance Project was begun.

Themes of the Renaissance Project Providing Proposals for Hospitable Pachinko and Pachislot Hall Environments In considering the pachinko and pachislot industry as a whole, the upgrading of pachinko and pachislot hall environments could be called a key to the industry’s future success. Sammy believes that, to revitalize the pachinko and pachislot industry, it is indispensable that different parts of the market - existing Thus, in order to solve the issues and problems involved in managing pachinko and players, dormant players (people who, after the industry’s popularity peaked, stopped playing because of such influences as the pachislot halls, Sammy aims to provide proposals for creative and innovative diversification of leisure activities), and new players who have never previously played - be enabled to play to their heart’s content. To pachinko and pachislot hall environments. enable all players to reaffirm the amusement of these machines, the company is using novel technologies and its creative abilities to The Sammy Group collectively conducts activities ranging from the comprehensive conduct diverse efforts aimed at opening up new avenues of entry into playing. planning of real estate use and the design and construction of pachinko and pachislot Not only is it developing games that are easy to play, it is also providing proposals for pachinko and pachislot hall environments, holding halls, to the supply of peripheral equipment. With regard to pachinko and pachislot hall interiors, it actively proposes ideas from the customer's standpoint, such as events for beginners, conducting advertising and other image-improving measures, and otherwise promoting a multiplicity of activities aimed establishing separate smoking and non-smoking areas or an area for beginners, and at reinvigorating the pachinko and pachislot industry. That is Sammy’s Renaissance Project. also provides proposals for creating pachinko and pachislot hall environments in which players can enjoy a greater degree of comfort.

Invigorating the Industry and Improving Its Image In August 2006, the Organization for the Sound Development of the Pachinko & Pachislot Industry was established as an impartial organization dedicated to creating hall environments where customers can play with peace of mind and to promoting the soundness of the

Hall design and construction where consideration is industry. Reform efforts, such as advancing the construction of foundations intended given to the environment to contribute to the sound development of the industry, are being implemented. As part of the background to this, Sammy has also been endeavoring to dispel the pachinko and pachislot industry’s negative image by reinforcing that the industry is a uniquely Japanese popular entertainment and creating an environment in which anyone can easily access. Towards those ends, Sammy conducts opinion surveys about such things as the lifestyles of players, holds educational seminars for the industry and its unions, and conducts PR activities - such as holding events and The Things with Which Sammy Will Grapple placing advertisements - aimed at obtaining new players. In addition, it provides “fun” for different generations and lifestyles. For example, in Seeking to Develop Game Machines that All Players Can Enjoy cooperation with local senior citizens’ facilities, it has been inviting seniors to its head As a manufacturer, what Sammy is most able to contribute to the revival of the pachinko and office showroom to enjoy playing pachinko and pachislot as recreation. Such activities are pachislot industry is the development of diverse variety of machines. The industry’s currently being implemented at Sammy’s regional business centers as well (see page 35). organizations and unions are now promoting a “Campaign to Make Pachinko and Pachislot In the future, Sammy intends to use media, such as the Internet and mobile phones, Easy, Affordable and Enjoyable to Play.” (“Yu Pachi”) As a symbol of the campaign, they are to carry out measures aimed at improving the industry’s image and educational distributing a “Yu Pachi” logo mark and calling on all manufacturers to use it. As an effort of activities aimed at invigorating the industry - undertakings that it sees as part of its the entire industry, the campaign is now showing signs of growing. mission as the leading company in the industry. Pachinko “CR OH! Animoh” Jankyu “Dream Jan Vegas” Sammy too has made progress in developing and selling machines that are effectively serving to address these issues. “Jankyu,” which can be played for hours with a small budget, and “CR OH! Animoh,” which does not have a liquid crystal display and can thus easily be used by seniors and others, are two examples that embrace the idea of the Renaissance Project. An advertisement placed in the Fuji Evening News (November 22, 2006). As a result of revisions to the Law on Control and Improvement of Amusement and Entertainment Business ※, machines conforming to the new standards (Reg. 5 machines), which have relatively lower volatility, overtook machines which conform to the prior period (Reg. 4 machines) as the main market constituent, marking the shift to machines that can be enjoyed by the more casual player. Sammy, using the know-how that has enabled it to provide its equipment with many functions that could be termed “industry firsts,” is developing machines that all players can enjoy to their heart’s content. In the future, to attract new players, Sammy plans to offer an even wider array of machines Use of the “Yu Pachi” Pachislot “Pachislot, mark is being promoted HOKUTO no KEN 2 by developing products specifically targeted at different age groups, different lifestyle by all of the industry’s RANSE HAOUDEN Sammy conducted an independent survey and analysis on more than 50,000 people from various angles - personal environments, genders and so on, from a multifaceted viewpoint. Its view is toward a organizations and unions. TENHA no SHOU” attributes, behavioral qualities, market condition, hindrance factors, promotion factors, etc. - and then fed the results back to A game machine exhibition where visitors can sample pachinko and pachislot industry that all people can enjoy. ※Changes in the rules for the ©Tetsuo Hara and the industry, the unions, etc. formal tests that the Security Buronson/NSP the machines. Electronics and 1983 ©NSP 2007 Communications Technology copyright licence SAD-304 Association requires game ©Sammy machine manufacturers to carry out. 8 SEGA SAMMY GROUP CSR REPORT 2007 SEGA SAMMY GROUP CSR REPORT 2007 9 Activities as a Corporate Citizen ①

Edutainment “Edutainment” is new word derived from “Education” and “Entertainment.” It means to think and learn while enjoying oneself through entertainment. Using its technology and creativity, SEGA has created products offering wide-ranging types of “Edutainment,” from simple mental exercise to disaster simulations. ―― Creating a New Type of Education At the same time, through education related to the entertainment industry, Sammy aims to cultivate talented people who will be able to carry on the industry in the future.

“Easily, Enjoyably Check Your Brainpower!” ―― Satisfy Your Intellectual Curiosity Contributing to Society Through Simulation Machines that Make Use of Game Technology

Recently, a type of content with which you use your mind to Simulators for Driving Schools satisfy your intellectual curiosity has attracted the spotlight. It has SEGA’s Computer Graphic driving games are popular games at appeared - mainly in the form of games - in a wide range of media, amusement centers. SEGA has also applied its related know- including TV shows and magazines. SEGA too has provided an how to teaching about traffic-accident and disaster prevention. Naruhodo: The Intellectual Curiosity Research extensive lineup of such content for various types of home video CenterTM In 2003, it marketed the “SEGA DRIVING SIMULATOR,” a machine games, thus contributing to of this boom. As part of its lineup, it for driving schools, and related software. This machine has since offers “Naruhodo: The Intellectual Curiosity Research Center,” a been introduced into many driving schools. It has also been installed new brand of product. Having started off by marketing such at the Science Museum in Tokyo. There, it has gained a reputation prominent products as “Brainpower Training Portable 2” and for enabling children to learn driving and simple traffic rules as they “Experience a Pleasant Aha! Feeling in the Brain, Supervised by enjoy themselves. A driving assistance device for people with leg

the Sony Computer Science Research Lab’s Kenichiro Mogi, Experience a Pleasant Children learn about driving as they enjoy themselves. (Photo obtained with the disabilities has been attached to one of the three machines installed at PhD,” SEGA now aims to move further ahead in this field. Aha! Feeling in the cooperation of the Science Museum.) the Science Museum. Employing the system and know-how used for Brain, Supervised by the Sony Computer In July 2006, SEGA also introduced an arcade game using touch Brainpower Trainer this machine, SEGA has also developed “SEGA DRIVING SCHOOL” Science Research Lab’s Portable 2 panels called, “Won’t You Enjoyable Check Your Brain Using a Kenichiro Mogi, PhD an amusement center game that has gained much popularity. Mental ability improving Touch Machine Or Else battle?” (TOUCH DE ZUNO!) This game has been so well received that SEGA has Raising Awareness About Disasters decided to create a home video game version of it. “Air Rescue Pilot,” a flight simulator for firefighting helicopters whose Moreover, the super-hit game “The King of Beetles: development SEGA headed, and “3D-The Big Earthquake in Kyoto,” “MUSHIKING”” contains an educational element: by basing its a ride theater that simulates a large earthquake, have been subject matter on the natural world, it increases the interest of permanently installed at the Kyoto City Citizen Disaster Prevention children in the environment which surrounds them. Center, where they are playing a role in raising disaster awareness.

©SEGA “Brainpower Trainer” In the future, SEGA will continue to apply, to such social is a trademark of SEGA TOYS CO., LTD. contributions, the content-related abilities and technological Brain Age Brain Stress Meter “Brain Age Brain Stress Meter” This flight simulator uses an actual (retired) firefighting helicopter. (Photo obtained abilities that it has cultivated in developing arcade game is a trademark of SEGA TOYS CO., LTD. TOUCH DE ZUNO! with the cooperation of Kyoto City Disaster Prevention Center.) ©SEGA machines and home video game software.

Opening of the G&E Business School

In April 2006, the G&E Business School was opened through a experience for the students. In the future, Sammy plans to joint investment by top companies related to the pachinko and continue to provide teachers from its various departments. pachislot industry: Sankyo CO., LTD, Fields Corporation, and The first class of students graduated in October 2006; the Sammy. second, in April 2007; and the third is now being taught. Many As indicated by its name, in which G stands for “Gaming” and E graduates have gone on to work for entertainment-related for “Entertainment,” the curriculum goes beyond pachinko and companies such as Sammy. Sammy believes that cultivating pachislot, covering a wide range of fields. Subjects such as talented personnel is linked to the sound development of the marketing, hospitality and how to think about entertainment are industry and, in cooperation with the other two companies, is taught. Such a diverse curriculum is not to be found at any other thus actively supporting this school. institution. The three investing companies have also provided many of the

teachers. Thus, many Sammy employees have stood on the Class in session at G&E Business School Free papers are published and other Students can choose from four courses: business, marketing teaching platform. Listening to them lecture has been a valuable activities are extensively conducted. management, product development, and general entertainment.

10 SEGA SAMMY GROUP CSR REPORT 2007 SEGA SAMMY GROUP CSR REPORT 2007 11 Activities as a Corporate Citizen ②

The SEGA SAMMY Group believes that the limitless drama of sports evokes dreams and excitement. We not only want to provide Providing Dreams and Excitement entertainment through our businesses but also provide our stakeholders worldwide with dreams and excitement through sports. The Group’s BASEBALL CLUB, TRACK AND FIELD CLUB, and SNOWBOARD CLUB, collectively the SEGA SAMMY ATHLETIC CLUB, provide Through Sports dreams and excitement by making it possible to immerse oneself in the respective sports. At the same time, through supporting various sports, the Group seeks to contribute to the development of the sports world and thereby to the formation of a cheerful, healthy society.

Aiming to Further Invigorate a National Pastime! Through Sports that Allow People to Experience Nature ── SEGA SAMMY BASEBALL CLUB ── SEGA SAMMY SNOWBOARD CLUB

Aiming to further invigorate one of Japan’s national pastimes, to expand its SEGA SAMMY SNOWBOARD CLUB was established at Sammy in May 2002. It popularity and to create a setting for the next generation of athletes to pursue features Kaori Mitsui, an athlete who has been active as a pioneer of the most their dreams, the SEGA SAMMY Group established SEGA SAMMY BASEBALL exciting event in snowboarding, snowboard cross. CLUB in 2005. Snowboard cross is an event in which a group of racers start simultaneously atop The Club got under way in earnest in January 2006, and in its first year, the Club an inclined course filled with obstacles and attempt to reach the distant end of reached the play off round for the title of No. 1 Representative of Tokyo to the the course first. It became an official Olympic event in the Torino Olympics. With

Intercity Baseball Tournament, Japan’s most prestigeous amateur baseball Aiming to be the best club in Japan Activities that communicate the wonder of nature are also conducted multiple athletes sliding down the course simultaneously, there is often a furious tournament. In its second year, 2007, the Club accomplished the feat of battling for position, which has given rise to the sport being called “motorcross on becoming a representative of Tokyo to the Intercity Baseball Tournament and it is snow.” strenuously training with the aim of winning this year’s Tournament as well the All- Ms. Mitsui was chosen as an athlete under the high performance program for the Japan Tournament later in the year. 2006 Torino Olympics and in 2007 she was also the overall winner at one of the The Club also engages in social contribution activities. For example, it holds youth leading tournaments in Japan. Aiming to get as many people as possible to baseball clinics in Miyazaki (the site of its spring camp), Hokkaido, and elsewhere discover the pleasures of snowboarding and the wonder of snow-covered throughout Japan. At these clinics it not only teaches baseball skills. After the mountains, she also actively participates as a coach in snowboarding clinics. clinics, it also joins with the children in picking up trash, actively strengthening its relations with the regions. In July 2006, moreover, the Club played a charity game, in Uonuma City, Niigata Prefecture, for purposes of helping the city recover Gratefully cleaning up the grounds that always make the games Snowboard cross, an event in which there is a furious battling for possible position (Snowboard cross racer Mitsui is on the right) from the severe damage it suffered in the Chuetsu Earthquake.

