3rd Quarter Results
Konami Corporation
14 February 2002
Announcement of the Consolidated financial Results
for Third Quarter and Nine Months
ended December 31, 2001
KONAMI CORPORATION announces the consolidated financial results for the third
quarter and the nine months ended December 31, 2001 as follows.
Consolidated sales for the third quarter ended December 31, 2001 was contributed
by 'METAL GEAR SOLID 2: SONS OF LIBERTY' and 'PRO EVOLUTION SOCCER' of the
Consumer-use Software (CS) business, the YU-GI-OH! OFFICIAL CARD GAME DUEL
MONSTERS series of the Character Products (CP) business and the sports club
operation of the Health Entertainment (HE) business. As a result, consolidated
sales of this third quarter and the nine months ended December 31, 2001 amounted
to Y72,883 million, increased by 31.8% and Y162,029 million, increased by 25.0%
respectively compared with the same period of the previous year.
Although the CS business made profits, decline in sales of the YU-GI-OH!
OFFICIAL CARD GAME DUEL MONSTERS series of the CP business affected consolidated
income. Consequently, consolidated operating income for the third quarter ended
December 31, 2001 was Y13,609. decreased by 17.7% compared with the same period
of the previous year. Consolidated operating income for the nine month ended
December 31, 2001 was Y23,136 million, also decreased by 31.3% compared with the
same period of the previous year.
Consolidated forecast for the year ended March 31, 2002 announced on November
15, 2001 is revised as below. Consolidated sales is estimated to be Y220,000
million (decreased by Y13,000 million from the previous forecast), consolidated
ordinary income and consolidated net income are estimated to be Y26,000 million
(decreased by Y5,000 million from the previous forecast) and Y13,500 million
(decreased by Y4,000 million from the previous forecast) respectively.
(Further inquiries from press)
KONAMI CORPORATION Public Relation Section
4-3-1, Toranomon, Minato-ku, Tokyo, 105-6021 Japan
TEL: 03-3432-5610 FAX: 03-3578-0549 Email::press@konami.com
http://www.konami.com/
Summary of Consolidated Financial Results for
Third Quarter and Nine Months Ended December 31, 2001
February 14, 2002
KONAMI CORPORATION
Address: 3-1, Toranomon 4-chome, Minato-ku, Tokyo, Japan
Stock Code Number: 9766
Shares Listed: Tokyo Stock Exchange, Osaka Securities Exchange, London Stock
Exchange and Singapore Exchange
Contact: Noriaki Yamaguchi, Representative Director and CFO(Phone: 03-3578-0573)
Date of Board Meeting on the financial results: February 14, 2002
Consolidated Results for the Third Quarter and the Nine Months Ended December
31, 2001
(1) Consolidated Results of Operations
(Figures truncated)
Year-on-year Operating Year-on-year Ordinary Year-on-year
Net Sales Change Income Change Income Change
(Y million) (%) (Y million) (%) (Y million) (%)
Third Quarter ended
December 31, 2001 72,883 31.8 13,609 (17.7) 14,578 (10.8)
Third Quarter ended
December 31, 2000 55,280 16,544 16,351
Nine months ended
December 31, 2001 162,029 25.0 23,136 (31.3) 24,119 (25.3)
Nine months ended
December 31, 2000 129,654 33,680 32,291
Diluted
Year-on-year Net Income Net Income
Net Income Change per Share per Share
(Y million) (%) (Y) (Y)
Third Quarter ended
December 31, 2001 8,080 (4.4) 63.19 -
Third Quarter ended
December 31, 2000 8,451 74.31 -
Nine months ended
December 31, 2001 10,602 (47.2) 82.55 -
Nine months ended
December 31, 2000 20,086 176.63 -
Notes:
1. Equity in net income (losses) of affiliated companies
Third Quarter ended December 31, 2001: Y841 million
Third Quarter ended December 31, 2000: Y(159) million
Nine months ended December 31, 2001: Y1,101 million
Nine months ended December 31, 2000: Y(866) million
2. Average number of shares issued and outstanding
Third Quarter ended December 31, 2001: 127,872,786 shares
Third Quarter ended December 31, 2000: 113,727,425 shares
Nine months ended December 31, 2001: 128,448,201 shares
Nine months ended December 31, 2000: 113,719,042 shares
3. There is no change in accounting policies.
4. Change (%) of net sales, operating income, ordinary income and net income
represents the increase or decrease ratio in relation with the same period of
the previous year.
* Change (%) for the third quarter and the nine months ended December 31, 2000
is not stated since quarterly financial results started to be disclosed from
the third quarter ended December 31, 2000.
(2) Consolidated Financial Position
Total Shareholders' Equity-Assets Total Shareholders'
Total Assets Equity Ratio Equity per Share
(Y million) (Y million) (%) (Y)
December 31, 2001 284,310 146,772 51.6 1,155.61
December 31, 2000 162,167 85,053 52.5 747.80
March 31, 2001 250,023 149,875 59.9 1,164.19
Note:
Number of shares issued and outstanding
December 31, 2001: 127,008,263 shares
December 31,2000: 113,737,436 shares
March 31, 2001: 128,737,538 shares
(3) Consolidated Cash Flows
Net Cash Provided by (Used in) Cash and
Operating Investing Financing Cash Equivalents
Activities Activities Activities at the End
(Y million) (Y million) (Y million) (Y million)
Third Quarter ended 8,457 (4,181) (12,909) 70,228
December 31, 2001
Nine months ended (3,792) (13,249) 14,489 70,228
December 31, 2001
Nine months ended 3,301 (5,048) (1,226) 54,699
December 31, 2000
(4) Consolidation Scope and Application of Equity Method as of December 31, 2001
Consolidated subsidiaries: 36 companies
Affiliated companies applicable under equity method: 3 companies
(5) Changes in Consolidation Scope and Application of Equity Method for the Nine
Months ended December 31, 2001
Increase in the number of consolidated Subsidiaries: 5 companies
Increase in the number of affiliates applicable under
equity method: 1 company
Note:
The financial results for the third quarter and the nine months ended December
31, 2001 and 2000 are not audited by the independent public accountants.
