6-K 1 d6k.htm FORM 6-K Form 6-K
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FORM 6-K

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16 of

the Securities Exchange Act of 1934

 

Commission File Number: 1-31452

 

For the month of February 2003.

 

KONAMI CORPORATION

(Translation of registrant’s name into English)

 

Marunouchi Building

4-1, Marunouchi 2-chome

Chiyoda-ku, Tokyo 100-6330

Japan

 

(Address of principal executive offices)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F x            Form 40-F ¨

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ¨

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ¨

 

Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

 

Yes ¨            No x

 

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-            

 

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Information furnished on this form:

 

EXHIBITS

 

Exhibit Number

1.

   

Press release of February 13, 2003 regarding consolidated financial results for the third quarter and the nine months ended December 31, 2002

2.

   

Consolidated financial results for the third quarter and the nine months ended December 31, 2002 which were filed with the Tokyo Stock Exchange on February 13, 2003

 

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

       

KONAMI CORPORATION

Date: February 13, 2003

      

By:

  

/s/    NORIAKI YAMAGUCHI

               

Name: Noriaki Yamaguchi

Title: Executive Vice President and CFO

 

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FOR IMMEDIATE RELEASE

 

February 13, 2003

 

KONAMI CORPORATION

2-4-1 Marunouchi Chiyoda-ku Tokyo, Japan

Kagemasa Kozuki

Chairman of the Board and CEO

Ticker 9766 at TSE1

Contact: Noriaki Yamaguchi

Executive Vice President and CFO

Tel: +81-3-5220-0163

 

Consolidated Results for the Third Quarter and the Nine Months

Ended December 31, 2002

(Prepared in Accordance with U.S. GAAP)

 

We hereby announce the consolidated results of the Konami Group in accordance with U.S. GAAP for the three months and nine months ended December 31, 2002 as stated in the attached documents.

 

As for the Computer & Video Games (former CS) segment, WORLD SOCCER WINNING ELEVEN 6: Final Evolution became a hit shipping more than 600,000 copies. PRINCE OF TENNIS: Aim at the Victory, and JIKKYO POWERFUL PRO BASEBALL 9 FINAL VERSION and METAL GEAR SOLID 2: SUBSTANCE also generated favorable sales.

 

The Yu-Gi-Oh! series became a big hit overseas as a result of synergies with the trading card game. Yu-Gi-Oh! Dark Duel Stories, Yu-Gi-Oh! THE ETERNAL DUELIST SOUL and Yu-Gi-Oh! FORBIDDEN MEMORIES shipped more than 1.3 million copies altogether during the third quarter ended December 31, 2002. Pro Evolution Soccer 2 became a big hit selling more than one million copies in Europe.

 

The Exercise Entertainment (former H&F) segment expanded the number of high-quality facilities by opening two new facilities Shin-ishikiri branch (Osaka Pref.), Hoshigaoka branch (Aichi Pref.) and remodeling three existing facilities, Takasaki branch (Gunma Pref.), Himeji-chuo branch (Hyogo Pref.), and Korien branch (Osaka Pref.), during the third quarter ended December 31, 2002. We also worked to improve efficiency by merging a subsidiary Konami Olympic Sports Club Corporation on October 1, 2002.

 

The Toy & Hobby (former T&H) segment maintained solid sales of the Yu-Gi-Oh! Official Card Game series. In particular, sales of the Yu-Gi-Oh! series became predominant in the trading card game market during the Christmas season in North America. The release of a new Yu-Gi-Oh! series card game helped us not only maintain a high level of domestic sales, but also to extend the sale of existing products during the competitive year-end sales season. DegiQ Formula, a new MICRO iR product, and COMBAT DigiQ contributed to increased MICRO iR sales. Candy Toys, which enjoy popularity for their high quality figures, especially MIZUSHIMA SHINJI CHARACTERS YAKYUGUNZOU, achieved more than one million sales following the SF Movie Selection: Thunderbirds series.

 

The Amusement (former AC) segment maintained the popularity of an e-AMUSEMENT product for amusement arcades, MAH-JONG FIGHT CLUB, which is a video game that allows players to compete directly with players in other arcade game locations via an online amusement connection. In addition, sales of WORLD COMBAT, a gun shooting game that allows many players to play at the same time, remained strong.

 

The Gaming (former GC) segment recorded favorable sales of domestic token-operated game products such as the large size token-operated game, MONSTER GATE III. The segment contributed to total sales with token-operated products that continue to be popular such as GI-WINNING SIRE, a large size token-operated horse racing game and FORTUNE ORB, a large-sized “penny-falls” game machine. With respect to our overseas gaming business, the installed base of our core product, video slot machines, has been increasing in line with a more diverse line up of products. As a result, sales of our products are improving steadily in Nevada and the mid-west region of the U.S. Our sales in Australia were strong in Queensland, Victoria, and New South Wales.

 

In this environment, consolidated net revenues, consolidated operating income and consolidated net income for the three months ended December 31, 2002 were ¥78,161 million, ¥13,646 million and ¥8,371 million, respectively. For the nine months ended December 31, 2002, consolidated net revenues, consolidated operating income and consolidated net income amounted to ¥191,356 million, ¥23,811 and ¥12,739 million, respectively.

 

Note:

 

Konami Corporation has decided to use U.S. GAAP for its financial reporting since it was listed on the New York Stock Exchange on September 30, 2002. The third quarter ended December 31, 2002 was the first period in which Konami prepared its quarterly consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). Therefore, U.S. GAAP consolidated financial information for the three months and the nine months ended December 31, 2001 is not available.

 

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Consolidated Financial Results

for the Third Quarter and the Nine Months Ended December 31, 2002

(Prepared in Accordance with U.S. GAAP)

 

February 13, 2003

 

KONAMI CORPORATION

Address:

   

4-1, Marunouchi 2-chome, Chiyoda-ku, Tokyo, Japan

Stock code number, TSE:

   

9766

Ticker symbol, NYSE:

   

KNM

URL:

   

http://www.konami.com

Shares listed:

   

Tokyo Stock Exchange, New York Stock Exchange, London Stock Exchange and Singapore Exchange

Representative:

   

Kagemasa Kozuki, Chairman of the Board and Chief Executive Officer

Contact:

   

Noriaki Yamaguchi, Executive Vice President and Chief Financial Officer

(Phone: +81-3-5220-0163)

Adoption of U.S. GAAP:

   

Yes

 

Notes:

1.   Financial information presented herein was not audited by independent public accountants.
2.   The third quarter ended December 31, 2002 was the first period in which Konami prepared its quarterly consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). Therefore, U.S. GAAP consolidated financial information for the three months and the nine months ended December 31, 2001 is not available. However, figures for the year ended March 31, 2002 presented herein have been prepared in accordance with U.S. GAAP.

