Financial Statements
Konami Corporation
14 June 2005
NOTICE OF THE 33RD ORDINARY GENERAL MEETING OF SHAREHOLDERS
June 1, 2005
Dear Shareholder,
You are cordially invited to attend the 33rd Ordinary General Meeting of
Shareholders, which will be held as described hereunder.
If you are unable to attend the meeting, you may exercise your voting rights
either in writing or over the Internet (instructions overleaf). Please complete
the proxy voting forms enclosed after reviewing the reference materials
included. To ensure your proxy vote is counted, please complete all online
procedures or return the completed postal ballot by no later than Wednesday,
June 22, 2005.
Sincerely yours,
Kagemasa Kozuki
Representative Director
KONAMI CORPORATION
4-1, Marunouchi 2-chome, Chiyoda-ku, Tokyo
MEETING AGENDA
1. Date and Time: 10:00 a.m., Thursday, June 23, 2005
2. Venue: 'Arena' of Konami Sports Corporation, 10-1, Higashi
Shinagawa 4-chome, Shinagawa-ku, Tokyo
(Please be aware that the venue is different from
that of the 32nd Ordinary General Meeting of Shareholders)
3. Agenda
Reports 1. Business Report, Consolidated Balance Sheet and Consolidated
Statement of Income for the 33rd fiscal year (from April 1,
2004 to March 31, 2005); and on the Reports of the Financial
Auditor and of the Board of Statutory Auditors regarding
Consolidated Financial Statements for the 33rd fiscal year.
2. Balance Sheet and Statement of Income for the 33rd fiscal
year and report on acquisition of the Company's own shares by
resolution of the Board of Directors, as authorized by the
Articles of Incorporation
Proposals
Proposal 1 Acceptance of Proposed Appropriation Plan of Earned Surplus for the
33rd fiscal year
Proposal 2 Amendments to the Articles of Incorporation
A discussion of the major points of this proposal can be found
on pages 41 to 42 of the attached 'Reference Materials Concerning
the Exerciseof Voting Rights.'
Proposal 3 Election of 8 members to the Board of Directors
Proposal 4 Election of 1 Corporate Auditor
Proposal 5 Retirement allowances for a retiring member of the Board of
Directors
Proposal 6 Issuance of new equity subscription rights in the form of stock
options
A discussion of the major points of this proposal can be found on pages 46 to 54
of the attached 'Reference Materials Concerning the Exercise of Voting Rights.'
* If attending the meeting in person, please remember to bring the ballot
enclosed with these materials and hand it to the receptionist at the Meeting.
(This is an English translation of the Report for the 33rd Fiscal Year (the
'Report') of Konami Corporation ('Konami') provided for your reference and
convenience. This translation includes a translation of the audit report of
KPMG AZSA & Co., Konami's independent auditor, of the financial statements
included in the original Japanese language Report.)
Procedures for Proxy Voting
If you are unable to attend the meeting, you may exercise your voting right by
following one of the procedures described below.
Voting by Mail
To vote by mail, please indicate on the enclosed voting form your approval or
disapproval of the proposal, affix your seal, and return the completed form to
us. All forms must be received no later than Wednesday, June 22, 2005.
Procedures for proxy voting by electronic means
Shareholders are asked to follow the procedures detailed below if they wish to
exercise their voting rights using the Internet.
1. Shareholders may only exercise their voting rights online through the
dedicated voting website designated by the Company. This voting website may be
also accessed by mobile phone.
Voting website URL: http://www.webdk.net
2. Shareholders choosing to exercise their voting rights online need to use the
voting code and password specified on the enclosed voting form. Once you have
entered the site, please vote for or against the resolution by following the
instructions on screen.
3. Online votes may be accepted up to Wednesday, June 22, 2005. However,
shareholders are kindly requested to register online votes as early as possible
to facilitate the counting of online votes.
4. If you duplicate your vote, i.e., if you exercise your voting rights both by
mail and via the Internet, we will consider only the Internet vote to be valid.
5. If you vote a number of times over the Internet, or if you duplicate your
vote using a PC and a mobile phone, we will consider the final vote to be the
valid one.
6. Any connection fees to the Internet providers or time charges (telephone
charges, etc.) incurred by shareholders in exercising votes online are to be
borne by the shareholders.
- System requirements for voting by electronic means
The following systems are required to access to the voting website.
(1) Internet access.
(2) Shareholders choosing to exercise their voting rights using a PC should
note that the site only supports the following browser software: Microsoft(R)
Internet Explorer 5.5 or above, Netscape(R) 6.2 or above. The site supports any
hardware platform running the software specified above.
(3) Shareholders choosing to exercise their voting rights using a mobile phone
should note that a handset model that supports 128-bit SSL (encrypted)
communication is required (for security reasons, the site has been designed only
to be accessible by mobile phones with 128-bit SSL encryption technology).
(Microsoft(R) is a registered trademark in the United States
and other countries of Microsoft Corporation of the U.S. Netscape(R) is a
registered trademark in the United States and certain other countries of
Netscape Communications Corporation.)
1. Business Performance
(1) Konami Group Business Conditions and Results
In the consolidated fiscal year ended March 31, 2005, corporate performance
improved and the Japanese economy grew steadily on the whole. However, personal
consumption still lagged behind and full-scale recovery is yet to be attained.
The U.S. economy expanded steadily, the Chinese economy maintained steady
growth, and a healthy recovery was observed generally on the global stage.
In the entertainment industry in which we operate, sales of home video game
software grew steadily on a global scale. Nintendo and Sony both released
new-style portable game consoles in the domestic and North American markets. In
the health industry, demand is growing, especially in the middle-aged and senior
groups, in light of the trend of increasing health consciousness. In Japan,
where membership in sports clubs is relatively low compared to that in Europe
and the U.S., the market is expected to grow with increased interest in health.
Under these circumstances, in the Computer & Video Games segment, we launched
the long-awaited big product, METAL GEAR SOLID 3 SNAKE EATER in Japan, the U.S.,
and Europe and achieved favorable sales. WINNING ELEVEN and PRO EVOLUTION
SOCCER, popular soccer game series, together tallied double million sales in
Japan and Europe for each of the last three consecutive years. As a result of
these achievements, the Computer & Video Games segment was able to achieve total
annual shipments of over 20 million units for four consecutive years.
In the Toy & Hobby segment, sales of Yu-Gi-Oh! trading card game continued to
grow steadily in the Japanese, U.S., and European markets. We also introduced
the PLAY-POEMS series, a new genre of virtual game, in the domestic market.
In the Amusement segment, products utilizing 'e-AMUSEMENT' services, such as
MAH-JONG FIGHT CLUB, enjoyed large sales. We exhibited numerous new products at
the 'AOU2005 Amusement EXPO' held in February 2005.
Sales in the Gaming segment increased steadily with the acquisition of gaming
licenses and an expanded line-up of products. Sales of not only the traditional
gaming machines but also gaming control systems are well underway, with a view
to expanding business operations.
In the Health & Fitness segment, our network of nationwide fitness club
facilities is being expanded. The Konami Group is putting in a good amount of
effort to accept entrustment of management of sports clubs owned by municipal
governments, and the number of sports clubs entrusted to the Group totaled 48
facilities as of the end of March 2005. We exhibited numerous exercise machines
both for institutional use and home use at the world's largest fitness trade
show, IHRSA (International Health, Racquet & Sports Club Association) 2005 held
in San Francisco in March 2005. These machines attracted a high level of
interest among visitors.
As a result, consolidated net revenue for the year ended March 31, 2005 amounted
to Y 260,691 million, consolidated operating income was Y 28,136 million,
consolidated income before tax was Y 27,442 million, and consolidated net income
was Y 10,486 million.
In the Computer & Video Games segment, WORLD SOCCER WINNING ELEVEN 8, the
popular soccer game for PlayStation2, recorded million sales for each of three
consecutive years in the domestic market.
Also, the popular series of JIKKYO PAWAFURUPUROYAKYU 11 sold a total of over
700,000 units for the PlayStation2 and Nintendo GameCube versions. As for
Konami's original titles, we released METAL GEAR SOLID 3 SNAKE EATER, the latest
product in the globally acclaimed METAL GEAR SOLID series, for the Christmas
season and recorded sales of more than 800,000 units. Sales of Suikoden IV for
PlayStation2 remained strong, matching the solid performance of the previous
production. In the area of comic content, THE PRINCE OF TENNIS series and the
Korokke series remained popular among primary and junior high school students.
In North America, METAL GEAR SOLID 3 SNAKE EATER was released in autumn ahead of
other markets and recorded sales of 1.5 million units. The Yu-Gi-Oh! series
continues to enjoy popularity. More than 1.5 million sales units in the series
have now been sold, including the titles Yu-Gi-Oh! Capsule Monsters
(PlayStation2 version) and Yu-Gi-Oh! Destiny Board Traveler (Game Boy Advance
version). As for the Dance Dance Revolution series, sales for the whole series,
including DDR Extreme for the PlayStation2 version, also reached 1.3 million
units.
In Europe, we released PRO EVOLUTION SOCCER 4 for PlayStation2, Xbox and PC in
October 2004.
The title turned out to be a big hit, selling a total of 3.5 million units for
the whole series. METAL GEAR SOLID 3 SNAKE EATER recorded million sales right
after its release in March 2005. The Yu-Gi-Oh! Series continues to be popular in
Europe as well, and the total shipment of the series amounted to 1.2 million
units.
As a result, consolidated net revenue of the Computer & Video Games segment was
Y 94,444 million for the year ended March 31, 2005 (102.1% of the year ended
March 31, 2004).
As in the previous year, the Toy & Hobby segment developed its business
operations focusing on a line-up of boys' toys. As for new initiatives in the
area of boys' toys, we concentrated attention on the expanding animation market,
began a full-scale drive to plan and develop an original TV animation series
called Get Ride! AMDRIVER, and launched a 'media-mix' project to promote this
content across a variety of media.
Also, as a new product for boys' toys, we released THE JUSTIRISERS as a
follow-up to GRANSAZERS, one after another, in line with the TV program aired
from October 2004. In November 2004 we started the release of the PLAY-POEMS
series, a new type of virtual game loaded with high-performance semiconductor
chips, POEMS, and we are striving to expand new markets. As for Yu-Gi-Oh!
trading card games, although there has been some decrease in sales compared to
the previous year in Europe, looking at the trading card game market as a whole,
we were able to maintain a steady level of sales. In Japan we recorded robust
sales exceeding the level of the preceding year.
As a result, the consolidated net revenue of the Toy & Hobby segment was Y
41,008 million for the year ended March 31, 2005 (71.4 % of the year ended march
31, 2004).
