1st Quarter Results - Part 2

Konami Corporation
9 August 2001


PART 2


(4) Consolidated Statements of Cash Flows (Unaudited)
                                                               (Millions of yen)

                                             Year ended     First Quarter ended
                                           March 31. 2001      June 30.2001

I OPERATING ACTIVITIES:
  Income before income taxes 
   and minority interest                     Y39,591                Y3,382
  Depreciation and amortization                3,123                 1,204
  Amortization of goodwill                       274                   726
  Increase (decrease) in liability for 
    directors' retirement benefits                61                  (261)
  Increase in liability for employees' 
    retirement benefits                            -                   184
  Increase (decrease) in allowance
   for bonuses                                   374                  (409)
  Increase (decrease) in allowance             
   for bad debts                                  35                  (109)
  Interest and dividend income                  (469)                  (61)
  Interest expenses                              810                   126
  Gain on sale Of treasury stock                 (16)                    -
  Foreign exchange losses (gains)               (650)                  214
  Stock issue expenses                           639                     -
  Equity in net losses (income) of 
   affiliated companies                          583                   (50)
  Gain on sale affixed assets                   (124)                   (4)
  Loss on sale and disposal of fixed assets      516                   170
  Gain on sale of investments in subsidiaries (3,947)                    -
  Decrease (increase) in trade receivables    (7,551)                10,843
  Increase in inventories                     (1,052)                (6,147)
  Increase (decrease)in trade payables         6,442                 (7,362)
  Increase (decrease) in consumption 
   taxes payable                                (230)                    19
  Other - net                                  1,923                 (3,541)
  Sub-total                                   40,334                 (1,077)

II Interests and dividends received              435                     94
   Interests paid                               (777)                   (54)
   Income taxes paid                         (18,875)               (14,295)
      Net cash provided by (used in) 
      operating activities                    21,116                (15,333)

III INVESTING ACTIVITIES:
    Decrease (increase) in time deposits       1,415                    (10)
    Proceeds from sale of marketable 
     securities                                    1                      0
    Acquisition of fixed assets               (2,822)                  (757)
    Proceeds from sale of fixed asset          1,274                    148
    Acquisition of intangible fixed assets    (1,488)                  (317)
    Acquisition of investment securities      (3,887)                   (72)
    Proceeds from sale of investment 
      securities                                  28                    552
    Acquisition of subsidiaries              (68,285)                   (24)
    Increase in short-term loans           
     receivable - net                            (69)                    12
    Repayment of deposits received            (3,054)                  (595)
    Increase in deposits received              3,448                      5
    Other - net                                  753                     16
      Net cash used in investment activities (72,686)                (1,041)

III FINANCING ACTIVITIES:
    
    Decrease in short-term loans payable      (1,220)                (1,038)
    Proceeds from long-term loans                720                      -
    Repayment of long-term loans              (1,983)                   (30)
    Proceeds from stock issuance              62,562                      -
    Proceeds from issuance of stock to
      minority shareholders                    6,060                      -
    Proceeds from sale of treasury stock          62                      1
    Dividends paid                            (5,913)                (3,604)
    Dividends paid to minority shareholders      (78)                  (492)
    Other - net                                  229                   (132)
     Net cash provided by (used in) 
         financial activities                 60,440                 (5,296)

IV FOREIGN CURRENCY
    TRANSLATION ADJUSTMENTS ON
     CASH AND CASH EQUIVALENTS                   575                    (59)

V  NET INCREASE IN CASH AND CASH EQUIVALENTS   9,446                (21,730)

VI CASH AND CASH EQUIVALENTS,
     BEGINNING OF PERIOD                      57,365                 66,812

VII CASH AND CASH EQUIVALENTS,
     END OF PERIOD                           Y66,812                Y45,082


SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1. Scope of Consolidation

(1) The consolidated financial statements include the accounts of KONAMI        
    CORPORATION (the 'company') and its 32 consolidated subsidiaries. See '1.   
    Organisation Structure of Konami Group', which shows major subsidiaries.
    NISSAN SPORTS PLAZA, CO., LTD., which was acquired and wholly owned by      
    Konami Sports Corporation, is newly consolidated. The subsidiaries listed   
    below changed their name as follows:

     Name before change                Name after change

     KCEO Inc.                       Konami Computer Entertainment Osaka, Inc,
     PEOPLE CO., LTD.                Konami Sports Corporation
     NAPS CORPORATION                Konami Sports Life Corporation
     NISSAN SPORTS PLAZA CO. LTD.    Konami Sports Plaza, Inc.
     Konami (Hong Kong) Ltd.         Konami Marketing (Asia) Ltd.

