RNS Number:4201L
Konami Corporation
22 May 2003
9. Summary of Non-consolidated Financial Results
for the Year Ended March 31, 2003
(Prepared in Accordance with Japanese GAAP)
May 22, 2003
KONAMI CORPORATION
Address: 4-1, Marunouchi 2-chome, Chiyoda-ku, Tokyo, Japan
Stock Code Number, TSE: 9766
Ticker symbol, NYSE: KNM
URL: http://www.konami.com
Shares Listed: Tokyo Stock Exchange, New York Stock Exchange, London Stock Exchange and
Singapore Exchange
Representative: Kagemasa Kozuki, Chairman of the Board and Chief Exective Officer
Contact: Noriaki Yamaguchi, Executive Vice President and Chief Financial Officer
(Phone:+81-3-5220-0163)
Date of Board Meeting to
approve the financial
results: May 22, 2003
Date of General Shareholders
Meeting:
June 19, 2003
Adoption of interim divided
system:
Yes
Adoption of unit trading Yes (1 Unit: 100 Shares)
system:
1. Financial Results for the Year Ended March 31, 2003
(1) Results of Operations
(Figures truncated)
Net revenues Year-on-year Operating Year-on-year Ordinary Year-on-year
change (%) income change (%) income change (%)
(millions of (millions of (millions of
yen) yen) yen)
Year ended 130,186 5.6 11,577 4.5 13,068 10.8
March 31, 2003
Year ended 123,283 (17.0) 11,083 (67.5) 11,792 (64.5)
March 31, 2002
Net income Year-on-year Net income Diluted net Return on Return on Ratio of
change (%) per share income per equity total ordinary
(millions share assets income to
of yen) (yen) (%) net
(yen) (%) revenues
(%)
Year ended (11,284) - (92.82) - (9.5) 6.6 10.1
March 31, 2003
Year ended 8,675 (51.9) 67.96 - 6.2 5.8 9.6
March 31, 2002
Notes:
1. Weighted-average common share outstanding:
Year ended March 31, 2003: 121,572,154 shares
Year ended March 31, 2002: 127,647,120 shares
2. Change in accounting policies: None
3. Change (%) of net revenues, operating income, ordinary income and net income represents the increase or
decrease ratio in relation with the same period of the previous year.
(2) Dividends
Cash dividends per share
Annual Interim Year-end Total dividend Pay-out ratio Dividend rate
payout for
shareholder's
equity
(yen) (yen) (yen) (millions of (%) (%)
yen)
Year ended 54.00 19.00 35.00 6,506 - 6.2
March 31, 2003
Year ended 54.00 27.00 27.00 6,836 78.8 5.2
March 31, 2002
(3) Financial Position
Total assets Total shareholders' Equity-assets Total shareholders'
(millions of yen ) equity ratio equity per share
(millions of yen) (%) (yen)
Year ended March 31, 186,668 105,107 56.3 872.38
2003
Year ended March 31, 208,896 132,573 63.5 1,029.80
2002
Notes:
Number of shares outstanding
March 31, 2003 120,484,375 shares
March 31, 2002 124,479,815 shares
Number of treasury stock
March 31, 2003 8,253,191 shares
March 31, 2002 4,257,751 shares
2. Financial Forecast for the Year Ending March 31, 2004
Net revenues Ordinary Net income Cash dividends per share
income
(millions of (millions of
yen) (millions of yen)
yen) Interim Year-end Annual
(yen) (yen) (yen)
Six months ending 27.00 - -
September 30, 2003
Year ending - 27.00 54.00
March 31, 2004
Notes:
