Business risks which may have significant impact on the OLC Group's financial performance, financial condition and stock price are as explained below.
Risks Related to Weakening of the Tokyo Disney Resort Brand
Quality of Tangibles (Facilities, Services, etc.)
The OLC Group's principal business, Tokyo Disney Resort, maintains guest satisfaction at a high level by constantly creating new experience value for guests through means such as introducing new facilities. The OLC Group will work to raise the overall appeal of Tokyo Disney Resort by raising the quality of its facilities and services. However, lower quality due to factors including an inability to properly time investments as a result of unforeseen circumstances could affect the performance of the OLC Group.
Quality of Intangibles (Cast Hospitality, etc.)
The OLC Group's principal business, Tokyo Disney Resort, is supported by numerous cast members. The hospitality of cast members creates strong feelings of satisfaction among guests. Going forward, the OLC Group will educate cast members and create a work environment that gives cast members a sense of pride and joy in their work. However, lower quality due to factors including a shortage of workers as a result of unforeseen circumstances could have consequences such as reduced theme park attendance, which could affect the performance of the OLC Group.
Risks Related to Operations
Product Deficiencies and Problems
Incidents, including attraction incidents, sale of defective merchandise or product tampering, involving the products and services of Tokyo Disney resort, including attractions, products and foods, could entail serious harm to the guests who are customers, and could result in material costs from factors including decreased trust in the Group's priority on safety, damage to the Group brand and lawsuits, which could affect the performance of the OLC Group.
The OLC Group emphasizes compliance in operating its businesses and conducting related transactions including the procurement of products and materials. We maintain systems that promote compliance and provide ongoing education to managers. These efforts notwithstanding, failure among managers to prevent major regulatory violations or incidents could result in the cessation of part or all operations due to government actions, reduced trust in the OLC Group, damage to the Group brand or other negative consequences including lawsuits involving large expenses that could affect the performance of the OLC Group.
The OLC Group takes full precautions in its business activities to prevent avoidable leaks of the personal information it maintains on guests and the proprietary information it maintains concerning business operations.
Risks Related to the External Environment
In the OLC Group's principal business, Tokyo Disney Resort, the number of guests that visit the theme parks is easily influenced by weather conditions such as climate and temperature. Consequently, an extended period of inclement weather could affect the performance of the OLC Group by causing the number of guests to decrease.
The OLC Group's business infrastructure is concentrated in the Maihama area, and a major earthquake, fire, flood or other disaster there could lead to adverse effects. Although the Group has given sufficient consideration to disaster resistance at all Tokyo Disney Resort facilities, there is a possibility that in the event of a disaster the damage caused to facilities and public transportation and the likely drop in consumer confidence would lead to a temporary decrease in the number of guests, which would affect the performance of the OLC Group.
Terrorism, Infectious Diseases or Similar Incidents
The OLC Group has numerous facilities where guests are present, and places the highest priority on ensuring safety at each of them. However, in the event of a terrorist attack or similar incident at a large-scale consumeroriented facility in Japan or overseas, or in the event of an outbreak of an infectious disease for which no treatment is available, consumer confidence would presumably decline. This would likely result in a temporary decrease in the number of guests, which could affect the performance of the OLC Group.
Changes in the Economy
The results of the OLC Group's principal business, Tokyo Disney Resort, have been stable in the past even when economic conditions were unfavorable in Japan. We therefore believe that Tokyo Disney resort is not greatly affected by the state of the economy. However, factors such as an unprecedented recession could result in a temporary decrease in the number of guests, which could affect the performance of the OLC Group.
The OLC Group is subject to various regulatory systems including safety standards for attractions, quality standards for products and other items provided to guests, environmental standards, accounting standards and tax laws. Of note, the OLC Group maintains its own standards for safety and quality that exceed those mandated by law. In the other areas, the OLC Group promotes full compliance. However, the OLC Group would necessarily have to comply with newly introduced or revised laws and regulations, which could temporarily constrain some or all operations and thus affect the performance of the OLC Group.