In the Amusement segment, products exploiting e-AMUSEMENT services for amusement
arcades, such as the MAH-JONG FIGHT CLUB series, a full-fledged mah-jong game
which allows direct competition with other players at other game locations
nationwide online, and QUIZ MAGIC ACADEMY II, the newest title in a quiz game
series allowing intellectual competition with other players, received favorable
reviews. Variation products of music simulation game series, most notably
drummania, GUITARFREAKS, and pop'n music, also sold steadily.
As for token-operated products, the new product Wing Fantasia, a
snake-and-ladder-type game which creates an exciting variety of party-game fun
previously unattainable with traditional large-scale token-operated games, and
GI-TURFWILD, a large-scale token-operated horseracing game machine which
provides a higher degree of realistic sensations and more advanced game features
than GI-WINNING SIRE, both generated strong sales.
As a result, consolidated net revenue of the Amusement segment was Y 37,582
million for the year ended March 31, 2005 (106.1 % of the year ended March 31,
2004).
Two centers of activity for our Gaming segment are North America and Australia.
In North America we mainly deploy video slot machines, our main product, and
ADVANTAGE SERIES, a new generation of Mechanical Slot Machines introduced in the
last fiscal year. During the current term under review, sales grew at an
especially rapid pace in the states of Nevada, California, Michigan, and
Wisconsin. In Canada we started sales activities in the provinces of British
Columbia and Quebec, expanding both sales areas and amounts. Sales of Forcise,
our first casino control system, are getting on track with steadily increasing
orders.
Although the Australian market leveled off, we secured sales in the country with
video slot titles such as EGYPTAGON. At the same time, we are pressing forward
to develop overseas markets.
As a result, consolidated net revenue of the Gaming segment was Y 11,643 million
for the year ended March 31, 2005 (106.4 % of the year ended March 31, 2004).
With regard to management of fitness clubs in the Health & Fitness segment, we
expanded our network of Konami Sports Club facilities further and opened eight
facilities, including renovations and consolidations, in Fukuoka Tenjinn
(Fukuoka prefecture), Oita Akeno (Oita prefecture), Ogaki (Gifu prefecture) and
the Head Office Nishinomiya Annex (Hyogo prefecture). As for new products and
services, we introduced in April 2004 a new corporate membership system which
offers members a choice between pay-per use and pay-per month, and under which
members' families aged 16 years or over can use the facilities. We also newly
created a 'gymnasts course' in our 'Undo-Jyuku' sports school to train young
gymnasts in the hopes of contributing to the further development of Japanese
sports. Also, as a step toward strengthening the structure of swimming
competitions, we set up an organizational system in support of instructors and
swimmers. In order to enhance safety and provide high quality services at the
facilities, we have installed and introduced an automated external defibrillator
(AED) in all the facilities of Konami fitness clubs.
In the area of fitness products for commercial use, we newly equipped our
exercise facilities with the EZ series products developed based on our network
technologies and knowledge in the entertainment business.
These products have already received highly favorable reviews from members. In
the area of home use, we released Refreshmentbike, a home use fitness machine
capable of generating highly concentrated oxygen and negative ions, and
Kenshin-Keikaku, a PC software application to display and manage exercise data
stored in e-walkeylife, a pedometer with multi-functions. We also released our
original supplements, most notably, FLAVANGENOL UP 50 and FLAVANGENOL MSMPLUS,
to further promote expansion of our product line-up.
As a result, consolidated net revenue of the Health & Fitness segment was Y
79,105 million for the year ended March 31, 2005 (100.3 % of the year ended
March 31, 2004).
(2) Konami Group Capital Expenditures and Financing Activities
Capital expenditures in the fiscal year ended March 31, 2005 totaled Y16,891
million. Principal capital investments were in new sports and fitness club
facilities and related renovations and in the construction of internal backbone
systems.
Capital spending was financed primarily from cash and deposits and operating
cash flow, with some additional financing from bank loans. The Company plans to
redeem its No. 3 straight corporate bond issue (Y15.0 billion, maturing in
September 2005) using cash reserves. Going forward, the Company plans to
maintain current financing levels to fund dynamic business development and to
ensure adequate short-term liquidity.
(3) Operating Results and Assets
1) Consolidated operating results and assets (U.S. GAAP)
(Millions of Yen, except per share data)
Years ended March 31 2002 2003 2004 2005
Net revenues 225,580 253,657 273,412 260,691
Operating income (loss) 18,087 (21,870) 40,713 28,136
Net income (loss) 11,402 (28,519) 20,104 10,486
Basic net income (loss)
per share (yen) 89.32 (234.58) 166.86 87.41
Total assets 328,091 278,250 294,497 304,321
Total shareholders' equity 134,990 90,406 102,129 105,857
Notes:
1. In line with the requirements of American Depositary Receipt issuance, the
figures for consolidated operating results and assets are presented in
conformity with U.S. GAAP, which comprises accounting standards and principles
generally accepted in the United States.
2. In the year ended March 31, 2003, a charge of Y47,599 million against
goodwill and other intangible assets was recorded in the Health & Fitness
business segment after an independent valuation by U.S. auditors determined that
the book value of the relevant assets exceeded fair value.
2) Non-consolidated operating results and assets (Japanese GAAP)
(Millions of Yen, except per share data)
Years ended March 31 2002 2003 2004 2005
Net revenues 123,283 130,186 146,654 134,117
Ordinary income 11,792 13,068 16,910 13,447
Net income (loss) 8,675 (11,284) 10,381 12,794
Net income (loss) per share (yen) 67.96 (92.82) 83.71 105.33
Total assets 208,896 186,668 183,031 187,798
Total shareholders' equity 132,573 105,107 108,016 111,423
(4) Issues for Konami Group
Restructuring of business operations in order to respond to changing market
conditions
Computer & Video Games, Toy & Hobby, Amusement, Health & Fitness and Gaming, the
five business segments that have supported the Konami group, strengthened their
respective presences, achieved good balance between creativity and
profitability, and earned wide acclaim from the markets. Meanwhile, the arrival
of an internet society and the development of digital technology have been
rapidly eroding the business barriers among industries related to digital
entertainment. This trend has accelerated since the emergence of the online game
market. In order to respond to the diversifying needs of consumers, we
positioned five areas (Computer & Video Games, Toy & Hobby, Amusement, On-line
and Multimedia) as a unified Digital Entertainment Business and established a
system that can maximize synergy effects. Along with this business
restructuring, we established three business segments to respond to the changing
market conditions: the Digital Entertainment segment, the Health & Fitness
segment, and the Gaming segment.
Increased profitability and injection of managerial resources into growing
business areas
On April 1, 2005, we merged our three group companies engaged in the production
of home videogame software and two group companies specialized in online games,
music and publishing. We will be integrating and sharing our creators,
intellectual property, and production know-how-resources previously
separated between our three production companies. We also will pursue improved
profitability by promoting an effective product line-up and streamlining
operations which have become redundant or complicated over many years. With the
maturation of the internet and other online environments, we will redistribute
our managerial resources from videogame software to online business, an area
expected to grow in the future. Through all of these efforts, we will strive to
maintain the Company's growth.
Promoting global development by implementing a Regional Corporate Structure
Given the acceleration of globalization and the transition to the internet in
recent years, we are expected to comprehend the specificity of the market, which
is growing globally, and respond flexibly and promptly, above and beyond
business segments. We now classify the world market into four regions,
Japan, America, Europe, and Asia. Henceforth we will be building an
organizational structure that can achieve maximal synergy effect among the
businesses in the market of each region. Three directors manage the businesses
in these four markets: one oversees the Japan market, one oversees the American
and European markets together, and one oversees the Asian market. Each director
also takes charge of development, production, and sales, across business
segments, and shoulders the role of promoting the further global development of
the Konami Group by assuming ultimate responsibility in each region.
Addition of Hudson as our subsidiary
Responding to a request from Hudson, a firm which expects to report a
considerable net loss for the year ended March31, 2005, to support an increase
in its capitalization we decided on April 11, 2005 to accept a subscription
offer to purchase additional shares of Hudson. Hudson aims to improve its
financial structure through increased capital. Consequently, Hudson Soft Co.,
Ltd. became our consolidated subsidiary. We will support Hudson's management
reconstruction and aim for a synergy effect mainly with our online business.
2. Corporate Data
(As of March 31, 2005)
(1) Principal Business
Konami Group's principal business and principal products are listed below.
Computer & Video Games Business:
Video game software for PlayStation 2
Video game software for PlayStation Portable
Video game software for NINTENDO DS
Video game software for GAME BOY ADVANCE
Video game software for Xbox
Video game software for NINTENDO GAMECUBE
Video game software for downloads by cellular phone
Procurement and distribution of consumer-use video game software produced by
other companies
Toy & Hobby Business:
Card games
Toys for boys
Toys for babies
Educational toys
Amusement Business:
Video game machines for arcades
Music-simulation game machines
Token-operated game machines for arcades
Gaming Business:
Video and mechanical slot machines for casinos; components for the manufacture
of video and mechanical slot machines
Slot machines for casino facilities
Casino control systems
Health & Fitness Business:
Operation of sports and fitness clubs
Fitness equipment
Health-related products
(2) Main Konami Group Offices
KONAMI CORPORATION
Headquarters (Tokyo) Chiyoda-ku, Tokyo
Roppongi Office Minato-ku, Tokyo
Zama Office Zama-shi, Kanagawa
Kobe Office Nishi-ku, Kobe-shi, Hyogo
Kyobashi Office Chuo-ku, Tokyo
Domestic subsidiaries, etc.
Konami Computer Entertainment Studios, Inc. Minato-ku, Tokyo
Konami Computer Entertainment Tokyo, Inc. Chuo-ku, Tokyo
Konami Computer Entertainment Japan, Inc. Minato-ku, Tokyo
Konami Online, Inc. Minato-ku, Tokyo
Konami Sports Corporation Shinagawa-ku, Tokyo
Konami Marketing, Inc. Minato-ku, Tokyo
Overseas subsidiaries, etc.
Konami Digital Entertainment, Inc. USA
Konami Marketing, Inc. USA
Konami Gaming, Inc. USA
Konami Australia Pty Ltd. Astralia
Konami Corporation of Europe B.V. UK
Konami of Europe GmbH Germany
(3) Status of Shares
1) Number of shares authorized 450,000,000
2) Number of shares outstanding 128,737,566
3) Number of shareholders 50,822
(4) The ten largest shareholders
Shareholders' Investment The Company's Investment
In the Company in Major Shareholders
Number Percentage Number Percentage
of Shares of Total of Shares of Total
(thousands) (%) (thousands) (%)
Kozuki Holding B.V. 13,530 11.33 - -
Kozuki Foundation for
Sports and Education 13,392 11.22 - -
The Master Trust Bank
of Japan, Ltd. (Trust
Account) 9,151 7.66 - -
Japan Trustee Services
Bank, Ltd. (Trust
Account) 8,221 6.89 - -
Kozuki Capital
Corporation 7,000 5.86 - -
Sumitomo Mitsui
Banking Corporation 4,353 3.65 - -
BNP PARIBAS Securities
(Japan) Ltd. 2,909 2.44 - -
Societe Generale Paris
OBE Dept 2,377 1.99 - -
Carillon DMA OTC 2,267 1.90 - -
Deutsche Bank AG London
610 1,824 1.53 - -
Notes:
1. The Company holds 9,256,000 treasury stocks.
2. Following its merger with the Kozuki Foundation for Higher Education and the
Kozuki Foundation for Advanced Information Technology, both of which were
leading shareholders as of March 31, 2004, the Kozuki Foundation for Sports and
Athletes, which was also a leading shareholder as of March 31, 2004, was renamed
the Kozuki Foundation for Sports and Education.
