Fields Corporation (2767)

Transcription

SR Research Report
2015/4/30
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
sr_inquiries@sharedresearch.jp or find us on Bloomberg.
SR Research Report
2015/4/30
Contents
Recent updates ......................................................................................................... 4
Highlights .............................................................................................................. 4
Trends and outlook ................................................................................................ 5
Business ................................................................................................................. 14
Summary ............................................................................................................ 14
Business description ............................................................................................. 14
Market and value chain ........................................................................................ 23
Strategy .............................................................................................................. 26
Historical financial statements .................................................................................. 27
Summary ............................................................................................................ 27
Income statement ................................................................................................ 32
Balance sheet ...................................................................................................... 34
Cash flow statement ............................................................................................ 35
Other information .................................................................................................... 36
History ................................................................................................................ 36
News and topics .................................................................................................. 37
Top management ................................................................................................. 39
Employees ........................................................................................................... 39
Major shareholders .............................................................................................. 40
Shareholder returns ............................................................................................. 41
Investor relations ................................................................................................. 41
By the way ............................................................................................................. 41
Company profile................................................................................................... 42
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Income Statement
(JPYmn)
Sales
YoY
FY03/08
FY03/09
FY03/10
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Est.
101,818
73,035
66,342
103,593
92,195
108,141
114,904
99,554
120,000
FY03/11 FY03/12 FY03/13 FY03/14 FY03/15 FY03/16
19.3%
-28.3%
-9.2%
56.1%
-11.0%
17.3%
6.3%
-13.4%
20.5%
Gross Profit
34,544
24,024
26,889
35,129
31,330
33,279
33,812
28,468
-
GPM
33.9%
32.9%
40.5%
33.9%
34.0%
30.8%
29.4%
28.6%
-
21,385
22,063
18,764
21,993
22,803
22,964
24,020
23,724
-
13,158
1,960
8,124
13,136
8,527
10,314
9,791
4,743
6,000
YoY
47.1%
-85.1%
314.5%
61.7%
-35.1%
21.0%
-5.1%
-51.6%
26.5%
OPM
12.9%
2.7%
12.2%
12.7%
9.2%
9.5%
8.5%
4.8%
5.0%
11,705
991
7,761
13,684
8,661
10,268
9,765
5,491
6,500
YoY
27.2%
-91.5%
683.1%
76.3%
-36.7%
18.6%
-4.9%
-43.8%
18.4%
RPM
11.5%
1.4%
11.7%
13.2%
9.4%
9.5%
8.5%
5.5%
5.4%
5,296
-1,481
3,289
7,520
5,991
4,720
5,370
3,018
3,500
42.7%
-
-
128.6%
-20.3%
-21.2%
13.8%
-43.8%
16.0%
347
216.7
1,408.5
50.0
347
172.7
1,539.0
50.0
34,700
142.3
1,644.2
50.0
34,700
161.8
1,756.3
50.0
34,700
91.0
1,792.8
60.0
SG&A
Operating Profit
Recurring Profit
Net Income
YoY
Per Share Data (JPY, Thousand Shares, After Stock Split Adjustments)
347
15,262.2
128,201.5
4,500.0
347
-42.7
1,173.3
45.0
347
94.8
1,236.5
45.0
Cash & Securities　12,841
11,181
15,916
15,873
18,344
23,314
29,583
15,823
Accounts Receivable
12,354
4,324
33,088
27,948
34,402
42,017
29,155
45,888
4,013
963
1,519
1,357
3,134
2,343
3,133
1,736
Total Current Assets
39,559
25,135
56,694
51,051
62,811
72,709
66,921
71,014
Total Assets
Number of Shares FY End
EPS
Book Value Per Share
Dividend Per Share
105.5
50.0
Balance Sheet (JPYmn)
Inventory
69,168
52,064
81,329
78,971
93,601
106,628
104,869
110,316
Accounts Payable
5,954
1,981
26,610
17,939
29,100
36,604
33,105
33,850
Interest-Bearing Debt
5,006
3,011
2,230
1,834
1,507
1,052
742
4,064
Total Liabilities
22,836
12,568
40,141
31,949
42,046
51,529
46,116
50,070
Shareholders' Equity
44,795
40,420
41,741
47,601
51,895
54,957
58,670
60,171
Net Debt
-7,835
-8,170
-13,686
-14,039
-16,837
-22,262
-28,841
-11,759
Working Capital
10,413
3,306
7,997
11,366
8,436
7,756
-817
13,774
Cash Flow Statement (JPYmn)
Operating Cash Flow
11,127
4,147
8,429
8,005
10,015
13,570
16,322
-9,086
Investment Cash Flow
-14,604
-6,182
-1,011
-4,356
-4,798
-6,263
-8,018
-6,297
-1,384
602
-2,687
-3,915
-2,565
-2,277
-2,018
1,624
Financial Cash Flow
Financial Ratios
ROA
17.3%
1.6%
11.6%
17.1%
10.0%
10.3%
9.2%
5.1%
ROE
11.9%
-3.5%
8.2%
17.1%
12.2%
8.9%
9.5%
5.1%
Equity Ratio
64.8%
77.6%
51.3%
60.3%
55.4%
51.5%
55.9%
54.5%
Source: Company data
Figures may differ from company materials due to differences in rounding methods.