 

Consolidated Financial Results for the Three and Nine Months Ended December 31, 2002

(Amounts are rounded to the nearest million)

 

(1)   Consolidated Results of Operations

 

    

(Millions of yen, except per share data)

    

Net revenues

     

Operating income

     

Income before income taxes, minority interest and equity in net income of affiliated companies

Three months ended December 31, 2002

   

¥

78,161

     

¥

13,646

     

¥

13,095

Nine months ended December 31, 2002

   

 

191,356

     

 

23,811

     

 

23,245

Year ended March 31, 2002

   

 

225,580

     

 

18,087

     

 

22,678

    

Net income

     

Net income

per share (yen)

     

Diluted net income per share (yen)

Three months ended December 31, 2002

   

¥

8,371

     

¥

69.47

     

 

—  

Nine months ended December 31, 2002

   

 

12,739

     

 

104.50

     

 

—  

Year ended March 31, 2002

   

 

11,402

     

 

89.32

     

 

—  

 

Notes:

1.   Equity in net income of affiliated companies

            Three months ended December 31, 2002:

   

¥978 million

            Nine months ended December 31, 2002:

   

¥1,622 million

            Year ended March 31, 2002:

   

¥755 million

2.   Weighted-average common shares outstanding

            Three months ended December 31, 2002:

   

120,487,247 shares

            Nine months ended December 31, 2002:

   

121,898,446 shares

            Year ended March 31, 2002:

   

127,647,120 shares

3.   Change in accounting policies: None
4.   Net income per share was prepared in accordance with Statement of Financial Accounting Standard (SFAS) No. 128 “Earnings per Share”.

 

 

 

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(2)    Consolidated Financial Position

 

    

(Millions of yen, except per share amounts)

    

Total assets

     

Total shareholders’ equity

     

Equity-assets ratio

       

Total shareholders’ equity per share (yen)

December 31, 2002

   

¥

320,673

     

¥

131,325

     

41.0

%

     

¥

1,089.97

March 31, 2002

   

 

328,091

     

 

134,990

     

41.1

%

     

 

1,084.44

 

Note:

Number of shares outstanding

     

December 31, 2002:

   

120,484,926 shares

March 31, 2002:

   

124,479,815 shares

 

(3)    Consolidated Cash Flows

 

    

(Millions of yen)

    

Net cash provided by (used in)

     

Cash and cash equivalents at end of period

    

Operating activities

   

Investing activities

     

Financing activities

     

Nine months ended December 31, 2002

   

¥

6,799

   

¥

(4,457

)

   

¥

(16,894

)

   

¥

60,670

Year ended March 31, 2002

   

 

11,119

   

 

(16,024

)

   

 

12,613

 

   

 

75,188

 

(4)    Number of Consolidated Subsidiaries and Companies Accounted for by the Equity Method

 

          Number of consolidated subsidiaries:

   

28

          Number of affiliated companies accounted for by the equity method:

   

3

 

(5)    Changes in Reporting Entities

 

          Number of consolidated subsidiaries added:

   

1

          Number of consolidated subsidiaries removed:

   

10

          Number of affiliated companies removed:

   

1

 

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1. Organizational Strtucture of the Konami Group

 

The Konami Group is a collection of companies with global operations in the entertainment industry and is comprised of KONAMI CORPORATION (the “Company”), 28 consolidated subsidiaries and 3 equity method affiliates.

 

The Company, its subsidiaries and affiliated companies are categorized into business segments according to their operations as stated below.

 

Business segment categorization is based on the same criteria explained in “6. Segment Information”.

 

Business Segments

   

Major Companies

Computer & Video Games

or former Consumer Software (CS)

(Note 6)

   

Domestic

(*9)

  

The Company (Note 3, 5, 9), Konami Marketing, Inc. (*2, *3)

    

Konami Computer Entertainment Osaka, Inc.

    

Konami Computer Entertainment Tokyo, Inc.

    

Konami Computer Entertainment Japan, Inc.

    

Konami Computer Entertainment Studios, Inc.

    

Konami School, Inc. (*1, *7, Note 3)

    

Konami Mobile & Online, Inc.

    

HUDSON SOFT CO., LTD. (*11),

    

Genki Co., Ltd. (*11)

  
  

Overseas

(*4)

  

Konami of America, Inc., Konami of Europe GmbH

    

Konami Marketing (Asia) Ltd.

    

Konami Software Shanghai, Inc., One other company

Exercise Entertainment

or former Health & Fitness (HF)

(*5, Note 5, 6)

   

Domestic

  

Konami Sports Corporation(*6, Note 4, 5)

Two other companies (Note 5)

Toy & Hobby

(*5, Note 6)

   

Domestic

  

The Company (Note 3, 5, 9), Konami Marketing, Inc. (*2, *3) Konami Music Entertainment, Inc.

  
  

Overseas

(*4)

  

Konami of America, Inc.

Konami Marketing (Asia) Ltd.

Amusement

or former Amusement Content (AC)

(Note 5, 6, 8)

   

Domestic

  

The Company (Note 3, 5, 9), Konami Marketing, Inc. (*2, *3)

Konami Sports Life Corporation (Note 5)

KPE, Inc. (*8), One other company (*8)

  
  

Overseas

(*4)

  

Konami of America, Inc.

Konami Amusement of Europe Ltd. (Note 7)

Konami Marketing (Asia) Ltd.

Gaming

or former Gaming Content (GC)

(Note 6, 8)

   

Domestic

  

The Company (Note 3, 5, 9), Konami Marketing, Inc. (*2, *3)

  
  

Overseas

  

Konami Gaming, Inc.

Konami Australia Pty Ltd., One other company

Other

   

Domestic

  

Konami Capital, Inc. (Note 9, 10), Konami Service, Inc.

    
    

Konami School, Inc. (*1, 7, Note 3)

  
      

TAKARA CO., LTD. (*11), One other company

  

Overseas

(*10)

  

Two other companies

 

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Notes:

1.   Companies that have multiple business segments are included in each segment in which they operate.
2.   Primary changes in major companies for the nine months ended December 31, 2002 are as follows:
  (*1)   Konami Computer Entertainment School, Inc. merged with Roppongi Monitoring Center, Inc. on May 1, 2002 for the purpose of improving the efficiency of their operations and changed its company name to Konami School, Inc.
  (*2)   Konami Amusement Operation, Inc. transferred its amusement facility operation business to its new wholly-owned subsidiary KAO Co., Ltd. on May 11, 2002. Konami Amusement Operation, Inc. then sold all shares in KAO Co., Ltd. to Amlead Co., Ltd. on May 13, 2002.
  (*3)   Konami Marketing, Inc. merged with Konami Style.com Japan, Inc. and Konami Amusement Operation, Inc. to improve the efficiency of their operations on August 1, 2002.
  (*4)   Konami (Singapore) Pte. Ltd. and Konami Corporation of Korea were dissolved in August 2002 and September 2002, respectively.
  (*5)   The Character Products (CP) segment and the Health and Fitness (HF) segment changed their names to Toy & Hobby (T&H) and Health & Fitness (H&F), respectively, on October 1, 2002.
  (*6)   Konami Sports Corporation merged with Konami Olympic Sports Club Corporation on October 1, 2002 to improve the efficiency of their operations.
  (*7)   The education business of Konami School, Inc., which used to be included in the Computer & Video Games segment, was transferred to the Other segment as of October 1, 2002 in order to develop human resources in the whole Konami group, while its debugging operations for video game software remain included in the Computer & Video Games segment.
  (*8)   Konami Parlor Entertainment, Inc. and Konami Parlor Research, Inc. changed their company names to KPE, Inc. and KPR, Inc., respectively, on November 11, 2002.
  (*9)   Konami Computer Entertainment Kobe, Inc. and Konami Computer Entertainment Nagoya, Inc. were dissolved in December 2002.
  (*10)   Konami Asia (Singapore) Pte. Ltd. Was dissolved in December 2002.
  (*11)   These are equity method affiliates.
3.   The Company took over the debugging business of Konami School, Inc. by acquisition following a corporate split on January 1, 2003.
4.   Konami Sports Corporation merged with Konami Sports Plaza, Inc. on January 1, 2003 in order to improve the efficiency of their operations.
5.   On January 15, 2003, the Company transferred all of its shares in Konami Sports Corporation to Konami Sports Life Corporation as a step toward changing the Company’s corporate structure by reorganizing into a pure holding company. As a result, the health entertainment business which had been a part of the Amusement segment was transferred to the Exercise Entertainment segment on January 16, 2003.
6.   The Consumer Software (CS) segment, Health & Fitness (H&F) segment, Toy & Hobby (T&H) segment, Amusement Content (AC) segment and Gaming Content (GC) segment changed their names to Computer & Video Games, Exercise Entertainment, Toy & Hobby, Amusement and Gaming, respectively on January 16, 2003.
7.   Konami Amusement of Europe Ltd. changed its company name to Konami Marketing Europe Ltd. on January 13, 2003.
8.   On January 27, 2003, the Gaming segment transferred its token-operated game machine business for the domestic market to the Amusement segment in order to focus on its gaming machine business for the overseas casino industry.
9.   The Company took over the financial service business, such as arrangement of intercompany loans, of its wholly-owned subsidiary Konami Capital, Inc. by acquisition following a corporate split on February 1, 2003. Konami Capital, Inc. now concentrates on its real estate management business.
10.   Konami Capital, Inc. changed its company name to Konami Real Estate, Inc. on February 1, 2003.