1. Organization Structure of Konami Group
Konami Group specifies its business domain as the global entertainment industry
by providing a wide range of entertainment, and is structured by KONAMI
CORPORATION (the 'Company'), 36 consolidated subsidiaries and 3 affiliated
companies applicable under equity method.
The Company, the subsidiaries and the affiliated companies are categorized into
each business segment according to their operations as stated below.
Business segment categorization stated below is based on the same categorization
stated in '1. Operating Segment Information' of '4. Consolidated Financial
Statements'
Business Segments Major Companies
The Company, Konami Marketing, Inc. (*11)
Konami Computer Entertainment Osaka, Inc.(*4)
Konami Computer Entertainment Tokyo, Inc.(*8)
Konami Computer Entertainment Japan, Inc.
Domestic Konami Computer Entertainment Studios, Inc.(*14)
Konami Computer Entertainment School Inc.
Consumer-use Software Konami Style.com Japan, Inc.
Konami Mobile & Online, Inc.(*12)
HUDSON SOFT CO., LTD. (*10,14,15),
Mobile21 Co., Ltd. (*15)
3 other companies
Konami of America, Inc., Konami of Europe GmbH
Overseas Konami Marketing (Asia) Ltd. (* 1)
Konami Software Shanghai, Inc., 3 other companies
Domestic The Company, Konami Marketing, Inc.(*11),
1 other company
Konami of America, Inc.
Amusement Machines Konami Amusement of Europe Ltd.
Overseas Konami Marketing (Asia) Ltd.(*1)
2 other companies
Domestic The Company, Konami Marketing, Inc. (*11)
Gaming Machines Konami Gaming, Inc.(*9), Konami Marketing (Asia)
Ltd.(*1)
Overseas Konami Australia Pty Ltd.(*13),
5 other companies (*13)
The Company, Konami Parlor Entertainment, Inc.
Pachinko Systems Domestic 1 other company (*7)
The Company, Konami Marketing, Inc. (*ll)
Character Products Domestic Konami Music Entertainment, Inc.,
(Note 2) Konami Style.com Japan, Inc.
Overseas Konami Marketing (Asia) Ltd.(*1), 2 other
companies
The Company, Konami Sports Corporation (*2)
Health Entertainment Domestic Konami Sports Life Corporation (*3,6)
2 other companies (*5)
Konami Capital, Inc., Konami Service, Inc.
Other Domestic Konami Amusement Operation, Inc.
TAKARA CO., LTD. (*15), 1 other company
Overseas 3 other companies
Notes:
1. The companies that have multiple business segments are included in each
segment respectively.
2. Creative Products segment changed its name to Character Products from the
third quarter ended December 31, 2001.
3. Changes in major companies for the nine months ended December 31, 2001 are as
follows:
(*1)Konami (Hong Kong) Ltd. changed its company name to Konami Marketing
(Asia) Ltd. on June 1, 2001.
(*2)PEOPLE CO., LTD. changed its company name to Konami Sports Corporation on
June 1,2001.
(*3)NAPS CORPORATION changed its company name to Konami Sports Life
Corporation on June 1, 2001.
(*4)KCEO Inc. changed its company name to Konami Computer Entertainment
Osaka, Inc. on June 28, 2001.
(*5)NISSAN SPORTS PLAZA, CO., LTD. became a wholly owned subsidiary of Konami
Sports Corporation on June 22, 2001 and changed its company name to Konami
Sports Plaza, Inc. on June 29,2001.
(*6)Konami Sports Life Corporation merged with KCE Planning, Inc. on July 12,
2001.
(*7)DELUCADERUYO, Inc. became a wholly owned subsidiary of Konami Parlor
Entertainment, Inc. on July 31, 2001 and changed its company name to
Konami Parlor Research, Inc. on August 1, 2001.
(*8)KCE Tokyo, Inc. changed its company name to Konami Computer Entertainment
Tokyo, Inc. on August 1, 2001.
(*9)Konami Gaming, Inc. acquired and merged with Paradigm Gaming Systems,
Inc. on August 3, 2001, and integrated it as a systems division.
(*10)HUDSON SOFT CO., LTD. became an affiliated company applicable under
equity method on August 22, 2001.
(*11)Konami Marketing, Inc. merged with 11 domestic sales dealers (TOKYO
KONAMI CO., LTD., OSAKA KONAMI CO., LTD., CHUBU KONAMI CO., LTD., CHUO
KONAMI CO., LTD., HOKKAIDO KONAMI CO., LTD., KITAKANTO KONAMI CO., LTD.,
HIGASHIKANTO KONAMI CO., LTD., MINAMIKANTO KONAMI CO. LTD. CHUGOKU KONAMI
CO., LTD., KYUSHU KONAMI CO., LTD. NISHINIHON KONAMI CO., LTD.) for the
purpose of the reinforcement and efficiency of domestic sales network on
October 1, 2001.