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Recent updates
Highlights
On April 30, 2015, Fields Corporation announced full-year earnings results for FY03/15; see the results
section for details.
On the same day, the company announced a revision to its dividend forecast (a special dividend
commemorating the company’s listing on the First Section of the Tokyo Stock Exchange).
On April 14, 2015, the company moved to the First Section of the TSE. It now plans to issue a special
year-end dividend of JPY10 per share commemorating this event. Together with an ordinary dividend of
JPY25, the total year-end dividend will be JPY35, meaning the company is forecasting a full-year dividend
per share of JPY60.
On April 7, 2015,the company announced its listing on the First Section of the Tokyo Stock Exchange.
The Tokyo Stock Exchange has granted the company approval to change its listing. On April 14, 2015,
Fields will move from TSE JASDAQ (Standard) to the First Section of the Tokyo Stock Exchange.
On March 4, 2015, the company updated the report after interviewing management; see the results
section for details.
On February 3, 2015, the company announced that nationwide sales have begun for Pachinko Ultra
Battle Retsuden, a new pachinko machine manufactured by OK Co., Ltd. The new machine is scheduled to
be installed in pachinko halls beginning in March 2015.
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 (cml)
(JPYmn)
Sales
YoY
Gross Profit
YoY
GPM
SG&A Expenses
YoY
SG&A / Sales
Operating Profit
YoY
OPM
Recurring Profit
YoY
RPM
Net Income
YoY
NPM
Quarterly Performance
(JPYmn)
Sales
YoY
Gross Profit
YoY
GPM
SG&A Expenses
YoY
SG&A / Sales
Operating Profit
YoY
OPM
Recurring Profit
YoY
RPM
Net Income
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
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
36,385
54,204
25.0%
13.5%
13,648
19,357
54.7%
28.5%
37.5%
35.7%
11,471
17,320
7.4%
6.8%
31.5%
32.0%
2,176
2,036
6.0%
3.8%
2,144
2,066
5.9%
3.8%
1,434
1,227
3.9%
2.3%
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
114,904
6.3%
33,812
1.6%
29.4%
24,020
4.6%
20.9%
9,791
-5.1%
8.5%
9,765
-4.9%
8.5%
5,370
13.8%
4.7%
Q1
7,459
29.8%
2,790
37.6%
37.4%
5,300
-9.5%
71.1%
-2,509
-2,254
-1,502
-
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
Q3
20,341
29,317
-44.1%
-45.9%
6,920
10,513
-49.3%
-45.7%
34.0%
35.9%
10,998
17,113
-4.1%
-1.2%
54.1%
58.4%
-4,077
-6,599
-4,072
-5,633
-2,509
-3,215
FY03/15
Q2
Q3
12,882
8,976
-58.0%
-49.6%
4,130
3,593
-64.5%
-37.1%
32.1%
40.0%
5,698
6,115
1.5%
4.5%
44.2%
68.1%
-1,568
-2,522
-1,818
-1,561
-1,007
-706
-
Q4
99,554
-13.4%
28,468
-15.8%
28.6%
23,724
-1.2%
23.8%
4,743
-51.6%
4.8%
5,491
-43.8%
5.5%
3,018
-43.8%
3.0%
FY03/15
% of FY
FY Est.
