Interim Results - Part 2

Konami Corporation
20 November 2000

PART 2 


(2) Operations by Geographic Area

Six months ended September 30, 2000


                                                               Millions of yen
                                                   
                   Japan         America      Europe     Asia     Total 
Net sales:
To customers    Y 69,520     Y    1,824    Y  2,219   Y    809   Y 74,374    
Inter-segment      2,666              2           -         29      2,697
Total             72,186          1,827       2,219        838     77,071
Operating 
expenses          49,155          4,310       2,432        777     56,676 
Operating income  
 (loss)           23,031         (2,483)       (213)        61     20,395 

                                                              Millions of yen
                                           Eliminations
                                                and
                                             Corporate          Consolidated

Net sales:                                    
To customers                                     -             Y   74,374
Inter-segment                                 (2,697)                   -
Total                                         (2,697)              74,374
Operating expenses                               561               57,237
Operating income (loss)                       (3,258)              17,136

Six months ended September 30,1999
   

                                                               Millions of yen
                                                   
                   Japan         America      Europe     Asia     Total 
Net sales:
To customers    Y 66,253     Y    5,415    Y  5,237   Y 1,340   Y  78,246    
Inter-segment      8,326             12          10        55       8,404
Total             74,580          5,427       5,247     1,395      86,651
Operating 
expenses          51,897          5,378       5,055     1,192      63,524  
Operating income  
 (loss)           22,683             48         191       203      23,126
Assets 
                                                                Millions of yen
                                           Eliminations
                                                and
                                             Corporate          Consolidated

Net sales:                                    
To customers                                     -             Y   78,246
Inter-segment                                 (8,404)                   -
Total                                         (8,404)              78,246
Operating expenses                            (5,233)              58,291 
Operating income (loss)                       (3,171)              19,955
Assets

Year ended March 31, 2000

                                                               Millions of yen
                                                   
                   Japan         America      Europe     Asia     Total 
Net sales:
To customers    Y 123,276     Y  11,827     Y  9,265   Y  2,297  Y 146,666    
Inter-segment      15,986           615            2        121     16,725
Total             139,262        12,442        9,267      2,418    163,391
Operating 
expenses          101,626        13,444        8,999      2,082    126,152  
Operating income  
 (loss)            37,636        (1,002)         267        336     37,239
 
                                                               Millions of yen

                                           Eliminations
                                                and
                                             Corporate          Consolidated

Net sales:                                    
To customers                                     -             Y  146,666
Inter-segment                                 (16,725)                  -
Total                                         (16,725)            146,666
Operating expenses                            (10,424)            115,727 
Operating income (loss)                       (6,300)              30,938


Notes: 1. Geographic areas are categorized by geographical proximity.
2. Each overseas segment consists of the following countries.
(1) America: United States of America
(2) Europe: United Kingdom, Germany and France
(3) Asia: Hong Kong, Singapore, and Korea
3. Unallocated operating expenses in the Eliminations and Corporate column,
mainly consisting of the administrative expenses of the parent company, amounted
to Y3,495 million and Y2,841 million for the months ended September 30, 2000,
and Y5,602 million for the previous year ended March 31, 2000.


(3) Overseas Sales
Six months ended September 30, 2000

                                                                Millions of yen

                         America           Europe       Other             Total

0verseas sales       Y     1,948        Y   2,146    Y  1,809      Y     5,903
Consolidatcd sales             -                -           -           74,374

Overseas portion in 
consolidated sales           2.6%            2.9%         2.4%             7.9%

Six months ended September 30,1999

                                                               Millions of yen

                         America            Europe      Other            Total

Overseas sales       Y    5,997         Y  4,876     Y  3,184         Y 14,058
Consolidated sales            -                -            -           78,246

Overseas portion in 
 consolidated sales        7.7%              6.2%       4.1%              18.0%

Year ended March 31, 2000

                                                            Millions of yen

                        America            Europe       Other           Total

Overseas sales       Y 12,586              8,582     Y 6,679      Y    27,848
Consolidated sales          -                  -           -          146,666
Overseas portion in 
 consolidated sales       8.6%               5.8%        4.6%            19.0%

Notes: 1. Geographic areas are categorized by geographical proximity. 
       2. Each overseas segment consists of the following countries: 
      (1) America: United States of America and Canada etc. 
      (2) Europe: United Kingdom, Germany, and France, etc. 
      (3) Other: Hong Kong, Singapore, and Australia, etc.

