Ultraman at TYO Create a Powerful Ultramanwith the New Knowledge Tag

In the Vanguard of Creativity Ultraman at TYO Create a Powerful Ultramanwith the new knowledge tag

TYO Inc. 2-21-7 Kami-Osaki, Shinagawa-ku, Tokyo 141-0021, Japan http://group.tyo.jp/ Neｗ Face JASDAQ Stock Code: 4358 ● TSUBURAYA PRODUCTIONS CO., LTD. ● ZEO Corporation In the vanguard of creativity ● Light Work Co., Ltd. ● Great Works AB ● dwarf Inc. ● LUDENS CO., LTD. The world of craftsmanship ● TYO Productions Inc. ©Tsuburaya Productions that brings happiness to creator and viewer alike

A Transformed Management Strategy Interview 2008 Neｗ Face ● Theoria Communications Inc. TYO Creative Business City ● COM Co., Ltd. ● 1st Avenue Inc. ● Haxen International Inc. Motivating the spirit of ● DOGA KOBO Inc.

creativity for the next TYO Management Strategy Interview 2007 ―Interview with new directors― TYO Fifteen talented men that the next generation requires Creative Business City Town Block Planning Management Strategy Interview 2008

Know-how that capitalizes on change and operational capability with originality otivating the spirit of creativity for the next TYO

Providing an “environment” where tal- business of rights management. ented creators can work at the highest TYO also is involved in new enterprises, level, TYO continues to produce excep- too, such establishing a game software tional content for every sector of the video sales company and becoming involved business. TYO has now established an with the Tsuburaya Productions. There are overseas presence in China and the West, 43 distinctive companies at present in this so there has been no change in its consis- group, which rang up consolidated sales of tent approach of responding to challenges. 18.9 billion yen in the year ended July 2007 TYO also has reorganized its corporate (a shortened 10-month accounting period). structure. TYO’s TV commercial planning The“creative engine TYO” has relaunched and production division was spun off as itself in an environment characterized by the independent TYO Productions Inc., and the increasing diversification of media and TYO has strengthened the functions of the growth of interactive content. Hiroaki the core TYO entity for the overall control Yoshida, TYO Group President and CEO, of the corporate group. Further, TYO has describes its vibrant strategy. taken on a full-fledged commitment to the

reorganizing its structure in response to mercials accounted for 54% of total rev- TYO continues to be a company that maintains its focus those trends and expanding and reducing enue. This indicates the extent to which on the forefront of the age the roster of group companies. the breadth of media has grown and The consistent basis of our operating phi- video content has diverged. These are the In the 26 years since its founding, TYO has losophy since our founding has been to trends of an age characterized by diversi- built a brand in the industry by providing the create business using the best talent and fication in and individuality. market with video content of exceptional generate profits without being contented In August 2008, to keep ahead of the quality. The video industry has been trans- with the status quo. trends of the times, we spun off the TV formed during this period, with changes TYO was launched with its main business commercial planning and production divi- that include the shift from analog to digital being the production of TV commercials. sion of the main TYO unit and created and the appearance of a succession of A look at the sales ratio for each busi- the independent TYO Productions Inc. new media. TYO has properly hewed to the ness segment during the previous term, to create a highly efficient and profitable course indicated by contemporary trends, however, shows that terrestrial TV com- business structure for all the TYO group A Transformed TYO C reative Business City 01 TYO Business Vol 4 Hiroaki Yoshida President and CEO, TYO Inc. TYO Group representative

companies. As a result, the main TYO unit ing who became the will no longer be involved with video pro- corporate core and duction. Instead, the core of its operations expanded our busi- will be to create business and provide the n e s s , t h e s e c o n d infrastructure that maximizes the profit- g e n e r a t i o n i s t h e ability of the group companies. g ro u p a s a w h o l e We also have appointed 11 new directors with the addition of from each of our business segments to the new directors from the organizational when that occurs. Are not companies join the four directors we have had since restructuring during the term under review that continue to undertake drastic reforms our founding. The directors will distill views to create an all-round video company. while accurately gauging the trends of the from a variety of perspectives to create a The newly appointed directors work at age the only ones capable of producing consensus and make decisions for TYO posts that correspond to the president of results that meet the needs of that age? operations. our group companies. They have been It is my sense after 26 years in this com- Further, in our industry, advertising and PR selected from every division, including pany that business requires no special sales tend to be concentrated in March advertising, the Web, entertainment, con- maneuvers. The most important factors and September. That made it difficult to tent solutions, the international division, are to increase corporate competitiveness ascertain our actual performance by the the administration division, finance, and by determining how consistently results end of the interim period in March and the business strategies. This expansion in are achieved and creating an organiza- full fiscal year in September. Therefore, our the breadth of information collated at the tional structure that does not overlook fiscal year will now conclude at the end of Board of Directors enables the examina- profit opportunities. Success in business July instead of September to enable us to tion and thorough scrutiny of the consoli- is not possible without the accumulation present sound and stable figures for our dated results from the perspective of the of these daily efforts. performance. group as a whole. Since its founding, TYO has constructed TYO is now facing a critical turning point its own methods for converting talent Reforming its organizational in its existence, but there will continue to to business and generating profits. We structure with an eye to the future be periods in the future in which change will not waver in following our precept of will be essential. It is our intention to cre- creating business using the best talent, If the first TYO generation could be ate a structure capable of eliciting the regardless of the changes in our organiza- described as the members at our found- maximum in organizational capabilities tion and structure. A Transformed TYO C reative Business City TYO Business Vol 4 02 Management Strategy Interview 2008

gained from its toys. In business, there is strength in start- operation. In other ing over from scratch. The top manage- our business divi- ment of Tsuburaya Productions consists sions, however, it of extremely capable people. President is apparent that Tsuneyuki Morishima has an exceptional earnings manage- production sense. The vice-presidents are ment has yet to Shinichi Ooka, who is an expert in filming, be as fully imple- and Junya Okabe, who has remarkable mented as it has abilities in the molding. We firmly believe been in the main that blending the abilities of these three unit. We intend men and incorporating a vision of over- to c o n d u c t th e seas expansion in the future will result in complete over- the successful growth of Tsuburaya Pro- sight of finances in ductions. the TYO manner Until now, TYO has never handled a with the result of character like Ultraman. We think that achieving sound Ultraman will become an important fac- business condi- tor in our multi-brand strategy from the tions for the entire perspective of the steady growth of rights company, while management. We view this heavy respon- r e s p e c t i n g t h e sibility as an opportunity and will use it to i n d i v i d u a l i t y of create yet another new “aspect” for TYO. each of the group TYO’s main unit: companies. No matter how many excel- For the vitality of TYO Playing a multifunctional role lent products we create, we will in the now and in the future in the future end lose the ability to create them unless With the spin-off of the TV commer- we have established excellent business The Web is serving as the agent driving cial planning and production division principles. We cannot be creative without the full-fledged media diversification now as an independent company, TYO will sound operations. We will surely make underway. Among all TYO sales, sales strengthen its role in the future as a hold- improvements if we rationally consider for this medium are growing steadily. The ing company that provides the business each of our businesses and companies. linkage between the Web and TV com- infrastructure to improve overall group This requires bold and decisive measures, mercials is already taken as a matter profitability. but it is the important role of the main TYO of course, and demand is projected to It will also launch a full-fledged rights unit to have a complete grasp of the situa- increase in the future. Collaboration within management business that will include tion down to the smallest details. the group for the Web productions is the management and distribution of con- increasing yearly. This allows us to display The start of the multi-brand tent copyrights, and the management of the group strengths. Each of the com- strategy and financing for films and TV programs. We panies in the group can introduce their the new Tsuburaya Productions will not limit ourselves to creating content group partners - their assets, so to speak of the highest quality; we also will create Tsuburaya Productions got a new start - to clients. Therefore, we want to utilize a structure for maximizing earnings by in the TYO group in October 2007. This the strengths of all 43 group companies to taking advantage of every distribution and had a greater impact than we originally their greatest extent. profit opportunity. envisioned. We recognized once again Our collaboration with brilliant creators For the administration of overall group that Ultraman was a character from whom throughout the world has become a firmly operations, the most important issues we social responsibility was demanded. entrenched part of our international busi- currently face are to manage earnings to The major reforms of Tsuburaya Produc- ness. One example is the Great Works, enable each of the 43 group companies tions have now been largely completed. In which have received several important to conduct business on a sound basis, addition to transforming its management advertising awards for the high quality of and to establish a unique TYO business team, we have reevaluated the operations the creations. There is no question that model. At present, the TV commercial of the Ultraman-related facilities, which needs will increase in the future for bor- planning and production division has were not generating earnings. Further, derless content production with border- achieved a sound business environment we have formed capital and business ties less media. with complete earnings management, in with Bandai Co., Ltd. for our long-term In the animation sector, we have been part due to the many years of experience strategic development, with a focus on making anticipatory investments in several

03 TYO Business Vol 4 areas since we established in 2005 the sales, in January 2008. This integrates the The results will not only drive the individual Japanese-Chinese joint venture Da Lian sales, advertising, and promotion func- companies so as to create a synergistic Eastern Dragon Cartoon Development tions of each company to boost sales of effect among all group companies, but Co., Ltd. In the future, we plan to expand original game software. As the game mar- will also actively promote joint efforts with our business in Asia such as Taiwan and ket in Japan grows and user preferences other companies. Hong Kong, and we also have Europe in diversify, we believed it was necessary to In the future, TYO will be vigorously our sights. There are 400 million children create a corporate structure that facilitated involved with turning the best talent into in the Chinese market alone, and Japan growth in software unit sales. Therefore, businesses as we increases the number accounts for 60% of the world’s animated we started this new enterprise. of “faces” we present to the public. You productions, so we expect our business In this way, the creative activities pro- can look forward to one constant - TYO there to flourish even further in the future. vide an “environment” for the conduct of will always be new. Further we launched Genterprise Inc., a business, and we think it is important to company specializing in game software expand this “environment” in the future.