1. Non-consolidated financial forecast for the year ending March 31, 2004 is not disclosed.
10. Non-consolidated Financial Statements
(1) Non-consolidated Balance Sheets (Unaudited)
(Millions of yen)
March 31, 2002 March 31, 2003
% %
ASSETS
CURRENT ASSETS:
Cash and cash equivalents 36,389 31,976
Trade notes receivable 163 37
Trade accounts receivable (Note 2) 35,383 30,068
Finished products 409 2,008
Raw materials and supplies 1,133 1,000
Work in process 2,702 2,409
Advances (Note 2) 2,445 3,144
Prepaid expenses 1,791 1,590
Short-term loans to subsidiaries 8,400 12,797
Other accounts receivable - 5,599
Refundable income taxes - 1,789
Deferred tax assets 4,740 12,099
Other 629 692
Allowance for bad debts (13 ) (407 )
Total current assets 94,176 45.1 104,806 56.1
FIXED ASSETS:
Tangible fixed assets (Note 1)
Buildings 4,636 4,379
Structures 114 88
Machinery 4 0
Transportation equipment 16 10
Tools and fixtures 778 1,023
Land 3,488 3,488
Total tangible fixed assets 9,038 4.3 8,991 4.8
Intangible fixed assets
In-house software 1,152 1,379
Other 26 27
Total intangible fixed assets 1,178 0.6 1,407 0.8
Investments and other assets
Investment securities 553 675
Investments in subsidiaries 101,297 65,544
and affiliates
Long-term prepaid expenses 50 11
Lease deposits 1,719 2,386
Deferred tax assets 834 2,801
Receivables from customers in bankruptcy - 73
proceedings
Other 46 44
Allowance for bad debts - (73 )
Total investments and other assets 104,501 50.0 71,463 38.3
Total fixed assets 114,719 54.9 81,862 43.9
TOTAL ASSETS Y208,896 100.0 Y186,668 100.0
(Millions of yen)
March 31, 2002 March 31, 2003
% %
LIABILITIES AND SHARHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade notes payable 7,856 6,091
Trade accounts payable (Note 2) 9,146 10,217
Other accounts payable 1,938 1,617
Accrued expenses 2,242 3,518
Short-term borrowings - 11,852
Income taxes payable 6,387 15
Notes payable for capital expenditures 14 -
Other 545 354
Total Current liabilities 28,130 13.4 33,667 18.0
LONG-TERM LIABILITIES:
Straight bonds 45,000 45,000
Liability for directors' retirement 1,346 1,353
benefits
Allowance for loss incurred 1,430 1,430
by subsidiaries
Long-term deposits received 414 110
Total long-term liabilities 48,191 23.1 47,893 25.7
Total liabilities 76,322 36.5 81,560 43.7
SHAREHOLDERS' EQUITY:
Common Stock (Note 3) 47,398 22.7 - -
Additional Paid-in Capital 47,106 22.6 - -
Legal Reserve 2,163 1.0 - -
Retained Earnings 50,907 24.4 - -
Voluntary earned surplus 42,107 -
Reserve for advanced depreciation 212 -
General reserve 41,894 -
Unappropriated earned surplus 8,800 -
Treasury Stock (15,003 ) (7.2 ) - -
Total shareholders' equity 132,573 63.5 - -
SHAREHOLDERS' EQUITY:
Common Stock (Note 3) - - 47,398 25.4
Additional Paid-in Capital - - 47,106 25.2
Retained Earnings - - 36,265 19.4
Legal Reserve - 2,163
Voluntary earned surplus
Reserve for advanced depreciation - 207
General reserve - 44,094
Unappropriated earned surplus - (10,200 )
Treasury Stock (Note 5) - (25,662 ) (13.7 )
Total shareholders' equity - - 105,107 56.3
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY Y208,896 100.0 Y186,668 100.0
(2) Non-consolidated Statements of Income (Unaudited)
(Millions of yen)
Year ended Year ended
March 31, 2002 March 31, 2003
% %
Net Revenues (Note 1) Y123,283 100.0 Y130,186 100.0
Cost of revenues (Note 1) 97,690 79.2 101,304 77.8
Finished goods, beginning of year 504 409
Purchases 21,868 31,666
Cost of goods manufactured 69,229 63,839
Less:
Transfer to other accounts (Note 2) (26 ) (5 )
Finished goods, end of year (409 ) (2,008 )
Royalty expenses (Note 3) 6,525 7,403
Gross Profit 25,592 20.8 28,881 22.2
Selling, General 17,303 13.3
and Administrative Expenses (Note 4, 5) 14,508 11.8
Operating Income 11,083 9.0 11,577 8.9
Non-operating income 1,485 1.2 2,843 2.2
Interest income 47 30
Dividend income (Note 1) 981 2,329
Rental income 6 -
Foreign exchange gains 243 -
Other 207 483
Non-operating Expenses 776 0.6 1,352 1.0
Interest expenses - 6
Bond interest expenses 325 400
Bond issue expenses 318 -
Bad debt expenses 20 -
Foreign exchange losses - 25
Related expenses for NYSE listing - 284
Other 110 635
Ordinary Income 11,792 9.6 13,068 10.1
Extraordinary Income 3,049 2.5 5,742 4.4
Gain on sale of 1,769
investments in subsidiaries (Note 8) 1,754
Gain on transfer of a business (Note 9) - 3,972
Gain on transfer of -
intellectual property rights 149
-
Gain on transfer of a business of a 1,145
subsidiary
Extraordinary Losses 874 0.7 39,401 30.3
Loss on sale and disposal of fixed assets 31 169
