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CME Issues Notice of its Consolidated Business Performance to the End of the Third Quarter of the Fiscal Year Ending March 2010

Returning to Profitability After 3 Years and Gearing up for New Business Development Aimed at Future Growth!

Columbia Music Entertainment Inc. (hereinafter CME; Head Office: Minato-ku, Tokyo Representative Executive Officer/President and Chief Operating Officer (COO): Yasuharu Hara, Chief Executive Officer (CEO): Strauss Zelnick) today issues its consolidated business results indicating the Company’s overall performance for the first three quarters (April 1 ~ December 31, 2009) of the fiscal year ending March 2010.

<Consolidated Business Performance to the End of Q3 of FY March 2010>
1. Sales Volume

CMEs cumulative consolidated sales to the end of the third quarter of the current fiscal year totaled 12,583 million yen, a decrease of 8.6% year-on-year. The main reasons for this were that although sales of the in-house Music Production business increased year-on-year, this was insufficient to compensate for the year-on-year declines in sales of the Custom Sales business, the P&D (Production & Distribution) business, Creative Core Co., Ltd., and CME’s overseas music production subsidiary. In the in-house Music Production business, sales of Animation and Educational titles and of J-Pop titles were higher than in corresponding period of the previous fiscal year.

2. Profitability
CME returned to the black for the first time in three years, recording a cumulative operating profit of 54 million yen (compared with a loss of 772 million yen for Q3 of the previous year). The main reasons for this result were that in addition to posting favorable sales and profit figures in the in-house Music Production business (and specifically for Animation and Educational titles and J-Pop titles), we were also able to make cuts in compensation and salaries as well as reducing our retirement benefit liabilities. Also, we recorded a cumulative ordinary profit of 20 million yen (compared with a loss of 734 million yen for Q3 of the previous fiscal year).

Furthermore, we booked extraordinary profits amounting to 1,297 million yen and extraordinary losses amounting to 744 million yen. A breakdown of the main items shows an extraordinary profit of 971 million yen with respect to the cumulative decrease in retirement benefit liabilities up to the end of the consolidated second quarter, an extraordinary profit of 285 million yen in connection with the transfer of the Company’s Head Office, and an extraordinary loss of 542 million yen with respect to goodwill to Creative Core and an impairment loss on audio and video equipment, etc., owned by that company. In addition, we broke down Creative Core’s deferred tax assets of 95 million yen during the consolidated second quarter. As a result of the above factors, the Company recorded a net profit for the third quarter under review of 445 million yen (compared with a net loss of 354 million yen for Q3 of the previous fiscal year).

3. Future Business Developments
On January 21, 2010, CME’s principal and largest shareholder RHJ International SA and its affiliate Ripplewood Nippon Columbia Partners II L.P., sold their entire shareholdings in the Company (31.39%) Faith, Inc. Representative Executive Officer/President: Hajime Hirasawa; Head Office: Nakagyo-ku, Kyoto; Securities code no: 4295; listed on the First Section of the Tokyo Stock Exchange).

In the future, by building up its strategic partnership with Faith as a member of the Faith Group, CME will unlock numerous business synergies shaped around cooperation on music-related services beginning with video-related businesses such as movie and short content production and the Online Games business, as well as artist production using mobile phones and the internet, the creation of new businesses, etc. Moreover, we will make even more active efforts to make greater use of our wealth of music assets as well as in branding Columbia artists and creating hit music.

We will attempt to expand our new music businesses by joining forces with different kinds of partner companies in a variety of their business fields. We will be deciding on specific measures for realizing business synergies from now on, and we will announce details of these measures promptly as soon as they have been agreed upon.

On January 1, 2010, CME absorbed the Educational, Games and Music Software businesses of its 100%-owned subsidiary Creative Core following a corporate split. From now on, we intend to proceed with further business integration, promote synergy effects, and realize improved performance.

On October 1, 2010, the Company will be celebrating the centenary of its foundation. On this happy anniversary, we would like to express our cordial gratitude for the patronage of all our stakeholders over so many years, and to let it be known that we intend to drive our business even father ahead as we enter our next century. In order to achieve our performance targets for the current fiscal year, we will continue to implement structural reforms with the aim of further securing and improving our sales and profitability.