The TYO foundation is made ew Organizational stronger by group reorganization Structure

All our businesses group now stands at 43, but we plan on owned subsidiary by establishing the new and the production expanding that number further. Drastic TYO Productions Inc. Previously, TYO has company are equidistant reform is required at our current stage to both conducted the business of produc- conduct agile operations regardless of how ing TV commercials while functioning as The TYO group undergoes an evolution large our organization grows, however. the center of the TYO group companies every four or five years, as we search for That’s why TYO came up with the idea for their management. The operations the path to advance to the next stage in of spinning off our TV commercial plan- of the TYO group today, however, have our quest for further growth in the future. ning and production division, and we diversified beyond advertising to include The number of companies in the TYO have converted this division into a wholly the Web business, entertainment business, content solutions business, and international business, comprising various Spinning off the TV commercial planning video content production companies. TYO and production division into a wholly owned subsidiary is now capable of devoting more energy and resources to the operational management of all group companies since it TYO Inc. has spun off its TV commercial planning and production division and placed all its TV commercial planning and production division enterprises on an equal footing with the production company. Further, we are now Spinning off the TV commercial planning and production division to establish TYO Productions able to gather more detailed information more promptly after the reorganization TYO Productions Inc. of the board of directors of our main unit through the selection of officers. We have therefore created a structure that enables greater agility in group operations. Advertising 43 group companies business Web business There is a tendency in the TV commercial planning and production market for Entertainment Content Solutions International proposals to be concentrated at large business business business production companies. Further raising market share when business is increas-

TYO Business Vol 4 04 Management Strategy Interview 2008 Interview ingly dominated by a few firms of course video-related business outside the field with requires a company to continue to provide of actual production, it will invest in video high quality products that are chosen by content of all types, acquire and manage New Directors the clients. This spin-off means that TYO rights, distribute and sell video content, Productions will further focus on the plan- and utilize the expertise it has cultivated ning and production of TV commercials, for overseeing group company opera- strengthen our business relationship with tions. We will become a comprehensive major advertising agencies, and facilitate holding company that will indeed handle our efforts to achieve a larger slice of mar- all aspects of the video business outside ket share. of production, including the provision of operating reforms to companies both Riding the waves inside and outside the group, and lending of change to the money. next stage of growth Now that we have undertaken the drastic reform of spinning off our TV commercial TYO will have two aspects in the future. planning and production division, the TYO The first will be as a holding company group has completed its preparations for functioning as the center for the 43 group moving on to the next stage. All the indus- companies. The second will be as an tries in which the TYO group operates are operating company that generates video- being buffeted by the waves of change. related business outside the field of actual The critical point for our future will be how production. As a holding company, it will well we are able to ride out these waves be responsible for such duties as manag- of change and achieve further growth. ing the operations of the group compa- Leaving the current situation for the next nies and handling administrative work. growth stage will show the real value of As an operating company that generates the new TYO group.

TYO is becoming a holding company for all aspects of the video business

Board of Directors Board of Auditors Auditors

President

Strategic Financing Department Strategic Business Planning

Accounting Finance Corporate Planning Business Planning Department Department Department Department FIFTEEN TALENTED THE NEXT MEN THAT REQUIRES GENERATION Management Strategy Group Management Investor Relations Account Settlement Finance Public Relations New Business Planning Consolidated Mergers, Acquisitions, Accounting System and New Company Formation The 15 newly Investment in Content appointed directors spoke to us about their commitment to the future and the growth of each business segment.

05 TYO Business Vol 4 The TYO Board of Directors is the most important body for making the business decisions of the entire group. TYO’s growth over the past 26 years has not been a phenomenon that occurred naturally. Companies that have achieved growth through their own efforts have done so by making clear judgments and taking prompt action in their business. We believe that adding the knowledge and intelligence of the young directors who represent all the group sectors will create new objectives and behavior for TYO by using newer information and concepts.

President and CEO CEO of the Group Hiroaki Yoshida

TYO has created a business model using a completely new style of operation. After fulfilling one role for 26 years, we have now entered a period of rebirth by incorporating the DNA of our previous incarnation. Media today is cross-fertilizing and becoming increasingly complex. Organizational strength and the speed of decision making are an important means for seizing new business opportunities. Our group reorganization will enable us to more aggressively exhibit our organizational strength and solidify a structure in which we will succeed by using our hands and head.

Vice-representative Executive Board Member President, Camp KAZ Productions Inc. Kazuyoshi Hayakawa

When considering how to create a better environment for craftsmanship, the first priority is to create a worksite that is always filled with vigor and vitality. The increase in the number of TYO group companies has increased our depth as a group as well as created the challenge of how best to proceed as a group with speed and dynamism. One way to meet this challenge is to be found in this turning point for the group. We believe that placing all the group companies in alignment will create an organizational form with a creative tension, making our approach to those outside the group more positive.

Vice-representative Executive Board Member President, Monster Films Inc. Shuji Kakimoto

This group reorganization will be a turning point for TYO. We have high hopes for the new TYO Productions. Corporate governance and compliance will be important topics for the company. This will expand the role of administration in TYO. I think it will be very interesting if administration expands our outlook in the future to include new business. Not only will this enhance our management inside the group, but it will also enable us to provide to those outside the group the know-how we have developed over the years, such as that related to information security.

Director in Charge of Administration Business Group Executive Officer, Executive Board Member President, TYO Administration Inc. Koichi Iida

It was good that we were able to create a structure that enabled us to decide things by adding young and adaptable directors. TYO has always taken the initiative in the trend toward the diversification of video content. It will be critical for corporate strategy in the future to anticipate the changes in media and rapidly make a decision. That’s why this aggregation of wisdom in the form of new directors who represent the group companies is very significant. Different personalities will think about the group as a whole, and we look forward to the emergence of viewpoints we haven’t seen before.

Director in Charge of Advertising Business Group Executive Officer, Executive Board Member Executive Vice President, TYO Productions Inc. Jun Ebihara

TYO Business Vol 4 06 This group reorganization has resulted in the further strengthening of horizontal ties between the companies. We can anticipate the successful applications of synergistic effects to continue, not only among group companies, but also with outside companies. The times demand effective cross-media strategies. TYO has evolved from being a TV commercial production company. It has established new, organic ties, and created a distinctive corporate style that has spread throughout the business world.

Director in Charge of Advertising Business Group Executive Officer, Executive Board Member Executive Vice President, TYO Productions Inc. Wajyu Fukuda

Reform is required for corporations to grow. The time for passing the torch from one generation to another will also come. Now, I believe the timing was right for reorganizing the TV commercial production division. The style in which people from various creative sectors meet and exchange opinions is possible because we are who we are, and this is a major source of sustenance for the group as a whole. The younger generation does not form factions and by nature they accept collaboration without hesitation, so, I look forward to developments growing more interesting in the future.

Director in Charge of Advertising Business Group Executive Officer, Executive Board Member President, SASSO Films, Inc. Haruo Takarada

The TYO group today consists of 43 companies, and it is an aggregation of diverse individuals. I think this group reorganization will be effective for more fully utilizing these advantages. That’s because the newly appointed directors are from a wide variety of sectors. The synergy will not be limited to the group, but will spread outside the group framework. I think TYO’s image will become one of borderless creativity. An important task for the future will be how the borderless medium of the web drives this development.

Director in Charge of Web Business Group Executive Officer, Executive Board Member President/C.E.O., TYO Interactive Design Inc. Kenji Morimoto

This reorganization is a great business opportunity. I expect the structure in the future will become one in which borders increasingly disappear, enabling collaboration to occur naturally within the group. The entertainment-related sectors are those in the TYO group closest to the consumer. There is the potential for great development in accordance with our business capabilities. In the future, I hope we keep our focus on distribution, create content that is current throughout the world, and expand the TYO original brand.

Director in Charge of Entertainment Business Group Executive Officer, Executive Board Member President, Digital Frontier Inc. Hidenori Ueki

I think there are many ways to increase TYO group profits in the entertainment sector, including future-based media proposals and package business. Our role is to create a mechanism that skillfully links all those, while boosting the profits of all our companies. It is also possible to consider game equipment as a medium. If the ties between our companies become closer, it will be easy for us to give form to the new ideas. We have created an environment in which more exciting business development is possible in the future.

Director in Charge of Entertainment Business Group Executive Officer, Executive Board Member President, SUZAK Inc. Masahiro Yonezawa

07 TYO Business Vol 4 Previously, the cooperative efforts within the group had taken different forms, but this group reorganization is an indication of our capabilities in that it strengthens us. The concept of“Multiple uses for unique content” is a key for TYO’s development. The time has come for us to expand our content business using our own strengths and accumulate know-how. For the animation, we’d like to take the initiative and take concrete steps in areas in which a market has not yet been established.

Director in Charge of Entertainment Business Group Executive Officer, Executive Board Member President, HAL FILM MAKER Inc. Katsunori Haruta

The media will evolve in different directions as we head toward the launch of terrestrial digital broadcasts in 2011. Now, I have personally added the perspective of viewing the group as a whole from the standpoint of a director. I’d really like to emphasize balance and convey information actively rather than passively so that TYO as a whole grows. To achieve that, we will make it a priority to first foster personnel in house at the editorial level who are capable of production. The increase in individual ability is what will enable us to obtain a synergistic effect.

Director in Charge of Contents Solution Business Group Executive Officer, Executive Board Member Senior Vice President, Post Production Center Inc. Kazuyuki Gondo

The TYO group currently has seven companies located overseas. The horizontal ties within the group are close to begin with due to the nature of overseas development, but we want to pursue flexible development in the future through more dynamic activities. Simply put, if the markets are different by nature of their being overseas, the style of collaboration will also be different. The capability for this type of flexible and obstacle- free movement is a TYO’s strength. Our collaboration will result in the creation of exceptional products that will elevate the TYO brand throughout the world.

Director in Charge of International Business Group Executive Officer, Executive Board Member Managing Director/CEO, TYO International B.V. You Matsutani

Before, our standpoint had been to consider overall group profits, but with our new structure, our target is to create a mechanism for profit growth. Achieving that will require an in-depth understanding of the business activities and conditions on-site at all of our companies, and managing through figures. This idea will involve a further strengthening of in-house information sharing, lead to the development of our own systems, and establish mechanisms for financial operations. One of our most important tasks for the future will be to commercialize these shared assets that are outside the creative sphere.

Director in Charge of Strategic Financing Group Executive Officer Executive Board Member Takashi Morita

The extremely important conditions for ensuring group expansion and promoting continued growth will be the creation of mechanisms for that objective and obtaining earnings in the sectors not involved with production. We can consider many possibilities apart from the financing and content distribution business that are currently in the planning stage. Our role is to help each company improve its quality, and increase its value. I hope to be able to turn the spotlight on the value of the TYO brand that differs from the common perception of us as a TV commercial production company.