(Note6)
Valuation loss of investment securities - 115
Valuation loss of investments in subsidiaries 106
(Note 7) 843
Loss on sale of investments in subsidiaries - 39,010
(Note 10)
Income (Loss) before Income Taxes 13,967 11.4 (20,590 ) (15.8 )
Income Taxes 5,291 4.3 9.306 7.1
Current 7,612 15
Deferred (2,320 ) (9,321 )
Net Income (Loss) 8,675 7.1 (11,284 ) (8.7 )
Unappropriated earned surplus 3,042
carried forward 3,600
Interim cash dividends 3,475 2,289
Increase in retained earnings from - 331
acquisition following a corporate split
Unappropriated Earned Surplus Y8,800 Y(10,200 )
(3) Statement of Cost of Goods Manufactured (Unaudited)
(Millions of yen)
Year ended Year ended
March 31 , 2002 March 31, 2003
% %
1 Material cost Y43,742 62.3 Y38,681 60.9
2 Contract processing cost 1,033 1.5 865 1.4
3 Labor cost 762 1.1 660 1.0
4 Overhead cost (Note 2) 1,009 1.4 1,033 1.6
5 Production cost (Note 3) 23,712 33.7 22,310 35.1
Total manufacturing cost for the year 70,260 100.0 63,551 100.0
Work in process, beginning of year 1,678 2,702
Less:
Work in process, end of year (2,702 ) (2,409 )
Transfer to other accounts (6 ) (5 )
Cost of goods manufactured Y69,229 Y63,839
Notes:
1. Process costing is applied to calculate cost of products other than production cost which is
calculated by job-order costing.
2. Major portion of overhead cost is follows:
(Millions of yen)
Year ended Year ended
March 31, 2002 March 31, 2003
Depreciation expense Y202 Y581
External service fee 164 210
Supplies expense 512 23
3. Major portion of production cost consists of the following:
(Millions of yen)
Year ended Year ended
March 31, 2002 March 31, 2003
Personnel expense Y3,627 Y3,216
Depreciation expense 326 258
Contract production expense 16,185 16,787
Other 3,572 2,047
Total Y23,712 Y22,310
(4) Proposed Appropriation Plan of Earned Surplus (Unaudited)
(Millions of yen)
Year ended Year ended
March 31, 2002 March 31, 2003
Unappropriated earned surplus
at year-end Y8,800 Y(10,200)
Reversal of general reserve
(Reversal of reserve
for advanced depreciation) 5 5
(Reversal of general reserve) - 20,000
Appropriations
Cash dividends 3,360 4,216
Directors' bonuses 202 -
Voluntary earned surplus
(Reserve for advanced depreciation) - 4
(General reserve) 2,200 -
Unappropriated earned surplus
carried forward Y3,042 Y5,583
Note:
1. Reversal of reserve for advanced depreciation was calculated with tax effect based on the special taxation measures
law.
2. Reserve for advanced depreciation was appropriated due to the amendments of local tax laws in Japan.
Summary of Significant Accounting Policies
1. Marketable and Investment Securities
Investments in subsidiaries and affiliated companies and other securities for which the market value is not
readily determinable are stated at cost based on the moving average method.
Other securities for which the market value is determinable are stated at market value as of the balance
sheet date. Unrealized gains and losses on those securities are reported in the shareholders' equity and
the cost of securities sold is determined by the moving average method.
2. Derivative Financial Instruments
Derivative financial instruments are stated at fair value.
3. Inventories
Inventories other than work in process are stated at cost determined by the moving average 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.
4. Depreciation Methods
Tangible fixed assets are depreciated 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.
Long-term prepaid expenses are amortized on a straight-line basis.
5. Foreign Currency Translation
Monetary assets and liabilities denominated in foreign currencies are translated at the current exchange
rate as of the balance sheet date, and the translation gains and losses are credited or charged to income.
6. Provisions
(a) Allowance for bad debts
Generally, 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.
(b) Allowance for retirement benefits (Prepaid pension expense)
Allowance for retirement benefits to be paid to employees is calculated based on the estimated amount of
the projected benefit obligation and the plan assets at the fiscal year-end.
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.
(c) Liability for directors' retirement benefits
Required amount for retirement benefits to be paid to directors as of the balance sheet date is reserved
as liability.
(d) Allowance for loss incurred by subsidiaries
Allowance for loss incurred by subsidiaries is provided at the amount determined based on its financial
condition.