(*12)Konami Mobile & Online, Inc. was established on October 1, 2001.
(*l3)Konami Australia Pty Ltd. and its subsidiary Konami Gaming Australia Pty
Ltd. became consolidated subsidiaries on October 1, 2001.
(*14)HUDSON SOFT CO., LTD. succeeded a portion of the business in Sapporo of a
consolidated subsidiary, Konami Computer Entertainment Studios, Inc., by
the method of absorption following a spin-off on December 1, 2001.
(*15)These are affiliated companies applicable under equity method.
4. Genki Co.,Ltd. became an affiliated company applicable under equity method on
January 30, 2002.
5. Konami Computer Entertainment Japan, Inc. was listed on JASDAQ (Japanese
over-the-counter market) on February 6, 2002.
6. DAIEI OLYMPIC SPORTS CLUB, INC will become a subsidiary of Konami Sports
Corporation and change its company name to Konami Olympic Sports Club
Corporation on February 27, 2002.
2. Business Review
1. Overview
In this third quarter the entertainment industry in which our group operates,
new type of consumer use game machines, NINTENDO GAMECUBE (September 2001 in
Japan, November 2001 in US) and Xbox (November 2001 in US) were released for the
Christmas selling season. Sales of PlayStation 2 significantly improved with
introduction of powerful software, supported by further price reduction in the
end of November 2001 in Japan and also by full supply in US market.
In this circumstance, the products contributed to the sales are our prominent
title 'METAL GEAR SOLID 2' as well as our branded sports game series by the
Consumer-use Software (CS) business, and card game series in the Character
Products (CP) business. Sports club operation in the Health Entertainment (HE)
business also contributed to the sales.
As a result, the consolidated sales for the third quarter and the nine months
ended December 31, 2001 amounted to Y72,883 million (131.8%) and Y162,029
million (125.0%) respectively. Consolidated ordinary income for the third
quarter and the nine months ended December 31, 2001 were Y14,578 million (89.2%)
and Y24,119 million (74.7%) respectively. Consolidated net income for the third
quarter and the nine months ended December 31, 2001 were Y8,080 million (95.6%)
and Y10,602 million (52.8%) respectively.
2. Performance by Business Segment
CS (Consumer-use Software) business released a long-awaited new product, 'METAL
GEAR SOLID 2: SONS OF LIBERTY', which received high acclaim as expected and has
been maintained its solid steps towards million sales in Japan. Products
released for the 2001 year-end holiday selling season in Japan marked constant
sales growth, particularly the most recent release of the WINNING ELEVEN series,
'PRO EVOLUTION SOCCER' and 'crash Bandicoot: The Wrath of Cortex' for
PlayStation 2, and 'YU-GI-OH! DARK DUEL STORIES' for Game Boy Advance. In the
overseas market on the other hand, 'METAL GEAR SOLID 2: SONS OF LIBERTY' for
PlayStation 2 released ahead in US, marked big hit sold over 2 million units.
'Frogger's Adventures' for Game Boy Advance and 'Frogger: The Great Quest' for
PlayStation 2 also made solid sales. 'PRO EVOLUTION SOCCER' and 'SILENT HILLS 2'
for PlayStation 2 maintained constant sales growth in Europe. Consolidated sales
of the CS business for the third quarter and the nine months ended December 31,
2001 were Y39,379 million (187.5%) and Y65,370 million (143.5%) respectively.
AM (Amusement Machines) business made sales of the pop'nmusic series and Dance
Dance Revolution series. Also deployment of variation kit of the Keisatsukan
series, a gun shooting game contributed to the sales. Consolidated sales of the
AM business for the third quarter and the nine months ended December 31, 2001
were Y1,627 million (36.4%) and Y7,053 million (53.0%) respectively.
GM (Gaming Machines) business marked significant contribution to the sales with
large size token-operated machine 'FORTUNE ORB', which captured the market for
its high entertaining performance. The GM business enjoyed continued hit of
'Monster Gate', a large size token-operated new type machines. Consolidated
sales of the GM business for the third quarter and the nine months ended
December 31, 2001 were Y4,719 million (205.7 %) and Y7,277 million (111.3%)
respectively.
PS (Pachinko Systems) business collaborating with pachinko machine manufacturer
has introduced the distinguished LCD unit concentrating on the development of
the product that meets market needs. As a result, the sales of the LCD unit
successfully grew. Consolidated sales of the PS business for the third quarter
and the nine months ended December 31, 2001 were Y4,306 million (173.0%) and
Y10,929 million (124.2%) respectively.
CP (Character Products) business saw continued sales growth of 'YU-GI-OH!
OFFICIAL CARD GAME DUEL MONSTERS: STRUCTURE DECK JONOUCHI' and 'YU-GI-OH!
OFFICIAL CARD GAME DUEL MONSTERS: Mythological Age', the newest products of the
YU-GI-OH! OFFICIAL CARD GAME DUEL MONSTERS series. Consolidated sales of the CP
business for the third quarter and the nine months ended December 31, 2001 were
Y7,573 million (32.3%) and Y20,133 million (39.9%) respectively.
HE (Health Entertainment) business maintained constant sales with Konami Sports
Corporation related business by actively opening new fitness facilities such as
FREIZEIT NAGASAKI opened in December, 2001, a large fitness facility with spa
operated by Konami Sports Corporation. Konami Sports Life Corporation maintained
solid sales of fitness devices and engineering business such as maintenance of
facilities, and has made effort to increase the sales of new products released
in the first half year ended September 30, 2001. 'Dance Dance Revolution
FAMIMAT' and 'FITNESSORCHESTRA SERIES'. Consolidated sales of the HE business
for the third quarter and the nine months ended December 31, 2001 were Y14,482
and Y47,103 respectively (no comparison with the same periods of the previous
fiscal year since the HE segment started operation from the fourth quarter ended
March 31, 2001).
