FY 2011 Full Year Results Presentation

FY 2011 Full Year Results Presentation May 16th, 2011 SEGA SAMMY HOLDINGS INC. [Disclaimer] The contents of this material and comments made during the questions and answers etc of this briefing session are the judgment and projections of the Company’s management based on currently available information. These contents involve risk and uncertainty and the actual results may differ materially from these contents/comments. © SEGA SAMMY HOLDINGS INC. All Rights Reserved. Contents 【FY 2011 Full Year Results】【FY 2012 Full Year Projections】 FY 2011 Highlights 3 Consolidated Income Statements 27 Operating Income Major Business Measures 4 28 Primary Factors behind Fluctuations Consolidated Income Statements 5 Major Business Measures 29 Consolidated tax return system / 6 Costs and Expenses Projections 30 Comprehensive Income Operating Income 7 Segment Projections Primary Factors behind Fluctuations Extraordinary Loss / Impact of the Earthquake 8 （Pachislot / Pachinko Market Forecast） 31 Cost and Expenses 9 Segment Projections： Pachislot and Pachinko Machines 32 Consolidated Balance Sheet 10 Segment Projections： Amusement Machine Sales 35 Consolidated Cash Flows 11 Segment Projections： Amusement Center Operations 37 Segment Results Segment Projections： Consumer Business 38 Segment results: Pachislot and Pachinko Machines 14 Segment results: Amusement Machine Sales 18 Appendix 42 Segment results: Amusement Center Operations 20 Segment results: Consumer Business 22 -1- © SEGA SAMMY HOLDINGS INC. All Rights Reserved. FY 2011 Full Year Results © SEGA SAMMY HOLDINGS INC. All Rights Reserved. FY 2011 Highlights ・ Net sales: 396.7 billion yen, Operating income 68.7 billion yen, Net income 41.5 billion yen ・ Year-on-year, sales and profits increased Net Sales / Profits ・ Posted total extraordinary losses of 14.3 billion yen ⇒Extraordinary losses from the Great East Japan Earthquake amounted to 1.2 billion yen ・ Year-on-year, sales and profits increased Pachislot and ・ Pachislot unit sales significantly exceeded results of the previous fiscal year Pachinko Machines ・ Pachinko unit sales decreased compared to the results of the previous fiscal year ・ Posted extraordinary losses for a pachislot machine during the 4th Quarter Segment breakdown Amusement ・ Year-on-year, sales and profits increased Machine Sales ・ Strong distribution of earnings due to utilization of revenue sharing model ・ Decreased sales year-on-year, but return to profitability due to a reduction of operating expenses Amusement Center ・ SEGA domestic same-store sales performed at a lower level year-on-year ・ Temporarily closed businesses of some facilities due to the impact of the Great East Japan Operations Earthquake ・ Decided to sell amusement center operations business in the U.S. ・ Year-on-year, sales and profits decreased ・ Strong domestic sales of game software, but weak sales of new titles overseas Consumer Business ・ Began full-fledged supplies of contents for new platforms ・ Postponed the launching of some game titles to the next fiscal year due to the impact of the Great East Japan Earthquake -3- © SEGA SAMMY HOLDINGS INC. All Rights Reserved. Major Business Measures ・Total number of shares acquired: 14,000,000 shares （March 15, 2011）・Total acquisition costs: 24,287,800,000 yen ◆ Completed acquisition of treasury stocks ・Acquisition period: From December 2, 2010 through (4th Quarter) March 15, 2011 ・Converted Sammy NetWorks (333 SEGA SAMMY shares per （December 1, 2010） share of Sammy NetWorks), SEGA TOYS (0.33 SEGA SAMMY shares per share of SEGA TOYS) and TMS ◆ Converted three listed subsidiaries ENTERTAINMENT (0.26 SEGA SAMMY shares per share of to wholly owned subsidiaries TMS ENTERTAINMENT) to wholly owned subsidiaries (3rd Quarter) through share exchange ⇒Used 13,977,737 shares in treasury stocks （December 10, 2010）・Cancelled 17,000,000 treasury stocks ◆ Cancellation of Treasury Stocks ⇒Total number of issued and outstanding shares: (3rd Quarter) 266,229,476 shares （as of March 31, 2011. ） -4- © SEGA SAMMY HOLDINGS INC. All Rights Reserved. Consolidated Income Statements FY 2010 FY 2011 Resutls through Full Year Resutls through Revised Full Year Full Year Projections YoY Change (JPY billion) 2Q Results 2Q (on Sep 30) Results Net Sales 154.3 384.6 217.8 410.0 396.7 +3.1% Pachislot and Pachinko Machines 68.3 160.3 134.2 215.0 212.0 +32.3% Breakdown Amusement Machine Sales 17.9 45.1 19.6 53.0 47.2 +4.7% Amusement Center Operations 28.9 54.7 23.6 45.0 45.6 -16.6% Consumer Business 37.6 121.5 38.7 94.0 88.8 -26.9% Other 1.5 2.8 1.5 3.0 2.8 - Operating Income -0.3 36.7 46.8 65.0 68.7 +87.2% Pachislot and Pachinko Machines 10.8 29.5 47.6 58.5 64.2 +117.6% Amusement Machine Sales -0.7 7.0 1.9 6.5 7.3 +4.3% Breakdown Amusement Center Operations 0.2 -1.3 1.1 -0.5 0.3 - Consumer Business -8.1 6.3 -1.3 6.0 1.9 -69.8% Other 0.2 0.3 0.1 0.0 0.0 - Eliminations -2.7 -5.2 -2.7 -5.5 -5.1 - Operating Income Margin - 9.5% 21.5% 15.9% 17.3% +7.8pt Ordinary Income -0.7 35.9 46.0 64.0 68.1 +89.7% Extraordinary Gain 1.9 3.1 2.8 - 3.7 - Extraordinary Loss 2.5 11.9 3.6 - 14.3 - Net Income -6.3 20.2 24.3 37.5 41.5 +105.4% Dividend Per Share (JPY) 15 30 20 40 40 - Earning Per Share (JPY) -25.10 80.46 96.66 147.44 163.19 - Net Assets Per Share (JPY) 841.80 937.80 1,031.45 - 1,093.23 - -5- © SEGA SAMMY HOLDINGS INC. All Rights Reserved. Consolidated tax return system / Comprehensive Income Impact of adopting consolidated tax return system （JPY billions） Income before income taxes and minority ５７.