Major Questions Concerning Actual Results for Year Ended March 2012 and Forecast for Year Ending March 2013

Key insights

6 takeaways

01
SEGA SAMMY HOLDINGS faced significant challenges in fiscal year 2012, primarily due to weak overseas packaged game software sales, resulting in 4.9 billion yen in impairment losses and 6.3 billion yen in restructuring costs for U.S. and European operations.See it on page 1
02
For fiscal year 2013, SEGA SAMMY HOLDINGS forecasts a return to profitability in its Consumer Business by shifting focus to digital content and network-based gaming, supported by the establishment of SEGA Networks.See it on page 5
03
The Pachislot and Pachinko Machines Business remained a strong performer for SEGA SAMMY HOLDINGS in fiscal year 2012, maintaining high margins and contributing positively to overall results.See it on page 4
04
SEGA SAMMY HOLDINGS is expanding into resort and casino operations through a joint venture with the Paradise Group, indicating a diversification strategy beyond traditional gaming segments.See it on page 4
05
Amusement Center Operations remained stable in fiscal year 2012 due to improved management, while Amusement Machine Sales are expected to temporarily decline in fiscal year 2013 due to product development cycles.See it on page 4
06
Capital expenditures in fiscal year 2012 were significantly impacted by the construction of a new plant and distribution center for Sammy Corporation.See it on page 2

Summary

This document outlines the fiscal performance of SEGA SAMMY HOLDINGS for the year ended March 2012 and provides strategic forecasts for the year ending March 2013. The primary objective is to address investor concerns regarding declining sales and income, specifically within the Consumer Business segment, while detailing the structural reforms initiated to restore profitability. The analysis covers the company’s diverse operations, including pachislot and pachinko machines, amusement center operations, amusement machine sales, and home video game software.

The fiscal year 2012 results were negatively impacted by weak performance in the overseas packaged game software market, leading to significant impairment losses on work-in-process assets totaling approximately 4.9 billion yen. Additionally, the company incurred 6.3 billion yen in restructuring costs to streamline U.S. and European operations. Conversely, the Pachislot and Pachinko Machines Business maintained strong margins, and the Amusement Center Operations segment remained stable through improved management of existing locations. Capital expenditures were notably influenced by the construction of a new plant and distribution center for the Sammy Corporation.

Looking toward the 2013 fiscal year, the company projects a return to profitability in the Consumer Business by shifting focus toward digital content and network-based gaming. Strategic initiatives include the establishment of SEGA Networks to accelerate decision-making and the expansion into resort and casino operations through a joint venture with the Paradise Group. While the Amusement Machine Sales segment anticipates a temporary decline due to product development cycles, the company expects overall growth driven by increased unit sales in the pachislot and pachinko sector and the successful implementation of organizational reforms across its global digital and packaged software divisions.