99.6%
100,000
-13.0%
94.9%
5,000
-48.9%
109.8%
5,000
-48.8%
120.7%
2,500
-53.4%
Q4
70,237
15.7%
17,955
24.2%
25.6%
6,611
-1.3%
9.4%
11,342
46.3%
16.1%
11,124
44.5%
15.8%
6,233
50.4%
8.9%
Figures may differ from company materials due to differences in rounding methods
Company estimates are the most recent released figures.
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Pachinko/pachislot machine sales
Pachinko/pachislot machine sales (cml)
FY03/14
(units)
Q1
Pachinko/pachislot machines
18,502
YoY
171,905
-71.4%
Total pachinko machines
12,842
YoY
YoY
231,636
35.6%
139,004
135.5%
5,560
61,529
-87.3%
Titles
Q3
70.0%
110,276
-38.6%
Total pachislot machines
FY03/15
Q2
76.7%
92,532
13.4%
0.4%
Q4
392,982
19.8%
162,879
62.9%
230,003
0.8%
Q1
44,197
Q2
102,119
138.9%
38,540
200.1%
5,657
1.7%
-40.6%
73,910
-33.0%
28,209
-54.2%
Q3
-33.7%
118,134
-15.0%
35,381
-61.8%
1
5
7
13
1
2
3
Pachinko
1
3
4
6
1
1
2
Pachislot
-
2
3
7
-
1
1
Pachinko/pachislot machine sales (quarterly)
FY03/14
(units)
Q1
Pachinko/pachislot machines
18,502
YoY
-71.4%
Total pachinko machines
322.4%
12,842
YoY
97,434
-38.6%
Total pachislot machines
276.3%
5,560
YoY
55,969
-87.3%
Titles
FY03/15
Q2
153,403
437.2%
Q4
153,515
Q3
59,731
-14.3%
28,728
-9.7%
31,003
-18.2%
Q4
161,346
2.6%
23,875
11.8%
137,471
1.1%
Q1
44,197
138.9%
38,540
200.1%
5,657
1.7%
Q2
57,922
-62.2%
35,370
-63.7%
22,552
-59.7%
Q3
Q4
51,396
-14.0%
44,224
53.9%
7,172
-76.9%
1
4
2
6
1
1
1
Pachinko
1
2
1
2
1
-
1
Pachislot
-
2
1
4
-
1
-
Source: supplementary company data on earnings
Pachinko/pachislot market trends
FY03/14
Market trends (cml.)
(units)
FY03/15
Q1
Q2
Q3
Q4
Q1
Q2
Q3
86.0
181.9
286.1
366.4
82.7
176.0
267.7
-21.9%
-12.5%
-9.8%
-9.6%
-3.8%
-3.2%
-6.4%
51.0
114.1
180.8
225.8
51.1
111.4
178.9
YoY
-30.0%
-19.6%
-13.5%
-15.2%
0.2%
-2.4%
-1.1%
35.0
67.8
105.3
140.6
31.6
64.6
88.8
YoY
-5.9%
2.9%
-2.8%
1.4%
-9.7%
-4.7%
-15.7%
Total pachinko/pachislot machines
YoY
Pachinko
Pachislot
FY03/14
Market trends (quarterly)
(units)
FY03/15
Q1
Q2
Q3
Q4
Q1
Q2
Q3
86.0
95.9
104.2
80.3
82.7
93.3
91.7
-21.9%
-1.8%
-4.8%
-8.5%
-3.8%
-2.7%
-12.0%
51.0
63.1
66.7
45.0
51.1
60.3
67.5
YoY
-30.0%
-8.6%
-0.6%
-21.6%
0.2%
-4.4%
1.2%
35.0
32.8
37.5
35.3
31.6
33.0
24.2
YoY
-5.9%
14.3%
-11.6%
16.1%
-9.7%
0.6%
-35.5%
Total pachinko/pachislot machines
YoY
Pachinko
Pachislot
Q4
Q4
Source: Fields earnings briefing session materials ("Market conditions of pachislot sales" and "Market conditions of pachinko sales.")
