Fields Corporation (2767)

Transcription

SR Research Report
2014/11/19
Shared Research Inc. has produced this report by request from the company discussed in the
report. The aim is to provide an “owner’s manual” to investors. We at Shared Research Inc. make
every effort to provide an accurate, objective, and neutral analysis. In order to highlight any biases,
we clearly attribute our data and findings. We will always present opinions from company
management as such. Our views are ours where stated. We do not try to convince or influence,
only inform. We appreciate your suggestions and feedback. Write to us at
[email protected] or find us on Bloomberg.
SR Research Report
2014/11/19
Contents
Recent updates .......................................................................................................4
Highlights ............................................................................................................4
Trends and outlook ...............................................................................................5
Business ............................................................................................................... 12
Summary .......................................................................................................... 12
Business description ........................................................................................... 12
Market and value chain ....................................................................................... 21
Strategy ............................................................................................................ 24
Historical financial statements ................................................................................. 25
Summary .......................................................................................................... 25
Income statement .............................................................................................. 36
Balance sheet .................................................................................................... 37
Cash flow statement ........................................................................................... 38
Other information .................................................................................................. 39
History .............................................................................................................. 39
News and topics................................................................................................. 40
Top management ............................................................................................... 51
Employees ......................................................................................................... 51
Major shareholders ............................................................................................. 51
Shareholder returns ............................................................................................ 52
Investor relations ............................................................................................... 52
By the way ........................................................................................................... 52
Company profile ................................................................................................. 53
http://www.sharedresearch.jp/
Copyright (C) 2013 Shared Research Inc. All Rights Reserved
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Income Statement
(JPYmn)
FY03/10
FY03/11 FY03/12 FY03/13 FY03/14 FY03/15
Cons.
Cons.
Cons.
Cons.
Cons.
Est.
66,342
103,593
92,195
108,141
114,904
100,000
-9.2%
56.1%
-11.0%
17.3%
6.3%
-13.0%
Gross Profit
26,889
35,129
31,330
33,279
33,812
GPM
40.5%
33.9%
34.0%
30.8%
29.4%
Sales
YoY
SG&A
18,764
21,993
22,803
22,964
24,020
Operating Profit
8,124
13,136
8,527
10,314
9,791
5,000
YoY
314.5%
61.7%
-35.1%
21.0%
-5.1%
-48.9%
OPM
12.2%
12.7%
9.2%
9.5%
8.5%
5.0%
Recurring Profit
7,761
13,684
8,661
10,268
9,765
5,000
YoY
682.9%
682.9%
682.9%
682.9%
-4.9%
-48.8%
RPM
11.7%
13.2%
9.4%
9.5%
8.5%
5.0%
3,289
7,520
5,991
4,720
5,370
2,500
-
128.6%
-20.3%
-21.2%
13.8%
-53.4%
Net Income
YoY
Per Share Data (JPY, Thousand Shares, After Stock Split Adjustments)
Number of Shares FY End
EPS
Book Value Per Share
Dividend Per Share
347
94.8
45.0
1,236.5
347
216.7
50.0
1,408.5
347
172.7
50.0
1,539.0
34,700
142.3
50.0
1,644.2
34,700
161.8
50.0
1,756.3
Cash & Securities　15,916
15,873
18,344
23,314
29,583
Accounts Receivable
33,088
27,948
34,402
42,017
29,155
1,519
1,357
3,134
2,343
3,133
Total Current Assets
56,694
51,051
62,811
72,709
66,921
Total Assets
81,329
78,971
93,601
106,628
104,869
26,610
17,939
29,100
36,604
33,105
2,230
1,834
1,507
1,052
742
Total Liabilities
40,141
31,949
42,046
51,529
46,116
Shareholders' Equity
41,741
47,601
51,895
54,957
58,670
Net Debt
-13,686
-14,039
-16,837
-22,262
-28,841
7,997
11,366
8,436
7,756
-817
75.3
50.0
Balance Sheet (JPYmn)
Inventory
Accounts Payable
Interest-Bearing Debt
Working Capital
Cash Flow Statement (JPYmn)
Operating Cash Flow
8,429
8,005
10,015
13,570
16,322
Investment Cash Flow
-1,011
-4,356
-4,798
-6,263
-8,018
Financial Cash Flow
-2,687
-3,915
-2,565
-2,277
-2,018
Financial Ratios
ROA
4.9%
9.4%
6.9%
4.7%
5.1%
ROE
8.2%
17.1%
12.2%
8.9%
9.5%
51.3%
60.3%
55.4%
51.5%
55.9%
Equity Ratio
Source: Company data
Figures may differ from company materials due to differences in rounding methods.
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Recent updates
Highlights
On November 19, 2014, Shared Research updated the report after interviewing management; see the
results section for details.
On October 31, 2014, Fields Corporation announced earnings results for 1H FY03/15; see the results
section for details.
On the same day, the company announced the domestic nationwide launch of pachislot machine
Salaryman Kintaro: Shusse Kaidou-hen, manufactured by Rodeo Corporation. The new machine will be
installed in pachinko halls beginning in January 2015.
On October 15, 2014, the company announced the nationwide release of a new pachinko machine from
Bisty Co., CR Evangelion 9.. It is expected to be available at pachinko halls from December 2014.
On August 29, 2014, Shared Research updated comments on the company’s earnings results for Q1
FY03/15 after interviewing management; see the results section for details.
On August 8, 2014, the company announced the nationwide release of a new pachinko machine from
Bisty Co., CR ayumi hamasaki 2. It is expected to be available at pachinko halls from October 2014.
For corporate releases and developments more than three months old, please refer to the
News and topics section.
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Trends and outlook
Quarterly trends and results
Quarterly Performance
(JPYmn)
Sales
YoY
GP
YoY
GPM
SG&A
YoY
SG&A / Sales
OP
YoY
OPM
RP
YoY
RPM
NI
YoY
NPM
Q1
5,748
-72.8%
2,027
-63.6%
35.3%
5,856
10.9%
101.9%
-3,829
-3,759
-2,290
-
FY03/14
Q2
Q3
30,637
17,819
284.3%
-4.3%
11,621
5,709
256.7%
-8.5%
37.9%
32.0%
5,615
5,849
3.9%
5.7%
18.3%
32.8%
6,005
-140
19.6%
5,903
-78
19.3%
3,724
-207
12.2%
-
Q4
60,700
0.5%
14,455
-20.6%
23.8%
6,700
-0.7%
11.0%
7,755
-32.4%
12.8%
7,699
-31.5%
12.7%
4,143
-23.2%
6.8%
Q1
7,459
29.8%
2,790
37.6%
37.4%
5,300
-9.5%
71.1%
-2,509
-2,254
-1,502
-
FY03/15
Q2
12,882
-58.0%
4,130
-64.5%
32.1%
5,698
1.5%
44.2%
-1,568
-1,818
-1,007
-
Q3
Q4
FY03/15
% of FY
FY Est.
20.3%
100,000
-13.0%
-
-
-
5,000
-48.9%
5.0%
5,000
-48.8%
5.0%
2,500
-53.4%
2.5%
Figures may differ from company materials due to differences in rounding methods
1H FY03/15 results (out October 31, 2014; see the table above)
Sales:
Operating loss:
Recurring loss:
Net loss:
JPY20.3bn (-44.1% YoY)
JPY4.1bn (operating profit of JPY2.2bn in 1H FY03/14)
JPY4.1bn (recurring profit of JPY2.1bn in 1H FY03/14)
JPY2.5bn (net profit of JPY1.4bn in 1H FY03/14)
Fields sold fewer pachinko and pachislot machines year-on-year: in 1H FY03/15, it booked sales of 73,910
pachinko machines (-36,366 YoY) and 28,209 pachislot machines (-33,420). This was due in part to the
company offering fewer titles compared to the previous year. Only one pachinko machine title was sold
during 1H FY03/15, compared to the previous year, when the company introduced three titles (including
the introduction of Evangelion 8, manufactured by Bisty Co.). Similarly, the company sold one pachislot
title (Pachislot Sengoku BASARA 3, manufactured by Enterrise Co.) in 1H—compared to the two types sold
the previous year—because sales of the Salaryman Kintaro: Shusse Kaido-hen machine type were
rescheduled from 1H to 2H FY03/15.
Sales by product in pachinko machines included about 29,000 units sold of Pachinko Onimusha: Dawn of
Dreams (manufactured by OK Co., Ltd. and on sale since Q4 FY03/14) and 20,000 units sold of CR
Evangelion 8 Extreme Battle (manufactured by Bisty Co. and on sale since July 2014). Pachinko machines
are sold through a reselling system, and sales are booked in the month following sales of the machinery,
after sales commissions are received from the manufacturers (see Business).
In pachislot machines, Pachislot Sengoku BASARA 3 (manufactured by Enterrise Co. and on sale since
August 2014) sold about 19,000 units.
The total number of units sold in the pachinko industry between the months of April and September 2014
was 1.1mn units (-2.4% YoY), and the number of pachislot units sold was 0.6mn units (-4.6%), for a total
of 1.8mn units (-3.2%) of amusement devices sold (source: company data). According to the company,
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growth in the amusement device market is flat year-on-year.
Although sales and profits are down year-on-year for amusement devices, progress toward targets is
steady in interactive media (such as social games) and consumer products. Changes in operating profit
were influenced by the factors below:

Sales and profits were down in amusement machines due to lower sales volume. The company
focused on product R&D in cooperation with subsidiaries to secure a solid future product lineup.

In consumer products, Fields established a stable revenue structure at Tsuburaya Productions, which
manages the Ultraman IP. Results were in line with the previous year, which marked the 50th
anniversary of the Ultraman franchise.

In interactive media, existing social games produced robust results, matching performance set during
1H FY03/14. The company released an app using original IP Kotokoto—Rasetsu to Kotodama no Kuni
in September 2014. The game outperformed expectations; it hit the ground running with over
500,000 downloads within the first three weeks of its release. On an operational level, Fields is
working to concentrate resources on profitable titles while discontinuing titles that are not producing
desired results in an effort to achieve higher profitability.