<Consolidated full Year Business Performance Forecast for Fiscal Year Ending March 2010>
Concerning the consolidated business performance forecast for the full fiscal year ending March 2010 (April 1, 2008 ~ March 31, 2010), our current forecast is for total sales of 17.5 billion yen, an operating profit of 250 million yen and an ordinary profit of 200 million yen, which is unchanged from the previous forecast. However, during the third quarter accounting period, we incurred extraordinary losses totaling 40 million yen that were not included in the previous business performance forecast. In addition, with the acquisition of RHJ International SA and Ripplewood Nippon Columbia Partners II L.P.’s shareholdings in CME by Faith, which was disclosed on January 21, 2010, we expect to record an extraordinary loss of 270 million yen in respect of structural reform expenses in the fourth quarter accounting period. Accordingly, CME is reducing its current full-year net profit forecast to 390 million yen from the previous forecast of 700 million yen (issued on November 6, 2009).

<Artists and Titles Making Major Contributions to Sales>
< Music Software>
Kiyoshi Hikawa—    Tokimeki no Rumba, Hikawa Kiyoshi Enka Meikyoku Collection 10
~Rokyoku Ichidai~, Hikawa Kiyoshi Enka Meikyoku Collection 11
~Tokimeki no Rumba~
Eisaku Okawa—    Naniwa Kotobuki
Harumi Miyako—    Chisana Haru
Madoka Oishi –    Roji Shigure
Kaela Kimura—    HOCUS POCUS, BANZAI
Chiharu Matsuyama—    Guzen to Hitsuzen
Tamurapan—    Noniunoun
Minna Anime ga Suki datta
2009 Pops Hit March ~Kiseiki~
THE IDOLM@STER Series
Samurai Sentai Shinkenjar Series

<Video Software>
Wanwan, Kotochan, Utan—    Inai Inai Baa! Ohisama to Dance
Inai Inai Baa! Osoto de Asobo ~Haru, Natsu, Aki, Fuyu~
THE IDOLM@STER 4th ANNIVERSARY PARTY SPECIAL DREAM TOUR’S
STARMEN—    Nazo no Shin Unit STA☆MEN Hour Riku! Umi! Sora! Bokurano Natsu Yasumi ~Kokoro no Tabi~

<Mail Order Business>
Yuji Koseki—    Kokuminteki Sakkyokuka: Koseki Yuji Zenshu
Hibari Misora—    Misora Hibari Best Hit Zenshu
Seishun Uta Nenkan  Senzen/Sengo Hen
Enka no Hanamichi

<PC/Mobile Phone Incoming Call Melodies>
Kaela Kimura—    Butterfly, Hot Pepper no Uta, BANZAI
Tamurapan—    Theme of Okami Shonen Ken (Lotte Fit’s TV CM song)
Chodo Ii Toko ni Itai
Samurai Sentai Shinkenjer—    Samurai Sentai Shinkenjer

<Game Software> (Creative Core)
Nintendo DS Software Kupu~!! Mamegoma!
Nintendo DS Software Akogare Girls Collection: Suteki ni Nurse Days
Nintendo DS Software Kindaichi Shounen no Jikenbo: Akuma no Satsujin Koukai

<P&D (Production & Distribution) Business>
YOSHIMOTO R and C Co., Ltd.
YU-A—    You Are My Love
Mai Satoda with the Goda Family—    Mai Satoda with the Goda Family
Droppu
Ameagari Kesshitai (a comedy duo), others—    Ametalk Series (talk program)

■ Columbia Music Entertainment Inc.

Company Name:     Columbia Music Entertainment Inc.
Address:    Edomizaka Mori Bldg., 4-1-40 Toranomon, Minato-ku, Tokyo
Representative:     Representative Executive Officer/President & COO Yasuharu Hara
Business contents:    Production, advertising and sales of music software, etc., and music artist management
Paid-in capital:    1,000,000,000
URL:    http://columbia.co.jp

■ For further information concerning this subject please contact:

Columbia Music Entertainment, Inc.
Ms. Tomoko Isawa, Chief Staff, PR/ER Group, Corp. Planning & Communication Dept.
Telephone:     03-6895-9821
Facsimile:    03-6895-9115
Mobile phone:    090-3548-6122
Email:     isawa_tomoko@columbia.co.jp