FY03/15 results
Sales:
Operating profit:
Recurring profit:
Net profit:
JPY99.6bn (-13.4% YoY)
JPY4.7bn (-51.6% YoY)
JPY5.5bn (-43.8% YoY)
JPY3.0bn (-43.8% YoY).
In the amusement machine sales business, Fields pursued a range of sales strategies as it looked to grow
sales of pachinko machines featuring leading intellectual property (IP). As a result, the company sold
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302,000 pachinko machines (+139,000 YoY), backed by contributions from a variety of different types of
machine, including CR Evangelion 9. Sales of three new pachislot slot machines, including Pachislot
BERSERK, also all outperformed targets. The launches of five new pachislot machines scheduled for this
year, however, were delayed until FY03/16 owing to new testing protocols introduced in September 2014.
As a result, the company sold 97,000 pachislot machines (-132,000 YoY). Overall, the company sold
399,000 amusement machines during the year (+6,000 YoY).
Developments in Fields’ IP are as follows:
 The company continued focusing on creating IP via the comic Heroes Monthly, and developing visual
content for the IP in this comic. It also decided to go ahead with the use of IP in video games, and
pachinko and pachislot machines.
 The Ultraman series generated stable revenues as the company deployed this IP across a range of
media. It continued broadcasting a TV series and premiered a new movie, while growing sales of TV
and movie tie-in products. In addition, overseas, the company sold existing movie products and
planned new movie products, while also holding events at complex facilities. The company also
planned, produced, and premiered a new live action show based on the Ultraman series that allows
that audience to experience the action. It plans to expand this production overseas.
 In social games, Fields made its operation and development framework more efficient, and focused on
improving the quality of its titles. In particular, it added new content and used real-life events to
enhance titles featuring the AKB48 brand. The company also steadily released new smartphone game
apps with exciting gameplay and appealing characters.
Q3 FY03/15 results
Sales:
Operating loss:
Recurring loss:
Net loss:
JPY29.3bn (-45.9% YoY)
JPY6.6bn (operating profit of JPY2.0bn in Q3 FY03/14)
JPY5.6bn (recurring profit of JPY2.1bn in Q3 FY03/14)
JPY3.2bn (net profit of JPY1.2bn in Q3 FY03/14)
During Q3 FY03/15, Fields booked sales of 118,134 pachinko machines (-20,870 YoY) and 35,381
pachislot machines (-57,251 YoY), demonstrating lower total unit sales year-on-year. Due to changes to
its initial sales schedule, Fields sold one type of pachinko machine during the October-December quarter,
CR ayumi hamasaki 2. (During the same period of the previous year, the company sold one type of
pachinko machine and one type of pachislot machine.) During cumulative Q3 (April-December), the
company sold two types of pachinko machines, compared to four types during cumulative Q3 FY03/14. In
pachislot machines, the company sold one type of machine, as opposed to three types during the
April-December period in 2014.
During Q4 (January-March 2015), Fields is scheduled to sell three types of pachinko machines and two
types of pachislot machines. In pachinko, the company plans to offer CR Evangelion 9, CR Batman, and
Pachinko Ultra Battle Retsuden. CR Evangelion 9, which was introduced in December 2014, has sold over
100,000 units; the company will book these sales in Q4. Pachinko Ultra Battle Retsuden is the successor
to a machine that sold around 80,000 units. Fields expects to sell even more of this new version, due to its
favorable reception at pachinko halls and positive sales timing.
In pachislot, sales are planned to include Salaryman Kintaro: Shusse Kaido-hen, which was launched in
January 2015, and Pachislot BERSERK. Fields’ initial plan was to sell four types of pachinko machines and
eight types of pachislot machines during the full year of FY03/15, but its currently anticipated number of
pachislot machines is down due to a September 2014 change to its testing methodology. During the full
year, the company now expects sales of five types of pachinko machines and three types of pachislot
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machines, with sales of around 40,000 units for Salaryman Kintaro: Shusse Kaido-hen, as well as a few
tens of thousands of units for Pachislot BERSERK.
However, sales results exceeded initial company forecasts during cumulative Q3, owing to effective sales
activities. Variety in machine types is also planned to be higher than planned in the future. As a result,
although there have been changes to the sales schedule and product lineup, Fields has not changed its
full-year earnings forecasts.