The company continued to devote significant resources to comic, animation, and movie/television
productions featuring characters and stories based on its IP portfolio, which is currently a driver for
growth. Five of the comic series from the Hero’s Monthly comic magazine are being prepared for
theaters and television beginning in FY03/16. Besides creating the script for the SOUL ReVIVER
television series for Hollywood (US) in July 2014, the company also began developing a cartoon based
on the comic, “Sword Guy Katana.” The company is also developing many multi-media IPs based on
television series and novels other than those from Hero’s Monthly. For example, “Appleseed Alpha,” a
cartoon created with a US partner firm, continued to run in North America, and a premium screening
took place at the Tokyo International film festival in October, 2014. It will be available in domestic
theaters in January 2015.
Q1 FY03/15 results (out July 31, 2014; see the table above)
Sales:
Operating loss:
Recurring loss:
Net loss:
JPY7.5bn (+29.8% YoY)
JPY2.5bn (operating loss of JPY3.8bn in Q1 FY03/14)
JPY2.3bn (recurring loss of JPY3.8bn in Q1 FY03/14)
JPY1.5bn (net loss of JPY2.3bn in Q1 FY03/14).
Fields booked sales of new pachinko machine Pachinko Onimusha: Dawn of Dreams, launched in Q4
FY03/14 (pachinko machines are sold through resellers; the company books sales the month after the
machine is sold, when it receives commissions from machine manufacturers [see the Business section for
details]). There were no new pachislot launches, and instead sales were centered on machines that were
part of a series, such as CR TEKKEN LIGHT VERSION and Pachinko Onimusha: Dawn of Dreams Light
Version. Total machines sold were 44,197 (+25,695 YoY), broken down as follows:
 Pachinko: approximately 38,540 units (+25,698)
 Pachislot: approximately 5,657 units (-3).
Pachinko Onimusha: Dawn of Dreams also contributed to total machines sold, with sales of about 29,000
units (bringing the cumulative figure up to 33,000).
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Total pachinko and pachislot machines sold across the market between April and June 2014 were about
827,000 units (-3.8% YoY), broken down as follows (source: company data):
 Pachinko: 511,000 units (+0.2%)
 Pachislot: 316,000 units (-9.7%).
According to the company, the pachislot and pachinko machine market was mostly flat year-on-year.
Fields is aiming for sustainable long term growth by focusing on intellectual property (IP), including
characters. This means maximizing the value of IP that it has acquired or created. The company is taking
full advantage of its expertise in IP development and its creative and business networks to cultivate IP
and create a profitable business around its partnerships.
The company is accelerating its plans to use IP in animated cartoons and movies, as part of its cross
media development. For example, it is working toward animated cartoons and movies for five brands
created in the comic Hero’s Monthly, including Ultraman. The SOUL ReVIVER series created by Tooru
Fujisawa—known for his work on the GTO comic—and Manabu Akishige looks likely to expand overseas,
with a script being developed together with the US movie production company Bedford Falls Productions.
In terms of television and movies, the company continued broadcasting the new television series of
Ultraman, which began in FY03/14, and launched the Ultraman Ginga S series in July 2014. The company
also developed across different media with various IP owned by Tsuburaya Productions.
Merchandizing generates earnings from IP. The company aims to improve earnings from social games by
cutting the number of titles. In May 2014, the company released AKB48 Music Game. The game got off to
a good start, with one million downloads in two months. The company aims to generate earnings from a
variety of merchandize as soon as possible; it acquired the merchandizing rights to Uglydoll—a popular
character in the US—and developed a range of products together with top-tier companies. In July 2014,
the company launched Pachislot Sengoku BASARA 3, which sold well and contributed to sales of pachinko
and pachislot machines. The company aims to continue releasing products based around its IP.
For details on previous quarterly and annual results, please refer to the Historical financial
statements section.
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FY03/15 outlook
FY03/15 Company Estimates
(JPYmn)
Sales
YoY
CoGS
Gross Profit
YoY
GPM
SG&A
SG&A/Sales
Operating Profit
YoY
OPM
Recurring Profit
YoY
RPM
Net Income
YoY
FY03/14
2H Act.
78,519
-0.6%
58,355
20,164
-17.5%
25.7%
12,549
16.0%
7,615
-37.4%
9.7%
7,621
-36.5%
9.7%
3,936
-30.9%
1H Act.
36,385
25.0%
22,737
13,648
54.7%
37.5%
11,471
31.5%
2,176
6.0%
2,144
5.9%
1,434
-
FY Act.
114,904
6.3%
81,092
33,812
1.6%
29.4%
24,020
20.9%
9,791
-5.1%
8.5%
9,765
-4.9%
8.5%
5,370
13.8%
1H Act.
20,341
FY03/15
2H Est.
79,659
FY Est.
100,000
-44.1%
1.5%
-13.0%
13,420
6,920
-49.3%
34.0%
10,998
54.1%
-4,077
9,077
5,000
-
19.2%
-48.9%
-
11.4%
5.0%
-4,072
9,072
5,000
-
19.0%
11.4%
-48.8%
5.0%
-2,509
5,009
2,500
-
27.3%
-53.4%
Fields projects a fall in sales and profits caused mainly by declining unit sales of pachinko/pachislot
machines.
The company plans to sell three types of pachinko machines and eight types of pachislot machines, for a
total of 11 types (five pachinko machines, eight pachislot machines, total of 13 types in FY03/14). By
manufacturer, Fields plans to sell two pachinko machines manufactured by Bisty, one machine
manufactured by OK, and one or two machines manufactured by Rodeo Corp., for which the company is
negotiating an end to its partnership. In May 2014, the company arranged partnerships with D-light Co.,
Ltd. and NANASHOW Corp. It will sell one machine from each of these companies.
The company released one pachinko machine and one pachislot machine during 1H, but there are plans
for the launch of multiple major titles during 2H, which are outlined below.
 Pachinko: CR Evangelion 9 (manufactured by Bisty; 16 previous Evangelion titles across both pachinko
and pachislot; over 1.9mn cumulative units sold)
 Pachislot: Salaryman Kintaro: Shusse Kaido-hen (manufactured by Rodeo; 10 previous titles in the
Hiroshi Motomiya series across both pachinko and pachislot; 450,000 cumulative units sold).
Changes to testing procedures
For amusement devices that are submitted to testing on September 16, 2014 or later, the Security
Communications Association has announced that it will utilize modified testing procedures. To meet these
new standards, the Nichidenkyo (a pachislot industry trade organization) announced updated industry
best practices that will apply from August 2014 onward.
New regulations require that the minimum payout ratio (55%) be maintained for sessions of long play
(17,500 games or longer), including situations in which the lowest reel stop order is used (stopping the
reels in the order of left, center, right). As of November 2014, popular AT and ART machines are designed
to yield a lower payout ratio, depending upon the order in which the reels are stopped. As a result, it is
possible that the payout ratio will be lower than the required minimum, in cases where the least favorable
order is used by the player.
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Effect of new regulations on FY03/15 earnings results
Results of new testing procedures for the months since its implementation are as follows:
 July (announced August 2014): 21 passed out of 49 applications
 August (announced September 2014): 3 passed out of 46 applications
 September (announced October 2014): 10 passed out of 32 applications
Source: Security Communications Association
To pass the new tests, it will be necessary for Fields to modify the specifications of its machines. As of the
earnings announcement for 1H FY03/15, the company announced that two machines had received
approval, one machine was undergoing testing, two machines were slated to begin tests, and about two
more machines were planned to be tested before end FY03/15.
Effect on the medium term
According to the company, the new regulations will gradually reduce the speculative nature of the
machines. As a result, it will become increasingly difficult for competing companies to differentiate
machines based upon payout structures, and there will be an increasing reliance on presentation and use
of IP. Fields has maintained a focus on IP and presentation elements in the past, and it maintains that this
will create favorable conditions for its machines to succeed in the marketplace.
The company has not released targets for total unit sales of pachinko/pachislot machines. However, SR
thinks the company is projecting sales in the region of 330,000 units (393,000 units in FY03/14), based on
the company’s aim of an average of 30,000 units per type.
The company began to report sales of Pachinko Onimusha: Dawn of Dreams in Q1 FY03/15. This machine
is manufactured by OK Co., Ltd. and was released in March 2014.
Fields projects a higher gross profit margin, as agency sales of pachinko machines account for an
increased share of total sales. However, the company forecasts a YoY fall in gross profit due to a decline in
sales.
The company plans to focus on its sales organization between FY03/15 and FY03/16, including growing
branch offices from 26 to 37, and sales staff from 300 to 400. It appears the company is projecting an
increase in SG&A expenses in line with these increases in personnel and offices.
The company forecasts a full-year dividend per share of JPY50 in FY03/15, for a payout ratio of 66%.
Long-term outlook
Fields aims to maximize the value of its intellectual property via a “growth-oriented business model”
(benefiting from seamless synergy between comics, animation, movie/TV, and merchandizing segments).
Over the medium term, the company will focus on stable profit growth in pachinko and pachislot
machines, and cultivating in-house and acquired content.
When considering Field’s growth strategy and vision for its future across different types of content,
Shared Research will be paying close attention to whether the company can make its new business model
a reality. In particular, Shared Research will focus on whether the company can maximize the value of
intellectual property created in-house and start a virtuous cycle across business operations. In our view,
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pachinko/pachislot machines will continue to be the main driver of profits, and we expect the expanded
range of these products for FY03/17 will significantly contribute to medium term earnings. Shared
Research also thinks growth at Tsuburaya Productions will contribute to consolidated earnings.
Expanding the pachinko/pachislot product range
Since 2001—when Fields made an exclusive third-party sales agreement with Rodeo Corp. for pachislot
machines—the company has gradually increased the number of partner firms. In FY03/14, Fields retailed
13 different types of pachinko/pachislot machines.
In FY03/15, the number of different machines will temporarily fall to 11, as the company moves to end its
agreement with Rodeo Corp. However, the company plans to sell 20 types by FY03/16, and 25 by FY03/17.
New regulations for pachislot machine testing that were introduced in September 2014 are not expected
to have a significant effect on the company’s medium term plans.
Types of pachinko/pachislot machine sold per manufacturer
Manufacturer
Type
Rodeo
Pachislot
3
3
2
2
Bisty
Pachinko
2
2
1
Pachislot
2
2
Pachinko
-
-
OK
FY03/11
FY03/12
FY03/13
FY03/14
FY03/15
FY03/16
FY03/17
Target
Target
Target
1
1
-
3
2
2
2
3
3
1
2
2
1
2
-
-
2
Pachislot
-
-
-
-
1
2
2
Enterrise
Pachislot
1
1
1
2
3
3
4
Mizuho
Pachinko
-
-
-
-
-
2
2
Pachislot
-
-
-
1
1
2
3
Pachinko
-
-
-
-
-
2
2
Pachislot
-
-
-
-
1
2
2
Pachinko
-
-
-
-
-
1
1
Pachislot
-
-
-
-
1
1
3
Total (pachinko)
2
2
2
5
3
9
9
Total (pachislot)
6
6
6
8
8
11
16
Total
8
8
8
13
11
20
25
D-light
NANASHOW
From FY03/17, Fields will no longer sell pachinko/pachislot machines manufactured by Rodeo Corp., with
whom the company is moving to end its partnership. However, the company plans to increase the range
of machines from other partner firms. Also, in May 2014 the company agreed on partnerships with D-light
Co., Ltd. and NANASHOW Corporation, both of whose machines will be added. According to the company,
the increase in product range also encompasses intellectual property rights to Hero’s Monthly and new
content rights. In Shared Research’s assessment, the company is likely aiming for annual sales of around
750,000 units in FY03/17, based on the company’s aim of average sales of about 30,000 units per
machine (393,000 units sold in FY03/14).
Fields also plans focus on its organization, growing branch offices from 26 to 37, and sales staff from 300
to 400 over FY03/15 and FY03/16. The company aims to decrease the number of pachinko halls assigned
to each salesperson and travel time to halls, thus boosting sales support for partner manufacturers.
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Growth at Tsuburaya Productions
Tsuburaya Productions owns the influential Ultraman series, and produces movies and TV programs in
addition to conducting licensing operations.
Profits fell and the financial situation worsened at Tsuburaya Productions from the late 1990s onward, as
the cost of producing new content rose, leading Tsuburaya Productions to restructure its finances in the
early 2000s. Fields acquired a 51.0% stake in Tsuburaya Productions in April 2010, making it a
consolidated subsidiary.
Tsuburaya Productions’ earnings began to recover in FY03/13. It achieved growth in both sales and profits
in FY03/14, partly due to special events to commemorate 50 years since founding (sales: JPY3.3bn
[+11.2% YoY], JPY670mn [+71.8%]).
According to the company, heading toward FY03/17, Tsuburaya Productions will focus on domestic
marketing and overseas expansion. The company is targeting operating profit of JPY2.0bn at Tsuburaya
Productions by FY03/17.
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Business
Summary
The company has two main businesses: the planning, development, and distribution of
pachinko/pachislot machines; and the planning, development, and distribution of intellectual property
(IP).
Up until FY03/12, the company had four reportable segments: Pachinko/Pachislot (PS) Field, Mobile Field,
Sports Entertainment Field, and Other Field. However, the company has announced its decision to shift
away from its traditional business model focusing on the PS Field and move into a new model
underpinned by IP. In line with that decision, the company aims to grow further by rebuilding strategies
based on the “growth-oriented business model” (seamlessly synergistic business development involving
Comics, Animation, Movie/TV, and Merchandising). Accordingly, in FY03/13, the company consolidated
the previous four segments to form a single segment centered on IP.
Business description
Comics
Comics are the source of the company’s IP. Through the Comics business, the company creates and
acquires original work, stories, and characters.
HERO’S Inc., a joint venture with Shogakukan Creative Inc., publishes the comic Heroes Monthly.
First launched on November 1, 2011, the company distributes Heros Monthly through pachinko halls and
convenience stores run by Seven-Eleven Japan Co., Ltd., a subsidiary of Seven & i Holdings Co., Ltd.
(TSE1: 3382).
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Animation
In this business, the company makes animation films based on popular works in comics and other media.
One example is the BERSERK animation film series based on the popular BERSERK manga series. Fields
subsidiary Lucent Pictures Entertainment, Inc. produces the film series by employing the latest animation
technologies. Set in a medieval Europe-inspired fantasy world, the story centers on an orphaned
mercenary who handles a huge sword and travels to get his revenge. A comic magazine serialized the
manga in 1989, and a total of over 35mn copies of the manga series have been sold worldwide as of 2013.
The company intends to diversify BERSERK-related IP use, such as for social games, pachinko/pachislot
machines, and licensed goods, and thereby maximize the IP value.
Movie/TV
Through movies and TV series, the company increases the market recognition for related works and
maximizes their values. For example, movie production subsidiary Tsuburaya Productions Co., Ltd.
produces movies and TV programs for the Ultraman series while spreading the use of Ultraman characters
in many forms of media. The company aims to grow Ultraman a global-scale character, and to this end it
plans to cooperate with powerful business partners.
Merchandising
In the Merchandising business, the company generates earnings from multimedia IP commercialization.
Larger fan base means greater IP values. By channeling such IP values into interactive media, consumer
products, and pachinko/pachislot machines, the company aims for a positive cycle of fan base and
earnings growth. Interactive media here refers to games, social networking services, etc.
Interactive Media
The company promotes such pachinko/pachislot-related contents as “NanaPachi” (online
pachinko/pachislot games) and “Fields Mobile” (website for feature phones). Also, the company grants
the use of its non-pachinko/pachislot-related contents (i.e., IP) in social games while offering “Shameji”
(photo application for mobile phones) and other communication services. In December 2010, the
company established IP Bros. Inc. jointly with NHN Japan Corporation (operator of online game portal
Hangame). IP Bros. helps the company provide its and partners’ IP for a variety of gaming platforms.
Consumer Products
The company plans, develops, and sells IP-based goods through its own store network while promoting
IP merchandising on pachinko/pachislot machines. Subsidiary Total Workout Premium Management Inc.
runs a fitness club business, provides media-related management services to professional athletes, and
offers special fitness support services for particularly health-conscious members.
Planning, Development, and Distribution of Pachinko/Pachislot Machines
This is the stable cash-flow source in the company’s Merchandising business.
As a fabless entity, the company creates contents or acquires merchandising rights to promising contents
in Japan and overseas. It then adds value through product planning, outsources development and
manufacture to partners, and sells finished pachinko/pachislot machines as the sales agent or distributor.
Although it does sell machines made by non-partners, most machines are made by partners.
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Fields’ added value comes from its ability to obtain and combine proprietary content to plan and develop
pachinko/pachislot machines. Because the company is the largest independent distributor with a national
sales network, its customers enjoy the benefit of purchasing titles from several different manufacturers
through a single sales contact. Its sales force has compiled a database about market trends and best
practices. The company shares this accumulated knowledge with pachinko halls, fostering customer
loyalty. Pachinko/pachislot machines require roughly two to three years from content search, study, and
acquisition to finished product delivery.
Manufacturing, development, and distribution flow
The company sells pachinko/pachislot machines in two ways. In distribution sales, the company sells
directly to pachinko halls via its regional and branch offices. It uses this sales method for most of the
pachislot machines and some of pachinko machines it sells. In the agency sales method used for pachinko
machines, the company serves as sales broker.
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Sales and profit reporting
In distribution sales the company purchases machines from machine makers and sells them to pachinko
halls. In agency sales, acting as a sales broker for machine makers, the company creates transaction
agreements between machine makers and pachinko halls, collects payments from pachinko halls,
prepares for pachinko hall openings, and provides after-sales services. By doing so, the company receives
commissions from machine makers. Sales are booked differently in the two methods. This means that the
company’s sales are a function of the composition of distribution and agency sales.