Consolidated sales of the Other segment for the third quarter and the nine
months ended December 31, 2001 were Y795 million (50.1%)and Y4,161 million
(82.2%) respectively.
*Percentage in parentheses represents the proportion to the amount of the third
quarter and the nine months ended December 31, 2000.
3. Forecast for the Year ended March 31, 2002
Sales for the year ended March 31, 2002 estimated in the previous forecast
announced in November 2001, is revised to decrease due to delayed release of the
CP's YU-GI-OH! OFFICIAL CARD GAME in US market, and for PS business segment, the
postponed development period of the new pachinko slot machine in order to add
more competitiveness in market.
Net income for the year ended March 31, 2002 is also revised to be lower than
the previous forecast due to decrease of the sales and other following factors.
Konami Sports Corporation, a subsidiary accounted for additional allowance for
uncollectible accounts such as lease deposits to MYCAL CORPORATION, which once
filed to reorganize under the Civil Rehabilitation Law but later changed under
the Corporate Rehabilitation Law. Konami Computer Entertainment Japan, Inc., a
consumer-use software subsidiary completed its initial public offering on JASDAQ
(over-the-counter market) on February 6, 2002, and the related extraordinary
income was lower than that previously expected.
Net Sales Ordinary Income Net Income
Previous Forecast FY 2002 233,000 31,000 17,500
(Million Yen)
Revised Forecast FY 2002 220,000 26,000 13,500
(Million Yen)
Change FY 2002 (13,000) (5,000) (4,000)
(Million Yen)
Change FY 2002 (5.6) (16.1) (22.9)
(%)
Sales by Segment
CS AM GM PS CP HE Other Total
Previous Forecast FY 86,500 13,000 13,000 19,500 30,000 65,000 6,000 233,000
(Million Yen) 2002
Revised Forecast FY 86,000 11,000 11,000 17,000 25,000 65,000 5,000 220,000
(Million Yen) 2002
Change FY (500) (2,000) (2,000) (2.500) (5,000) 0 (1,000) (13,000)
(Million Yen) 2002
*FY 2002 represents the year ended March 31, 2002
Cautionary Statement
These statements are based on information currently available to management but
subject to change. Actual financial results might differ due to a number of
factors, not limited to but, general global economy, foreign exchange rates in
which Konami Group trades and the Konami Group's capability to come up with
innovative and attractive products in highly competitive market of which we have
solid confidence.
4. Consolidated Financial Statements
(1) Consolidated Balance Sheets (Unaudited) (Millions of yen)
December 31, 2000 December 31, 2001 March 31, 2001
Component Component Component
Ratio Ratio Ratio
ASSETS:
I Current Assets Y128,260 79.1% Y150,909 53.1% Y125,278 50.1%
Cash and cash equivalents 56,084 70,264 66,812
Trade notes and accounts receivable 48,267 45,009 33,870
Inventories 16,069 18,321 13,997
Other 8,246 18,129 11,127
Allowance for bad debts (407) (814) (528)
II Fixed Assets 33,907 20.9 133,400 46.9 124,744 49.9
1.Tangible fixed assets 22,298 32,824 31,865
Buildings and structures 10,661 18,557 19,137
Land 8,252 9,145 8,225
Other 3,384 5,121 4,503
2.Intangible fixed assets 1,830 62,367 62,736
Goodwill - 55,937 57,857
Other 1,830 6,429 4,878
3.Investments and other assets 9,778 38,209 30,143
Lease deposits 4,123 22,683 21,696
Other 5,654 17,406 8,446
Allowance for bad debts - (1,880) -
TOTAL ASSETS Y162,167 100.0% Y284,310 100.0% Y250,023 100.0%
(Millions of yen)
December 31, 2000 December 31, 2001 March 31, 2001
Component Component Component
Ratio Ratio Ratio
LIABILITIES:
I Current Liabilities Y67,225 41.4% Y69,463 24.5% Y77,570 31.0%
Trade notes and accounts payable 28,455 21,538 24,651
Short-term borrowings 3,298 3,283 5,686
Current portion of long-term loans
payable 1,347 3,275 2,001
Current portion of straight bonds 10,000 - 10,000
Income taxes payable 9,913 9,190 14,880
Allowance for bonuses 550 - 1,964
Other 13,659 32,175 18,386
II Long-term Liabilities 4,887 3.0 51,787 18.2 8,553 3.5
Straight bonds - 45,000 -
Long-term loans payable 3,261 343 3,262
Liability for directors' retirement
benefits - 1,173 1,818
Liability for directors' retirement 1,543 1,481 1,738
benefits
Other 82 3,789 1,733
TOTAL LIABILITIES 72,113 44.4 121,250 42.7 86,124 34.5
MINORITY INTEREST 5,001 3.1 16,286 5.7 14,023 5.6
SHAREHOLDERS' EQUITY:
I Common Stock 15,793 9.7 47,398 16.7 47,398 19.0
II Additional Paid-in Capital 15,516 9.6 47,106 16.6 47,106 18.8
III Retained Earnings 53,557 33.0 58,451 20.5 55,253 22.1