Developments in the company’s IP are as follows:
 Heroes Monthly—which is intended as a springboard for new IP—has entered its fourth year of
publication, and has published 49 different works. Of these, seven have begun to develop visual
content, and cross-media initiatives to span games, movies, pachinko, and pachislot are in progress.
 At Tsurubaya Productions, the company moved to expand its fan base for the Ultraman series by
connecting with fans both domestically and abroad, as part of measures to develop and increase
profitability of IP. In Japan, Fields attempted to capture the family market by continuous airing of a
television series, in addition to the scheduled release of a feature film in March 2015. The stage
production Ultra Heroes THE LIVE: Acrobattle Chronicle is planned to begin performances in March
2015, and Fields also plans to launch this performance overseas._The company is aggressively
promoting the Ultraman series overseas, and Fields expects Tsurubaya Productions to deliver total
sales increases from FY03/16 onward.
 In social games, the company launched new content and held fan events to leverage the AKB48 title.
In September 2014, Fields also launched KOTOKOTO—The World of Words, which uses the company’s
IP. The social game got off to a solid start, being downloaded more than 1 million times in the first
three months post-launch, but the company plans to reinforce its billing mechanisms for revenue
generation. The October-December quarter also saw the launch of one new game title, which makes
use of new animated content.
1H FY03/15 results
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).
In pachislot machines, Pachislot Sengoku BASARA 3 (manufactured by Enterrise Co. and on sale since
August 2014) sold about 19,000 units.
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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,
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
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. 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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FY03/16 outlook
FY03/16 Company Estimates
(JPYmn)
Sales
YoY
CoGS
Gross Profit
YoY
GPM
SG&A Expenses
SG&A/Sales
Operating Profit
YoY
OPM
Recurring Profit
YoY
RPM
Net Income
YoY
1H Act.
20,341
-44.1%
13,420
6,920
FY03/15
2H Act.
79,213
FY Act.
99,554
FY03/16
FY Est.
120,000
0.9%
-13.4%
20.5%
57,666
21,548
71,086
28,468
-49.3%
6.9%
-15.8%
34.0%
27.2%
28.6%
10,998
12,726
23,724
54.1%
16.1%
23.8%
4,743
6,000
-
15.8%
-51.6%
26.5%
-
11.1%
-4,077
-4,072
8,820
4.8%
5.0%
9,563
5,491
6,500
-
25.5%
-43.8%
18.4%
-
12.1%
5,527
5.5%
3,018
3,500
-
40.4%
-43.8%
16.0%
-2,509
5.4%
Fields’ full-year earnings forecasts for FY03/16 are as follows:
 Sales:
JPY120.0bn (+20.5% YoY)
 Operating profit: JPY6.0bn (+26.5% YoY)
 Recurring profit: JPY6.5bn (+18.4% YoY)
 Net income:
JPY3.5bn (+15.9% YoY).
In the pachinko and pachislot machine business, Fields plans to begin selling products from two new
client manufacturers. It also aims to take a greater share of the market in terms of machines sold. In the
social games business, it plans to improve gameplay in existing titles and steadily release highly novel
new titles.
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,
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
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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 eight (five pachinko and three
pachislot), as the company moves to end its agreement with Rodeo Corp. and due to changes in pachislot
machine testing procedures. However, the company plans to sell nine types of pachinko machines and
six–nine types of pachislot machines by FY03/16.
Types of pachinko/pachislot machine sold per manufacturer (sales base)
Manufacturer
Type
FY03/11
FY03/12
FY03/13
FY03/14
FY03/15
FY03/16
Target Revised target
Rodeo
Pachislot
3
3
2
2
1
1
Bisty
Pachinko
2
2
1
3
2
2
Pachislot
2
2
3
3
1
-
OK
Pachinko
-
-
1
2
1
1
Pachislot
-
-
-
-
-
-
Enterrise
Mizuho
Pachislot
1
1
1
2
3
1
Pachinko
-
-
-
-
-
1
(including Macy)
Pachislot
-
-
-
1
1
-
D-light
Pachinko
-
-
-
-
-
-
Pachislot
-
-
-
-
1
-
Pachinko
-
-
-
-
-
-
Pachislot
-
-
-
-
1
1
NANASHOW
Total (pachinko)
2
2
2
5
3
4
Total (pachislot)
6
6
6
8
8
3
Total
8
8
8
13
11
7
Note: The new pachinko machine manufactured by OK Co., Ltd in FY03/14 will be booked in FY03/15.
