Fiscal Year 2010 Results Briefing May 17, 2011

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Fiscal Year 2010 Results Briefing May 17, 2011 Stock Listing :Tokyo Stock Exchange HAPPINET CORPORATION Code Number :7552 Fiscal Year 2010 Results Briefing May 17, 2011 0 Table of contents FY2010 Results Summary Change of business results・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 3 Consolidated results for FY2010 Profit & loss statement・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 4 Balance sheet ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 9 Cash-flow statement・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 11 FY2010 Summary for each business Toy business・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 15 Visual and Music business・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・18 Video-game business・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 24 Amusement business・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 23 Impact of the Great East Japan Earthquake・・・・・・・・・・・・・・・・・・・ 31 Reorganization of distribution locations・・・・・・・・・・・・・・・・・・・・・・・ 32 Full Year Projection for FY2010・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 34 1 FY2010FY2010 ResultsResults SummarySummary HideoHideo AsatsuAsatsu BoardBoard Director,Director, CFOCFO SeniorSenior ManagingManaging DirectorDirector CorporateCorporate ManagementManagement HeadquartersHeadquarters 2 Change of business results Fiscal period FY2006 FY2007 FY2008 FY2009 FY2010 Net Sales ¥million 160,606 168,958 166,778 194,246 190,891 Operating profit ¥million 2,153 1,451 2,137 2,327 2,855 Recurring profit ¥million 2,554 1,569 2,322 2,513 3,013 Net profit ¥million 1,616 -1,490 1,135 1,179 1,376 Comprehensive ¥ income million ― ― ― ― 1,179 Net assets ¥million 20,602 18,811 18,184 18,962 19,802 Total assets ¥million 45,801 48,486 54,661 49,050 48,507 Net assets per share ¥ 1,714.73 1,566.17 1,599.08 1,692.76 1,767.34 Net profit per share ¥ 134.54 -124.11 97.64 104.60 122.56 Dividends per share 30.0 40.0 30.0 30.0 30.0 ¥ (Interim dividends) (15.00) (25.00) (15.00) (15.00) (15.00) No. of employees People 743 890 1,008 945 923 Notes: 1. Consolidated sales figures do not include consumption tax. 2. Happinet Corporation acquired shares of Sunlink Co.,Ltd.and The Apple Corporation on November 30, 2007, making it a subsidiary. 3. Happinet Corporation established Happinet Marketing Corporation as a wholly owned subsidiary effective February 1, 2008. 4. Happinet Corporation acquired shares of WINT CORPORATION on March 10, 2009, making it a subsidiary. 5. The visual and music business of Happinet Corporation are transferred to WINT CORPORATION, and which is renamed Happinet Pictures and Music Corporation on April 1, 2011. 6. The interim dividends for the FY2007 includes a commemorative dividends of 10 yen to mark our 40th anniversary. 