Director in Charge of Strategic Business Group Executive Officer Executive Board Member Hiroaki Uekubo

TYO Business Vol 4 08 In the Vanguard of Creativity Ultraman at TYO

The multibrand strategy Create a powerful Ultraman POWER UP with the new knowledge tag surprised by the power of your ideas. We enjoy craftsmanship, and that is why we want to make Ultraman Okabe : I’m just in love with craftsman- a key part of our efforts ship, and I also have a tendency to get carried away with myself, but I want to Ooka : I’ve been involved with filming revive Ultraman, this time being aware of Ultraman for a long time, and I found it the management aspects. extremely interesting that management was devoting so much effort to a reborn The new ideas and transformed Ultraman. I am keenly for improving Ultraman aware of the need to quickly launch a new production system. Okabe : The TYO group has many Okabe : As one whose experience with talented creators. In the future I want Ultraman has been watching and enjoy- to establish Tsuburaya Productions’ ing the program since childhood, it feels position within the group, and initiate funny to have been added to the man- exchanges with creators active in other agement team and becoming involved cultures for production purposes. I with the actual production. I hope to be think the synergy resulting from those able to use my connection with the pro- exchanges will generate the driving force gram’s past to produce a result in a form that creates the new Ultraman. that everyone can accept. ©1966 Tsuburaya Productions Ooka : I think it is my role to realize your Ooka : Considering the complex relation- conceptual abilities within the context ship between operations and craftsman- Ooka is the cameraman who has of Tsuburaya Productions. It’s like traffic ship, it won’t be possible to maintain the continually filmed the hero. Okabe is management. Your abilities for conceiv- success of Ultraman, a sort of national the creator who has provided us with ing and executing ideas not tied to exist- hero, merely by creating good video a unique world using special models ing concepts will be the stimulus and product. When considering the future of and filming of the characters. Using energy that changes Tsuburaya Produc- Ultraman, the participation of Tsuburaya the advantages of both of these tions. You will be destroying those exist- Productions in the TYO group will be perspectives, these two brilliant ing concepts in the positive sense of the extremely beneficial from the perspective creators will work closely together term. That’s what I’m looking forward of their personnel and information net- to face the challenge of creating to from you. A new Ultraman requires a works, as well as their operations. I also a new Ultraman. new approach. understand your job well, but I am really Okabe : My intention is to maintain that

The company’s name was changed to January “Tsuburaya Productions” The “Tsuburaya The first TV program Special Effects Lab” filmed with special effects, was established “Ultra Q”, achieved by Eiji Tsuburaya, its highest audience the leader in special share of 36.8% 1967 effects technology.

October “UltraSeven” 1963 ©1967 Tsuburaya Productions July “Tsuburaya Special The first “Ultraman” production Effects Productions” in the Ultra series achieved was established. ©1966 its highest audience share of 42.8%. Tsuburaya Productions

09 TYO Business Vol 4 1966 unique worldview while improving quality, is important to formulate a strategy with and add something new and different. clear targets from the planning stage. I think this will also allow us to lighten the Ultraman development burden on the technical production sys- with an eye toward tem. For example, one procedure that commercial success can be considered is the diversification and combination of several teams for Ooka : One of the things that Tsuburaya production rather than having one team Productions has lacked until now has been create all the video. Certain scenes can the clear vision for its products. There has be assigned to teams whose specialty Junya Okabe been a particular weakness in the market- is computer graphics, or certain charac- Vice president ing strategy. With the increasingly radical TSUBURAYA PRODUCTIONS CO., LTD. ters could be assigned to another team. changes taking place with media, includ- This also will minimize lost time. ing broadcasting and distribution, there used until now. This does not lessen the was no long-term vision in sight for how to flavor of craftsmanship. Rather, it is the combine media and develop characters, The idea of craftsmanship for idea that we can select the best methods and include rights management in the creating products because we have many to choose from. process. I think the capital ties with Ban- with a higher dimension This may sound conceited, but I have both dai Co., Ltd. that were formed in January the nerve and the confidence to create Ooka : It has only been a short time since high quality productions on the level of the 2008 will enable total character develop- the new structure was created, so we past Ultraman productions, even for the ment. This also allows for the possibility of can’t expect results right away, but I am special effects. blending in the TYO group’s video produc- convinced we will be able to create good Ooka : I want to continue to incorporate tion know-how. products. There is a history of the unique the beneficial practices and techniques to Okabe : That’s right. Marketing is an methods and processes developed over promote the broader and deeper penetra- essential part of character development. 40 years in the production of Ultraman, tion of Ultraman, both overseas as well as The most important prerequisite for cre- but each of the companies in the TYO Japan. I hope to bring about a new Tsub- ating a total image is solid production. It group has their own rules. The process uraya Productions that blends different of determining the rules of production by talents to create a hero that transcends refining each of those rules, and creating generations. It seems that Tsuburaya the product by ultimately determining how Productions has become identified with to evaluate and select those rules, will be Ultraman before I knew it, but one of my indispensable in the future for creating targets for the future to have Tsuburaya good productions. Productions return to being the leader in Okabe : It’s best not to stick too closely Japan for special effects technology. to one set of rules when making anything. It’s the same with Ultraman. If we want to Shinichi Ooka make a good film, it’s not necessary to Vice president insist on the production methods we’ve TSUBURAYA PRODUCTIONS CO., LTD. to be contined・・・

TYO Business Vol 4 10 Profiles of New Members of the TYO group

TSUBURAYA PRODUCTIONS CO., LTD. Charged with energy and aiming for a global presence of Tsuburaya Productions Ultraman fans in Japan watch every move of Tsuburaya Productions. While bearing this pressure and responsibility, the reborn Tsuburaya Productions is working to spread the dream across the world.

Tsuneyuki Morishima President Between business Working to expand TSUBURAYA PRODUCTIONS CO., LTD. and creative activities strategic markets

TSUBURAYA PRODUCTIONS CO., LTD. The target of Ultraman is today’s children, 1-10-1 Hachimanyama, Setagaya-ku, Tokyo In the world of commercial “production”, 156-8678, Japan marketing and creative activities are like and the “original” children from the TEL: +81-3-5317-7820 / FAX: +81-3-5317-7839 40-year period from the birth of Ultraman URL http://m-78.jp/ the two wheels on an axle. If the balance Date Established: April 1963 between the two is off, it is not possible to until today. Ultraman is a rare character Capital: 310 million yen go straight ahead. Tsuburaya Productions that combines diversity with unpredict- (Investment share of TYO: 66.6%) Business content: Film and TV production, gave birth to a hero character popular ability. That is what has kept Ultraman Costume rental business, Licensing business nationwide, but even it has gotten out of going for over 40 years. While valuing balance in this regard. these two aspects we will work in a regu- View of the October 17, 2007 press conference Creators are usually fastidious about qual- lar and timely manner to maximize the ity when they create things, but some- Ultraman asset. times they get too caught up in the pursuit Ultraman is a character which can also be of “high quality” and lose their cost per- said is also a Japanese asset. By compre- spective, which is fatal to business. hensively winning the lawsuit in Thailand Tsuburaya Productions aims to take the that has lasted over 10 years, Ultraman will opportunity of joining the TYO group to now be able to make the world his stage make a new start. We will launch the “New in fact as well as name. The advancement Tsuburaya Productions” by clearly stat- of modern media and technology will ing company objectives and ensuring all make this a reality in a short time. employees have the same information and In addition, we will implement thorough values. The products we produce after and smart cost reductions in the pro- joining the TYO group will not start to be duction process without compromising released until 2009, but we are heading in quality. For example, if we determine the that direction at full throttle. broadcast framework in advance and plan Because it consists of a variety of creative the contents of the entire series ahead of companies, we are looking forward to time, we will also be able to systemati- working in the fortuitous environment pro- cally plan set construction. Our goal is to vided by the TYO group to see how the develop production to balance and har- characters of Tsuburaya Productions will monize the three aspects of scheduling, be utilized to realize their future potential. quality, and budget. We look forward to offering fans “an even The ultimate mission of Tsuburaya Pro- stronger Ultraman”. ductions is “to continue to provide children with dreams and imagination” by giving our all from major targets to small efforts to keep Ultraman as a hero forever.

11 TYO Business Vol 4 Profiles of New Members of the TYO group

ZEO Corporation Aiming for maximum effect in marketing communication Creating a location is not the only work of a space producer. The foundation of ZEO’s creative work is never being satisfied with the status quo but continually seeking to create the unique by adding something new.

Hiromasa Kuroi President ＆ CEO Space production that tests Techniques for staying out of a rut ZEO Corporation overall capability are important for creative work

ZEO Corporation ZEO was established in 1988 to produce Since its foundation, ZEO has made “Cool 2-9-28 Hiroo, Shibuya-ku, Tokyo 150-0012, Japan space for exhibitions and stores in partic- & Unique” its creation theme. Creations TEL: +81-3-5467-8911 / FAX: +81-3-5467-8203 URL http://www.zeo.co.jp/ ular. The start of the company coincided have to look cool, but I also want them Date Established: May 1988 with the economic boom and most of to be unique in a way that others cannot Capital: 63,709 thousand yen (Investment share of TYO: 70%) our work was producing discos and res- copy them. To do that, we have to keep Business content: Space production, Promotional taurants. At that time, just placing some ourselves in a position where we can marketing nondescript rock in front of a restaurant continually receive fresh stimulation that garnered the incredible production fee of keeps us from becoming stuck in a rut. several million yen. Being emerged in such Being able to joint the TYO group, a listed an environment will dull our senses and company, puts us in an environment with the direction the company should take, the best kind of stimulation. Many of our so we shifted from store and restaurant clients to date have been foreign compa- production to exhibitions and other space nies because they often select companies production. based on the degree of quality. Although The work of space production is deeply things are changing, Japanese clients related to the overall company marketing tend to select companies based on their communication. To effectively express the size. With the support of the TYO group, InterBee Adobe Systems booth company brand concept requires a range we will actively make presentations to of creativity that must take into consid- domestic companies as well. We will also eration images and visitor oriented com- strengthen ourselves in the field by real- munication tools based on this concept; a izing synergies with companies from other website, questionnaires, and other infor- groups that are strong in the general con- mative materials; and onsite communica- sumer market. tion. Joint the TYO group has the additional So-called space production is compre- merit that it provides the framework for hensive creative work of images, music, our work to be evaluated objectively. ZEO and lighting as well as the form and details has now set a business plan that calls for PIE Sigma booth of the space itself. Further, a single proj- 3 billion yen in sales in 2010. ect will require interaction with 30 to 50 Today, the advertising world requires companies, so having the skill to maintain higher quality communication. We are uniform quality is a must. very excited with the prospect that the TYO group synergies will present various methods of high-quality expression.