3. Oveseas sales consist of the sales of the parent company and consolidated
companies outside Japan.
   
              6. Marketable and Investment Securities

1. Other securities with market value (as of September 30, 2000)

                                                            (Millions of yen)
                                        Balance sheet
                  Acquisition cost      amount                    Difference

Other investment 
 securities                    200                152                  (47)

2. Major securities not valued at market (as of September 30, 2000)

                           (Millions of yen)
                             Balance sheet
                                  amount
Unlisted stock
(except over-the-counter stock)    726

Note:
 Investments in affilliates, with market value are stated in notes to the
 non-consolidated financial statements.

                          7. Derivatives

As of September 30, 2000
                                                            (Millions of yen)
                                                               Unrealized
                         Contract amount  Market value     holding gain (loss)
Foreign exchange forward contract
  for receivables in:
      USD                          106             106               0
      GBP                          132             130               1
      EUR                          319             309               9
      AUD                          118             109               8
Total                              676             656              19

Note: Such information for outstanding foreign exchange forward contracts at
 previous fiscal year-end as for market value is not denoted, since the
 contracts are all assigned to accompanying receivables in foreign currencies
 according to the accounting standards for foreign currency transactions.
 
           8. Summary of Non-consolidated Financial Results
                for the Six Months Ended September 30, 2000
                                                         November 16,2000

KONAM1 CORPORATION
Address: 3-1, Toranomon 4-chome, Minato-ku, Tokyo, Japan 
Stock Code Number: 9766
Shares Listed: Tokyo Stock Exchange (First Section), Osaka Securities Exchange
(First Section), London Stock Exchange, and Singapore Exchange (Main Board)
Contact: Mr. Noriaki Yamaguchi, Director 
Phone:[phone]
http://www.konami.com 
Date of Board Meeting on financial results for the six-month period: November
16, 2000 
Date of commencement of interim dividend payment: December 1, 2000

1. Financial Results for the Six Months Ended September 30, 2000

(1) Results of Operation
                                                          (Figures truncated)
                Year-on-year   Operating   Year-on-year  Ordinary  Year-on-year
            Net    Change         Income     Change      Income      Change
            Sales   (%)       (Y million)     (%)       (Y million)   (%)
          (Y million)

Six months ended
September 
30, 2000    66,506  (4.3)       15,427       (7.4)        15,369    (7.3)

Six months ended
September 
30, 1999    69,507  82.8        16,661      432.8         16.581   537.7

Year ended
March 
31,2000    130,124              25,613                    25,374

                               Year-on-year     Net Income
                   Net Income     Change        Per Share
                   (Y million)      (%)            (Y)
Six months ended
 September 30,2000    8,777       (24.1)          77.17

Six months ended
September 30,1999    11,569       780.0          205.80

Year ended
March 31,2000        16,236                      287.17

Notes
1. Average number of shares issued
  Six months ended September 30, 2000:        113,737,566 shares
  Six months ended September 30, 1999:         56,217,159 shares
  Year ended March 31,2000:                    56,540,767 shares
2. There is no change in accounting policies.
3. 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.
4. Figures in parentheses represent negative values.

(2) Dividends
                        Cash dividends per share
                        Interim           Annual
                          (Y)              (Y)

Six months ended
 September 30,2000        26.00             -
Six months ended
 September 30,1999        45.00             -
Year ended
 March 31,2000            97.00             -

Note: There is no commemorative or special dividend included in the six-month
period ended September 30,2000.