3 ConsolidatedConsolidated resultsresults forfor FY2010FY2010 (1)Profit & loss statement (¥ millions; rounded down, %) FY2009 FY2010 % of total YoY % of total YoY Net sales 194,246 100.0 16.5 190,891 100.0 -1.7 Cost of sales* 171,779 88.4 17.0 168,564 88.3 -1.9 Gross profit 22,467 11.6 12.4 22,326 11.7 -0.6 SG&A expenses 20,140 10.4 12.8 19,471 10.2 -3.3 Personnel 7,011 3.6 11.7 6,921 3.6 -1.3 Contract personnel costs 1,668 0.9 -20.5 1,632 0.9 -2.2 Depreciation and amortization 825 0.4 51.1 781 0.4 -5.3 Depreciation and amortization of goodwill 446 0.2 87.4 445 0.2 -0.2 Operating income 2,327 1.2 8.9 2,855 1.5 22.7 Non-operating income 275 0.1 3.8 190 0.1 -30.9 Interest and dividends received 52 0.0 -26.8 43 0.0 -17.3 Other 222 0.1 14.4 147 0.1 -33.8 Non-operating expenses 89 0.0 11.3 33 0.0 -62.9 Interest paid 55 0.0 400.0 19 0.0 -65.5 Other 33 0.0 -51.5 13 0.0 -60.6 Ordinary income 2,513 1.3 8.2 3,013 1.6 19.9 Extraordinary gains 138 0.1 236.6 148 0.1 7.2 Extraordinary losses 576 0.3 51.2 341 0.2 -40.8 Net profit before income taxes 2,074 1.1 4.6 2,820 1.5 36.0 Income taxes 895 0.5 7.4 1,443 0.8 61.2 Income before minority interests ― ― ― 1,376 0.7 ― Minority interests -0 -0.0 ― -0 -0.0 -1.7 Net income 1,179 0.6 3.9 1,376 0.7 16.7 *Including stock clearances of ¥2,532m in FY2010 and ¥2,321m in FY2009. Net profit per share (¥) 104.60 ― ― 122.56 ― 17.2 Average number of shares during period 11,277,363 11,232,958 No. of employees at end of period* (people) 945 ― -6.3 923 ― -2.3 *The number of employees includes employees temporarily transferred from other companies and contract employees, but excludes employees temporarily transferred to other companies and temporary employees. Capital expenditures 650 ― -58.9 471 ― -27.4 4 ConsolidatedConsolidated resultsresults forfor FY2010FY2010 (1)Profit & loss statement ① Change by business segment ■ Net sales (¥ millions; rounded down, %) Period FY2008 FY2009 FY2010 Segment % of total YoY % of total YoY % of total YoY Toy business* 61,813 37.1 -1.7 65,654 33.8 6.2 69,104 36.2 5.3 Other business 7,330 4.4 43.0 7,904 4.1 7.8 7,818 4.1 -1.1 Visual and Music business 36,570 21.9 -5.1 67,838 34.9 85.5 57,759 30.3 -14.9 Video-game business 50,474 30.3 -7.4 44,372 22.9 -12.1 46,447 24.3 4.7 Amusement business 17,919 10.7 38.3 16,381 8.4 -8.6 17,579 9.2 7.3 Total 166,778 100.0 -1.3 194,246 100.0 16.5 ###### 100.0 -1.7 * Including "Other business". ■ Segment profit (¥ millions; rounded down, %) Period FY2008 FY2009 FY2010 Segment YoY YoY YoY Toy business* 996 -24.6 1,865 87.2 2,321 24.4 Other business 101 152.5 232 129.7 118 -48.8 Visual and Music business 1,330 3,494.6 253 -81.0 -656 -358.9 Video-game business 1,221 -7.6 1,035 -15.2 1,156 11.7 Amusement business -127 ─ 544 ― 1,340 146.4 Eliminations and corporate -1,283 -1,371 -1,307 Total 2,137 47.3 2,327 8.9 2,855 22.7 * Including "Other business". 5 ConsolidatedConsolidated resultsresults forfor FY2010FY2010 (1)Profit & loss statement ②Sales by channel (¥ millions; rounded down, %) Period FY2008 FY2009 FY2010 Channel % of total YoY % of total YoY % of total YoY Specialty stores* 552 33.1 8.5 639 32.9 15.6 653 34.2 2.3 General merchandise store 270 16.2 -9.5 356 18.4 32.1 367 19.3 3.1 Wholesalers 170 10.2 14.2 215 11.1 26.6 154 8.1 -28.4 E-commerce 288 17.3 -17.6 222 11.5 -22.9 241 12.7 8.5 Convenience stores 141 8.5 11.3 215 11.1 53.0 213 11.2 -1.2 Suburban stores 90 5.4 -33.0 193 9.9 112.9 185 9.7 -4.2 Department stores 16 1.0 -36.9 16 0.9 3.8 13 0.7 -18.3 Other 137 8.3 45.8 82 4.2 -40.2 79 4.1 -3.9 Total 1,667 100.0 -1.3 1,942 100.0 16.5 1,908 100.0 -1.7 * Including consumer electronics and camera stores. * We made some minor alterations to the figure of FY2009. 