IV Unrealized Holding Gains (Losses)
on Other Investment Securities (72) (0.0) 70 0.0 115 0.0
V Foreign Currency
Translation Adjustments 259 0.2 592 0.2 1 0.0
85,054 153,619 149,875
VI Treasury Stock (1) (0.0) (6,847) (2.4) (0) (0.0)
TOTAL SHAREHOLDERS' EQUITY 85,053 52.5 146,772 51.6 149,875 59.9
EQUITY
TOTAL LIABILITIES,
MINORITY INTEREST AND
SHAREHOLDERS' EQUITY Y162,167 100.0% Y284,310 100.0% Y250,023 100.0%
(2) Consolidated Statements of Income (Unaudited)
(Millions of yen)
Third quarter ended Third quarter ended
December 31, 2000 December 31, 2001 Change
Share of Share of
net sales net sales
I Net Sales Y55,280 100.0% Y72,883 100.0% Y17,603 31.8%
II Cost of Sales 31,495 57.0 45,853 62.9 14,358 45.6
Gross Profit 23,784 43.0 27,029 37.1 3,244 13.6
III Selling, General and
Administrative Expenses 7,240 13.1 13,420 18.4 6,179 85.3
Operating Income 16,544 29.9 13,609 18.7 (2,934) (17.7)
IV Non-operating Income 237 0.5 1,320 1.8 1,083 457.0
Interest income 104 37
Rental income 12 -
Foreign exchange gains - 393
Equity in net income of
affiliated companies - 841
Other 120 48
V Non-operating Expenses 430 0.8 350 0.5 (79) (18.4)
Interest expenses 176 153
Bond issue expenses - 39
Equity in net losses of
affiliated companies 159 -
Other 93 157
Ordinary Income 16,351 29.6 14,578 20.0 (1,772) (10.8)
VI Extraordinary Income 0 0.0 1,844 2.5 1,844 238,579.2
Gain on sale of fixed assets 0 10
Gain on sale of investments in
subsidiaries - 1,129
Gain on transfer of operation - 704
VII Extraordinary Losses 218 0.4 114 0.1 (103) (47.4)
Loss on sale and disposal of
fixed assets 131 65
Addition to allowance for bad debts 86 49
Net Income before Income Taxes
and Minority Interest 16,133 29.3 16,308 22.4 175 1.1
Income taxes - Current 9,278 16.8 8,833 12.1 (444) (4.8)
Income taxes - Deferred (1,972) (3.6) (1,868) (2.5) 103 5.3
Minority interest 375 0.7 1,263 1.7 887 236.2
Net Income Y8,451 15.3% Y8,080 11.1% Y(371) (4.4)%
(Millions of yen)
Nine months ended Nine months ended
December 31, 2000 December 31, 2001 Change
Share of Share of
net sales net sales
I Net Sales Y129,654 100.0% Y162,029 100.0% Y32,375 25.0%
II Cost Of Sales 75,502 58.2 106,442 65.7 30,939 41.0
Gross Profit 54,151 41.8 55,586 34.3 1,435 2.7
III Selling, General and
Administrative Expenses 20,471 15.8 32,450 20.0 11,979 58.5
Operating Income 33,680 26.0 23,136 14.3 (10,544) (31.3)
IV Non-operating Income 754 0.6 1,996 1.2 1,241 164.4
Interest income 322 162
Rental income 15 -
Foreign exchange gains - 289
Equity in net income of
affiliated companies - 1,101
Other 417 442
V Non-operating Expenses 2,144 1.7 1,013 0.6 (1,130) (52.7)
Interest expenses 573 412
Bond issue expenses - 282
Equity in net losses of
affiliated companies 866 -
Other 704 318
Ordinary Income 32,291 24.9 24,119 14.9 (8,172) (25.3)
VI Extraordinary Income 4,091 3.1 2,897 1.8 (1,193) (29.2)
Gain on reversal of allowance
for bad debts 107 -
Gain on sale of fixed assets 35 26
Gain on sale of investment securities - 416
Gain on sale of investments in
subsidiaries 3 1,129
Gain on sale of minority interest in
a subsidiary 3,944 -
Gain on reversal of liability
for employees' retirement benefits - 621
Gain on transfer of operation - 704
VII Extraordinary Losses 182 0.1 2,511 1.6 2,329 1,278.4
Loss on sale and disposal of fixed assets 182 631
Addition to allowance for bad debts - 1,880
Net Income before Income Taxes
and Minority Interest 36,200 27.9 24,505 15.1 (11,695) (32.3)
Income taxes - Current 16,984 13.1 12,926 8.0 (4,058) (23.9)
Income taxes - Deferred (1,637) (1.3) (1,317) (0.8) 319 19.5
Minority interest 767 0.6 2,294 1.4 1,526 199.1
Net Income Y20,086 15.5% Y10,602 6.5% Y(9,483) (47.2)%
(3) Consolidated Statements of Retained Earnings (Unaudited)
(Millions of yen)
Third quarter ended Third quarter ended Year ended
December 31, 2000 December 31, 2001 March 31, 2001
I Retained Earnings at Beginning Y48,062 Y53,730 Y39,565
II Increase in Retained Earnings - 117 -
Increase by merger - 117 -
III Decrease in Retained Earnings 2,956 3,475 6,094
Cash dividends 2,956 3,475 5,913
Directors' bonuses - - 170
Decrease by consolidated
subsidiary's merger with
unconsolidated subsidiary - - 10
IV Net Income 8,451 8,080 21,781
V Retained Earnings at End of
Period Y53,557 Y58,451 Y55,253
(Millions of yen)
Nine months ended Nine months ended
December 31, 2000 December 31, 2001
I Retained Earnings at Beginning Y39,565 Y55,253
II Increase in Retained Earnings - 117
Increase by merger - 117