     (2) Four subsidiaries are excluded from the scope of consolidation since   
         each of their net assets, net sales, net income, and retained earnings 
         is immaterial, and has no significant effect as a whole on the         
         consolidated financial statements.

2. Application of Equity Method

     (1) Two affiliated companies. Mobile 21 Co., Ltd. and TAKARA CO., LTD, are 
         accounted for by the equity method.
     (2) The equity method is not applied to unconsolidated subsidiaries as they
         have no significant effect on the consolidated net income and retained 
         earnings, and are immaterial as a whole.

3. Balance Sheet Date of Consolidated Subsidiaries

   All consolidated subsidiaries use the same balance sheet date as the Company 
   uses for the quarter.

4. Accounting Standards

   a. Valuation of Assets

     (1) Marketable and Investment Securities

         Other investment securities for which the market value is not readily  
         determinable are stated at cost based on the moving average method.
         Other investment securities for which the market value is readily      
         determinable are stated at fair value as of the balance sheet date.    
         Unrealized holding gain or loss is reported as a separate component of 
         shareholders' equity, The cost of securities sold is determined        
         primarily by the moving average method.
     (2) Derivatives
         Foreign exchange forward contracts are stated at fair value,
     (3) Inventories
         Inventories other than merchandise and work in process are stated at   
         cost determined by the moving average method.
         Merchandise is stated at the lower of cost or market, cost being       
         determined mainly by the first-in, first-out method.
         Work in process consisting of hardware products is stated at cost      
         determined by the moving average method while work in process          
         consisting of software products is stated at cost determined by the    
         specific identification method.

   b. Depreciation Methods
      Tangible fixed assets are depreciated mainly using the declining balance  
      method while intangible fixed assets are amortized mainly using the       
      straight-line method. For in-house software, amortization is computed     
      using the straight-line method based on the estimated useful life of 5    
      years.

   c. Provisions
     (1) Allowance for bad debts
         Generally, the allowance for bad debts is calculated based on the      
         actual ratio of bad debt losses incurred. For specific accounts with   
         higher possibility of bad debt loss, the allowance is determined by    
         independent judgment.

     (2) Allowance for bonuses
         As part of estimated bonus payment to employees in the following       
         period, appropriate amount is provided.

     (3) Liability for employees' retirement benefits (Prepaid pension expense)
         Liability for retirement benefits paid to employees is calculated based
         on the estimated amount of the projected benefit obligation and the    
         plan assets at the end of period.
         Generally, unrecognized net transition asset is amortized over 13      
         years.
         Unrecognized actuarial net gain or loss will be amortized from the     
         following fiscal year within the average remaining service period of 13
         years on a straight-line basis.

     (4) Liability for directors' retirement benefits
         Required amount is reserved for retirement benefits paid to directors  
         of the Company, Konami Sports Corporation and Konami Sports Life       
         Corporation.

  d. Foreign Currency Translation
     Monetary assets and liabilities denominated in foreign currencies are      
     translated at the current exchange rates at each balance sheet date, and   
     the translation gains and losses are credited or charged to income. Assets 
     and liabilities of foreign subsidiaries are translated into yen at the     
     current exchange rate at each balance sheet date while revenue and expenses
     are translated at the average exchange rate for the period. Differences    
     arising from such translation are included as translation adjustments in   
     minority interest and shareholders' equity.

  e. Leases
     Finance leases other than those that deem to transfer ownership of the     
     leased property to the lessee are accounted for as operating lease         
     transactions.

  f. Consumption Tax
     Consumption tax is excluded from the stated amount of revenue and expenses.

5. Valuation of Subsidiaries' Assets and Liabilities

   All of assets and liabilities of consolidated subsidiaries are stated at     
   their fair value when acquired.

6. Amortization of Goodwill

   The difference between the cost and underlying fair value of the net equity  
   of investments in subsidiaries at acquisition is amortized on a straight-line
   basis over the estimated period or 5 years. Such difference is charged to    
   income as incurred if the amount is considered immaterial.

7. Appropriation of Retained Earnings

   The consolidated statements of retained earnings are prepared based on the   
   appropriation as proposed for each fiscal year.

8. Cash and Cash Equivalents

   The cash and cash equivalents stated in the consolidated statements of cash  
   flows consist of cash on hand, all time deposits, and short-term investments,
   which have original maturities of three months or less and can be withdrawn 
   on demand with no diminution of principal.

