Notice of EGM
Konami Corporation
11 January 2006
NOTICE OF EXTRAORDINARY GENERAL MEETING OF SHAREHOLDERS
January 11, 2006
Dear Shareholder,
You are cordially invited to attend an Extraordinary General Meeting of
Shareholders, which will be held as described hereunder.
If you are unable to attend the meeting, please review the reference materials
contained herein and exercise your voting rights either by returning to us by
mail the enclosed voting form or via the Internet. Please exercise your voting
right by Wednesday, January 25, 2006.
Sincerely yours,
Kagemasa Kozuki
President and Representative Director
KONAMI CORPORATION
4-1, Marunouchi 2-chome, Chiyoda-ku, Tokyo 100-6330
MEETING AGENDA
1. Date and Time: 10:00 a.m., Thursday, January 26, 2006
2. Venue: 'Arena' of Konami Sports Corporation, 10-1, Higashi
Shinagawa 4-chome, Shinagawa-ku, Tokyo
3. Agenda: Proposals
Proposal 1: To approve Share Exchange Agreement concluded
between Konami Corporation and Konami Sports Corporation:
For details about the proposal, please refer to ' Reference
Materials Concerning the Exercise of Voting Rights' on pages
3 to 35.
Proposal 2: To approve Plan for Corporate Split:
For details about the proposal, please refer to 'Reference
Materials Concerning the Exercise of Voting Rights' on pages
36 to 54.
Proposal 3: Amendments to the Articles of Incorporation:
For details about the proposal, please refer to 'Reference
Materials Concerning the Exercise of Voting Rights' on pages
55 to 56.
* If attending the meeting, please hand in the voting form enclosed with these
materials to the receptionist at the Meeting.
(This is an English translation provided for your reference and convenience.)
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, January 25, 2006.
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, January 25, 2006. 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.)
Reference Materials Concerning the Exercise of Voting Rights
1. Number of Voting Rights Held by All Shareholders: 1,298,498
2. Agenda and Reference Matters
Proposal No. 1: To approve Share Exchange Agreement concluded between Konami
Corporation and Konami Sports Corporation
1. Reasons for Share Exchange
Assuming that the merger under the merger agreement dated January 5, 2006 in
which Konami Sports Corporation is to be the surviving entity and Konami Sports
Life Corporation is to be the dissolving entity becomes effective, the Company
and Konami Sports Corporation (hereinafter referred to as 'Konami Sports') have
agreed that the Company will become the wholly-owning parent company of Konami
Sports and Konami Sports will become the wholly-owned subsidiary of the Company
through a share exchange effective on March 1, 2006. Eventually, the two
companies entered into a share exchange agreement effective on January 5, 2006.
It is specified in the agreement that the share exchange shall be made at a
ratio of 1.0: 0.79 (one share of the Company for every 0.79 share of Konami
Sports).
With the advent of aging society, people are increasingly interested in the
pursuit of health and, as a trend, their needs against health-related services
are expected to be diversified. From the view point of coping quickly with the
change of times, we have come to a conclusion that it would be the best solution
for us to make Konami Sports, which is engaged in the operation of fitness
clubs, distribution of health-related devices and provision of health-related
services, our wholly-owned subsidiary by way of share exchange if and after the
Merger is consummated. The Company believes that such measure will enable its
management to be with appropriate allotment of resources and speedy
determination, eventually making shareholder value of the Company to further
increase.
In this light, we sincerely request our shareholders to understand the
purpose of the share exchange and give approval to the share exchange agreement.
2. Contents of the Share Exchange Agreement
Share Exchange Agreement (Copy)
Konami Corporation (hereinafter referred to as 'Konami') and Konami Sports
Corporation (hereinafter referred to as 'Konami Sports') hereby enter into a
share exchange agreement (such agreement hereinafter referred to as the
'Contract' and, if reduced to any form of instrument, the 'Agreement') under the
following terms and conditions.
Article 1. (Share Exchange)
Konami and Konami Sports shall engage in the Share Exchange where Konami will
become the wholly-owning parent company of Konami Sports and Konami Sports will
become the wholly-owned subsidiary of Konami.
Article 2. (Shares Issued and Allotted upon the Share Exchange)
1. Konami shall, in addition to its treasury stock of 5,874,833 shares,
issue 4,024,078 common shares making the total number of common stock to be
allotted by Konami to Konami Sport's shareholders 9,898,911 shares. By using
such shares, Konami will allot its 0.79 common shares in exchange for each one
(1) common share of Konami Sports to Konami Sport's shareholders (including
beneficial shareholders and hereinafter the same) who are listed or registered
in the final register of shareholders (including register of beneficial
shareholders and hereinafter the same) of Konami Sports as of the day
immediately preceding the day when the Share Exchange was executed; provided,
that no such allotment will be made concerning Konami Sport's 15,760,500 shares
of common stock held by Konami as of the day immediately preceding the day when
the Share Exchange was executed.
2. The calculation of the profit dividend payable on common stock allotted
by Konami to Konami Sport's shareholders pursuant paragraph 1 hereof shall
commence on October 1, 2005.
Article 3. (Cash Consideration for the Share Exchange)
No cash consideration shall be distributed by Konami in connection with the
Share Exchange.
Article 4. (Increase in Common Stock and Capital Reserve)
The amount of common stock and capital reserve of Konami to be increased upon
the Share Exchange shall be as follows:
(1) Amount of common stock to be increased: None.
(2) Amount of capital reserve to be increased:
An amount obtained by subtracting the sum of book value of Konami's common
shares to be allotted to Konami Sport's shareholders in accordance with Article
2, paragraph 1 hereof from the amount obtained by multiplying Konami Sport's net
assets on the day of the share exchange by the ratio of the Konami Sport's
shares to be transferred to Konami through the share exchange to the total
number of outstanding shares of Konami Sports.
Article 5. (Succession of Stock Subscription Rights)
Konami shall, as set forth below, succeed the obligations of Konami Sports
concerning stock subscription rights in the number of 12,200 which were, as the
first round of issuance, issued by Konami Sports effective on July 30, 2004
pursuant to a resolution adopted at Konami Sport's ordinary general shareholders
meeting held on June 23, 2004:
(1) Class and number of shares to be issued upon the exercise of stock
subscription rights:
Class of shares: Common stock of Konami
Number of shares: 963,800 shares (79 common stock of Konami will be allotted in
exchange for each one (1) stock subscription right)
(2) Amount to be paid in upon the exercise of each stock subscription right:
The amount to be paid in upon the exercise of each stock subscription right
shall be an amount obtained by multiplying the amount to be paid in for each
share issued or transferred upon the exercise of each stock subscription right
(hereinafter referred to as the 'Exercise Amount') by the number of shares to be
issued upon the exercise of stock subscription rights. The amount to be paid in
for each share shall be 3,133 yen.