CETEC JAPAN TDK booth

TYO Business Vol 4 12 Profiles of New Members of the TYO group

Light Work Co., Ltd. Shining light on productions through reliability built on workplace capability and abundant experience Light Work is the leader in lighting equipment rentals in Japan and the abilities of the second president, Naoki Kondo, are expanding the company and solidifying its position as a lighting professional. Naoki Kondo President firmly establishing ourselves in the industry Light Work Co., Ltd. Lighting services are moving to the as lighting professionals. era of providing total packages Light Work Co., Ltd. Shining light 16-9 Tomihisa-cho, Shinjuku-ku, Tokyo 162-0067, Japan on the production site with pride TEL: +81-3-3357-8321 / FAX: +81-3-3359-2869 Light Work was established in 1973 with URL http://www.light-work.co.jp/ lighting equipment rental as its main busi- Established: October 1973 Capital: 10 million yen ness. Our company was the first to intro- Lighting is not a simple thing. Expensive (Investment share of TYO: 70%) duce metal halide lamps (HMI) to Japan pieces of lighting equipment can cost sev- Business content: Rental, development, in/out transport of lighting equipment and other related and the rental business for these was well eral million yen per system and some pieces services received. The company gradually increased of this equipment approach being works of the type of lighting equipment it offered art. Since we carry a wide range of equip- to where now the lineup is the greatest in ment, much time is required for mainte- Homepage top Japan with tens of thousands of items to nance and the knowledge and technology select from. for modifying important equipment to meet Today, in addition to renting lighting equip- Japanese specifications are required. It is ment for commercials and promotions, also important to gather information on new events, movies, and similar activities, the products in Europe and on what kind of company also rents out equipment trucks “light” is currently required. We strive to and power trucks for on-location use to pro- send technicians to overseas events and to vide total light-related services. utilize technician networks to continually One of our current focuses is “location exchange the latest information. package plans”. For these plans, lighting We have recently begun to prepare manu- technicians are dispatched with the vehicles als on lighting types and effects for new and lighting equipment to handle all of the employees as well as manuals covering lighting work. This style has been common maintenance technology, but preparing outside of the urban areas, but it had not manuals for everything is an impossible caught on in the urban area where lighting task, so we give priority to onsite training for

Equipment catalog technicians are freelance. However, provid- new employees because onsite communi- ing such total packages greatly reduces the cation with customers is important for pro- HMI light preparation time before the event begins posing and assembling the suitable lighting and thus reduces costs, so the demand for equipment. such services is very high in the urban area Although not limited to lighting, the produc- now as well. tion site requires imagination and a sense of Joining the TYO group has increased the things as manuals alone are insufficient for trust built with customers and is increasing the work. The first thing we do is to have the the number of clients that order total pack- staff understand how fascinating but difficult ages as well as the number of new custom- the work is. Because our work is to “shine ers. First of all, we will solidify the orders for light” on the production site, we aim to be a this total service to expand the company company that takes pride in meeting 100% Light Work equipment truck beyond being just an equipment provider to of customer needs.

13 TYO Business Vol 4 Profiles of New Members of the TYO group

Great Works AB High-quality products expand the possibilities of interactive media

Great Works has been working on high-quality works since its founding. The company has

Directors of Great Works also received many advertising awards since it joined the TYO group. Its advertising develop- Great Works AB ment that utilizes vertical and horizontal net- Drottninggatan 89, 113 60 Stockholm, Sweden works is excellent and much is expected of the TEL.+46-8-52-80-77-70 URL.http://www.greatworks.se/ company going forward. Date Established: April 2002 Capital: SEK 100,000 (Investment share of TYO International: 60%) nies was an advantageous decision for us. ping site for the Swedish apparel maker Business content: Interactive agency Working with other companies in the TYO H&M (Hennes & Mauritz AB). We are also ＊Refer to page 18 for information on GreatWorks, S.L. and Great Works America Inc. group will energize our operations while at opening a new office in Japan with plans the same time we want to be an asset to the to support the global campaigns of client other companies. companies. The goal of Great Works by establishing Advertisement production Using many awards as steps offices around the world is to become one making maximum use of the to reaching the top of the world of the most creative digital agencies in advantage of global media the world. As a member of the TYO group It was in March 2004 when three compa- We take pride in the high appraisal given with its excellent creative mind we are nies merged to form Great Works. These to our creativity. We have been nomi- aiming to create products that put us at three companies were a conceptual nated for nearly all of the major adver- the top of the world. agency, a web production company, and tising awards and have received many a film production company. The company of these awards including the Cannes currently has offices in Stockholm, Swe- Lions, Europe’s Premier Creative Awards den, Barcelona, Spain, and New York, (Epica), New York Festival Awards, Webby USA, giving it the ability to make creative Awards, Cresta International Advertising campaigns and strategies for global proj- Award, One Show Advertising Award, ects involving digital channels. The num- The Eurobest Award, D&AD Award, and ber of employees is 40 in Stockholm, 10 in domestic awards from several countries. Barcelona, and 6 in New York, and these The best known award-winning work people are young with an average age of our company is the V&S ABSOLUT around 30. SPIRITS, a Swedish vodka manufacturer, Before joining the TYO group the com- promotion site “ABSOLUT METROPOLIS”. pany jointly developed a campaign for No other online campaign has received National with group company TYO-ID, so many awards. A point in common of all ABSOLUT METROPOLIS made creative proposals to clients in three of our offices in Stockholm, Barce- Sweden, and worked together on several lona, and New York is that they have large other projects. coverage by employing multiple channels This was not only done with the coopera- in the web markets of those cities. A good tion of TYO-ID but through the utilization example is the promotion site “ABSOLUT of various experiences and the realization Machines”, which was set up as a music that going forward networking among machine between Stockholm and New creators in the various countries would be York that allows mutual access from the extremely important for developing media website. globally. Currently, we are building a new system Joining the TYO group with its global net- for the ABSOLUT project and we are work and various types of creative compa- also constructing a new online shop- ABSOLUT Machines

TYO Business Vol 4 14 Profiles of New Members of the TYO group

LUDENS CO., LTD. To be a creator that takes on the challenge to advance the

business potential of CG CG & SYSTEM CREATION A person who uses his own sense of taste to work on character design and package illustrations and who was a pioneer of SF illustration in Japan, Ryukow Masuo established LUDENS in 1990 and is now moving the company into new businesses.

Ryukow Masuo one thing that motivates everybody in the CEO CG is an attractive expression company. LUDENS CO., LTD. with a temporal axis ＊SIGGRAPH: This is held annually in the United States to allow people to present papers related to computer graphics and is the largest LUDENS CO., LTD. I first got the impression that the world of computer graphics festival in the world. 4th Floor, Chugai Bldg., 3-1-16 Uehara, Shibuya-ku, Tokyo 151-0064, Japan computer graphics (CG) that takes on the TEL: +81-3-5452-0050 / FAX: +81-3-5452-0112 dimensions of fantasy and desire could be Creating a world URL http://www.ludens.co.jp/ with a new value standard of CG Established: March 1990 used for realistic creation when participat- Capital: 10 million yen ing in the international society SIGGRAPH＊ (Investment share of TYO: 72%) LUDENS has been an independent com- Business content: Computer graphics production held in Boston in 1982. That is when I came in contact with the CG imaging in “Star pany for close to 20 years, but in thinking Trek II: The Wrath of Khan”, which was a about the development of the company I movie that made true, if only partial, use wondered whether continuing that style of of CG. I strongly felt that means of expres- management would be the best for the sion would allow me to realize the things I future. Technological innovation in the CG wanted to do. Creating CG images at that world is rapid and needs are increasingly time required a huge amount of money and diversifying, so high-quality creative work was still just a dream for me. Several years alone is not sufficient to survive in the busi- later I acquired an environment that could ness world. Considering the risk involved,

Name of work: Theater movie “Kiraware Matsuko no Issyou” be bought with personal funds but which capital investment in technology, and Director: Tetsuya Nakashima 2006 “Kiraware Matsuko no Issyou” Production Committee I could manage to use to create full-color development of people required to take on CG still images. Then, at a price tens of large projects, a company needs to have millions higher than that, it became pos- active management as well as actively take sible to acquire an environment for creat- on the development of original contents ing movies, so I started LUDENS with the and technologies. Taking those things into desire to create CG imaging. consideration, I decided the best course Since I was an illustrator, the policy of the was to participate in the TYO group. company from its inception was “CG is to The name of the company was taken from

Name of product: evian Name of work: “Water Life” version make pictures”. The rapid advancement the work “Homo Ludens” by Dutch author Client: Danone Waters of Japan Co., Ltd. Agent: Ogilvy & Mather Japan K.K. of computer hardware and software has Johan Huizinga. In Latin Homo Ludens Production Company: PYRAMID FILM INC. created an age when anyone can “make means “a person who plays”. Just as this pictures” even if they are lacking a pro- book discusses that “economic benefits fessional touch. If we don’t understand accrue to play, which is human creativity”, a “picture” as a work of art, it is nothing the business model sought for by our cre- more than data created with CG software ators is not just to concentrate on the cost and will not communication a sense of life cutting or pursuit of profits that are in front as a work of art does. I’m honored that in of our noses, but also to spend money to this respect the CG of LUDENS contin- provide high-quality works that bring in ues to meet the needs of clients for high profits. In other words, our goal is not just quality. For that reason, I have no inten- to create what is desired, but to make a Name of work: Theater movie “PACO and The Magical Book (Paco to Maho no Ehon)” (Scheduled for fall 2008 release) tion of lowering the hurdle. I realize that is profit by providing what we think is good. Director: Tetsuya Nakashima 2008 “PACO and The Magical Book” Production Committee

15 TYO Business Vol 4 Profiles of New Members of the TYO group

TYO Productions Inc.

Wajyu Fukuda Executive Vice President We aim for hit productions TYO Productions Inc. from a core position in the TYO group In discussing the history of the TYO group, one has to men- tion two of the top officers, Wajyu Fukuda and Jun Ebihara, who lead the production of TV commercials. They became independent of the business division of the main TYO unit to take on more challenging and solid creative system.