 

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2. Business Performance and Cash Flows

 

(1) Business Review

 

Overview

 

With respect to the entertainment industry in which we operate, during the third quarter ended December 31, 2002, PlayStation 2 maintained its global popularity as a video game software platform during the competitive Christmas sales season and its sales grew significantly. As a result, Sony Corporation’s presence became even more dominant in the home video game software platform market. The domestic industry is approaching a turning point with debate about lifting of the ban on casino gaming and commencement of restructuring the video game software industry through mergers and business alliances.

 

Sales of Yu-Gi-Oh! card game and video game software titles grew significantly in the U.S. and began in Europe resulting in favorable performance. Also, Pro Evolution Soccer 2, a home video game software title for the overseas market sold over one million copies following WORLD SOCCER WINNING ELEVEN that was previously released in Japan. Thus, we have received significant recognition in both domestic and overseas markets.

 

In this environment, consolidated net revenues, consolidated operating income and consolidated net income for the three months ended December 31, 2002 were ¥78,161 million, ¥13,646 million and ¥8,371 million, respectively. For the nine months ended December 31, 2002, consolidated net revenues, consolidated operating income and consolidated net income amounted to ¥191,356 million, ¥23,811 and ¥12,739 million, respectively.

 

Performance by business segment

 

Summary of net revenues by business segment:

 

      

Millions of Yen

  
      

Three months ended

December 31, 2002

       

Nine months ended

December 31, 2002

  

Computer & Video Games (former CS)

     

¥

31,607

 

     

¥

67,005

 

Exercise Entertainment (former H&F)

     

 

18,321

 

     

 

56,460

 

Toy & Hobby (former T&H)

     

 

18,463

 

     

 

37,907

 

Amusement (former AC)

     

 

8,061

 

     

 

26,670

 

Gaming (former GC)

     

 

4,053

 

     

 

12,468

 

Other

     

 

1,693

 

     

 

4,396

 

Less: Intersegment revenues

     

 

(4,037

)

     

 

(13,550

)

      
    

Consolidated net revenues

     

¥

78,161

 

     

¥

191,356

 

      
    

Note:

The Consumer Software (CS) segment, Health & Fitness (H&F) segment, Toy & Hobby (T&H) segment, Amusement Content (AC) segment and Gaming Content (GC) segment changed their names to Computer & Video Games, Exercise Entertainment, Toy & Hobby, Amusement and Gaming, respectively on January 16, 2003.

 

The Computer & Video Games (former CS) segment released WORLD SOCCER WINNING ELEVEN 6: Final Evolution for the PlayStation 2 in December 2002, which became a hit shipping more than 600,000 copies. PRINCE OF TENNIS: Aim at the Victory for the GameBoy Advance, and JIKKYO POWERFUL PRO BASEBALL 9 FINAL VERSION and METAL GEAT SOLID 2: SUBSTANCE for the PlayStation 2 also generated favorable sales.

 

The Yu-Gi-Oh! series became a big hit overseas as a result of synergies with the trading card game. Yu-Gi-Oh! Dark Duel Stories for the GameBoy Color, Yu-Gi-Oh! THE ETERNAL DUELIST SOUL for the GameBoy Advance and Yu-Gi-Oh! FORBIDDEN MEMORIES for the PlayStation shipped more than 1.3 million copies altogether during the third quarter ended December 31, 2002. Pro Evolution Soccer 2 released in October 2002 became a big hit selling more than one million copies in Europe. The Dancing Stage series maintained favorable sales in the U.K., and Dancing Stage Euromix and Dancing Stage Party Edition became hits selling more than 400,000 copies altogether.

 

As a result, consolidated revenues of the Computer & Video Games segment for the three months and the nine months ended December 31, 2002 were ¥31,607 million and ¥67,005 million, respectively.

 

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The Exercise Entertainment (former H&F) segment expanded the number of high-quality facilities by opening two new facilities Shin-ishikiri branch (Osaka Pref.), and Hoshigaoka branch (Aichi Pref.) and remodeling three existing facilities, Takasaki branch (Gunma Pref.), Himeji-chuo branch (Hyogo Pref.), and Korien branch (Osaka Pref.), during the third quarter ended December 31, 2002. We also worked to improve efficiency by merging a subsidiary Konami Olympic Sports Club Corporation on October 1, 2002.

 

In a move to improve customer satisfaction and convenience, we introduced two new membership programs that allow members to use all facilities in a specific area (the “Chubu Net Membership” and the “Hyogo Net Membership”). We also introduced a new personal trainer service that provides professional one-to-one advice. We also introduced a new “Undo-Jyuku” training class in order to expand our program offerings and broaden the age group of our members.

 

We are working to expand our exercise entertainment business beyond the operation of fitness clubs. For example, we have created a web site called “Konami Sports Club” which we believe to be the first i-mode official site in the fitness industry and have also introduced a new jazzercise membership program that is intended to be more user-friendly so as to encourage more members to join our jazzercise program, which we believe to be the largest dance fitness program in the world.

 

As a result, consolidated revenues of the Exercise Entertainment segment for the three months and the nine months ended December 31, 2002 were ¥18,321million and ¥56,460 million, respectively.

 

The Toy & Hobby (former T&H) segment maintained solid sales of the Yu-Gi-Oh! Official Card Game series. Sales of the Yu-Gi-Oh! series rapidly expanded in the North America due to improving recognition. They became predominant in the trading card game market during the Christmas season in North America. The release of a new Yu-Gi-Oh! series card game helped us not only maintain a high level of domestic sales, but also to extend the sale of existing products during the competitive year-end sales season. DegiQ Formula, a new MICRO iR product, and COMBAT DigiQ contributed to increased MICRO iR sales and the robust sales performance of our hobby products. Candy toys, which enjoy popularity for their high quality figures, especially MIZUSHIMA SHINJI CHARACTERS YAKYUGUNZOU, achieved more than one million sales following the SF Movie Selection: Thunderbirds series, and achieved a more dominant position in the market.

 

As a result, consolidated revenues of the Toy & Hobby segment for the three months and the nine months ended December 31, 2002 were ¥18,463 million and ¥37,907 million, respectively.