(3) Stock subscription right exercise period:
From July 1, 2006 to June 30, 2009.
(4) Terms and conditions of the exercise of stock subscription rights:
No partial exercise of stock subscription rights shall be allowed.
(5) Events and conditions to cancel stock subscription rights:
Konami may at any time cancel the unexercised stock subscription rights obtained
and held by Konami without consideration.
(6) Restriction on a transfer of stock subscription rights:
Any transfer of stock subscription rights shall be subject to the approval of
the Board of Directors of Konami.
(7) Others:
Other details not specified above-such as the number of stocks subject
to the stock subscription rights, adjustments in amounts to be paid in upon the
exercise of each right, etc.-are pursuant to Konami Sport's issuance
guideline.
Article 6. (General Shareholders Meeting for the Approval of the Share Exchange)
Konami and Konami Sports shall each convene their respective general
shareholders meeting on January 26, 2006 (hereinafter referred to as the
'General Shareholders Meeting for the Approval of the Share Exchange') to ask
for the approval of this Agreement and for resolutions on matters necessary
thereto; provided, however, that such date may be changed through consultation
between Konami and Konami Sports where necessary in light of the proceeding on
share exchange procedures or for any other reason.
Article 7. (Effective Date of the Share Exchange)
The date on which the Share Exchange should be consummated shall be March 1,
2006; provided, however, that such date may be changed through consultation
between Konami and Konami Sports where necessary in light of the proceeding of
share exchange procedures or for any other reason.
Article 8. (Submission of Share Certificates of Konami Sports)
In executing the Share Exchange, any and all share certificates that represent
Konami Sport's share shall be submitted to Konami Sports by the day immediately
preceding the day when the share exchange is consummated.
Article 9. (Management of Corporate Assets)
During the period from the date of the execution of this Agreement up to the
Share Exchange Date, Konami and Konami Sports shall execute their business
operations and manage and operate their properties with the due diligence of a
good manager and no action that may have any material effect on their respective
properties or rights and obligations shall be taken, without prior consultation
and agreement between the Parties.
Article 10. (Term of Office of the Corporate Auditors of Konami Who Took Office
before the Share Exchange)
The term of office of corporate auditors of Konami who took office prior to the
Share Exchange shall not be affected by the Share Exchange, and they shall
remain in office for the respective term stipulated at their inauguration.
Article 11. (Amendment of the Terms and Conditions of the Share Exchange and
Termination of the Agreement)
In case there shall be any material change in the financial conditions or
operational conditions of Konami or Konami Sports or any event that materially
impair the ability of the Parties to consummate the Share Exchange during the
period from the date of execution of this Agreement up to the Share Exchange
Date, Konami or Konami Sports may through consultation amend the terms and
conditions of the Share Exchange or terminate this Agreement.
Article 12. (Merger of Konami Sports and Corporate Split of Konami)
1. The Share Exchange set forth under the Contract shall be conditional
upon the effectuation of the Merger Agreement on February 28, 2006 as specified
in Exhibit 1, in which Konami Sports is to be the surviving entity and Konami
Sports Life Corporation is to be the dissolving entity, and should the Merger
Agreement fail to become effective on that day, the Share Exchange shall be
terminated.
2. Konami Sports shall, in accordance with the Plan for Corporate Split as
specified in Exhibit 2, adopt a resolution at its general shareholders meeting
to the effect that a type of corporate split 'Bunshagata Shinsetsu Bunkatsu, '
under which Konami Digital Entertainment Co., Ltd., a newly incorporated
subsidiary, will succeed digital entertainment business of Konami, will be
executed effective on the Split Date (March 31, 2006).
Article 13. (Effect of the Agreement)
If any approval at the General Shareholders Meeting for the Approval of the
Share Exchange of both Konami and Konami Sports as set forth in Article 6 hereof
or of competent government authorities as set forth in any applicable laws and
regulations necessary to fulfil the Contract is failed to obtain, the Agreement
shall become null and void.
Article 14. (Matters not Specified in the Contract)
Any matter necessary for the Share Exchange other than as specified in the
Agreement shall be determined through consultation between Konami and Konami
Sports in accordance with the purpose hereof.
IN WITNESS WHEREOF, Konami and Konami Sports have affixed their respective
signatures and seals to execute this Agreement in duplicate, keeping one copy
each.
January 5, 2006
Konami
By: Kagemasa Kozuki (Seal)
Title: Representative Director of Konami Corporation
Address of the Corporation:
4-1, Marunouchi 2-chome, Chiyoda-ku, Tokyo, Japan
Konami Sports
By: Toshimitsu Oishi (Seal)
Title: Representative Director of Konami Sports Corporation
Address of the Corporation:
10-1, Higashi-Shinagawa 4-chome, Shinagawa-ku, Tokyo, Japan
Exhibit 1: Merger Agreement
Merger Agreement
Konami Sports Corporation (hereinafter referred to as 'Konami Sports') and
Konami Sports Life Corporation (hereinafter referred to as 'Konami Sports Life')
hereby enter into a merger agreement (hereinafter referred to as the 'Merger
Agreement') under the following terms and conditions.
Article 1. (Method of Merger)
Konami Sports and Konami Sports Life shall engage in a merger where Konami
Sports is the surviving entity and Konami Sports Life is the dissolving entity.
Article 2. (Merger Date)
The date of merger shall be February 28, 2006 (the 'Merger Date'); provided,
however, that such date may be changed through consultation between Konami
Sports and Konami Sports Life where necessary in light of the status of the
merger procedures or for any other reason.
Article 3. (Shares Issued and Allotted upon Merger)
1. Upon the Merger, Konami Sports shall allot to the shareholders listed
or registered on the final register of shareholders of each of Konami Sports
Life as of the date immediately preceding the Merger Date 3.99 common stock of
Konami Sports per share of common stock of Konami Sports Life.
2. Konami Sports shall, in exchange for the issuance of new shares, add
common stock of 15,457,741 shares that it may succeed from Konami Sports Life
through the Merger to its treasury stock of 302,759 shares, making the total
number of common stock to be transferred to Konami Sports Life's shareholders
15,760,500 shares.
Article 4. (Increase in Common Stock and Capital Reserve)
1. The amounts of common stock, capital reserve, legal reserve, voluntary
reserve and other retained earnings of Konami Sports to be increased upon the
Merger shall be as follows; provided, however, such amounts may be changed
through consultation between Konami Sports and Konami Sports Life, depending on
the position of assets and liabilities of Konami Sports Life as of the Merger
Date:
(1) Common stock to be increased:
None.