Passing the Baton and Passing On Dreams The Feeling of Oneness, Between Group and Stakeholders, ── SEGA SAMMY TRACK & FIELD CLUB Created by the SEGA SAMMY ATHLETIC CLUB

SEGA SAMMY TRACK & FIELD CLUB began in 2002, when five people (three Most members of the SEGA SAMMY ATHLETIC CLUB are hired as employees. athletes and two staff) transferred to Sammy from their previous company. Initially, After they retire from active competition, we seek to find a place for them in the the new Club was so small that its members could only compete in individual Group and enable them to pursue a career with us. There are thus examples of events. Gradually, however, its members increased so that, after three years, in former Club members who are now working in our corporate offices. 2005, the Club was able to enter the Eastern Japan Corporate-Club Marathon Club members who are also employees are assigned to the various departments Relay Race, where it won the right to compete in the All-Japan Corporate-Club at Company, SEGA and Sammy, enabling them to engage in both work Women’s Marathon Relay Race. Aiming to be No. 1 in Japan in marathon relays Many employees come to cheer on the athletes operations and competitive activities. With regard to individual events, Yasuko Hashimoto, who won the Berlin Moreover, Club members and other employees can both share the excitement of Marathon in 2003, achieved her first victory in a Japanese marathon, the Nagoya sports through, among other things, the avid support that the entire Group provides International Women’s Marathon, in March 2007, earning the right to compete in for the Club. This also helps to create a feeling of oneness in the entire Group. the IAAF World Championships in Athletics. The SEGA SAMMY ATHLETIC CLUB is not just about winning and losing. It also In Asian Cross Country Championships, the Club’s Eri Kotake, representing seeks to elicit the maximum entertainment value that sports inherently contain. Japan, finished fifth. Moreover, it sets great value on communicating the deep pleasure of sports to the In a marathon relay race, the Club overcomes the long, excruciating distance by next generation - an effort that it sees as its mission. functioning as one as they pass the baton to each other, thereby generating not The Group will continue to provide society with dreams and excitement, and only a Club spirit but also hope and excitement in many people. Achieving this is contribute to the creation of a rich society through sports. the “dream” contained in the baton of the Club. Yasuko Hashimoto won the Nagoya International Women’s Marathon A feeling of oneness is created through sharing the joy in 2007 ©PHOTO KISHIMOTO CORPORATION

12 SEGA SAMMY GROUP CSR REPORT 2007 SEGA SAMMY GROUP CSR REPORT 2007 13 Corporate Governance

The SEGA SAMMY Group regards corporate governance as key foundation for its corporate activities. ■ Corporate Governance System – Chart 2 We believe it to be indispensable for continuously creating corporate value. Office of Corporate Board of Corporate Board of Directors Executive Officers Auditors Auditors

Basic Stance on Corporate Governance Corporate Governance Organization Deliberation / Independent Auditors Reporting / Reflection in Exchange of The SEGA SAMMY Group regards corporate governance as the key The Group has adopted a corporate auditor system in consideration of Implementation of Information Reporting / foundation for its corporate activities. The fundamental principles of the its objective of enabling directors, who have abundant knowledge and Policies Exchange of Group’s corporate governance policy are to enhance efficiency, secure experience of industry, market trends, products, merchandise, and Information a sound corporate organization, and enhance transparency. This policy services, to make quick and optimal management decisions in a Auditors and Office of Group Audit CSR Management Group Audit Holdings Audit is the basis for addressing such imporatant management issues as rapidly changing management environment. At the same time, we have Corporate Auditors Committee Committee Liaison Committee Liaison Committee selecting candidates for directorships, deciding compensation for appointed outside directors and strengthened our executive officer and Liaison Committee directors, implementing management oversight, and determining internal audit systems, reinforcing our corporate governance Governance Corporate compensation for corporate auditors. organization from aspects of business execution and organizational Deliberation / Reflection in Enhancing Efficiency oversight. Reporting / Implementation of The Group will strive to maximize corporate value by establishing Exchange of Policies expeditious, appropriate decision-making processes and by increasing The Constituents of the Corporate Information Group Companies the efficiency of corporate management. We will work to return the Governance System and Their Main (As of July 31st, 2007) benefits of these efforts to our shareholders and other stakeholders. Securing a Sound Corporate Organization Activities Internal Controls System other ways, we conduct risk management for the Group as a whole. To maximize corporate value in volatile business conditions, the Group Information Management System will identify and manage the range of risks that it faces. At the same Company’s Board of Directors holds a regular meeting once a month Representative examples of items to be considered, policies under Regarding the state of development of Company’s information time, we will secure a sound corporate organization through the and extraordinary meetings as needed. Since the end of March 2007, consideration, and objectives in regard to the future enhancement of management system, we have created an Information Security Policy reinforcement of compliance systems focused on strict adherence to seven directors have been actively managing the Company. Moreover, corporate governance by the Company and the Group include the and Internal Regulations on Information Management, in which we laws and regulations as well as social norms. the Board of Directors and other bodies make decisions and issue implementation of a Group Internal Control System project targeting the have established appropriate methods of handling and managing Enhancing Transparency reports on certain important managerial subjects and other matters establishment of a framework for evaluating and reporting on Internal confidential corporate and other information. With regard to the use of In light of the growing importance of disclosure by companies, the related to other Group Companies. The Board of Corporate Auditors Control Systems. This framework will be implemented in response to in-house system terminals and networks, we obligate each employee Group will increase management transparency by fulfilling its also holds a regular meeting once a month and extraordinary meetings the system for evaluation and auditing standards for internal control for to submit a written oath at the time of joining the Company, and responsibility to explain corporate actions to shareholders and other as needed. Since the end of March 2007, four auditors have been financial reports as stipulated by the Financial Instruments and otherwise encourage employees to manage and handle information stakeholders and by realizing enhanced disclosure through proactive actively conducting the board’s deliberations, thoroughly analyzing and Exchange Law, which is commonly known as “J-SOX” Rules. appropriately. investor relations(IR) activities. investigating specific issues. Other members of the corporate Previously, each Company in the Group established its own Internal Public Notification System governance system include a Group Management Liaison Committee Control System. From the fiscal year ended March 2006, Sammy, a Based on the spirit of our Group CSR Charter, we have created a and a Group Audit Committee. The following two diagrams depict the core company of the Group, began to design an Internal Control System for Internal Notifications (Establish a “Hot Line” system that Corporate Governance System. They show the constituents of the System based on the so-called COSO framework. Subsequently, the enables an employee to report in the interest of public good any system, their functions, and their interrelationships. Financial Services Agency framework was released, and Sammy violation of law, and so forth) in order to promote “self-purification” in established an Internal Control System in response to that framework. the Group, and in order to prevent deplorable events caused by legal Currently, the development of that system has progressed to the stage violations or improper actions inside the Companies. As part of this of effectiveness verification. system, we have established notification centers inside each Group On the other hand, the company established the Internal Control Company and at law offices outside the Company. Regarding reported ■ Corporate Governance System – Chart 1 Promotion Office in February 2007. As the nucleus of the internal matters, we conduct fact-finding investigations and implement control projects that were under way within the Group, the system corrective measures and recurrence prevention measures. A system General Meeting of Shareholders developed by the forerunner Sammy will be utilized by other Group for protecting the identity of notifiers has also been established. In each Election / Dismissal Election / Dismissal Companies. In this way, while maintaining each company’s Company, moreover, we have set up a consultation channel that can Auditing independence, as a corporate group, we are working to establish a answer a broad range of employee consultation needs. It not only framework for evaluation and reporting on Internal Control Systems in serves to prevent legal violations but also carries out mental health Advance Deliberations Advice / Oversight Board of Corporate Board of Directors response to “J-SOX” Rules. We are confident that in the fiscal year measures. Group Management Auditors Reports / Proposals ending March 2009, we will be prepared to present the “Internal Control Emergency Measures for Use in a Disaster, etc. Liaison Committee System Report” and the “internal control audit report” required by “J- The SEGA SAMMY Group has established measures to ensure that, Appointment / should damage result from a disaster or accident, important operations Dismissal / SOX” Rules. will not be interrupted or can quickly be restored if they are interrupted. Instructions Executive So as to be able to confirm the safety of employees and their families Officers Reports / Risk Management should a large-scale disaster occur, Company’s has introduced a Proposals “Safety Confirmation System,” a mechanism that makes it possible to Specific Business Execution We believe that the core of effective risk management derives from a Reports / corporate culture with a deeply rooted “compliance awareness.” To quickly and reliably carry out emergency communications and Decisions Reflected Proposals / achieve such awareness, we have expanded compliance education, understand conditions on the ground. In addition, it has confirmed the Divisions Exchange of in Each Company appropriateness of emergency communication procedures and Information increased internal audit activities, and carried out other measures, in accordance with the conditions at each company. In addition, we have distributed disaster-prevention supplies, and continue to introduce, into each Group Company, measures designed for use in case of Group Companies devised various management measures specific to the risks in each company’s business. We also obtain and share information with the emergency. (As of July 31st, 2007) other companies as appropriate and necessary. Thus, in these and

14 SEGA SAMMY GROUP CSR REPORT 2007 SEGA SAMMY GROUP CSR REPORT 2007 15 CSR Management

The Concept of CSR Regarding the Creation of the CSR Charter By infusing the spirit of CSR into the Group’s management, we aim to become corporations that are truly needed by the society.

Defining the SEGA SAMMY Group’s CSR We have established the CSR Charter as we regard the fulfillment of corporate social responsibility (CSR) as one of our At the SEGA SAMMY Group we conceive of CSR as follows. most important management objectives. As a responsible corporate citizen, we will comply with all relevant laws, regulations ■It is a general term for the type of corporate conduct that and social norms and further deepen the relationship with our stakeholders. Through these efforts, we believe we can corporations should follow - both as a policy of maximum provide sound management of our group and fulfill our responsibilities to society. This CSR Charter provides guidelines for importance for increasing corporate value and as corporate our business operations. We aim to achieve the continued development of both SEGA SAMMY Group and society. citizens that will continue to exist in society - in order to needed by society. ■ The Place and Concept of CSR ■It is behavior that, by establishing corporate governance that encompasses compliance and risk management and by Establishment of CSR Promotion Office Overview of CSR effectively and actively strengthening relations with stakeholders, Management Philosophy of the The topmost philosophy in Management CSR aims to realize both the Group’s continuous creation of value and the group management In October 2004, SEGA and Sammy came together under SEGA SEGA SAMMY Group Fundamental Thinking the continuous development of society. SAMMY HOLDINGS INC., thus creating the SEGA SAMMY Group, an According to the SEGA SAMMY Group’s basic thinking, CSR activities Interpretation of the Group Management Philosophy - CSR Charter - Code of Conduct Management Philosophy based organization with greater social responsibility than either Company had can be divided into three types, each aimed at achieving one of the on CSR concepts, described We aim to incorporate this CSR concept into the Group’s management CSR Charter of the previously had. following goals. specifically for each group of philosophy, conducts, guidelines, and specific activities. To achieve SEGA SAMMY Group The SEGA SAMMY Group aims “to provide people throughout the 1. Sound management stakeholders. They serve as on- that goal, “Group Management Philosophy,” “Group CSR Charter,” and the-job guidelines for employees. world with entertainment brimming with dreams and excitement.” 2. Further deepen the relationship with our stakeholders “Group Code of Conduct” have been systematically established. In Specific description of the Group Entertainment is dreams and pleasure and culture all rolled into one. By 3. The continuous development of the corporations and society accordance with these three factors, the Group as a whole will reflect SEGA SAMMY Group CSR Charter, interpreted from the continuing to provide superior entertainment, the Group will contribute Overview of Development of CSR System viewpoint of the employees and the spirit of CSR in its management and conduct corporate activities. Code of Conduct to the realization of an rich society and the creation of culture. Having clarified the goals to be achieved and the milestones to be the daily work. It serves as action guideline for employees. Moreover, in the 21st century, Companies consider as important not reached along the way, we planned, based on that basic thinking, only the growth of their business but also economic, environmental three phases for the creation of an effective CSR system for the entire and social issues such as environmental protection, compliance with Group - building of foundations, conducting of activities, and Further the laws, regulations and social norms, active disclosure, the development - adjusting the plan as necessary to accommodate each transparency of management, etc. We believe that corporations and Group Company. society can together achieve continuous development only if Then, based on the plan, in its first year, fiscal 2006, we strengthened corporations do not just seek to increase their earnings but also fulfill our Corporate Governance System - the foundation of the Group’s The Stakeholders of the SEGA SAMMY Group their role and responsibility as good corporate citizens. management. We also drafted a Group Management Philosophy, a It was against this backdrop that the SEGA SAMMY Group positioned Group CSR Charter, and a Group Code of Conduct, and integrated our Ever mindful of our five types of stakeholders, we continually seek to improve our relations with them. the performance of CSR as an important theme of its management, governance ideas. In the second year, fiscal 2007, we carried out and established a CSR Promotion Office at Company in April 2005. It measures to inculcate CSR; at the same time, we analyzed current With our focus set on our five types of stakeholders - customers, was then that we began CSR activities in earnest. conditions at SEGA, Sammy, and Company, whereupon we established business partners, shareholders and investors, employees, and society CSR Promotion Topics and, for each of the three companies, a CSR - we are constantly working to further build up and strengthen our Promotion Plan. In the future, the CSR Management Committee will relations with them. ensure that the CSR Promotion Plans are effectively implemented, and ■ The SEGA SAMMY Group’s 5 Types of Stakeholders CSR activities will be systematically expanded as well. Moreover, using Customers ─────────────────────── the efforts heretofore of the three companies as benchmarks, we will The SEGA SAMMY Group progresses with the satisfaction of promote CSR activities at all of the other companies in the Group. its customers. With Partners ──────────────────────── ■ Overview of the SEGA SAMMY Group’s CSR Customers Our business partners are equal partners. We aim to grow together with them. Expansion of CSR With With activities Shareholders and Investors ─────────────── Dialogue Society Partners Continuous development of Our shareholders and investors are important entities that SEGA SAMMY ■Analysis of current conditions corporations and society ■Establishment of CSR provide our corporate capital. Group’s ■Building of PDCA cycle Promotion Topics 5 Stakeholders ■Group efforts ■CSR inculcation, educational ■Environmental protection measures Employees ─────────────────────── activities Our employees are the Group’s most cherished asset. Only With when each of them grows does the company develop. With Shareholders Employees Society ───────────────────────── and Investors Corporate governance Society forms the very foundation of the SEGA SAMMY ■Organization of ideas ■Preparation of promotion system Group’s existence. As a corporate citizen, we actively and Specification of stakeholders ■ voluntarily endeavor to carry out social contributions,

［Building of foundations］［ Conducting of activities］［ Further developmentTime］ environmental considerations, etc.