III Decrease in Retained Earnings 6,094 7,522
Cash dividends 5,913 7,080
Directors' bonuses 170 442
Decrease by consolidated
subsidiary's merger with
unconsolidated subsidiary 10 -
IV Net Income 20,086 10,602
V Retained Earnings at End of
Period Y53,557 Y58,451
(4) Consolidated Statements of Cash Flows (Unaudited) (Millions of Yen)
Nine months ended Nine months ended Third quarter ended
December 31,2000 December 31, 2001 December 31, 2001
I OPERATING ACTIVITIES;
Income before income taxes and minority
interest Y36,200 Y24,505 Y16,308
Depreciation and amortization 2,059 4,461 1,807
Amortization of goodwill - 2,174 749
Increase (decrease) in liability for
directors' retirement benefits 57 (257) 2
Increase in allowance for bad debts - 2,303 295
Interest and dividend income (323) (171) (40)
Interest expenses 573 412 153
Bond issue expenses - 282 39
Equity in net losses (income) of
affiliated companies 866 (1,101) (868)
Loss on sale and disposal of fixed assets - 631 65
Gain on sale of investments in
subsidiaries (3,947) (1,129) (1,129)
Gain on sale of investment securities - (416) 0
Increase in trade receivables (21,480) (13,708) (18,304)
Decrease (increase) in inventories (4,571) (3,937) 1,383
Increase (decrease) in trade payables 10,531 (4,610) 3,649
Increase in consumption tax payable 372 - -
Other-net 1,651 5,411 8,885
Sub-total 21,989 14,849 12,997
Interests and dividends received 300 229 85
Interests paid (475) (289) (33)
Income taxes paid (18,513) (18,581) (4,591)
Net cash provided by (used in) operating
activities 3,301 (3,792) 8,457
II INVESTING ACTIVITIES:
Acquisition of tangible fixed assets (1,417) (4,531) (1,669)
Proceeds from sale of tangible fixed assets 451 394 57
Acquisition of intangible fixed assets (982) (2,381) (1,858)
Acquisition of investment securities (3,568) (5,285) (200)
Proceeds from sale of investment
securities 22 516 -
Acquisition of investments in subsidiaries - (1332) (984)
Proceeds from sale of investments in
subsidiaries - 1,857 1,857
Increase in short-term loans receivable-net (67) - -
Decrease in deposits received-net - (1,608) (1,063)
Other-net 512 (880) (320)
Net cash used in investing activities (5,048) (13,249) (4,181)
III FINANCING ACTIVITIES:
Increase (decrease) in short-term
borrowings 233 (3,585) (406)
Proceeds from long-term loans 172 469 -
Repayment of long-term loans (1,979) (2,129) (1,614)
Proceeds from issuance of bonds - 44,717 (39)
Redemption of bonds - (10,000) -
Proceeds from issuance of common stock to
minority shareholders 6,060 - -
Acquisition of treasury stock - (6,847) (6,847)
Dividends paid (5,913) (7,080) (3,512)
Dividends paid to minority shareholders (78) (572) (242)
Other-net 277 (481) (246)
Net cash provided by (used in) financing
activities (1,226) 14,489 (12,909)
IV FOREIGN CURRENCY
TRANSLATION ADJUSTMENTS ON
CASH AND CASH EQUIVALENTS 307 601 663
V NET INCREASE IN CASH AND
CASH EQUIVALENTS (2,666) (1,951) (7,970)
VI CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 57,365 66,812 72,841
VII CASH AND CASH EQUIVALENTS OF
NEWLY CONSOLIDATED COMPANY - 10 -
VIII CASH AND CASH EQUIVALENTS OF
NEWLY MERGED COMPANIES - 5,356 5,356
IX CASH AND CASH EQUIVALENTS,
END OF PERIOD Y54,699 Y70,228 Y70,228
Summary of Significant Accounting Policies
1. Scope of Consolidation
(1) The consolidated financial statements include the accounts of KONAMI
CORPORATION (the 'Company') and its 36 consolidated subsidiaries (See '1.
Organization Structure of Konami Group', which shows major subsidiaries).
Konami Mobile & Online, Inc., Konami Australia Pty Ltd. and its subsidiary, Konami
Gaming Australia Pty Ltd. have been consolidated from the third quarter ended
December 31, 2001. NISSAN SPORTS PLAZA. CO., LTD. (currently named Konami Sports
Plaza, Inc.), which was acquired and wholly owned by Konami Sports Corporation,
and DELUCADERUYO, Inc. (currently named Konami Parlor Research, Inc.), which was
acquired and wholly owned by Konami Parlor Entertainment, Inc., were newly
consolidated.
Konami Sports Life Corporation merged with KCE Planning, Inc.
Konami Gaming, Inc. acquired and merged with Paradigm Gaming Systems, Inc.
Konami Marketing, Inc. merged with 11 domestic sales dealers (TOKYO KONAMI CO.,
LTD., OSAKA KONAMI CO., LTD., CHUBU KONAMI CO., LTD., CHUO KONAMI CO., LTD.,
HOKKAIDO KONAMI CO., LTD., KITAKANTO KONAMI CO., LTD., HIGASHIKANTO KONAMI CO.,
LTD., MINAMIKANTO KONAMI CO., LTD., CHUGOKU KONAMI CO., LTD., KYUSHU KONAMI CO.,
LTD. and NISHINIHON KONAMI CO., LTD.).