(2) Capital reserve to be increased:
An amount obtained by subtracting the amounts specified in items 3 and 4 of this
paragraph from the amount obtained by subtracting the total of the amount of
liabilities succeeded from Konami Sports Life and of treasury stock to be
transferred to Konami Sports Life's shareholders in exchange for the issuance of
new shares from the amount of properties succeeded from Konami Sports Life
(hereinafter referred to as the 'Gain on the Merger'), if the Gain on the Merger
exceeds the amounts specified in items 3 and 4 of this paragraph.
(3) Legal reserve to be increased:
The amount of the legal reserve of Konami Sports Life as of the Merger Date.
(4) Voluntary reserve and other retained earnings to be increased:
The total amount of the voluntary reserves and other retained earnings of Konami
Sports Life as of the Merger Date; provided, however, the amounts to be
allocated to various capital accounts shall be determined through consultation
between Konami Sports and Konami Sports Life.
2. If the Gain on the Merger does not reach the total of the amounts
specified in Items (3) and (4) in paragraph 1 hereof, the amount of increase
will be deducted, first from Item (4) and then from Item (3) down to the amount
of the Gain on the Merger.
Article 5. (General Shareholders Meeting for the Approval of the Merger)
Konami Sports and Konami Sports Life shall each convene their respective general
shareholders meetings for the approval of the Merger (hereinafter referred to as
the 'General Shareholders Meeting for the Approval of the Merger') on January
26, 2006 to ask for the approval of the Merger Agreement and for resolution on
matters necessary thereto; provided, however, that such date may be changed
through consultation between the Parties where necessary in light of the
proceeding of merger procedures or for any other reason.
Article 6. (Changes in the Articles of Incorporation)
Upon the Merger, Konami Sports shall add following changes to its Articles of
Incorporation (amendments shown by underlines), which shall come into force
effective on the Merger Date.
Before Amendment After Amendment
Article 2. (Purpose) Article 2 (Purpose)
The purpose of the Corporation shall be to engage in The purpose of the Corporation shall be to engage in
the following business activities: the following business activities:
24. Manufacture, processing, sale and import and export 24. Manufacture, processing, sale and import and export
of cosmetics, pharmaceuticals, quasi-pharmaceuticals, of food stuffs, cosmetics, pharmaceuticals,
-----------
health appliances and medical equipment; quasi-pharmaceuticals, health appliances and medical
equipment;
Article 7. (Succession of Corporate Assets)
As of the Merger Date, Konami Sports Life shall transfer to Konami Sports and
Konami Sports shall succeed from Konami Sports Life any and all assets,
liabilities, rights and obligations based on the balance sheets and other
accountings as of September 30, 2005, after making adjustments for the period up
to the Merger Date.
Article 8. (Dividend Calculation Commencement Day)
The calculation of the profit dividend payable on shares to be transferred from
Konami Sports to Konami Sports Life's shareholders pursuant to Article 3 shall
commence on October 1, 2005.
Article 9. (Cash Consideration for Merger)
No cash consideration shall be distributed by Konami Sports in connection with
the Merger.
Article 10. (Management of Corporate Assets)
During the period from the date of the execution of the Merger Agreement up to
the Merger Date, Konami Sports and Konami Sports Life shall execute their
business operations and manage and operate their properties with the due
diligence of a good manager and no action that may have any material effect on
their respective properties or rights and obligations shall be taken, without
prior consultation and agreement between the Parties.
Article 11. (Treatment of Employees)
Effective from the Merger Date, all employees of Konami Sports Life as of that
Date shall become employees of Konami Sports. The length of service for Konami
Sports Life shall be regarded as the length of service for Konami Sports. Other
working conditions shall be determined through consultation between the Parties.
Article 12. (Term of Office of Konami Sport's Corporate Auditors Who Took Office
Prior to the Merger)
The term of office of Konami Sport's corporate auditors who took office prior to
the Merger shall not be affected by the Merger, and they shall remain in office
for the respective term stipulated at their inauguration.
Article 13. (Cost of Dissolution)
Any cost or expense that may incur on or after the Merger Date for the
dissolution of Konami Sports Life shall be borne by Konami Sports.
Article 14. (Amendment to the terms and conditions of Merger and termination of
the Agreement)
In case there shall be any material change in the financial conditions or
operational conditions of Konami Sports or Konami Sports Life or any event that
materially impair the ability of the Parties to consummate the Merger during the
period from the date of execution of the Merger Agreement up to the Merger Date,
Konami Sports or Konami Sports Life may through consultation amend the terms and
conditions of the Merger or terminate the Merger Agreement.
Article 15. (Share Exchange between Konami Sports and Konami Corporation and
Corporate Split of Konami Corporation)
1. Assuming that the Merger comes into force, Konami Sports shall execute
a share exchange with Konami Corporation, in which Konami Corporation shall
pursuant to Appendix 1 'Share Exchange Agreement' become the wholly-owning
parent company of Konami Sports and Konami Sports shall become the wholly-owned
subsidiary of Konami Corporation effective on March 1, 2006; provided, however,
that such share exchange shall be conditional upon the approval at general
shareholders meetings of Konami Sports and Konami Corporation.
2. In accordance with the Plan for Corporate Split as specified in
Appendix 2, Konami Corporation has a plan to execute corporate split effective
on March 31, 2006, under which Konami Digital Entertainment Co., Ltd., a newly
incorporated subsidiary, will succeed digital entertainment business of Konami
Corporation.
Article 16. (Effect of the Agreement)
If any approval at the General Shareholders Meeting for the Approval of the
Merger of both Konami Sports and Konami Sports Life as set forth in Article 5
hereof or of competent government authorities as set forth in any applicable
laws and regulations necessary to fulfil the Merger Agreement is failed to
obtain, this Agreement shall become null and void.
Article 17. (Consultation)
Any matter necessary for the Merger other than as specified in the Merger
Agreement shall be determined through consultation between Konami Sports and
Konami Sports Life in accordance with the purpose of the Merger Agreement.
IN WITNESS WHEREOF, Konami Sports and Konami Sports Life have affixed their
respective signatures and seals to execute this Agreement in duplicate, keeping
one copy each.
January 5, 2006
Konami Sports
By: Toshimitsu Oishi
Title: Representative Director of Konami Sports Corporation
Address of the Corporation:
10-1, Higashi-Shinagawa 4-chome, Shinagawa-ku, Tokyo, Japan
Konami Sports Life
By: Tomiaki Tanaka
Title: Representative Director of Konami Sports & Life Co., Ltd.
Address of the Corporation:
10-27, Higashi-Shinagawa 4-chome, Shinagawa-ku, Tokyo, Japan
Appendix 1: Share Exchange Agreement:
As described in pages 3 to 7, in the section of Reference Materials Concerning
the Exercise of Voting Rights.
Appendix 2: Plan for Corporate Split:
As described in pages 36 to 39, in the section of Reference Materials Concerning
the Exercise of Voting Rights.