Producing commercials Jun Ebihara Taking on challenges with both strengths of individuality Executive Vice President as the group’s cleanup hitters and organizational capability

TYO Productions Inc. Ebihara : The spin-off of TYO Productions Ebihara : As always we are in the midst of 1-7-13 Mita, Meguro-ku, Tokyo 153-0062, Japan was handled as an inevitable and natural change in the planning and production of TV TEL: +81-3-5434-8575 / FAX: +81-3-5434-1598 URL http://www.tyo.co.jp/index2.html development. Self-supporting accounting commercials, and clients continue to seek Date Established: August 2007 was already used while still a part of the greater sophistication. We are entering an age Capital: 300 million yen (Investment share of TYO: 100%) business division of the main TYO unit, so where only production companies with high Business content: Planning and production of nothing in particular changed with the spin-off. creative capabilities that embrace excellent TV commercials Fukuda : Of course, we spend more time producers can satisfy the needs of clients. on management than we did while still part Fukuda : It is taken for granted that the of the business division of the main TYO quality of commercials should be high, and unit, but on the other hand being two of the today even more is expected. This includes top management allows for quicker decision knowledge of promotions, the latest informa- making, which is an advantage for company tion, a media mix, and so on. The creative management. sense that digs deep into a single thing is also Ebihara : Of the individual companies in the important, but generally it is necessary to group, TYO Productions has become the accumulate a variety of alternatives. In other largest with about 110 employees. We are words, we have entered an age where victory honored to be the core of TYO and we plan comes from strength in a “plane” rather than to continue to lead the group well as the in a single “point”. core company. Ebihara : One of the characteristics of TYO Fukuda : We realize we must be prepared is “mega strength”. We are past the age when to be the “cleanup hitter” at all times. Rather commercials are made using the star power than doing something small, we will work to of just the producer. Looking at the group Japan Medical Association “School Insurance” version meet expectations by always getting a good overall, the individual companies retain their hit. I think it is important to always have that respective strengths while coalescing into sense of urgency and mission. a greater strength. I am confident that the Ebihara : However, we can’t go on the organization with this strength can meet the defensive. We must always take on new needs of the times and come out victorious. challenges. Since we have an environment Fukuda : And with the media diversifying that allows quick decision making, we need like it is today, we must continuously work in to keep taking on new challenges and bat the main stream to keep our senses sharp. out a string of safe hits while also knocking We must keep a sharp eye on the things that in a number of home runs. That is the kind change and those that don’t, on pushing of company we want to be. individuality and on maintaining harmony. Our goal is to continue to be a company that keeps these things in good balance.

Honda Motor Co., Ltd’s ASHIMO “DINER” version

TYO Business Vol 4 161 6 Corporate Information

Group Outline

TYO Inc.

● Location of Head Office 2-21-7 Kami-Osaki, Shinagawa-ku, Tokyo TEL: +81-3-5434-1580 FAX: +81-3-5434-1595

● TYO Group Executives Officers and Auditors (As of January 31, 2008)

Director in Charge of Entertainment President and CEO, Hiroaki Yoshida Business, Group Executive Officer, Masahiro Yonezawa and CEO of the Group Executive Board Member Director in Charge of Entertainment Vice-representative, Kazuyoshi Hayakawa Business, Group Executive Officer, Katsunori Haruta Executive Board Member Executive Board Member Director in Charge of Contents Vice-representative, Shuji Kakimoto Solution Business, Group Executive Kazuyuki Gondo Executive Board Member Officer, Executive Board Member Director in Charge of Administration Director in Charge of International Business, Group Executive Officer, Koichi Iida Business, Group Executive You Matsutani Executive Board Member Officer, Executive Board Member Director in Charge of Advertising Director in Charge of Strategic Business, Group Executive Jun Ebihara Financing, Group Executive Takashi Morita Officer, Executive Board Member Officer, Executive Board Member Director in Charge of Advertising Director in Charge of Strategic Business, Group Executive Wajyu Fukuda Business, Group Executive Hiroaki Uekubo Officer, Executive Board Member Officer, Executive Board Member Director in Charge of Advertising Business, Group Executive Haruo Takarada Auditor Hidejiro Matsuda Officer, Executive Board Member Director in Charge of Web Business, Group Executive Kenji Morimoto Auditor Keisuke Morishima Officer, Executive Board Member Director in Charge of Entertainment Business, Group Executive Officer, Hidenori Ueki Auditor Shigeyuki Mito Executive Board Member

●Capital ●Number of group employees ¥1,077 million (as of September 31, 2007) ¥1,077 million (as of July 31, 2007) 884 (as of July 31, 2007) 43 (as of January 31, 2008) (including equity method affiliates) ●Number of group companies ●Consolidated net sales 43 (as of January 31, 2008) (including equity method affiliates) ¥18,912 million (as of July 31, 2007) 884 (as of September 30, 2007) ¥18,912 million (as of July 31, 2007) Group Companies

Advertising Business

TYO Productions Inc. TV commercial MONSTER FILMS Inc. TV commercial Investment share of TYO: 100% planning and Investment share of TYO: 80% planning and 1-7-13 Mita, Meguro-ku, Tokyo 153-0062, Japan production, Web advertising, 4-2-14 Roppongi, Minato-ku, Tokyo 106-0032, Japan production, TEL: +81-3-5434-8575 FAX: +81-3-5434-1598 Video production TEL: +81-3-6229-1611 FAX: +81-3-6229-1622 Video production

M-one Productions Inc. Investment share of TYO: 100% Camp KAZ Productions Inc. TV commercial Investment share of TYO: 100% TV commercial Hiroo Alpha Bldg., 4-5-48 Minami-Azabu, Minato-ku, planning and 1-12-24 Mita, Meguro-ku, Tokyo 153-0062, Japan planning and Tokyo 106-0047, Japan production TEL: +81-3-5725-6321 FAX: +81-3-5725-6322 production TEL: +81-3-5447-6751 FAX: +81-3-5447-6755

SASSO Films, Inc. Kirameki Inc. TV commercial TV commercial Investment share of TYO: 70% Investment share of TYO: 80% planning and 3-17-39 Nishi-Azabu, Minato-ku, Tokyo 106-0031, Japan planning and production 1-13-6 Kami-Meguro, Meguro-ku, Tokyo 153-0051, Japan production TEL: +81-3-5785-3011 FAX: +81-3-5785-3012 TEL: +81-3-5459-1091 FAX: +81-3-5459-1092

Ultra Inc. 1st Avenue Inc. Investment share of TYO: 100% Planning Advertisement and Investment share of TYO: 75% 1-1-4-604 Kami-Osaki, Shinagawa-ku, Tokyo 141-0021, Japan 1-7-13 Mita, Meguro-ku Tokyo 153-0062, Japan planning and production production TEL: +81-3-5475-6922 FAX: +81-3-5475-6923 TEL: +81-3-5719-1900 FAX: +81-3-5719-1901

ZEO Corporation Lemon Company Inc. Investment share of M-one Productions: 100% TV commercial Investment share of TYO: 70% Marketing 2-9-28 Hiroo, Shibuya-ku, Tokyo 150-0012, Japan Hiroo Alpha Bldg., 4-5-48 Minami-Azabu, Minato-ku, Tokyo planning and Communication production TEL: +81-3-5467-8911 FAX: +81-3-5467-8203 106-0047, Japan TEL: +81-3-5447-0581 FAX: +81-3-5447-0582

17 TYO Business Vol 4 Entertainment business Digital Frontier Inc. Investment share of TYO: 100% CG and digital GEMBA, Inc. Digital content content Investment share of Digital Frontier: 85% and CG 7th floor, Nielsen Bldg., 1-1-71 Naka-Meguro, Meguro-ku, planning and 1-1-5 Kami-Meguro, Meguro-ku, Tokyo 153-0051, Japan planning and Tokyo 153-0061, Japan production TEL: +81-3-5724-4442 FAX: +81-3-5724-4443 production TEL: +81-3-3794-2476 FAX: +81-3-3794-2472

LUDENS CO., LTD. CG and digital SARUCHIN COMPANY Digital content, Investment share of TYO: 72% Investment share of Digital Frontier: 80% games and content 4th floor, Chugai Bldg., 3-1-16 Uehara, Shibuya-ku, Tokyo 2-26-15 Kitazawa, Setagaya-ku, Tokyo 155-0031, Japan CG planning planning and 151-0064, Japan TEL: +81-3-3467-5505 FAX: +81-3-3467-5642 and production production CG & SYSTEM CREATION TEL: +81-3-5452-0050 FAX: +81-3-5452-0112

Suzak Inc. Game Genterprise Inc. Investment share of TYO: 100% Game Investment share of TYO: 100% software software 1-7-13 Mita, Meguro-ku, Tokyo 153-0062, Japan development 1-7-13 Mita, Meguro-ku, Tokyo 153-0062, Japan sales TEL: +81-3-5724-5912 FAX: +81-3-5724-5913 TEL: +81-3-5724-8891 FAX: +81-3-5724-8892

Sting Co., Ltd. Game 5pb Inc. TV commercial Investment share of TYO: 80% software Investment share of TYO: 80% planning and 1-7-13 Mita, Meguro-ku, Tokyo 153-0062, Japan development 28-11 Sarugaku-cho, Shibuya-ku, Tokyo 150-0033, Japan production, Music TEL: +81-3-5768-6234 FAX: +81-3-5768-6682 TEL: +81-3-5457-3567 FAX: +81-3-5457-3568 production

HAL Film Maker Inc. Animation REAL-T Inc. Post Investment share of TYO: 82% planning and Investment share of HAL Film Maker: 80% production for 1-10-6 Kamiogi, Suginami-ku, Tokyo 167-0043, Japan production 4-38-19 Naritahigashi, Suginami-ku, Tokyo 166-0015, Japan animations TEL: +81-3-5347-9330 FAX: +81-3-5347-9337 TEL: +81-3-5929-1695 FAX: +81-3-5929-1694

Yumeta Co., Ltd. Investment share of TYO: 80% Animation DOGA KOBO Inc. Animation Investment share of TYO: 70% Yokoyama Bldg., 1-42-20 Matsuyama, Kiyose-shi, planning and planning and 5-41-21 Higashi-Oizumi, Nerima-ku, Tokyo 178-0063, Japan Tokyo 204-0022, Japan production production TEL: +81-3-3978-6393 FAX: +81-3-3978-7221 TEL: +81-424-95-5116 FAX: +81-424-95-5117