Distribution sales: Machine sales to pachinko halls are booked as sales in the month of sales.
Payments for machines purchased are booked as CoGS.
Agency sales: Commissions received from machine makers upon machine sales are booked as sales
in the following month of sales.
As of March 31, 2014, the company had more than 300 sales staff at seven regional offices and 26 branch
offices nationwide. The company’s salespeople cover approximately 40 accounts each. Salespeople
employ a “consulting sales” approach where they contribute to efficient pachinko hall management. The
company has machine showrooms in all of its branch offices. Fields utilizes two distribution channels. The
first is a direct channel (selling directly to hall operators); around 70% of machines are sold using the
direct channel. The second is sales through resellers; this channel is lower margin than the direct channel,
but sometimes makes economic sense due to the small size or geographic location of end customers.
The company has been expanding its distribution channels since FY03/13. In FY03/16, Fields aims to
establish seven regional and 37 branch offices nationwide while expanding its sales team (400 staff in
total). The number of pachinko and pachislot halls under a salesperson’s coverage will be reduced, and
access time to such hall operators shortened. The company aims to strengthen its sale support to
affiliated pachinko and pachislot machine manufacturers. Machine volumes are the main swing-factor for
earnings (see chart below).
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Operating profit versus machines sold
(JPYmn)
14,000
('000)
700
12,000
600
10,000
500
8,000
400
6,000
300
4,000
200
2,000
100
0
0
FY03/06
FY03/07
FY03/08
Operating profit
FY03/09
FY03/10
Pachislot: machines sold (right axis)
FY03/11
FY03/12
FY03/13
FY03/14
Pachinko: machines sold (right axis)
Strategic partnerships
The company partners with key machine manufacturers to jointly promote wide-ranging machine brands.
For these manufacturers, the company acts as the sole distribution agent.







Rodeo Corp.: Subsidiary of Sammy Inc. under Sega Sammy Holdings Inc. (TSE1: 6460),
equity-method affiliate of Fields (Sammy: 65.0%; Fields: 35.0%). Pachislot focus. Following its
exclusive third-party sales agreement for pachislot machines in 2001, the company bought a stake in
Rodeo Corp. in 2002. Owns hit titles such as SALARYMAN KINTARO and Onimusha: Dawn of Dreams.
Bisty Co., Ltd.: Subsidiary of SANKYO Co., Ltd. (TSE1: 6417), Fields’ partner pachinko/pachislot
machine manufacturer. Since its tie-up in 2003, Bisty has developed a variety of titles including the
Evangelion series.
OK Co., Ltd.: Tie-up with KYORAKU SANGYO (unlisted) in February 2008. Fields and KYORAKU
SANGYO jointly launched new brand “OK” to create a new pachinko market and expand the pachinko
fan base. A new-generation pachinko machine GHOST IN THE SHELL STAND ALONE COMPLEX was
introduced in October 2012.
Enterrise Co.: Subsidiary of Capcom Co., Ltd. (TSE1: 9697), a leading video game company, Fields’
partner. Fields began sales of Enterrise pachislot machines in 2010, as the exclusive retailer. Hit titles
include the Sengoku BASARA series and Biohazard 5 series.
Mizuho Corp.: Fields and signed a joint business agreement with Universal Entertainment Corp.
(JASDAQ: 6425) and Mizuho in 2011. Fields acquired a 49.8% stake in Mizuho in 2012, and will begin
retailing Mizuho pachislot machines in 2014.
D-light Co., Ltd.: Founded in 2000 as a second brand for Daiichi Shokai Co., Ltd. (unlisted). Business
alliance agreed upon with Fields in 2014.
NANASHOW Corp.: Established in 2009. Fields bought a stake in NANASHOW in 2014 (38.9%).
Business alliance agreed upon with Fields in 2014.
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Sales by Brand
FY03/09
FY03/10
FY03/11
FY03/12
FY03/13
FY03/14
(Units)
Sammy Group
41,536
28,762
121,691
81,820
104,549
26,505
-67.5%
-30.8%
323.1%
-32.8%
27.8%
-74.6%
262,087
363,056
306,585
263,530
114,092
173,630
-20.6%
38.5%
-15.6%
-14.0%
-56.7%
52.2%
Enterrise
-
2,498
16,119
7,264
47,889
72,085
YoY
-
-
545.3%
-54.9%
559.3%
50.5%
-
-
-
-
32,437
28,790
YoY
SANKYO GROUP
YoY
OK
YoY
-
-
-
-
-
-11.2%
Mizuho
-
-
-
-
-
54,127
YoY
-
-
-
-
-
-
Others
27,582
55,564
35,878
59,776
29,143
37,845
YoY
Total
YoY
2.5%
101.5%
-35.4%
66.6%
-51.2%
29.9%
331,205
449,880
480,273
412,390
328,110
392,982
-31.6%
35.8%
6.8%
-14.1%
-20.4%
19.8%
Major hit titles, such as the Evangelion series developed jointly with SANKYO subsidiary Bisty, are
significant earnings drivers for Fields. Evangelion is a hit animation franchise that has gained further
popularity since the release of a four-part movie series, Rebuild of Evangelion in 2007. The series rose to
popularity in 1995-1996 when 26 episodes of the show were broadcast on TV Tokyo. The company has
sold more than 1.8mn machines based on Evangelion-related IP by the end of FY03/13.
Business model
Based on the “growth-oriented business model,” Fields is pushing efforts to maximize the value of its IP
portfolio. The “growth-oriented business model” will have the following cornerstones. Through synergies
of these cornerstones, the company aims to maximize the value of its IP portfolio and realize continuous,
organic business expansion.
 Comics: Acquire/create content (original titles, stories, characters, etc.)
 Animation: Raise the added value of content through CG and other leading-edge technologies
 Movies/TV series: Spread animated content in the market and expand fan base
 Merchandising/commercialization
(games,
media,
SNS,
consumer
products,
pachinko/pachislot): Use IP effectively in each sector to improve profitability
Some examples of how the company is working to acquire and generate IP include Heroes Monthly,
“BERSERK” and “Ultraman.” The company intends to use such IP assets in various media to accelerate its
fan base growth from FY03/13 onward. For instance, the business model for Heros Monthly is to target
profits by first starting with comics and from there move to animation, television series and movies, and
ultimately to merchandising, SNS, consumer products, and new pachinko/pachislot titles. The company
hopes to increase the number of fans in all of these fields, raise the value of its IP, generate profit, and
then again pour these results back into comics.
Group companies
Fields Group companies operate in a variety of areas, such as comics, animation, mobile, and
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pachinko/pachislot machines. As of March 2013, the company had 16 subsidiaries, seven equity-method
affiliates, and one related company. Main group companies are listed below (when joined the group;
Fields’ stake).
Comics


HERO’S Inc. (April 2010; 49.0%): Plans, produces, and manages comic magazines and character
contents
Kadokawa Haruki Corp. (March 2005; 30.0%): Plans, produces, edits, publishes, and sells books and
magazines
Animation


Lucent Pictures Entertainment, Inc. (October 2007; 90.0%): Plans and produces animation films
Digital Frontier Inc. (April 2010; 86.9%): Plans and produces computer graphics
Movie/TV


Tsuburaya Productions Co. Ltd. (April 2010; 51.0%): Plans and produces movies and TV shows. Plans,
produces, and sells character merchandise
SPO Inc. (March 2008; 31.8%): Plans, produces, and distributes movies
Merchandising
Interactive Media
 IP Bros. Inc. (December 2010; 85.0%): Runs IP-based digital content business. Develops and
manages websites dedicated to pachinko/pachislot machines
 Future Scope Corp. (October 2006; 83.3%): Provides mobile content-related and online shopping
services.
Consumer Products
 Total Workout Premium Management Inc. (May 2011; 95.0%): Runs fitness clubs
 Express Inc. (December 2007; 80.0%): Runs fitness clubs
Pachinko/Pachislot Machines
 Fields Jr. Corp. (March 2002; 100.0%): Provides maintenance services
 Shin-Nichi Technology Co. (January 2008; 100.0%): Develops machines
 Microcabin Corp. (January 2011; 85.0%): Plans and develops software
 Nex Entertainment Co. (November 2011; 64.6%): Plans, produces, develops, and sells software
 BOOOM Corp. (May 2009; 51.0%): Plans and develops machines
 Rodeo Corp. (March 2002; 35.0%): Develops and manufactures machines
 G&E Corp. (May 2005; 33.3%): Runs comprehensive entertainment business school
 NANASHOW Corp. (January 2014, 38.9%): Develops and manufacturers pachinko/pachislot machines
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Profitability snapshot and financial ratios
Profit Margin
FY03/10 FY03/11 FY03/12 FY03/13 FY03/14
Cons.
Cons.
Cons.
Cons.
Cons.
GP Margin
40.5%
33.9%
34.0%
30.8%
29.4%
OP Margin
12.2%
12.7%
9.2%
9.5%
8.5%
RP Margin
11.7%
13.2%
9.4%
9.5%
8.5%
NP Margin
5.0%
7.3%
6.5%
4.4%
4.7%
Financial Ratios
FY03/10 FY03/11 FY03/12 FY03/13 FY03/14
Cons.
Cons.
Cons.
Cons.
Cons.
ROA
4.9%
9.4%
6.9%
4.7%
5.1%
ROE
8.2%
17.1%
12.2%
8.9%
9.5%
Total Asset Turnover
0.82
1.31
0.98
1.01
1.10
Inventory Turnover
43.7
76.3
29.4
46.2
36.7
8.4
4.8
12.4
7.9
10.0
Quick Ratio
136.8%
158.8%
139.1%
137.9%
140.8%
Current Ratio
158.2%
185.1%
165.6%
153.5%
160.4%
Days of Inventory
Equity Ratio
51.3%
60.3%
55.4%
51.5%
55.9%
-32.8%
-29.5%
-32.4%
-40.5%
-49.2%
OCF / Current Liabilities
0.24
0.29
0.26
0.29
0.39
OCF / Total Liabilities
0.21
0.25
0.24
0.26
0.35
Net Debt / Equity
While true peer analysis is not possible due to the company’s unique business model, one could say ROE
trends show high profitability. Recent years saw operating profit in the 10-14 bn range. The
“growth-oriented business model” can be viewed as the company’s attempt to further raise profitability.
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Strengths and weaknesses
Strengths



Sales power: Manufacturers use Fields to take advantage of the company’s large and skilled sales
force, enabling them to extend their geographic reach and accelerate their speed to market.
Brand creativity: The ability to create new, distinct brands gives the company's partners more
bandwidth to sell product while defraying their marketing costs. (Operators tend to allocate hall-space
per brand; distinct labels enable manufacturers to “backdoor” additional machines into one venue.)
Alliances with top manufacturers possessing high level of technology and development skills
Weaknesses:



