1
Consolidated Financial Results
for the Six Months Ended September 30, 2009
(Prepared in Accordance with U.S. GAAP)
November 5, 2009
KONAMI CORPORATION
Address:
7-2, Akasaka 9-chome, Minato-ku, Tokyo, Japan
Stock code number, TSE:
9766
Ticker symbol, NYSE:
KNM
URL:
Shares listed:
www.konami.net
Tokyo Stock Exchange, New York Stock Exchange and London Stock Exchange
Representative:
Kagemasa Kozuki, Representative Director and Chief Executive Officer
Contact:
Noriaki Yamaguchi, Representative Director and Chief Financial Officer (Phone: +81-3-5771-0222)
Date of dividend payment:
November 27, 2009
Adoption of U.S. GAAP:
Yes
1. Consolidated Financial Results for the Six Months Ended September 30, 2009
(Amounts are rounded to the nearest million)
(1) Consolidated Results of Operations
(Millions of Yen, except per share data)
Net revenues
Operating
income
Income before
income taxes
Net income
attributable to
Konami Corporation
Six months ended September 30, 2009
% change from previous period
113,914
(22.5)%
4,611
(79.8)%
4,029
(82.0)%
2,232
(81.3)%
Six months ended September 30, 2008
% change from previous period
146,904
9.8%
22,844
75.2%
22,408
71.4%
11,964
90.3%
Basic net income
attributable to Konami
Corporation per share
(yen)
Diluted net income
attributable to Konami
Corporation per share
(yen)
Six months ended September 30, 2009
16.73
16.73
Six months ended September 30, 2008
87.07
87.01
Note: Upon adoption of FASB Accounting Standards Codification 810, (former Statement of Financial Accounting
Standards No.160), “Net income attributable to Konami Corporation” represents “Net Income” up to the year ended March 31, 2009.
(2) Consolidated Financial Position
(Millions of Yen, except per share amounts)
Total assets
Konami Corporation
stockholders’ equity
Konami Corporation
stockholders’
equity ratio
Konami Corporation
stockholders'
equity per share
September 30, 2009
280,031
176,367
63.0%
1,321.48
March 31, 2009
301,670
178,632
59.2%
1,338.46
2
2. Cash Dividends
Record Date
Cash dividends per share (yen)
First quarter end
Second quarter
end
Third quarter end
Year end
Annual
Year ended March 31, 2009
-
27.00
-
27.00
54.00
Year ending March 31, 2010
-
27.00
-Forecast-
-
27.00
54.00
Change in forecasts of dividends during this three months ended
September 30, 2009: None
3. Consolidated Earnings Forecast for the Year Ending March 31, 2010
(Millions of Yen, except per share data)
Net revenues
Operating
income
Income before
income taxes
Net income
attributable to
Konami
Corporation
Net income
attributable to
Konami
Corporation per
share
Year ending March 31, 2010
% change from previous year
310,000
0.1%
30,000
9.6%
28,500
15.3%
16,000
47.1%
119.88
Note: Change in earnings forecasts for the fiscal year ending March 31, 2010 during the three months ended September
30, 2009: None
4. Other
(1)
Changes in significant consolidated subsidiaries during the period (status changes of subsidiaries due to changes in the scope of consolidation) : None
(2)
Adoption of simplified methods in accounting principles or specific accounting procedures for quarterly consolidated financial statements: None
(3)
Changes in accounting principles, procedures and reporting policies for quarterly consolidated financial
statements (items to be disclosed in “Significant change in preparation basis of quarterly consolidated
financial statements”)
1. Changes accompanying amendment of accounting standard: Yes
2. Other: None
Please refer to page 10 for details.
(4) Number of shares issued (Common Stock)
1. Number of shares issued: (Treasury stock included)
Six months ended September 30, 2009
143,500,000 shares
Year ended March 31, 2009
143,500,000 shares
2. Number of Treasury Stock:
Six months ended September 30, 2009
10,038,735 shares
Year ended March 31, 2009
10,038,498 shares
3. Average number of shares outstanding:
Six months ended September 30, 2009
133,461,290 shares
Six months ended September 30, 2008
137,406,295 shares
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Cautionary Statement with Respect to Forward-Looking Statements: Statements made in this document with respect to our current plans, estimates, strategies and beliefs, including
the above forecasts, are forward-looking statements about our future performance. These statements are based on
management's assumptions and beliefs in light of information currently available to it and, therefore, you should not place undue reliance on them. A number of important factors could cause actual results to be materially
different from and worse than those discussed in forward-looking statements. Such factors include, but are not
limited to: (i) changes in economic conditions affecting our operations; (ii) fluctuations in currency exchange
rates, particularly with respect to the value of the Japanese yen, the U.S. dollar and the Euro; (iii) our ability to
continue to win acceptance of our products, which are offered in highly competitive markets characterized by the
continuous introduction of new products, rapid developments in technology and subjective and changing
consumer preferences; (iv) our ability to successfully expand internationally with a focus on our Digital
Entertainment business and Gaming & System business; (v) our ability to successfully expand the scope of our
business and broaden our customer base through our Health & Fitness business; (vi) regulatory developments and
changes and our ability to respond and adapt to those changes; (vii) our expectations with regard to further
acquisitions and the integration of any companies we may acquire; and (viii) the outcome of existing
contingencies.
Please refer to page 8 for information regarding the assumptions and other related items used in the preparation of
these forecasts.