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. The company is aiming for average sales of about 30,000 units per machine.
Fields also plans focus on its organization, growing branch offices from 26 to 37, and sales staff from 300
to 400 from FY03/15. 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.
Merchandising based on own IP portfolio
Fields explains that converting its IP portfolio into merchandising revenue typically takes between three to
five years for books and theatrical releases. For instance, the company expects several series releases and
a merchandising rollout based on Hero’s Monthly (a comic magazine launched in November 2011)
between FY03/16 and FY03/17. As of February 2015, seven screening projects are underway based on
the Hero’s Monthly IP, including SOUL ReVIVER and Sword Guy Katana.
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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
Fields operates a “circular” business, based on four categories of product that interact with each other.
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.
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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).
The company is adding several products to its IP portfolio based on the Hero’s Monthly comic magazine.
Notably, in July 2014 the company began creating the script for the SOUL ReVIVER television series for
Hollywood (US).
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 is
trying to maximize the value of its BESERK IP portfolio through development across multiple media,
including social games, pachinko and pachislot machines, and merchandise. 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.
Merchandizing across media—the lateral development of IP
Fields generates revenue from IP by merchandizing it in interactive media such as games, mobile content,
social network services, in addition to consumer products and pachinko and pachislot machines.
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.
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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.
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. From FY03/15, 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
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
0
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
YoY
SANKYO GROUP
YoY
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%
-
2,498
16,119
7,264
47,889
72,085
-
-
545.3%
-54.9%
559.3%
50.5%
-
-
-
-
32,437
28,790
Enterrise
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. As of February 2015,
the first three series have been produced and released. 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
pachinko/pachislot machines. As of March 2014, the company had 15 subsidiaries, nine equity-method
affiliates, and one related company. Main group companies are listed below (when joined the group;
Fields’ stake).
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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; 100.0%): Plans and produces animation films
Digital Frontier Inc. (April 2010; 86.9%): Plans and produces computer graphics
Movie/TV

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; 87.7%): Provides mobile content-related and online shopping
services.
Consumer Products
 Tsuburaya Productions Co. Ltd. (April 2010; 51.0%): Plans and produces movies and TV shows. Plans,
produces, and sells character merchandise
 Total Workout Premium Management Inc. (May 2011; 95.0%): 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; 100.0%): Plans and develops software
 Nex Entertainment Co. (November 2011; 69.8%): 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
GP Margin
FY03/08
FY03/09
FY03/10
FY03/11
FY03/12
FY03/13
FY03/14
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
FY03/15
Cons.
33.9%
32.9%
40.5%
33.9%
34.0%
30.8%
29.4%
28.6%
OP Margin
12.9%
2.7%
12.2%
12.7%
9.2%
9.5%
8.5%
4.8%
RP Margin
11.5%
1.4%
11.7%
13.2%
9.4%
9.5%
8.5%
5.5%
NP Margin
Financial Ratios
5.2%
-2.0%
5.0%
7.3%
6.5%
4.4%
4.7%
3.0%
FY03/08
FY03/09
FY03/10
FY03/11
FY03/12
FY03/13
FY03/14
FY03/15
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
ROA
17.3%
1.6%
11.6%
17.1%
10.0%
10.3%
9.2%
5.1%
ROE
11.9%
-3.5%
8.2%
17.1%
12.2%
8.9%
9.5%
5.1%
1.47
1.40
0.82
1.31
0.98
1.01
1.10
0.90
57.3
Total Asset Turnover
Inventory Turnover
25.4
75.8
43.7
76.3
29.4
46.2
36.7
Days of Inventory
14.4
4.8
8.4
4.8
12.4
7.9
10.0
6.4
Quick Ratio
130.4%
205.4%
136.8%
158.8%
139.1%
137.9%
140.8%
134.8%
Current Ratio
204.7%
333.0%
158.2%
185.1%
165.6%
153.5%
160.4%
155.1%
64.8%
77.6%
51.3%
60.3%
55.4%
51.5%
55.9%
54.5%
-17.5%
-20.2%
-32.8%
-29.5%
-32.4%
-40.5%
-49.2%
-19.5%
Equity Ratio
Net Debt / Equity
OCF / Current Liabilities
0.58
0.55
0.24
0.29
0.26
0.29
0.39
-0.20
OCF / Total Liabilities
0.49
0.33
0.21
0.25
0.24
0.26
0.35
-0.18
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 (4), Osaka (3),
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%
7.3%
9.8%
Kyoraku Sangyo
Sanyo Bussan
SANKYO
Sammy
Heiwa, Olympia
Others
Sammy
Heiwa, Olympia
Daito Giken
8.6%
8.4%
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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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)
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
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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
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
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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.