 

The Amusement (former AC) segment maintained the popularity of an e-AMUSEMENT product for amusement arcades, MAH-JONG FIGHT CLUB, which is a video game that allows players to compete directly with players in other arcade game locations via an online amusement connection. In addition, sales of WORLD COMBAT, a gun shooting game that allows many players to play at the same time, remained strong.

 

The health entertainment business continued to focus on expanding distribution of existing products such as Dance Dance Revolution FAMIMAT and MARTIAL BEAT, a fitness action game that uses popular martial arts, and MARTIAL BEAT 2, the sequel to MARTIAL BEAT, the first game with the ability to measure physical strength that was released in September 2002.

 

The LCD unit business will aim to continue to introduce distinct and appealing products.

 

As a result, consolidated revenues of the Amusement segment for the three months and the nine months ended December 31, 2002 were ¥8,061 million and ¥26,670 million, respectively.

 

The Gaming (former GC) segment recorded favorable sales of domestic token-operated game products such as the large size token-operated game, MONSTER GATE III that was released in December 2002 as a sequel to MONSTER GATE II, which is known for having established a new category of token-operated game. The segment contributed to total sales with token-operated products that continue to be popular such as GI-WINNING SIRE, the latest large size token-operated horse racing game in the GI series which has a realistic “right there in the midst of it” feel, and FORTUNE ORB, a large-sized “penny-falls” game machine, popular for its entertaining stage effects. With respect to our overseas gaming business, we acquired gaming licenses in 18 states in North America, and the installed base of our core product, video slot machines, has been increasing in line with a more diverse line up of products. As a result, sales of our products are improving steadily in Nevada and the mid-west region of the U.S. The combination of WILD FIRE, a stand-alone progressive game with gaming contents has been well received in Australia. We have acquired gaming licenses in all Australian states, and sales in Queensland, Victoria, and New South Wales were especially strong.

 

As a result, consolidated revenues of the Gaming segment for the three months and the nine months ended December 31, 2002 were ¥4,053million and ¥12,468 million, respectively.

 

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Consolidated revenues for the Other segment for the three months and the nine months ended December 31, 2002 were ¥1,693 million and ¥4,396 million, respectively.

 

(2)    Cash Flows

 

Cash flow summary for the nine months ended December 31, 2002:

 

      

Millions of Yen

  
      

Nine months ended

December 31, 2002

  

Net cash provided by operating activities

     

¥

6,799

 

Net cash used in investing activities

     

 

(4,457

)

Net cash used in financing activities

     

 

(16,894

)

Effect of exchange rate changes on cash and cash equivalents

     

 

34

 

Net decrease in cash and cash equivalents

     

 

(14,518

)

Cash and cash equivalents at December 31, 2002

     

 

60,670

 

 

Cash follows from operating activities:

 

Net cash provided by operating activities amounted to ¥6,799 million for the nine months ended December 31, 2002. This resulted primarily from net income of ¥12,739 million due to favorable sales of the Computer & Video Games (former CS) segment and the Toy & Hobby (former T&H) segment with an increase in trade notes and account receivables of ¥6,269 million and an increase in inventories of ¥1,775 million.

 

Cash flows from investing activities:

 

Net cash used in investing activities amounted to ¥4,457 million for the nine months ended December 31, 2002. This resulted primarily from acquisitions of property and equipment of ¥7,723 million, which was due mainly to an active increase in new club locations of the Exercise Entertainment (former H&F) segment, with proceeds from the sale of subsidiary shares of ¥2,081 million and proceeds from the sale of property and equipment of ¥1,444 million.

 

Cash flows from financing activities:

 

Net cash used in financing activities amounted to ¥16,894 million for the nine months ended December 31, 2002. This was primarily due to purchases of treasury stock of ¥10,658 million, a payment of dividends of ¥6,172 million and a decrease in debts of ¥9,297 million with proceeds from issuance of bonds of ¥14,902 million.

 

 

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3. Consolidated Balance Sheets (Unaudited)

 

    

Millions of Yen

   

Thousands of U.S. Dollars

    

Dec. 31, 2002

   

Mar. 31, 2002

   

Dec. 31, 2002

           

%

          

%

       

ASSETS

                               

CURRENT ASSETS:

                               

Cash and cash equivalents

   

¥

60,670

        

¥

75,188

        

$

504,532

Trade notes and accounts receivable, net of allowance for doubtful accounts of ¥868 million ($7,218 thousand) and ¥636 million at December 31, 2002 and March 31, 2002, respectively

   

 

39,715

        

 

34,275

        

 

330,270

Inventories

   

 

17,652

        

 

15,990

        

 

146,794

Deferred income taxes, net

   

 

11,558

        

 

9,708

        

 

96,116

Prepaid expenses and other current assets

   

 

6,696

        

 

6,894

        

 

55,685

    
  
  
  
  

Total current assets

   

 

136,291

   

42.5

   

 

142,055

   

43.3

   

 

1,133,397

PROPERTY AND EQUIPMENT, net

   

 

42,919

   

13.4

   

 

43,562

   

13.3

   

 

356,915

INVESTMENTS AND OTHER ASSETS:

                               

Investments in marketable securities

   

 

145

        

 

204

        

 

1,206

Investments in affiliates

   

 

14,884

        

 

13,459

        

 

123,775

Identifiable intangible assets

   

 

57,527

        

 

60,169

        

 

478,395

Goodwill

   

 

36,967

        

 

36,825

        

 

307,418

Lease deposits

   

 

24,079

        

 

24,654

        

 

200,241

Other assets

   

 

7,861

        

 

7,163

        

 

65,372

    
  
  
  
  

Total investments and other assets

   

 

141,463

   

44.1

   

 

142,474

   

43.4

   

 

1,176,407

    
  
  
  
  

TOTAL ASSETS

   

¥

320,673

   

100.0

   

¥

328,091

   

100.0

   

$

2,666,719

    
  
  
  
  

 

8

Table of Contents

 

    

Millions of Yen

     

Thousands of U.S. Dollars

  
    

Dec. 31, 2002

     

Mar. 31, 2002

     

Dec. 31, 2002

  
             

%

 

            

%

 

         

LIABILITIES AND SHAREHOLDERS’ EQUITY

                                         

CURRENT LIABILITIES:

                                         

Short-term borrowings

   

¥

3,938

 

          

¥

10,948

 

          

$

32,748

 

Current portion of long-term debt and capital lease obligations

   

 

2,035

 

          

 

4,751

 

          

 

16,923

 

Trade notes and accounts payable

   

 

20,912

 

          

 

20,292

 

          

 

173,904

 

Income taxes payable

   

 

9,426

 

          

 

13,224

 

          

 

78,387

 

Accrued expenses

   

 

18,603

 

          

 

21,120

 

          

 

154,703

 

Deferred revenue

   

 

5,324

 

          

 

3,866

 

          

 

44,274

 

Other current liabilities

   

 

4,593

 

          

 

5,347

 

          

 

38,196

 

    
  
  
  
  

Total current liabilities

   

 

64,831

 

   

20.2

 

   

 

79,548

 

   

24.2

 

   

 

539,135

 

LONG-TERM LIABILITIES:

                                         

Long-term debt and capital lease obligations, less current portion

   

 

63,236

 

          

 

48,031

 

          

 

525,871

 

Accrued pension and severance costs

   

 

2,450

 

          

 

2,607

 

          

 

20,374

 

Deferred income taxes, net

   

 

21,923

 

          

 

22,986

 

          

 

182,312

 

Other long-term liabilities

   

 

3,170

 

          

 

4,013

 

          

 