(3) Financial Position
                         Total Shareholders' Equity-Assets  Total Shareholders'
            Total Assets        Equity           Ratio      Equity Per Share
            (Y million)       (Y million)         (%)             (Y)

September 
30,2000       125,319           76,806           61.3           675.29
September 
30,1999       124,800           69,027           55.3         1,213.95

March 31,2000 120,859           71,154           58.9         1,251.47

Notes:
 Number of shares issued
 September 30,2000     113,737,566 shares
 September 30,1999      56,862,074 shares
 March 31,2000          56,857,100 shares

2. Financial forecast for the year ended March 31,2001

                           Ordinary       Net       Cash Dividends Per Share
               Net Sales    Income      Income         Year-end       Annual 
              (Y million) (Y million) (Y million)        (Y)           (Y)
Year ended
March 31,2001   132,000      23,000      13,000          26.00       52.00

Note:
 Estimated net income per share for the year ended March 31,2001 is Y114.30.

                   9. Non-consolidated Financial Statements

(1) Non-consolidated Balance Sheets                         (Millions of yen)

                    September 30,2000    September 30,1999    March 31, 2000
                             Share of             Share of          Share of
                         total assets         total assets      total assets

ASSETS:

I Current Assets      Y 94,383   75.3 %  Y  99,479   79.7 %  Y 94,522  78.2%
Cash and cash 
 equivalents            38,993              47,784             48,578
Trade notes 
 receivable                 19                 753                  3
Trade accounts
 receivable             34,989              32,019             25,723
Marketable
 securities                  -                 678                  0
Treasury stock               0                  21                  1
Finished products        2,300               2,356              2,187
Raw materials
 and supplies              539                 765                789
Work in process          1,820               2,052              1,808
Advances                 2,083                 983              1,850
Prepaid expenses         2,257                 692              1,007
Short-term loans
 to affiliates           9,824              10,057             10,796
Current portion of
 long-term loans
  to affiliates            108                 106                106
Deferred tax assets      1,008               1,032              1,438
Others                     455                 393                416
Allowance for bad debts    (17)               (218)              (186)

II Fixed Assets        30,935     24.7      25,321   20.3      26,337   21.8
1. Tangible fixed 
    assets             10,075      8.1      12,498   10.0      10,216    8.5
Buildings               5,243                6,489              5,427
Structures                143                  169                154
Machinery                   7                    4                  9
Transportation
 equipment                 39                   40                 31
Tools and fixtures      1,152                1,095              1,105
Land                    3,488                4,699              3,488

2. Intangible fixed
     assets             1,152      0.9         890    0.7       1,199    1.0
In-house software       1,123                  855              1,170
Others                     29                   35                 29

3. Investments and 
     other assets      19,707     15.7      11,932    9.6      14,920   12.3
Investment securities     426                    -                240
Investment in 
  affiliates           16,632                9,234             11,846
Treasury stock             15                  221                 30  
Long-term loans
 to affiliates              -                  111                 55
Long-term prepaid
  expenses                  3                    6                  4
Lease deposits          1,981                1,712              1,998
Deferred tax assets       603                  402                499
Others                     45                  245                245
Allowance for bad debts     -                   (1)                (0)

   TOTAL ASSETS     Y 125,319   100.0  % Y 124,800   100.0 %  Y120,859 100.0 %

                                                      (Millions of yen)
                      
                    September 30,2000    September 30,1999     March 31,2000
                             Share of             Share of          Share of
                                total             total             total       
                         liabilities          liabilities       liabilities
                                  and                  and               and
                         shareholders'         shareholders'    shareholders'   
                              equity                equity           equity

LIABILITIES:
I Current Liabilities    Y 45,462  36.3 %     Y 37,035   29.7% Y 36,740  30.4%
     Trade notes payable   13,747               13,590           11,491
     Trade accounts payable 8,099                7,209            6,881
     Short-term loam payable  324                1,037              796
     Current portion of 
     straight bonds        10,000                  400                -
     Current portion of 
     convertible bonds          -                   10                -
     Current portion of 
     long-term debt             -                    -            1,000
     Other accounts payable 2,956                2,647            3,722
     Income taxes payable   6,443                9,546            9,751
     Accrued expenses       3,057                1,719            2,430
     Allowance for bonuses    554                  566              519
     Notes payable for 
     plant and equipment       32                  124               88
     Warrants                   -                    0                -
     Others                   247                  182               60