High dependency on hit titles
Lack of manufacturing capability limits profit sources to distribution margins
Historically, uneven execution among group companies
Main facilities
Fields Corporation’s operational backbone is based on its national sales network. This includes 26 branch
offices (as of FY03/14) located in Hokkaido-Tohoku (3), North Kanto (3), Tokyo (6), Nagoya (3), Osaka (4),
Chugoku-Shikoku (3) and Kyushu (4).
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Market and value chain
This section focuses on the pachinko/pachislot machine market.
Market overview
The Japan Productivity Center estimated the total domestic leisure market at JPY65.2tn in fiscal year 2013
(source: White Paper on Leisure 2014). Pachinko/pachislot was estimated at JPY18.8tn, or around 29% of
the leisure market. Of that amount, JPY16.2tn was returned to players in payouts or “winnings.”
Operators reinvested about JPY1.1tn of the remaining JPY2.8tn into new machine purchases (company
estimate).
Market Trends
2000
(Million Yen)
Pachinko
Market Size
568,300
Machines Sold (Thousand)
3,360
Average Price Per Machine (Yen) 169,137
Pachislot
Market Size
314,500
Machines Sold (Thousand)
1,130
Average Price Per Machine (Yen) 278,319
2007
2008
2009
2010
2011
2012
868,600 921,300 985,200
3,170
3,330
3,330
274,006 276,667 295,856
886,900
2,900
305,828
826,700
2,600
317,962
772,900
2,490
310,402
502,500 247,800 225,800
1,740
910
760
288,793 272,308 297,105
286,700
970
295,567
375,000
1,250
300,000
429,900
1,320
325,682
Source: Company data, SR Inc. Research
Industry data shows that the market remains stagnant. The player population fell to 9.7mn in 2013,
compared with 23.1mn in 1997 (roughly one in seven Japanese were pachinko and pachislot players).
The number of pachinko halls declined to 11,893 in 2013 from 18,224 in 1995 (source: National Police
Agency). A decrease in the amount of cash flow available for new investments has forced some smaller
operators to sell or shut operations. At the same time, hall sizes have become larger increasing to an
average of 388 installed machines per hall in 2013 from 261 machines in 1995. Larger chains also appear
to be gaining scale highlighting continued polarization of the market.
Order trends for Fields are tied to the financial health of its pachinko hall customers. Logically, the higher
the cash flows of pachinko halls, the more funds they can spend on new equipment. Industry new
machine investment is broadly defined by the average number of times halls “turn” their machine line-up
per year. In 2013, turnover for pachinko was 0.68 times and for pachislot 0.87 times (source: Yano
Research Institute, National Police Agency).
In terms of the machine market, pachinko machine sales rose from 3.7mn machines in 1995 to a peak of
4mn machines in 2005. But since then, pachinko machine sales have been declining. On the other hand,
pachislot machine sales expanded five-fold to 1.8mn in 2005 off a low base of 350,000 machines in 1995.
Following the introduction of stricter regulation in 2007, demand for lower gambling nature pachislot
machines fell before recovering from the second half of 2009.
As the size of the market has changed so competition between manufacturers has intensified. Well-known
franchises have a tendency to generate repeat sales, yet breaking into the top ranks has not been easy for
smaller players. Today, while top-selling blockbusters may still garner over 200,000 machines in sales,
less popular titles may not even sell 10,000 machines. The chart below illustrates market share per
manufacturer on a machine basis (source: Yano Research Institute, Trends of Pachinko Related
Manufacturers and Market Share 2012). Pachinko appears less concentrated compared with pachislot.
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Across both segments, Shared Research believes the success of the company is partly due to its ability to
partner with key players at the development stage. Manufacturers, in turn, have reason to partner with
Fields as it enables the creation of secondary brands and higher penetration per account resulting in a
higher market share.
Pachinko Market Share
Installed Base (Fiscal 2013)
Pachislot Market Share
Installed Base (Fiscal 2013)
17.0%
21.7%
33.9%
38.5%
15.4%
15.5%
9.6%
14.3%
8.6%
7.3%
9.8%
8.4%
Kyoraku Sangyo
Sanyo Bussan
SANKYO
Sammy
Heiwa, Olympia
Others
Sammy
Heiwa, Olympia
Daito Giken
Universal
SANKYO
Others
Source: Yano Research Institute, Trends of Pachinko Related Manufacturers and Market Share
For pachinko machines, SANKYO includes Bisty. Sammy includes Ginza and Taiyo Elec.
For pachislot machines, Sammy includes Rodeo, IGT, TRIVY, and Taiyo Elec. SANKYO includes Bisty. Universal includes Eleco, Mizuho, and Macy. Olympia includes
machines sold by Heiwa; data is for the total of all Olympia and Heiwa brands.
The company believes a recent move away from dependency on high gambling nature machines towards
healthier and more entertainment-orientated machines should resume growth for the pachinko industry
in the near future. While it is difficult to provide solid proof of this view, consumers’ average leisure time
has been increasing and the company believes the evolution and growth of the pachinko industry into one
of the choices of entertainment to fill this increased leisure time is a likely scenario. In addition, the
pachinko market appears to be relatively impervious to the economic cycle. The company thinks that the
decline of the playing population is related more to the peculiarities of the pachinko and pachislot markets
themselves.
Market growth potential and cyclicality
The market is mature and arguably in secular decline due to Japan's declining population and emerging
forms of passive entertainment. However, industry innovation could reverse or slow what has been a
gradual decline. The key cyclical drivers are government regulation and the industry's growth as a distinct
type of popular entertainment. The industry is regulated by the National Public Safety Commission. Rules
on the approval and certification of machines are set in accordance with the Entertainment Business
Control Law per each prefecture.
Historically, regulators have tended to change the technical specifications regarding gambling nature
limits every several years. The goal has been to prevent excessive gambling and trends in high-gambling
nature machines have been easing. For instance, a change in regulations in 2004 led to a de-emphasis in
the gambling aspect of pachislot machines, and to a big wave of replacement sales in 2007. Pachislot
machine sales then declined as some players gravitated to pachinko. However, as manufacturers compete
to develop machines compliant with the newest regulations and increase the entertainment aspect of new
machines there has been an acceleration in both hardware and software innovation.
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According to Fields, the gambling aspect has an influence on players and thus potentially on market
growth. Since FY03/11, many manufacturers have focused on so-called "max-type" machines where
average spend per player tends to be higher when compared with other types of machines, but the
expected return is also likely to be higher (which can be appealing to serious players). This means on
average a player loses money faster on these types of machines. Although max-type machines could
mean higher cash flow for pachinko halls in the short run, Fields was concerned this trend might alienate
casual players and could be an unhealthy trend for the overall market. However, from FY03/12, such trend
has shown a turnaround: pachinko halls have increasingly installed machines with low gambling nature
(e.g., light-middle and middle types) because these machines could push up machine utilization.
Classification of pachinko specifications (i.e., jackpot-probabilities) is based on explanations from the
company. Probabilities: max-type is 1/370-1/399; middle-high is 1/320-1/369; middle-low is 1/280-1/319;
light-middle is 1/150-1/279; “amadeji” class is between 1/40 and 1/149+.
SR Inc. thinks Fields could be a long-term beneficiary from the rise and fall in popularity of different
machines. Regulatory revisions can upstage market leaders and give manufacturers a short window when
they need to scramble for new innovative products. The company helps manufacturers plan and develop
new product lines to sell to halls that could be otherwise reluctant to increase dependence on a particular
maker.
Customers
Pachinko halls are the company’s clients. Pachinko halls could buy directly from manufacturers, but the
benefits of using Fields include a single supplier relationship (i.e., they can buy titles of different
manufacturers from Fields) and market knowledge that the company can share (such as which machines
are popular nationwide).
Suppliers
Field’s main suppliers are pachinko/pachislot machine manufacturers. This is the core relationship
defining the company’s business model. The relationship is mutually beneficial—manufacturers provide
the company with products to sell, and in return receive content rights, design ideas and benefit from the
sales channel.
Barriers to entry
Barriers to entry are high; the industry has a number of sophisticated and well capitalized players, while
products require substantial development costs, and carry high failure rates. The company’s business
model is unique and would be difficult to replicate. It possesses an extensive expert sales network and
has long-term relationships both with top manufacturers and thousands of pachinko halls. With roughly
300 salespeople in daily discussions with pachinko hall operators, the customer relationship base is sticky
and it has extensive information about customers. Moreover, pachinko tends to be a personality-driven
industry reliant on trust. Incumbents with existing relationships therefore have a natural advantage.
Finally, the pachinko hall operator market is fragmented and a newcomer would need significant time to
gather a critical mass of customers to become profitable.
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Competition
The company estimates there are approximately 1,000 distribution companies in the pachinko/pachislot
market. However, no other company has a business model or a nationwide sales network that rivals Fields’.
The company's products though do in fact compete with those of its partner and non-partner
manufacturers. Listed manufacturers include SANKYO Co., Sega Sammy Holdings Inc., Heiwa Corp.
(TSE1: 6412), and Universal Entertainment Corp.
Substitutes
Casinos: As of May 31, 2014, casinos were officially banned in Japan. However, there was an ongoing
debate regarding potential legalization. SR Inc. thinks even if casinos were legalized, only a limited
number would be licensed to operate. As such, the substitution effect would negligible on the larger
network of nearly 11,893 pachinko/pachislot halls in local neighborhoods across Japan (2013 data).
Strategy
Based on the “growth-oriented business model,” the company is pushing efforts to maximize the value of
its intellectual property (IP) portfolio. Fields sees its core strength as its ability to find and leverage
content for its pachinko and pachislot clients. However, the company’s longer-term ambition is to extend
its capabilities beyond the pachinko/pachislot business. Fields has not been able to develop a large
enough or profitable enough business outside of pachinko/pachislot for the past several years, but its
profitability has been recovering, and the company may be back on a growth track. While pachinko and
pachislot will likely remain the main earnings drivers for the time being, SR Inc. estimates that Tsuburaya
Productions could determine Fields’ future success. Also, HERO’S Inc. is responsible for creating content
and on top of contributing toward the pachinko and pachislot business, it is expected to be involved in
other entertainment ventures, such as digital comics.
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Historical financial statements
Summary
Earnings results discussion for the year preceding current fiscal year
FY03/14 Results (announced on April 30, 2014)
In the pachinko/pachislot business, the company launched four pachinko titles (three new titles in the
previous year) and seven pachislot titles (six in the previous year). The new pachinko titles included a new
model of the Evangelion series and the pachislot titles newly included Mizuho Corp.’s machines. Total sales
of pachinko/pachislot machines increased to 392,982 units (+64,872 YoY), including 162,879 pachinko
machines (+62,886 YoY) and 230,103 pachislot machines (+1,986).
Higher unit sales of pachinko machines were partly due to The Evangelion 8 machine—manufactured by
Bisty Co.—which saw sales of 75,000 units. Pachislot Monster Hunter by Enterrise Co. and Another God
Hades by Mizuho Corp. both contributed to increased unit sales of pachislot machines, with sales of about
45,000 and 54,000 units respectively.
According to the company, utilization rates fell in the pachinko/pachislot market, but unit sales—which
fluctuate with popular machine introductions—were mostly unchanged. Total market sales of
pachinko/pachislot machines between April 2013 and March 2014 were 3.7mn units (-9.5% YoY),
including 2.3mn pachinko machines (-15.2%) and 1.4mn pachislot machines (+1.3%) (source: company
materials).
Profits were up for pachinko/pachislot machines and consumer products, but fell for social games in
interactive media. Factors that affected operating profit are as follows:
 In the pachinko/pachislot business, profit increased YoY thanks to steady selling activities though the
company spent more to strengthen the sales structure and expand sales promotion activities. The
company strengthened development of new machines in cooperation with its subsidiaries in a bid to
broaden its product line-up for the medium and long term.
 In the consumer products business, movie production subsidiary Tsuburaya Productions Co., Ltd., the
founder and holder of the “Ultraman” series, is building up a structure to obtain stable income. The
license business performed well as Tsuburaya Productions held events to mark its 50th anniversary
and produced a new TV series. Tsuburaya Productions reported sales of JPY3.3bn (+11.2% YoY) and
operating profit of JPY670mn (+71.8%).
 In interactive media, sales of ongoing popular content were robust. Meanwhile, the company
promoted reform of the income structure, such as narrowing down the lineup of games and
implementing more efficient operations and development, to cope with a transition from Web
applications to native applications in the social game market. As a result, there was a temporary fall in
profitability in FY03/14.
 In the comics, animation and movie/TV businesses, the company continued to spend management
resources for creating and fostering intellectual property, such as characters and stories, as the
sources of growth. Particularly, it made efforts to make animations from comics that were created in
the company’s media and strengthened sales promotion for them.
Operating profit saw a 5.1% YoY fall as a result of measures and advance investments toward growth for
the medium and long term.
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Q3 FY03/14 Results (announced on February 4, 2014)
The company maintained its full-year FY03/14 forecasts.
Cumulative Q3 sales were JPY54.2bn (+13.5% YoY), operating profit was JPY2.0bn (JPY1.2bn loss a year
earlier), recurring profit was JPY2.1bn (JPY975mn loss a year earlier), and net income was JPY1.2bn
(JPY677mn loss a year earlier).
In the pachinko/pachislot business, 4 pachinko and 3 pachislot titles were sold in cumulative Q3
(compared to 3 pachinko and 3 pachislot titles in the same period of the previous year). As a result, sales
were up. The total number of pachinko machines sold in cumulative Q3 was 139,004 (up 60,357 YoY) and
the total number of pachislot machines sold was 92,632 (up 465), for a total of 231,636
pachinko/pachislot machines sold (up 60,822). Sales of the “Evangelion 8” pachinko unit, manufactured
by Bisty Co., Ltd. (a subsidiary of Sankyo Co., Ltd.; TSE1: 6417) contributed to higher total sales with
about 75,000 units sold. For pachislot units, sales of “Kaido Mokushiroku Kaiji 3”, “Devil May Cry 4”,
manufactured by Capcom Co., Ltd. (TSE1: 9697) subsidiary Enterrise Co., Ltd. and “Ultraman Wars”,
manufactured by Bisty, each exceeded 20,000 units.
Pachislot is a type of Japanese slot machine, the name of which is an amalgamation of the words “pachinko”
and “slot machine.”
According to Fields, the pachinko/pachislot market was stable with no significant changes. Industrywide
unit sales can experience volatility depending upon the presence of popular titles, but remained flat on
the whole. In April-December 2013, a total of 1,810 thousand units of pachinko machines were sold
industrywide (-13.5% YoY), while 1,054 thousand units of pachislot machines (-2.8%) were sold (source:
company data, SR research).
Regarding pachinko hall attitudes toward new machine installations, halls were inclined to install
successor machines to previously popular titles. Initial orders were placed in numbers of ten or less, and
additional purchases were made if machines performed well.
Additionally, a variety of initiatives based on the “Ultraman” series owned by the Group were successfully
deployed, including a TV series and events to mark the 50th anniversary of Tsuburaya Productions, which
contributed to higher earnings in cumulative Q3. Orders for CG video creation for various media, such as
movies, games, and pachinko/pachislot, also increased, further boosting earnings.
To realize the company’s medium to-long-term growth strategy, the 6 fields of comics, animation,
movies/TV/live entertainment, interactive media such as games, consumer products, and
pachinko/pachislot are going ahead with raising intellectual property (IP) value, while working together to
develop and commercialize IP.
The main initiatives for development and commercialization of IP in Q3 were as follows.
The “HERO’S Monthly” comic magazine, which is intended to create heroes, sequentially publishes new
comic book volumes of serialized stories, and a project to make several movies is underway to further
expand the fan base.
In the “GINGA KIKOTAI: Majestic Prince” series, following the broadcasting of a TV animation and the
development and sale of goods linked to the comic magazine, the company plans to distribute social
games (native applications) in February 2014.
In the “Ultraman” series, the company worked to expand the fan base among families and create new
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fans by distributing social games (native applications) and selling pachislot machines. This followed the
TV broadcast and movie release of “Ultraman Ginga” and “ULTRA MONSTERS RUSH: ULTRA FRONTIER,”
as well as the development of arcade games in collaboration with partner companies.
In the interactive media field, the company focused its resources on core social game titles in order to
raise IP value and optimize revenue. Accordingly, the company launched 5 titles, including 4 Web
applications and 1 native application.
In cumulative Q3, sales accounted for 45.2%, and operating profit stood at 16.3% of the company’s
full-year FY03/14 estimates. In Q4 FY03/14, the company is scheduled to release two pachinko machines
and four pachislot machines (see below), which will be close to the same number of releases conducted in
the first nine months of FY03/14 combined. SR believes that this will cause significant changes in the
company’s results.
Pachinko/pachislot machines scheduled for release in Q4 FY03/14
Pachinko machines
 CR Evangelion 8 Premium Battle (Bisty)
 Pachinko Onimusha: Dawn of Dreams (OK Co., Ltd., a subsidiary of Kyoraku Sangyo Co., Ltd.;
unlisted)
Pachislot machines
 Mobile Suit Gundam (Bisty)
 Evangelion: Ketsui no Toki (Bisty)
 Pachislot Monster Hunter (Enterrise)
 Another God Hades (Mizuho Corp., a subsidiary of Universal Entertainment Corporation; TSE1: 6425)
Q2 FY03/14 Results (announced on November 6, 2013)
Sales were JPY36.4 bn (+25.0% YoY), operating profit JPY2.2 bn (operating loss of JPY1.9 bn a year
earlier), recurring profit JPY2.1 bn (recurring loss of JPY1.7 bn a year earlier), and net income JPY1.4 bn
(net loss of JPY980 mn a year earlier).
According to the company, pachinko and pachislot machines recorded favorable sales due to strong unit
sales of both machines. For 1H, the number of pachinko machines sold was approximately 110,000 units
(up about 63,000 units from a year earlier), and the number of pachislot machines sold was
approximately 61,000 units (up about 7,000 units from a year earlier). In pachinko, the company sold
72,000 units of Bisty Co., Ltd.’s “CR Evangelion 8.” In pachislot, sales of “Kaido Mokushiroku Kaiji 3” and
Enterrise Co.’s “Devil May Cry 4” each exceeded 20,000 units.
According to Fields, the pachinko/pachislot market was stable with no significant changes, and
industrywide unit sales remained steady despite some volatility due to the release of popular titles. In
April-September 2013, a total of 1,143 thousand units of pachinko machines were sold industrywide
(-19.5% YoY), while 679 thousand units of pachislot machines (+2.9% YoY) were sold (source: company
data, SR Inc. Research). The company said that pachinko halls were operating with steady flows of
customers despite a decline in the pachinko-player population. Fields added that there were no significant
changes to related regulations during the period.
Facing such an environment, pachinko halls were increasingly careful in installing new machines. More
specifically, each hall refrained from installing more than 20 units of any new title at one time while being
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inclined to install less than 10 units of successor machines of once-popular titles. Such a stance of
pachinko halls has made it rare for any given machine to sell more than 200,000 units.
The planned sales tax hike in April 2014 should have significant impact on the pachinko/pachislot market.
As SR Inc. understands it, pachinko halls are paying the sales tax on pachinko balls and pachislot coins as
of November 2013. Industrywide talks have yet to reach a conclusion as to whether pachinko halls or
players will shoulder the sales tax burden after the planned hike. Should pachinko halls be responsible for
the tax, their margins and performance could dent accordingly, which could then put downward pressure
on pachinko/pachislot machine sales.
On the other hand, players may bid farewell to pachinko halls due to higher ball/coin prices if the tax
burden was passed onto them. It should be noted, however, that tax burden removal from pachinko halls
should likely improve their profitability and, consequently, business performance. This scenario, when
realized, may boost pachinko/pachislot machine sales.
The Fields group is aiming at medium-to-long term sustainable development by emphasizing Intellectual
Property (IP) such as characters and maximizing the value of IP that it acquired, held and created.
To realize this aim, the company’s six fields of comics, animation, movies/TV/live show, and interactive
media such as games, consumer products, and pachinko/pachislot are going ahead with raising IP value,
while working together to develop and commercialize its IP.
According to the company, the main initiatives for development and commercialization of IP in 1H were:




