Consolidated Financial Results of the Year ended March 31, 2008 (Unaudited) Date of Issue: May 20, 2008 Company Name : CAPCOM Co., Ltd. Stock Listing: Tokyo, Osaka Code Number : 9697 Location of Headquarters: Osaka Prefecture (URL http://www.capcom.co.jp/) Tel: +81-6-6920-3605 Representative :Haruhiro Tsujimoto, President and COO Contact Person :Kazuhiko Abe, Managing Corporate Officer Ordinary General Meeting of Shareholders : June 19, 2008 Dividend Payment Date: June 20, 2008 Filing Date for Annual Financial Report : June 20, 2008 (Note: Numbers are rounded down at Million Yen) 1. Results of the Year ended March 31, 2008 (April 1, 2007 - March 31, 2008) (1) Financial Results Note: Percentage represents change against corresponding period of the previous year. Net Sales Operating Income Ordinary Income Net Income Million Yen ％ Million Yen ％ Million Yen ％ Million Yen ％ Year ended March 31, 2008 83,097 11.5 13,121 36.6 12,267 15.7 7,807 33.4 Year ended March 31, 2007 74,542 6.1 9,602 45.9 10,600 51.1 5,852 (15.7) Earnings per Share of Return (net Return (ordinary Earnings per Share Return (operating Common Stock income) income) on Total of Common Stock income) on Sales (Assuming Full Diluted) on Equity Assets yen yen ％ ％ ％ 1Y6ear ended March 31, 2008 132.90 116.84 15.8 13.3 15.8 1Y5ear ended March 31, 2007 107.52 84.81 13.8 11.2 12.9 Reference: Investment Profit / Loss on Equity Method Year ended March 31, 2008: 0 million yen Year ended March 31, 2007: -million yen (2) Financial Position Total Shareholders' Shareholders' Equity Shareholders' Equity Total Assets Equity Ratio to Total Asset per Share Million Yen Million Yen ％ yen Year ended March 31, 2008 93,606 53,660 57.3 881.13 Year ended March 31, 2007 91,478 45,144 49.3 799.35 Reference: Shareholders' Equity Year ended March 31, 2008: 53,660 million yen Year ended March 31, 2007: 45,127 million yen (3) Cash Flows Cash Flows from Cash Flows from Cash Flows from Ending Balance of Cash Operating Activities Investing Activities Financing Activities and Cash Equivalents Million Yen Million Yen Million Yen Million Yen Year ended March 31, 2008 7,452 (3,374) (2,448) 32,763 Year ended March 31, 2007 16,063 (6,715) (15,206) 35,020 2. Dividends Dividend per Share Dividends Payout Dividends on Total Dividend Ratio Equity Payment (Annual) Interim Year-end Annual (Consolidated) (Consolidated) yen yen yen Million Yen ％ ％ Year ended March 31, 2007 15 00 15 00 30 00 1,633 27.9 4.0 Year ended March 31, 2008 15 00 15 00 30 00 1,798 22.6 3.6 Year ending March 31, 2009 20 00 15 00 35 00 24.9 (Forecast) Note: Breakedown for Dividend Forecast Year ending March 31, 2009:¥15 ordinary dividend ¥5 commemorative dividend 3. Forecast for the Fiscal Year ending March 31, 2009 (April 1, 2008 - March 31, 2009) Note: Percentage represents change against corresponding period of the previous year. Net Income per Net Sales Operating Income Ordinary Income Net Income Share Million Yen ％ Million Yen ％ Million Yen ％ Million Yen ％ yen Mid-Term Fiscal Period 34,700 11.5 3,300 7.9 3,400 0.1 1,800 12.3 29.44 Fiscal Year 95,300 14.7 14,600 11.3 14,800 20.6 8,600 10.1 140.60 1 4. Others (1) Changes in Major Subsidiaries during the Fiscal Year(changes in consolidated subsidiaries and affiliated companies with equity-method): No (2) Changes in Accounting Principles, Procedures and Presentation for Consolidated Financial Statements (those items listed under the “Major Changes in the Fundamental Items of Consolidated Financial Statements”) ① Changes resulting from the revision of the accounting principles: Yes ② Changes other than ① : Yes (3) Number of shares outstanding (Common stock): ①Number of shares outstanding at end of year (including treasury stock) Year ended March 31, 2008: 66,719,458 Year ended March 31, 2007: 62,269,007 ②Number of treasury stock at end of year Year ended March 31, 2008: 5,820,147 Year ended March 31, 2007: 5,813,727 (Note) The above-mentioned business forecasts were based on information available as of the release of this report. Please note that future events may cause the actual results to be significantly different from the forecasts. 2 Operating Results 1. Operating Results (1) Overview of the Fiscal Year ended March 31, 2008 The Japanese economy in this consolidated fiscal year (ended March 31, 2008) leveled-off despite steady exports and capital investments. We saw further signs of adverse business prospects including a downturn in stock prices, the accelerated appreciation of the yen, prolonged high crude oil prices, and a slowing US economy. As for the video game industry, this market thrived with the accelerated diffusion of new game consoles, as well as the expanded user base with increased novice users including seniors and females. The arcade industry, on the other hand, struggled due to the growing popularity of home video game consoles. This market also lacked appealing products that could attract customers, and