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Columbia Music Entertainment Inc. (hereinafter CME; Head Office: Minato-ku, Tokyo; Chief Executive Officer (CEO): Sadahiko Hirose, Chairman: Strauss Zelnick) has today issued its consolidated business results indicating its overall performance for the fiscal year ending March 31, 2007 (April 1, 2006 ~ March 31, 2007).

 

During the fiscal year under review, as a result  of  strong revenue performance , CME was able to achieve   the highest levels of operating profit, ordinary profit, and current term net profit since ownership changed and corporate revitalization began in October, 2001.

 

CME’s consolidated sales totaled 29,336 million yen (an increase of 1.5% compared with the previous fiscal year)., While the Japanese CD market as a whole recorded negative growth,  sales in CME’s  in-house Music Production  business expanded significantly, recording a 26% increase compared with fiscal year ending March 2003. During the fiscal year under review, Kiyoshi Hikawa received the 48th Japan Record Award for the song Ikken, and Kaela Kimura’s third album Scratch went straight into the weekly Oricon Chart at No.1 and stayed there for two successive weeks, marking a breakthrough for this artist. In addition, Yo Hitoto’s first best-of album BESTYO has achieved  sales of almost a million copies.  Sales of in-house produced titles sold briskly due to the popularity of our hit artists and the use of outside producers.  Sales in  CME’s digital music business increased by 65% year-over-year.

 

In addition, we have started up two new projects with the aim of making even greater use of our rich sound source catalogue. The first, entitled the LP Project, revived  CME’s practice of producing vinyl LP records after an 18-year hiatus. We have already released a total of 15 titles ranging from Showa Kayokyoku to Jazz and Classical albums, and an additional slate of releases is scheduled for this coming October. The second project is Japan’s first-ever music distribution service to allow customers to customize the music they wish to purchase on CR-R using a special order terminal installed in music stores.

 

As for the profit and loss situation, increases in income from CME’s in-house music entertainment business and our digital business made significant contributions to profitability. CME’s custom sales business and  music publication subsidiaries also performed favorably.. As a result, CME recorded a consolidated ordinary profit of 619 million yen for the fiscal year under review, an increase of 28.6% compared with the previous fiscal year, and a consolidated net profit for the fiscal year under review of 561 million yen, compared with a net loss of 2,054 million yen for the previous fiscal year.

 

Meanwhile, cash reserves, which stood at about 2 billion yen three years ago, rose to over 5 billion yen at the end of the fiscal year under review. Over this period we have also paid back all our bank loans, CME is now operating  debt-free .

 

Full Year Business Result Forecast for Fiscal Year Ending March 31, 2008 

As announced earlier, the company will change its method of accounting for sales in its Pressing &Distribution Business, resulting in lower reported revenue, but higher profit margins. Although we are expecting an increase in revenue from the Digital Business, the change in the method of reporting sales in the P&D Business will result in a decrease in total sales figures.  Although CME has delivered major hits in the recent past, we have conservatively not forecast any million-seller hits in the upcoming year.   In addition, CME is  planning to make significant investments in new digital-related projects that continue to help fuel our growth. Accordingly, CME’s consolidated performance forecast for the fiscal year ending March 31, 2008 (April 1, 2007 ~ March 31, 2008) is for total sales of 20 billion yen, an operating profit of 500 million yen, an ordinary profit of 450 million yen, and net income for the term in question of JPY 400 million yen.

We continue to make adjustments to our management structure to allow us to optimize profit on a sustained basis even in the absence of major hits.  As always, we will seek to continuously improve the Company's ability to generate profits.

 

Furthermore, digital music distribution (such as music downloads, etc.) is expanding rapidly in Japan, with sales in this market now exceeding those of the CD singles.  We will endeavor to continue to develop new content and improve  our distribution platforms in accordance with the needs of this market.