Sega Sammy Holdings Financial Results Nine Months Ended 12/31/08 – millions in revenue lost, 560 jobs being cut
Consolidated operating results for the nine months ended December 31, 2008
Net sales – ¥309,018 [compared to ¥342,092 nine months ended 12/31/07]
Operating income (loss) – ¥(2,757) [compared to ¥(1,528) nine months ended 12/31/07]
Net income (loss) – ¥(10,840) [compared to ¥(15,766) nine months ended 12/31/07]
During the first three quarters of the fiscal year ending March 31, 2009, the Japanese economy faced more severe hardships as pressure on corporate earnings from the ongoing and sharp rise in the yen, the country’s worsening job picture, and other factors amid continued turmoil in the global financial markets, raised concerns that the real economy would slow further.
In this environment, the momentum in the pachislot and pachinko industry to replace older pachinko machines with models offering more diverse gameplay remained strong as the industry responds to recent revisions to regulations pertaining to the Entertainment Establishments Control Law of Japan. Meanwhile, the partial amendment in March 2008 of Standards for Interpretation of Technical Specifications is expected to invigorate the pachislot machine market by stimulating the development and supply of highly original pachislot machines with an emphasis on outstanding gameplay.
In the amusement center industry, fueled by economic uncertainty, the market continues to confront an increasingly harsh business environment due mainly to sluggish individual consumption. The market awaits the appearance of new game machines that will lead the market by meeting a wide range of customer needs, including those of families and casual players.
In the home video game software industry, while the demand growth for software has leveled off in Japan, reflecting the widespread purchase of the current generation of game platforms, demand continues to hold firm in Europe and North America.
As a result, consolidated net sales totaled ¥309,018 million during the first three quarters of the current fiscal year. The Company posted an operating loss for the first three quarters of ¥2,757 million, and a net loss of ¥10,840 million for the first three quarters, due to such factors as the sales of noncurrent assets, and the amortization of goodwill.
Results by business segment were as follows.
《Pachislot and Pachinko Machines》 In the pachinko machine business, the Company continued to sell its major title for the year, “Pachinko CR Hokuto No Ken,” released in the second quarter under the Sammy brand, selling a cumulative total of more than 180 thousand units, and bringing overall pachinko machine sales to 237 thousand units for the period. In the pachislot machine business, reflecting improved gameplay enabled by partial amendment of Standards for Interpretation of Technical Specifications, the Company launched well-received machines that included “Pachislot Hard Boiled” under the Sammy brand and “KAIDOU-MOKUSHIROKU KAIJI 2″ under the RODEO brand. Consequently, overall pachislot machine sales amounted to 108 thousand units for the period. As a result, the segment recorded net sales of ¥106,951 million and operating income of ¥5,292 million for the period under review.
《Amusement Machine Sales》 In the amusement machine sales business, the Company continued to sell major titles released for the year that included “WORLD CLUB Champion Football Intercontinental Clubs 2006-2007,” a trading card game and “GALILEO FACTORY,” a large medal game. The segment recorded net sales of ¥52,798 million, and operating income of ¥6,221 million.
《Amusement Center Operations》 In amusement center operations, fueled by economic uncertainty, same-store sales, particularly in suburban areas, were hit by sluggish personal consumption, and performed at a lower level in year-on-year terms. While the Company has closed 22 amusement centers in Japan that have shown low profitability and low prospects for improvement, as a result of 6 new amusement center openings, the number of amusement centers totaled 347 at the end of the period. Consequently, segment net sales were ¥54,422 million with an operating loss of ¥4,970 million.
《Consumer Business》 In the consumer business, overseas home video game software sales were firm thanks to favorable year-end sales of major titles released for the fiscal year, such as “Sonic Unleashed” and “Football Manager 2009,” as well as titles such as “Mario & Sonic at the Olympic Games” released in the previous year. In contrast, sales of titles in Japan were sluggish during the year-end selling season. Consequently, the segment recorded total video game sales of 21,090 thousand copies for the period, with 8,820 thousand copies sold in the U.S., 9,130 thousand copies sold in Europe, and 3,130 thousand copies sold in Japan and other regions. As a result of the foregoing, net sales in the segment amounted to ¥96,216 million, with an operating loss of ¥5,647 million.
(2) Consolidated Financial Position Total assets as of December 31, 2008 were ¥449,050 million, a decrease of ¥20,592 million from the prior fiscal year-end. This was primarily attributable to a decrease of ¥41,896 million in noncurrent assets, mainly due to a decrease in intangible assets such as goodwill, and property, plant and equipment such as land, despite an increase in current assets due to an increase of ¥24,701 million in short-term investment securities, such factors as negotiable certificates of deposit.
Net assets were ¥254,358 million, a decrease of ¥27,269 million from the prior fiscal year-end, largely due to a net loss, the payment of dividends, and a decrease in foreign currency translation adjustment due to fluctuations in the currency market. The current ratio remained at a high level of 271.5%, up 64.5 points from the prior fiscal year-end. As a result, the equity ratio was 52.2%, down 3.1 points from the prior fiscal year-end.
(3) Projection for Consolidated Results Full-year consolidated forecasts for the current fiscal year are as announced in the “Notice of Adjustment to the Forecast of Whole-Year Consolidated Operating Results for the Year Ending March 31, 2009″ on February 10, 2009.