26,362

 

    
  
  
  
  

Total long-term liabilities

   

 

90,779

 

   

28.3

 

   

 

77,637

 

   

23.7

 

   

 

754,919

 

MINORITY INTEREST IN CONSOLIDATED SUBSIDIARIES

   

 

33,738

 

   

10.5

 

   

 

35,916

 

   

11.0

 

   

 

280,565

 

SHAREHOLDERS’ EQUITY:

                                         

Common stock, no par value-

                                         

Authorized 450,000,000 shares; issued 128,737,566 shares at December 31, 2002 and March 31, 2002

   

 

47,399

 

   

14.8

 

   

 

47,399

 

   

14.4

 

   

 

394,170

 

Additional paid-in capital

   

 

46,736

 

   

14.6

 

   

 

46,736

 

   

14.2

 

   

 

388,657

 

Legal reserve

   

 

2,163

 

   

0.7

 

   

 

2,163

 

   

0.7

 

   

 

17,988

 

Retained earnings

   

 

60,239

 

   

18.8

 

   

 

53,149

 

   

16.2

 

   

 

500,948

 

Accumulated other comprehensive income

   

 

449

 

   

0.1

 

   

 

546

 

   

0.2

 

   

 

3,734

 

    
  
  
  
  

Total

   

 

156,986

 

   

49.0

 

   

 

149,993

 

   

45.7

 

   

 

1,305,497

 

Treasury stock, at cost-

                                         

8,252,640 shares and 4,257,751 shares at December 31, 2002 and March 31, 2002, respectively

   

 

(25,661

)

   

(8.0

)

   

 

(15,003

)

   

(4.6

)

   

 

(213,397

)

    
  
  
  
  

Total shareholders’ equity

   

 

131,325

 

   

41.0

 

   

 

134,990

 

   

41.1

 

   

 

1,092,100

 

COMMITMENTS AND CONTINGENCIES

   

 

—  

 

          

 

—  

 

          

 

—  

 

    
  
  
  
  

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

   

¥

320,673

 

   

100.0

 

   

¥

328,091

 

   

100.0

 

   

$

2,666,719

 

    
  
  
  
  

 

 

9

Table of Contents

 

4. Consolidated Statements of Income (Unaudited)

 

    

Millions of Yen

   

Thousands of U.S. Dollars

  
    

Three months
ended

Dec. 31, 2002

     

Nine months
ended

Dec. 31, 2002

     

Year ended

Mar. 31, 2002

   

Three months ended

Dec. 31, 2002

     

Nine months ended

Dec. 31, 2002

  
             

%

 

            

%

 

            

%

                  

NET REVENUES:

                                                                

Product sales revenue

   

¥

59,843

 

          

¥

135,052

 

          

¥

165,154

 

        

$

497,655

 

   

$

1,123,093

 

Service revenue

   

 

18,318

 

          

 

56,304

 

          

 

60,426

 

        

 

152,333

 

   

 

468,225

 

    
  
  
  
  
  
  
  

Total net revenues

   

 

78,161

 

   

100.0

 

   

 

191,356

 

   

100.0

 

   

 

225,580

 

   

100.0

   

 

649,988

 

   

 

1,591,318

 

    
  
  
  
  
  
  
  

COSTS AND EXPENSES:

                                                                

Costs of products sold

   

 

34,061

 

          

 

77,787

 

          

 

104,192

 

        

 

283,251

 

   

 

646,877

 

Costs of services rendered

   

 

17,129

 

          

 

50,615

 

          

 

50,459

 

        

 

142,445

 

   

 

420,915

 

Selling, general and administrative

   

 

13,325

 

          

 

39,143

 

          

 

52,842

 

        

 

110,811

 

   

 

325,514

 

    
  
  
  
  
  
  
  

Total costs and expenses

   

 

64,515

 

   

82.5

 

   

 

167,545

 

   

87.6

 

   

 

207,493

 

   

92.0

   

 

536,507

 

   

 

1,393,306

 

    
  
  
  
  
  
  
  

Operating income

   

 

13,646

 

   

17.5

 

   

 

23,811

 

   

12.4

 

   

 

18,087

 

   

8.0

   

 

113,481

 

   

 

198,012

 

    
  
  
  
  
  
  
  

OTHER INCOME (EXPENSES):

                                                                

Interest income

   

 

87

 

          

 

256

 

          

 

244

 

        

 

723

 

   

 

2,129

 

Interest expense

   

 

(190

)

          

 

(633

)

          

 

(767

)

        

 

(1,580

)

   

 

(5,264

)

Gain on sale of subsidiary shares

   

 

—  

 

          

 

552

 

          

 

4,655

 

        

 

—  

 

   

 

4,590

 

Other, net

   

 

(448

)

          

 

(741

)

          

 

459

 

        

 

(3,726

)

   

 

(6,162

)

    
  
  
  
  
  
  
  

Other income (expenses), net

   

 

(551

)

   

(0.7

)

   

 

(566

)

   

(0.3

)

   

 

4,591

 

   

2.1

   

 

(4,583

)

   

 

(4,707

)

    
  
  
  
  
  
  
  

INCOME BEFORE INCOME TAXES, MINORITY INTEREST AND EQUITY IN NET INCOME OF AFFILIATED COMPANIES

   

 

13,095

 

   

16.8

 

   

 

23,245

 

   

12.1

 

   

 

22,678

 

   

10.1

   

 

108,898

 

   

 

193,305

 

INCOME TAXES:

                                                                

Current

   

 

6,994

 

          

 

13,449

 

          

 

17,276

 

        

 

58,162

 

   

 

111,842

 

Deferred

   

 

(1,835

)

          

 

(3,078

)

          

 

(5,609

)

        

 

(15,260

)

   

 

(25,597

)

    
  
  
  
  
  
  
  

Total

   

 

5,159

 

   

6.6

 

   

 

10,371

 

   

5.4

 

   

 

11,667

 

   

5.2

   

 

42,902

 

   

 

86,245

 

INCOME BEFORE MINORITY INTEREST AND EQUITY IN NET INCOME OF AFFILIATED COMPANIES

   

 

7,936

 

   

10.2

 

   

 

12,874

 

   

6.7

 

   

 

11,011

 

   

4.9

   

 

65,996

 

   

 

107,060

 

MINORITY INTEREST IN INCOME OF CONSOLIDATED SUBSIDIARIES

   

 

543

 

   

0.7

 

   

 

1,757

 

   

0.9

 

   

 

364

 

   

0.1

   

 

4,516

 

   

 

14,611

 

EQUITY IN NET INCOME OF AFFILIATED COMPANIES

   

 

978

 

   

1.2

 

   

 

1,622

 

   

0.9

 

   

 

755

 

   

0.3

   

 

8,133

 

   

 

13,489

 

    
  
  
  
  
  
  
  

NET INCOME

   

¥

8,371

 

   

10.7

 

   

¥

12,739

 

   

6.7

 

   

¥

11,402

 

   

5.1

   

$

69,613

 

   

$

105,938

 

    
  
  
  
  
  
  
  

 

10

Table of Contents

PER SHARE DATA:

 

    

Yen

     

U.S. Dollars

    

Three months ended

Dec. 31, 2002

   

Nine months ended

Dec. 31, 2002

   

Year ended

Mar. 31, 2002

     

Three months ended

Dec. 31, 2002

     

Nine months ended

Dec. 31, 2002

Basic and diluted net income per share

   

¥

69.47

   

¥

104.50

   

¥

89.32

     

$

0.58

     

$

0.87

    
  
  
    
    

Weighted-average common shares outstanding

   

 

120,487,247

   

 

121,898,446

   

 

127,647,120

                  

 

 

Note:   Net income per share was prepared in accordance with Statement of Financial Accounting Standard (SFAS) No. 128 “Earnings per Share”. Konami had no dilutive securities outstanding at December 31, 2002 and March 31, 2002, and therefore there is no difference between basic and diluted EPS.

