Through a broad business portfolio, we will seek to bolster our presence in the market as a comprehensive entertainment trading company.
		President and COO Kazuhiko Note

Can you tell us about the Company’s operating results for the fiscal year 2009?
　
　During the fiscal year 2009, despite some signs of a recovery in certain quarters, corporate earnings remained sluggish and the employment environment steadily deteriorated. Personal consumption also remained weak, in the face of a worsening income environment. The environment surrounding the business sectors in which we operate also remained challenging, reflecting the declining birthrate and the diversification of consumers’ needs.
　Despite the difficult circumstances, Happinet was able to record higher sales and profits, by executing strategic measures and proceeding with Business Structural Reform.
　With respect to sales, following the inclusion of WINT CORPORATION in the Group in March 2009, both sales of the Visual and Music business and its share of the Group’s overall sales rose significantly.
　Looking at profits, throughout fiscal 2009, we focused on analyzing and reforming our business structure to make our operations profitable. As part of these initiatives, WINT CORPORATION comprehensively reviewed its inventory valuation. Although we recorded losses as a result of these initiatives, the Toy business and the Amusement business posted a significant income.
　Until the previous fiscal year, income from both the Toy business and the Amusement business was held back by the significant disposal of stock. However, these businesses achieved noticeably higher income for fiscal 2009 by adopting measures in which they vigorously focused on the inventory turnover rate and thoroughly streamlined their operations. The Amusement business, meanwhile, began to enjoy a positive impact from the integration of its subsidiaries, which was designed to streamline its operations. With these measures, we were able to establish an operational structure that can consistently generate profits.
　As a result of these initiatives, in fiscal 2009 the Happinet Group recorded net sales of 194,246 million yen, up 16.5% from the previous year, operating profit of 2,327 million yen, rising 8.9%, recurring profit of 2,513 million yen, increase of 8.2%, and net profit of 1,179 million yen, up 3.9%.

What were the factors behind the strong performance to the Toy business and Amusement business?

　Both the Toy business and the Amusement business posted higher income.
　This strong outcome was attributable to the fact that the two businesses closely monitored the inventory turnover rate by promptly identifying and accurately maintaining the appropriate amount of inventories based on the level of sales in markets nationwide.
　Inventory volumes were reduced significantly at the end of March 2010, as the Toy business cut its inventories from approximately 3.1 billion yen for fiscal 2008 to around 1.7 billion yen, while the Amusement business reduced its inventories from approximately 1.6 billion yen to about 0.9 billion yen. This appropriate inventory control enabled the two businesses to reduce the dumping and disposal of their stock, which resulted in an increase in their income.
　As part of our initiatives in the Toy business for fiscal 2010, we have also been active in providing support to our retailers to help them revitalize their shops. Specifically, with the cooperation of our retailers, we analyze the sales data of individual shops by statistically comparing them with the nationwide sales situation. Based on accumulated data of individual products by type, we will make accurate trend forecasts, introduce appropriate zoning based on the characteristics of shops, control inventories at shops appropriately, restock products in small quantities, respond to consumer needs, and promptly provide products. Through these new measures, we will strengthen our functions to support our retailers.

What were the reasons for the significant decline in income from the Visual and Music business?

　 The Visual and Music business recorded significantly higher sales, but a fall in income, reflecting the addition of WINT CORPORATION to the Group. During fiscal 2009, to establish comprehensive measures, we began with a focus on analyzing the business structure of WINT CORPORATION. As a result, WINT CORPORATION turned out to have a number of business practices that were different from those of the Happinet Group, including high logistics costs and a different inventory evaluation method. At the same time, we also learned that WINT CORPORATION had significant scope to improve its operations, mainly by cutting its logistics costs, reducing losses from the disposal of stock, and cutting fixed costs.
　The Happinet Group is now determined to bolster the earnings of WINT CORPORATION for the next fiscal year, principally by reducing the ratio of logistics costs to sales by approximately 1%, and cutting losses from the disposal of stock through appropriate inventory control.
　With the inclusion of WINT CORPORATION in the Group, we have secured top-level sales in the visual and music distribution market, and acquired the ability to comprehensively handle visual and music products. By taking advantage of the synergies generated from our Visual and Music business and WINT CORPORATION, we will aim to bolster our share in the distribution industry, and become the number one distributor in the future.

What message do you have for shareholders?

　Our basic policy on the distribution of profits to shareholders is to pay stable and sustainable dividends. In line with this policy, we paid a term-end dividend of 15 yen per share for fiscal 2009, unchanged from fiscal 2008. As a result, our annual dividend came to 30 yen per share, including an interim dividend of 15 yen per share.
　We operate a broad portfolio of businesses as a comprehensive entertainment trading company with a diverse range of products. We believe that, to meet the expectations of shareholders, our mission is to take advantage of this broad portfolio of businesses to increase our presence in the market and achieve further growth while maintaining the stability of our businesses.
　We would appreciate the continued understanding and support of our shareholders.