SEGMENT INFORMATION 
(1) Operating Segment Information

First Quarter ended June 30, 2001                             (Millions of yen)
 

                Consumer-use   Amusement   Gaming   Pachinko  Creative   Health 
                Software       Machines    Machines Systems   Products  Ent'ment

Net Sales
                 
 To customers      Y8,692      Y2,181      Y 626    Y3,623    Y5,771     Y15,482
 Inter-segment        195          54        108         -         0           -
    Total           8,888       2,235        735     3,623     5,771      15,482

Operating Expenses  8,052       1,918      1,159     2,443     3,135      15,239
Operating Income      835         317       (424)    1,180     2,635         243

Assets             40,012       7,468      9,605     8,890     8,317      95,585

Depreciation
  expenses            294          78        122         5        37         485
Capital 
  expenditures       Y567         Y34       Y130       Y29       Y40      Y1,064
    
     
                   Amusement                            Eliminations            
                  Operations  Finance    Other   Total  & Corporate Consolidated
 
Net Sales
                 
 To customers      Y  993      Y    8     Y 342  Y37,723   Y    -     Y37,723
 Inter-segment          -          29       456      845     (845)          -   
  
    Total             993          38       798   38,568     (845)     37,723

Operating Expenses  1,007          37       777   33,771    1,182      34,954   
Operating Income      (13)          0        21    4,796   (2,027)      2,769

Assets              2,976      10,239    22,235  207,332   14,499     221,831 
Depreciation
  expenses             23           0        53    1,102      102       1,204   
Capital 
  expenditures       Y  8          Y-       Y10   Y1,888      Y36      Y1,924   
  
Notes:

1.   Business segments are determined by the internal management on a basis of  
     the similarities in the type, nature and production methods of their       
     products.  Primary products and services of each segment are defined as    
     follows:

Consumer-use Software: Software for home-use game machines
                       Procurement and distribution of home-use game software.

Amusement Machines:    Coin-operated game machines for amusement operations     
                       Dance-simulation game machines 
                       Music-simulation game machines 
                       Disc jockey-simulation game machines

Gaming Machines:       Parts for video slot machines for casinos 
                       Token-operated game machines for amusement operations

Pachinko Systems:      LCD units for pachinko game machines 
                       Pachinko slot machines

Creative Products:     Card games 
                       Character goods 
                       Portable game machines

Health Entertainment:  Operation of fitness facilities 
                       Entertainment-oriented health-related products           
                       Entertainment-oriented fitness machines 
                       Home-use fitness games 
                       Health network services

Amusement Operations:  Operations of amusement centers 

Finance:                Financial services for the group companies 

Other:                  Management of the group companies' real estate

2. Unallocated operating expenses in the Eliminations and Corporate column,     
   mainly consisting of the administrative expenses of the Company, amounted to 
   Y1,898 million.
3. Assets in the Elimination and Corporate column, mainly consisting of cash and
   cash equivalents, investment securities and administrative assets of the     
   Company, amounted to Y37,382 million.
4. Numbers in parentheses represent negative values.


(2) Geographic Information

First Quarter ended June 30,2001                               (Millions of yen)

                                                       Eliminations             
                   Japan  America  Europe  Asia  Total & Corporate  Consolidated
 
Net Sales
                 
 To customers     Y32,581  Y2,803  Y2,032  Y306 Y37,723   Y   -        Y37,723
 Inter-segment      3,157      10       0     0    3,168    (3,168)           - 
        
    Total          35,739   2,184   2,032   306   40,892    (3,168)      37,723 
   
Operating Expenses 32,559   3,460   1,894   321   38,236    (3,281)      34,954
Operating Income      
    (losses)        3,180    (646)    137   (15)   2,656       113        2,769
Assets           Y153,647  Y6,958  Y4,669  Y926 Y166,202   Y55,629     Y221,831


Notes:
1. Geographic areas are categorized by geographical proximity.
2. Each overseas segment consists of the following countries:
     America: United States of America
     Europe; United Kingdom, Germany, France, etc.
     Asia: Hong Kong, Singapore and Korea
3. Unallocated operating expenses in the Eliminations and Corporate column,     
   mainly consisting of the administrative expenses of the Company, amounted to 
   Y1,898 million.
4. Assets in the Elimination and Corporate column, mainly consisting of cash and
   cash equivalents, investment securities and administrative assets of the     
   Company, amounted to Y37,382 million.
5. Numbers in parentheses represent negative values.
   
(3) Overseas Sales

First Quarter ended June 30,2001                              (Millions of yen)

                           Americas     Europe      Other      Total

Overseas sales             Y2,407      Y2,057       Y435      Y4,901
Consolidated sales              -           -          -      37,723
Overseas portion in 
  consolidated sales         6.4%        5.5%        1.1%       13.0%

Notes:
1. Geographic areas are categorized by geographical proximity.
2. Each overseas segment consists of the following countries:
   Americas: United States of America, Canada, etc,
   Europe; United Kingdom, Germany, France, etc. 
   Asia: Hong Kong, Singapore, Australia, etc.
3. Overseas sales consist of the sales outside Japan of the Company and         
   consolidated subsidiaries.