Exhibit 2: Plan for Corporate Split:
As described in pages 36 to 39, in the section of Reference Materials Concerning
the Exercise of Voting Rights.
3. A Paper Documents Stating the Reasons for Share Allotment as Provided for in
Article 354, Paragraph 1, Item 2 of the Commercial Code
Statements of Reasons for the Calculation of Share Exchange Ratio
(1) Request for the Calculation of the Share Exchange Ratio to a
Third-party Organization
Prior to the execution of the Share Exchange, Konami Corporation (hereinafter
referred to as 'Konami') and Konami Sports Corporation (hereinafter referred to
as 'Konami Sports'), in order to ensure fairness and appropriateness, asked
Nikko Cordial Securities Inc. (hereinafter referred to as 'Nikko Cordial
Securities') as a neutral third-party organization to calculate the share
exchange ratio.
(2) Method and Ground of the Calculation of the Share Exchange Ratio by the
Third-party Organization
Nikko Cordial Securities performed an analysis and evaluated share values of
each of Konami and Konami Sports using the market share price method and
discounted cash flow method (DCF), and calculated the potential range of share
exchange ratio taking into account the overall results of the evaluation of each
method and submitted the results to Konami and Konami Sports.
(3) Examination of the Share Exchange Ratio
Konami and Konami Sports examined the proposal for the potential share exchange
ratio submitted by Nikko Cordial Securities. Finding that the suggested method
and ground of the calculation are reasonable, Konami and Konami Sports continued
discussion based on the proposal.
(4) The Share Exchange Ratio
In light of the above background, Konami and Konami Sports each adopted a
resolution at respective Board of Directors meeting held on January 5, 2006 to
enter into a share exchange agreement, which includes a provision to set the
following share exchange ratio within the range of ratio suggested by Nikko
Cordial Securities.
Name of Company Konami Konami Sports
Share Exchange Ratio 1 0.79
4. A Paper Documents Stating the Reasons for the Succession of Obligations
Concerning Stock Acquisition Rights Issue by a Company Becoming a Wholly-Owned
Subsidiary as Provided for in Article 354, Paragraph 1, Item 2 (2) of the
Commercial Code
Statement of Reasons for the Succession of Obligations Concerning Stock
Acquisition Rights Issue by a Company Becoming a Wholly-Owned Subsidiary
Konami Corporation (hereinafter referred to as 'Konami') has a plan that it will
become the wholly-owning parent company of Konami Sports Corporation
(hereinafter referred to as 'Konami Sports') which will become the wholly-owned
subsidiary of Konami by way of a share exchange that will take effect on March
1, 2006.
Based on a resolution adopted at its ordinary general shareholders meeting
held on June 23, 2004, Konami Sports, as the first round of issuance, issued
12,200 stock acquisition rights (hereinafter referred to as the 'First Round of
Stock Acquisition Rights'). In this relation, we are of the view that in order
to maximize its corporate value, it is indispensable for Konami Sports to
increase the motivation and bolster the morale of officers and employees of
Konami Sports by endorsing the stock acquisition rights it has issued. Due to
such reason, Konami determined that it will succeed obligations concerning the
First Round of Stock Acquisition Rights as shown below.
Matters Concerning the Succession of the First Round of Stock Acquisition Rights
(1) Class and number of shares to be issued upon the exercise of stock
acquisition rights:
Class of shares: Common stock of Konami
Number of shares: 963,800 shares (79 common stock of Konami will be allotted in
exchange for each one (1) stock acquisition right)
(2) Amount to be paid in upon the exercise of each stock acquisition right:
The amount to be paid in upon the exercise of each stock acquisition right shall
be an amount obtained by multiplying the amount to be paid in for each share
issued or transferred upon the exercise of each stock acquisition right
(hereinafter referred to as the 'Exercise Amount') by the number of shares to be
issued upon the exercise of stock acquisition rights. The amount to be paid in
for each share shall be 3,133 yen.
(3) Stock acquisition right exercise period:
From July 1, 2006 to June 30, 2009.
(4) Terms and conditions of the exercise of stock acquisition rights:
No partial exercise of stock acquisition rights shall be allowed.
(5) Events and conditions to cancel stock acquisition rights:
Konami may at any time cancel the unexercised stock acquisition rights obtained
and held by Konami without consideration.
(6) Restriction on a transfer of stock acquisition rights:
Any transfer of stock acquisition rights shall be subject to the approval of the
Board of Directors of Konami.
(7) Others:
Other details not specified above-such as the number of stocks subject
to the stock acquisition rights, adjustments in amounts to be paid in upon the
exercise of each right, etc.-are all pursuant to Konami Sports' issuance
guideline.
5. Balance sheets and statements of operations of the companies involved in the
share exchange pursuant to Items 3 to 6, Paragraph 1, Article 354 of the
Commercial Code of Japan
(1) Balance sheets and statements of operations prepared six months before
this extraordinary general shareholders meeting
Konami Corporation
Non-consolidated Balance Sheet
As of September 30, 2005
(Millions of yen)
ASSETS LIABILITIES
Current Assets: Current Liabilities:
Cash and cash equivalents Y57,773 Trade notes payable Y1,448
Trade notes receivable 1 Trade accounts payable 8,710
Trade accounts receivable 12,207 Current portion of long-term debt 2,152
Inventories 13,061 Current portion of long-term bonds 15,000
Other 16,711 Income taxes payable 573
Allowance for doubtful accounts (16) Other 7,236
Total current assets 99,738 Total current liabilities 35,120
Fixed Assets: Long-Term Liabilities:
Tangible fixed assets 3,709 Straight bonds 15,000
Intangible fixed assets 11,767 Long-term debt 2,276
Investments and other assets 88,001 Allowance for directors' retirement 1,332
Investment securities 80,654 benefits
Other 7,446 Long-term deposits received 2
Allowance for doubtful accounts (98) Total long-term liabilities 18,610
Total fixed assets 103,478 Total Liabilities 53,730
STOCKHOLDERS' EQUITY:
Common Stock 47,398
Additional paid-in capital 60,236
Retained earnings 70,018
Legal reserve 206
Voluntary earned surplus 34,094
Unappropriated earned surplus 35,716
Net unrealized gains on
available-for-sale securities 1
Treasury Stock (28,168)
Total stockholders' equity 149,486
TOTAL ASSETS Y203,217 TOTAL LIABILITIES AND STOCKHOLDERS' Y203,217
EQUITY
See accompanying notes to non-consolidated financial statements.
Konami Corporation
Non-consolidated Statement of Operations
Six months ended September 30, 2005
(Millions of yen)
Net revenues Y51,016
Cost of revenues 33,041
Gross profit 17,975
Selling, general and administrative expenses 12,795
Operating income 5,179
Non-operating income 4,505
Non-operating expenses 276
Ordinary income 9,408
Extraordinary income 5,788
Extraordinary losses 25
Income before income taxes 15,172
Income taxes:
Current 697
Deferred 3,277
Total income taxes 3,974
Net income 11,197
Unappropriated earned surplus carried forward 7,710
Received undistributed profit from merger 16,808
Unappropriated earned surplus Y35,716
See accompanying notes to non-consolidated financial statements.