II Long-term Liabilities    3,050   2.4         18,738   15.0    12,964  10.7
     Straight bonds             -               15,000           10,000
     Long-term loans payable    -                1,000                -
     Liability for 
     directors' retirement 
     benefits               1,542                1,258            1,486
     Allowance for loss 
     incurred by a 
     subsidiary             1,430                1,430            1,430
     Long-term deposits 
     received                  78                   50               47
      
    TOTAL LIABILITIES      48,513  38.7         55,773   44.7    49,704  41.1

SHAREHOLDERS'EQUITY:
     I Common Stock        15,793  12.6         15,787   12.6    15,793  13.1
     II Additional 
     Paid-in Capital       15,516  12.4         15,509   12.5    15,516  12.8
III Legal Reserve           1,474   1.2            906    0.7     1,162   1.0
IV Retained Earnings       44,020  35.1         36,824   29.5    38,682  32.0
     1. Voluntary earned 
        surplus            33,243  26.5         22,803   18.3    22,803  18.9
     2. Unappropriated 
        earned surplus     10,777   8.6         14,020   11.2    15,878  13.1

     TOTAL SHAREHOLDERS' 
        EQUITY             76,806  61.3         69,027   55.3    71,154  58.9

     TOTAL LIABILITIES AND
     TOTAL 
     SHAREHOLDERS'EQUITY Y125,319 100.0 %     Y124,800  100.0% Y120,859 100.0%
      
(2) Non-consolidated Statements of Income    
                         Six months ended     Six months ended     Year ended
                         September 30,2000    September 30,1999    March        
                                                                31, 2000
                                  Share of            Share of     Share of
                                 net sales            net sales    net sales

I  Net Sales            Y 66,506  100.0 %     Y 69,507  100.0% Y130,124  100.0%
II Cost of Sales          42,092   63.3         44,941   64.7    87,719   67.4
   Gross Profit           24,414   36.7         24,566   35.3    42,404   32.6
III Selling, General and 
 Administrative Expenses   8,986   13.5          7,905   11.3    16,790   12.9
     Operating Income     15,427   23.2         16,661   24.0    25,613   19.7
IV Non-operating Income      369    0.5            910    1.3     1,372    1.0
     Interest income          57                    78              175
     Dividend income         220                    83               87
     Gain on sale of 
   marketable securities       0                   310              634
     Gain on sale of treasury
       stock                   8                   141              213
     Rental income             7                    72              114
     Others                   75                   223              146
V Non-operating Expenses     427      0.6          990    1.4     1,610   1.2
     Interest expenses        34                    50              100
     Bond interest expenses  132                   191              384
     Foreign exchange losses   7                   446              615
     Loss on devaluation of 
     membership              204                     -                -
     Others                   48                   301              509
     Ordinary Income      15,369     23.1       16,581   23.9    25,374  19.5
VI Extraordinary Income      172      0.2        7,871   11.3     8,769   6.7
     Gain on reversal of 
 allowance for bad debts     168                    56               88
     Gain on sale of fixed 
        assets                 -                    51               56
     Gain on transfer of 
intellectual property rights   -                     -              831
     Gain on sale of 
 investment securities         3                     -                -
     Gain on sale of 
investment in subsidiaries     -                 7,763            7,793
VII Extraordinary Losses      17     0.0         3,339   4.8      4,861  3.7
     Loss on sale and 
disposal of fixed assets      17                 3,281            4,759
     Loss on sale of 
investment in subsidiaries     -                    58              101
     Income before 
     Income Taxes         15,524    23.3        21,113  30.4     29,282 22.5
     Provision for 
     income taxes          6,420     9.6         9,604  13.8     13,609 10.4
     Income tax adjustments  326     0.5           (61) (0.1)      (564)(0.4)
     Net Income            8,777    13.2        11,569  16.7     16,236 12.5
     Unappropriated earned 
  surplus carried forward  2,000                   914              914
     Prior year adjustment 
    for deferred tax           -                 1,373            1,373
     Reversal of reserve 
   for advanced depreciation
   due to adoption of deferred 
    tax accounting             -                   163              163
     Interim cash dividends    -                     -            2,553
     Transfer to legal reserve
          due to interim 
     cash dividends            -                     -             255
     Unappropriated 
     Earned Surplus      Y10,777              Y 14,020        Y 15,878
 

Summary of Significant Accounting Policies

1. Valuation of Assets
(1) Inventories

a. Finished products and raw materials and supplies are stated at cost based on
the moving average method.

b. Work in process is stated at cost based on the moving average method while
that of consumer-use game software is stated at cost based on the specific
identification method.