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
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(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.
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.
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Income statement
Income Statement
(JPYmn)
Sales
YoY
FY03/08
FY03/09
FY03/10
FY03/11
FY03/12
FY03/13
FY03/14
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
101,818
73,035
66,342
103,593
92,195
108,141
114,904
99,554
-13.4%
19.3%
CoGS
Gross Profit
SG&A
Operating Profit
YoY
Non-Operating Income
Non-Operating Expenses
Recurring Profit
YoY
Extraordinary Gains
Extraordinary Losses
Pretax Profit
Tax Charges
Minorities etc.
Net Income
YoY
FY03/15
-28.3%
-9.2%
56.1%
-11.0%
17.3%
6.3%
67,274
49,010
39,452
68,464
60,865
74,862
81,092
71,086
34,544
24,024
26,889
35,129
31,330
33,279
33,812
28,468
23,724
21,385
22,063
18,764
21,993
22,803
22,964
24,020
13,158
1,960
8,124
13,136
8,527
10,314
9,791
4,743
47.1%
-85.1%
314.5%
61.7%
-35.1%
21.0%
-5.1%
-51.6%
1,213
313
528
484
1,136
574
738
1,313
1,766
1,497
846
588
440
784
1,339
465
11,705
991
7,761
13,684
8,661
10,268
9,765
5,491
27.2%
-91.5%
-43.8%
683.1%
76.3%
-36.7%
18.6%
-4.9%
97
269
53
215
8
10
29
479
1,292
3,840
597
488
404
1,276
207
215
10,509
-2,579
7,218
13,410
8,265
9,002
9,588
5,754
5,101
-126
3,900
5,883
2,099
4,224
4,143
2,430
111
-971
29
6
174
57
74
305
5,296
-1,481
3,289
7,520
5,991
4,720
5,370
3,018
-
128.6%
-20.3%
-21.2%
13.8%
-43.8%
42.7%
-
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
Fields Corporation machine sales).
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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.
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Balance sheet
Balance Sheet
(JPYmn)
Cash and Equivalents
FY03/08
FY03/09
FY03/10
FY03/11
FY03/12
FY03/13
FY03/14
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
12,841
11,181
15,916
15,873
18,344
23,314
29,583
15,823
45,888
Securities
Accounts Receivable
Inventories
Other
Current Assets
FY03/15
-
-
48
-
12,354
4,324
33,088
27,948
34,402
42,017
29,155
4,013
963
1,519
1,357
3,134
2,343
3,133
1,736
10,351
8,667
6,171
5,873
6,931
5,035
5,050
7,567
39,559
25,135
56,694
51,051
62,811
72,709
66,921
71,014
Tangible Assets
8,093
10,898
9,721
10,089
10,980
11,151
12,104
12,197
Intangible Assets
3,937
2,761
2,333
5,070
4,372
4,540
4,365
4,490
17,578
13,268
12,578
12,760
15,437
18,226
21,477
22,614
Fixed Assets
29,608
26,929
24,634
27,920
30,790
33,918
37,948
39,302
Total Assets
69,168
52,064
81,329
78,971
93,601
106,628
104,869
110,316
Accounts Payable
5,954
1,981
26,610
17,939
29,100
36,604
33,105
33,850
Short-Term Debt
4,322
781
720
869
1,068
943
692
4,056
Other
9,046
4,785
8,515
8,779
7,757
9,818
7,933
7,867
Current Liabilities
19,322
7,547
35,845
27,587
37,925
47,365
41,730
45,773
Long-Term Debt
684
2,230
1,510
965
439
109
50
8
2,830
2,791
2,785
3,397
3,682
4,055
4,336
4,288
LT Investment Securities etc.