Summary of Significant Accounting Policies
1. Methods and Standards for the Valuation of Assets
(1) Marketable and Investment Securities
Investments in subsidiaries and affiliated companies and other securities for
which the market value is not readily determinable are stated at cost based on
the moving average method.
Other securities for which the market value is determinable are stated at market
value as of the balance sheet date. (Unrealized gains and losses on those
securities are reported in the stockholders' equity and the cost of securities
sold is determined by the moving average method.)
(2) Derivative Financial Instruments
Derivative financial instruments are stated at market value.
(3) Inventories
Inventories other than work in process are stated at cost determined by the
moving average method.
Work in process consisting of hardware products is stated at cost determined by
the moving average method, while work in process consisting of software products
is stated at cost determined by the specific identification method.
2. Depreciation Methods
Tangible fixed assets are depreciated using the declining balance method.
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. Provisions
(1) Allowance for doubtful accounts
Generally, allowance for doubtful accounts is calculated based on the actual
ratio of bad debt losses incurred. For specific accounts with higher possibility
of bad debt loss, the allowance is determined by independent judgment.
(2) Allowance for employees' retirement benefits (prepaid pension expense)
Allowance for retirement benefits to be paid to employees as of balance sheet
date is calculated based on the estimated amount of the projected benefit
obligation and the plan assets at the fiscal year-end.
Unrecognized net transition asset or obligation is amortized over 13 years.
Unrecognized actuarial net gain or loss will be amortized from the following
fiscal year within the average remaining service period of 8 years on a
straight-line basis.
(3) Allowance for directors' retirement benefits
Required amount for retirement benefits to be paid to directors as of balance
sheet date is reserved as liability.
4. Foreign Currency Translation
Monetary assets and liabilities denominated in foreign currencies are translated
at the current exchange rates as of the balance sheet date, and the translation
gains and losses are credited or charged to income.
5. Leases
Finance leases other than those that deem to transfer ownership of the leased
property to the lessee are accounted for as operating lease transactions.
6. Accounting Standard for Impairment of Fixed Assets
Since the interim fiscal period, the Company adopts the accounting standard for
impairment of fixed assets (the statement of position regarding the accounting
standard for impairment of fixed assets; compiled by Business Accounting Council
on August 9, 2002) and the policy for accounting standard for impairment of
fixed assets (the policy to apply corporate accounting standards No. 6, August
31, 2003). The effects on income/loss due to this change are insignificant.
7. Other Significant Matters
Consumption Tax: Consumption tax is excluded from the stated amount of revenue
and expenses.
Notes to Non-consolidated Financial Statements
(Notes to Balance Sheet)
1. Net amount of consumption tax payable and consumption tax to be
refunded at September 30, 2005, is included in 'Other' of current assets.
2. Accumulated depreciation of tangible fixed assets is as follows: Y5,734
million
3. The Company guarantees subsidiaries' loans payable to financial
institutions as follows:
Konami Software Shanghai, Inc. (Y97 million (US$863,000))
4. Number of shares issued for the six months ended September 30, 2005
Reason for Issue: Merger
Issued date: April 1, 2005
Number of shares issued: 10,794,142 shares
Issued price: -
Total capitalized amount: -
(Notes to Statement of Operations)
1. Non-operating income mainly consists of the following:
Interest income: Y29 million
Dividend income: Y4,394 million
Foreign exchange gains: Y4 million
2. Non-operating expenses mainly consist of the following:
Bond interest expenses: Y200 million
3. Extraordinary income mainly consists of the following:
Gains due to sell-off of affiliates' stocks: Y5,555 million
4. Extraordinary losses mainly consist of the following:
Loss on sale and disposal of fixed assets: Y25 million
5. Depreciation expense is as follows:
Tangible fixed assets: Y634 million
Intangible fixed assets: Y1,352 million
Konami Sports Corporation
Non-consolidated Balance Sheet
As of September 30, 2005
(Millions of yen)
ASSETS LIABILITIES
Current Assets: Current Liabilities:
Cash and cash equivalents Y328 Trade notes payable Y109
Trade accounts receivable 1,658 Trade accounts payable 581
Inventories 1,141 Short-term borrowings 7,490
Other 4,040 Other accounts payable 3,021
Allowance for doubtful accounts (35) Income taxes payable 227
Total current assets 7,133 Advances received 5,637
Allowance for bonuses 484
Fixed Assets: Other 2,662
Tangible fixed assets 15,312 Total current liabilities 20,215
Intangible fixed assets 1,329
Investments and other assets 24,944 Long-Term Liabilities:
Affiliated company shares 371 Straight bonds 15,000
Long-term lease deposits 20,578 Long-term debt of affiliates 150
Other 3,994 Allowance for employees' retirement
Allowance for doubtful accounts 0 benefits 1,258
Allowance for directors' retirement
Total fixed assets 41,586 benefits 12
Other 714
Total long-term liabilities 17,135
Total Liabilities (37,351)
STOCKHOLDERS EQUITY:
Common Stock 5,040
Additional paid-in capital 6,549
Retained earnings 7,782
Voluntary earned surplus 6,743
Unappropriated earned surplus 1,039
Net unrealized gains on other
securities 80
Treasury Stock (8,085)
Total Stockholders' Equity (11,368)
TOTAL ASSETS Y48,719 TOTAL LIABILITIES AND STOCKHOLDERS' Y48,719
EQUITY
See accompanying notes to non-consolidated financial statements.
Konami Sports Corporation
Non-consolidated Statement of Operations
Six months ended September 30, 2005
(Millions of yen)
Net revenues Y39,946
Cost of revenues 36,720
Selling, general and administrative expenses 2,262
Operating income 963
Non-operating income 36
Non-operating expenses 166
Ordinary income 833
Extraordinary losses 133
Income before income taxes 700
Income taxes:
Current 111
Deferred 287
Net income 301
Unappropriated earned surplus carried forward 737
Unappropriated earned surplus Y1,039
See accompanying notes to non-consolidated financial statements.
Summary of Significant Accounting Policies
1. Methods and Standards for the Valuation of Assets
(1) Marketable and Investment Securities
Investments in subsidiaries and other securities for which the market value is
not readily determinable are stated at cost based on the moving average method.
Other securities for which the market value is determinable are stated at market
value as of the balance sheet date. (Unrealized gains and losses on those
securities are reported in the stockholders' equity and the cost of securities
sold is determined by the moving average method.)
(2) Inventories
Merchandise: Stated at cost based on the moving average method.