6 ConsolidatedConsolidated resultsresults forfor FY2010FY2010 (1)Profit & loss statement ③Main business summary ■ Toy business (¥100millions; rounded down, %) Period FY2008 FY2009 FY2010 Manufacturer % of total YoY % of total YoY % of total YoY Bandai Co., Ltd. 289 46.8 -3.9 327 49.9 13.4 333 48.2 1.7 Tomy Co., Ltd. 48 7.8 -1.1 50 7.7 5.3 44 6.4 -12.8 Happinet originals 12 2.0 -52.3 14 2.2 14.5 14 2.1 1.5 Other manufacturers 195 31.5 -3.4 184 28.1 -5.3 220 32.0 19.6 (Other business*) 73 11.9 43.0 79 12.0 7.8 78 11.3 -1.1 Total 618 100.0 -1.7 656 100.0 6.2 691 100.0 5.3 *"Other business" sell mainly trading cards. ■ Visual and Music business* (¥100millions; rounded down, %) Period FY2008 FY2009 FY2010 Division % of total YoY % of total YoY % of total YoY Wholesale 291 79.6 -2.6 368 54.3 26.6 344 59.6 -6.6 Exclusive titles 74 20.4 -13.9 57 8.5 -23.2 59 10.2 2.8 Visual 365 100.0 -5.2 425 62.8 16.5 403 69.8 -5.3 Music ─ ─ ─ 252 37.2 ― 174 30.2 -30.9 Total 365 100.0 -5.2 678 100.0 85.5 577 100.0 -14.9 *Starting in the FY2009, the name of the"Video-related business"segment was changed to the "Visual and Music business " 7 ConsolidatedConsolidated resultsresults forfor FY2010FY2010 (1)Profit & loss statement ③Main business summary ■Sales by video game platform (¥100millions; rounded down, %) Period FY2008 FY2009 FY2010 Platform % of total YoY % of total YoY % of total YoY PlayStation3(PS3) 38 7.6 21.1 60 13.6 57.4 55 12.0 -7.8 PlayStation2(PS2) 29 5.9 -48.6 9 2.2 -67.1 4 1.0 -50.6 PlayStation Portable(PSP) 103 20.5 10.3 80 18.2 -21.7 116 25.1 44.0 Wii 42 8.5 -52.7 64 14.5 50.0 47 10.2 -26.6 Nintendo 3DS ― ― ― ― ― ― 24 5.2 ― Nintendo DS 96 19.0 -24.6 103 23.2 7.1 75 16.2 -26.9 Other 194 38.5 34.9 125 28.3 -35.4 140 30.3 12.3 Total 504 100.0 -7.5 443 100.0 -12.1 464 100.0 4.7 ■ Breakdown of PlayStation sales and sales volume (¥100millions; rounded down, %) Period FY2008 FY2009 FY2010 Item % of total YoY % of total YoY % of total YoY hardware 17 10.0 -11.6 29 19.8 74.6 24 14.0 -17.0 units(ten-thausand) 4 9 8 PS3 software 20 11.9 95.1 28 19.0 40.4 27 15.4 -5.1 accessories 0 0.4 -59.2 1 1.1 131.5 3 2.0 108.6 hardware 2 1.2 -40.0 0 0.4 -73.6 0 0.1 -76.2 units(ten-thausand) 1 0 0 PS2 software 27 15.8 -49.1 9 6.0 -66.6 4 2.6 -48.8 accessories 0 0.4 -51.2 0 0.2 -61.5 0 0.1 -59.3 hardware 59 34.8 1.2 31 21.1 -46.5 30 17.1 -5.0 units(ten-thausand) 31 18 18 PSP software 40 23.6 33.1 47 31.2 16.5 84 47.6 78.7 accessories 3 1.9 -24.3 1 1.2 -42.0 2 1.1 5.8 Total 171 100.0 -6.5 150 100.0 -12.0 176 100.0 17.2 8 ConsolidatedConsolidated resultsresults forfor FY2010FY2010 (2)Balance sheet (¥ millions; rounded down, %) FY2009 FY2010 Change (Assets) Cash and deposits 6,312 8,220 1,907 Accounts and notes receivable 22,937 23,206 269 Inventories 6,750 6,436 -314 Advances 1,858 1,016 -842 Deferred tax assets 1,153 939 -213 Other 1,278 1,296 18 Allowance for doubtful accounts -149 -76 73 Current assets 40,140 41,039 898 Tangible fixed assets 1,668 1,555 -113 Buildings and structures 472 463 -8 Land 638 633 -4 Other 557 458 -99 Intangible fixed assets 3,836 3,132 -703 Goodwill 1,322 876 -445 Other 2,513 2,255 -258 Investments and other assets 3,405 2,780 -624 Investment securities 2,083 1,548 -535 Long-term prepaid expenses 19 5 -14 Guarantees paid 834 663 -170 Deferred tax assets
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