Square Enix Consolidated Financial Report: Nine-Month Period Ended December 31, 2006

Square Enix experienced significant financial growth during the nine-month period ending December 31, 2006, driven primarily by a robust release schedule of major console titles. Consolidated net sales reached ¥123,035 million, representing a 78.3% increase over the same period in the previous fiscal year. Operating income saw a substantial rise of 210.3% to ¥19,656 million, while net income grew by 111.9% to ¥9,095 million. These results reflect the company’s strategic focus on high-profile game releases and the expansion of its self-publishing capabilities in international markets.

The Games (Offline) segment served as the primary growth engine, generating ¥40,298 million in sales—a 90.1% increase—supported by the successful launches of titles such as Final Fantasy XII, Kingdom Hearts II, and Final Fantasy III. The Games (Online) segment also contributed positively, with net sales rising 9.8% to ¥10,568 million, bolstered by the expansion of Final Fantasy XI. Conversely, the Amusement segment, which incorporates the Taito Group, reported net sales of ¥56,369 million but incurred an operating loss of ¥754 million, prompting the company to initiate structural restoration efforts and divest its commercial karaoke machine business.

Geographically, the company maintained a strong presence in Japan while expanding its footprint in North America and Europe. The consolidation of Square Enix of America Holdings, Inc. and the transition to self-publishing in Europe were key operational developments during this period. As of December 31, 2006, the company held ¥87,546 million in cash and cash equivalents. Looking ahead, management projects continued favorable performance across most segments, with full-year forecasts for net sales and recurring income trending upward despite ongoing restructuring costs within the amusement division.