(2) KCE Enterprise, Inc. is excluded from the scope of consolidation since its
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) Three affiliated companies, TAKARA CO., LTD., Mobile 21 Co., Ltd. and HUDSON
SOFT CO., LTD. are accounted for by the equity method.
HUDSON SOFT CO., LTD. has been accounted for by the equity method since the
period ended September 30,2001.
(2) The equity method is not applied to KCE Enterprise, Inc. (unconsolidated
subsidiary) as it has no significant effect on the consolidated net income and
retained earnings, and is immaterial as a whole.
3. Fiscal year-end of Consolidated Subsidiaries
Two consolidated subsidiaries, Konami Sports Corporation and THE CLUB AT YEBISU
GARDEN CO., LTD. use fiscal year-ends at September 30, 2001 and March 31, 2002
for the year ended March 31, 2002. All the other consolidated subsidiaries use
the same balance sheet date as that of the Company.
4. Accounting Standards
a. Valuation of Assets
(1) Marketable and Investment Securities
'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.
'Other investment securities' for which the market value is not readily
determinable are stated at cost based on the moving average method.
(2) Derivative financial instruments
Derivative financial instruments 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) Liability for employees' retirement benefits (Prepaid pension costs)
Liability for retirement benefits to be paid to employees is calculated based on
the estimated amount of the projected benefit obligation and the plan assets as
of the balance sheet date. Generally, unrecognized net transition asset or
obligation 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.
(3) Liability for directors' retirement benefits
Required amount for retirement benefits to be paid to directors of the Company,
Konami Sports Corporation and Konami Sports Life Corporation as of the balance
sheet date is reserved as liability.
d. Foreign Currency Translation
Monetary assets and liabilities denominated in foreign currencies are translated
into Japanese yen 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 Japanese yen at the
current exchange rates at each balance sheet date while revenue and expenses are
translated at the average exchange rates for the period.
Differences arising from such translation are included in minority interest and
shareholders' equity as foreign currency translation adjustments.
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.
g. Income Taxes
Current and deferred income taxes for the third quarter and the nine months
ended December 31, 2001 are calculated on the assumption of the reversal of
reserve for advanced depreciation in appropriations of retained earnings planned
at the fiscal year-end.
5. Cash and Cash Equivalents
The cash and cash equivalents stated in the Consolidated Statements of Cash
Flows consist of cash on hand, deposits which can be withdrawn on demand and
short-term investments which have original maturities of three months or less
with insignificant risk of changes in value of principal.
Segment Information
1.Operating Segment Information
Third quarter ended December 31, 2000
(Millions of Yen)
Eliminations
and
Consumer-use Amusement Gaming Pachinko Creative Health Other Total Corporate Consolidated
Software Machines Machines Systems Products Entertain-
ment
Net Sales:
To Customers Y21,004 Y4,467 Y2,294 Y2,489 Y23,436 - Y1,588 Y55,280 - Y55,280
Inter-segment 702 131 106 - 27 - 513 1,482 Y(1,482) -
Total 21,707 4,598 2,401 2,489 23,463 - 2,102 56,762 (1,482) 55,280
Operating
expenses 17,071 2,975 2,337 2,011 11,751 - 2,197 38,344 391 38,735
Operating income
(losses) 4,635 1,623 63 478 11,712 - (95) 18,418 (1,873) 16,544
Nine months ended December 31, 2000
(Millions of Yen)
Eliminations
Consumer-use Amusement Gaming Pachinko Creative Health Other Total and Consolidated
Software Machines Machines Systems Products Entertain- Corporate
ment
Net Sales:
To Customers Y45,540 Y13,315 Y6,540 Y8,763 Y50,429 - Y5,064 Y129,654 - Y(129,654)
Inter-segment 1,510 184 307 - 62 - 1,602 3,666 Y(3,666) -
Total 47,050 13,499 6,848 8,763 50,492 - 6,667 133,320 (3,666) 129,654
Operating
expenses 39,339 9,972 6,726 6,698 25,263 - 6,455 94,456 1,517 95,973
Operating
income 7,711 3,527 121 2,064 25,228 - 212 38,864 (5,184) 33,680
Third quarter ended December 31, 2001
(Millions of yen)
Eliminations
Consumer-use Amusement Gaming Pachinko Character Health Other Total and Consolidated
Software Machines Machines Systems Products Entertain- Corporate
ment
Net sales:
To customers Y39,379 Y1,627 Y4,719 Y4,306 Y7,573 Y14,482 Y795 Y72,883 - Y72,883
Inter-segment 330 61 141 - 74 15 1,209 1,832 Y(1,832) -
Total 39,710 1,688 4,861 4,306 7,647 14,497 2,004 74,715 (1,832) 72,883
Operating
expenses 28,870 1,387 3,872 3,171 5,512 13,952 2,165 58,933 340 59,273
Operating income
(losses) 10,839 300 988 1,134 2,134 545 (160) 15,782 (2,173) 13,609
Nine months ended December 31, 2001
(Millions of yen)
Eliminations
Consumer-use Amusement Gaming Pachinko Character Health Other Total and Consolidated
Software Machines Machines Systems Products Entertain- Corporate
ment
Net sales:
To customers Y65,370 Y7,053 Y7,277 Y10,929 Y20,133 Y47,103 Y4,161 Y162,029 - Y162,029
Inter-segment 762 173 310 - 89 15 2,167 3,519 Y(3,519) -
Total 66,132 7,227 7,588 10,929 20,223 47,118 6,328 165,548 (3,519) 162,029
Operating
expenses 51,277 5,950 7,086 7,956 13,028 44,153 6,319 135,771 3,121 138,893
Operating income 14,855 1,277 501 2,973 7,194 2,965 8 29,776 (6,640) 23,136
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
Character 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
Other: Operations of amusement centers
Financial services for the group companies
Management of the group companies' real estate
2. Creative Products segment changed its name to Character Products from the
third quarter ended December 31,2001.