16 SEGA SAMMY GROUP CSR REPORT 2007 SEGA SAMMY GROUP CSR REPORT 2007 17 CSR Promotion System Group CSR Promotion Topics

CSR Committees information is exchanged, problems are shared, and an attempt is Deciding on CSR Promotion Topics and Priority Topics Conducting of CSR Activities For promoting CSR activities, we have established a CSR made to achieve a kind of unified progress. In order to give Group CSR activities a sense of unity, Group CSR Using the priority topics as guideposts, Company, SEGA and Sammy Management Committee that decides on the policy and course for PDCA Cycle Promotion Topics - which serve as the standards for CSR activities - surveyed the current state of their respective CSR activities and promoting the CSR of the Group as a whole; establishes specific A PDCA (Plan-Do-Check-Action) cycle for the CSR activities of the have been established separately for each type of stakeholder. determined the degree of progress being made in achieving their measures for promoting CSR activities and gives instructions for Group as a whole is realized through the various CSR committees Based on the spirit of the Group CSR Charter and the Group Code of respective CSR Promotion Plans, the need or not for an improvement carrying them out; checks the state of progress of CSR activities; and cooperating with each other as they manage the progress of their Conduct, and taking into account the SEGA SAMMY Group’s business plan, and future issues. They then translated that degree of progress generally provides leadership for the entire Group in the area of CSR. respective activities and fulfill their respective roles. In devising the plan interests and social position and referring to the GRI Guidelines (see into a kind of scorecard and reported this to the CSR Management Moreover, so that Company, SEGA and Sammy can each devise a (P) of the PDCA cycle, the CSR Management Committee reported the page 3) and the CSR Initiative ※, we deduced a total of 35 Group CSR Committee. CSR activities plan, carry out appropriate promotion measures, and results of a survey of current conditions over the course of two of its Promotion Topics from the requirements that must be met in order for The CSR Management Committee analyzed the current state of CSR manage its own progress according to the framework and milestones meetings. Problems and issues were deduced from the reports “Group the Group’s corporations to coexist symbiotically with the economy, the activities in detail, whereupon it gave instructions regarding the future presented in the Group CSR Activities Plan devised by the CSR CSR Promotion Topics” were planned accordingly their order of priority environment and society; and then broadly organized them. From the course to be taken and the time when goals are to be achieved. These Management Committee, each company has established its own CSR was decided and they were then put into action (D). After this, the state 35 topics, moreover, 26 were selected as priority topics that should be instructions were incorporated into each company’s CSR Promotion committee. of progress of the Group’s CSR will be accurately checked and addressed right away. Thus, based on their degree of importance, we Plan. The CSR Management Committee, which oversees the CSR activities evaluated (C), and, if necessary, additional measures and have established an order of priority for our efforts to conduct effective In order to realize a reliable PDCA cycle, the degree of progress in

of the Group as a whole, is chaired by the Chairman of the Board and improvements will be implemented (A). In this way, we will steadily CSR. achieving the CSR Promotion Plans must be reported to the CSR Management CSR Chief Executive Officer of Company, while the presidents of SEGA and promote our CSR efforts. Management Committee. Moreover, the priority topics, which serve as ※:“CSR Initiative” Sammy serve as members. The CSR Management Committee is the body with the ultimate The CSR Initiative, written by the CSR Initiative Committee of the Japan Society for Business guideposts for the CSR Promotion Plans, are always communicated in Moreover, the CSR committees of SEGA and Sammy, which manage decision-making authority over the Group’s CSR. As such, it discusses Ethics Study, is a recommended model for a CSR management philosophy, action charter and CSR reports and elsewhere. This allows for accurate reports to be the progress of their respective companies’ CSR activities, are chaired the Group’s various CSR efforts, from the state of progress of CSR code of conduct, and serves as a compass for companies to use in conducting their CSR made to outside the company, helps raise awareness inside the activities. by their respective companies’ presidents and have a system in which activities to methods of reporting CSR inside and outside Company; company, and serves as a push to the promotion of CSR. activities are promoted in a top-down fashion. coordinates the thinking and aligns the management vectors of Liaison meetings among the executive offices of their respective Company, SEGA and Sammy; and otherwise endeavors to steadily companies’ committees are held regularly. At these meetings, and effectively promote CSR. ■ Diagram of CSR Committees ■ The Concept for the Group CSR Promotion Topics

CSR Management Committee (meets quarterly at Company) CSR Management Committee Subjects to be investigated Chairman: Chairman of the Board and Chief Executive Officer of Company Standards (guideposts) for the Group in the future ・Decides on the policy and course for promoting CSR. Approval, Proposals, ・Establishes, and gives instructions regarding, each company’s CSR Promotion Instructions Reports Topics. Future issues ・Checks the state of progress of each company's CSR activities and provides CSR Initiative related leadership. and GRI 35 topics were 26 topics were Guidelines established and then The SEGA SAMMY Information Information selected as being (meets regularly) organized according to Group’s 35 CSR Sharing Sharing Each company’s CSR committee particularly important each of the Group’s 5 Promotion Topics SEGA CSR Company Sammy and urgent. 26 Committee CSR Committee CSR Committee Chairman: Each company's president (Company vice president) types of stakeholders. priority Immediate issues ・Devises and implements a plan regarding the CSR Promotion Topics. topics Executive office CSR Promotion Department Executive office ・Prepares a database that includes previously issued CSR reports. ・Reports to the CSR Management Committee and carries out improvement work. (As of July 31st, 2007)

The Transparency of CSR We are deepening the Group’s understanding about CSR through pamphlets and intranet use. CSR Inculcation Through the Intranet Inculcation of CSR at SEGA’s and Sammy’s General Meetings We believe it is essential that, both at work and outside of it, each Internal Promotion for Inculcating CSR We believe that we can further deepen the understanding of CSR by SEGA and Sammy each regularly hold general meetings for Group employee perceives the importance of CSR activities as a In conjunction with creating the Group Code of Conduct, we placing CSR information where employees can readily see it. Thus, administrators. At these meetings, each company’s top management matter of personal concern and independently and vigorously acts prepared and distributed a CSR handbook, put up CSR posters in all to achieve that goal we use the intranet, which can be viewed by all repeatedly communicates the necessity and importance of CSR. accordingly. Thus, we have investigated and planned inculcation workplaces, and posted a CSR page on the intranet. We also employees, including part-time employees, temporary employees, Following the meetings, the administrators devise measures that measures geared to the different levels of understanding of included the Group Management Philosophy, Group CSR Charter, and contract employees. CSR-related information is gathered communicate to their employees, and are steadily carrying them out. and Group Code of Conduct in a notebook distributed to each together there; at any time, employees can read past “A Message subordinates, in plain language, A Message from the Top employee. In order to deepen understanding about important from the Top,” refer to the CSR handbook, or access various other the CSR information presented at As one inculcation measure, CSR messages are issued from top themes, moreover, we produce pamphlets containing detailed information. Moreover, to help employees think about the CSR with the meetings, thus promoting the management. Top management, in its own words, repeatedly information on those themes. which they are personally involved, we have started up a blog and further inculcation of CSR. communicates to employees its unshakeable belief in CSR and the post columns related to CSR. importance of CSR to the SEGA SAMMY Group. When the Group Management Philosophy and the Group CSR Charter were created, Company’s Chairman of the Board and Chief Executive Officer A general meeting of Sammy administrators

Hajime Satomi communicated such a message by video. In each 様 お客 About Future Policy

「と もに歩む」 「夢と感 Group company, its president, using the Internet and pamphlets, 動 の提 供 」 It is important that employees feel CSR as being something 「公 「地 平 ・公球 正環 な関境 保 係護 「良きパー」への取 組 会 み」 repeatedly provides employees with messages that serve to deepen 社 トナー」 personally close to them and link it to concrete action. Thus, in the

「企 「地 業 市球 「 民環 ステーク を自覚境 」 「法 保 護 令ホルダー 「文への取 の遵 化 守 CSR understanding inside the company. In this way, top の発組 「健」との 良 み」 展 全好 ・支 な経な関 援 営 」 係」 A CSR poster, and the CSR future, to achieve that end we will look into types of training and 」

「企 「適業 時価 的値 確の最 な情大 化 報 」「適 handbook distributed to all management throughout the Group has come together to conduct 開 示 正 「透」 な利 明 益 な経還 education that use our existing tools, and into specific activities 「従 営元 」」 業 員 が最 大 の財 産 」「と employees. もに成 長 coordinated educational activities. 」 which employees can experience and that will deepen their CSR blog (intranet) understanding of CSR.

18 SEGA SAMMY GROUP CSR REPORT 2007 SEGA SAMMY GROUP CSR REPORT 2007 19 Together with Customers

Improvement of Customer Satisfaction ■System for Responding to Issues Raised by Customers

CSR Charter: With Customers For customer satisfaction, approaches are adopted from Consultation requests and complaints from customers both “Hard” and “Soft” Fronts Responding to frequently asked questions (FAQ) We will bear in mind the current needs and Facilities for responding to In-house responses Responding through amusement machine-related issues In order to deal effectively with the issues about which customers Responses by sales the customer consultation interests of our customers in our effort to provide (SEGA LOGISTICS SERVICE CO., LTD.) contact them, SEGA and Sammy have established a consultation desk personnel and on the Web desk (JMS) entertainment filled with dreams and excitement. In-house responses, responding through as a joint undertaking. Operation of this customer consultation desk customer consultations desk (JMS), and has been entrusted to Japan Multimedia Services Corporation (JMS), a responding to amusement machine-related issues Group Company, where a specialized consultation staff endeavors to

0.00.20.40.60.81.0 provide customers with prompt, thoughtful responses. Sammy 0.00.20.40.60.81.0 SEGA CSR Promotion Topics ・The department in charge researches appropriate measures. ・The department in charge researches appropriate measures. → Measures suited to the situation are carried out. → Measures suited to the situation are carried out. At the scene of the customer Japan Multimedia Services Corporation operates a ・A report is presented at the Customer Satisfaction Promotion ・A report is presented at the Monthly Quality Meeting. consultation desk Among the Group’s CSR Promotion Topics, we multimedia telecommunications network service Committee’s monthly meeting. ・A report is presented to Management and other related business that includes a telephone number information ・A report is presented to Management and other related departments.departments. Customers with Together give particular importance to the following in our service available by dialing 104 and various kinds of relations with customers. call center services. The measures are reflected in products and services • Customer satisfaction • Safety, product quality SEGA Aiming to Provide Better Products and Services ability to use the system and get a polite and helpful response” For the • Product labeling, disclosure of information SEGA offers a customer consultation room. Moreover, in cooperation people in charge of sales, this system has helped strengthen their The Greatest Customer Satisfaction Comes from Providing with SEGA LOGISTICS SERVICE CO., LTD. (providing handling, relations with customers, and could also be said to have created an • Marketing, market research Safe, High-Quality Products maintenance, repairs, and after-sales services [see page 37]), SEGA environment conducive for them to make proposals to customers. • Business strategy SEGA has established “strengthening the company’s system for and its related departments regularly conduct trend analysis of quality Customer Satisfaction on the “Hard” Front • Protection of personal information providing safe, high-quality products” as a CSR Priority Promotion problems for purposes of improvement, and then feed the results back Until now, Sammy has developed numerous novel, highly entertaining Topic. Accordingly, it is working to strengthen that system and improve to the Development, Production and Sales Departments, where they products that have been “firsts in the industry.” That is because customer satisfaction. Specifically, its various projects are decided by are applied to making improvements. Sammy believes that providing products that players can enjoy to their top management at Project Meetings, and are then consistently In the event that a product liability problem or some other serious heart’s content is what is most important for customer satisfaction. managed and conducted at all stages, from the start of development Who Are Our Customers? matter should occur, SEGA has established reporting channels and is Moreover, to satisfy hall operators, whose businesses take various to sales and on to the final evaluation of the project. A project watch strengthening the system whereby, depending on the seriousness of forms, Sammy has begun to develop machines that can be played function (project supervision, and issuing of alarms when necessary, by All of the people who enjoy the products and the matter, it can promptly take the necessary steps, from establishing with pleasure by casual players, and is proceeding with the a third party) has also been established; and effort is being made to services sold and provided by the SEGA SAMMY a countermeasures organization or disclosing relevant information to development of “omni-directional” games machines geared to the improve management by, among other things, reviewing what’s been Group are our customers. In response to their promptly resolving the issue or permanently preventing a recurrence. disparate needs of the different generations. Thus, on the “hard” front done until now regarding management standards related to QCD needs, we provide them with entertainment Aiming to prevent quality problems, the company acts from the too, Sammy is trying to satisfy all customers through manifold efforts (quality / cost / delivery schedule). designed to enable them to enjoy themselves to standpoint of failsafing (designing for reliability), so as to be able to that have resulted in an extensive lineup of offerings. As for strengthening its basic system, SEGA has built a system in further guarantee quality and safety. A Balanced Management System their heart’s content. conformity with ISO9001, international standards for quality By managing various kinds of data – product development, quality management systems; and, based on a quality policy of “leading the guarantee, customer management, etc. – all together, Sammy has The customers who purchase SEGA’s market in creativity and providing customers with satisfaction through Sammy achieved a balanced management system. Moreover, acting from the SEGA quality,” it is working to produce safe, high-quality products through home video game software, the Increasing Satisfaction by Acting According standpoint of hall operators, Sammy seeks to devise plans, proposals carrying out management by objectives. customers who go to JOYPOLIS and to the Concept of Tr!pleC and operations that will optimize hall management. Based on rules that the other amusement centers operated by SEGA, To meet the various needs of customers, Sammy promotes Tr!pleC are uniform throughout the company and using a system that can and the amusement center operators who have activities. Based on the attitudes represented by the words Challenge, quickly solve the problems of pachinko and pachislot halls, Sammy will installed SEGA arcade games are all valued Change and Creation, Sammy is attempting to implement the mindset, continue in the future to pursue the causes of complaints, link its customers of SEGA. “It’s possible because Sammy’s doing it, and only Sammy can do it.” findings to the improvement of quality, and otherwise work to increase Sammy believes that in order to truly satisfy all customers, it is customer satisfaction. important for each employee to have this positive approach and desire The pachinko and pachislot halls that for improvement. Sammy purchase Sammy’s pachinko and I listen to what customers say and then We’re working to get hall operators link it to developing better products. Customer Satisfaction on the “Soft” Front to use the call center. pachislot game machines, and the Naoko Koike, SEGA CORPORATION For pachinko and pachislot halls, machines breaking down on a Toichiro Shimizu, Sammy Corporation players who enjoy playing pachinko and pachislot, Before products go to market, they weekend or a holiday, when peak utilization occurs, means an In cooperation with JMS, we set up a call undergo location tests in which they’re enormous loss of business opportunity. Thus, in December 2005, are Sammy’s valued customers. center that receives questions, parts used in actual amusement centers. My job Sammy became the first company in the pachinko and pachislot orders, and complaints from hall operators. is to find out the wishes of the amusement industry to provide customer support in the late hours of weekday Regarding the center, we did a center operators who participate in the questionnaire on customers and got many tests, and to then communicate them to the Development Department. The nights and on weekends and national holidays, inaugurating its efforts response saying, “I have a sense of security” because the center operates things with which I concern myself daily are the accuracy and the speed with to increase customer satisfaction on the “soft” front. on holidays and weekday nights and even in the wee hours. I’m proud that which I communicate those wishes to the Development Department. They In October 2006, Sammy established a Customer Service Department we lead the industry in after-service. On the other hand, since the call center cover a wide range of issues, from the content of games to the shapes of inside the company. In cooperation with JMS, moreover, it has made has replaced sales personnel as “the face of Sammy,” I’m sensitive to game machine parts. I analyze and aggregate them and then feed them maintaining improving the quality of how we deal with customers over the back to the Development Department. Then the last of the fine-tuning is its after-service uniform nationwide. phone. The hall operators who use the call center are still only about 40% of done and the product finally goes to market. I also often go to amusement It has also improved the quality of its service through organizing a PR the total. So we plan to conduct PR activities for the center, so that its centers in my private life. And seeing people from a wide range of support system. From hall operators it has received such comments of existence and convenience become better known and it hopefully becomes generations playing SEGA games with apparent pleasure gives me a sense satisfaction about this system as, “I was given a thoughtful answer more extensively used. that my job is truly worth doing. when I consulted about a breakdown” and “I felt reassured by the

20 SEGA SAMMY GROUP CSR REPORT 2007 SEGA SAMMY GROUP CSR REPORT 2007 21 Disclosing Information About Products and Services Business Efforts

We use appropriate manuals and tools to enable customers to accurately understand our offerings. We have established an extensive system for achieving customer satisfaction.