Other
Fixed Liabilities
3,514
5,021
4,295
4,362
4,121
4,164
4,386
4,296
Total Liabilities
22,836
12,568
40,141
31,949
42,046
51,529
46,116
50,070
Shareholders' Equity
44,795
40,420
41,741
47,601
51,895
54,957
58,670
60,171
-554
-821
-824
-398
-390
-679
242
483
539
473
753
Appraisal Gains / Losses etc.
1,536
-924
Minority Interests
Net Assets
46,331
39,496
41,187
47,021
51,555
55,098
58,753
60,246
Total Liabilities & Net Assets
69,168
52,064
81,329
78,971
93,601
106,628
104,869
110,316
Working Capital
10,413
3,306
7,997
11,366
8,436
7,756
-817
13,774
5,006
3,011
2,230
1,834
1,507
1,052
742
4,064
-7,835
-8,170
-13,686
-14,039
-16,837
-22,262
-28,841
-11,759
Interest-Bearing Debt
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
equity ratio has ranged between 39.1% and 77.6% from FY03/03-FY03/13.
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Cash flow statement
Cash Flow Statement
FY03/08
FY03/09
FY03/10
FY03/11
FY03/12
FY03/13
FY03/14
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Operating Cash Flow (A)
11,127
4,147
8,429
8,005
10,015
13,570
16,322
-9,086
Investment Cash Flow (B)
-14,604
-6,182
-1,011
-4,356
-4,798
-6,263
-8,018
-6,297
-3,477
-2,035
7,418
3,649
5,217
7,307
8,304
-15,383
(JPYmn)
Free Cash Flow (A+B)
FY03/15
-1,384
602
-2,687
-3,915
-2,565
-2,277
-2,018
1,624
Depreciation (A)
1,097
1,775
1,368
1,734
1,962
2,207
2,164
2,137
Capital Expenditures (B)
4,211
5,111
919
1,490
2,420
3,312
3,449
3,252
-1,988
-7,107
4,691
3,369
-2,930
-680
-8,573
14,591
4,170
2,290
-953
4,395
8,463
4,295
12,658
-12,688
Financing Cash Flow
Working Capital Changes (C)
Simple FCF (NI + A - B - C)
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
January 2015
On January 14, 2015, the company announced that Nanashow Corp. will conduct a nationwide launch
of its pachislot machine BERSERK, part one. The new machine will be installed in pachinko halls in Japan
beginning in March 2015.
October 2014
On October 31, 2014, 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.
August 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.
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
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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)
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.
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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.
Top management
Hidetoshi Yamamoto Founded Fields in 1988. Chairman with responsibility for executing Company’s long-term vision.
Takashi Oya
President
Kiyoharu Akiyama
Vice President
Tetsuya Shigematsu Senior Managing Director
Masakazu Kurihara
Managing Director
Akira Fujii
Managing Director
Kenichi Ozawa
Managing Director
Hiroyuki Yamanaka
Director and Planning and Administration Division Manager
Hideo Ito
Director, Corporate Division Manager
Teruo Fujishima
Director and Pachinko/Pachislot Business Management Division Manager
Nobuyuki Kikuchi
Director and Media Relations Business Division Manager
Shigesato Itoi
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.
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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
Head Office
Fields Corporation
Shibuya Garden Tower
16-17 Nampeidai-cho Shibuya-ku
Tokyo, Japan 150-0036
Phone
Listed On
+81-3-5784-2111
Tokyo Stock Exchange 1st Section
Established
Exchange Listing
June 10, 1988
March 19, 2003
Website
Fiscal Year-End
http://www.fields.biz/ir/j/
March
IR Contact
IR Web
XXX Watanabe
http://www.fields.biz/ir/e/
IR Mail
IR Phone
ir@fields.biz
+81-3-5784-2111
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Fields Corporation (2767)

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