Sega Dreamcast Archive

Sega's Financial Statements 1998

Sega's 1998 Annual Report

---

Summary

For this Annual Report from Sega for the year 1998 which covers the period from April 1st, 1997 to March 31st, 1998. The fiscal year 1997-1998 was a difficult one for Sega, with the Japanese economy in a recession partially due to the 1997 Asian financial crisis and the Sega Saturn being phased out a mere 3-4 years after its launch as seen on page 9 of their report:

"However, the Company reported special losses of ¥42.8 billion. This was mainly attributable to efforts to improve asset quality, including the disposal of inventories in preparation for the launch of Dreamcast , SEGA's next-generation home video game console, as well as the transfer of losses posted by two affiliated companies to SEGA's nonconsolidated accounts."

These inventories would be Sega Saturn consoles, controllers, games and any other accessory for the platform. While the Saturn was still moderately successful in Japan being in second place (behind the Sony PlayStation), it was essentially dead in the West for most of 1997 and especially 1998 as Sega shifted development resources for the Dreamcast. We see this move towards the Dreamcast as well in the R&D (Research and Development) increase from FY 1997 to FY 1998. Total R&D expenditures went from ¥24.0 billion in FY 1997 to ¥27.1 billion in FY 1998, an increase of ¥3.1 billion.

---

Financial Ratios (1997-1998)

This part will cover the Financial Ratios for FY 1997 and FY 1998, the reason behind showing FY 1997 is to show the change since 1997. We will not be changing the currency units used which will remain Japanese Yen (¥). I will mention in "Financial Ratios" what each ratio means and what a "good", "bad" or "average" ratio is, this will be represented by the color, "good" will be green, "average" will be a yellow-orange and "bad" will be red. A number in () is a negative number in the "language" of accounting and I won't be changing that however when showing divisions I will use () to make it obvious that it is a division.

---

Key Numbers

---

Financial Ratios