４ interests Income taxes-current ２７.４ Income taxes-deferred (１４.１) Effect of adopting consolidated tax return system : -12.1 billion yen Income before minority interests ４４.１ Minority interests in income ２.６ Net income ４１.５ Comprehensive Income （JPY billions） Net income ４１.５ Minority interests in income ２.６ Income before minority interests ４４.１Ａ Valuation difference on available-for- １０.９ sale securities Foreign currency translation adjustment (１.６) Other comprehensive income ９.２Ｂ Comprehensive income increased by 11.9 Comprehensive income ５３.４Ａ＋Ｂ billion yen compared to net income -6- © SEGA SAMMY HOLDINGS INC. All Rights Reserved. Operating Income – Primary Factors behind Fluctuations (Major Causes) （JPY Billion） Pachislot AM Machine AM Center Consumer Pachinko +1.6 -4.4 Operating +0.3 Income +34.7 ＜Primary factor＞＜Primary factor＞＜Primary factor＞・Strong distribution of ・Operating expenses, ・Home Video Game Operating earnings due to such as depreciation software unit sales Income utilization of revenue expenses, decreased decreased sharing model 68.7 ＜Primary factor＞・ Reviewed portfolio of ・Posting of goodwill in ・Increase in high margin domestic and overseas tandem with obtaining ・Pachislot unit sales CVT KIT titles amusement centers. wholly-owned increased subsidiaries ・Pachislot sales ratio 36.7 increased ・Cost improvement effect FY 2010 FY 2011 Results Consolidated Operating Income : +32.0 Billion yen Results -7- © SEGA SAMMY HOLDINGS INC. All Rights Reserved. Extraordinary Loss / Impact of the Earthquake FY 2010 Full Year Results FY 2011 Full Year Results Impairment loss ¥3.8 billion Cost of product compensation related ¥5.2billion Loss on revaluation of investment in ¥2.4 billion Impairment loss ¥1.5billion securities Loss on liquidation of subsidiaries ¥1.4billion Loss on liquidation of subsidiary ¥1.6 billion Loss on valuation of investment securities ¥1.3billion Loss on facility closures ¥0.8 billion Loss on disaster ¥1.2billion Loss on sales of stocks of subsidiaries and ¥0.6 billion affiliates Loss on adjustment for changes of accounting standard for asset retirement ¥1.1billion Loss on disposal of fixed assets ¥0.4 billion obligations Other ¥2.3 billion Other ¥2.6billion Total extraordinary losses ¥11.9 billion Total extraordinary losses ¥14.3billion Major Impact of the Great East Japan Earthquake ◆ Posted extraordinary losses pertaining to the Great East Japan Earthquake amounting to 1.2 billion yen ◆ Temporarily closed businesses of some amusement centers ◆ Shortened business hours (until March 31) of amusement centers located within areas covered by Tohoku Electric Power and Tokyo Electric Power Company ◆ Postponed the launching of the home video game software, “Ryu ga Gotoku OF THE END” to the next fiscal year -8- © SEGA SAMMY HOLDINGS INC. All Rights Reserved. Costs and Expenses （JPY billion） FY 2010 FY 2011 Resutls Full Year Resutls Revised Full Year Full Year Projections YoY Change through 2Q Results through 2Q (on Sep 30) Results R&D expense / 22.941.518.643.441.1-1.0% Content Prodcution Expense Cap-ex 6.3 16.1 6.5 18.9 19.6 +21.7% Depreciation 7.3 17.1 7.3 17.8 15.9 -7.0% Advertising 7.8 20.7 7.3 19.7 15.1 -27.1% -9- © SEGA SAMMY HOLDINGS INC. All Rights Reserved. Consolidated Balance Sheet (JPY billion) 【 Assets 】【 Liabilities and Net Assets 】 Account End of previous fiscal year End of this fiscal year Change Account End of previous fiscal year End of this fiscal year Change Cash and Deposits 101.3 149.0 +47.7 Accounts Payable 37.3 37.5 +0.2 Accounts Receivable 67.0 56.4 -10.6 Corporate Bond 20.6 11.8 -8.8 Securities 73.4 42.4 -31.0 Short Term Borrowings 3.4 2.8 -0.6 Inventories 36.7 36.3 -0.4 Other 31.5 56.9 +25.4 Other 20.3 31.4 +11.1 0.0 0.0 Total Current Liabilities 92.8 109.0 +16.2 Total Current Assets 298.7 315.5 +16.8 Corporate Bond 41.5 29.6 -11.9 Tangible Fixed Assets 59.0 57.1 -1.9 Long Term Debt 6.1 5.3 -0.8 Intangible Fixed Assets 13.3 22.7 +9.4 Other 25.9 29.2 +3.3 Investment Securities 28.6 44.1 +15.5 0.0 Other 23.5 19.1 -4.4 Total Noncurrent Liabilities

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