(5) Acquisition, Disposition, Sales, and Holdings of Treasury Stocks
1. Acquisition of shares Common stock 1,001,995 shares
Amount of shares acquired Y2,605,821,000
Note:
The figure for shares acquired includes 1,000,000 shares of common stock
purchased by authorization of the Board of Directors for a total acquisition
cost of Y2,600,740,500. The purchase of these shares was undertaken to ensure
that the Company is able to pursue dynamic financial policies in response to
changes in management and other conditions.
2) Disposition of share Common stock 154 shares
Amount of shares disposed Y440,000
3) Holdings as of the end of current fiscal year Common stock 9,256,155 shares
(6) Issuance of stock options
Outstanding new equity subscription rights are as follows:
Date of issuance resolution: June 20, 2002
Number of stock options: 17,849
Type of shares subject to stock options: Common stock
Number of shares subject to stock options: 1,784,900 shares
Value of stock options issued: Issued without
consideration
(7) Employees
1) Konami Group
Number of Employees Change from End of Previous Term
Computer & Video
Games Business 1,355 (95)
Toy & Hobby Business: 223 8
Amusement Business: 603 64
Gaming Business: 329 12
Health & Fitness Business: 1,437 101
Other Business 101 (50)
Entire Company (corporate staff) 499 114
Total 4,547 154
Notes:
1. Employees include all persons on the Konami Group payroll.
2. Employees classified as corporate staff for the entire Company are
administrative staff not assigned to any particular business segment.
2) KONAMI CORPORATION
Change from Average Length
of Service
Number of Employees End of Previous Term Average Age (years) (years)
876 (28) 32.4 4.7
Note: Employees include all persons on the parent company payroll.
(8) Group Status
1) Major subsidiaries
Company Capital Voting Rights Major Businesses
Percentage
Konami Computer Entertainment Studios, Y1,213 67.1 Research & development and production of
Inc. million consumer-use video game software
Konami Computer Entertainment Tokyo, Y2,323 65.7 Research & development and production of
Inc. million consumer-use video game software
Konami Computer Entertainment Japan, Y3,367 66.2 Research & development and production of
Inc. million consumer-use video game software
Konami Online, Inc. Y300 100.0 Production and distribution of
million game-related and other content for
mobile phones
Konami Sports Life Corporation Y15,050 100.0 Production, manufacture and sales of
million sports equipment for fitness clubs
Konami Sports Corporation Y5,041 (64.2) Operation of sports clubs
million 64.2
Konami Media Entertainment, Inc. Y180 100.0 Music production and publishing
million
Konami Marketing, Inc. Y1,162 100.0 Domestic sales of products
million
Konami Real Estate, Inc. Y10,000 100.0 Real estate leasing and management
million
Konami School, Inc. Y80 100.0 Fostering and training of digital
million creators
Konami Career Management, Inc. Y60 100.0 Personnel outplacement
million
Konami Digital Entertainment, Inc. US$21,500 (100.0) Sales of consumer-use video game
thousand 100.0 software in U.S.A.
Konami Marketing, Inc. US$170 (100.0) Sales of toys and hobby products in
thousand 100.0 U.S.A.
Konami Gaming, Inc. US$1,700 (100.0) Production and sale of gaming machines
thousand 100.0 in U.S.A.
Konami Australia Pty Ltd. A$3,000 100.0 Production and sale of gaming machines
thousand in Australia
Konami Corporation of Europe B.V. Eur 9,019 100.0 Sales of toys, hobby products and
thousand products for amusement facilities in
Europe
Konami of Europe GmbH Eur 5,113 (100.0) Sales of consumer-use video game
thousand 100.0 software in Europe
Konami Marketing (Asia) Ltd. HK$19,500 100.0 Sales in Asia
thousand
Konami Software Shanghai, Inc. US$2,000 100.0 Production of consumer-use video game
thousand software in Asia
Note: Voting Rights shown in parentheses are the indirect ownership percentage,
and are included in the percentage indicated in the second line.
2) New developments in corporate consolidation
In March 2005, Konami Digital Entertainment, Inc. absorbed the operations of
Konami Computer Entertainment Hawaii, Inc.
3) Consolidated results (U.S. GAAP)
The Company consolidates 27 companies, including the 19 major subsidiaries
listed above, and applies the equity method to 2 affiliated companies.
An overview of consolidated performance is provided above under the heading '1.
Business Performance, (1) Konami Group Business Conditions and Results.'
4) Other developments in corporate consolidation
In March 2005, the Company sold its entire shareholding in Genki Co., Ltd., an
equity-method affiliate.
(9) Lenders, Loans and Shares Held by Lenders
Number of shares of the Company
owned by the lender
Lender Amount of loan Number of Shares Percentage of
(thousands) Total (%)
(millions)
Sumitomo Mitsui Banking Corporation 2,783 4,353 3.65
The Bank of Tokyo-Mitsubishi, Ltd. 1,720 - -
Mizuho Corporate Bank, Ltd. 381 - -
(10) Directors and Corporate Auditors
Position Name Areas of responsibility and primary duties
Representative Director Kagemasa Kozuki Chairman of the Board and CEO
Representative Director Kagehiko Kozuki Vice Chairman
Representative Director Noriaki Yamaguchi Executive Corporate Officer,
Vice President and CFO
Director Toshiro Tateno Executive Corporate Officer
Director Tomokazu Godai President, Maya Tec Co., Ltd.
Director Hiroyuki Mizuno Director, Research Institute of Kochi University
of Technology
(Former Vice President, Matsushita Electric
Industrial Co., Ltd.)
Director Tsutomu Takeda Chairman, Konami Sports Corporation
(Former Representative Director and President,
Asatsu-DK Inc.)
Director Akira Gemma Senior Corporate Adviser, SHISEIDO Co., Ltd.
Standing Corporate Auditor Noboru Onuma (Former Director, Sakura Bank Co., Ltd.*)
*Now Sumitomo Mitsui Banking Corporation
Standing Corporate Auditor Tetsuro Yamamoto (Former Director, Bank of Tokyo-Mitsubishi, Ltd.)
Corporate Auditor Minoru Nagaoka President, Capital Markets Research Institute
(Former Chairman, Tokyo Stock Exchange)
Corporate Auditor Masataka Imaizumi Chairman, Keisatsu Kyokai
(Former Superintendent-General of the Metropolitan
Police Department)
Note 1: Board members Tomokazu Godai, Hiroyuki Mizuno and Akira Gemma are
external directors as defined under Article 188, Section 2-7-2 of the Commercial
Code.
Note 2: Corporate auditors Noboru Onuma, Tetsuro Yamamoto, Minoru Nagaoka and
Masataka Imaizumi are external corporate auditors as defined under Article 18,
Section 1 of the 'Law for Special Exceptions to the Commercial Code concerning
Audits, etc. of Corporations.'
Note 3: Changes in the status of directors during the year ended March 31,
2004 were as follows.
Retired June 24, 2004 Director Satoshi Akagi
Appointed June 24, 2004 Director Akira Gemma
(11) Payments to independent auditors
1) Total payments to independent auditors by the Company and its subsidiaries: Y209 million
2) Of total in 1) above, total payments by the Company and its subsidiaries
for certified auditing services: Y179 million
3) Of total in 2) above, total payments by the Company for services rendered
as independent auditors: Y110 million
Note: The auditing contract between the Company and the independent auditors
makes no distinction between auditing services based on the Law Concerning the
Commercial Code and Special Treatment Under the Code for the Audit, etc. of
Kabushiki Kaisha and auditing services based on the Securities & Exchange Law.
Since no effective distinction can be made in practice, only the total amounts
are listed.
3. Important Events Following the End of the Fiscal Year
(1) Following approval of the merger resolution at the Extraordinary General
Meeting of Shareholders held on February 22, 2005, the Company merged on April
1, 2005 with three production subsidiaries, Konami Computer Entertainment
Studios, Inc., Konami Computer Entertainment Tokyo, Inc., and Konami Computer
Entertainment Japan, Inc.
1) Merger rationale
To date within the Computer & Video Games business segment of the Konami Group,
the aforementioned three production subsidiaries have been responsible for the
production of game software, while the Company, operating as a publisher, has
commercialized the game software, selling the games through Konami Group sales
subsidiaries. As a result of the merger, the Company has assumed the roles of
these three production companies. This means that, as a game software publisher,
the Company will now be able to integrate all functions ranging from product
planning and production to the acquisition of merchandising rights and sales
promotion. This change will promote faster and more flexible decision-making. In
addition, the merger allows the Company to bring together the creative talent
and to share related software production expertise that was previously
distributed between three separate production subsidiaries. This will enable the
Company to prioritize greater investment of resources in the online games
business, which has significant growth potential. Separate to this move, the
Company merged on April 1, 2005 with Konami Online, Inc., which is the main
Konami Group company involved in the online games business. This additional
merger will enhance the benefits of the other. These moves also promise to
facilitate further synergy between the Amusement and Toy & Hobby business
segments.
2) Method of merger
The Company was the surviving entity in the merger. Konami Computer
Entertainment Studios, Inc., Konami Computer Entertainment Tokyo, Inc., and
Konami Computer Entertainment Japan, Inc. were all dissolved in the merger.
Merger date: April 1, 2005
Merger ratio
KONAMI CORPORATION Konami Computer Konami Computer Konami Computer
Entertainment Studios, Entertainment Tokyo, Inc. Entertainment Japan, Inc.
Inc.
1.00 0.42 1.00 0.81
Merger-related distributions
The three production companies made the distributions stipulated below to the
shareholders of each company, the date of record being the day prior to the
effective date of merger. These amounts were all calculated on the basis of 50%
of net income for the year ended March 31, 2005, less any interim dividends.
Konami Computer Entertainment Studios, Inc. Y0 (Y0 / share)
Konami Computer Entertainment Tokyo, Inc. Y424 million (Y88.00 / share)
Konami Computer Entertainment Japan, Inc. Y271 million (Y55.50 / share)
3) Pre-merger outline of dissolved entities
Millions of yen Konami Computer Konami Computer Konami Computer
Entertainment Studios, Inc. Entertainment Tokyo, Inc. Entertainment Japan, Inc.