SEGA Sammy SEGA Sammy So that customers can use its products safely, SEGA, in accordance With regard to players, Sammy does not use expressions that might Business Strategy Business Strategy with the legal system (the Product Liability Law, etc.), industry over emphasize the volatility element or lead to misunderstanding of its At SEGA, employees are familiar with the market-oriented approach Sammy aims to be a total service company in the Pachislot and guidelines and in-house manuals, endeavors to use appropriate, easy- products. Rather, it presents its products using tools that provide an and a system has been established whereby desired products can be Pachinko business. So as to meet the various needs of hall operators, to-understand language in its instruction manuals. Moreover, it has accurate understanding and that enable players to enjoy pachinko and quickly introduced into the market. In its consumer business, for it works to strengthen its business system, has established a business actively worked to clarify the range of each product’s use and to deal pachislot to their heart’s content. With regard to inappropriate, example, it constantly endeavors, through product meetings and other plan, and conducts diverse business activities. It has also stepped up with ethical issues. Specifically, it has established rules of use for each deceptive advertising used in part of the industry, Sammy encourages means, to anticipate the market and provide enjoyable, high-quality its development efforts for pachinko, pachislot, jankyu and other home game machine and attraction, and provides product information caution on its website and carries out other measures. In addition, it products that meet customer needs. products, and strengthened the production system at its Kawagoe through guidebooks and labeling. In 1994, to enable customers to has eliminated any vague expressions and hyperbolic language which In its amusement machine sales business, to strengthen its relations Factory. In addition, it carries out strategic fixed-capital investments. select home video game software with peace of mind, it set up, inside may have been contained in some of the tools used by sales with each of its corporate customers, SEGA has built a sales support Through these various efforts, it cultivates market needs and effectively the company, a Television Games Ethical Review Board, an oversight personnel, and otherwise endeavors to ensure that hall operators are system and works to promptly provide products that meet each advances its business interests, strengthening its ability to provide hall organization that established ethical regulations, the only such provided with correct information. With the understanding and customer's specific needs. Moreover, in order to promote the sound operators with solid support. Customers with Together organization in Japan’s consumer industry at the time. In 1995, it cooperation of hall operators, moreover, it distributes tools that enable development of the amusement industry, SEGA holds meetings for the began displaying ratings on products. Since then, the consumer game players to fully enjoy playing in pachinko and pachislot halls. purpose solving the various problems faced by the industry, and then software industry, based on the belief that fair and accurate ratings carries out activities in cooperation with corporate customers. would improve customer satisfaction, has established two groups, In its amusement center operation business, SEGA always listens to CESA※1 and CERO※2; and, to contribute to their development, SEGA the opinions of customers and operates its centers accordingly. In has provided them with both regulations and information on the results addition, it feeds customer opinions back to its game machine of its activities. At present, SEGA carefully investigates the content of development departments, with the aim of creating facilities that are each of its products, on which it also displays the rating resulting from friendly, safe and enjoyable for each and every customer. CERO’s ethical review. Education of Sales Personnel In its consumer business, SEGA holds a monthly study meeting about ※1：CESA = COMPUTER ENTERTAINMENT SUPPLIERS’ ASSOCIATION new products in order to share product information and facilitate ※2：CERO = COMPUTER ENTERTAINMENT RATING ORGANIZATION effective sales activities. Our corporate customers and SEGA hold meetings for the purpose of improving our sales representatives’ skills for necessary business proposals to reinforce the business relationships with customers. In addition, they also hold a monthly A private exhibition of pachinko and pachislot game machines. Simple expressions are used on product study meeting on new products. Moreover, in its amusement center packages according to established guidelines, operation business, where its top priority is satisfying the customers at so that a general understanding of the For each model of machine, a pamphlet is prepared that gives the centers, it regularly trains all levels of employees in providing product can be immediately obtained. the methods of use and other detailed information. Education of Sales Personnel customers with pleasing treatment. In the area of employee education, Sammy has established various kinds of training for new employees and employees entering the Marketing company in mid-career, and also conducts education and training in management skills. With regard to business skills, the G&E Business In order to satisfy customer needs more fully, we conduct various customer surveys and analyses School (see page 10), in which Sammy has invested, conducts training that imparts extensive knowledge about the entertainment industry in Sammy SEGA セガ】 ー general. Sammy has thus built an educational system based on an In order to meet the needs of customers, SEGA places importance on Seeking to encourage not only existing players but as wide a range of employee development plan conceived from a multifaceted viewpoint, marketing. Thus, customer attitudes and needs are ascertained people as possible to play pachinko and pachislot enjoyably and facilitating the company’s efforts to meet the various needs of through questionnaires packaged with products, surveys of customer casually, Sammy is developing machines that offer a better balance pachinko and pachislot halls. opinions about new products and about SEGA, questionnaires at between gameplay entertainment and volatility. In order to accurately amusement centers, location tests of new products, customer meet the needs of the market, moreover, Sammy has long conducted, comments placed on SEGA’s website, and other means. through hall operator feed back, a separate machine evaluation In order to meet the needs thus ascertained, moreover, SEGA believes questionnaire for each model produces. It then works to develop that, in its amusement business, it is especially important to create products based on the results of such questionnaires and on the games that can be understood and enjoyed even by beginners and analytical results from such undertakings as company recognition develop amusement centers that are segmented by type of customer. surveys that use product commercials. Furthermore, in its consumer business, SEGA prepares its final In addition, Sammy issues a monthly marketing report that assesses Employees being trained in SEGA’s amusement center operation business. business plans by way of meetings held to determine whether the market trends, and distributes it to sales personnel; at the same time, it medium-term product lineup strategy and the products to be marketed ascertains and analyzes the market trends in each region in what are Efforts to Protect Personal Information in the following fiscal year are in accordance with customer needs, and called “spot reports,” and shares this information with sales personnel. otherwise endeavors to develop products that will accurately meet the Sales personnel then promptly provide these various kinds of Aiming to obtain deeper trust, we are working to protect personal information needs of as many customers as possible. information to hall operators, facilitating Sammy's strategy for introducing new machines into pachinko and pachislot halls. The importance and usefulness of personal information in business privacy policy and, based on it, introduced appropriate information activities has increased in recent years. At the same time, society has management measures to prevent information from being leaked, lost, demanded that such information be handled carefully. Fully aware of damaged, etc. In these and other ways the Group is working to protect this, the SEGA SAMMY Group not only obeys the laws related to the personal information entrusted to it. protecting personal information; each Group Company, as an enterprise that handles personal information, has also established a

22 SEGA SAMMY GROUP CSR REPORT 2007 SEGA SAMMY GROUP CSR REPORT 2007 23 Together with Business Partners

Fair Selection Sammy CSR Charter: With Partners Checking Conducted by Outside Organizations and Multiple In order to build strong relationships of trust with business, in accordance with fixed purchasing rules. Departments In selecting a new business partner, the candidate is investigated by We will maintain fair and impartial relationships with partners, we have created standards and a Group-wide system from a multifaceted viewpoint. Sammy has established various kinds of internal regulations - including multiple departments, whose findings, along with data obtained from our suppliers and work together as partners in Internal Regulations on Managing Outside Orders for Purchasing, and the candidate and from outside consultants, are then used to evaluate providing entertainment filled with dreams and Internal Regulations on Managing Business Partner Accounts - and the suitability of the candidate. A selected business partner is also Established Business Partner Selection Standards; Together excitement. endeavors to evaluate and select business partners, and conduct regularly audited and reevaluated after business transactions begin. with Partners To explain its basic thinking regarding business, the SEGA SAMMY Equitable Relations CSR Promotion Topics Group has created a Group Code of Conduct that serves a behavioral guideline for all Group employees and helps to ensure that these In order to maintain equitable relations with our partners, Sammy Among the Group’s CSR Promotion Topics, we employees will raise more awareness about its basic thinking regarding we have strengthened the integrity of our business give particular importance to the following in business. So that the Group Code of Conduct can be revised as dealings through compliance measures. Improving the Level of Management and Building a

Cooperative System Partners Business with Together conducting our relations with our business partners. appropriate, all Group employees are alert to changes in social conditions, and to demands from stakeholders, that might necessitate such revisions. Employing a Compliance System that Begins with Sammy endeavors to make its purchasing policy known by, for • Fair selection, equitable relations example, periodically holding explanatory meetings for its business Moreover, based on the spirit of the Group CSR Charter and the Observance of the Law partners. In addition, it conducts regular audits and reviews its • Integrity Group Code of Conduct, we have established a Group policy for In order to guarantee obedience to the law, the SEGA SAMMY Group evaluations of business partners, while at the same time attempting to • Dialogue with business partners selecting business partners. With this policy, business partners are works to maintain and improve a system that ensures the increase its own and their management efficiency and strengthen selected according to a number of criteria: economic efficiency, appropriateness of each Group Company’s activities, and also holds mutual relationships of trust. safety/quality, maintenance, technology, and the environment. Based study meetings for Group Companies and otherwise conducts Sammy sees the establishment and operation of its Compliance Group Code of Conduct on the policy, moreover, each Group Company will establish its own measures geared to disseminating knowledge of the law. System as one of its most important tasks, which it thus assiduously individual selection standards, geared to the characteristics of its field In November 2006, SEGA received an admonition from the Fair Trade carries out. In addition, it has informed its business partners in writing As guidelines for Group employee behavior as of business. The SEGA SAMMY Group’s efforts regarding compliance Council that it had violated the Law for Preventing Delays in Payments about its thinking as regards “the integrity of business” and about the regards business partners, the SEGA SAMMY are not limited to Group Companies; we also obtain our partners’ to Subcontractors, etc. (hereafter, the Subcontractor Law). The entire “consultation channel for business partners” that it has established. understanding and cooperation regarding them, in order to broaden Group took this admonition to heart and, aiming to further strengthen Group has established six provisions in its Group Regarding “the integrity of business,” it is working to ensure that the their application and increase their efficacy. its Subcontractor Law Compliance System, carried out the following Code of Conduct. following issues are understood. measures. ・Officers and employees must maintain sound, normal relations “Fair Business Relations” and “Impartial Selections” ・Ascertained the situation with the Group’s subcontractor with business partners. SEGA business. ① Our relationships with trade partners will always be ・Officers and employees may not provide to business partners, or Evaluating and Selecting Business Partners According to ・Conducted Subcontractor Law-related education, primarily conducted cleanly, transparently and fairly; and we will receive from them, entertainment or gifts that deviate from Purchasing Rules through a subcontractor business department and a related not engage in any acts that might be misinterpreted ordinary commercial custom. Based on its internal regulations, SEGA evaluates and selects business person in charge. as being part of a “cozy relationship” or collusion. Through these efforts and through sound dealings, Sammy is partners and continuously manages its relations with them. In evaluating ・Revised and distributed a model contract and basic information deepening its relationships of trust with its business partners and ② As to the selection of trade partners, we will and selecting business partners, multiple departments conduct an related to the Subcontractor Law. bolstering its cooperative system. comprehensively consider such characteristics as investigation of the candidate that includes the results of continuous ・Strengthened the system for auditing matters related to the Moreover, thanks to the establishment of the “consultation channel for creditworthiness, technological capability, development management, and a fair decision as to whether the candidate is suitable and Subcontractor Law. business partners,” if, for example, any of Sammy’s officers or capability, price, adaptability to environment, and appropriate is made based on a final, comprehensive evaluation of the data. employees should ever make an unfair request to a business partner, judge them based on fair and open standards. In its amusement business, SEGA seeks to strengthen the manufacturing Moreover, based on the spirit of the Group Code of Conduct, we the business partner can report it via this channel and Sammy’s abilities and management efficiency of its business partners. Towards that created a compliance handbook that puts the content of the above ③ We will conduct transparent and fair transactions corporate headquarters will deal with it from a neutral standpoint, with end, it established the SEGA COOPERATION Association, an measures into concrete terms. The handbook contains information on even within our Group Companies. the officer in charge, etc., taking responsibility for resolving the matter. organization consisting of several companies, including companies that the kinds of events likely to occur in the course of daily activities, and Sammy notified its business partners of these measures in fiscal 2006. “Entertainment and Gift-Giving” provide parts and materials, companies that process semi-finished has been edited so that it will be easy for employees to read and New business partners are notified of them in writing at the time that products, and more. In its capacity as the association’s executive office, understand. In addition, we are continuing to conduct in-house business transactions begin. Sammy also provides these new business ④ When entertaining or giving gifts to trade partners, SEGA is engaged in maintaining and operating the association. Through educational and training activities as part of our efforts to raise partners with explanations about compliance. In addition, it tries to we will not only follow internal rules stipulated by the the association, SEGA makes its ordering policy clear and also conducts awareness about compliance. relevant company, but will also, in view of social subcommittee meetings and study meetings intended to promote mutual ensure fairness by having a third party that is not directly related to the common sense, remain moderate in our conduct prosperity and understanding. In addition, the association serves to business transactions (its Internal Controls Promotion Office) monitor and make appropriate judgments. create opportunities for dialogue between SEGA’s top management and SEGA purchases and their results. ⑤ We will not carry out any acts that may be considered its business partners, and to allow both sides to check that the other’s Working to Further Strengthen Expressions and Recognition to be an offering of payoffs, favors or gifts to people management of operations has not fallen into complacency. of Integrity who are prohibited from receiving such payoffs, favors SEGA has informed its business partners in writing not to do such or gifts by relevant laws, both at home and abroad, things as dispense with etiquette, give money or goods, or provide such as politicians, civil servants (including deemed entertainment. In addition, using such settings as the SEGA civil servants who are employees of corporations or COOPERATION Association, it has stated the importance of associations) and foreign civil servants. maintaining the integrity of business relations and requested participation in its efforts to promote compliance. “Individual profits” As part of the Group’s Compliance System, SEGA also holds various ⑥ We will not pursue personal profits from trade partners seminars for managers and regular employees. In these seminars, it including receiving profits or favors by using our individual seeks to strengthen awareness about such matters as the importance positions. of maintaining fair and equitable relations with business partners and of One of the regular explanatory meetings that are held to General meeting in fiscal 2007 of the SEGA maintain good, sound relations with business partners. COOPERATION Association. maintaining integrity.