The “HERO’S Monthly” comic magazine, which is intended to create heroes, published the third
volume of the “ULTRAMAN.” This comic book has been sold steadily, with a cumulative total of
approximately 900,000 volumes sold.
A total of 24 episodes of “GINGA KIKOTAI: Majestic Prince” were broadcast as a TV animation linked
to the comic magazine. Goods were developed and sold in conjunction with this animation. In
addition, the Fields group took measures to expand it into other media formats, as with the
development of social games (native application).
In the “BERSERK” series, following the release of animated movies (trilogy), the Fields group
developed and sold social games (Web application) and a pachinko machine.
In the “Ultraman” series, we worked to attract a new fan base through comics. The company also
broadcast TV shows and movies of “Ultraman Ginga” and “ULTRA MONSTERS RUSH: ULTRA
FRONTIER” and developed arcade games in collaboration with partner companies to expand the
number of fans in families. Working with pachinko and pachislot machine manufacturers, it
implemented several measures to promote the development and sale of pachislot machines in the
“Ultraman” series.
The 1H sales and operating profit respectively accounted for 30.3% and 17.4% of the company’s full-year
FY03/14 estimates. Fields said that the 1H results were largely in line with its estimates, adding that the
release of new titles in 2H should bring the full-year results to target levels.
Q1 FY03/14 Results (announced on August 6, 2013)
Sales were JPY5.7 bn (-72.8% YoY), operating loss was JPY3.8 bn (operating profit of JPY283 mn in the
previous year), recurring loss wasJPY3.8 bn (recurring profit of JPY574 mn in the previous year), and net
loss was JPY2.3 bn (net profit of 342million in the previous year). The company stated that these results
were largely in line with its estimates (undisclosed) and, consequently, it maintained its full-year earnings
forecast.
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The company did not disclose Q1 FY04/14 forecasts, but results were in line with management’s
expectations, according to the company. The main factor behind the earnings decline in Q1 FY03/14 was
a drop in the number of pachinko and pachislot machines sold YoY, attributable to more machines planned
for launch in Q2 FY03/14 than in the previous year. The company planned to launch several major new
titles in Q2 FY03/14.
In Q1 FY03/13, the company released two new pachinko machines and booked a portion of sales of the
pachislot machine “Monster Hunter,” which was pushed back from FY03/12. On the other hand, Fields
launched only one pachinko machine, “Beyond the Heavens,” during Q1 FY03/14.
The Fields group is aiming to achieve sustainable long-term growth by emphasizing intellectual property
(IP) such as characters and maximizing the value of IP that it has acquired and created. To achieve this
goal, the company is raising the IP value in the following six fields: comics, animation, movies/TV,
interactive media such as games, consumer products, and pachinko and pachislot machines.
Fields made the following comments on its initiatives in main businesses:
The company began broadcasting “Ginga Kikotai: Majestic Prince” on television in April 2013 in
conjunction with the comics, as well as promoting planning and development of products and services
utilizing IP. As for the Ultraman series, the company began broadcasting the latest television series,
“Ultraman Ginga” in July 2013, and developed character goods utilizing its IP working together with
partner companies.
Pachinko/Pachislot Industry Conditions
Fields stated that the industry environment did not see major changes during the period. Over the past
several years, pachinko halls have become increasingly careful in installing new machines. This has made
it difficult to have megahit titles while causing a wider spread between sales of popular and unpopular
titles. In recent months, pachinko halls were increasingly changing their pachinko machine lineups, from
max-type machines to more middle-types. According to Fields, middle-type machine utilization at
pachinko halls has stayed at a high level, suggesting a possible future recovery in player population.
Status of Fields’ Pachinko/Pachislot Machine Sales
The total number of pachinko and pachislot machines sold was about 18,000 units (down about 46,000
units over the previous year). In Q2, the company released a new pachinko title “CR Evangelion 8” in July
2013 and launched several promising titles, such as pachislot machine “Devil May Cry 4,” pachislot
machine “Kaido Mokushiroku Kaiji 3,” and new-generation pachinko machine “BERSERK” as planned.
FY03/13 Results (announced on May 7, 2013)
Sales were JPY108.1 bn (+17.3% YoY), operating profit was JPY10.3 bn (+21.0% YoY) recurring profit
was JPY10.3 bn (+18.6% YoY), and net profit was JPY4.7 bn (-21.2% YoY). The main factor behind this
earnings fluctuation was the increase in the number of pachislot machines sold compared with the
previous year as a result of the launch of strong products in the pachislot market. A few subsidiaries
recorded extraordinary losses that caused net income to decline YoY. The company pursues business
activities with an emphasis on maximizing the value of its characters and other intellectual property (IP)
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based on the “growth-oriented business model” (seamlessly synergistic business development involving
Comics, Animation, Movie/TV, and Merchandising) announced in May 2012.
Fields made the following comments on its initiatives in main businesses:
 IP Acquisition, Creation, and Development; Comics; Animation; Movie/TV
In the comics segment, the comic Heros Monthly marked the first anniversary in November 2012 since
launch, as well as favorable publication of the “Heroes Mix” comic since its launch in September 2012.
Volumes one and two of the “Ultraman” comic series sere published, selling over 400,000 issues. In the
animation and movie/TV segment, the company plans to bring its comic stories to the screen. The
animation “Ginga Kikotai: Majestic Prince” began broadcasting on television in April 2013.
The company released three series of the animated movie “BERSERK.” This movie was selected for the
Special Achievement Award in the animation division at the Agency of Cultural Affairs’ 16th Japan Media
Arts Festival. The movie was also nominated for an award at the Festival International du Film d’Animation
d’ Annecy in France. Given the success of its animation, the company is expanding into new media. Fields
pursued plans to raise its name recognition for a number of IP by expanding them into the merchandising
segment.
 Merchandising
In the merchandising segment, the company is enhancing its services and products for a broad range of
media and platforms, by expanding its stories and characters created and promoted from its comics,
animation, and movies/TV segments, to increase the value of its intellectual properties and maximize
profits. In interactive media, Fields was focusing on the high-growth social media field and advancing
activities to increase profitability in this segment. In the social game segment, the company focused on
planning and developing new game titles to enhance its competitive advantage over its competitors.
In the pachinko/pachislot sales business, the company is implementing a number of measures to increase
support from existing fans, as well as capturing new pachinko and pachislot players. The company
became the overall sales agent for a new pachinko machine brand, “OK” for a major pachinko machine
maker in FY03/13. The company received rave reviews for its “Biohazard 5” pachislot machine from its
fans. In FY03/13, the company sold 228,000 pachislot machines (up 49,000 units YoY), a record high.
However, it sold 100,000 pachinko machines (down 133,000 units YoY), mainly affected by the absence of
major model releases during the period. As a result, total unit sales of pachinko and pachislot machines
fell in FY03/13 over the previous year.
FY03/12 Results (announced on May 9, 2012)
The company downwardly revised its FY03/12 forecast on March 16, 2012. Actual results were largely in
line with the revised forecast. Sales were down 11.0% YoY at JPY92.1 bn with operating profit tumbling
35.1% to 8.5 billion. Net income fell 20.3% YoY to JPY5.9 bn due to the recognition of a deferred tax
asset from the dissolution/liquidation of its Japan Sports Marketing Inc. subsidiary and a lower corporate
tax burden. The company posted YoY declines in sales and profitability. However, this was because the
company released a number of blockbuster Pachinko and Pachislot machine titles in Q4 giving
consideration to component supply shortage due to March 2011’s earthquake, and some sales related to
a pachislot machine released in Q4 are now to be booked in FY03/13.
The company has continued investing in the entertainment field based on a vision of maximizing
Intellectual Property (IP) value through the use of various forms of media, including pachinko/pachislot
machines, from the viewpoint of building a business centered on IP. These efforts can be seen in such
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projects as its comic Heros Monthly and the movie “BERSERK.”
Performance by segment:

PS Field: Sales of JPY83.9 bn (-10.8% YoY); Operating profit of JPY8.6 bn (-32.7% YoY)
Industry Situation:
Pachinko and pachislot machine manufacturers had changed their sales schedules with a focus on 2H
FY03/12 activity (October 2011 to March 2012), as component makers, such as semiconductor firms,
began recovering from March 2011’s earthquake going into summer 2011. Consequently, 1H sales were
sluggish industry-wide on a YoY basis as machine sales were focused on those units where components
had been procured pre-quake. However, the supply chain has recovered faster than initially expected and
for Q3 machine makers released numerous new titles, with a number of them becoming hit machines.
Pachinko hall operators have also been actively replacing models with new machines. Specifically, 2H saw
the increased replacement with major titles (each selling more than 50,000 units). Regarding the impact
of the November 2011 floods in Thailand there have been limited issues with component procurement,
however, the industry wide effect was not perceived to be particularly severe.
According to the company’s analysis, the number of pachinko machine titles sold during 1H declined by 29
to 92, while the number of pachislot machine titles offered decreased by 8 to 53. In 2H, during which time
supply chains damaged by the earthquake disaster were restored, the number of pachinko machine titles
sold increased by 14 to 106, while the number of pachislot machine titles sold declined by 8 to 48. This
trend is indicative of the pachinko/pachislot market where there tends to be a focus on major titles in the
second half, especially among pachislot machine makers. For the full year, the number of pachinko
machine titles sold declined 15 to 198 and the number of pachislot machine titles sold decreased by 16 to
101. So the number of titles fell for both types of machines, a result probably due in large part to impacts
from the March 2011 Great East Japan Earthquake.
Company Situation:
Given the above situation of most makers choosing to release titles in Q3, as a distributor to halls Fields
Corporation decided to go for Q4 releases of its titles to attract players. As for Q4, the latest release in its
hit Evangelion Pachinko machine series, “CR Evangelion 7,” was released in January 2012. This new title
was well received. The ongoing recovery in the Pachislot segment continued, and the company launched
“Evangelion—the Heartbeat of Life,” its second major title for the quarter, in February as well as a third
major title in March 2012: the pachislot machine “Monster Hunter.”
Some of the sales related to the pachislot title “Monster Hunter” are now to be booked in FY03/13 as
component procurement had been disrupted by the November 2011 flooding in Thailand. In addition, the
company delayed the release of a new Bisty Co., Ltd. title until FY03/13 to make the machine
specifications compliant with the regulations revised after April 1, 2012. Unit sales performance was
179,167 pachislot machine units (down 38,492 units YoY) and 233,223 pachinko machine units (down
29,391 units YoY).
 Mobile field: Sales of JPY1.9 bn (-5.3% YoY); operating profit of JPY11 mn (-95.1% YoY).
Operating profit declined, but this was due to the results for some mobile content operations being
booked on a parent-only (PS Field) basis. As such, mobile-related results should not necessarily be viewed
as sluggish.
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Sports entertainment field: Sales of JPY1.9 bn (-10.4% YoY); operating profit of JPY7 mn
(operating loss of JPY290 mn YoY)
Business reorganization helped to bring about a return to profitability.