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Business Performance
1. Consolidated Results of Operations
(1)
Business Overview
The business environment surrounding KONAMI CORPORATION and its subsidiaries (“Konami”) was harsh despite showing signs of some recovery from the economic slowdown that began last year. This was mainly due to continued uncertainty caused by factors such as the impact of the appreciation of the yen and a decline in consumer spending. Regarding the entertainment industry, the amusement arcade market remained in a severe state largely because of the credit crunch. In the home video game market, which also remained in a severe condition, gamescom 2009, one of the largest interactive game trade fairs in Europe, was held in August 2009, and the Tokyo Game Show 2009 was held in September 2009, following the Electronic Entertainment Expo 2009 held in June 2009. The various new products and titles exhibited at the trade fairs again attracted great attention not only in Japan but also in the overseas markets, primarily in North America and Europe. Efforts to stimulate new demand are being carried out in the industry, including announcements made by various hardware manufacturers of price reductions in standalone video game consoles. In the health and fitness industry, heightened interest and demand related to the maintenance and promotion of good health are expected to continue due to concerns over the arrival of an aging society as well as of lifestyle diseases. Against such a backdrop, Konami’s Digital Entertainment segment rolled out titles in home video game software series, such as PUROYAKYU SPIRITS, Winning Eleven (known in the U.S and Europe as PRO EVOLUTION SOCCER), JIKKYOU PAWAFURU PUROYAKYU and DanceDanceRevolution, on multiple platforms. The new romantic communication game LOVEPLUS, an original title, was also released to favorable market reviews. Although sales of card games, centering on Yu-Gi-Oh! TRADING CARD GAME, were satisfactory, sales in video game software and amusement arcade video games have fallen compared to the same period last year when major titles had been released. In the Health & Fitness segment, we strove to upgrade services supporting the maintenance and promotion of good health both within and outside our facilities by increasing the number of new fitness clubs under our direct management or outsourced to us, introducing new services that meet the diversifying needs of customers, reinforcing the development and sale of health products and promoting the computerization of health management. As for the Gaming & System segment, we enjoyed healthy sales of the K2V, Advantage 5 and other slot machine series in the North American and Australian markets. Furthermore, sales through the Konami Casino Management System and participation agreements (equipment sales in which profits are shared with operators) also expanded steadily.
In terms of the consolidated results for the six months ended September 30, 2009, net revenues amounted to ¥113,914 million (a year-on-year decrease of 22.5%), operating income was ¥4,611 million (a year-on-year decrease of 79.8%), income before income taxes was ¥4,029 million (a year-on-year decrease of 82.0%), and net income attributable to Konami Corporation was ¥2,232 million (a year-on-year decrease of 81.3%).
5
(2) Performance by Business Segment
Summary of net revenues by business segment:
Millions of Yen
Six months ended
September 30, 2008
Six months ended
September 30, 2009
% change
Digital Entertainment
¥93,030
¥51,419
(44.7)
Health & Fitness
45,456
43,375
(4.6)
Gaming & System
7,854
8,896
13.3
Other and Eliminations
564
10,224
1,712.8
Consolidated net revenues
¥146,904
¥113,914
(22.5)
Digital Entertainment Computer & Video Games business: A diverse lineup of products was released in Japan in addition to sports titles – which are Konami’s forte – such as PUROYAKYU SPIRITS 6, J.LEAGUE Winning Eleven 2009 CLUB CHAMPIONSHIP and JIKKYOU PAWAFURU PUROYAKYU PORTABLE 4. The lineup included the animated titles A penguin's troubles X and Okamikakushi, and the new communication game LOVEPLUS in which characters’ daily lives are linked to time and season in the real world. Regarding the distribution of game software titles for mobile phones and terminals including the iPhone and iPod touch, Konami promoted development utilizing various popular titles. Amusement business: In the amusement arcade video games, jubeat ripples, the latest game in this music series; HORSERIDERS 2, a horseracing simulation card game; and InfinityRings, a mass medal game in a new genre were released in addition to popular music games already in place utilizing the e-AMUSEMENT service that links amusement arcades nationwide through its network. Card games business: The Yu-Gi-Oh! TRADING CARD GAME series continued to show steady sales.
Meanwhile, in North America and Europe, sales were strong for the DanceDanceRevolution series (known as DancingStage in Europe) and the PRO EVOLUTION SOCCER series, which were released last year. Due to the absence of major titles such as last year’s METAL GEAR SOLID 4 GUNS OF THE PATRIOTS and the fact that most of the main titles driven by our Digital Entertainment segment for this current fiscal year were not scheduled to be released until the second half of the year, sales fell this quarter as compared to the same period the previous year. In terms of financial performance, consolidated net revenues for the six months ended September 30, 2009 of this segment amounted to ¥51,419 million (a year-on-year decrease of 44.7%).
Health & Fitness
Operation of fitness clubs: While there were signs of some recovery from the economic slowdown from factors such as continued financial unrest since last year, consumer spending continued to be suppressed due to uncertainty over employment and income. The business environment surrounding the fitness club industry remained harsh, as the trend towards lower prices continued and the increase in the number of facilities made the capturing of members difficult. Against such a backdrop, Konami strove to enhance its value-added services both within and outside its facilities as well as its health products and expand the range of services and the lineup of products that meet regional characteristics and customer needs.
Regarding directly managed facilities, 19 fitness clubs were closed as part of the streamlining efforts executed as Konami’s structural reform. Meanwhile, a total of five facilities, including relocated and