24 SEGA SAMMY GROUP CSR REPORT 2007 SEGA SAMMY GROUP CSR REPORT 2007 25 Together with Shareholders and Investors

Accurate, Fair and Prompt Disclosure of Increasing of Dialogue with Shareholders and Investors Distribution of Profit and Preventing We provide information about the condition of our business to CSR Charter: Information shareholders and investors by way of various communication activities; Insider Trading With Shareholders and Investors at the same time, we gather investors’ valuable opinions regarding our To gain the trust of shareholders and investors, we deal business and feed them back to management. In order to appropriately, accurately and satisfactorily with them appropriately, in accordance with the law and Specifically, for domestic and overseas institutional investors and meet the demands of shareholders and investors, we We will view our business with a global perspective established regulations. securities analysts, we hold semi-annual meetings to explain the provide reasonable dividends that correspond to our in our efforts to ensure sustained growth and to corresponding settlements of accounts, and conduct telephone profit and appropriately manage information. A Highly Transparent Disclosure Policy maximize enterprise value. conferences regarding each quarterly settlement. In addition, we Company discloses information in accordance with the Rules on Additionally, we will enhance management actively hold and participate in 1-on-1 meetings and small meetings. Distributing Profit to Shareholders Timely Disclosure of Corporate Information by Issuer of Listed transparency and meet the expectations of our For overseas institutional investors, we carry out annual overseas At Company, we have made the distribution of profit to shareholders a Securities and the Like (hereinafter, the Disclosure Regulations), shareholders and society through fair and timely roadshows to Asia, Europe and the United States. We also perform principal management issue, and established the provision of established by the Tokyo Stock Exchange. In order to meet the needs such activities as conducting observation tours of Sammy’s factory in reasonable dividends that correspond to profit as a basic policy. disclosure and appropriate returns in profits. of shareholders and investors, we also proactively and promptly Kawagoe and holding explanatory meetings for individual investors. disclose accurate and unbiased information that is not governed by the Investors and Shareholders with Together Moreover, at the time of our mid-term business report for the term Efforts to Prevent Insider Trading Disclosure Regulations. CSR Promotion Topics ended March 2007, we conducted our first questionnaire of In order to prevent insider trading by executives and employees, Important Information that Should Be Made Public ● shareholders, and we have also expanded our channels for fielding Company has established the “Internal Regulations SEGA SAMMY The following information is considered important company information inquiries. Group Insider Trading Prevention.” These internal regulations, as that should be made public. Among the Group’s CSR Promotion Topics, we stipulated by law contain provisions related to the restrictions on • Information whose disclosure is required by the Financial give particular importance to the following in trading in one’s own Company’s stock; and they also endeavor to Instruments and Exchange Law, Timely Disclosure Regulations by conducting our relations with investors and prevent insider trading by requiring that any purchase or sale of Stock Exchange, etc. shareholders. Company stock by executives or employees be reported in advance. • Information not included in the above but considered important in In addition, various measures are carried out to raise the awareness of terms of the influence that it might have on the investment • Accurate, fair and prompt disclosure of executives and employees about insider trading prevention. For decisions of investors. information example, information on insider trading regulations is disseminated as ●Rules Related to the Place and Time of Disclosure (TDnet, etc.) appropriate via the intranet. • Two-way communication with shareholders In accordance with the Disclosure Regulations, information governed and investors by those regulations is publicly disclosed through the Timely Information Disclosure System (TDnet) after it is first explained to the Tokyo Stock Exchange. Information publicly disclosed on TDnet is then Changes in Composition of promptly posted on Company’s IR website. Moreover, information that is not governed by the Disclosure Regulations is accurately and fairly Shareholders communicated to shareholders and investors by an appropriate method. (Unit: %) ●Quiet Period Explanatory meeting for individual investors Shareholder category Period ended 3/05 Period ended 3/06Period ended 3/07 In order to prevent information that could affect the price of our stock from being disclosed during the period in which we prepare the data to National and municipal governments 0.00 0.00 0.00 Providing Information on the Group Through company’s IR be announced in a settlement of accounts, we at Company have Banks 0.44 0.52 0.51 Website established the four weeks prior to announcement as a “Quiet Period,” On Company’s IR website, we post timely and accurate business Trust banks 14.19 11.60 7.88 during which we refrain from answering questions and making information about the SEGA SAMMY Group, and also provide general Life insurance companies 1.02 1.07 1.19 comments related to the settlement. However, should an expectation information in order to deepen shareholder and investor understanding that a forecasted performance figure will greatly diverge from an actual Non-life insurance companies 0.28 0.33 0.28 of the Group. For example, on the page entitled “Understanding SEGA performance figure emerge during Silent Time, we will disclose it as Other financial institutions 0.35 0.54 0.47 SAMMY Group at a Glance,” we provide an easy-to-understand appropriate through a press release. Securities companies 1.29 1.04 2.02 introduction to the Group’s business activities; Sammy’s main factory, in Kawagoe, can be visited in “Virtual Factory Tour”; and SEGA’s Other corporations 21.78 7.02 7.33 Two-Way Communication with Shareholders and Investors enterprises in amusement center operation and equipment sales are Overseas corporations, etc. 26.64 35.50 36.70 At Company, we conduct explanatory meetings for shareholders and presented in “Virtual Amusement Center Tour” (in English only). In the investors in Japan and overseas. We have also established an IR Individuals and others 33.95 31.34 32.57 future we plan to further expand the website, reflecting in the process Information Center, to answer the questions of shareholders and Treasury stock 0.05 11.04 11.04 the opinions that we receive from all of you. investors. Moreover, we communicate timely information on our Total 100.00 100.00 100.00 In April 2007, Daiwa Investor Relations Co., Ltd. announced that it had business by means of our website, annual reports and other IR selected Company’s IR website as a winner of the “Company with materials. ※For the period ended 3/05, the proportion of the Company shares held by Superior IR Website” award for 2007. This marks the seventh time in both SEGA and Sammy is included under “Other corporations.” as many years that Company’s or Sammy’s IR website has won this ※As of the end of March 2007, the number of shareholders was 101,258. award. Main page of Company’s IR website http://www.segasammy.co.jp/english/ir/index.jsp ■Main IR Activities in Fiscal 2007

Explanations of mid-term and term-end settlements 2 Explanatory meetings about quarterly settlements (telephone conferences) 2 Small meetings 6 Individual meetings 396 Our IR website was selected as a winner Factory observation tours 2 of the “Company with Superior IR website” Explanatory meeting for individual investors 1 award for 2007 Annual overseas road show (Asia, Europe, US) 1

26 SEGA SAMMY GROUP CSR REPORT 2007 SEGA SAMMY GROUP CSR REPORT 2007 27 SEGA Together with Employees

■SEGA’s Systems for Childcare Leave and Family Care Leave

Career Paths 【In-house Communication】Mechanisms for Conducting Work Childcare leave Can be used until the child is 1 year old. (If certain requirements are More Smoothly system met, leave can be extended until the child is 1 year, 6 months.) CSR Charter: With Employees As mechanisms for promoting in-house communication, SEGA has Childcare Shortened working Can be used until the child enters elementary school. Until the child SEGA has created workplaces where it is easy to work thanks hours for childcare reaches 3, no salary deductions are made. to lively in-house communication resulting from a personnel created an intranet, introduced management by objectives, and Up to 5 days per year can be obtained until the child enters system and an educational system that elicit motivation. Child healthcare Our employees bring to us creativity and a spirit of established sites for recreational activities and for meetings and leave elementary school. discussions. Family care leave A maximum of 3 consecutive months can be obtained per family challenge. They are our most cherished assets and system that requires care. 【Personnel System】A Qualification System in Which Employees Can For consulting about work or one’s personal life, SEGA has created, Family the fuel to our growth. care Shortened working inside and outside the company, channels for dealing with sexual Up to 93 days can be obtained per family that requires care. Choose Their Career Path, and Treatment Based on Fair Evaluations hours for family care We will cultivate a corporate culture which allows So that employees can fully demonstrate their abilities, and to increase harassment, power harassment, personnel matters, career matters, them to fully exploit their talents and enables us to their motivation, SEGA introduced a new personnel system in April childcare, legal issues and health issues, as well as daily work operations. 【Employee Welfare】Aiming to Create an Environment in grow together with our employees. 2007. So that employees will have a strong sense of themselves as Moreover, in addition to its system for promoting compliance and its Which Employees Can Work While Feeling a Sense of professionals, this system provides them with compensation according system for protecting personal information, SEGA is moving ahead Happiness and Well-Being to their qualifications, roles and performance. To achieve fair employee with creating standard written forms to be used for Q&A, notifications, So that employees can feel refreshed, and to foster an animated spirit CSR Promotion Plan evaluations, which are indispensable for operating this new personnel etc., so that, when information about important laws or other matters regarding work, SEGA has created various employee welfare systems. oehrwt Employees with Together system appropriately, all managers are obliged to take evaluator training. is communicated to employees, it can be readily understood by those Thus, so that employees can recover from fatigue and restore their Based on the Group CSR Charter, SEGA gives Moreover, to support employees in shaping their careers, SEGA who receive it. strength, it has set up a relaxation room in the vicinity of the head priority to the following CSR Promotion Topics in introduced a dual-track career system, allowing employees to choose office. In addition, it has established employee resorts at Lake conducting its relations with employees. a career as either a manager or a professional. SEGA also instituted an Diversity Yamanaka, Onahama, the Zushi Marina, and elsewhere; provides a in-house system for announcing available assignments, and has taken subsidy for the recreational activities conducted in each department, • Mental health measures other steps that have engendered a corporate culture in which In accordance with changes in hiring practices, the social thereby supporting the invigoration of those activities SEGA also works • Increasing the rate of hiring disabled people employees are eager to undertake any challenge. environment and the living environment, SEGA has expanded to promote communication among employees, increase organizational • Expansion of the childcare system its system to accommodate greater diversity. and team power, and promote physical and mental health. • Increasing the rate at which paid vacations 【Educational System】Training that Supports the Undertaking Moreover, it is endeavoring to provide still other welfare benefits - such are taken of Challenges and Expands Potential Abilities 【Employment】Use of Fair Hiring Practices and a Follow-up as the SEGA Mileage System (a cafeteria system), in which employees SEGA SEGA continuously conducts education and training corresponding to System for Recent Hirees are annually granted a certain number of points that they can the different qualifications, and different types of work, of employees. SEGA offers various forms of employment. For some time, moreover, it exchange for various types of services - that answer the needs of The forms of training sponsored by the Personnel Department include has hired people without regard to gender, nationality, etc. It has also employees. SEGA Quantitative Data on new employee training, training at time of promotion, training that established a system for rehiring seniors. Individuals are hired and Personnel supports young employees in designing their careers, evaluator training employed according to the standards set for each form of employment. Health and Safety that helps managers make fair evaluations, and mental health training New employees are provided with orientation and introductory training Employee gender and total Male Female Total for creating a safe, healthy workplace. In each workplace, moreover, and otherwise supported so that they can assume their assignments SEGA seeks to create an environment where employees 1 Number of new college graduates※ 113 41 154 specialized training is carried out for the different types of work done smoothly. After employees have been in the company for three can work even more safely and healthfully. 2 Number of mid-career hirees※ 241 65 306 there. months, moreover, they are interviewed and their performance is Number of employees 2,837 483 3,320 SEGA also has systems that assist employees in their independent assessed, and the results are then used to follow up on them at their SEGA has a Health and Safety Committee, conducts regular health efforts to improve their abilities. Thus, SEGA has established a system assigned posts and in their subsequent careers. check-ups, provides assistance for complete physicals, has installed a ※3 special health and safety hot-line, employs full-time nurses, has Average length of employment of current employees 8 years, 3 months that defrays half the cost of class materials when employees take 【Employment of the Disabled】Promotion of Vigorous and established a health management center where consultation is Managers correspondence-course lectures to improve their skills, and a system Continuous Hiring Activities available with an internist or a psychiatrist, and has built a counseling Total number 529 that partially subsidizes the cost of taking tests. Moreover, when an employee wishes to undertake self-education, SEGA will endeavor to SEGA has established a disabled persons employment plan in each of system affiliated with an outside EAP (Employee Assistance Program). Proportion of all employees 15.9% arrange, with an outside educational service provider, for the employee its departments and is otherwise making vigorous efforts to employ the With regard to disaster-prevention measures, it has established a Female managers to receive an appropriate educational menu. disabled. This is considered a CSR Priority Promotion Topic, and the Disaster Prevention Month, distributes disaster-prevention goods, 13 Total number company is moving ahead with creating workplaces where the disabled conducts training, and has created a website with various information. Proportion of all managers 2.5% can comfortably work. With regard to the workplace environment, it is It has also prepared a system for promptly checking on the safety of ※2 ■SEGA’s Training System Paid vacation utilization rate 21% seeking to station in each department a person able to consult with the employees should a disaster occur. ※2 Number of people obtaining childcare leave 13 Training Sponsored by Personnel Department disabled about their working life. In addition, it conducts periodic ※2※4

Number of work accidents the companyinmid-career T Management lectures (correspondence courses) Support forself-education interviews, has established back-up systems, and is endeavoring to raise Training in knowledge and raining foremployeesentering Training for promotion to councilor Commuting accidents 18 (12) skills related to management awareness inside the company with regard to employment of the disabled. An international environment where Accidents while on duty 72 (65) Fundamentals of workplace people from diverse backgrounds Training for new managers management can be active participants : Data for items without annotation are from March 31, 2007. Mental health 【Work-Life Balance】Maximization of Abilities Through the Balance ※ Evaluator training training Fair evaluation / Ari Staiman, SEGA CORPORATION ※1: Among the freshman employees entering the company on April 1, 2006. of Working Life and Home Life Creating a healthy workplace ※2: In the period of April 1, 2006 - March 31, 2007. Leader training So that employees can achieve compatibility between their working life I am a member of the Legal Affairs Awareness of one’s role as 3: Includes periods of employment at other companies in the Group. Division, which handles SEGA’s ※ a workplace leader and home life, SEGA has established and supports a childcare leave system Career design training ※4: The numbers in parentheses are for amusement center employees. and a family care leave system that exceed the requirements of the law. international legal issues. Our department is staffed by people from diverse cultural Support for career autonomy Before an employee obtains maternity leave or childcare leave, the Follow-up training for new employees backgrounds coming from various countries all over the world. I myself am Support for employee and the employee’s superior are provided with an explanation Training for unofficially accepted Establishing oneself as a self-education, dissemination an American lawyer from New York City. Serving as the General Counsel, employees/new employees member of the organization of the company's vision, etc. of the childcare leave system and the procedures involved. A childcare my primary duty is to oversee the Global Legal Team, which includes the consultation channel has also been established, as has a Childcare legal departments of SEGA’s many subsidiaries worldwide. SEGA owes much of its success to its commitment to diversity, rewarding people based Education and Training in the Workplace Bulletin Board, where information about child-rearing can be exchanged. on ability and achievement, regardless of other factors such as cultural Specialized education for different types of work This and other in-house information can also be viewed while on leave, background or disability. I am proud to work for SEGA, alongside helping to facilitate a smooth reentry into the workplace. sophisticated business people who have a global vision and see great value ・Language training ・Area manager training ・Training for new managers of amusement centers Moreover, employees are given paid vacations according to a schedule in diversity. ・Sales training ・Development skills training Etc. designed to enable them to take their vacations without difficulty.