saw sluggish growth overall. Software development costs have increased as new game consoles have been released. In response to this situation, Capcom has been engaged in software development under thorough revenue management. The usage of "MT Framework", Capcom's original software development tool, is just one example of such efforts. "MT Framework" makes it possible to simultaneously develop a software for various hardware, including Playstation 3, Xbox 360, and PCs, and, therefore, reduces time and costs associated with development. We placed extra emphasis on the distribution of games to mobile phones in both domestic and overseas markets in order to strengthen our profit base. Additionally, we have been building a management framework to prepare for the full-scale operation of online business. In the home video game segment, which is one of the core businesses of Capcom, "Resident Evil 4 Wii edition" and "Resident Evil: The Umbrella Chronicles" (for Wii) increased their sales satisfactorily especially in the US and Europe. In addition, "Devil May Cry 4" (for Xbox 360 and Playstation 3), which targeted overseas markets, also proved to have real value and achieved sales of over two million units exceeding our projection significantly. These flagship titles made strong showings in overseas markets, and the shipments of these three titles surpassed one million units, just as they did in the previous year. These successful results indicate that our business development, which specifically follows market trends, is heading in the right direction. The resulting net sales increased to 83,097 million yen (up 11.5 % from the previous year). As for profits, operating income increased to 13,121 million yen (up 36.6 % from the previous year), ordinary income increased to 12,267 million yen (up 15.7 % from the previous year), and the net profit for the current fiscal year increased to 7,807 million yen (up 33.4 % from the previous year). 3 (2) Status of Each Operational Department ①Home Video Games In this business segment, "Resident Evil 4 Wii edition" and "Resident Evil: The Umbrella Chronicles" (for Wii) increased their brand recognition especially in overseas markets. Their shipment surpassed one million units, greatly exceeding our projection. "Devil May Cry 4" (for Xbox 360 and Playstation 3) gained overwhelming popularity as soon as it was released and continued to achieve smooth growth in the US and Europe. This software achieved record sales for Capcom in recent years with over two million units sold. "Monster Hunter Freedom 2nd G" (for PlayStation Portable), which was released in the end of this fiscal year, also made a strong start, and almost one million units were sold. These leading software titles continued to be a tremendous success for Capcom. In addition, Capcom's original courtroom simulation game, "Apollo Justice: Ace Attorney" (for Nintendo DS) reached the sales of over 500,000 copies, achieving the highest sales of the series. "Monster Hunter Freedom 2nd (for PlayStation Portable), which was a huge success in the previous term, also continued to grow and contributed to overall profit increase. The resulting net sales increased to 51,679 million yen (up 18.0 % from the previous year), and the operating income increased to 11,609 million yen (up 44.1 % from the previous year) contributing to the improvement of overall operating results. ②Arcade Operations In this business segment, we tried to attract more customers including women and families while assuring repeated visits by current customers. Such efforts included offering clean, bright and fun arcades; holding various marketing events; implementing special discount days; and introducing a wide variety of game machines that satisfy customer demands. However, this business segment had sluggish growth under adverse market conditions. There were several factors that negatively affected performance: the dissemination of home video game machines, intensified competition, declining popularity of card dispensing games for children, and the decrease of visitors to those arcades located in suburban shopping malls due to rising gasoline/petrol prices. As for the new arcades, we opened nine stores this year: "Plaza Capcom Iruma", "Plaza Capcom Elumi Konosu", and "Plaza Capcom Hanyu" in Saitama Prefecture; "Plaza Capcom Rock City Sanuma" and "Plaza Capcom Sendai Izumi" in Miyagi Prefecture; "Plaza Capcom Chiharadai" in Chiba Prefecture; "Plaza Capcom Kofu" in Yamanashi Prefecture; "Plaza Capcom Rinku" in Osaka Prefecture; "Plaza Capcom Ashikaga" in Tochigi Prefecture. The current number of Plaza Capcoms totals 42 at the end of this fiscal year. The resulting net sales increased to 13,406 million yen (up 2.8 % front the previous year), while the operating income decreased to 753 million yen (down 62.5 % from the previous year) due to the increased expense associated with the opening of new arcades.