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Realizing Underlying Strengths, Creating Innovative Products Tirelessly SHIGERU AOKI President, Representative Director, and Chief Operating Officer, Sammy Corporation

Remain the Earnings Mainstay

Fiscal 2014 calls for a serious rethink because, for the second consecutive fiscal year, we missed our initial targets. Sammy Corporation is the core operating company of the Pachislot and Pachinko Machine Business segment and must remain the SEGA SAMMY Group's earnings mainstay. To meet the expectations of shareholders and other investors, we will spare no effort to overcome problems and grow earnings.

Our paramount task is to continue supplying competitive products. A declining pachinko and pachislot machine player population is affecting the business management of pachinko hall operators and encouraging them to curb capital investment. Because they are focusing investment selectively on machines that generate reliable returns, the contrast between winners and losers among pachinko and pachislot machine manufacturers is becoming increasingly stark. To ensure our place among the winners, we need to continue marketing titles that promise high utilization rates. Our developmental vision is "Sammy…the wellspring of new ideas." By continuing to bring products to market that embody this vision, we will achieve differentiation. Also, aiming to develop such new user groups as young adults, we will roll out mold-breaking pachislot and pachinko machines.

Another important task is implementing reforms to avoid new machine launches concentrating in the second half of fiscal years—the main reason we did not reach targets. In conjunction with efforts to diversify our product portfolio, we have already begun reworking product launch schedules to better balance them between fiscal years' first and second half.

Grow Earnings and Improve Cost Structure

We will pursue the perennial task of cost reduction based on three strategies. First, we will diversify products by developing and manufacturing low-cost casual-play machines while developing progressive machines. This will not only lower the product lineup's overall development and manufacturing costs but also develop new user groups. Our second strategy will promote component reuse. We plan to extend reuse efforts from LCD panels and ROMs to encompass a wider range of components. Moreover, to increase our ability to incorporate reuse into plans, we intend to design product cycles from development and manufacturing through to sales. We expect lateral projects spanning divisions will enable these initiatives to bear fruit comparatively quickly. The third strategy entails sharing components across multiple brands. In addition to such immediate benefi ts as reducing procurement costs through joint purchasing, in the medium term this strategy promises to allow larger cost improvements through component reuse among different brands.

Amid continuing tough market conditions, personnel will be the source of competitiveness and the driver of stable earnings growth. Accordingly, we will advance reforms so that personnel from developmental, manufacturing, and sale divisions can cross organizational barriers and make concerted efforts to prevail in challenging competitive conditions. Sammy will continue marshaling organizational strengths to offer wellhoned products that energize not only the Pachislot and Pachinko Machine Business segment but the pachinko and pachislot machine market as a whole.



HAJIME SATOMI President and Chief Executive Officer SEGA SAMMY HOLDINGS INC.

NAOYA TSURUMI Chief Operating Officer and Senior Executive Vice President SEGA SAMMY HOLDINGS INC.

HIDEKI OKAMURA President, Representative Director, and Chief Operating Officer, SEGA CORPORATION

SHIGERU AOKI President, Representative Director, and Chief Operating Officer, Sammy Corporation


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