(Change in accounting policies)
The Company has changed the method for the evaluation of merchandise from the
one stated at cost based on the specific identification method to the one stated
at cost based on the moving average method. This change is intended to enable
the Company to promptly make managerial decisions by speedily determining
monthly profits/losses and period profits/losses, with the launch of a new
integrated mission critical system. The change has little effect on financial
statements for the first half of the fiscal half-year under review.
Supplies: Stated at the last purchase cost.
2. Depreciation Methods for Fixed Assets
(1) Tangible fixed assets are depreciated using the declining balance method,
while buildings (excluding fixtures) acquired after April 1, 1998 are
depreciated using the straight-line method. The estimated useful lives are as
follows:
Buildings: 8-50 years; Others: 2-50 years
(2) 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. Provisions
(1) Allowance for doubtful accounts
Generally, allowance for doubtful accounts is calculated based on the actual
ratio of bad debt losses incurred. For specific accounts with higher possibility
of bad debt loss, the allowance is determined by independent judgment.
(2) Allowance for bonuses
Provided for the payment of bonuses to employees by the estimated amount of
payment.
(3) Allowance for employees' retirement benefits
Allowance for retirement benefits to be paid to employees as of balance sheet
date is calculated based on the estimated amount of the projected benefit
obligation and the plan assets at the fiscal year-end.
Unrecognized actuarial net gain or loss will be amortized from the following
fiscal year within the average remaining service period of 12 years on a
straight-line basis.
(4) Allowance for directors' retirement benefits
Required amount for retirement benefits to be paid to directors as of balance
sheet date is reserved as liability.
4. Leases
Finance leases other than those that deem to transfer ownership of the leased
property to the lessee are accounted for as operating lease transactions.
5. Other Significant Matters
Consumption Tax: Consumption tax is excluded from the stated amount of revenue
and expenses.
6. Tax Effect Accounting
Tax amounts and income taxes for this interim fiscal period are calculated
assuming to reverse extraordinary reserves for depreciation of specified
telecommunication equipment in the form of planned appropriation of surplus in
the fiscal year under review.
Notes to Non-consolidated Financial Statements
(Notes to Balance Sheet)
1. Accumulated depreciation of tangible fixed assets is as follows:
Y24,104 million
2. Consumption Tax
Suspense receipts and payments of consumption taxes, etc. are offset
against each other, and the net amount is posted under 'other' in the
current liabilities, due to the amount being immaterial.
3. Assets subject to lien
Investment securities: Y1 million
This amount is pledged as collateral for borrowings made by contract
companies, etc. and posted under 'other' in the investments and other
assets.
4. Amounts less than one million yen are disregarded.
(Notes to Statement of Operations)
1. Non-operating income mainly consists of the following:
Interest income: Y22 million
Dividend income: Y6 million
2. Non-operating expenses mainly consist of the following:
Interest expenses: Y23 million
Bond interest expenses: Y95 million
3. Extraordinary losses mainly consists of the following:
Loss on sale and disposal of fixed assets: Y114 million
Loss on lease cancellation: Y10 million
Others: Y8 million
4. Depreciation expense for each period is as follows:
Tangible fixed assets: Y927 million
Intangible fixed assets: Y56 million
5. Net income per share: Y12.50
6. Amounts less than one million yen are disregarded.
(2) Final balance sheets and statements of operations
Konami Corporation
Non-consolidated Balance Sheet
As of March 31, 2005
(Millions of yen)
ASSETS LIABILITIES
Current Assets: Current Liabilities:
Cash and cash equivalents Y37,121 Trade notes payable Y5,662
Trade accounts receivable 18,233 Trade accounts payable 8,589
Finished products 2,846 Short-term borrowings (bonds) 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 assets 9,719 Short-term deposits received 136
Short-term loans 3,192 Other 173
Other accounts receivable 1,244 Total current liabilities 41,008
Other 567
Allowance for doubtful accounts (199) Long-Term Liabilities:
Total current assets 79,904 Straight bonds 30,000
Long-term debt 3,972
Fixed Assets: Liability for directors' retirement
benefits 1,354
Tangible fixed assets Long-term deposits received 41
Building improvement 356 Total long-term liabilities 35,367
Structures 1 Total Liabilities (76,375)
Machinery 0
Transportation equipment 3
Tools and fixtures 1,596
Construction in process 27 STOCKHOLDERS' EQUITY:
Total tangible fixed assets 1,986 Common stock 47,398
Intangible fixed assets Additional paid-in capital 47,106
In-house software 5,899 Retained earnings 45,188
In-house software development in Voluntary earned surplus 29,094
progress 5,427 General reserve 29,094
Other 5 Unappropriated earned surplus 16,093
Total intangible fixed assets 11,332 Net unrealized gains on
Investments and other assets available-for-sale securities 0
Investment securities 360 Treasury stock (28,271)
Investments in subsidiaries and
affiliates 87,318
Long-term loans 1,496
Receivables from customers in
bankruptcy proceedings 98
Long-term prepaid expenses 61
Deferred tax assets 2,380
Lease deposits 2,459
Other 511
Allowance for doubtful accounts (111)
Total investments and other assets 94,574
Total fixed assets 107,894 Total Stockholders' Equity 111,423
TOTAL ASSETS Y187,798 TOTAL LIABILITIES AND STOCKHOLDERS' Y187,798
EQUITY
See accompanying notes to non-consolidated financial statements.
Konami Corporation
Non-consolidated Statement of Operations
For the fiscal year ended March 31, 2005
(Millions of yen)
Net revenues Y134,117
Cost of revenues 107,121
Finished goods, beginning of year 4,287
Purchases 19,560
Cost of goods manufactured 76,514
Less:
Transfer to other accounts (104)
Finished goods, end of year (2,846)
Royalty expenses 9,711
Gross profit 26,995
Selling, general and administrative expenses 22,733
Operating income 4,261
Non-operating income 9,838
Interest income 64
Dividend income 9,418
Foreign exchange gains 245
Other 109
Non-operating expenses 652
Interest expenses 153
Bond interest expenses 400
Other 98
Ordinary income 13,447
Extraordinary income 1,722
Gain on sales of shares of affiliated companies 703
Gain on reversal of allowance for loss incurred by subsidiaries 1,019
Extraordinary losses 67
Loss on sale and disposal of fixed assets 67
Income before income taxes 15,102
Income taxes 2,308
Current 4,410
Deferred (2,102)
Net income 12,794
Unappropriated earned surplus carried forward 6,534
Interim cash dividends 3,235
Unappropriated earned surplus Y16,093
See accompanying notes to non-consolidated financial statements.
Summary of Significant Accounting Policies
1. Marketable and Investment Securities
(1) Investments in subsidiaries and other securities for which the market
value is not readily determinable are stated at cost based on the moving average
method.