 

 

11

Table of Contents

 

5. Consolidated Statements of Cash Flows (Unaudited)

 

      

Millions of Yen

     

Thousands of U.S. Dollars

  
      

Nine months

ended

Dec. 31, 2002

       

Year ended

Mar. 31, 2002

     

Nine months

ended

Dec. 31, 2002

  

Cash flows from operating activities:

                               

Net income

     

¥

12,739

 

     

¥

11,402

 

   

$

105,938

 

Adjustments to reconcile net income to net cash provided by operating activities—  

                               

Depreciation and amortization

     

 

8,263

 

     

 

15,460

 

   

 

68,715

 

Provision for doubtful receivables

     

 

569

 

     

 

4,189

 

   

 

4,732

 

Loss on sale or disposal of property and equipment, net

     

 

837

 

     

 

924

 

   

 

6,960

 

Gain on sale of subsidiary shares

     

 

(552

)

     

 

(4,655

)

   

 

(4,590

)

Equity in net income of affiliated companies

     

 

(1,621

)

     

 

(755

)

   

 

(13,480

)

Minority interest

     

 

1,757

 

     

 

364

 

   

 

14,611

 

Deferred income taxes

     

 

(3,078

)

     

 

(5,609

)

   

 

(25,597

)

Change in assets and liabilities:

                               

Increase in trade notes and accounts receivable

     

 

(6,269

)

     

 

(3,930

)

   

 

(52,133

)

Increase in inventories

     

 

(1,775

)

     

 

(1,594

)

   

 

(14,761

)

Increase (decrease) in trade notes and accounts payable

     

 

874

 

     

 

(5,934

)

   

 

7,268

 

Decrease in income taxes payable

     

 

(3,880

)

     

 

(1,722

)

   

 

(32,266

)

Increase (decrease) in accrued expenses

     

 

(2,742

)

     

 

2,305

 

   

 

(22,802

)

Increase in deferred revenue

     

 

1,468

 

     

 

805

 

   

 

12,208

 

Other, net

     

 

209

 

     

 

(131

)

   

 

1,738

 

      
    
  

Net cash provided by operating activities

     

 

6,799

 

     

 

11,119

 

   

 

56,541

 

Cash flows from investing activities:

                               

Purchases of investments in affiliates

     

 

—  

 

     

 

(8,115

)

   

 

—  

 

Purchases of investments in a subsidiary

     

 

(315

)

     

 

—  

 

   

 

(2,620

)

Proceeds from sales of investments in subsidiaries

     

 

2,081

 

     

 

1,797

 

   

 

17,306

 

Capital expenditures

     

 

(7,723

)

     

 

(8,095

)

   

 

(64,225

)

Proceeds from sales of property and equipment

     

 

1,444

 

     

 

444

 

   

 

12,008

 

Acquisition of new subsidiaries, net of cash acquired

     

 

—  

 

     

 

692

 

   

 

—  

 

Decrease in time deposits, net

     

 

521

 

     

 

90

 

   

 

4,333

 

Increase in lease deposits, net

     

 

(384

)

     

 

(1,877

)

   

 

(3,193

)

Other, net

     

 

(81

)

     

 

(960

)

   

 

(674

)

      
    
  

Net cash used in investing activities

     

 

(4,457

)

     

 

(16,024

)

   

 

(37,065

)

Cash flows from financing activities:

                               

Net decrease in short-term borrowings

     

 

(6,811

)

     

 

(1,108

)

   

 

(56,640

)

Proceeds from long-term debt

     

 

—  

 

     

 

45,230

 

   

 

—  

 

Repayments of long-term debt

     

 

(2,486

)

     

 

(13,172

)

   

 

(20,674

)

Principal payments under capital lease obligations

     

 

(1,931

)

     

 

(2,407

)

   

 

(16,058

)

Proceeds from issuance of bonds

     

 

14,902

 

     

 

—  

 

   

 

123,925

 

Net proceeds from issuance of common stock by a subsidiary

     

 

—  

 

     

 

7,035

 

   

 

—  

 

Dividends paid

     

 

(6,172

)

     

 

(7,652

)

   

 

(51,326

)

Purchases of treasury stock by parent company

     

 

(10,658

)

     

 

(15,006

)

   

 

(88,632

)

Purchases of treasury stock by subsidiaries

     

 

(3,075

)

     

 

(194

)

   

 

(25,572

)

Other, net

     

 

(663

)

     

 

(113

)

   

 

(5,514

)

      
    
  

Net cash provided by (used in) financing activities

     

 

(16,894

)

     

 

12,613

 

   

 

(140,491

)

Effect of exchange rate changes on cash and cash equivalents

     

 

34

 

     

 

667

 

   

 

283

 

Net increase (decrease) in cash and cash equivalents

     

 

(14,518

)

     

 

8,375

 

   

 

(120,732

)

Cash and cash equivalents, beginning of the period

     

 

75,188

 

     

 

66,813

 

   

 

625,264

 

      
    
  

Cash and cash equivalents, end of the period

     

¥

60,670

 

     

¥

75,188

 

   

$

504,532

 

      
    
  

 

 

12

Table of Contents

6. Segment Information (Unaudited)

 

a . Operations in Different Industries

 

Three months ended

Dec. 31, 2002

  

CS

  

H&F

    

T&H

  

AC

  

GC

    

Other

    

Total

   

Eliminations and Corporate

    

Consolidated

   

(Millions of Yen)

Net revenue:

                                                               

Customers

  

¥

31,367

  

¥

18,318

 

  

¥

18,351

  

¥

5,586

  

¥

3,995

 

  

¥

544

 

  

¥

78,161

   

 

—  

 

  

¥

78,161

Intersegment

  

 

240

  

 

3

 

  

 

112

  

 

2,475

  

 

58

 

  

 

1,149

 

  

 

4,037

   

¥

(4,037

)

  

 

—  

   
 
 
 
 
 
 
  
 

Total

  

 

31,607

  

 

18,321

 

  

 

18,463

  

 

8,061

  

 

4,053

 

  

 

1,693

 

  

 

82,198

   

 

(4,037

)

  

 

78,161

Operating expenses

  

 

24,932

  

 

19,217

 

  

 

11,065

  

 

6,186

  

 

3,552

 

  

 

1,481

 

  

 

66,433

   

 

(1,918

)

  

 

64,515

   
 
 
 
 
 
 
  
 

Operating income (loss)

  

¥

6,675

  

¥

(896

)

  

¥

7,398

  

¥

1,875

  

¥

501

 

  

¥

212

 

  

¥

15,765

   

¥

(2,119

)

  

¥

13,646

   
 
 
 
 
 
 
  
 

Nine months ended

Dec. 31, 2002

  

CS

  

H&F

    

T&H

  

AC

  

GC

    

Other

    

Total

   

Eliminations and Corporate

    

Consolidated

   

(Millions of Yen)

Net revenue:

                                                               

Customers

  

¥

65,770

  

¥

56,304

 

  

¥

37,776

  

¥

17,701

  

¥

12,299

 

  

¥

1,506

 

  

¥

191,356

   

