Advancing Structural Reform Aimed at Achieving an Operating Margin of 30%

The pachinko and pachislot machine industry underwent major changes in 2015. The firstever simultaneously enforced self-regulatory measures for pachinko and pachislot machines, a problem related to pins, and a new distribution system were among the many issues we faced. To overcome these issues and open up a new future for the industry, Sammy Corporation needs to reestablish a shared sense of crisis and a common purpose. With this in mind, I introduced the mission pyramid concept after assuming control of Sammy's business management in April 2016. In descending order, the layers of this pyramid are mission, vision, goal, strategy, organization, and tactics. While maintaining our founding principle, "Always Proactive, Always Pioneering," as an unchanging value, I established continuing to create moving experiences as our mission. This mission reflects my belief that the essence of entertainment lies in surpassing customers' expectations. I believe that "moving experiences" arise from the disparity between expectations and actual experiences. In addition, I clarified our vision, or target profile, which is for Sammy to be "the wellspring of new ideas as an innovator in the industry." Also, we set achieving an operating margin of 30% by fiscal 2020 as a goal, which we refer to as G30 (Goal 30%). To reach this goal, we established an overriding strategy, and we outlined the type of organization needed to implement the strategy. For the base of the pyramid, we prepared specific tactics in each area. Based on the companywide mission pyramid, each division prepared a mission pyramid. By inculcating the mission pyramids in departments, groups, and individuals, we will enable individual employees to take the initiative in the organizations or roles for which they are responsible. The accumulation of such efforts will lead to the achievement of the companywide mission. Thus, the mission pyramid provides a clear, effective structure for implementation. We will implement and embed measures steadily and undertake structural reform with a view to achieving an operating margin of 30%.

Leading the Industry's Revitalization

I want to see a shared sense of crisis not only among our employees but also in the entire industry. Accordingly, Sammy will lead the pachinko and pachislot machine industry in a concerted effort to expand customer groups and revitalize the industry. As part of this effort, we are developing unprecedented new partnerships. For example, in March 2016 we established a joint venture, ZEEG Co. Ltd., with Universal Entertainment Corporation, with which we previously had a solely competitive relationship. ZEEG's establishment reflects a strong desire to revitalize the industry as a whole on the part of both companies' senior management teams as well as the coalescence of a shared sense of crisis in the industry. Moreover, this joint effort shows that, rather than struggling against each other in the industry, we should be exploring the meaning and hidden potential of the joint initiative and seeking breakthrough solutions to the industry's crisis. Never postponing our responses to problems, we will take all measures promptly to bring to market "moving experiences" and realize self-reform steadily.