28 SEGA SAMMY GROUP CSR REPORT 2007 SEGA SAMMY GROUP CSR REPORT 2007 29 Sammy Together with Employees

Career Paths In the area of training by occupational category, it prepares a training Diversity plan in cooperation with the Personnel Department and the various CSR Charter: With Employees So that employees can demonstrate their abilities to the headquarters, and then conducts education and training appropriate to Seeking to employ the most suitable personnel, Sammy maximum, Sammy will raise their awareness of each department. has built a system for carefully selecting and following up on employees. Our employees bring to us creativity and a spirit of themselves as professionals through a performance- based compensation system and fair evaluations. 【In-house Communication】Mechanisms for Conducting Work challenge. They are our most cherished assets and More Smoothly 【Employment】Identifying Highly Motivated Talent the fuel to our growth. 【Personnel System】Introduction of a Performance-Based As mechanisms that promote communication inside the company, Sammy has established a clear image of the type of personnel that it We will cultivate a corporate culture which allows Personnel System Sammy has established an intranet and regularly holds meetings, wants. Thus, in accordance with that image, it conducts effective them to fully exploit their talents and enables us to In March 2001, Sammy vastly revised its personnel system. By April including an annual business strategy explanation meeting. It also screening procedures, carrying out interviews and aptitude tests, and grow together with our employees. 2004, it had carried out two more revisions, expanding the system in publishes an in-house newsletter, “Sign,” and provides notifications selects the most qualified individuals. In line with the company policy of response to the desire of employees to make a contribution. Its aim from the various departments regarding work and other matters. To “always proactive, always pioneering” Sammy especially employs was to cultivate in employees a strong awareness of themselves as facilitate communication in the workplace, moreover, it has created an talented people who have a challenging spirit whereby they will CSR Priority Promotion Plan in-house system of associations of like-minded people. undertake anything with a positive attitude. In addtion, Sammy has in

professionals. Towards that end, it introduced a performance-based Employees with Together compensation and treatment system and a mechanism for fair place employment and personal systems which evaluate talent and Based on the Group CSR Charter, Sammy gives evaluations. With regard to cultivating a professional self-awareness, it Work-Life Balance performance on a gender-free basis. priority to the following CSR Promotion Topics in also instituted a system whereby employees can choose their own Creating workplace system and an environment in which 【Employment of the Disabled】Promotion of Vigorous and conducting its relations with employees. career path, thereby eliciting greater motivation from them. Specifically, it created a management course and a professional course, and it is easy to work, Sammy has supported the Continuous Hiring Activities • Creating mechanisms based on personnel worked to establish greater specialization and clarify roles. compatibility between working life and home life to Regarding the hiring of the disabled, Sammy participates around 3-4 management policy. Subsequently, in order to use its talented personnel to full advantage, it enable employees to demonstrate their abilities to the times per year in group interviews with prospective disabled • Researching and building a new educational again revised the personnel system. It plans to continue in the future to maximum. employees that are sponsored by public and private employment system. grapple with creating mechanisms that enable employees to agencies, and otherwise conducts related hiring activities on an Sammy • Supporting a work-life balance. demonstrate their abilities to the maximum, based on the personnel 【Compatibility Between Working Life and Home Life】 ongoing basis. A Support System that Exceeds Legal Requirements • Creating a workplace environment where it is management policy. Sammy has not just implemented a system based on the next- Health and Safety safe and easy to work. Sammy has also introduced various systems designed to give employees incentive, such as a stock option system. Until now, it has generation action plan prescribed in the Law to Promote Measures to granted stock to employees eight times. To enable employees to Support the Development of the Next Generation. It has also Aiming to create an environment in which employees can shape their own careers, moreover, it has instituted an in-house expanded its system of shortened working hours for childcare, work even more safely and healthfully, Sammy has system for announcing available assignments, which has been actively introduced “no overtime days” in order to curtail overtime work, and established various consultation channels. Sammy Quantitative Data on used by many employees. taken other steps to create an environment in which it is easy to work. Personnel Moreover, it is looking into introducing a system for promoting the Focused on protecting the health and safety of employees, Sammy’s 【Educational System】Conducting Education that Instills taking of paid vacations. Health and Safety Committee meets every month. At the Kawagoe Factory, employees themselves check for risk factors lurking around Employee gender and total Male Female Total Responsibility; Providing Employees Who Seek Challenges ※1 ■Sammy’s Systems for Childcare Leave and Family Care Leave them and carry out activities called “6S Patrol” to improve the Number of new college graduates 50 7 57 with Opportunities to Develop Their Abilities problems that they find. ※2 Sammy provides separate training for each level of employees and for Can be used until the child is 1 year old. (If certain 97 12 109 Childcare leave Number of mid-career hirees requirements are met, leave can be extended until the child is each occupational category. In the area of training for each level of system Sammy is also working to reduce the overtime work of employees who Number of employees 975 125 1,100 1 year, 6 months.) employee, it provides the beginning class of employees with training work long overtime hours, and has established a system whereby Childcare Shortened working employees can obtain an interview or consultation with an designed to foster a proper attitude towards work in terms of how to hours for childcare Can be used until the child enters elementary school. Average length of employment of current employees 5 years, 6 months approach and conduct work. For mid-level employees, it conducts occupational health physician or a nurse. In the future, as mental health Managers training aimed at promoting autonomy and encouraging contemplation Child healthcare Up to 5 days per year can be obtained until the child enters measures, it will implement a consultation system that utilizes outside leave elementary school. Total number 258 of one’s future career. For managers, it conducts training intended to resources, introduce tools for promoting self-care, and carry out other Proportion of all employees 23.5% cultivate leadership ability. Moreover, for employees who transfer to the Family care leave A total of 93 days per year can be obtained per family that efforts aimed at improving preventive measures and dealing with system requires care. issues at an early stage. Female managers company in mid-career from other industries, it provides training aimed Family care Total number 4 at enabling them to fit smoothly into the workplace. Shortened working Up to 93 consecutive days can be obtained per family that hours for family care requires care. Proportion of all managers 1.6% Since there is an unbiased evaluation ※2 ■Sammy’s Training System Paid vacation utilization rate 46% system, I can work with a sense of ※2 Number of people obtaining childcare leave 3 total commitment. Managers Training for new leaders 【Employee Welfare】Improving Welfare Services Through the T T Education bycorrespondence course 2 the industryformid-career hirees ※ raining inbasicknowledgeabout Number of work accidents raining byoccupationalcategory Use of a Specialized Company Mitsuko Saito, Sammy Corporation T raining formid-career hirees Commuting accidents 2 Management skills So that employees can refresh themselves and foster an energetic I work as a manager in the department in charge of designing the frames and faces Accidents while on duty working mindset Sammy has endeavored to further improve its 5 and other parts of pachinko machines. This Mid-level Training for mid-level employee welfare system. Thus, in October 2006 it outsourced some ※: Data for items without annotation are from March 31, 2007. employees is work that requires a general design ability of its employee welfare services to a specialized company (Relo Club) and which I find highly rewarding. My group has six men and four women. In the ※1: Among the freshman employees entering the company on April 1, 2006 Support for autonomy, as part of an effort to improve the quality and increase the efficiency of personnel evaluations at Sammy, the employee and the employee’s superior ※2: In the period of April 1, 2006 - March 31, 2007. contemplation of career those services. As for facilities, it has established employee resorts in fill out an Employee Performance Management Sheet and then, every six months, evaluate the employee’s degree of attainment based on his or her performance. Beginning Izu, Kobuchizawa, Karuizawa, Naeba, and Kusatsu. Not only Training for new employees There’s thus an atmosphere in which the employee’s independence is respected, class Follow-up training for new employees employees but also anyone accompanying them is welcome to use regardless of the employee’s gender. As a manager I have the goal of creating Establishing oneself as a member an environment where it's possible to work even more enjoyably, with a positive, of the organization Mindset these facilities. enthusiastic, questing spirit. In order to achieve a new design, I give myself to the challenge completely, and I do my best to support and encourage my

By level Self-education Mid-career hireesBy department subordinates, who are also ardent in their efforts to realize own design ideas.

30 SEGA SAMMY GROUP CSR REPORT 2007 SEGA SAMMY GROUP CSR REPORT 2007 31 Together with Society (Social Contributions)

Support for Sports, the Arts, and other “Special Olympics Nippon” “The World of Canzone” The Special Olympics (SO) is an international sports organization that, In February-March 2007, we helped celebrate Italia in Giappone by CSR Charter: With Society Cultural Activities throughout the year, provides regular sports training to people with supporting concerts held at Yokohama Minato Mirai Hall, thereby We seek to build a rich society through support efforts intellectual disabilities and holds tournaments where the results of that contributing to the advancement of art and culture and to Italo- training can be demonstrated. Japanese friendship. As corporate citizens, we will contribute to society aimed at realizing a society where one can live healthfully in both body and mind. In November 2006, it supported the “4th SO Nippon Summer National not only by prospering in business but also by Games - Kumamoto,” a national tournament. This proved to be an Opera: “Don Giovanni” proactively supporting both the development of Sports event where the participating athletes could demonstrate all of the In October 2005, we supported the first performance in Japan by cultural activities including art and sport and the skills that they had cultivated and share friendship with many people. Royal Opera House La Monnaie, under the baton of the famous preservation of the global environment. Japanese conductor, Kazushi Ono - thus contributing to the The SEGA SAMMY BASEBALL CLUB’s Baseball Clinics development in Japan of a stage art that combines theater and music. The SEGA SAMMY BASEBALL CLUB holds baseball clinics for elementary and middle school students in Japan, and in fiscal 2007, Ballet: “Edward SCISSORHANDS” CSR Promotion Topics the club members trained over 700 children in batting, fielding and In August-September 2006, we supported the other skills. Through such activities, the club is supporting the Contributions) (Social Society with Together production of a ballet that was the world's first Among the Group’s CSR Promotion Topics, we expansion of Japan’s national pastime, baseball, from the grass roots. give particular importance to the following in our attempt at a stage adaptation of this megahit relations with society (as regards social fantasy film masterpiece, thus contributing to the development of stage art in Japan by way of contributions). overseas ballet. • Support for sports, the arts, and other cultural Special Olympics Nippon activities © • Support for social contribution activities photo by BILL COOPER • Social responsibility (donation activities) “SEGA SAMMY ATHLETIC PROGRAM” • Social contributions that make use of our A baseball clinic in progress base running practice In order to provide upcoming young athletes with an environment Culture business activities where they can concentrate on their sports, we have prepared this training program to support them. “A Bridge of Friendship,” a Japan Folk Crafts Museum’s Concert in Celebration of Japanese-Korean Friendship “Nagashima Japan Dream Project 2007” What Are the SEGA SAMMY “Support for Golfers” We supported this musical concert, which was held at the Japan Folk We provided special support for “Nagashima Japan” (effort of Group’s Social Contributions? At JAPAN GOLF TOUR’s “SEGA SAMMY CUP,” which is sponsored Crafts Museum, an institution founded by Soetsu Yanagi, a pioneer in Nagashima Japan at the Athens Olympics generated enormous by the SEGA SAMMY Group, we regularly hold a SNAG golf clinic for the folk craft movement, and thus contributed to the advancement of excitement throughout Japan) held in January 2007, and thus helped boys and girls (see page 35). Japanese-Korean friendship. The SEGA SAMMY Group is strongly aware of itself to provide an Moreover, through our special support for one of JAPAN GOLF TOUR as a member of society and, as a corporate citizen, opportunity for CHALLENGE TOURNAMENT, we provide young professional golfers “Dankai Nihombashi Academy” clearly recognizes the need to contribute to society. communicating the who are the sport’s future with an opportunity to display their abilities. Sponsored by Nikkei Inc., the Dankai Nihonbashi Academy has been Thus, we not only contribute to the creation of an wonder and joy of studying the subject of “the possibilities of the future” in regards to the enriched society by offering entertainment that baseball to children as a baby-boom generation. Agreeing with the Academy’s purposes, “living experience.” provides dreams and excitement; we also regularly The Arts Company’s Chairman of the Board and Chief Executive Officer, Hajime and extensively support sports, the arts and Satomi, participated as a panelist in a workshop forum conducted by various other activities. Moreover, we are actively TOKYO JAZZ FESTIVAL 2006 the Academy in December 2006. engaged in creating a corporate culture that raises We provide support for one of the largest jazz festivals in Japan, which, each employee’s awareness of the importance of Nagashima Japan a scene from the event in September 2006, was held for the fifth time, at the Tokyo Moreover, we have donated to the renovation of the Japanese Institute International Forum. Together with first-class artists who came of Anatolian Archaeology, an enterprise of the Middle Eastern Culture contributing to society. “Paralympics” together across generations and national borders, we contributed to Center in Japan, an organization engaged in collecting Middle Eastern There is one other Olympics, the Paralympics (Parallel Olympics), an the development of a new culture in Tokyo while deepening our ties documentary records and archaeological materials. We have also international sporting event in which the world's foremost athletes with with regional activities. donated to Association for Corporate Support of the Arts, Japan, disabilities compete against each other. Through support of the Japan whose purpose is to promote corporate mecenat (support for the arts Sports Association for the Disabled, we contribute to the promotion of and culture). sports for the disabled in Japan. In addition, we have supported the following: “Playback, Part 2,” a musical sponsored by HoriPro Inc; “To Live 2005, Together with “Japan Disabled Persons Cross Country Ski Club” ISHIHARA INTERNATIONAL PRODUCTIONS” a campaign to fight We support the Disabled Persons Cross Country Ski Club. In March children’s cancer, sponsored by The Mainichi Newspapers; “The 2006, the club’s Miyuki Iguchi (maiden name, Kobayashi) competed for Japan Classical Music Concours,” a contest arranged by the Japan Japan in the Nordic events at the Torino Winter Olympics, winning gold classical music society and in which a wide range of musician and silver medals. participated, including the students of noted educators and musical performers; and Aoyama Gakuin University’s “EVERGREEN21” project,

© TOKYO JAZZ FESTIVAL 2006 whose purpose is to expand the university’s study facilities and programs.