 

—  

 

  

¥

191,356

Intersegment

  

 

1,235

  

 

156

 

  

 

131

  

 

8,969

  

 

169

 

  

 

2,890

 

  

 

13,550

   

¥

(13,550

)

  

 

—  

   
 
 
 
 
 
 
  
 

Total

  

 

67,005

  

 

56,460

 

  

 

37,907

  

 

26,670

  

 

12,468

 

  

 

4,396

 

  

 

204,906

   

 

(13,550

)

  

 

191,356

Operating expenses

  

 

54,417

  

 

57,594

 

  

 

23,607

  

 

21,654

  

 

11,839

 

  

 

4,367

 

  

 

173,478

   

 

(5,933

)

  

 

167,545

   
 
 
 
 
 
 
  
 

Operating income (loss)

  

¥

12,588

  

¥

(1,134

)

  

¥

14,300

  

¥

5,016

  

¥

629

 

  

¥

29

 

  

¥

31,428

   

¥

(7,617

)

  

¥

23,811

   
 
 
 
 
 
 
  
 

Year ended

Mar. 31, 2002

  

CS

  

H&F

    

T&H

  

AC

  

GC

    

Other

    

Total

   

Eliminations and Corporate

    

Consolidated

   

(Millions of Yen)

Net revenue:

                                                               

Customers

  

¥

88,762

  

¥

60,426

 

  

¥

25,213

  

¥

31,641

  

¥

13,264

 

  

¥

6,274

 

  

¥

225,580

   

 

—  

 

  

¥

225,580

Intersegment

  

 

1,367

  

 

120

 

  

 

388

  

 

7,092

  

 

382

 

  

 

2,622

 

  

 

11,971

   

¥

(11,971

)

  

 

—  

   
 
 
 
 
 
 
  
 

Total

  

 

90,129

  

 

60,546

 

  

 

25,601

  

 

38,733

  

 

13,646

 

  

 

8,896

 

  

 

237,551

   

 

(11,971

)

  

 

225,580

Operating expenses

  

 

71,777

  

 

65,042

 

  

 

18,400

  

 

32,346

  

 

14,285

 

  

 

9,241

 

  

 

211,091

   

 

(3,598

)

  

 

207,493

   
 
 
 
 
 
 
  
 

Operating income (loss)

  

¥

18,352

  

¥

(4,496

)

  

¥

7,201

  

¥

6,387

  

¥

(639

)

  

¥

(345

)

  

¥

26,460

   

¥

(8,373

)

  

¥

18,087

   
 
 
 
 
 
 
  
 

Three months ended

Dec. 31, 2002

  

CS

  

H&F

    

T&H

  

AC

  

GC

    

Other

    

Total

   

Eliminations and Corporate

    

Consolidated

   

(Thousands of U.S. Dollars)

Net revenue:

                                                               

Customers

  

$

260,848

  

$

152,333

 

  

$

152,607

  

$

46,454

  

$

33,222

 

  

$

4,524

 

  

$

649,988

   

 

—  

 

  

$

649,988

Intersegment

  

 

1,996

  

 

25

 

  

 

931

  

 

20,582

  

 

483

 

  

 

9,555

 

  

 

33,572

   

 

(33,572

)

  

 

—  

   
 
 
 
 
 
 
  
 

Total

  

 

262,844

  

 

152,358

 

  

 

153,538

  

 

67,036

  

 

33,705

 

  

 

14,079

 

  

 

683,560

   

 

(33,572

)

  

 

649,988

Operating expenses

  

 

207,335

  

 

159,809

 

  

 

92,016

  

 

51,443

  

 

29,538

 

  

 

12,316

 

  

 

552,457

   

 

(15,950

)

  

 

536,507

   
 
 
 
 
 
 
  
 

Operating income (loss)

  

$

55,509

  

$

(7,451

)

  

$

61,522

  

$

15,593

  

$

4,167

 

  

$

1,763

 

  

$

131,103

   

$

(17,622

)

  

$

113,481

   
 
 
 
 
 
 
  
 

Nine months ended

Dec. 31, 2002

  

CS

  

H&F

    

T&H

  

AC

  

GC

    

Other

    

Total

   

Eliminations and Corporate

    

Consolidated

   

(Thousands of U.S. Dollars)

Net revenue:

                                                               

Customers

  

$

546,944

  

$

468,225

 

  

$

314,145

  

$

147,202

  

$

102,278

 

  

$

12,524

 

  

$

1,591,318

   

 

—  

 

  

$

1,591,318

Intersegment

  

 

10,270

  

 

1,297

 

  

 

1,090

  

 

74,586

  

 

1,406

 

  

 

24,033

 

  

 

112,682

   

 

(112,682

)

  

 

—  

   
 
 
 
 
 
 
  
 

Total

  

 

557,214

  

 

469,522

 

  

 

315,235

  

 

221,788

  

 

103,684

 

  

 

36,557

 

  

 

1,704,000

   

 

(112,682

)

  

 

1,591,318

Operating expenses

  

 

452,532

  

 

478,952

 

  

 

196,316

  

 

180,075

  

 

98,454

 

  

 

36,316

 

  

 

1,442,645

   

 

(49,339

)

  

 

1,393,306

   
 
 
 
 
 
 
  
 

Operating income (loss)

  

$

104,682

  

$

(9,430

)

  

$

118,919

  

$

41,713

  

$

5,230

 

  

$

241

 

  

$

261,355

   

$

(63,343

)

  

$

198,012

   
 
 
 
 
 
 
  
 

 

 

13

Table of Contents

 

Notes:

            
   

1.

  

Primary businesses of each segment are as follows:

       

Consumer Software (CS):

  

Production and sale of home-use video game software

       

Health and Fitness (H&F):

  

Operation of health and fitness clubs

       

Toy & Hobby (T&H):

  

Production and sale of character related products

       

Amusement Content (AC):

  

Manufacture and sale of amusement arcade games and related components

       

Gaming Content (GC):

  

Manufacture and sale of gaming machines for overseas market and token-operated games for domestic market

       

Other:

  

Financial and real estate management services provided primarily to our subsidiaries

   

2.

  

The Health and Fitness (HF) segment and the Character Products (CP) segment changed their names to Health & Fitness (H&F) and Toy & Hobby (T&H), respectively, on October 1, 2002.

       

The Consumer Software (CS) segment, the Health & Fitness (H&F) segment, the Toy & Hobby (T&H) segment, the Amusement Content (AC) segment and the Gaming Content (GC) segment changed their names to Computer & Video Games, Exercise Entertainment, Toy & Hobby, Amusement and Gaming, respectively, on January 16, 2003.

   

3.

  

Intersegment revenues primarily consists of sub-licensing of intellectual property rights from CS and T&H to AC and GC, sales of hardware and components from AC and GC to CS and H&F, and administrative services provided by shared-service subsidiaries included in other. Eliminations and corporate primarily consist of eliminations of intercompany profits on inventories and expenses for corporate headquarters.

