Square Enix Consolidated Financial Report: Three Months Period Ended June 30, 2006

The consolidated financial report for Square Enix for the three-month period ending June 30, 2006, details a significant expansion in financial performance compared to the same period in the previous fiscal year. Net sales reached 37,196 million yen, representing a 229.8% increase, while operating income rose by 629.9% to 2,717 million yen. Net income saw a substantial surge of 1,573.1%, totaling 888 million yen. These results were heavily influenced by the company’s title release schedule and the integration of the Taito Group into the consolidated scope.

Performance across business segments was mixed. The Games (Offline) segment rebounded from an operating loss in the previous year to an operating income of 363 million yen, driven by releases such as Dragon Quest: Young Yangus' Mysterious Dungeon and Valkyrie Profile 2: Silmeria. The Games (Online) segment continued to perform strongly, with net sales of 4,751 million yen and an operating income of 2,003 million yen, bolstered by the expansion of Final Fantasy XI. Conversely, the newly consolidated Amusement segment reported an operating loss of 663 million yen, as the business struggled to offset poor performance in home game software and commercial karaoke machine sales.

Geographically, the company’s operations remained concentrated in Japan, which accounted for the majority of net sales. The report maintains a neutral outlook, noting that there were no revisions to the previously announced forecasts for the 2006 fiscal year. The financial position remains stable, with cash and cash equivalents totaling 76,841 million yen at the end of the quarter, supported by positive cash flows from operating activities.