Other field: Sales of JPY5.4 bn (-7.2% YoY); operating loss of JPY139 mn (operating profit of JPY315
mn YoY)
The operating loss was due to continued investment in the acquisition and creation of IP such as the
comic Heros Monthly and the production and distribution of the movie “BERSERK.”
The first issue of the comic Heroes Monthly, a joint venture with Shogakukan Creative Inc., debuted in
November 2011 and the eighth issue was released on June 1, 2012.
Subsidiary Lucent Pictures Entertainment Inc. on February 4, 2012 released the anime film BERSERK I
THE HIGH KING'S EGG in theaters nationwide. There are plans to release the second installment in this
series, BERSERK II THE BATTLE OF DOLDREY, in June 2012.
Tsuburaya Productions released the latest Ultraman movie “Ultraman Saga” nationwide in March 2012.
Pachinko/Pachislot Market Trends (May 2012 press briefing)
The company provided the following information about recent developments for the pachinko and
pachislot markets.
Installation Shares by Pachinko Machine Type
Looking at pachinko hall installation shares by machine types, the share held by “ ama-deji” type machines
(offer the best chance of winning, but payouts are smaller) have held steady, while shares held by the
“MAX” and “middle-high” type machines have continued shrinking. Meanwhile, shares have been
increasing for “middle-low” type machines such as “CR Evangelion 7” and “light-middle” machines.
Looking at these trends, the company thinks needs of pachinko fans are shifting, from machines with
strong gambling nature to those with somewhat weaker gambling nature but appealing content for
relatively casual entertainment.
Fields uses the following terms to classify pachinko machine specifications (odds of hitting a big payout).
MAX: odds 1/370-1/399, middle-high: 1/320-1/369, middle-low: 1/280-1/319, light-middle: 1/150-1/279
and ama-deji: at least 1/149.
Pachinko machine utilization
Pachinko machine utilization levels remained high between 2007 and 2008 (approximately 25,000
balls/day per unit). Utilization levels then continued declining from 2009 to 2011 due in part to the
emergence of the MAX-type machines with higher gambling elements. However, as the middle-low and
light-middle machines became more common from 2011, utilization has remained at a stable level
(approximately 20,000 balls/day per unit), suggesting the earlier decline had bottomed.
Pachislot machine utilization
Utilization levels declined sharply following the complete mandatory shift to the machines compliant with
Regulation 5 in October 2007 (approximately 9,000 coins/day per unit). However, from 2010 there was a
recovery mainly for ART (Assist Replay Time) and similar pachislot machines, and recently utilization
levels have been growing (approximately 11,000 coins/day per unit). The current utilization levels are on
par with those during the later stage of Regulation 4.
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FY03/12 (April-March) top selling machine titles
During FY03/12 the pachinko market had 15 top-selling machine titles defined as having sales of more
than 40,000 units. Fields produced two of these titles: “CR The Story of Ayumi Hamasaki—the prologue”
and “CR Evangelion 7.” The pachislot market had 17 top-selling machine titles defined as having sales of
more than 15,000 units. Fields produced three of these titles: “Kaze no Youjinbou—Memory of Butterflies,”
“Evangelion—the Heartbeat of Life” and “Monster Hunter.” Big hits for the pachislot industry were
concentrated in the second half of the year.
Pachinko/pachislot new titles sales
The company estimated that the number of new pachinko machines sold market-wide remained at
roughly the same level as during FY03/11, while sales of pachislot machines were estimated to have
surged compared to FY03/11 and topped the one million unit mark.
New management policy (summary based on FY03/12 financial report)
Since its listing, the company had followed a business model focusing on the PS Field. This changed
several years ago: the company has worked to shift its focus to intellectual property (IP) in a bid to
achieve long-term growth. Approaching the 10th listing anniversary and the 25th founding anniversary,
the company is eyeing the establishment of a “growth-oriented business model” for the next 25 years.
With a new business model, the company aims for further corporate growth.
FY03/11 Results
Sales increased 56.2% YoY in FY03/11 to JPY103.5 bn with operating income up 61.7% at JPY13.1 mn.
The company attributed the dramatic improvement in sales and operating profitability to the following:
Pachislot machine sales were particularly strong hitting record highs due to additional orders for the
“Onimusha: Dawn of Dreams” model launched in March 2010, and solid orders for other models such as
“Ore no Sora—Spirit of Young Justice” and “MOBASLO Evangelion—for your own wish.”
New subsidiaries Tsuburaya Productions Co. and Digital Frontier Inc. were included in consolidated results
beginning April 2010, improving group profitability.
The company sold 262,614 pachinko machines (down 68,120 units YoY), and had a 9.1% market share of
the pachinko machine market in FY03/11, the same level as the previous FY. The “CR
Evangelion—Evangelical of the Beginnings” pachinko game unit made a significant contribution to this
sales figure at 250,000 units. In the pachislot machine segment the company sold 217,659 units (a YoY
increase of 98,513 units), expanding its market share by 5.6% to 24.5% and maintaining the company's
top position in the space. Pachislot unit sales hit a record high driven by a solid product lineup, including
“MOBASLO Evangelion—for your own wish” (55,000 units), “Onimusha: Dawn of Dreams” (63,000 units),
“Ore no Sora—Spirit of Young Justice” (38,000 units) and “Sengoku BASARA 2” (16,000 units).
Combined operating profit for the group (excluding PS Field and inclusive of intersegment sales) was
JPY261 mn vs. JPY1 mn operating loss in FY03/10.
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FY03/10 Results
FY03/10 Results Report Card
Sales were JPY66.3 bn (-9.2% YoY), operating profit JPY8.1 bn (+314.3% YoY), recurring profit JPY7.7 bn
(+682.9% YoY), net income JPY3.2 bn (vs. a net loss of JPY1.4 bn in FY03/09).
As a percentage of the company forecast, the results were as follows:
Sales: 94.8% (vs. full year forecast of JPY70.0 bn)
Operating profit: 81.2% (vs. full year forecast of JPY10.0 bn)
Recurring profit: 77.6% (vs. full year forecast of JPY10.0 bn)
Net income: 73.1% (vs. full year forecast of JPY4.5 bn)
Revenues
Target: JPY70.0 bn (-4.2% YoY)
Result: JPY66.3 bn (-9.2% YoY)
Gross profit
Target: JPY28.5 bn gross profit (+18.6% YoY)
Result: JPY26.8 bn (+11.9% YoY)
SG&A, operating profit
Target: JPY18.5 bn SG&A (-16.1% YoY)
Result: JPY18.7 bn (-15.0% YoY)
Target: JPY10.0 bn OP (+410.2% YoY)
Recurring profit
Target: JPY10.0 bn (+909.1% YoY)
Net income
Target: JPY4.5 bn (vs. -JPY1.4 bn in FY03/09)
Result: JPY3.2 bn
Additional discussion
Consolidated sales were somewhat below the initial company estimate (JPY66.3 bn vs. JPY70.0 bn;
-5.2%). Parent sales were closer to the company forecast but also marginally below (JPY61.3 bn vs.
JPY63.0 bn; -2.6%).
While the fact that the full-year estimates were not achieved is disappointing, the pachinko/pachislot
business appears to have resumed growth. A total of 449,880 machines were sold in the year (330,734
pachinko, 119,146 pachislot) vs. 331,205 in FY03/09 (+35.8% YoY). SR Inc. originally estimated total
sales of 450,000-500,000 machines so actual results were at the low end of estimates. At the same time,
SR Inc. notes that looking at aggregate numbers is not entirely meaningful due to differences in
profitability—lower pachinko machine sales are easily offset by a smaller unit increase of pachislot
machines. All in all, the pachislot business performed in-line with expectations while the pachinko
business underperformed.
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In pachinko, the Evangelion series continued to dominate earnings while new non-Evangelion titles sold
approximately 100,000 machines. In terms of the recent dynamics of the overall pachinko market, there
has been a trend towards halls focusing on famous franchise titles and max type machines with high
gambling potential. The pachislot market seems to have started coming back to life and this could be
positive for earnings. The SG&A expenses in FY03/10 were slightly higher than the initial forecast but
down substantially YoY, in a big part due to the absence of D3 Inc. (D3) subsidiary in FY03/10 results. In
terms of consolidated operating profit, the overall performance of subsidiaries has improved and the
company commented that the operating profit of most subsidiaries was “more or less in line with the plan.”
The dividend of 4,500 yen per share (2,000 yen at the interim and 2,500 yen at the year-end) was
identical to one paid in FY03/09. The payout ratio in FY03/10 amounted to 45.9%.
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Income statement
Income Statement
FY03/10
(JPYmn)
Sales
YoY
CoGS
Gross Profit
FY03/11 FY03/12 FY03/13 FY03/14
Cons.
Cons.
Cons.
Cons.
Cons.
66,342
103,593
92,195
108,141
114,904
-9.2%
56.1%
-11.0%
17.3%
6.3%
39,452
68,464
60,865
74,862
81,092
26,889
35,129
31,330
33,279
33,812
SG&A
18,764
21,993
22,803
22,964
24,020
Operating Profit
8,124
13,136
8,527
10,314
9,791
314.5%
61.7%
-35.1%
21.0%
-5.1%
Non-Operating Income
484
1,136
574
738
1,313
Non-Operating Expenses
846
588
440
784
1,339
7,761
13,684
8,661
10,268
9,765
-4.9%
YoY
Recurring Profit
YoY
683.1%
76.3%
-36.7%
18.6%
Extraordinary Gains
53
215
8
10
29
Extraordinary Losses
597
488
404
1,276
207
7,218
13,410
8,265
9,002
9,588
3,900
5,883
2,099
4,224
4,143
29
6
174
57
74
3,289
7,520
5,991
4,720
5,370
-
128.6%
-20.3%
-21.2%
13.8%
Pretax Profit
Tax Charges
Minorities etc.
Net Income
YoY
Performance overview
Sales can be affected by the mix between pachinko/pachislot sales due to accounting treatment
(pachinko revenues are a commission, pachislot revenues are for the full machine price). Field’s operating
profit trends track the underlying market cycle.
FY03/09 Results
FY03/09 sales declined 28.3% YoY to JPY73.0 bn; OP declined 85.1% YoY to JPY1.96 bn. Reasons were a
delay in release schedule of large scale pachinko title “CR Neon Genesis Evangelion—The Beginning and
the End” combined with an operating loss of JPY1.3 bn in the Game Field business (sales JPY12.6 bn) due
to underperformance of D3. D3 was subsequently sold to NAMCO BANDAI Games.
FY03/08 Results
Sales growth YoY was mainly driven by replacement demand for pachislot machines related to regulatory
changes.
FY03/07 Results
Sales declined YoY as halls faced funding challenges for purchasing new pachislot machines (regulatory
changes required machines to be replaced). Pachislot machine sales have higher profit margins than
pachinko, resulting in declines in profit margins (see table above).
FY03/06 Results
Sales rose YoY due to strong demand for both pachinko and pachislot machines. “CR Neon Genesis
Evangelion: Second Impact” was released during the year (selling 161,000 machines, 29.0% of total
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Fields Corporation machine sales).
FY03/05 Results
Sales rose YoY due to the popularity of “CR Neon Genesis Evangelion” pachinko machine (selling
approximately 125,000 machines, 26.0% of total Fields machine sales for the year) and +7.3% YoY
growth in pachislot machines (191,944 machines vs. 178,906 in FY03/04).
FY03/04 Results
Sales rose YoY, but were affected by a change in revenue recognition for certain pachislot machine sales.
Under the revised policy, sales began to be recognized when machines shipped from manufacturers vs.
delivery and installation in halls. The accounting change resulted in an additional JPY6.0 bn of sales
during the year.
Balance sheet
Balance Sheet
FY03/10
(JPYmn)
FY03/11
FY03/12
FY03/13
FY03/14
Cons.
Cons.
Cons.
Cons.
Cons.
Cash and Equivalents
15,916
15,873
18,344
23,314
29,583
Accounts Receivable
33,088
27,948
34,402
42,017
29,155
Inventories
1,519
1,357
3,134
2,343
3,133
Other
6,171
5,873
6,931
5,035
5,050
Current Assets
56,694
51,051
62,811
72,709
66,921
Tangible Assets
9,721
10,089
10,980
11,151
12,104
Intangible Assets
2,333
5,070
4,372
4,540
4,365
12,578
12,760
15,437
18,226
21,477
Fixed Assets
24,634
27,920
30,790
33,918
37,948
Total Assets
LT Investment Securities etc.
81,329
78,971
93,601
106,628
104,869
Accounts Payable
26,610
17,939
29,100
36,604
33,105
Short-Term Debt
720
869
1,068
943
692
8,515
8,779
7,757
9,818
7,933
Current Liabilities
35,845
27,587
37,925
47,365
41,730
Long-Term Debt
1,510
965
439
109
50
Other
2,785
3,397
3,682
4,055
4,336
Fixed Liabilities
Other
4,295
4,362
4,121
4,164
4,386
Total Liabilities
40,141
31,949
42,046
51,529
46,116
Shareholders' Equity
41,741
47,601
51,895
54,957
58,670
Net Assets
41,187
47,021
51,555
55,098
58,753
Total Liabilities & Net Assets
81,329
78,971
93,601
106,628
104,869
Working Capital
7,997
11,366
8,436
7,756
-817
Interest-Bearing Debt
2,230
1,834
1,507
1,052
742
-13,686
-14,039
-16,837
-22,262
-28,841
Net Debt
Increases in sales have tended to lead to higher accounts receivable, reflecting the company’s role as a
distributor and its function as a trading partner. The company does not put pachinko machines on its
balance sheet and therefore inventories are not significant. The net interest-bearing debt
(interest-bearing debt minus cash and equivalents) has long been negative (practically debt-free). The
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equity ratio has ranged between 39.1% and 77.6% from FY03/03-FY03/13.
Cash flow statement
Cash Flow Statement
FY03/10
FY03/11
FY03/12
FY03/13
(JPYmn)
Cons.
Cons.
Cons.
Cons.
Cons.
Operating Cash Flow (A)
8,429
8,005
10,015
13,570
16,322
Investment Cash Flow (B)
-1,011
-4,356
-4,798
-6,263
-8,018
7,418
3,649
5,217
7,307
8,304
-2,687
-3,915
-2,565
-2,277
-2,018
1,368
1,734
1,962
2,207
2,164
919
1,490
2,420
3,312
3,449
4,691
3,369
-2,930
-680
-8,573
-953
4,395
8,463
4,295
12,658
Free Cash Flow (A+B)
Financing Cash Flow
Depreciation (A)
Capital Expenditures (B)
Working Capital Changes (C)
Simple FCF (NI + A - B - C)
FY03/14
Fields’ operating cash flows (OCF) have been lumpy mainly due to working capital changes.
Negative simple free cash flow was largely the result of cash used in working capital, driven by higher
machine sales.
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Other information
History
The company was established in Nagoya in 1988 by its founder and current Chairman/CEO, Hidetoshi
Yamamoto. Yamamoto was exposed to the pachinko industry initially through his father whose Nagoya
company was involved in management of pachinko halls. The younger Yamamoto proved a skilled advisor,
adept at helping improve pachinko halls’ operating performance.
During Fields’ first decade the business grew rapidly as the company augmented its sales pitch with
pachinko hall space design and machine installation advice. After establishing itself in Kyushu and Tokyo
in 1992, Fields Corporation rolled-out operations on a national scale by establishing branch offices in
Tohoku, Chugoku, Shikoku and Kansai in 1995.
The company realized halls wanted access to the best machines to attract fans, but industry practice at
the time wedded a pachinko hall to one specific manufacturer. What was needed was a flexible system
whereby halls could freely pick and choose popular titles. Positioning itself as an unaligned distributor, the
company uncovered a profitable niche that it has since fortified.
Important developments since 2000 include partnerships with several major pachinko/pachislot
manufacturers. One important example of this was when the company started selling machines of Rodeo,
a subsidiary of Sammy Corp. Fields took a 35% equity stake in Rodeo in 2002 and used its Rodeo
relationship to demonstrate its ability to source publishing rights from third parties. In this case, it
licensed rights from Toei Corp. (TSE1: 9605) for “Gamera” (a giant sea-turtle and rival to the Godzilla
franchise), and the Gamera model sold a respectable 60,000 machines at the time of its release. The
event also raised the company’s ability to price its services; specifically, revenue per machine effectively
doubled when this approach was employed.
Starting in the early 2000s, Fields set up several ventures outside of pachinko/pachislot planning,
development and sales in order to create new content and realize multiple use of content. These included
a sports gym operation, a sports management office for professional athletes, a game software company,
a magazine publishing firm, and a mobile content company. In 2003, the company listed on the JASDAQ
exchange, receiving the ticker code 2767. It then formed a business tie-up with Bisty of SANKYO Group.
SANKYO Co. took a 15% stake in Fields in 2008. The company has also teamed up (in 2006) with Olympia
Co. (unlisted) and formed an alliance in 2008 with KYORAKU SANGYO (unlisted).
In 2007, Takashi Oya, a prominent games and IT securities analyst, joined the company as its new
president and COO. With his arrival, the company focused on improving execution, and systemizing many
of its planning and sales functions. At the same time, his appointment allowed Chairman Yamamoto the
time and freedom to execute his vision. From 2008, Fields can be viewed as transitioning from a machine