Mazri Inc. Music clip Haxen International Inc. Broadcast Investment share of TYO: 100% planning and Investment share of TYO: 95% program 2-21-7 Kami-Osaki, Shinagawa-ku, Tokyo 141-0021, Japan production 1-7-13 Mita, Meguro-ku, Tokyo 153-0062, Japan planning and TEL: +81-3-5434-8751 FAX: +81-3-5434-5530 TEL: +81-3-5725-9799 FAX: +81-3-5725-9733 production

dwarf Inc. Character TSUBURAYA PRODUCTIONS CO., LTD. Film and TV Investment share of TYO: 82% planning and Investment share of TYO: 66% production, Costume 1-7-13 Mita, Meguro-ku, Tokyo 153-0062, Japan development 1-10-1 Hachimanyama, Setagaya-ku, Tokyo 156-8678, Japan rental business, TEL: +81-3-5719-4666 FAX: +81-3-5719-4667 TEL: +81-3-5317-7820 FAX: +81-3-5317-7839 Licensing business Web Business International Business TYO Interactive Design Inc. Da Lian Eastern Dragon Cartoon Development Co., Ltd. Investment share of TYO: 100% (equity method affiliate) Investment share of TYO: 35% Web Animation 6th floor, RE-KNOW Meguro Bldg., production No.39 Rui Feng Yuan, Gan Jing Zi, Dalian, China planning and 3-1-4 Kami-Osaki Shinagawa-ku, Tokyo 141-0021, Japan Dalian Dong Man Chang Ye Wai Bao Jia Gong Zhong Xin production TEL: +81-3-5793-8500 FAX: +81-5793-9030 TEL: +86-411-84799945 FAX: +86-411-84799957

colab Inc. TYO International B.V. International Investment share of TYO: 51% Web investment, Investment share of TYO: 100% corporate 1-7-13 Mita, Meguro-ku, Tokyo 153-0062, Japan production Stille Veerkade 36, 2512BG, Den Haag, The Netherlands operations and TEL: +81-3-5434-8815 FAX: +81-3-5434-8816 TEL: +31-70-3265604 FAX: +31-70-3265366 management

Cailoghi s.r.l. COM Co., Ltd. Web Investment share of TYO: 73% Web Investment share of TYO International: 80% production advertising 1-7-13 Mita, Meguro-ku, Tokyo 153-0062, Japan Via dei Bardi 36, 50125 Firenze, Italy production TEL: +81-3-5724-5639 FAX: +81-3-5724-5654 TEL/FAX: +39-055-245-855

Theoria Communications Inc. Investment share of TYO: 87% Great Works AB Web Investment share of TYO International: 60% 1st floor, MO Bldg., 3-14-15 Higashi, Shibuya-ku, Interactive production Drottninggatan 89, 113 60 Stockholm, Sweden Agency Tokyo 150-0011, Japan TEL : +46-8-52-80-77-70 TEL: +81-3-5774-8558 FAX: +81-3-5774-8557

SEPTENI BROADCASTING CO., LTD. The planning, Great Works, S.L. (equity method affiliate) Investment share of TYO: 30% production, Investment share of TYO International: 60% Sumitomo Gaien Bldg., 24 Daikyo-cho, Shinjuku-ku, Tokyo and sale of Interactive C/Santa Eulalia, 5-9, 08012 Barcelona, Spain Agency 160-0015, Japan Internet video TEL : +34-93-217-34-58 TEL: +81-3-5363-7350 FAX: +81-3-3357-5965 advertising

Content Solutions Business Great Works America Inc. Investment share of TYO International: 60% Interactive 530 Broadway, 6th floor, New York, NY 10012, USA Agency Post Production Center Inc. TEL : +1-646-403-9740 FAX:+1-646-390-6821 Investment share of TYO: 73% Post production 4-11-30 Minami-Azabu, Minato-ku, Tokyo 106-0047, Japan for films Shepherd Digital Marketing TEL: +81-3-3473-2861 FAX: +81-3-3473-2566 Consulting (Shanghai) Co.,Ltd. Investment share of TYO International: 97% Digital Marketing CRANK Inc. Suite 727, 7/F, 289 Wu Jin Road, Shanghai 200080, China Investment share of TYO: 100% Filming- TEL : +86-21-635-68830 FAX:+86-21-635-68839 B1 floor, Round-cross Minami-Azabu Bldg., related 4-11-21 Minami-Azabu, Minato-ku, Tokyo 106-0047, Japan operations TEL: +81-3-5447-6081 FAX: +81-3-5447-6082 Group management services

Light Work Co., Ltd. Lighting TYO Administration Investment share of TYO: 70% equipment Investment share of TYO: 100% Administration 16-9 Tomihisa-cho, Shinjuku-ku, Tokyo 162-0067, Japan related 2-21-7 Kami-Osaki, Shinagawa-ku, Tokyo 141-0021, Japan operations TEL: +81-3-3357-8321 FAX: +81-3-3359-2869 businesses TEL: +81-3-5434-1585 FAX: +81-3-5434-1595

TYO Business Vol 4 18 Advertising Business

he TYO group’s advertising business con- T sists of the planning and production of TV Users / Viewers commercials and advertising. In the process of expanding our business to include film production, Advertisers Television broadcasts we added the ZEO Corporation to our group in July (Watching) Advertising orders 2007. This marked our first entry into the marketing and communications sector. We also spun off the Advertising agencies, etc. Broadcasting companies TV commercial planning and production division of TYO Inc. in August 2007 to form the new company, Productions TYO Productions Inc. We thus created a structure that allowed each of our companies to focus on their Production orders core business. We intend to continue to provide creative products in the future that will meet our clients’

needs in a wide range of areas. Marketing Advertising Television commercials Communication planning TYO Productions Inc. MONSTER FILMS Inc. and production SASSO Films, Inc. ZEO Corporation Ultra Inc. M-one Productions Inc. Lemon Campany Inc. 1st Avenue Inc. Kirameki Inc. Camp KAZ productions Inc.

Web Business

his business is involved with the planning and T production of interactive content. An increas- Users / Viewers ing number of companies are utilizing web advertising as a mainstay medium to rank side-by-side with TV Advertisers Communications commercials. This market is growing dramatically. In (Browsing / Use) Advertising orders addition, the viewing of videos on the Internet is now an established practice, and we expect demand for Internet Advertising agencies, etc. video advertising to increase in the future. With this

climate prevailing in our industry, we brought SEPTENI Productions BROADCASTING CO., LTD., which is involved with Production orders video advertising on the Internet, into the group as a company accounted for under the equity method. Mak- ing this video advertising specialist a group member will Web expand the territory of our web business both in Japan TYO Interactive Design Inc. and overseas as we continue to create media combina- colab Inc. tions, including the Internet, in corporate advertising COM Co., Ltd. strategies. Theoria Communications Inc. SEPTENI BROADCASTING CO., LTD.,

19 TYO Business Vol 4 Corporate Information

Entertainment Business

ur entertainment business is growing in a multitude of sec- our character business, dwarf Inc. has been involved with the planning O tors, including the production of computer graphics, anima- and development of original characters. They also started operation tion, game software, and music videos; and the planning and pro- of a studio exclusively for the use of stop motion technique, and have duction of characters and documentaries; and the content business. been working in film and TV program production. TSUBURAYA PRODUCTIONS CO., LTD., known for its Ultraman series, In the future, we intend to devote additional resources to business which features the most popular Japanese action hero, became part of expansion, focusing as much as possible on the core businesses our group in October 2007. TSUBURAYA PRODUCTIONS and Bandai of our group, by enhancing the brand strength of each enterprise, Co., Ltd. formed capital and business ties in January 2008 for the long- investing in production committees, establishing new companies, term, strategic development of the content business in the future. In and acquiring existing companies through merger or acquisition.

Broadcast Movies Characters Modeling Broadcasting Stations dwarf Inc.

TSUBURAYA PRODUCTIONS CO., LTD. Partical Investment LUDENS CO., LTD. Movie Computer Screening Theaters Digital Frontier Inc. Graphics GEMBA, Inc. SARUCHIN COMPANY

Yumeta Co., Ltd. Sales Limited Clients DVD Sales HAL Film Maker Inc. Companies Liability Partnership REAL-T Inc.

DOGA KOBO Inc. Animation Game Software Sales Documentaries Sales Companies Game Equipment Haxen International Inc. and Software Games Manufacturers Suzak Inc. Genterprise Inc. Mazri Inc. Adventising/operations/sales DVD Sales Record 5pb Inc. Companies CD Sales Music Promotion Videos Sting Co., Ltd. Planning and Production

TYO Business Vol 4 20 Content Solutions Business

n this business we provide the platform and I editing technology for visual content produc- Users / Viewers tion, shoot the video, and handle the lighting work. Advertisers The post production division provides the most Television broadcasts advanced platform and the technology required for (Watching) Advertising orders visual content editing. The filming-related operations division sends camera operators to locations and Broadcasting Advertising agencies, etc. companies lends filming equipment. In addition, Light Work Co., Ltd., which develops and lends lighting equipment, Productions ordering / Production became part of our group in October 2007. This Television commercial has enabled us to rapidly provide all the equipment production company needed for video production. In the future, we hope Provision of solutions to improve our service as we expand the range of the solutions we provide.