32 SEGA SAMMY GROUP CSR REPORT 2007 SEGA SAMMY GROUP CSR REPORT 2007 33 Support for Social Contribution Social Responsibility Social Contribution Activities that Make Activities (Donation Activities) Use of Our Business Activities It makes me happy to see seniors playing in the showroom. Teruyuki Kajihara, Sammy Corporation In order to promote volunteer activities by employees, we As a member of society, we seek to realize a rich society Through entertainment, we conduct activities that give have established a volunteer vacation system, among pleasure to the disabled and the elderly. The people who are invited to the head other things. Continuous Donation Activities office’s showroom are from three facilities in the ward. About 10 people will come In order for the SEGA SAMMY Group to fulfill its responsibility as a We participate in society as a good corporate citizen and believe that, from each facility. They’re unfamiliar with As a Group, we do not just conduct social contribution through making member of society and contribute, however much possible, to the based on the idea of providing dreams and excitement through the place, so we caution them to watch use of our business activities. We also think it is important to create an realization of a rich society and the creation of culture, it must conduct entertainment brimming with creativity, we can also meet society's their step and otherwise try to look after them. Seeing seniors who initially in-house environment that encourages each employee to voluntarily continuous, steady donation activities. Each activity is carefully public expectations through undertakings that make use of our have a look that says, “What should I do?” then enjoying playing as they get conduct social contribution activities as an independent member of considered for clavity of purpose and effect. business activities. used to pachinko and pachislot game machines makes me feel happy. We’ve held these events many times, so some of the people who come and society. Thus, we systematically and actively conduct donation activities I have gotten to recognize each other. The same arrangements are being Thus, Company, SEGA and Sammy have each introduced a volunteer according to guidelines established based on the Group CSR Charter planned and implemented at our regional business centers, so I’m hoping vacation program that serves to promote social contribution activities and the Group Code of Conduct. These guidelines deal with such SEGA that this will spread even further. As for what’s next, I think it would be good by employees. matters as deciding on target areas for donations, selecting donation Participating in Social Contribution Activities on “Game’s Day” if plans for enabling seniors to enjoy themselves even more - such as for pachinko tournaments - could be realized. recipients, and determining appropriate donation amounts. Moreover, Every year, around the time of Game’s Day (November 23), game with regard to disaster relief, guidelines have been especially designed industry organizations hold events - social contribution activities - in Contributions) (Social Society with Together SEGA with the aim of providing support to victims in a timely manner. various regions of the country. In these events, which are for the Use of UNICEF Greeting Cards disabled, children in protective care facilities, and others who rarely Efforts of Group Companies As greeting cards for its business partners in Europe and the United Disaster Relief visit amusement centers, the organizations invite such people to States, SEGA uses the cards of the Japan Committee for UNICEF. In The SEGA SAMMY Group, strongly aware of itself as a member of amusement centers or bring amusement machines to senior citizens’ As a Group we carry out various efforts that promote 2006, it sent out approximately 2,000 cards. Half of the proceeds from society, provides donations and supports relief activities for disasters homes, children’s protective care facilities, and the like. SEGA, as a social contribution activities. the cards and envelopes go to fund UNICEF’s worldwide activities, that occur, whether in Japan or in other regions of the world. member of such organizations, actively cooperates in the events. In SEGA SAMMY GOLF ENTERTAINMENT INC. which serve to protect the lives and foster the healthy growth of In recent years we provided the following disaster relief. various regions of the country, it provides personnel, amusement Business Golf course management (The North Country Golf children. [Fiscal 2007 Donations] machines and prizes, enabling many people to experience the pleasure 【 】 Club) • Java earthquake relief of games. This company conducts social contribution activities with the • Flood relief for Kagoshima Prefecture, Miyazaki Prefecture, proceeds from admission tickets to the SEGA SAMMY CUP. For Nagano Prefecture example, it has provided computers and laser printers to the [Fiscal 2006 Donations] Sammy regional welfare council and SNAG golf※ sets to the regional • Hurricane Katrina relief in the US The Showroom at the Head Office, Opened to Senior Citizens’ board of education, and has also given cash donations to the • Earthquake relief in northern Pakistan Welfare Facilities regional newspaper’s volunteer foundation. In addition, it actively [Fiscal 2005 Donations] In cooperation with the Tokyo Council of Social Welfare of Toshima cooperates in the board of education’s SNAG golf promotion • Earthquake relief for the Chuetsu Earthquake in Niigata Prefecture Ward, Sammy has been inviting senior citizens from welfare facilities to activities by, among other things, sending personnel to • Sumatra offshore earthquake relief the pachinko and pachislot showroom at its head office since June participate. 2006. 2006 UNICEF greeting card ©SEGA Social Contribution Activities in the Form of Donations to Non- Moreover, Sammy’s seven nationwide business centers, in conjunction ※SNAG Golf Profit Organizations with their local social welfare councils, are also gradually moving ahead SNAG is an acronym for Starting New At Golf. SNAG golf includes all of The SEGA SAMMY Group has donated to the following: Jagaimo no with preparations to realize the same arrangements. At the business the basic elements of golf. Moreover, it is safe and easy to understand, Sammy teaches manners and etiquette, and can be thoroughly enjoyed in a Kai, an organization that supports education for refugees and other center in Sendai, the arrangements were already put into operation in limited space. It has thus attracted attention as a way for children to Collection of Used Stamps activities through charity shows put on voluntarily by popular singers; April 2007. learn the fundamentals of golf and become involved in the sport. As part of Sammy’s social contribution activities, its employees ASSOCIATION FOR PROMOTION OF INTERNATIONAL Sammy does not just provide entertainment to people from a wide cooperate to collect used stamps. In fiscal 2007, through the efforts of COOPERATION, an information center that promotes international range of generations. It also places great value on contact with local its head office and various branch offices, a total of 1,317 stamps were cooperation such as government ODA (overseas development people. OASIS PARK Co., Ltd. collected. Working together with the Tokyo Council of Social Welfare of assistance); and the India Center, an NGO engaged in forming and 【Business】Operation of “highway oases” Toshima Ward, the cooperation of stamp collectors is obtained and developing a partnership between Japan and India. Once a year, this company provides local middle school children the collected stamps are traded in for money. The money obtained is with the opportunity to learn about the pleasures and rigors of then used to send medical workers to regions, mainly in Asia, where work by experiencing employment at its restaurant/retail-store medical care is in short supply. It is also used to assist people in establishments. It also supports regional events by providing various Asian event sites and personnel, and contributes to the PR for local countries who wish to specialty products and to promoting sightseeing and exchanges. become medical Moreover, it actively promotes the entrustment of work to local workers. senior citizens’ centers.

XYZ CINEMAS CO., LTD. 【Business】Operation of cinema complexes This company has established sections for wheelchairs in its movie theaters. Moreover, as part of its relief activities for Hurricane Katrina in the United States, it held a charity screening of “The Eraser in My Head”; and as the opening event for its new Festival Walk Soga complex, it held a screening of “Backdraft.” The head office’s showroom, open to seniors. Charitable donations were solicited at both screenings and then contributed to the Japanese Red Cross Society. The entire company collected used stamps. (The Sendai branch office is shown here.)

34 SEGA SAMMY GROUP CSR REPORT 2007 SEGA SAMMY GROUP CSR REPORT 2007 35 Together with Society (Environment)

Observance of Environmental Laws and Regulations The entire Group is working to CSR Charter: With Society strengthen the recycling system. SEGA Logistics Service supports the operation of SEGA’s amusement Hiroshi Kanai, centers in various ways. While mainly providing logistical services - We are moving towards building a basic program for SEGA LOGISTICS SERVICE CO., LTD.. As corporate citizens, we will contribute to society environmental activities. transport, packing, storage - it also handles a wide range of other activities, from the delivery and installation of amusement games and At SEGA Logistics Service, we not only by prospering in business but also by equipment to their maintenance. disassemble by hand each discarded Countermeasures for climate change and other serious global proactively supporting both the development of game machine that we recover. We cultural activities including art and sport and the environmental problems are urgently required, and it is important that separate it into steel, coated copper wires, Development of Energy-Efficient Products preservation of the global environment. companies voluntarily and actively continue to conduct environmental fluorescent lamps, and glass, and try to recycle as many parts as possible. protection activities. The SEGA SAMMY Group not only complies with In the area of game machines, SEGA actively seeks to develop Compared to before, there’s room for research to be done with regard to environmental laws and regulations; in order to reduce our products that are less energy-consuming. With regard to amusement cost, but our recycling system, which is among the best in the industry, indicates, I think, how great the entire Group’s awareness is of the environmental impact even more than what is required by law, and in equipment, for example, it is promoting a switchover from conventional CSR Promotion Topics importance of recycling. At present, this manual disassembly work is being order to establish a system for conducting and promoting CRT (cathode rate tube) displays to liquid crystal displays, which conducted in six of our eight nationwide regions, and we plan to introduce it

environmental protection activities, we are currently looking into consume less electricity; in addition, it is moving ahead with use of the into the other two within the year. In the future, our planning and (Environment) Society with Together Among the Group’s CSR Promotion Topics, we building a basic program for the entire Group’s environmental inverter method for fluorescent lamps and other lights, and with a manufacturing departments for business-use game machine will also get involved. I’d like to see the entire Group join together in this effort. give particular importance to the following in our activities. In particular, we are endeavoring to do the following. switchover to LEDs (light-emitting diodes) as well. relations with society (as regards the environment). ① Understand current conditions. ② Specify relevant laws and regulations. Turning Trading Cards into Solid Fuel • Observance of environmental laws and Purchasing of Green Power Certificates ③ Analyze environmental risks. SEGA sells cards for kids’ games such as “The King of Beetles: regulations Since 2005, SEGA has been annually purchasing 1-million kWh “Green ④ Determine the particulars of the required environmental “MUSHIKING”” and “OSHAREMAJO LOVE AND BERRY,” Cards that • Effective use of resources and energy Power Certificates.” These certificates are based on the Green Power management operations. are submitted as part of the “30 cards exchange present” (in which Certification System of the Japan Natural Energy Company Limited, • Environmental education ⑤ Establish an environmental policy and plan consonant with the customers, by sending in 30 cards [duplicates, etc.], can receive with which SEGA has concluded a contract for their purchase. By • Social responsibility (environmental support) elements of the Group’s businesses. goods in exchange), and cards that have become obsolete because using this clean energy system, SEGA is reducing its environmental ⑥ Prepare an organization. new versions have gone on sale, are 100% recycled as solid fuel. impact from energy use. ⑦ Use a PDCA cycle based on ISO14001. SEGA was the first company in Japan to enter into a contract for The SEGA SAMMY Group conducts a wide range of businesses, from The SEGA SAMMY Group and Green Power Certificates issued for micro-hydro power. the manufacturing of products to the operation of food and beverage the Environment facilities. The laws and regulations related to its businesses are thus also wide-ranging. Therefore, so that there will not be any omissions in ■SEGA’s Record of Purchasing Green Power Certificates Needless to say, as a member of society, we feel compliance, we are conducting environmental education and ※1 Fiscal 2006 Fiscal 2007 Total duty-bound to address in earnest environmental reemphasizing the 3Rs (reduce, reuse, recycle) with our employees, Energy amount 2 million kWh problems. and otherwise doing all that we currently can as we proceed with purchased with Green Power 1,000,000kwh 1,000,000kwh (CO2 reduction: In fiscal 2007, the SEGA SAMMY Group studied building the basic program. Certificates approx. 736 tons) 1 million kWh the possibility that the various aspects of SEGA’s Micro-hydro Effective Use of Resources and Energy power 500,000kwh 500,000kwh (CO2 reduction: and Sammy's businesses - production processes, approx. 368 tons) products, services - were adversely impacting the In order to leave resources for posterity, we have Discarded obsolete cards Recycled solid fuel 1 million kWh environment. (The study was entrusted to an implemented the 3Rs in everything from product Biomass 500,000kwh 500,000kwh (CO2 reduction: outside research agency that specializes in development to recycling and office work. approx. 368 tons) environmental matters.) Promotion of Green Purchasing in the Offices ※1：The CO2 conversion coefficient used was taken from the “List of Calculation Methods and SEGA has been using an electronic purchasing system to move ahead Discharge Coefficients for the Conversion, Reporting and Public-Announcement System,” The study found no serious environmental risks in released by the Ministry of the Environment in April 2007. SEGA the elements of the companies’ operations. with the green purchasing of stationery, business cards, recycled Recycling of Game Machines toners, and other office supplies. Thus, in fiscal 2006, approximately However, the Group is not content with these Since April 2007, moreover, SEGA has been participating in the To enable its game machines to be enjoyed for as long as possible at its 60% of its office purchases were for environmentally friendly eco- findings alone. Rather, it is actively promoting Yokohama City Wind-Power Electrical Generation Project as a project amusement centers, SEGA conducts thoroughgoing maintenance on products, whereas in fiscal 2007 that proportion rose to almost 80%. supporter (Y-Green Partner※2). various environmental measures of its own. These them and otherwise tries to extend their useful lives. However, when such In the future, SEGA will continue to contribute to protecting the global involve such objectives as ensuring thorough environment by actively purchasing environmentally friendly products. efforts no longer avail and its game machines must be retired, SEGA ※2: Conducted primarily by operating wind turbines installed in Yokohama’s Kanagawa Ward, compliance with environmental laws and endeavors to recycle their materials. Specifically, SEGA LOGISTICS At the same time, it will link these efforts to raising the environmental this project, which is based on the cooperation of three entities - government (City of regulations, the efficient use of energy and SERVICE CO.LTD., the company that handles distribution for the SEGA awareness of its employees. Yokohama), the people (the people of Yokohama), and business (project-supporting companies) - is part of Yokohama's efforts to promote the use of natural energy and combat resources, green purchasing, and using low- Group, invites companies that handle the intermediate processing of global warming. polluting vehicles as company vehicles. industrial waste materials to its distribution centers, where they work to recycle the waste materials from the discarded games machines that Moreover, we have been attempting to foster and ■Rate of Growth of SEGA’s Green Purchasing of Stationery, etc. have been recovered from the amusement centers. At present, SEGA strengthen the environmental awareness of each of has already achieved its goal, of completely eliminating the use of Eco-products Ordinary products our employees, so that they will act with concern incineration and landfill burial for disposal, at its operations in the Kanto for the environment in their private lives as well as 79.2% 20.8% and Kyushu regions. In fiscal 2008, it plans to expand its recycling Fiscal 2007 at work. system to include the rest of its nationwide operations. With regard to 60.3% 39.7% materials used for distribution (cardboard, plastic, etc.), the SEGA Group Fiscal 2006 is promoting their delivery in returnable containers and then their recycling Green Power Certificates (for biomass, micro-hydro power, wind-generated power) following their use. In the future, it plans to contribute to the building of a 020406080100% recycling-oriented society through its thoroughgoing recycling efforts. ※Proportion of all products purchased