Other securities for which the market value is determinable are stated at market
value as of the balance sheet date. (Unrealized gains and losses on those
securities are reported in the stockholders' equity and the cost of securities
sold is determined by the moving average method.)
(2) Derivative financial instruments
Derivative financial instruments are stated at market value.
(3) Inventories
Inventories other than work in process are stated at cost determined by the
moving average method.
Work in process consisting of hardware products is stated at cost determined by
the moving average method, while work in process consisting of software products
is stated at cost determined by the specific identification method.
2. Depreciation Methods
Tangible fixed assets are depreciated using the declining balance method.
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. Provisions
(1) Allowance for doubtful accounts
Generally, allowance for doubtful accounts is calculated based on the actual
ratio of bad debt losses incurred. For specific accounts with higher possibility
of bad debt loss, the allowance is determined by independent judgment.
(2) Allowance for employees' retirement benefits (prepaid pension expense)
Allowance for retirement benefits to be paid to employees as of balance sheet
date is calculated based on the estimated amount of the projected benefit
obligation and the plan assets at the fiscal year-end. Unrecognized net
transition asset or obligation (Y81 million) is amortized over 13 years.
Unrecognized actuarial net gain or loss will be amortized from the following
fiscal year within the average remaining service period of 8 years on a
straight-line basis.
(3) Allowance for directors' retirement benefits
Required amount for retirement benefits to be paid to directors as of balance
sheet date is reserved as liability in accordance with Article 43 of the
Enforcement Regulations of Commercial Code of Japan.
4. Leases
Finance leases other than those that deem to transfer ownership of the leased
property to the lessee are accounted for as operating lease transactions.
5. Consumption Tax
Consumption tax is excluded from the stated amount of revenue and expenses.
6. Calculation Basis
Amounts less than one million yen are disregarded.
7. Others
'The extraordinary cases of affiliates' described in Article 48 of the
Enforcement Regulations of the Commercial Code of Japan are applied.
Notes to Non-consolidated Financial Statements
(Notes to Balance Sheet)
1. Monetary assets and liabilities in relation to affiliated companies
Short-term assets: Y26,278 million
Short-term liabilities: Y4,421 million
Long-term assets: Y2,641 million
Long-term liabilities: Y39 million
2. Accumulated depreciation of tangible fixed assets is as follows: Y3,949
million
3. Significant lease assets
In addition to tangible fixed assets shown on the Balance Sheet, computers
used for R&D and production, and some office equipment are leased.
4. Number of issued and treasury stocks as follows:
Shares issued and outstanding: 128,737,566 shares (common stock)
Treasury stocks the Company holds: 9,256,155 shares (common stock)
5. Limits to dividends
Net assets evaluated in fair market value based on Article 124-3 of the
Commercial Code of Japan:
Y0 million
(Notes to Statement of Operations)
1. Non-consolidated statements of operations include inter-company
transactions as follows:
Net sales: Y133,209 million
Purchases: Y23,399 million
Selling, general and administrative expenses: Y4,454 million
Non-operating transactions: Y9,866 million
2. Net income per share: Y105.33
Konami Sports Corporation
Non-consolidated Balance Sheet
As of March 31, 2005
(Millions of yen)
ASSETS LIABILITIES
Current Assets: Current Liabilities:
Cash and cash equivalents Y837 Trade notes payable Y47
Trade notes receivable 0 Trade accounts payable 198
Trade accounts receivable 1,341 Short-term borrowings 8,800
Merchandise 843 Other accounts payable 3,121
Supplies 303 Income taxes payable 240
Prepaid expenses 1,555 Consumption tax payable 227
Deferred tax assets 1,499 Accrued expenses 1,281
Other current assets 290 Advance payments 5,047
Lease deposits to be returned within Short-term deposits received 596
one year 375 Allowance for bonuses 329
Other current assets 140 Trade notes payable for capital
Allowance for doubtful accounts (31) expenditure 529
Total current assets 7,155 Total current liabilities 20,420
Fixed Assets: Long-Term Liabilities:
Tangible fixed assets Straight bonds 15,000
Building 12,755 Long-term deposits received 760
Structures 375 Allowance for employees' retirement
benefits
Transportation equipment 1 Allowance for directors' retirement 1,304
Tools and fixtures 676 benefits 12
Land 1,728 Other long-term liabilities 20
Construction in process 17 Total long-term liabilities 17,098
Total tangible fixed assets 15,553
Intangible fixed assets Total Liabilities 37,518
Tenant rights 2,901
Facility use rights 72
In-house software 131 STOCKHOLDERS' EQUITY:
Other intangible fixed assets 473 Common stock 5,040
Total intangible fixed assets 3,578 Additional paid-in capital 6,550
Investments and other assets Retained earnings 7,861
Investment securities 140 Voluntary earned surplus 6,257
Subsidiary shares 171 Reserve for special depreciation of
Long-term loans 636 specified telecommunication equipment 57
Long-term lease deposits 19,947 General reserve 6,200
Facility leasehold in progress 495 Unappropriated earned surplus 1,603
Long-term prepaid expenses 157 Net unrealized gains on
available-for-sale securities 69
Deferred tax assets 1,110 Treasury stock (8,083)
Other investment 9
Allowance for doubtful accounts 0
Total investments and other assets 22,668
Total fixed assets 41,800 Total Stockholders' Equity 11,437
TOTAL ASSETS Y48,955 TOTAL LIABILITIES AND STOCKHOLDERS' Y48,955
EQUITY
See accompanying notes to non-consolidated financial statements.
Konami Sports Corporation
Non-consolidated Statement of Operations
For the year ended March 31, 2005
(Millions of yen)
Net revenues Y77,380
Sales from fitness services 70,919
Sales from merchandise 4,576
Other net revenue 1,884
Cost of revenues 72,967
Cost of sales 68,775
Selling, general and administrative expenses 4,192
Operating income 4,412
Non-operating income 93
Interest income and dividend income 44
Others 48
Non-operating expenses 540
Interest expenses 36
Bond interest expenses 190
Other 312
Ordinary income 3,965
Extraordinary losses 1,630
Loss on sale and disposal of fixed assets 27
Valuation loss of investment securities 10
Valuation loss of inventories 116
Loss related to reconstruction of facilities 1,239
Expenses related to brand unification 237
Income before income taxes 2,335
Income taxes
Current 163
Deferred 967
Net income 1,204
Unappropriated earned surplus carried forward 760
Interim cash dividends 362
Unappropriated earned surplus Y1,603
See accompanying notes to non-consolidated financial statements.
Summary of Significant Accounting Policies
1. Marketable and Investment Securities
(1) Investments in subsidiaries and other securities for which the market
value is not readily determinable are stated at cost based on the moving average
method.