CRANK Inc. Post Production Center Inc. Light Work Co., Ltd. Filming / Post Equipment / production Film studio

International Business

n this business we are involved with the expansion overseas of our group. We also established Shepherd Digital Marketing Consult- I interactive content and animation. As the core of our group’s ing, involved with the production of digital advertising, in Shanghai, global strategy, TYO International B.V., an intermediate holding com- China, in June 2007. It is providing creative work of the highest qual- pany, invests in, establishes, and facilitates mergers and acquisitions ity to the Chinese-language Internet market. In the future, we will between brilliant creative enterprises throughout the world. In March continue to aggressively expand our business and internationalize the 2007, Great Works, a major Western web production company brands of our group companies. whose clients include the world’s largest companies, became part of

21 TYO Business Vol 4 Corporate Information

Medium-Term Management Plan

he objective of our group is to establish ourselves as the lead- business risk caused by changes in the economic climate. Our goal T ing brand in the markets in which our group companies oper- over the mid-term is for consolidated sales of 40 billion yen by 2010, ate. In addition, we will continue to expand our business into different achieving our plan as outlined below. visual content sectors with the intention of creating a new business We intend to redouble our efforts to expand our businesses and model that is not limited to the existing visual content business. Our manage our profits in the future by aggressively continuing to create aim is not merely to expand profits by boosting our shares through new companies and promote mergers and acquisitions with the goal continued multi-branding in each business segment. We also will of achieving our mid-term business targets. rebuild the business portfolio for the entire group and ameliorate

Fiscal year ended Fiscal year ended Fiscal year ended Fiscal Term September 2008 September 2009 September 2010

Net Sales (¥ billion) 29.0 34.5 40.0

Ordinary Income (¥ billion) 1.70 2.28 3.00

Sales and Ordinary Income Ratio (%) 5.9 6.6 7.5

Challenges Ahead

ur most pressing challenges as we work to achieve our seas development, thorough implementation of cost management, O group’s mid-term target of 40 billion yen in sales by 2010 and investments in all our production committees. include a further expansion of our business areas including over-

Promoting mergers, acquisitions, Thorough profit management 1 2 and the establishment of new companies

We will define standard numerical values for sales and ordinary The number of companies in our group has expanded from income ratios in every segment to identify the mission of all our eight JASDAQ-registered companies in 2002 to 43 today. In the group companies, and strive to establish solid profit management future, we will strengthen our brand by aggressively promoting with a dedicated concentration to conducting business that mergers, acquisitions, and the establishment of new companies, achieves these figures. particularly in the web and entertainment sectors. We also aim to expand our business with the intension of exchange listing individual group companies.

3 Group development overseas 4 Investment business development

The Web and animation businesses are part of the international In addition to the production of animations, films, and games in market, so we plan to conduct aggressive overseas business our entertainment business, we will acquire window rights and development, including mergers, acquisitions, and the copyrights by investing in production committees to obtain greater establishment of new companies, to expand our business profits within the range of production profits. opportunities.

TYO Business Vol 4 22 Corporate会社情報 Information

Our Basic Stance on Corporate Governance

ur basic stance on corporate governance involves not tant factors for doing so will be the governance system for the O just strengthening the corporate governance practices overall group, the group subsidiaries, and companies accounted conducted by each individual company, but the corporate gover- for under the equity method. Oversight through regulations and nance practices for the group as a whole. We obtained ISO 27001 auditing are of course essential aspects of this effort, but it is also certification for our information security management system in necessarily important to create incentives leading to corporate April 2007. In the future, we intend to expand our creative busi- behavior by subsidiaries and companies accounted for under the ness areas based on our multibrand strategy. Extremely impor- equity method that accords with group policies

General Shareholders’ Meeting

Appointment Appointment Appointment

Our Company Board of Directors Accounting auditors Concurrent positions Audit Board of Auditors Alliances

President

Audit Strategic Financial Strategic Business Department Planning Alliances Audit

Administration work Internal audits

Budget control TYO Administration Inc.

Group internal auditing office

Administration work Internal audits

All company auditing reports

Board of Directors Auditors

Audit

President Our group companies

23 TYO Business Vol 4 Financial Information

Results for the Consolidated Fiscal Year ended 2007 Under Review

ur group devoted itself to organizational reform, a challenge it Third, we appointed directors to represent all our business segments. O had been facing for some time, to promote future growth. The participation of influential personnel from all our segments as First, we spun off the TV commercial planning and production divi- directors in our operations will enable us to create an operating struc- sion and created the wholly owned subsidiary of TYO Productions ture with greater mobility. Inc. This enables us to devote more time to oversight and the new In conjunction with the change in the end of our business year, the con- company to devote more of its energies to planning and produc- solidated accounting year under review lasted 10 months from October tion of TV commercials. Second, we shifted the end of our business 1, 2006, to July 31, 2007. Therefore, we were unable to incorporate our year from the end of September to the end of July. Sales of advertising revenue from the core advertising business, in which sales are concen- and publicity, which is the primary business of our group, are focused trated in August and September. During this period, we posted operating in March and September. That made it difficult to accurately gauge our profit of 780 million yen, current profit of 585 million yen, and net profit of performance in the interim period and for the full fiscal year. Changing 210 million yen on sales of 18.912 billion yen. the end of our business year will enable us to avoid dealing with the gap (Figures for the 26th business year are relatively low because of the between the forecast business results and the actual business results. shortened 10-month accounting period, which we explained previously.)

Net Sales (Unit: ¥ Million) Operating Income (Unit: ¥ Million)

24,000 1,400 1,280 1,279 21,054 1,200 20,000 19,839 18,912 1,000 16,000 800 12,000 708 600 8,000 400

4,000 200

0 0 Fiscal year Fiscal year Fiscal year Fiscal year Fiscal year Fiscal year ended ended ended ended ended ended September 2005 September 2006 July 2007 September 2005 September 2006 July 2007

Ordinary Income (Unit: ¥ Million) Current Net Income (Unit: ¥ Million)

20000 1,400 500 489 17500 450 1,200 1,207 1,185 400 15000 1,000 12500 1400 300 800 10000 1200 600 585 210 7500 200 1000 5000400 100800 2500200 600 0 0 Fiscal year Fiscal year Fiscal year 400 Fiscal year Fiscal year Fiscal year ended ended ended ended ended ended September 2005 September 2006 July 2007 September 2005 September 2006 July 2007 200

TYO Business Vol 4 24

1400

1200

1000

800

600

400

200

0 Sales by Business Segment

Advertising Business Unit: ¥ thousands

Business was brisk in the advertising business overall despite the impact of a shortened, Fiscal year ended July 2007 10-month accounting period due to the change in the end of the business year. This seg- Sales 12,088,715 ment posted operating profit of 1.016 billion yen on sales of 12.088 billion yen. In addition, 36 (Customers) 12,083,602 million yen for the goodwill amortization resulting from mergers and acquisitions is included (Inter-segment Sales) 5,113 in selling, general, and administrative expenses. Operating cost 11,072,311 Operating income 1,016,403

Web Business Unit: ¥ thousands

There has been rapid growth in the Internet advertising market in recent years, and we Fiscal year ended July 2007 achieved sharp increases in both sales and operating profit in our web business for the year Sales 1,668,063 under review despite the shortened, 10-month accounting period due to the change in the (Customers) 1,525,645 end of the business year. We posted operating profit of 172 million yen on sales of 1.668 bil- (Inter-segment Sales) 142,418 lion yen. In addition, 64 million yen for the goodwill amortization resulting from mergers and Operating cost 1,495,402 acquisitions is included in selling, general, and administrative expenses. Operating income 172,660

Entertainment Business Unit: ¥ thousands

In our entertainment business, the computer graphics business achieved substantial rev- Fiscal year ended July 2007 enue during the second half, but we did not meet our operating profit targets for the anima- Sales 4,108,796 tion business. Therefore, we suffered an operating loss of 130 million yen on 4.18 billion yen (Customers) 4,080,702 in sales. In addition, 100 million yen for the goodwill amortization resulting from mergers and (Inter-segment Sales) 28,093 acquisitions is included in selling, general, and administrative expenses. Operating cost 4,239,397 Operating income (130,601)

Content Solutions Business Unit: ¥ thousands

We were able to achieve solid business results in our content solutions business due to the Fiscal year ended July 2007 boost provided by the TV commercial production business. Sales 1,415,354 We posted operating profit of 211 million yen on sales of 1.415 billion yen. In addition, one (Customers) 800,687 million yen for the goodwill amortization resulting from mergers and acquisitions is included (Inter-segment Sales) 614,666 in selling, general, and administrative expenses. Operating cost 1,203,972 Operating income 211,381

International Business Unit: ¥ thousands

We prioritized management costs during the consolidated accounting year under review, so the Fiscal year ended July 2007 performance in our international business was insufficient to contribute to consolidated revenue Sales 425,210 and earnings. We will create a structure in the near future to enable this business’s contribution (Customers) 421,858 to our results by focusing on the management of operations of companies already in the group (Inter-segment Sales) 3,352 and newly established companies.We suffered an operating loss of 41 million yen on sales of 425 Operating cost 466,388 million yen in this sector. In addition, 13 million yen for the goodwill amortization resulting from Operating income (41,177) mergers and acquisitions is included in selling, general, and administrative expenses.

25 TYO Business Vol 4 Financial Information

Consolidated Cash Flows

Cash flows from operating activities Cash flows from operating activities The funds used for operating activities totaled 445 Cash flow from investing activities million yen, a decline of 1.231 billion yen from the year- before period. The primary factors behind this included Cash flow from financing activities (Unit: ¥ Million) the increase in net income before income taxes and accounts payable. Offsetting factors were the increase 1,500 in accounts receivable, the increase in inventory 1,481 assets, and corporate tax payments. 1,200

Cash flow from investing activities 900 785 The funds used for investing activities totaled 958 million yen, an increase of 258 million yen from the 600 567 year-before period. The primary factors contributing to the increase included the recovery of funds from 300 loans, the sale of subsidiaries’ stock, and the sales 176 of investment securities. The factors reducing the overall total included the acquisition of tangible and 0 intangible fixed assets, the purchases of investment -61 securities, investments in production committees, and -300 the acquisition of subsidiaries’ stock through mergers and acquisitions. -600 -445

-900 Cash flow from financing activities -805 -958 The funds derived from financing activities totaled 1.481 -1,200 billion yen, an increase of 914 million yen from the year-before period. The primary factors contributing -1,217 to the increase included both short-term and long- Fiscal year Fiscal year Fiscal year ended ended ended term borrowings. The factors reducing the overall total September 2005 September 2006 July 2007 included the repayment of long-term borrowing, the purchases of treasury stock, and the dividends paid.