3. As from the nine-month period ended December 31, 2001, Amusement Operations
and Finance are included in Other. Net sales, operating expenses and operating
income or losses of Amusement Operations and Finance for each period are as
follows.
(Millions of yen)
Third quarter ended Nine months ended
December 31, 2001 December 31, 2001
Amusement Amusement
Operations Finance Operations Finance
Net sales 1,088 40 3,486 120
Operating expenses 1,117 33 3,559 105
Operating income (losses) (28) 7 (72) 15
4. Unallocated operating expenses in the Eliminations and Corporate column,
mainly consisting of the administrative expenses of the Company, amounted to
Y1,918 million and Y1,250 million for the third quarter ended December 31,2001
and 2000 respectively and Y6,054 million and Y4,746 million for the nine months
ended December 31, 2001 and 2000.
2. Geographic Information
Third quarter ended December 31, 2000
(Millions of yen)
Eliminations
and
Japan Americas Europe Asia Total Corporate Consolidated
Net sales:
To customers Y47,851 Y4,371 Y2,660 Y397 Y55,280 - Y55,280
Inter-segment 4,807 14 0 5 4,827 Y(4,827) -
Total 52,658 4,385 2,661 402 60,107 (4,827) 55,280
Operating expenses 35,320 4,083 2,348 477 42,230 (3,494) 38,735
Operating income (losses) 17,338 301 312 (75) 17,876 (1,332) 16,544
Nine months ended December 31, 2000
(Millions of yen)
Eliminations
and
Japan Americas Europe Asia Total Corporate Consolidated
Net sales:
To customers Y117,371 Y6,195 Y4,880 Y1,206 Y129,654 - Y129,654
Inter-segment 7,473 16 0 34 7,524 Y(7,524) -
Total 124,844 6,212 4,880 1,241 137,179 (7,524) 129,654
Operating expenses 84,475 8,394 4,781 1,255 98,906 (2,933) 95,973
Operating income (losses) 40,369 (2,181) 99 (14) 38,272 (4,591) 33,680
Third quarter ended December 31, 2001
(Millions of yen)
Eliminations
and
Japan Americas Europe Asia/ Total Corporate Consolidated
Oceania
Net sales:
To customers Y52,068 Y13,458 Y6,397 Y959 Y72,883 - Y72,883
Inter-segment 14,592 385 2 150 15,130 Y(15,130) -
Total 66,660 13,843 6,399 1,110 88,013 (15,130) 72,883
Operating expenses 53,912 12,606 5,115 918 72,553 (13,279) 59,273
Operating income 12,748 1,237 1,283 191 15,460 (1,851) 13,609
Nine months ended December 31, 2001
(Millions of yen)
Eliminations
and
Japan Americas Europe Asia/ Total Corporate Consolidated
Oceania
Net sales:
To customers Y129,252 Y21,494 Y9,728 Y1,553 Y162,029 - Y162,029
Inter-segment 22,921 1,902 3 180 25,008 Y(25,008) -
Total 152,173 23,397 9,732 1,734 187,037 (25,008) 162,029
Operating expenses 124,947 22,592 8,476 1,605 157,621 (18,728) 138,893
Operating income 27,226 805 1,256 128 29,416 (6,280) 23,136
Notes:
1. Geographic areas are categorized by geographical proximity.
2. Each overseas segment consists of the following countries:
Americas: United States of America
Europe: United Kingdom, Germany, France, etc.
Asia/Oceania: Hong Kong, Singapore, Korea, Australia, etc.
3. Unallocated operating expenses in the Eliminations and Corporate column,
mainly consisting of the administrative expenses of the Company, amounted to
Y1,918 million and Y1,250 million for the third quarter ended December 31,2001
and 2000 respectively and Y6,054 million and Y4,746 million for the nine months
ended December 31,2001 and 2000.
3. Overseas Sales
Third quarter ended December 31, 2000
(Millions of yen)
Americas Europe Other Total
Overseas sales Y4,597 Y2,723 Y761 Y8,083
Consolidated sales - - - 55,280
Overseas portion in consolidated sales 8.3% 4.9% 1.4% 14.6%
Nine months ended December 31, 2000
(Millions of yen)
Americas Europe Other Total
Overseas sales Y6,546 Y4,870 Y2,570 Y13,986
Consolidated sales - - - 129,654
Overseas portion in consolidated sales 5.0% 3.8% 2.0% 10.8%
Third quarter ended December 31, 2001
(Millions of yen)
Americas Europe Other Total
Overseas sales Y12,176 Y6,305 Y610 Y19,092
Consolidated sales - - - 72,883
Overseas portion in consolidated sales 16.7% 8.7% 0.8% 26.2%
Nine months ended December 31, 2001
(Millions of yen)
Americas Europe Other Total
Overseas sales Y21,498 Y9,716 Y1,566 Y32,781
Consolidated sales - - - 162,029
Overseas portion in consolidated sales 13.3% 6.0% 1.0% 20.2%
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.
Other: Hong Kong,Singapore, Australia, etc.
3. Overseas sales consist of the sales outside Japan of the parent company
and consolidated subsidiaries.
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