(2) Marketable and investment securities

a. Investments in affiliates are stated at cost based on the moving average
method,
b. Other securities without market value are stated at cost based on the moving
average method.

(3) Derivatives

 Foreign exchange forward contracts are stated at market value.

2. Depreciation Methods

a. Tangible fixed assets are depreciated on the declining balance method
according to Corporation Tax Law.

b. Intangible fixed assets are amortized on the straight-line method according
to Corporation Tax Law. (In-house software is amortized on the straight-line
method based on estimated useful life of 5 years.)

3. Provisions

(1) Allowance for bad debts
Generally, allowance for bad debts is calculated according to the actual ratio
of bad debt losses incurred. For specific accounts with higher possibility of
bad debt loss, the allowance is determined by independent judgement.

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

(3) Allowance for retirement benefits
Accrued amount in the six-month period is provided for retirement benefits paid
to employees based on estimated amount of the projected benefit obligation and
plan assets as of the end of the period. Unrecognized net transition asset of
Y81 million is credited to expense over 13 years on a straight-line basis.

(4) Liability for directors' retirement benefits
Required amount for the six-month period is provided as liability for retirement
benefits paid to the Company's directors.

(5) Allowance for loss incurred by a subsidiary
The Company provides an allowance for loss incurred by a subsidiary at amounts
determined after consideration of the financial position of the subsidiary.

4. Foreign Currency Translation
Monetary assets and liabilities denominated in foreign currencies are translated
at the current exchange rates as of the interim balance sheet date, and the
translation gains and losses are credited or charged to income.

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

6. Other
(1) Consumption tax is excluded from the stated amount of revenue and expenses.
(2) Assuming the expected reversal of reserve for advanced depreciation as
appropriation of earned surplus, provision for income taxes and deferred income
taxes are recognized.

Additional Information

1. Accounting for Retirement Benefits
Since the beginning of the six-month period ended September 30, 2000, the
accounting standards for retirement benefits, which were released on June 16,
1998, have been adopted. The financial impact of this change is considered
immaterial.

2. Accounting for Financial Products 
Since the beginning of the six-month period ended September 30, 2000, the
accounting standards for financial products, which were released on January 22,
1999, have been adopted. As a result of this change, ordinary income and net
income before income taxes for the six-month period decreased by Y204 million
each. In addition, considering the purpose of holding marketable securities at
the beginning of the period, the securities classified as 'other securities' are
stated as investment securities.

3. Accounting for Foreign Currency Transactions 
Since the beginning of the six-month period ended September 30, 2000, the
amended accounting standards for foreign currency transactions, which were
released on October 22, 1999, have been adopted. The financial impact of this
change is considered immaterial.

Notes to Balance Sheets

1. Accumulated Depreciation of Tangible Fixed Assets

                                           (Millions of yen)
September 30-2000    September 30-1999     March 31-2000
            6,129                5,801             5,760

2. Liability for Guarantee

                                           (Millions of yen)
September 30-2000    September 30-1999     March 31-2000
            8,757                9,101             7,519

3. Marketable and Investment Securities 
   Investment in affiliates with market value as of September 30, 2000:

                                                        (Millions of yen)
                  Carrying value     Market value             Difference

Investment in 
 subsidiaries                725           29,677                 28,951
Investment in 
other affiliates           3,372            4,088                    716
Total                      4,097           33,766                 29,668

4. Increase in Number of Common Shares Issued

                  Transaction                      Number of shares issued
Two-for-one stock split made on May 19,2000              56,868,783 shares

5. Trade Notes Trade notes matured on the balance sheet date are settled on the
exchange date of the notes. Since September 30, 2000 was a holiday for financial
institutions, the following matured trade notes are included in the balance
sheet for the six-month period.