 

14

Table of Contents

b . Operations in Geographic Areas

 

Three months ended December 31, 2002

   

Japan

   

Americas

     

Europe

   

Asia /Oceania

   

Total

   

Eliminations

     

Consolidated

    

(Millions of Yen)

Net revenue:

                                                     

Customers

   

¥

46,412

   

¥

22,667

 

   

¥

6,772

   

¥

2,310

   

¥

78,161

   

 

—  

 

   

¥

78,161

Intersegment

   

 

22,717

   

 

788

 

   

 

—  

   

 

80

   

 

23,585

   

¥

(23,585

)

   

 

—  

    
  
  
  
  
  
  

Total

   

 

69,129

   

 

23,455

 

   

 

6,772

   

 

2,390

   

 

101,746

   

 

(23,585

)

   

 

78,161

Operating expenses

   

 

58,551

   

 

21,974

 

   

 

5,897

   

 

1,868

   

 

88,290

   

 

(23,775

)

   

 

64,515

    
  
  
  
  
  
  

Operating income (loss)

   

¥

10,578

   

¥

1,481

 

   

¥

875

   

¥

522

   

¥

13,456

   

¥

190

 

   

¥

13,646

    
  
  
  
  
  
  

Nine months ended December 31, 2002

   

Japan

   

Americas

     

Europe

   

Asia /Oceania

   

Total

   

Eliminations

     

Consolidated

    

(Millions of Yen)

Net revenue:

                                                     

Customers

   

¥

138,208

   

¥

36,545

 

   

¥

10,777

   

¥

5,826

   

¥

191,356

   

 

—  

 

   

¥

191,356

Intersegment

   

 

38,522

   

 

977

 

   

 

27

   

 

315

   

 

39,841

   

¥

(39,841

)

   

 

—  

    
  
  
  
  
  
  

Total

   

 

176,730

   

 

37,522

 

   

 

10,804

   

 

6,141

   

 

231,197

   

 

(39,841

)

   

 

191,356

Operating expenses

   

 

154,850

   

 

37,021

 

   

 

10,370

   

 

4,864

   

 

207,105

   

 

(39,560

)

   

 

167,545

    
  
  
  
  
  
  

Operating income (loss)

   

¥

21,880

   

¥

501

 

   

¥

434

   

¥

1,277

   

¥

24,092

   

¥

(281

)

   

¥

23,811

    
  
  
  
  
  
  

Year ended March 31, 2002

   

Japan

   

Americas

     

Europe

   

Asia /Oceania

   

Total

   

Eliminations

     

Consolidated

    

(Millions of Yen)

Net revenue:

                                                     

Customers

   

¥

177,618

   

¥

26,002

 

   

¥

19,320

   

¥

2,640

   

¥

225,580

   

 

—  

 

   

¥

225,580

Intersegment

   

 

31,446

   

 

2,860

 

   

 

6

   

 

199

   

 

34,511

   

¥

(34,511

)

   

 

—  

    
  
  
  
  
  
  

Total

   

 

209,064

   

 

28,862

 

   

 

19,326

   

 

2,839

   

 

260,091

   

 

(34,511

)

   

 

225,580

Operating expenses

   

 

185,089

   

 

30,438

 

   

 

14,944

   

 

2,695

   

 

233,166

   

 

(25,673

)

   

 

207,493

    
  
  
  
  
  
  

Operating income (loss)

   

¥

23,975

   

¥

(1,576

)

   

¥

4,382

   

¥

144

   

¥

26,925

   

¥

(8,838

)

   

¥

18,087

    
  
  
  
  
  
  

Three months ended December 31, 2002

   

Japan

   

Americas

     

Europe

   

Asia /Oceania

   

Total

   

Eliminations

     

Consolidated

    

(Thousands of U.S. Dollars)

Net revenue:

                                                     

Customers

   

$

385,963

   

$

188,499

 

   

$

56,316

   

$

19,210

   

$

649,988

   

 

—  

 

   

$

649,988

Intersegment

   

 

188,915

   

 

6,553

 

   

 

—  

   

 

665

   

 

196,133

   

 

(196,133

)

   

 

—  

    
  
  
  
  
  
  

Total

   

 

574,878

   

 

195,052

 

   

 

56,316

   

 

19,875

   

 

846,121

   

 

(196,133

)

   

 

649,988

Operating expenses

   

 

486,911

   

 

182,736

 

   

 

49,039

   

 

15,535

   

 

734,221

   

 

(197,714

)

   

 

536,507

    
  
  
  
  
  
  

Operating income (loss)

   

$

87,967

   

$

12,316

 

   

$

7,277

   

$

4,340

   

$

111,900

   

$

1,581

 

   

$

113,481

    
  
  
  
  
  
  

Nine months ended December 31, 2002

   

Japan

   

Americas

     

Europe

   

Asia /Oceania

   

Total

   

Eliminations

     

Consolidated

    

(Thousands of U.S. Dollars)

Net revenue:

                                                     

Customers

   

$

1,149,339

   

$

303,908

 

   

$

89,622

   

$

48,449

   

$

1,591,318

   

 

—  

 

   

$

1,591,318

Intersegment

   

 

320,349

   

 

8,125

 

   

 

224

   

 

2,620

   

 

331,318

   

 

(331,318

)

   

 

—  

    
  
  
  
  
  
  

Total

   

 

1,469,688

   

 

312,033

 

   

 

89,846

   

 

51,069

   

 

1,922,636

   

 

(331,318

)

   

 

1,591,318

Operating expenses

   

 

1,287,734

   

 

307,867

 

   

 

86,237

   

 

40,449

   

 

1,722,287

   

 

(328,981

)

   

 

1,393,306

    
  
  
  
  
  
  

Operating income (loss)

   

$

181,954

   

$

4,166

 

   

$

3,609

   

$

10,620

   

$

200,349

   

$

(2,337

)

   

$

198,012

    
  
  
  
  
  
  

 

Note:   For the purpose of presenting its operations in geographic areas above, Konami and its subsidiaries attribute revenues from external customers to individual countries in each area based on where products are sold and services are provided.

 

 

15

Table of Contents

 

Notes:

 

1.   The U.S. dollar amounts included herein represent a translation using the mid price for telegraphic transfer of U.S. dollars as of December 31, 2002 of ¥120.25 to $1 and are included solely for the convenience of the reader. The translation should not be construed as a representation that the yen amounts have been, could have been, or could in the future be converted into U.S. dollars at the above or any other rate.

 

2.   The consolidated financial statements presented herein were prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP).

 

3.   The third quarter ended December 31, 2002 was the first period in which Konami prepared its quarterly consolidated financial statements in accordance with U.S. GAAP. Therefore, U.S. GAAP consolidated financial information for the three months and the nine months ended December 31, 2001 is not available.

 

4.   Comprehensive income for the three months and the nine months ended December 31, 2002 and for the year ended March 31, 2002 consisted of the following:

 

      

Millions of Yen

       

Thousands of U.S. Dollars

  
      

Three months ended

Dec. 31, 2002

       

Nine months ended

Dec. 31, 2002

       

Year ended

Mar. 31, 2002

       

Three months ended

Dec. 31, 2002

     

Nine months ended

Dec. 31, 2002

  

Net income

     

¥

8,371

 

     

¥

12,739

 

     

¥

11,402

 

     

$

69,613

 

   

$

105,938

 

Other comprehensive income:

                                                     

Foreign currency translation adjustments

     

 

27

 

     

 

(186

)

     

 

709

 

     

 

225

 

   

 

(1,547

)

Net unrealized gains (losses) on available-for-sale securities

     

 

(8

)

     

 

89

 

     

 

(189

)

     

 

(67

)

   

 

740

 

      
    
    
    
  
      

 

19

 

     

 

(97

)

     

 

520

 

     

 

158

 

   

 

(807

)

      
    
    
    
  

Comprehensive income

     

¥

8,390

 

     

¥

12,642

 

     

¥

11,922

 

     

$

69,771

 

   

$

105,131

 

      
    
    
    
  

 

16