Net revenues 9,549 12,917 8,581
Net income 448 2,623 1,453
Total assets 9,904 14,446 15,777
Shareholders' equity 5,782 12,113 13,947
Number of employees 391 300 244
Common stock 1,213 2,323 3,366
Shares outstanding (share) 14,941,500 14,601,840 14,424,000
Type of business Production and sale of Production and sale of Production and sale of
consumer-use video game consumer-use video game consumer-use video game
software software software
(All financial data accurate as of March 31, 2004)
(2) By resolution of the Board of Directors on April 11, 2005, the Company
decided to underwrite an increase in capital by third-party allotment of Hudson
Soft Co., Ltd. Following payments made on April 27, 2005, the Company acquired
an equity stake of 53.99% in Hudson, which in the process became a consolidated
subsidiary.
1) Rationale for acquisition of majority stake
Hudson expects to record a substantial loss for the year ended March 31, 2005,
which reflects major ongoing restructuring of its operations. Since this loss
would have resulted in a significant decline in the company's net worth, Hudson
requested the Company for financial assistance. The Company accepted this
request, and plans to support the ongoing reconstruction of Hudson's business.
The ultimate aim is to generate synergy between Hudson and other Konami Group
operations, particularly in the online gaming sector.
2) Outline of capital increase by third-party allotment
Shares acquired: 3,000,000 shares (acquisition cost: Y1,434 million)
Payment date: April 27, 2005
3) Hudson Soft Co., Ltd.
Millions of yen
Corporate name Hudson Soft Co., Ltd.
Net revenues 13,116
Net income 1,130
Total assets 15,417
Shareholders' equity 9,604
Number of employees 532
Common stock 4,347
Shares outstanding (share) 16,214,000
Type of business Production, manufacture and sale of mobile
and online content and consumer-use video
game software
(All financial data accurate as of March 31, 2004)
(3) The Company decided to sell its entire shareholding in Takara Co., Ltd. by
resolution of the Board of Directors on April 25, 2005. The sale transaction was
completed on the same day.
1) Rationale for share sale
Following a request for financial assistance from Takara Co., Ltd., the Company
underwrote an increase in capital by third-party allotment for Takara in July
2000, through which the Company acquired 20,104,000 shares of Takara common
stock (22.2% of shares outstanding). Due to significant changes in the business
environment surrounding both companies in the four years and nine months since
this action, the Company reviewed its capital relationship with Takara and
decided to dispose of this shareholding.
2) Outline of share sale
Shareholding prior to disposal: 20,104,000 shares
Number of shares sold: 20,104,000 shares (sale price: Y11,016 million)
Shareholding after disposal: 0 shares
Gain on share disposal: Y5,555 million (parent level)
Date of sale transaction: April 25, 2005
3) Takara Co., Ltd.
Millions of yen
Corporate name Takara Co., Ltd.
Net revenues 68,287
Net income 2,055
Total assets 52,266
Shareholders' equity 29,898
Number of employees 459
Common stock 18,121
Shares outstanding (share) 90,462,244
Type of business Manufacture and sale of toys
(All financial data accurate as of March 31, 2004)
Consolidated Balance Sheet
(As of March 31, 2005)
(Millions of yen)
ASSETS: LIABILITIES:
Current assets Y161,938 Current liabilities Y99,827
Cash and cash equivalents 89,583 Short-term borrowings 8,582
Trade notes and accounts Current portion of long-term debt
receivable, net of allowance and capital lease obligations 16,727
for doubtful accounts of Trade notes and accounts payable 16,134
Y604 millions
at March 31, 2005 33,577 Accrued income taxes 28,372
Inventories 15,488 Accrued expenses 19,875
Deferred income taxes, net 18,392 Deferred revenue 5,396
Prepaid expenses and other Other current liabilities 4,741
current assets 4,898
Property and equipment, net Y46,595 Long-term liabilities Y73,150
Investments and other assets Y95,788 Long-term debt and capital lease
obligations, less current portion 52,780
Investments in marketable 165
securities Accrued pension and severance costs 2,344
Investments in affiliates 5,184 Deferred income taxes, net 16,147
Identifiable intangible
assets 45,991 Other long-term liabilities 1,879
Goodwill 849
Lease deposits 24,216
Minority interest in
Other assets 19,383 consolidated subsidiaries Y25,487
Commitments and contingencies -
SHAREHOLDERS' EQUITY:
Common stock 47,399
Additional paid-in capital 46,736
Retained earnings 37,776
Accumulated other comprehensive
income (loss) 2,217
134,128
Treasury stock (28,271)
Total shareholders' equity 105,857
Total assets Y304,321 Total liabilities, minority interests
and shareholders' equity Y 304,321
Consolidated Statement of Income
(Year ended March 31, 2005)
(Millions of yen)
Net revenues Y260,691
Costs and expenses 232,555
Cost of revenues 180,363
Selling, general and administrative expenses 52,192
Operating income 28,136
Other income (expenses) (694)
Interest income 518
Interest expense (971)
Gain on sale of shares of affiliated companies 563
Other, net (804)
Income before income taxes, minority interest and equity in 27,442
net income (loss) of affiliated companies
Income taxes 7,902
Current 15,517
Deferred (7,615)
Income before minority interest and equity in net income (loss) of
affiliated companies 19,540
Minority interest in income of consolidated subsidiaries 2,761
Equity in net income (loss) of affiliated companies (6,293)
Net income Y10,486
Assumptions underlying preparation of consolidated financial statements
Summary of Significant Accounting Policies
1. Basis of presentation for consolidated financial statements
The consolidated statutory report including consolidated balance sheets and
consolidated statements of income has been prepared on the basis of accounting
principles generally accepted in the United States of America ('U.S. GAAP'), in
compliance with Article 179, Section 1 of the Commercial Code Enforcement
Regulations. However, in compliance with the article, certain disclosure that is
required on the basis of U.S. GAAP is omitted.
2. Methods and standards for the valuation of assets
(1) Marketable and Investment Securities
Marketable securities and securities held for trading purposes are stated at
fair value when readily determinable. Held-to-maturity debt securities are
stated at amortized cost after adjustment for any premium or discount. Gains
from the sale of marketable securities are computed using the average-cost
method.
(2) Inventories
with higher possibility of bad debt loss, the allowance is determined by
respective judgment.
(2) Liability for retirement benefits
The Company's financial statements have been prepared in conformity with
Statement of Financial Accounting Standards ('SFAS') No. 87, Employers'
Accounting for Pensions. With defined-benefit pension schemes operated by
multiple business owners, SFAS No. 87 requires the recognition of net pension
exp Resalable products, finished products, work-in-process, raw materials and
supplies are stated at the lower of cost or market. Cost is determined by the
first-in first-out method for merchandise, by the identified-cost method for
software, and by averaging for all other items.
3. 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.
4. Accounting standards for material reserves
(1) Allowance for bad debts
Generally, allowance for bad debts is calculated based on the actual ratio of
bad debt losses incurred. For specific accounts ense based on the value of
obligatory contributions for each fiscal period.
5. Consumption Tax
Consumption tax is excluded from the stated amount of revenue and expenses.
6. Goodwill and intangible assets subject to amortization
Goodwill is recognized as the difference between the purchase price of the
acquired company and the estimated fair value of its net assets. Intangible
assets subject to amortization associated with the purchase of subsidiaries are
deemed to include trademarks, employee lists, gaming licenses, existing
technologies, customer relationships and franchise agreements. In accordance
with SFAS No. 142, reviews are conducted at least once annually to identify any
impairment against fair value for goodwill and intangible assets subject to
amortization with indefinite useful lives, and a test for any impairment loss is
conducted at the end of each consolidated fiscal period. Intangible assets
subject to amortization with definite useful lives are amortized over a period
of 2-5 years corresponding to the estimated useful life.
7. Scope of consolidation
Major consolidated subsidiaries are listed above in ' (8) Group Status.'
8. Rounding policy
Amounts of less than one thousand yen are rounded to the nearest unit.
Notes to Consolidated Balance Sheet
1. Accumulated depreciation of tangible fixed assets Y47,951 million
2. Other comprehensive income
A breakdown of other comprehensive income at the consolidated level in the year
ended March 31, 2005 is as follows.
Foreign currency translation adjustments Y2,019 million
Unrealized gains on available-for-sale securities - net Y198 million
Accumulated other comprehensive income Y2,217 million
Notes to Consolidated Statement of Income
Basic net income per share Y87.41
Subsequent events
1. A merger of the Company on April 1, 2005 with the three production
subsidiaries Konami Computer Entertainment Studios, Inc., Konami Computer
Entertainment Tokyo, Inc., and Konami Computer Entertainment Japan, Inc.
involved the acquisition of all minority interests in these three firms. The
effect of the merger on the Company's consolidated total assets and net assets
is currently being evaluated by independent third-party audit.
2. The Company decided to underwrite an increase in capital by third-party
allotment of Hudson Soft Co., Ltd. by resolution of the Board of Directors on
April 11, 2005. This involved the purchase of 3,000,000 shares of common stock
of Hudson for Y1,434 million. Payment of this sum on April 27, 2005 resulted in
the Company owning an equity stake of 53.99% in Hudson, which thus became a
consolidated subsidiary. The effect of this transaction on the Company's
consolidated total assets and net assets is currently being evaluated by
independent third-party audit.
3. The Company decided to sell its entire shareholding in Takara Co., Ltd. by
resolution of the Board of Directors on April 25, 2005. The sale transaction was
completed on the same day. Takara Co., Ltd. ceased to be an equity-method
affiliate as a result of this transaction.
4. By resolution of the Board of Directors on May 10, 2005, the Company decided
to table a proposal to the 33rd Ordinary General Meeting of Shareholders
scheduled to be held on June 23, 2005 to approve the issuance of new equity
subscription rights in the form of stock options. The Company plans to offer
stock options to executive officers and employees of Konami Corporation, its
subsidiaries and affiliates in a range of eight plans (A-H), as
described below.