                (Millions of yen)
              September 30, 2000
Trade notes receivable        16
Trade notes payable        2,137
   


Notes to Statements of Income

Depreciation expense of fixed assets:
                                                              (Millions of yen)
                   September 30,2000     September 30,1999       March 31, 2000
Tangible fixed assets            473                   651                1,231
Intangible fixed assets          191                   142                  305

Leases

Finance leases other than those that deem to transfer ownership of leased
property to the lessee:

1. Equivalents of acquisition cost accumulated depreciation, and ending balance
of leased assets

                                                              (Millions of yen)
                              September 30,2000
                       Acquisition    Accumulated   Ending
                          cost       depreciation  balance
Tools & fixtures              609             262      346
Total                         609             262      346


                                                              (Millions of yen)
                              September 30,1999
                       Acquisition    Accumulated   Ending
                          cost       depreciation  balance
Tools & fixtures              244             102      141
Total                         244             102      141


                                                              (Millions of yen)
                              March 31,2000
                       Acquisition    Accumulated   Ending
                          cost       depreciation  balance
Tools & fixtures              518             184      334
Total                         518             184      334


2. Obligations under finance leases, lease payments and depreciation equivalents

                                                             (Millions of yen)
                 September 30,2000     September 30, 1999        March 31,2000

Obligations under finance leases
     Due within one year       174                     66                  157
     Due after one year        171                     75                  176
Total                          346                    141                  334

                  Six months ended       Six months ended           Year ended
                September 30, 2000     September 30, 1999       March 31, 2000

Lease payments                  83                     32                  118
Depreciation equivalents        83                     32                  118

Notes:
(1) Since the total obligation for unexpired leases at balance sheet date
occupies only a small part of the ending balance of tangible fixed assets,
acquisition cost equivalent and obligation for unexpired leases at the end of
period are calculated including interest expenses.

(2) Depreciation equivalents are computed according to the straight-line method
with lease term as useful life and salvage value of zero.

                           10. Sales by.Division

                                                              (Millions of yen)
         Six months ended     Six months ended     Year-on-year     Year ended
        September 30, 2000   September 30, 1999      Change     March 31, 2000
                  Share of             Share of                       Share of
Division  Total   net sales  Total     Net sales      %        Total     net    
                                                                        sales 
Consumer-
Use 
Software Y 22,303  33.5 %   Y 32,229    46.4 %      69.2 %    Y 55,884   42.9 %
           (2,061) (9.2)      (6,673)  (20.7)      (30.9)     _(12,177) (21.7)
Amusement 
Machines   13,460  20.2       14,618    21.0        92.1        22,842   17.6
           (1,450)(10.8)      (1,881)  (12.9)      (77.1)       (4,427) (19.4)
Gaming 
Machines    4,208   6.3        6,139     8.8        68.6        13,398   10.3
             (703)(16.7)      (1,592)  (25.9)      (44.2)       (2,758) (20.5)
Pachinko 
Systems         -     -        5,242     7.5           -        11,589    8.9
               (-)   (-)          (-)     (-)         (-)           (-)    (-)
Creative 
Products   26,518  39.9       11,242    16.2       235.9        26,350   20.2
             (177) (0.7)        (197)   (1.8)      (90.0)         (582)  (2.2)
Other          15   0.0           35     0.1        42.8            59    0.1
               (-)   (-)          (-)     (-)         (-)           (0)  (0.0)  
 Total   Y 66,506 100.0 %   Y 69,507    100.0 %     95.7 %    Y130,124  100.0 %
          (4,393)  (6.6)     (10,344)   (14.9)     (42.5)      (19,945) (15.3)

Note: 1. Values in parentheses represent export sales.

2. As from March 31, 2000, the operation of manufacturing the disc
jockey-simulation and music-simulation game machines of Gaming Machines Division
were transferred to Amusement Machines Division.

3. As from March 31, 2000, the operations of manufacturing the software with LCD
units of Pachinko Systems Divisions were transferred to Amusement Machines
Division, and the operations of manufacturing pachinko slot machines of this
division were transferred  to Gaming Machines Division.