7. 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.
8. Other significant matters
(a) Consumption tax
Consumption tax is excluded from the stated amount of revenue and expenses.
(b) Treasury stock and reversal of legal reserve
The Company adopted Accounting Standards Board Statement No.1, "Accounting Standard on Treasury Stock and
Reversal of Legal Reserve", issued by Accounting Standards Board of Japan from the year ended March 31,
2003, and the adoption did not have a material effect on the Company's results of operations. The Company
reflected certain reclassification on the balance sheet as of March 31, 2003 to conform to the new
standard.
Change in Presentation of Non-consolidated Financial Statements
Non-consolidated Balance Sheets
"Other accounts receivable" at March 31, 2003 is separately stated in the balance sheet although it
had been included in "Other" in the previous year (Y236 million at March 31, 2002).
Notes to Non-consolidated Financial Statements
Notes to Non-consolidated Balance Sheets
1. Accumulated depreciation of tangible fixed assets is Y6,782 million and Y7,143 million for the years ended
March 31, 2002 and 2003, respectively.
2. Assets and liabilities to subsidiaries and affiliated companies other than the separately stated accounts
are as follows:
(Millions of yen)
March 31, 2002 March 31, 2003
Trade accounts receivable Y34,905 Y29,740
Advances 1,895 3,134
Trade accounts payable 2,208 2,728
3. Number of shares at year-end is as follows:
(Thousands of shares)
March 31, 2002 March 31, 2003
Shares authorized 450,000 450,000
Shares issued and outstanding 128,737 128,737
4. The Company guarantees subsidiaries' loans payable to financial institutions
as follows:
(Millions of yen)
March 31, 2002 March 31, 2003
Konami Capital, Inc. Y2,398 -
Konami Gaming, Inc. 1,830 Y1,607
(USD 13.74 million) (USD13.375million)
Konami of America, Inc. 319 -
(USD 2.4 million)
Total Y4,548 Y1,607
5. Treasury stock at March 31, 2003 is 8,253,191 shares.
Notes to Non-consolidated Statements of Income
1. Non-consolidated statements of income include inter-company transactions as
follows:
(Millions of yen)
Year ended Year ended
March 31, 2002 March 31, 2003
Net sales Y117,709 126,800
Purchases 34,930 40,580
Dividend income 981 2,329
2. Transfer to other accounts represents the transfer of Y26 million and Y5 million to selling, general and
administrative expenses for the year ended March 31, 2002 and March 31, 2003, respectively.
3. Royalty expenses consist of the royalties paid in relation to manufacturing and sales activities by
Computer & Video Games, Toy & Hobby, Amusement and Gaming segment.
4. Major portion of selling, general and administrative expenses consists of the following:
(Millions of yen)
Year ended
March 31, 2002
Directors' fee Y768
Advertising expenses 2,187
Salary expenses 2,633
Depreciation expense 697
Rental expenses 1,882
Commissions 1,642
Addition to allowance for bad debts 11
Selling expenses portion 15.8%
General and administrative
expenses portion 84.2%
(Millions of yen)
Year ended
March 31, 2003
Advertising expenses Y4,080
Salary expenses 2,911
Depreciation expense 864
Rental expenses 2,089
External service fee 2,597
Bad debt expenses 990
Addition to allowance for bad debts 272
Selling expenses portion 23.8%
General and administrative
expenses portion 76.2%
5. General and administrative expenses include research and development expenses of Y87 million and Y347
million for the years ended March 31, 2002 and 2003, respectively.
6. Loss on sale and disposal of fixed assets consists of the following:
(Millions of yen)
Year ended
March 31, 2002
Disposal of buildings Y9
Disposal of tools and fixtures 22
Total Y31
(Millions of yen)
Year ended
March 31, 2003
Disposal of buildings Y62
Disposal of structures 9
Disposal of machinery 2
Sale and disposal of tools and fixtures 93
Total Y169
7. Major portion of valuation loss of investments in subsidiaries consists of the following:
(Millions of yen)
Year ended Year ended
March 31, 2002 March 31, 2003
Konami Computer Entertainment Kobe, Inc. Y693 -
Konami School, Inc. - Y106
8. Gain on sale of investments in subsidiaries consists of the following:
(Millions of yen)
Year ended Year ended
March 31, 2002 March 31, 2003
Konami Computer Entertainment Tokyo, Inc. Y1,754 -
Konami Computer Entertainment Studios, Inc. - Y1,769
(Sold to Konami Computer Entertainment Osaka,
Inc.)