36 SEGA SAMMY GROUP CSR REPORT 2007 SEGA SAMMY GROUP CSR REPORT 2007 37 Sammy Environmental Measures at Sammy’s Manufacturing Center, Conducting of Environmental Education ※The Akaya Project is a project centered around three organizations - the the Kawagoe Factory Akaya Project Regional Conference, an association of local citizens; the Forestry Agency; and THE NATURE CONSERVATION SOCIETY OF JAPAN - Implementation of the 3Rs In purchasing raw materials and shipping products at its factory in Pachinko and pachislot machines are products subject to the Act on A handbook and other tools have been prepared to and whose purpose is to restore and maintain the biodiversity of Kawagoe, Sammy uses goods-delivery boxes and otherwise tries to facilitate activities by the Group as a whole. approximately 10,000 hectares of national forest north of Minakami Town. the Promotion of Effective Utilization of Resources. Efforts related to reduce the packaging materials employed in the transport of the 3Rs are thus required for them. merchandise. To visitors who come to observe the factory, it offers as So that the SEGA SAMMY Group as a whole can effectively address Support for Environmental Protection In 2006, Sammy, as a manufacturer of pachinko and pachislot souvenirs flowerpots made from paper discarded at the factory. environmental issues, we actively provide employees with education machines, reorganized all stages of its operations so as to more Activities Moreover, to combat global warming and provide a place of peace aimed at expanding their environmental awareness. Thus, we not only effectively achieve the 3Rs. It is thus conducting efforts that contribute and tranquility, it has created a rooftop garden and is otherwise raise awareness about environmental issues in our CSR handbook and Sharing their ideals, we donate to certain outside to the 3Rs in each stage of its operations. For example, in the design promoting the greening of the factory. Of the factory’s total area of on the intranet; we have also prepared and distributed to employees organizations that meet our standards. and development stage, it is seeking to use resources more effectively 2 2 16,970 m , 5,433 m (a greening rate of 32%) has been greened so far, an environmental handbook that serves as an educational tool. In by limiting the types of machine substrates manufactured and making greatly exceeding the greening standard (25%) in Saitama Prefecture, writing this environmental handbook, In the SEGA SAMMY Group, we do not just conduct our own them usable in different products, and by enabling extra parts that where Kawagoe is located. In addition, the Kawagoe factory is a emphasis was placed on making it easy environmental protection activities. We also support the activities of occur for one product to be used for others. With regard to the visually impressive building. Thus, it has won the Saitama to understand, so that employees who others. We took our first step in this direction in fiscal 2005, when we manufacturing stage, it has asked its parts suppliers to reduce their Environmental Design Award (sponsored by Saitama Prefecture) and have increased their environmental officially endorsed the Global Environment Prize, sponsored by packaging materials so as to lessen the occurrence of waste materials, Design prize (AWARD FOR KAWAGOE LANDSCAPE DESIGN). awareness through CSR activities could FUJISANKEI COMMUNICATIONS GROUP. Since then we have and is endeavoring to recycle and appropriately treat the waste

obtain even more extensive supported various environmental activities. In fiscal 2007 for example, (Environment) Society with Together materials that do occur. Moreover, in order to appropriately handle the environmental knowledge and connect it, we provided support to the global environmental NPO, the WWF※1, as pachinko and pachislot machines that customers have finished using, in their public and private lives, to well as to the Wild Bird Society of Japan※2 and the Nature it is building a recycling system in cooperation with industrial groups, specific, environmentally friendly Conservation Society of Japan※3. hall proprietors, and recycling and processing companies; accepts activities. trade-ins of its own machines; and is using the collection systems of ※1: WWF (World Wide Fund for Nature) business groups to have recycling done. Active in over 100 countries, the WWF is the world’s largest environmental protection NGO (non-governmental organization). It conducts activities related to, among other things, protecting endangered species, protecting regions important for preserving biodiversity, and An educational tool whose theme is promoting the sustainable use of forests and oceans. the environment ※2: Wild Bird Society of Japan Founded in 1934, the Wild Bird Society of Japan is a pioneer among One of Japan’s largest glass structures built using the dot glazing In order to learn how to provide an experiential type of education that environmental protection organizations. It works to preserve wild bird construction method enables employees to feel, with their five senses, the importance of habitats, protect endangered species, and otherwise safeguard birds and nature. grappling with environmental issues, we have observed diverse ■Sammy The Distribution Routes of Products ※3: THE NATURE CONSERVATION SOCIETY OF JAPAN programs and activities. Noteworthy among these is the Akaya Project※, THE NATURE CONSERVATION SOCIETY OF JAPAN is an environmental which, located in Gunma Prefecture’s Minakami Town, endorses the protection organization with a history of more than 50 years. Among its ④ Development Factory concept of biodiversity. activities, it is engaged in protecting the buna (Japanese beech) forest in Material recycling the Shirakami Mountains and the Shiraho Coral Reef off Ishigaki Island. Thermal recycling

⑤ ⑥ ●Basic Environmental Data about the SEGA SAMMY Group ●The State of Sammy’s Environmental 【The Year Concerned】April 1, 2006 - March 31, 2007 Efforts at Its Kawagoe Factory Parts removal 【The Facilities Concerned】 【The Year Concerned】April 1, 2006 - March 31, 2007 Recycler Offices ------SEGA: workplaces, sales offices (23 places) 【The Facilities Concerned】Sammy Kawagoe Factory company The factory’s rooftop garden ① Sammy: workplaces, sales offices, distribution centers (57 places) Coexisting with the environment, the garden also provides ＜Use of Environmentally Friendly Materials＞ Company: head office (1 place) workers with a place to relax Production site------Sammy: Kawagoe factory (1 place) Amount of lumber used 4.977t ■Kawagoe Factory: Overview of Facilities Amusement centers---Directly operated by SEGA (193 places), JOYPOLIS (3 places),spa facilities (2 places) ② ③ ※ Offices Production site Amusement centers Amount of PEFC Location: • Minamidai, Kawagoe City, Saitama Prefecture certified lumber 404t（8%） Amount of energy used (electricity, city gas, LP Owner: • Sammy Corporation gas, kerosene)※1 204.05TJ 30.40TJ 1,376.66TJ Amount of CO2 discharge accompanying energy Amount of adhesives used 2t Pachinko and pachislot halls Construction start: • April 2001 use※2 8,237 t-CO2 1,321 t-CO2 64,901 t-CO2 Use: • Factory for manufacturing and shipping game Amount of water-based Amount of water used※3 153,930m3 10,258m3 628,594m3（138,675m3） adhesives 2t（100%） ① New products ④ Efforts directed at reduction machines (pachinko, pachislot) Amount of ordinary waste material discharged 2 ※4 421ｔ 46ｔ 1,342ｔ ② Trade-in of used Sammy machines⑤ Reusable parts Area: • 16,970 m (excluding amount recycled) ＜Landscaping for preventing global warming 3Ｒ and creating places of tranquility＞ ③ Machines recovered from ⑥ Recycled raw materials Green area: • 5,433 m2 (including a roof garden of 1,105 m2, Amount of industrial waste discharged※4 578ｔ 933ｔ 131ｔ business-group collection a parking lot green area of 250 m2, and other Rate of factory greening 32% systems, etc. ※1：For the offices and amusement centers (excluding spa facilities), the amounts of electricity used were totaled; for the areas totaling 4,078 m2) production site, the amounts of electricity, city gas, LP gas and kerosene used were totaled; and for the spa facilities, the ※： PEFC certified lumber amounts of electricity and city gas used were totaled. Through the PEFC (Programme for the Endorsement For certain facilities, the amount used was estimated based on energy charges and floor area of Forest Certification Schemes), lumber is For converting electricity to heat, a primary conversion based on (8.81 MJ/kWh) was used. appropriately procured from forests certified by an Efforts Regarding Green Purchasing Environmental Considerations in the Offices TJ (terajoule) = 1012J impartial organization as being under “sustainable forest management.” By purchasing PEFC-certified Sammy is addressing the effective use of resources and energy not In its offices, Sammy is promoting the use of recycled paper. For ※2：The CO2 conversion coefficient used was taken from the “List of Calculation Methods and Discharge Coefficients for the lumber through an arrangement intended to curtail only in its pachinko and pachislot production processes, but also in its stationary and other supplies, it is increasingly conducting green Conversion, Reporting and Public-Announcement System,” released by the Ministry of the Environment in April 2007. the distribution of lumber and other products derived design and development operations. Thus, as a result of its green purchasing, mainly through buying products with the Eco Mark. It is ※3：For certain facilities, the amount used was estimated from water charges, etc. from environmentally destructive lumbering, we are participating in promoting sustainable forest The figure inside parentheses under “Amusement centers” is the amount of water used at the 2 spa facilities. purchasing efforts - decisions to purchase raw materials that have little also looking into using resources more efficiently by recycling work management. ※4： For certain facilities, the discharged amount was estimated from floor space. effect on the environment - it uses lead-free soldered parts, wood that uniforms. Moreover, it is contributing to reducing CO2 emissions and has received a Forest Certification, and water-based adhesives. combating global warming through Cool Biz, Warm Biz measures involving all employees, including officers.

38 SEGA SAMMY GROUP CSR REPORT 2007 SEGA SAMMY GROUP CSR REPORT 2007 39 Third Party’s Opinion

Mr. Hiroshi Ishida Profile Since leaving the Industrial Bank of Japan, Mr. Ishida has served as the Executive Director of the Caux Round Table - Japan, the Associate Professor at the Graduate School of Kwansei Gakuin University, part-time lecturer in The Power of Entertainment to Enrich People’s Hearts the Research Department of the Aoyama Gakuin University Graduate School of International Management, part- time lecturer in the Division of International Studies at International Christian University, and a technical expert at ABEST21, an organization dedicated to advancing education at graduate schools of business. He has been actively involved in efforts to disseminate and inculcate CSR among corporations both in Japan and overseas.

About the “SEGA SAMMY Group CSR Report 2007” We have likened this power - at times beautiful, at times passionate - to a rose. The SEGA SAMMY Group as the general entertainment 1. Set up an organization to manage the progress of CSR corporation, there are many commendable CSR efforts activities, including the protection of the environment in a “A rosy world enabled by entertainment.” conducted. In particular, there are four distinguished efforts: centralized way. Just as roses are given on the birthday of someone dear, 1. SEGA SAMMY Group’s process of the systematic 2. Always seek to accurately understand the needs of the establishment of the positioning and the concept of CSR, the society, and build a mechanism to utilize CSR management we provide quality entertainment to people throughout the world establishment of the unique CSR management, the selection throughout the Group. with hopes that it will be a source of happiness. of the “priority implementation items” and the development of “CSR Promotion Plan” are carried out logically. 3. Manage a system or structure to share information related with CSR throughout the Group employees. 2. In this CSR report, in order to disclose information on its CSR activities enthusiastically, the main issues selected from the 4. For the group’s CSR effort, aim for enthusiastic disclosure of “priority implementation items” are organized by information to increase presence towards stakeholders. stakeholders. Furthermore, the measures for future improvements are stated. 5. Use the characteristic of the Group as the general entertainment provider, as a good corporate citizen, in 3. In order to disseminate and inculcate CSR for our employees, addition to the realization of social contribution through its the executives have lead the way to deliver CSR message, main business, in each local communities enable the CSR handbook has been published and an intranet are being employees to conduct volunteer activities. developed. Therefore, it is clear the internal awareness change are being carried out enthusiastically. Finally, the SEGA SAMMY Group as the unchanging philosophy “A rosy world enabled by entertainment.” and foundation it has the 2 principles of conducting “CSR 4. Regarding the issue of environment, to conduct education on through mainstream business” and carrying out “CSR as a As the world changes, entertainment too must change. environment throughout the Group, an environmental social contribution”. It is notable how the implementation of the handbook was prepared, and efforts are made for CSR activities will be conducted in practice. We must always strive to offer truly high-quality entertainment implementing 3Rs － reduce, reuse and recycle. which will enrich the people, societies and cultures of the future. We of the SEGA SAMMY Group promise to face this challenge In the future, for the SEGA SAMMY Group as the industry’s with creative and innovative minds. leading company to realize even more fulfilling CSR, the question is whether it will be possible to realize PDCA cycle in Hiroshi Ishida Through entertainment provided by us come dreams, the CSR management system. To achieve this, I hope the Executive Director, Caux Round Table – excitement and a rosy world. Company will enthusiastically challenge the following issues: Japan, Associate Professor, Institute of Business and Accounting, Kwansei Gakuin University

Hajime Satomi Afterword Chairman of the Board and Chief Executive Officer, Thank you very much for reading the “SEGA SAMMY Group CSR Report As was recommended in “Third Party’s Opinion,” we intend to further SEGA SAMMY HOLDINGS INC. 2007.” strengthen our relations with our various stakeholders through, among other This is our first CSR report. While proceeding through trial and error, we were things, systematically conducting CSR management and actively disclosing able to review our planned CSR activities. We thus feel that our new CSR information, while, at the same time, paying attention to the balance between regime truly got under way in earnest during the past year. maintaining a solid financial structure and conducting CSR activities as a good What kind of CSR activities should our Group, a diversified entertainment corporate citizen, and attempt to achieve the continued development of the provider, carry out in the future? That is a very big question. But through Group and society. editing this report, we have come to believe that we will be able to conduct CSR activities that only the SEGA SAMMY Group is capable of achieving. Tadashi Ishida http://www.segasammy.co.jp In the future, we will continue to respect the viewpoints of our employees, Senior Managing Director and Officer in who will play important roles in our CSR activities. We also plan to first do the Charge of the CSR Promotion Department, things that we can and then try to make those into sustained activities. SEGA SAMMY HOLDINGS INC.

40 SEGA SAMMY GROUP CSR REPORT 2007