1) Outline of issuance of stock options (Plan A)
Share issuance ceiling: 10,900 shares
Strike price: Y2,761
Exercise period: To be determined by the Board of Directors between August 1,
2005 and December 15, 2005
2) Outline of issuance of stock options (Plan B)
Share issuance ceiling: 24,800 shares
Strike price: Y2,814
Exercise period: To be determined by the Board of Directors between August 1,
2005 and July 31, 2007
3) Outline of issuance of stock options (Plan C)
Share issuance ceiling: 72,600 shares
Strike price: Y2,857
Exercise period: To be determined by the Board of Directors between July 1,
2006 and June 30, 2008
4) Outline of issuance of stock options (Plan D)
Share issuance ceiling: 94,900 shares
Strike price: Y1,779
Exercise period: To be determined by the Board of Directors between August 1,
2005 and November 13, 2006
5) Outline of issuance of stock options (Plan E)
Share issuance ceiling: 44,000 shares
Strike price: Y1,670
Exercise period: To be determined by the Board of Directors between August 1,
2005 and July 31, 2007
6) Outline of issuance of stock options (Plan F)
Share issuance ceiling: 51,400 shares
Strike price: Y2,399
Exercise period: To be determined by the Board of Directors between July 1,
2006 and June 30, 2008
7) Outline of issuance of stock options (Plan G)
Share issuance ceiling: 83,100 shares
Strike price: Y2,146
Exercise period: To be determined by the Board of Directors between August 1,
2005 and November 13, 2007
8) Outline of issuance of stock options (Plan H)
Share issuance ceiling: 31,200 shares
Strike price: Y2,433
Exercise period: To be determined by the Board of Directors between July 1,
2006 and June 30, 2008
5.By resolution of the Board of Directors on May 19, 2005, the Company decided
to table a proposal to the 33rd Ordinary General Meeting of Shareholders
scheduled to be held on June 23, 2005 to approve the issuance of new equity
subscription rights in the form of stock options in addition to those stated in
4. above. The Company plans to offer stock options to executive officers and
employees of Konami Corporation, its subsidiaries and affiliates in Plan I.
Outline of issuance of stock options (Plan I)
Share issuance ceiling: 1,150,000
Strike price: Shall be the amount calculated as the average of the
closing price of the Company's ordinary shares of each day (excluding the days
on which there is no transaction of the Company's ordinary shares) of the month
immediately preceding the month in which the date of issue of equity
subscription rights falls, at the Tokyo Stock Exchange, multiplied by 1.20, with
fractions less than one yen being rounded up to a whole yen. However, in case
the amount is less than the closing price of the Company's ordinary shares on
the issue date of such equity subscription rights (if there is no transaction of
the Company's ordinary shares, the closing price on the date immediately
preceding it) closing price of the date immediately preceding the transaction,
the closing price shall be the strike price.
Exercise period: To be determined by the Board of Directors between July
1, 2006 and June 30, 2008
(English Translation of the Auditors' Report Originally Issued in Japanese
Language)
Independent Auditors' Report
May 27, 2005
The Board of Directors
KONAMI CORPORATION: KPMG AZSA & Co.
Hideki Amano (Seal)
Designated and Engagement Partner
Certified Public Accountant
Hidetoshi Fukuda (Seal)
Designated and Engagement Partner
Certified Public Accountant
We have audited the consolidated statutory report, that is the consolidated
balance sheet and the consolidated statement of income of KONAMI CORPORATION
('the Company') for the 33rd business year from April 1, 2004 to March 31, 2005
in accordance with Article 19-2(3) of the 'Law for Special Exceptions to the
Commercial Code Concerning Audit, etc. of Kabushiki Kaisha'. The consolidated
statutory report is the responsibility of the Company's management. Our
responsibility is to express an opinion on the consolidated statutory report
based on our audit as independent auditors.
We conducted our audit in accordance with generally accepted auditing standards
in Japan. Those auditing standards require us to obtain reasonable assurance
about whether the consolidated statutory report is free of material
misstatement. An audit is performed on a test basis, and includes assessing the
accounting principles used, the method of their application and estimates made
by management, as well as evaluating the overall presentation of the statutory
report and supporting schedules. We believe that our audit provides a
reasonable basis for our opinion. Our audit procedures also include those
considered necessary for the Company's majority-owned subsidiaries.
As a result of the audit, in our opinion, the consolidated statutory report
referred to above presents fairy the consolidated financial position of the
Company and consolidated subsidiaries , and the consolidated results of their
operations in conformity with related laws and regulations and the Articles of
Incorporation of the Company.
As discussed in Note to the consolidated statutory report , merger of three of
its majority-owned subsidiaries, sale of Takara Co., Ltd. shares, additional
acquisition of Hudson Soft Co., Ltd. shares and approval of subscription-rights
option plan by the board of directors may have a material effect on the
financial position and the results of operations of the Company and subsidiaries
in the business years subsequent to March 31, 2005.
Our firm and engagement partners have no interest in the Company which should be
disclosed pursuant to the provisions of the Certified Public Accountants Law of
Japan.
Report of the Board of Corporate Auditors on the Consolidated Financial
Statements
Having received reports from each corporate auditor regarding the methods and
results of the audit for the 33rd term of business that extended from April 1,
2004 to March 31, 2005, and based on discussion of relevant matters, we, the
Board of Corporate Auditors, present our report on the Company's consolidated
financial statements (the consolidated balance sheet and statement of income).
1. Outline of Auditing Procedures by the Corporate Auditors
Based on the auditing standards established by the Board of Corporate Auditors
and in accordance with the allocation of responsibilities, each of the auditors
received reports and explanations from the directors of the Company and the
independent auditors regarding the consolidated financial statements and, where
deemed necessary, audited the operations and financial condition of subsidiaries
and consolidated subsidiaries, based on documents requested from these firms.
2. Conclusions of the Audit
(1) We affirm that the methods and the conclusions of the audit by Azsa & Co.,
the independent auditors are proper.
(2) Based on the results of subsidiaries and consolidated subsidiaries audits,
we note no material findings with respect to the consolidated financial
statements.
3. Subsequent events
We certify that recognized significant events occurring after the end of the
fiscal year under review that would have a material impact on the Company's
financial statements in terms of the assets and income/loss of the Company are
limited to the merger with three production subsidiaries, the underwriting of a
third-party capital increase of Hudson Soft Co., Ltd. and the disposal of shares
in Takara Co., Ltd.
May 31, 2005
Board of Corporate Auditors
KONAMI CORPORATION
Noboru Onuma (Seal)
Standing Statutory Corporate Auditor
Tetsuro Yamamoto (Seal)
Standing Statutory Corporate Auditor
Minoru Nagaoka (Seal)
Statutory Corporate Auditor
Masataka Imaizumi (Seal)
Statutory Corporate Auditor
Note: Statutory Corporate Auditors Messrs. Noboru Onuma, Tetsuro Yamamoto,
Minoru Nagaoka and Masataka Imaizumi are outside statutory corporate auditors as
provided for in Article18.1 of the 'Law for Special Exceptions to the Commercial
Code concerning Audits, etc. of Corporations' of Japan.
Balance Sheet
(As of March 31, 2005)
(Millions of yen)
ASSETS: LIABILITIES:
Current assets Y79,904 Current liabilities Y41,008
Cash and cash equivalents 37,121 Trade notes payable 5,662
Trade accounts receivable 18,233 Trade accounts payable 8,589
Finished products 2,846 Bonds redeemable with 1 year 15,000
Raw materials and supplies 719 Current portion of long-term debt 912
Work in process 2,019 Other accounts payable 2,443
Advances 3,862 Accrued expenses 4,843
Prepaid expenses 577 Income taxes payable 3,245
Deferred tax asset 9,719 Short-term deposits received 136
Short-term loans to subsidiaries 3,192 Other 173
Other accounts receivable 1,244
Other 567 Long-term liabilities Y35,367
Allowance for bad debts (199) Bonds 30,000
Long-term debt 3,972
Fixed assets Y107,894 Liabilities for directors' 1,354
Tangible fixed assets 1,986 retirement benefits
Buildings improvement 356 Long-term deposits received 41
Structures 1
Machinery 0 Total liabilities Y76,375
Transportation equipment 3
Tools and fixtures 1,596 SHAREHOLDERS' EQUITY:
Construction in progress 27 Common stock 47,398
Intangible fixed assets 11,332 Capital reserves 47,106
In-house software 5,899 Additional paid-in capital 23,608
In-house software development in 5,427 Other capital reserves 23,498
progress Gain on reduction of capital or capital 23,498
Other 5 reserves
Investments and other assets 94,574 Retained earnings 45,188
Investment securities 360 Appropriated earned surplus 29,094
Investments in subsidiaries and 87,318 General reserve 29,094
affiliates Unappropriated earned surplus 16,093
Long-term loans to subsidiaries 1,496
Receivables from customers in 98 Valuation differences on stocks, etc. 0
bankruptcy proceedings
Long-term prepaid expenses 61 Treasury stock (28,271)
Deferred tax asset 2,380
Lease deposits 2,459 Total shareholders' equity Y111,423
Other 511
Allowance for bad debts (111)
Total assets Y187,798 Total liabilities and shareholders' equity Y187,798
Statement of Income
(Year ended March 31, 2005)
(Millions of yen)
I Net revenues Y134,117
II Costs and expenses 129,855
Cost of revenues 107,121
Selling, general and administrative expenses 22,733
Operating income 4,261
III Non-operating income 9,838
Interest and dividend income 9,483
Foreign exchange gains 245
Other 109
IV Non-operating expenses 652
Interest expenses 153
Bond interest expense 400
Other 98
Ordinary income 13,447
V Extraordinary income 1,722
Gain on sale of shares of affiliated companies 703
Gain on reversal of allowance for investment loss on
subsidiary 1,019
VI Extraordinary losses 67
Loss on disposal of fixed assets 67
Income before income taxes 15,102
Current 4,410
Deferred (2,102)
Net income 12,794
Unappropriated earned surplus carried fowared 6,534
Interim cash dividends 3,235
Unappropriated earned surplus Y 16,093
Summary of Significant Accounting Policies
1. Methods and standards for the valuation of assets
(1) Marketable and Investment Securities
Securities in affiliated companies are stated at cost based on the moving
average method.
Other investment securities
- Quoted securities: the market value method is applied, based
on the market value as of the fiscal year-end. The entire positive or negative
valuation difference with the purchase price is booked directly as shareholders'
equity, and the cost of securities sold is calculated using the moving average
method
Unquoted securities: valued at cost using the moving average method
(2) Derivatives
Stated at fair value.
(3) Inventories
Finished products and raw materials and supplies 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.
2. 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.
3. Accounting standards for material reserves
(1) 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 respective judgment.
(2) Liability for retirement benefits (Prepaid pension expense)
Provided based on the estimated amount of the projected benefit obligation and
the plan assets at the year-end. Unrecognized net transition asset of Y81
million is credited to expense over 13 years on a straight-line basis.
Unrecognized actuarial net gain or loss will be amortized from the following
fiscal year within the average remaining service period of 8 years on a
straight-line basis.
(3) Allowance for directors' retirement benefits
Reserved as per Article 43, of the Commercial Code to provide for the payment of
special retirement allowances to directors and corporate auditors. The amount is
calculated based on the amount to be paid at the end of the term as per internal
regulations.