9. Gain on transfer of a business to a subsidiary of Y3,972 million represents the gain arising from the
transfer of the liquid crystal display business to a consolidated subsidiary, KPE, Inc.
10. Loss on sale of investments in subsidiaries of Y39,010 million represents the loss incurred by the sale of
shares of Konami Sports Corporation to Konami Sports Life Corporation as a step toward changing the
Company's corporate structure by reorganizing into a pure holding company.
Leases
Finance leases other than those that deem to transfer ownership of leased
property to the lessee:
The amount of obligation and depreciation under finance leases for the year
ended March 31, 2002 was calculated by the effective interest method which
excludes the imputed interest portion although it had been calculated by the
method which includes the imputed interest portion.
1. Acquisition cost, accumulated depreciation, and ending balance of leased
assets
(Millions of yen)
March 31, 2002 March 31, 2003
Acquisition Accumulated Ending Acquisition Accumulated Ending
cost depreciation balance cost depreciation balance
Transportation equipment Y8 Y3 Y5 Y8 Y6 Y1
Tools and fixtures 1,213 549 664 1,590 999 591
Total Y1,222 Y553 Y669 1,599 1,006 593
2. Obligations under finance leases
(Millions of yen)
March 31, 2002 March 31, 2003
Due within one year Y412 370
Due after one year 286 251
Total Y699 622
3. Lease payments, depreciation expense and interest expense
(Millions of yen)
Year ended Year ended
March 31, 2002 March 31, 2003
Lease payments Y411 Y472
Depreciation expense 395 452
Interest expense 20 19
4. Depreciation expense is calculated according to the straight-line method with lease term as useful life
and salvage value of zero.
5. Interest expense is defined as the difference between total lease payment and equivalent of acquisition
cost, and allocated using the effective interest method to each period.
Investment Securities
Investments in subsidiaries and affiliated companies which have fair value.
(Millions of yen)
March 31, 2002 March 31, 2003
Balance Fair value Differences Balance Fair value Differences
sheet sheet
amount amount
Investments in subsidiaries Y70,327 Y91,364 Y21,036 Y 1,312 Y49,262 Y47,950
Investments in affiliated 11,905 23,076 11,171 12,194 18,251 6,057
companies
Total Y82,233 Y114,441 Y32,208 Y13,506 Y67,514 Y54,008
Income Taxes
1. Major portion of deferred tax assets and deferred tax liabilities consists of
the following:
(Millions of yen)
March 31, 2002
Deferred tax assets:
Enterprise taxes payable Y576
Liability for directors' retirement benefits 565
Allowance for loss incurred by subsidiaries 600
Valuation loss of investments in subsidiaries 354
Accrued expenses 179
Inventories 3,982
Other 394
Sub total 6,653
Less: Valuation allowance (903)
Total deferred tax assets Y5,750
Deferred tax liabilities:
Reserve for advanced depreciation (150)
Other (25)
Total deferred tax liabilities Y(175)
Deferred tax assets - net Y5,575
(Millions of yen)
March 31, 2003
Deferred tax assets:
Liability for director's retirement benefits Y550
Allowance for loss incurred by subsidiaries 582
Accrued expenses 1,452
Inventories 5,472
Net operating loss carryforwards 7,414
Other 499
Sub total 15,971
Less: Valuation allowance (715)
Total deferred tax assets Y15,255
Deferred tax liabilities:
Reserve for advanced depreciation (141)
Other (212)
Total deferred tax liabilities Y(354)
Deferred tax assets - net Y14,900
2. A reconciliation between the statutory tax rate and the effective tax rate is omitted for the year ended
March 31, 2003 since the Company had loss before income taxes.
3. Pursuant to the Amendments to the Local Tax Laws of 2003, the capital-based enterprise tax on corporation
will become effective from the fiscal year commencing on or after April 1, 2004, which will lower the
statutory tax rate from 42.0% to 40.7% for the income-based enterprise tax on corporation. This change is
expected to have no material effect on our financial statements.
11. Changes in Board of Directors (Effective June 19, 2003)
1. Changes in Directors
(1) New Director Candidate
TSUTOMU TAKEDA, Director (former Representative Director and President of ASATSU-DK INC.)
(2) Retiring Directors
HIDETOSHI INATOMI, Director (current Executive Vice President of Konami Sports Corporation)
TAKUYA IWASAKI, Director
2. Changes in Corporate Auditors
No changes
Note: The new director candidate above will be an Outside Director as defined by
Article 188-2-7-2 of the Commercial Code of Japan.
This information is provided by RNS
The company news service from the London Stock Exchange
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