The Consumer Business centered on SEGA CORPORATION is expected to post operating loss in the year ending March 2012, given the severe economic environment in the U.S. and Europe and rapid change in market environment of home video game software. Amid such business environment, the Company decided to implement structural reform of the Consumer Business at SEGA CORPORATION to strive for a shift to a structure corresponding to the market environment for the purpose of earnings recovery in the following period and after.
In accordance with the decision, the Company is expected to record extraordinary loss totaling around 7.1 billion yen, including costs in line with the streamlining of organizations and the canceling of development of some game software and costs for processing inventory. As for the Consumer Business in the following period and after, the Company projects decreases in operating expenses due to the reform.
Please refer to “Concerning Structural Reform of Consumer Business at SEGA CORPORATION” announced on the same day for details of the reform.
The Consumer Business centered on SEGA CORPORATION is expected to post operating loss in the year ending March 2012, due to the challenging economic climate and significant changes in the home video game software market environment in the U.S. and Europe.
Given this circumstance, the companies determined that in order to actualize earnings recovery of the Consumer Business in the following period and after and return to a growth path, it is essential to streamline organizations in the field of home video game software in the U.S. and European markets, while shifting to a structure that corresponds to change in environment, including strengthening development in the field of digital content.
2. Descriptions of measures
(1) streamline organizations
We will streamline organization in the U.S. and Europe home video game software. This will create a smaller company positioned for sustained profitability.
(2) Reduction of number of titles
We conducted detailed reviews of earnings projections for titles targeted toward the U.S. and European markets and decided to narrow down sales titles from the following period and after to strong IPs, such as “Sonic the Hedgehog,”, “Football Manager”, “Total War” and “Aliens” which are expected to continue posting solid earnings. In accordance with this, we are canceling the development of some game software titles.
(3) Booking impairment loss on work in process assets
We will book impairment loss on work in process assets concerning some titles after
reevaluating the profitability of work in process concerning game software which are going to be sold in the U.S. and European markets from the end of the current fiscal period to the following fiscal period.
(4) Processing of inventory
In accordance with the streamlining of organization in the U.S. and Europe markets, we will
estimate allowance for expenses among game software inventories, including inventory on the market that is currently circulating.
4. Future outlook
In the year ending March 2012, we are planning to record 7.1 billion yen in extraordinary loss as
expenses in accordance with the structural reform, which the cost is believed to be 4.9 billion yen.
Please refer to “Notice of Extraordinary Loss and Adjustment to the Forecast of Operating
Results” announced on the same day as its forecast for the full-year consolidated operating results
for the year ending March 2012.
We expect operating expenses for the Consumer Business in the following period to decrease due
to our latest efforts.