4. Leases
Finance leases other than those that are deemed to transfer ownership of the
leased property to the lessee are accounted for as operating lease transactions.
5. Consumption Tax
Consumption tax is excluded from the stated amount of revenue and expenses.
6. Rounding policy
Amounts of less than one thousand yen are rounded to the nearest unit.
7. Others
The rules governing exemptions for affiliates under Article 48, Section 1 of the
Commercial Code are applied to the presentation of certain parts of the
financial statements.
Notes to Balance Sheet
1. Monetary assets and liabilities in relation to subsidiaries and affiliated
companies
(Millions of yen)
Short-term assets 26,278
Short-term liabilities 4,421
Long-term assets 2,641
Long-term liabilities 39
2. Accumulated depreciation of tangible fixed assets Y3,949 million
3. Major leased assets
In addition to tangible fixed assets shown on the balance sheet, computers used
for research, development, and production and some office equipment are leased.
4. Number of outstanding shares and treasury stock
Total shares outstanding at end of term: 128,737,566 shares
Number of own shares held at end of term: 9,256,155 shares
5. Limitation on dividend
Net asset value as stipulated in Article 124 Section 3 of the Commercial Code:
Y0 million
Notes to Statement of Income
1. Transactions with subsidiaries and affiliated companies
(Millions of yen)
Revenues 133,209
Purchases 23,399
Selling, general and administrative expenses 4,454
Non-operating transactions 9,866
2. Net income per share Y105.33
Proposed Appropriation Plan of Earned Surplus
(Year ended March 31, 2005)
(Yen)
Unappropriated earned surplus at year-end Y 16,093,700,333
To be appropriated as follows.
Cash dividends 3,225,998,097
( Y27.0 per share)
Directors' bonuses 157,000,000
General reserve 5,000,000,000
Unappropriated earned surplus carried forward to next year Y7,710,702,236
Notes:
1. On November 30, 2004, interim cash dividends amounting to Y3,235,228,938
(Y27.0 per share) were paid.
2. Cash dividends exclude dividends on 9,256,155 shares of treasury stock.
(Translation of the original auditors' report issued in the Japanese language.)
Independent Auditors' Report
May 9, 2005
The Board of Directors of
KONAMI CORPORATION:
Azsa&Co.
Hideki Amano
Designated and Engagement Partner
Certified Public Accountant
Hidetoshi Fukuda
Designated and Engagement Partner
Certified Public Accountant
We have audited the balance sheet, the statement of profit and loss, the
business report (limited to matters concerning accounting), the proposal for
appropriation of earnings, and the related schedules (limited to matters
concerning accounting) of KONAMI CORPORATION ('the Company') for the 33rd
business year ended March 31, 2005 for the purpose of reporting under the
provisions of Article 2.1 of the Commercial Code Special Measures Law concerning
Audit, etc. of Kabushiki Kaisha. With respect to the aforementioned business
report and the schedules, our audit was limited to matters concerning
accounting, which are based on the accounting records of the Company. The
aforementioned business report and the schedules are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audits in accordance with auditing standards generally accepted
in Japan. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit is conducted on a test basis and includes assessment of
the accounting principles adopted, their application and significant estimates
made by management, as well as evaluation of the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion. Our audit also included auditing procedures that we deemed necessary
pertaining to subsidiaries.
In our opinion,
(1) the balance sheet and the statement of profit and loss present fairly the
financial position and results of its operations of the Company in conformity
with laws, ordinances and the Articles of Incorporation of the Company;
(2) the business report, insofar as it relates to matters concerning accounting
included therein, presents fairly the status of the Company in conformity with
laws, ordinances and the Articles of Incorporation of the Company;
(3) the proposal for appropriation of earnings has been prepared in conformity
with laws, ordinances and the Articles of Incorporation of the Company; and
(4) with respect to the schedules, insofar as they relate to matters concerning
accounting included therein, there is no matter to be pointed out under the
provision of the Commercial Code.
We certify that recognized significant events occurring after the end of the
fiscal year under review that would have a material impact on the Company's
financial statements in terms of the assets and income/loss of the Company are
limited to the merger with three production subsidiaries, the underwriting of a
third-party capital increase of Hudson Soft Co., Ltd. and the disposal of shares
in Takara Co., Ltd.
We have no financial or other interests in the Company required to be stated by
the provisions of the Certified Public Accountant Law.
COPY OF THE BOARD OF STATUTORY CORPORATE AUDITORS' REPORT
We, the Board of Corporate Auditors, have received reports from each of the
Corporate auditors on the Conduct of business activities by the directors of the
Company during the 33rd term, Which extended from April 1, 2004 to March 31,
2005 and on the methods and results of the audit covering such term. After
meeting and discussing these matters, we report as follows:
1. Outline of Auditing Procedures by the Corporate Auditors
Based on the auditing standards established by the Board of Corporate Auditors
and in accordance with audit policies and plans, each of the auditors attended
meetings of the Board of Directors and other important meetings; interviewed
directors regarding the execution of their duties (including matters such as
oversight of internal control systems for legal compliance and risk management);
inspected important accounting documents; carried out investigations of the
Company's business operations and financial condition at the Head Office and all
major sites; and audited the operations and financial condition of major
subsidiaries as necessary, based on documents requested from these firms.
In addition to the above-mentioned auditing procedures, with respect to such
matters as the engagement of a director in a competing business, the conduct of
transactions causing a conflict of interest between a director and the Company,
the provision of benefits by the Company without consideration, the conduct of
irregular transactions with subsidiaries or shareholders of the Company, and
acquisitions and disposal of own shares by the Company, we employed such methods
as requiring reports from directors and others and made detailed inspections or
such matters.
2. Conclusions of the Audit
(1) We affirm that the methods and the conclusions of the audit by Azsa & Co.,
the independent auditors are proper.
(2) We affirm that the business report fairly presents the situation of the
Company in compliance with the provisions of applicable laws, regulations and
the Articles of Incorporation.
(3) That the proposition relating to the appropriation of retained earnings has
nothing to be pointed out considering the state of property of the Company and
other circumstances;
(4) That the accompanying detailed statements fairly present the matters to be
stated therein and contain nothing to be pointed out; and
(5) We affirm that there have been no illegal acts committed or any serious
violations of laws and regulations or the Company's Articles of Incorporation
with regard to the directors' execution of corporate duties.
We also affirm that there have been no violations by directors with regard to
matters such as engaging in a competing business or other operational conflicts
of interest, receipt of remuneration other than that for execution of corporate
duties, conduct of irregular transactions with subsidiaries or shareholders of
the Company, or the acquisition or disposal of shares in the Company.
(6) We note no material findings with respect to the directors' execution of
duties in regard to internal control systems.
(7) Based on the results of subsidiary audits, we note no material findings
with respect to the directors' execution of duties.
3. Subsequent events
We certify that recognized significant events occurring after the end of the
fiscal year under review that would have a material impact on the Company's
financial statements in terms of the assets and income/loss of the Company are
limited to the merger with three production subsidiaries, the underwriting of a
third-party capital increase of Hudson Soft Co., Ltd. and the disposal of shares
in Takara Co., Ltd.
May 9, 2005
Board of Corporate Auditors
KONAMI CORPORATION
Noboru Onuma (Seal)
Standing Statutory Corporate Auditor
Tetsuro Yamamoto (Seal)
Standing Statutory Corporate Auditor
Minoru Nagaoka (Seal)
Statutory Corporate Auditor
Masataka Imaizumi (Seal)
Statutory Corporate Auditor
Note: Statutory Corporate Auditors Messrs. Noboru Onuma, Tetsuro Yamamoto,
Minoru Nagaoka and Masataka Imaizumi are outside statutory corporate auditors as
provided for in Article18.1 of the 'Law for Special Exceptions to the Commercial
Code concerning Audits, etc. of Corporations' of Japan.
Reference Materials Concerning the Exercise of Voting Rights
1. Number of votes for all shareholders 1,194,115
2. Proposals and related items
Proposal 1: Acceptance of Proposed Appropriation Plan of Earned Surplus for the
33rd fiscal year.
Details of this proposal appear on page 37 of the appended materials.
The Company believes that the maintenance of a high dividend and the enhancement
of enterprise value are important means of providing value to shareholders.
Based on the policy concerning dividends described above, the dividend for the
current term is proposed to be Y27 per share.
When this dividend is added to the interim dividend (Y27 per share), the total
dividend for the year is Y54 per share.
Proposal 2: Amendments to the Articles of Incorporation
1. Reasons for amendments
The Company proposes to make partial amendments to the Articles of Incorporation
for the reasons outlined below.
(1) Additional items are proposed for Article 2 (Objectives) to cover future
business development possibilities.
(2) Revisions to the Commercial Code governing the use of electronic media
for disseminating corporate public notices (Law No. 87, 2004) came into force on
February 1, 2005. These introduced a system permitting the online publication of
such notices. In view of widespread Internet usage, the Company proposes to
amend Article 4 of the Articles of Incorporation to permit electronic
publication of Company notices, since this promises to reduce publication costs
while also making it easier for such notices to be viewed.
(3) To enable swift decision-making to respond accurately to a fast-changing
business environment, the Company proposes to lower the maximum number of
directors from 25 to 12 via an amendment of Article 16 (Number of Directors).
2. Specific changes
A table comparing the current Articles of Incorporation with the proposed
changes is shown below.
(Amendments are underlined)
Current Articles of Incorporation Proposed changes
(Objectives) (Objectives)
Article 2 The Company shall aim to Article 2 The Company shall aim to carry
carry out the following out the following businesses.
businesses.
1. 1.
2. The planning, production and 2. Planning, production,
sale of recordings of sound manufacture, rental and
and moving visual images on distribution of music, audio
records, tapes, disks, film, and visual software (including
etc. disks, tape and film, etc.);
production and acquisition of
master copies, and transferal
or usage permission thereof.
3. (Newly added) 3. Acquisition, management,
promotion of usage and
development of music copyright
and related performance
rights, and transferal or
usage permission thereof.
3. The planning, production and 4. Planning, production and
sale of books, magazines and distribution of books,
other publications magazines, sheet music and
other publications
4. to 19 5. to 20.
(Method of Public Notification) (Method of Public Notification)
Article 4 The Company shall publish its Article 4 Public notices of the Company
public notifications in the shall be published
Nihon Keizai Shimbun. electronically. In cases where
accident or other unavoidable
circumstances preclude online
publication, notices shall be
carried in the Nihon Keizai
Shimbun.
(Number of Directors) (Number of Directors)
Article 16 The number of Directors of Article 16 The number of Directors of the
the Company shall not be more Company shall not be more than
than twenty-five (25). twelve (12).
Proposal 3: Election of 8 members to the Board of Directors
Because the terms of office for all directors expire as of the end of this
General Meeting of Shareholders, this proposal requests the election of 8
directors.