distributor to an IP business.
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News and topics
July 2014
On July 15, 2014, the company announced the nationwide release of a new pachislot machine from
Enterrise Co. “Sengoku BASARA 3”. It is expected to be available at pachinko halls from September 2014.
May 2014
On May 7, 2014, the company announced earnings forecasts for FY03/15.
FY03/15 earnings forecast:
 Sales: JPY100bn
 Operating profit: JPY5bn
 Recurring profit: JPY5bn
 Net income: JPY2.5bn
 Net income per share: JPY75.34
As a primary reason for the forecast, the company has entered new business partnerships with D-light Co.,
Ltd. and NANASHOW Corporation in pachinko/pachislot machine sales. Meanwhile, the company is
holding numerous conscientious discussions with Sammy Corporation and RODEO Co., Ltd. regarding the
overall approach to their business affiliation. As a result, Fields is not including products produced by
RODEO in its forecast with the exception of one title, production of which has been postponed from
FY03/14 to FY03/15.
On the same day, the company announced a business alliance with D-light Co., Ltd., a member of the
Daiichi Shokai Co., Ltd Group.
Daiichi Shokai and the company agreed on the use of Fields’ intellectual property and nationwide logistics
network to support the creation and development of new pachinko/pachislot machines with a high degree
of novelty, leading to the business alliance for conducting joint business with D-light.
On the same day, the company announced a business alliance with NANASHOW Corporation.
According to the company, NANASHOW is a pachinko/pachislot machine manufacturer that joined the
Japan Amusement Machine Industry Association in 2013. Fields holds 210 shares of NANASHOW’s
common stock with a stake of 38.9%.
March 2014
On March 18, 2014, the company announced a revision to its FY03/14 earnings forecast.
Revised FY03/14 earnings forecast:
Sales: JPY114bn (previous forecast: JPY120bn)
Operating profit: JPY9.6bn (JPY12.5bn)
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Recurring profit: JPY10.3bn (JPY12.5bn)
Net income: JPY5.2bn (JPY6.3bn)
The pachislot business held steady from efforts by the company to strengthen and enhance its product
lineup. However, the company modified the release date of a new machine to FY03/15, and this required
a revision to its FY03/14 earnings forecast. In interactive media, Fields moved to concentrate its efforts on
select social game titles in order to increase intellectual property value and maximize revenue. As a result,
the company stated that number of titles released in FY03/14 decreased.
January 2014
On January 28, 2014, the company announced the release of a new pachislot machine from Enterrise
Co., Ltd., “Pachislot Monster Hunter: Gekka Raimei.” It was expected to be available at pachinko halls
from March 2014.
On the same date, the company announced the release of a new pachinko machine from OK Co., Ltd.,
“Pachinko Onimusha: Dawn of Dreams.”
On January 7, 2014, the company announced the release of a new pachislot machine from Bisty Co,
Ltd. “Evangelion-Ketsui no Toki”. It was expected to be available at pachinko halls from February 2014.
July 2013
On July 31, 2013, the company announced the release of a new pachislot machine from Bisty Co, Ltd.
“Ultraman Wars”. It was expected to be available at pachinko halls from October 2013.
On July 29, 2013, the company announced the release of a new pachislot machine from Enterrise Co,
Ltd. “Devil May Cry 4”. It was expected to be available at pachinko halls from September 2013.
On July 17, 2013, the company announced the release of a new pachislot machine “Kaiji Act 3”. It was
expected to be available at pachinko halls from September 2013.
On July 9, 2013, the company announced the release of a new pachinko machine from OK Co., Ltd.,
“New-century Pachinko BERSERK” It was expected to be available at pachinko halls from August 2013.
On June 5, 2013, the company announced the release of a new pachinko machine from Bisty Co., Ltd.
“CR Evangelion 8". It was expected to be available at pachinko halls from July 2013.
March 2013
On March 12, 2013, the company announced the release of a new pachinko machine from Bisty Co., Ltd.
“CR SOUTEN KOURO.” It was expected to be available at pachinko halls from May 2013.
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February 2013
On February 12, 2013, the company announced the release of a new pachislot machine from Rodeo Co.,
Ltd. “Onimusha: Dawn of Dreams—The Second Coming.” It was expected to be available at pachinko halls
from March 2013.
On February 1, 2013, the company lowered its full-year FY03/13 forecasts.
Full-Year FY03/13 Forecast Revisions
 Sales: JPY107.0bn (previous forecast: JPY115.0bn)
 Operating profit: JPY9.0bn (JPY14.0bn)
 Recurring profit: JPY9.0bn (JPY14.5bn)
 Net income: JPY4.5bn (JPY7.3bn)
According to the company, in the pachislot market, orders for major titles were concentered in the 2H due
to the implementation of self-regulation. In the pachinko market, demand grew particularly for machines
with high product competitiveness. In response, the company decided to conduct additional development
activities for the three major titles that it initially planned to launch during the year and accordingly
delayed the release of these titles through consultation with manufacturers.
Despite these situations, the company was expecting to meet its full-year forecasts because of the
superior product competitiveness of the two titles (listed below) that were scheduled to go on sale in 2H.
However, the company revised its full-year forecasts due to conditions below:
1.
2.
“Resident Evil 5” (manufactured by Enterrise Co., Ltd.) released in December 2012 received more
inquiries than any of the company’s past titles. The company and Enterrise could not fully meet the
strong demand despite their efforts to address issues in delivery date, parts procurement, and
production capacity.
Although “EVANGELION” (manufactured by Bisty Co., Ltd.) that the company is trying to sell has
been highly acclaimed for its models, other major titles released at the end of 2012 showed poor
performance and lost the momentum for their large-scale introduction. Orders accordingly remained
lower than expected.
The company maintained its year-end dividend forecast at 25 yen per share.
January 2013
On January 9, 2013, the company announced the release of a new pachislot machine from Bisty Co.,
Ltd. “EVANGELION.” It was expected to be available at pachinko halls from February 2013.
December 2012
On December 13, 2012, the company announced the release of a new pachislot machine from Rodeo
Co., Ltd. “SAKIGAKE OTOKOJUKU—TENCHO-GORIN THE FINAL.” It was expected to be available at
pachinko halls from February 2013.
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September 2012
On September 26, 2012, the company announced the release of a new pachislot machine from
Enterrise Co. “Resident Evil 5.” It was expected to be available at pachinko halls from December 2012.
August 2012
On August 29, 2012, the company announced the release of a new-generation pachinko machine under
the new “OK” brand “GHOST IN THE SHELL STAND ALONE COMPLEX” as the first collaborative title with
Kyoraku Sangyo. It was expected to be available at pachinko halls from October 2012. The “OK” brand
was launched jointly with Kyoraku Sangyo to create a new pachinko market and expand the pachinko fan
base.
On August 23, 2012, the company announced its plans for a stock split and the adoption of a stock
trading unit.
According to the release, the company’s board of directors made decisions on the stock split and stock
trading unit in a meeting held on the same date.
 Stock Split
With September 30, 2012 (actually September 28 due to the shareholder registry administrator’s holiday)
set as the record date and October 1, 2012 as the effective date, the company will execute a 1-to-100
stock split. With this, the number of the company’s outstanding shares will increase from 347,000 to
34,700,000.
 Adoption of Stock Trading Unit
On October 1, 2012 (effective date for the above stock split), the company will adopt the trading unit of
100 shares.
 Dividend Forecast Revision
FY03/13 year-end dividend forecast was revised from 2,500 yen to 25 yen per share in line with the stock
split (essentially no change).
July 2012
On July 3, 2012, the company announced the release of a new pachislot machine from Bisty Co., Ltd.
“yaoh.” It was expected to be available at pachinko halls from August 2012.
May 2012
On May 28, 2012, the company announced the release of a new pachinko machine from Bisty Co., Ltd.
“CR Sengoku BASARA 3 - Battle of Sekigahara”. It was expected to be available at pachinko halls from July
2012.
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April 2012
On April 24, 2012, the company announced the release of a new pachislot machine from Bisty Co., Ltd.
“GTO Limit Break”. It was expected to be available at pachinko halls from June 2012.
On April 10, 2012, the company announced the release of a new pachinko machine from Bisty Co., Ltd.
“EVA Light III”. It was expected to be available at pachinko halls from May 2012.
March 2012
On March 16, 2012, the company announced a downward revision to its FY03/12 forecast.
The downward revision was as follows:
 Sales: JPY92.0 bn (vs. previous forecast of 100.0 billion yen)
 Operating profit: JPY8.4 bn (vs. previous forecast of 14.0 billion yen)
 Recurring profit: 8.5 billion yen (vs. previous forecast of 14.0 billion yen)
 Net income: 6.0 billion yen (vs. previous forecast of 8.0 billion yen)
The company cited the following reasons behind its lowered forecast:
 Some of the sales related to the planned Q4 release of a Bisty Co. title would now be posted in
FY03/13 instead.
 Most of the sales related to the pachislot title “Monster Hunter” were expected to be booked also in
FY03/13 as component procurement had been disrupted by the November 2011 flooding in Thailand.
The company further noted that Bisty had extended the development period for its title in a bid to
strengthen product development and respond to regulatory changes. Meanwhile, the Monster Hunter title
had received good market feedback. The company maintained its forecast full-year dividend payout of
5,000 yen per share.
February 2012
On February 13, 2012, the company announced the release of a new pachislot machine from Rodeo Co.
Ltd. “Monster Hunter”. It was expected to be available at pachinko halls from March 2012.
January 2012
On January 18, 2012, the company announced the release of a new pachislot machine from Bisty Co.
“Evangelion – the Heartbeat of Life”. It was expected to be available at pachinko halls from February
2012.
December 2011
On December 26, 2011, the company announced that its Board of Directors had concluded a basic
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agreement with Universal Entertainment Corp. (Jasdaq 6425) for a joint venture across a variety of
entertainment fields.
Overview of the Basic Agreement
 The company and Universal Entertainment Corp. agreed to start joint venture operations through
Mizuho Corp., a wholly owned subsidiary of Universal Entertainment.
 The company plans to acquire 198 shares in Mizuho (an ownership ratio of 49.75%) at projected total
cost of JPY1.0 bn during a third party offering that is targeted for early January 2012.
 In addition, the company and Universal Entertainment also agreed to look for further tie-up
opportunities across the entertainment industry.
November 2011
On November 15, 2011, the company announced the release of a new pachinko machine from Bisty Co.,
Ltd. “CR Evangelion 7". It was expected to be available at pachinko halls from January 2012.
October 2011
On October 4, 2011, the company Corporation and Enterrise Co. an affiliate of the major videogame
manufacturer Capcom Co., announced the release of a “Street Fighter IV” pachislot machine. It was
expected to be available at pachinko halls from November 2011.
September 2011
On September 6, 2011, the company announced the release of a new pachislot machine from Rodeo
called “Rahxephon”. It was expected to be available at pachinko halls from October 2011.
August 2011
On August 23, 2011, the company announced that its Board of Directors had come to a decision to
restructure its Japan Sports Marketing Inc. subsidiary (JSM).
The basic outline of the restructuring is as follows:
 JSM’s fitness club business will be carved out of the original business, absorbed into Fields and run by
the company.
 After this divestiture, JSM will be dissolved and put into special liquidation proceedings.
The company made the following comments about the restructuring:
 Regarding JSM’s fitness club business the company decided that carving out the business and
absorbing it would result in high levels of synergies given expected growth opportunities and the
resources that the business could leverage
 As for JSM’s other businesses (sports player and rights management), gauging revenue opportunities
was judged to be difficult and it was decided to dissolve the business
The impact from the restructuring on the company's results was yet to be determined, but if a significant
impact on performance was determined this would be promptly disclosed, the company noted.
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June 2011
On June 22, 2011, the company announced the release of a new pachislot machine from Rodeo called
“Kaze no Youjinbou—Memories of a Butterfly.” It was expected to be available at pachinko halls from
August 2011.
May 2011
On May 13, 2011, the company announced the nationwide release of a new pachinko machine from
Bisty Co., “CR The Story of Ayumi Hamasaki—the prologue.” It was expected to be available at pachinko
halls from July 2011.
April 2011
On April 19, 2011, the company announced the nationwide release of a new pachislot machine from
Bisty “SAMURAI 7.” It was expected to be available at pachinko halls from May 2011.
February 2011
On February 2, 2011, the company announced the nationwide release of a new pachislot machine from
Bisty, “MOBASLO Evangelion—for your own wish.” It was expected to be available at pachinko halls from
March 2011.
January 2011
On January 14, 2011, the company announced the nationwide release of a new pachislot machine from
Enterrise Co. “Sengoku BASARA 2.” It was expected to be available at pachinko halls from February 2011.
Enterrise is a subsidiary of Capcom Co., a major game software developer.
On January 14, 2011, the company also announced that it entered into an agreement with AQ
Interactive Inc. (TSE 3838) to acquire shares of Microcabin Corp., an AQ Interactive subsidiary. The
company provided the following details:
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The company would acquire an 85.0% stake in Microcabin on January 14, 2011, making it a subsidiary
The acquisition would be made with funds on hand, at a total cost of JPY756 mn
The acquisition was intended to strengthen the relationship with AQ Interactive and create synergies
between Fields and Microcabin
AQ Interactive Inc. would maintain a 15.0% share of Microcabin
On January 6, 2011, the company announced the nationwide release of a new pachinko machine from
Bisty, “CR Kung Fu Panda”. It was expected to be available at pachinko halls from February 2011.
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December 2010
On December 7, 2010, the company announced the nationwide release of “Gravion”, a pachislot
machine by Rodeo Co., Ltd. (Rodeo). The animated work “Gravion,” was created and directed by Masami
Obari, and was broadcasted by Fuji Television Network in 2002 and 2004. “Gravion” was an innovative
new robot animation that combined classic designs and stories. The machine is expected to be available
at pachinko halls from January 2011.
November 2010
On November 4, 2010, the company announced an upward revision to its FY03/11 forecasts and
revised up the expected interim dividend payment.
October 2010
On October 20, 2010, the company announced the nationwide release of “Ore no Sora – Spirit of Young
Justice”, a pachislot machine by Rodeo. The machine is the third commemorative title celebrating Rodeo’s
10th anniversary. It is expected to be available at pachinko halls from December 2010.
On October 5, 2010, the company announced the nationwide release of a new pachinko machine from
Bisty Co., Ltd., “CR Evangelion – Evangelical of the beginnings Light ver.” The company indicated that this
light version of “CR Evangelion - Evangelical of the beginnings” the machine includes attractive game
functions and will be launched as a “high chance” model that has been preset to make it easier to hit the
jackpot.
August 2010
On August 4, 2010, the company revised 1H FY03/11 earnings estimates upward.
July 2010
The company announced the launch of the pachislot machine “Magical Shopping Arcade Abenobashi” on
July 5, 2010. It employs anime content which won a prize at the 2002 Japan Media Arts Festival,
planned and produced by GAINAX Co., Ltd. The machine is expected to be available at the halls from
August 2010.
June 2010
On June 24, 2010, the company announced that the board of directors made on that day the decision to
additionally acquire Digital Frontier Inc. shares (planned date for the share transfer is June 30, 2010).
Details are as follows:

Number of shares to be acquired: 60 (12.6% of total shares outstanding)
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
Change in the number of the shares held: from 353 shares (shareholding ratio: 74.3%) to 413 shares
(shareholding ratio: 86.9%).
The impact on the FY03/11 performance (both consolidated and parent basis) is minor.
April 2010
On April 30, 2010, the company announced the release of “CR Neon Genesis Evangelion—Evangelical of
the beginnings,” a new pachinko machine by Bisty Co., Ltd. The machine employs high-quality images
from the movie “Evangelion: 1.0 You are (not) alone” and “Evangelion: 2.0 You can (not) advance.” It also
uses a new special “double impact” frame for the machine body modeled on the Evangelion EVA-01 Test
Type. According to the news release, the machine is available in pachinko halls in June 2010.
On April 20, 2010, the company has announced the release of “Gamera,” a pachislot machine by Rodeo
Co., Ltd. “Gamera” is the second commemorative title to celebrate the 10th anniversary of the Rodeo
brand. It retained the original “anyone can play it” concept from the 1st “Gamera” title released in 2000.
Fields Corporation commented that alongside features reproduced from the earlier title, such as
continuous scenes and reel control, new “Gamera” incorporates modern game system and is a completely
new machine. The release said that the machine is to hit the halls in June 2010.
On April 15, 2010, the company issued an additional press release regarding the acquisition of Digital
Frontier shares. The information below has been updated to reflect the new data. The numbers and facts
updated on April 15, 2010 are highlighted in bold.
On March 26, 2010, the company announced that it made a decision to acquire shares of Digital Frontier,
a subsidiary of TYO Inc. and reached a basic agreement in this regard with TYO. According to this
agreement, it is assumed that Fields Corporation would acquire 74.3% of Digital Frontier shares out of
84.21% that are owned by TYO. According to the release, Digital Frontier is one of the leading Japanese
domestic companies in the field of CG (Computer Graphics) production, its track record including CG in
movies “DEATH NOTE” and “SUMMER WARS.”
Further on April 15, 2010, Fields Corporation said that the board of directors made on that
day the final decision to acquire the abovementioned shares in a share transfer.
DF
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Company Outline
Name: Digital Frontier Inc.
Main businesses: Production of computer graphics
Date of establishment: May 16, 2000
Location of head office: 1-1-71 Naka Meguro Meguro Ward Tokyo Japan
Representative: President/Representative Director Hidenori Ueki
Paid-in capital: JPY31 mn
Financial year-end: July 31
Shares outstanding: 475 shares
Major shareholders and shareholdings: TYO Inc. 84.2%, Hidenori Ueki 4.8%
Details of the number of shares to be acquired, the number of shares to be held after the changes and the
anticipated schedule for the changes are listed below
 Number of shares to be acquired: 353 ordinary shares (acquisition price JPY650 mn)
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
Shares to be held after change: 353 ordinary shares (74.3% stake)
Dates
 March 25, 2010, resolution by board of directors, signing of the basic agreement.
 April 15, 2010, Board meeting of Fields Corporation regarding the issue and signing of the share
transfer.
 April 16, 2010, date of share transfer.
DF will become a consolidated subsidiary of Fields Corporation. There was no impact on Field’s FY03/10
financial results. Any such impact on FY03/11 financial results and beyond has not been yet determined
as of April 15, 2010.
On April 6, 2010, the company announced that it established a new publishing company, “HERO’S,” with
Shogakukan Creative Inc. Shogakukan Creative and Fields will have 51% and 49% stakes respectively.
The new company is planning to launch a monthly comic magazine for young readers at the end of 2010.
On April 1, 2010, the company announced an update regarding a share buyback conducted in March
2010.
 The buyback period: March 1, 2010 until March 31, 2010.
 Shares repurchased: 46
 Amount: 5,058,000 yen
As of March 31, 2010 there were 332,115 shares outstanding (excluding 14,885 treasury shares).
The company also announced the completion of the repurchase program announced in November 2009.
The cost and number of shares repurchased during the total buyback period (from November 24, 2009
until March 31, 2010) is as follows:
 Total number of shares repurchased: 4,242
 Total cost: 454,641,100 yen
March 2010
On March 26, 2010, the company issued an additional press release regarding the signing of the
agreement to acquire the shares of Tsuburaya Pro. The information below has been updated to reflect the
new data. The numbers and facts updated on March 26, 2010 are highlighted in bold.
On March 17, 2010, the company announced a decision to acquire shares of Tsuburaya Productions Co.
Ltd., a consolidated subsidiary of TYO Inc. The company has reached a basic agreement as a precursor to
the transfer of the 51.0% of Tsuburaya Pro ordinary shares held by TYO, and both companies have
entered into the main negotiations regarding this transfer. Tsuburaya Pro produces and owns various
content, notably the “Ultraman Series,” and became a company under the umbrella of TYO in October
2007.
Further on March 26, 2010, Fields Corporation said that the board of directors made a day earlier the final
decision to acquire the abovementioned shares in a share transfer.
Reasons for the acquisition:
1. The multi-use development by the Fields Corporation group companies can be expected thanks to
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2.
cooperation with Bandai Co., Ltd, which has a 49.0% stake in Tsuburaya Pro. Examples of such
cooperation include new character merchandising initiatives and active use of entertainment
machine tie-ins with Fields Corporation partner companies.
The “Ultraman Series” is intellectual property recognized by markets around the world, so the
company expects to find opportunities to develop overseas businesses in areas such as films and
character merchandising.
Tsuburaya Pro Company Outline
 Trading name: Tsuburaya Productions Co., Ltd.
 Main businesses: Planning and production of films and television programs; planning, production and
marketing of licensed goods featuring character images.
 Date of establishment: April 12, 1963
 Location of head office: 1-10-1 Hachimanyama Setagaya Ward Tokyo Japan
 Representative: President/Representative Director Shinichi Ohka
 Paid-in capital: JPY310 mn
 Financial year-end: July 31
 Shares outstanding: 100,000 shares
 Major shareholders and shareholdings: TYO Inc. 51.0%, Bandai Co., Ltd. 49.0%
 Results for the fiscal year to July 2009: Sales JPY3,577 mn; Recurring profit JPY328 mn; Net profit
JPY238 mn
Details of the number of shares to be acquired, the number of shares to be held after the changes and the
anticipated schedule for the changes are listed below.
 Number of shares to be acquired: 51,000 ordinary shares (acquisition price of JPY1.1 bn)
 Shares to be held after change: 51,000 ordinary shares (51.0% stake)
Dates
 March 17, 2010, resolution by board of directors, formulation of basic agreement.
 March 25, 2010, final decision by board of directors to acquire shares, determination of the date and
price of acquisition.
 April 2, 2010, signing of share transfer agreement, date of transfer of shares.
Tsuburaya Pro will become a consolidated subsidiary of Fields Corporation. There is no impact on Field’s
FY03/10 financial results. Any such impact on FY03/11 financial results and beyond has not been yet
determined as of March 26, 2010.
Additionally, the release of March 26, 2010 indicated that Fields Corporation acquired TYO treasury stock
from TYO in a 3rd party offering (payment to be effected on April 2, 2010). As a result of this transaction
Fields Corporation becomes a holder of 14.9% of TYO shares.
On March 5, 2010, the company announced an update regarding a share buyback conducted in
February 2010.
 Buyback period: February 1, 2010 until February 28, 2010.
 Shares repurchased: 3,496
 Amount of cash: JPY0.373 bn
As of February 28, 2010 there were 332,161 shares outstanding (excluding 14,839 shares held in
treasury).
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Top management
Hidetoshi Yamamoto Born in 1955, founded Fields in 1988. He is Chairman and has responsibility for executing Company’s long-term
vision.
Takashi Oya
Born in 1965, is President and Animation Produce Division Manager.
Kiyoharu Akiyama
Born in 1952, is a Vice President, Pachinko/Pachislot Business Management Division Manager.
Tetsuya Shigematsu Born in 1968, is a Senior Managing Director, Interactive Media Business Division Manager, Consumer Products
Business Division Manager.
Masakazu Kurihara Born in 1960, is a Managing Director, Contents Division Manager, General Manager of Planning and Promoting
Dept. II under Contents Division.
Akira Fujii
Born in 1960, is a Managing Director.
Kenichi Ozawa
Born in 1966, is a Managing Director.
Hiroyuki Yamanaka
Born in 1967, is a Director and Planning and Administration Division Manager.
Hideo Ito
Born in 1969, is a Director, Corporate Division Manager.
Teruo Fujishima
Born in 1960, is a Director and Pachinko/Pachislot Business Management Division Manager.
Nobuyuki Kikuchi
Born in 1958, is a Director and Media Relations Business Division Manager.
Shigesato Itoi
Born in 1948, is an Outside Director.
Employees
Fields employed 770 employees at the parent company (1,588 total employees on a consolidated group
basis). Average age was 35.8, average salary was JPY6.67mn (both parent company)—data as of March
31, 2014.
Major shareholders
As of the end of March 2014, the shareholder breakdown was as follows: individuals/other 57.29%,
foreign institutions 19.26%, financial institutions 2.26%.
Top Shareholders
Amount Held
Hidetoshi Yamamoto
SANKYO CO., LTD.
Takeshi Yamamoto
Mint Co.
Northern Trust Company (AVFC) RE NV 101
25.00%
15.00%
10.41%
4.61%
2.87%
JP Morgan Chase Bank 385632
1.60%
Takashi Oya
Northern Trust Company (AVFC) Re 15 PCT Treaty Account
Northern Trust Company (AVFC) Account Non Treaty
The Bank of New York Mellon (International) Limited 131800
1.30%
1.13%
1.01%
0.93%
Source: Company data, SR Inc. Research
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Shareholder returns
The company adheres to the policy of paying dividends in line with its earnings levels. Specifically, Fields
determines dividend amounts based on cash flow status with a yardstick of the 20%+ consolidated
payout ratio.
Investor relations
The company hosts quarterly analyst meetings following earnings announcements.
In July 2012, the company improved the content of its English IR website, adding “Top Message”
(message from chairman and president) “Financials” (description of the company’s business results,
financial statements, segment data, etc.), “CSR” (message from COO, etc.), and other information.
(Click here to visit the English IR website.)
By the way


Chosen by Daiwa Investor Relations Co., Ltd. as “2013 Company of Excellence” for its website.
Chosen by Nikko Investor Relations, Co., Ltd. for the “Best Corporate Website” award in 2013.
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Company profile
Company Name
Fields Corporation
Phone
Head Office
Shibuya Garden Tower
16-17 Nampeidai-cho Shibuya-ku
Tokyo, Japan 150-0036
Listed On
+81-3-5784-2111
Established
June 10, 1988
Website
http://www.fields.biz/ir/j/
IR Contact
Takuya Takano
IR Mail
[email protected]
JASDAQ Standard
Exchange Listing
March 19, 2003
Fiscal Year-End
March
IR Web
http://www.fields.biz/ir/e/
IR Phone
+81-3-5784-2111
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