Consolidated Net Assets (Unit: ¥ Million) Consolidated Total Assets (Unit: ¥ Million) 2,800 18,000 2,633 2,439 16,112 2,400 2,276 15,000

2,000 12,996 12,000 12,119 1,600 1200 9,000 1,200 900 6,000 800 600 3,000 400 300 0 0 Fiscal year Fiscal year Fiscal year 0 Fiscal year Fiscal year Fiscal year ended ended ended ended ended ended September 2005 September 2006 July 2007 September 2005 September 2006 July 2007 -300 -600 Consolidated Equity Ratio (％ ) Consolidated Return on Equity Ratio (％ ) 20 20.1 25 25.2 -900 12500 18.1 20 15 10000 18.8

12.6 15 7500 10

10 9.6 5000 5 5 2500

0 0 Fiscal year Fiscal year Fiscal year 0 Fiscal year Fiscal year Fiscal year ended ended ended ended ended ended September 2005 September 2006 July 2007 September 2005 September 2006 July 2007

2500

TYO Business Vol 4 26 2000 30

25 1500

20 1000

15 500 10

0 5

0 Consolidated Balance Sheet

(Unit: ¥ thousands)

Fiscal Term Previous Consolidated Fiscal Year Consolidated Fiscal Year Under Review Difference (as of Sept. 30, 2006) % (as of July 31, 2007) % Item Amount Ratio Amount Ratio Amount

(Assets)

I. Current Assets

1. Cash and cash equivalents 1,511,731 1,794,565

2. Notes and accounts receivable 3,785,717 4,399,968

3. Inventories 1,823,034 2,539,490

4. Deferred tax assets 98,345 66,740

5. Other 309,319 585,644

6. Allowance for doubtful accounts (17,659) (18,703)

Total Current Assets 7,510,488 57.8 9,367,705 58.1 1,857,217

II. Fixed assets

1. Tangible fixed assets

(1) Buildings 1,238,000 1,402,017

Accumulated depreciation 525,157 712,843 587,582 814,434

(2) Land 746,208 869,199

(3) Other 715,621 854,677

Accumulated depreciation 429,933 285,688 530,382 324,295

Total tangible fixed assets 1,744,740 13.4 2,007,929 12.5 263,189

2. Intangible fixed assets

(1) Goodwill 465,947 1,487,092

(2) Other 193,813 314,982

Total intangible fixed assets 659,760 5.1 1,802,075 11.2 1,142,314

3. Investments and other assets

(1) Investment securities 492,847 442,251

(2) Long-term loans receivable 130,221 －

(3) Contribution to capital 515,382 503,374

(4) Investment in affiliated companies 227,144 222,481

(5) Deferred tax assets 280,506 161,124

(6) Insurance reserves 860,480 967,692

(7) Lease deposits 488,798 541,887

(8) Other 92,497 264,583

(9) Allowance for doubtful accounts (6,009) (168,389)

Total investments and other assets 3,081,869 23.7 2,935,005 18.2 (146,864) Total Fixed Assets 5,486,371 42.2 6,745,010 41.9 1,258,639 Total Assets 12,996,860 100.0 16,112,716 100.0 3,115,856

27 TYO Business Vol 4 Financial Information

(Unit: ¥ thousands)

Fiscal Term Previous Consolidated Fiscal Year Consolidated Fiscal Year Under Review Difference (as of Sept. 30, 2006) % (as of July 31, 2007) % Item Amount Ratio Amount Ratio Amount

(Liabilities) I. Current Liabilities

1. Notes and accounts payable 2,261,995 2,864,361

2. Current portion of long-term bonds 50,000 50,000

3. Short-term borrowings 3,292,357 5,365,612

4. Accrued liabilities 581,033 778,955

5. Income taxes payable 287,854 282,127

6. Advance received 622,249 519,144

7. Allowance for bonuses 103,862 63,035

8. Allowance for customer benefit program 919 －

9. Other 207,518 192,273

Total Current Liabilities 7,407,790 57.0 10,115,509 62.8 2,707,719 II. Fixed Liabilities

1. Bonds 85,000 40,000

2. Long-term loans 2,416,232 3,231,509

3. Allowances for retirement benefits 19,802 7,626 4. Allowances for retirement benefits and compensation for executives. 368,683 380,933 5. Other 65,864 60,583

Total Fixed Liabilities 2,955,582 22.7 3,720,653 23.1 765,070 Total Liabilities 10,363,373 79.7 13,836,163 85.9 3,472,790 (Net Assets) I. Common stock

1. Capital stock 1,077,582 8.3 1,077,582 6.7 －

2. Capital surplus 1,029,124 7.9 1,023,186 6.4 (5,938)

3. Retained earnings 636,857 4.9 723,325 4.5 86,467

4. Treasury stock (429,011) (3.3) (879,305) (5.5) (450,293)

Total common stock 2,314,553 17.8 1,944,789 12.1 (369,764) II. Evaluation and conversion difference

1. Net unrealized gain on other securities 20,469 0.2 8,727 0.0 (11,741)

2. Foreign currency translation adjustment 16,085 0.1 70,209 0.4 54,124

Total evaluation and conversion difference 36,554 0.3 78,937 0.4 42,382 III. Minority interests 282,378 2.2 252,827 1.6 (29,551) Total net assets 2,633,487 20.3 2,276,553 14.1 (356,933) Total liabilities and net assets 12,996,860 100.0 16,112,716 100.0 3,115,856

N.B.: The accounting period was shortened to 10 months due to the change in the end of the business year in July 2007.

TYO Business Vol 4 28 Consolidated Statements of Income

(Unit: ¥ thousands) Previous Consolidated Consolidated Fiscal Year Fiscal Term Fiscal Year Under Review Difference (Oct. 1, 2005 to Sept. 30, 2006) % (Oct. 1, 2006 to July 31, 2007) % Item Amount Ratio Amount Ratio Amount I. Net Sales 21,054,751 100.0 18,912,496 100.0 － II. Cost of Sales 16,398,135 77.9 14,499,518 76.7 － Gross Profit 4,656,616 22.1 4,412,978 23.3 － III. Sales, General and Administrative Expenses 1. Provision for allowance for doubtful accounts 2,107 4,667 2. Executive compensation 953,846 1,068,936 3. Salaries and bonus 570,033 638,184 4. Provision for accrued bonus 35,127 16,764 5. Business consignment fee 349,053 324,196 6. Rent expenses paid 156,842 182,408 7. Provision for allowances for retirement benefits and compensation for executives 14,982 12,249 8. Retirement benefit cost 12,601 38,518 9. Goodwill depreciation 216,742 216,760 10. Other 1,066,046 3,377,382 16.0 1,201,536 3,704,223 19.5 － Operating Income 1,279,233 6.1 708,754 3.8 － IV. Non-operating Income 1. Interest income 5,441 12,723 2. Insurance refund 27,670 8,328 3. Dividends from investment in associations 52,320 133,601 4. Other 25,443 110,876 0.5 43,976 198,630 1.0 － V. Non-operating Expenses 1. Interest expenses 72,939 109,723 2. Loss on sale of accounts receivable 32,447 34,134 3. Equity in losses of affiliates 2,878 12,922 4. Commission expenses 21,992 17,561 5. Depreciation on investments in associations 62,017 120,449 6. Other 11,982 204,257 1.0 26,668 321,459 1.7 － Ordinary Income 1,185,852 5.6 585,926 3.1 － VI. Extraordinary Income 1. Gain on sales of equity in affiliates 141,627 485,333 2. Gain on sale of securities － 141,627 0.7 11,215 496,549 2.6 － VII. Extraordinary Loss 1. Loss on disposal of fixed asset 3,212 20,495 2. Provision for prior year allowances for retirement benefits and compensation for executives 43,532 － 3. Valuation loss on investment securities 62,800 109,545 0.5 21,930 42,425 0.2 － Income before income taxes and distribution of net income/loss to silent partnership 1,217,935 5.8 1,040,050 5.5 － Distribution of net income/loss to silent partnership 8,009 0.1 (103) 0.0 － Net income before income taxes 1,209,926 5.7 1,040,154 5.5 － Income taxes - current 680,351 601,056 Income taxes - deferred (8,214) 672,137 3.2 148,238 749,294 4.0 － Minority Interests 87,104 0.4 80,848 0.4 － Net Income 450,684 2.1 210,011 1.1 －

N.B.: There is no comparison to year-before figures because the accounting period was shortened to 10 months due to the change in the end of the business year in July 2007.

29 TYO Business Vol 4 Financial Information

Consolidated Statements of Shareholders’ Equity

(Unit: ¥ thousands) Evaluation and conversion Common stock difference

Net Foreign Total Minority Total net Total unrealized valuation interests assets Capital Capital Retained Treasury common gain on currency and stock surplus earnings stock stock other translation conversion securities adjustment differencet Balance at September 30, 2006 1,077,582 1,029,124 636,857 (429,011) 2,314,553 20,469 16,085 36,554 282,378 2,633,487

Difference in amount during fiscal year

Distribution of surplus (Note) (123,543) (123,543) (123,543)

Net income 210,011 210,011 210,011

Disposal of treasury stock (5,938) 17,884 11,946 11,946

Acquisition of treasury stock (468,178) (468,178) (468,178)

Difference in amount (net) in items other than shareholders’ (11,742) 54,124 42,381 (29,551) 12,829 equity during fiscal year Total difference in amount during fiscal － (5,938) 86,467 (450,293) (369,764) (11,742) 54,124 42,381 (29,551) (356,934) year Balance at July 31, 2007 1,077,582 1,023,186 723,325 (879,305) 1,944,789 8,727 70,209 78,937 252,827 2,276,553

Note: Profit appropriation items as presented to the regular general shareholders’ meeting held in December 2006.

Consolidated Statements of Cash Flow

(Unit: ¥ thousands) Previous Consolidated Fiscal Year Consolidated Fiscal Year Under Review Fiscal Term (Oct. 1, 2005 to Sept. 30, 2006) (Oct. 1, 2006 to July 31, 2007) Difference Item Amount Amount Amount I. Cash Flows from Operating Activities 785,763 (445,698) (1,231,462)

II. Cash Flows from Investing Activities (1,217,248) (958,776) 258,471

III. Cash Flows from Financing Activities 567,835 1,481,912 914,076

IV. Foreign Exchange Adjustments on Cash 19,079 48,238 29,158 and Cash Equivalents V. Increase (Decrease) in Cash and Cash Equivalents 155,430 125,675 (29,755) VI. Cash and Cash Equivalents at Beginning 1,356,300 1,511,731 155,430 of Year

VII. Cash and Cash Equivalents at End of Year 1,511,731 1,637,406 125,675

N.B.: The accounting period was shortened to 10 months due to the change in the end of the business year in July 2007.

TYO Business Vol 4 30 4

In the Vanguard of Creativity Ultraman at TYO Create a Powerful Ultramanwith the new knowledge tag

creativity for the next TYO Management Strategy Interview 2007 ―Interview with new directors― TYO Fifteen talented men that the next generation requires Creative Business City Town Block Planning