Candidates for the new board are as follows:
In addition, the following nominees for director are candidates for external
director, as provided under Article 188-2-7-2 of the Commercial Code: Tomokazu
Godai, Hiroyuki Mizuno and Akira Gemma.
Name Resume & representation of other companies Shares of the
Company's stock
(Date of Birth) owned
1 Kagemasa Kozuki Mar. 1969 Founded Konami Industries (private enterprise)
(Nov. 12, 1940) Mar. 1973 Established Konami Industries Co., Ltd. (now KONAMI
CORPORATION) with the paid-in capital of 92,760
Y1 million
Mar. 1974 Assumed the office of Representative Director and
President
Jun. 1987 Representative Director and Chairman of the Board
Jun. 1994 Representative Director and Chairman of the Board
and CEO (to present)
2 Kagehiko Kozuki Dec. 1983 Joined the Company as Manager of Production division
(Mar. 7, 1944) May 1984 Director
Aug. 1990 Managing Director 27,543
May 1991 Senior Managing Director
Jun. 1997 Director and Vice Chairman
Mar. 1998 Representative Director and Vice Chairman (to
present)
Representation of other companies
• Representative Director and Chairman of the Board, Konami
Marketing, Inc.
3 Noriaki Yamaguchi Jun. 1994 Joined the Company as Advisor
(Jan. 26, 1944) Jun. 1994 Managing Director in charge of International
Business Division 14,372
Jul. 1995 Managing Director in charge of Administration
Division
Feb. 1996 Managing Director in charge of Finance and
Accounting Division
Jun. 2000 Director and Executive Corporate Officer Finance
and Accounting Division
Jun. 2001 Representative Director and Executive Corporate
Officer Finance and Accounting Division
Jan. 2003 Representative Director and Executive Corporate
Officer, Vice President and CFO (to present)
Name Resume & representation of other companies Shares of the
Company's stock
(Date of Birth) owned
* Kimihiko Higashio Dec. 1997 Joined the Company
4 (Sep. 24, 1959) Jan. 2000 Executive Corporate Officer (Kansai Region
Representative) 1,766
May 2003 Executive Corporate Officer (Division
President, Human Resources)
Jan. 2005 Division President, Human Resources (to present)
Representation of other companies
• Representative Director and President, Konami Career
Management, Inc.
5 External Director May 1992 Director (to present)
Tomokazu Godai Representation of other companies 7,408
(Oct. 6, 1939) • Representative Director and President, Maya Tec Co., Ltd.
• Representative Director and President, Santetsu Giken
Co., Ltd.
• Representative Director and President, Hiroshima River
Industry Co., Ltd.
6 External Director Jun. 1990 Vice President, Matsushita Electrical Industrial
Co., Ltd.
Hiroyuki Mizuno
Aug. 1994 Adjunct Professor, Stanford University
(Apr. 20, 1929) 6,749
Jun. 2001 Director (to present)
Mar. 2003 Director, Research Institute of Kochi
University of Technology (to present)
Tsutomu Takeda Mar. 1996 Representative Director and President, Asatsu Inc.
(the present-day Asatsu-DK Inc.)
7 (May 13, 1937)
Sep. 2001 Director and Senior Corporate Adviser
20,800
Jun. 2003 Director (to present)
Representation of other companies
• Representative Director and Chairman of the Board, Konami
Sports Corporation
External Director Jun. 1997 Representative Director and President, SHISEIDO
Co., Ltd.
8 Akira Gemma
Jun. 2002 Representative Director and Corporate Officer,
(Aug. 1, 1934) Chairman of the Board 7,300
Jun. 2003 Senior Corporate Adviser (to present)
Notes
1. The proposed candidate for director Tsutomu Takeda is concurrently a
representative director of Konami Sports Corporation. A trading relationship
exists between the Company and Konami Sports Corporation extending to the
provision of network and other services.
2. No special conflicts of interest exist between the Company and any other
proposed candidates for director.
3. The asterisk indicates a first-time candidate.
Proposal 4: Election of 1 Corporate Auditor
The term of office of Noboru Onuma expire at the end of this General Meeting.
Accordingly, this proposal requests the election of 1 statutory auditor. The
following is information on the nominee for corporate auditor.
Candidates for the new corporate auditor is as follows:
The Company has received approval from the Board of Auditors for this proposal.
Noboru Onuma is a nominee for external statutory auditors, as provided under
Article 18.1 of the Law Concerning Special Measures under the Commercial Code
with respect to Audits, etc. of Corporations (Kabushiki Kaisha).
Name Resume & representation of other companies Shares of the
Company's stock
(Date of Birth) owned
Noboru Onuma Apr. 1970 Entered Mitsui Bank (now Sumitomo Mitsui Banking
Corporation)
(Jan. 1, 1948)
Apr. 1998 Sakura Bank: General Manager, Fukuoka Branch 1,166
Apr. 1999 Sakura Bank: Director
Jun. 1999 Appointed Standing Corporate Auditor of the Company
(to present)
Note: There is no special conflict of interest between the candidate and the
Company.
Proposal 5: Retirement allowance for a retiring member of the Board of
Directors
The term of office of director Toshiro Tateno comes to an end at the conclusion
of this general meeting. In recognition of his contribution, both as a director
from June 2000 onwards and as a senior manager prior to that, the Company would
like to award him a retirement allowance within the scope provided for in
Company regulations governing allowances for directors. We ask that the specific
amount, timing of its payment, method, and other details be left to the
discretion of the Board of Directors.
The following is a brief summary of the careers of the retiring Director.
Name Resume & representation of other companies
Apr. 1994 Joined the Company
Toshiro Tateno Jun. 1996 Director in charge of Planning Division
Mar. 1998 Managing Director in charge of Planning Division
Nov. 1999 Managing Director in charge of Management Division
Jun. 2000 Director and Executive Corporate Officer Corporate Planning Division (to
present)
May 2004 Director and Executive Corporate Officer Consolidated Corporate Planning
Division
Apr. 2005 Director and Executive Corporate Officer
May 2005 Director (to present)
Proposal 6: Issuance of new equity subscription rights in the form of stock
options
The Company seeks the approval of shareholders to issue new equity subscription
rights in the form of stock options, the aim of which is to raise the motivation
of executive officers and employees of Konami Corporation, its subsidiaries and
affiliates, and to facilitate greater retention of talent. More details of this
proposal are set out below in pages 47 to 55.
1. Rationale for issuance of stock options on preferential terms
The merger on April 1, 2005 of the Company with the three production
subsidiaries Konami Computer Entertainment Studios, Inc., Konami Computer
Entertainment Tokyo, Inc., and Konami Computer Entertainment Japan, Inc.
(hereinafter referred to collectively as 'the three dissolved firms') resulted
in the discontinuation of stock options that had been granted by the three
dissolved firms. To ensure incentives made by the three dissolved firms remain
in place, based on the stock options previously granted the Company plans to
award new stock option plans with varying terms (plans A-H, detailed
below) in order to raise the motivation of any executive officers and employees
of the Company, its subsidiaries and affiliates that were owners of stock
options previously granted by the three dissolved firms.
Stock option plan I, also detailed below, contains provisions that allow the
granting of extra options to certain executive officers and employees of Konami
Corporation, its subsidiaries and affiliates as additional incentives to ensure
that the value of the Company is maximized.
2. Outline of issuance of stock options (Plan A)
(1) Recipients of stock options
Recipients shall be limited to executive officers and employees of the Company,
its subsidiaries and affiliates.
(2) Type and number of shares purchasable under stock option plan
The maximum number of shares of the Company's common stock that can be purchased
shall be 10,900.
Exception: Any adjustment to the number of shares per option in accordance with
(3) below shall result in a corresponding change to this ceiling.
(3) Total issuance of stock options
The maximum number of options that can be granted shall be 109.
The number of shares corresponding to each option shall equal 100. In the event
of a common stock split or share consolidation, the number of shares per option
shall be adjusted in accordance with the following formula.
Post-adjustment number = Pre-adjustment number * Split / consolidation ratio
Similarly, appropriate adjustments to the number of shares per option shall be
made, within the limits of necessity and reason, in the event of a merger
involving the Company, a stock split, a reduction in capital or any other
eventuality that necessitates such adjustment.
In such cases, all fractional shares of less than one unit that are created by
this adjustment shall be rounded down.
(4) Issuance price of stock options
All options shall be issued gratis.
(5) Amount paid to exercise stock options
In all cases, the amount paid to exercise stock options shall equal the number
of shares pertaining to the options being exercised multiplied by the amount
paid per share issued or transferred as a result of the exercise of the said
options (hereinafter referred to as the 'strike price').
The strike price is set at Y2,761.
The strike price shall be adjusted in accordance with the following formula in
the event of a common stock split or share consolidation. Any fractional shares
valued at under Y1 that are created by such adjustment shall be rounded up.
Post-adjustment strike price = Pre-adjustment strike price * 1 / (Split /
Consolidation ratio)
In addition, the strike price shall be adjusted in accordance with the following
formula in cases where the Company either issues new equity in the form of
common stock or cancels treasury stock at below market price (excluding the
conversion of equity warrants or of equity warrants with forcible conversion
clauses, or the exercise of stock options or of compulsory sales rights for
shares of less than the minimal trading unit (tangen) as stipulated in Article
221 Section 2 of the Commercial Code). Any fractional shares valued at under Y1
that are created by such adjustment shall be rounded up.
Post-adjustment strike price = Pre-adjustment strike price *((Total shares in
issue + (New shares issued * Price paid per share) / Market price) / ( Total
shares in issue + New shares issued ))
'Total shares in issue' in the above formula shall equal the total number of
shares of the Company's common stock outstanding, less the number of shares of
common stock owned by the Company as treasury stock. In the case of treasury
stock cancellations, 'New shares issued' in the above formula shall be taken to
mean 'Number of shares of treasury stock cancelled.'
Similarly, appropriate adjustments shall be made to the strike price, within the
limits of necessity and reason, in the event of a merger involving the Company,
a common stock split, a reduction in capital or other eventuality that
necessitates the adjustment of the strike price.
(6) Exercise period for stock options
The Board of Directors shall determine the exercise period for stock options
between August 1, 2005 and December 15, 2005.
(7) Conditions attached to exercising stock options
1) Partial exercising of stock options shall not be permitted.
2) The Board of Directors shall determine other conditions attached to
exercising stock options.
(8) Rationale for and terms attached to cancellation of stock options
The Company shall retain the right, at any time, to cancel at no charge any
unexercised stock options that it owns or acquires.
(9) Restrictions on transfer of stock options
Transfers of stock options shall require the approval of the Board of Directors
of the Company.
3. Outline of issuance of stock options (Plan B)
(1) Recipients of stock options
Recipients shall be limited to executive officers and employees of the Company,
its subsidiaries and affiliates.
(2) Type and number of shares purchasable under stock option plan
The maximum number of shares of the Company's common stock that can be purchased
shall be 24,800.
Exception: Any adjustment to the number of shares per option in accordance with
(3) below shall result in a corresponding change to this ceiling.
(3) Total issuance of stock options
The maximum number of options that can be granted shall be 248.
The number of shares per option shall equal 100. Any adjustments in this number
shall be in accordance with the corresponding provisions of stock option Plan A
(see 2. (3) above).
(4) Issuance price of stock options
All options shall be issued gratis.
(5) Amount paid to exercise stock options
In all cases, the amount paid to exercise stock options shall equal the number
of shares pertaining to the options being exercised multiplied by the amount
paid per share issued or transferred as a result of the exercise of the said
options (hereinafter referred to as the 'strike price').
The strike price is set at Y2,814.
Any adjustments to the strike price shall be in accordance with the
corresponding provisions of stock option Plan A (see 2. (5) above).
(6) Exercise period for stock options
The Board of Directors shall determine the exercise period for stock options
between August 1, 2005 and July 31, 2007.
(7) - (9): same as in stock option Plan A
4. Outline of issuance of stock options (Plan C)
(1) Recipients of stock options
Recipients shall be limited to executive officers and employees of the Company,
its subsidiaries and affiliates.
(2) Type and number of shares purchasable under stock option plan
The maximum number of shares of the Company's common stock that can be purchased
shall be 72,600.
Exception: Any adjustment to the number of shares per option in accordance with
(3) below shall result in a corresponding change to this ceiling.
(3) Total issuance of stock options
The maximum number of options that can be granted shall be 726.
The number of shares per option shall equal 100. Any adjustments in this number
shall be in accordance with the corresponding provisions of stock option Plan A
(see 2. (3) above).
(4) Issuance price of stock options
All options shall be issued gratis.
(5) Amount paid to exercise stock options
In all cases, the amount paid to exercise stock options shall equal the number
of shares pertaining to the options being exercised multiplied by the amount
paid per share issued or transferred as a result of the exercise of the said
options (hereinafter referred to as the 'strike price').
The strike price is set at Y2,857.
Any adjustments to the strike price shall be in accordance with the
corresponding provisions of stock option Plan A (see 2. (5) above).
(6) Exercise period for stock options
The Board of Directors shall determine the exercise period for stock options
between July 1, 2006 and June 30, 2008.
(7) - (9): same as in stock option Plan A
5. Outline of issuance of stock options (Plan D)
(1) Recipients of stock options
Recipients shall be limited to executive officers and employees of the Company,
its subsidiaries and affiliates.
(2) Type and number of shares purchasable under stock option plan
The maximum number of shares of the Company's common stock that can be purchased
shall be 94,900.
Exception: Any adjustment to the number of shares per option in accordance with
(3) below shall result in a corresponding change to this ceiling.
(3) Total issuance of stock options
The maximum number of options that can be granted shall be 949.
The number of shares per option shall equal 100. Any adjustments in this number
shall be in accordance with the corresponding provisions of stock option Plan A
(see 2. (3) above).
(4) Issuance price of stock options
All options shall be issued gratis.
(5) Amount paid to exercise stock options
In all cases, the amount paid to exercise stock options shall equal the number
of shares pertaining to the options being exercised multiplied by the amount
paid per share issued or transferred as a result of the exercise of the said
options (hereinafter referred to as the 'strike price').
The strike price is set at Y1,779.
Any adjustments to the strike price shall be in accordance with the
corresponding provisions of stock option Plan A (see 2. (5) above).
(6) Exercise period for stock options
The Board of Directors shall determine the exercise period for stock options
between August 1, 2005 and November 13, 2006.
(7) - (9): same as in stock option Plan A
6. Outline of issuance of stock options (Plan E)
(1) Recipients of stock options
Recipients shall be limited to executive officers and employees of the Company,
its subsidiaries and affiliates.
(2) Type and number of shares purchasable under stock option plan
The maximum number of shares of the Company's common stock that can be purchased
shall be 44,000.
Exception: Any adjustment to the number of shares per option in accordance with
(3) below shall result in a corresponding change to this ceiling.
(3) Total issuance of stock options
The maximum number of options that can be granted shall be 440.
The number of shares per option shall equal 100. Any adjustments in this number
shall be in accordance with the corresponding provisions of stock option Plan A
(see 2. (3) above).
(4) Issuance price of stock options
All options shall be issued gratis.
(5) Amount paid to exercise stock options
In all cases, the amount paid to exercise stock options shall equal the number
of shares pertaining to the options being exercised multiplied by the amount
paid per share issued or transferred as a result of the exercise of the said
options (hereinafter referred to as the 'strike price').
The strike price is set at Y1,670.
Any adjustments to the strike price shall be in accordance with the
corresponding provisions of stock option Plan A (see 2. (5) above).
(6) Exercise period for stock options
The Board of Directors shall determine the exercise period for stock options
between August 1, 2005 and July 31, 2007.
(7) - (9): same as in stock option Plan A
7. Outline of issuance of stock options (Plan F)
(1) Recipients of stock options
Recipients shall be limited to executive officers and employees of the Company,
its subsidiaries and affiliates.
(2) Type and number of shares purchasable under stock option plan
The maximum number of shares of the Company's common stock that can be purchased
shall be 51,400.
Exception: Any adjustment to the number of shares per option in accordance with
(3) below shall result in a corresponding change to this ceiling.
(3) Total issuance of stock options
The maximum number of options that can be granted shall be 514.
The number of shares per option shall equal 100. Any adjustments in this number
shall be in accordance with the corresponding provisions of stock option Plan A
(see 2. (3) above).
(4) Issuance price of stock options
All options shall be issued gratis.
(5) Amount paid to exercise stock options
In all cases, the amount paid to exercise stock options shall equal the number
of shares pertaining to the options being exercised multiplied by the amount
paid per share issued or transferred as a result of the exercise of the said
options (hereinafter referred to as the 'strike price').
The strike price is set at Y2,399.
Any adjustments to the strike price shall be in accordance with the
corresponding provisions of stock option Plan A (see 2. (5) above).
(6) Exercise period for stock options
The Board of Directors shall determine the exercise period for stock options
between July 1, 2006 and June 30, 2008.
(7)-(9): same as in stock option Plan A
8. Outline of issuance of stock options (Plan G)
(1) Recipients of stock options
Recipients shall be limited to executive officers and employees of the Company,
its subsidiaries and affiliates.
(2) Type and number of shares purchasable under stock option plan
The maximum number of shares of the Company's common stock that can be purchased
shall be 83,100.
Exception: Any adjustment to the number of shares per option in accordance with
(3) below shall result in a corresponding change to this ceiling.
(3) Total issuance of stock options
The maximum number of options that can be granted shall be 831.
The number of shares per option shall equal 100. Any adjustments in this number
shall be in accordance with the corresponding provisions of stock option Plan A
(see 2. (3) above).
(4) Issuance price of stock options
All options shall be issued gratis.
(5) Amount paid to exercise stock options
In all cases, the amount paid to exercise stock options shall equal the number
of shares pertaining to the options being exercised multiplied by the amount
paid per share issued or transferred as a result of the exercise of the said
options (hereinafter referred to as the 'strike price').
The strike price is set at Y2,146.
Any adjustments to the strike price shall be in accordance with the
corresponding provisions of stock option Plan A (see 2. (5) above).
(6) Exercise period for stock options
The Board of Directors shall determine the exercise period for stock options
between August 1, 2005 and November 13, 2007.
(7)-(9): same as in stock option Plan A
9. Outline of issuance of stock options (Plan H)
(1) Recipients of stock options
Recipients shall be limited to executive officers and employees of the Company,
its subsidiaries and affiliates.
(2) Type and number of shares purchasable under stock option plan
The maximum number of shares of the Company's common stock that can be purchased
shall be 31,200.
Exception: Any adjustment to the number of shares per option in accordance with
(3) below shall result in a corresponding change to this ceiling.
(3) Total issuance of stock options
The maximum number of options that can be granted shall be 312.
The number of shares per option shall equal 100. Any adjustments in this number
shall be in accordance with the corresponding provisions of stock option Plan A
(see 2. (3) above).
(4) Issuance price of stock options
All options shall be issued gratis.
(5) Amount paid to exercise stock options
In all cases, the amount paid to exercise stock options shall equal the number
of shares pertaining to the options being exercised multiplied by the amount
paid per share issued or transferred as a result of the exercise of the said
options (hereinafter referred to as the 'strike price').
The strike price is set at Y2,433.
Any adjustments to the strike price shall be in accordance with the
corresponding provisions of stock option Plan A (see 2. (5) above).
(6) Exercise period for stock options
The Board of Directors shall determine the exercise period for stock options
between July 1, 2006 and June 30, 2008.
(7)-(9): same as in stock option Plan A
10. Outline of issuance of stock options (Plan I)
(1) Recipients of stock options
Recipients shall be limited to executive officers and employees of the Company,
its subsidiaries and affiliates.
(2) Type and number of shares purchasable under stock option plan
The maximum number of shares of the Company's common stock that can be purchased
shall be 1,150,000.
Exception: Any adjustment to the number of shares per option in accordance with
(3) below shall result in a corresponding change to this ceiling.
(3) Total issuance of stock options
The maximum number of options that can be granted shall be 11,500.
The number of shares per option shall equal 100. Any adjustments in this number
shall be in accordance with the corresponding provisions of stock option Plan A
(see 2. (3) above).
(4) Issuance price of stock options
All options shall be issued gratis.
(5) Amount paid to exercise stock options
In all cases, the amount paid to exercise stock options shall equal the number
of shares pertaining to the options being exercised multiplied by the amount
paid per share issued or transferred as a result of the exercise of the said
options (hereinafter referred to as the 'strike price').
The strike price shall be set at a 20% premium to the average of the closing
prices (hereinafter referred to as the 'closing price') at which shares of the
common stock of the Company trade on the Tokyo Stock Exchange during the month
prior to that containing the day on which the stock options are granted
(hereinafter referred to as the 'issuance date'), excluding any days on which no
trading activity in the Company's shares is recorded. However, if this value is
less than the closing price on the issuance date (or the closing price on the
most recent trading day if no trading activity in the Company's shares is
recorded on that date), the strike price shall be set at the corresponding
closing price. Any fractional values in the strike price shall be rounded up.
Any adjustments to the strike price shall be in accordance with the
corresponding provisions of stock option Plan A (see 2. (5) above).
(6) Exercise period for stock options
The Board of Directors shall determine the exercise period for stock options
between July 1, 2007 and June 30, 2009.
(7) - (9): same as in stock option Plan A
This information is provided by RNS
The company news service from the London Stock Exchange
Friday, 17th May 2024
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