Other securities for which the market value is determinable are stated at market
value as of the balance sheet date. (Unrealized gains and losses on those
securities are reported in the stockholders' equity and the cost of securities
sold is determined by the moving average method.)
(2) Inventories
Merchandise: Stated at cost based on the specific identification method.
Supplies: Stated at the last purchase cost.
2. Depreciation Methods
(1) Tangible fixed assets are depreciated using the declining balance method,
while buildings (excluding fixtures) acquired after April 1, 1998 are
depreciated using the straight-line method. The estimated useful lives are as
follows:
Buildings: 8-50 years; Others: 2-50 years
(2) 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 Treatment of Deferred Assets
Debenture issue expenses: Evenly amortized over the longest period specified in
the Commercial Code of Japan (3 years).
4. Provisions
(1) Allowance for doubtful accounts
Generally, allowance for doubtful accounts is calculated based on the actual
ratio of bad debt losses incurred. For specific accounts with higher possibility
of bad debt loss, the allowance is determined by independent judgment.
(2) Allowance for bonuses
Provided for the payment of bonuses to employees by the estimated amount of
payment.
(3) Allowance for employees' retirement benefits
Allowance for retirement benefits to be paid to employees as of balance sheet
date is calculated based on the estimated amount of the projected benefit
obligation and the plan assets at the fiscal year-end.
Unrecognized actuarial net gain or loss will be amortized from the following
fiscal year within the average remaining service period of 12 years on a
straight-line basis.
(4) Allowance for directors' retirement benefits
Required amount for retirement benefits to be paid to directors as of balance
sheet date is reserved as liability. This allowance is regarded as liability
stipulated in Article 43 of the Enforcement Regulations of the Commercial Code
of Japan.
5. Leases
Finance leases other than those that deem to transfer ownership of the leased
property to the lessee are accounted for as operating lease transactions.
6. Consumption Tax
Consumption tax is excluded from the stated amount of revenue and expenses.
Notes to Non-consolidated Financial Statements
(Notes to Balance Sheet)
1. Accumulated depreciation of tangible fixed assets: Y23,483 million yen
2. Short-term monetary assets in relation to the shareholder holding the
majority voting rights: Y22 million
3. Short-term monetary liabilities in relation to the shareholder holding
the majority voting rights:
Y378 million
4. Long-term monetary liabilities in relation to the shareholder holding
the majority voting rights:
Y20 million
5. Short-term monetary assets in relation to subsidiaries: Y48 million
6. Short-term monetary liabilities in relation to subsidiaries: Y735
million
7. Major leased assets:
In addition to tangible fixed assets shown on the Balance Sheet, fitness
machines, school buses, etc. are leased.
8. Fixed assets whose ownership is reserved to the sellers:
Some of buildings, etc. are purchased on installment terms and hence the
ownership is reserved to sellers. The unpaid amount is Y101 million.
9. Net assets increased by Y69 million as a result of securities being
valued at market price. However, the allocation of this amount for
dividends is restricted pursuant to Paragraph 3, Article 124 of the
Enforcement Regulations of the Commercial Code of Japan.
10. Amounts less than one million yen are disregarded.
(Notes to Statement of Operations)
1. Transactions with the shareholder holding the majority voting rights
Revenues (sales commissions, etc.): Y330 million
Operating expenses (for the purchase of merchandise, the repairs and
maintenance of facilities, etc.): Y3,659 million
Purchase amounts of fixed assets: Y28 million
2. Transactions with subsidiaries
Revenues (royalty earnings, etc.): Y235 million
Non-operating revenues (dividends received): Y5 million
Non-operating expenses (interest expenses): Y3 million
3. Net income per share: Y48.08
4. Amounts less than one million yen are disregarded.
Proposal No. 2: To approve Plan for Corporate Split
1. Reasons for Corporate Split
Ever since its establishment, the Company has expanded its business for
thirty-two years by adding every cutting-edge business one at a time. Currently,
it is composed of highly competitive three core businesses-digital
entertainment business, health & fitness business and gaming & system business.
However, with the remarkable moves toward speedier management practices
brought about by the development of information technology and increasing demand
for management transparency at a global level due to the expansion of borderless
business activities, environment around the business has changed dramatically.
In such circumstances, we have come to a conclusion that it would be the best
choice for us to adopt holding company structure in order to enhance our
corporate as well as shareholder value.
In view of this, the Company has determined that, by conducting a corporate
split ('Butteki Shinsetsu Bunkatsu') effective on March 31, 2006 under which
Konami Digital Entertainment Co., Ltd., a newly incorporated subsidiary, will
succeed digital entertainment business of the Company, it will adopt holding
company structure, in which the Company will operate multiple wholly-owned
business entities under the umbrella of a single company, including entities for
digital entertainment business, health & fitness business and gaming & system
business.
Under the new system, the Company will endeavor to achieve its main goals of
improving management transparency, building up speedy and flexible management
structure and building up complete profit responsibility structure.
We sincerely request shareholders to approve the Plan for the Corporate
Split.
The contents of the Plan for the Corporate Split are as follows:
2. Contents of the Plan for Corporate Split
Plan for Corporate Split (Copy)
Konami Corporation (hereinafter referred to as 'Party A') specifies in this Plan
for Corporate Split (hereinafter referred to as the 'Plan') a corporate split
(or 'Shinsetsu Bunkatsu' and hereinafter referred to as the 'Corporate Split '),
under which Konami Digital Entertainment Co., Ltd. (hereinafter referred to as
'Konami Digital Entertainment'), a newly incorporated subsidiary, will succeed
the digital entertainment business of Konami (hereinafter referred to as the
'Business').
1. Contents of the Articles of Incorporation of Konami Sports Life
The contents of the Articles of Incorporation of Konami Digital Entertainment
shall be as specified in Appendix 1 ('Articles of Incorporation of Konami
Digital Entertainment Co., Ltd.')
2. Date When the Corporate Split Should Be Made
The Corporate Split shall be made on March 31, 2006 (hereinafter referred to as
the 'Corporate Split Date'); provided, however, that such Date may be changed
through the resolution of the Board of Directors of Konami where necessary in
light of the proceeding of the corporate split procedures.
3. Class, Number and Allotment of Shares to be Issued by Konami Digital
Entertainment through the Corporate Split
At the execution of the Corporate Split, Konami Digital Entertainment shall
issue 520,000 shares of common stock and allot all of them to Konami.
4. Paid-in Capital and Capital Reserve
The paid-in capital and capital reserve of Konami Digital Entertainment shall be
as follows; provided, however, that they may be changed where necessary in light
of the position of assets and liabilities of Konami Digital Entertainment as of
the Corporate Split Date:
(1) Paid-in capital: Y26 billion (26,000,000,000 yen)
(2) Capital reserve: An amount of the difference between (i) the amount
obtained by subtracting the amount of liabilities of Konami Digital
Entertainment succeeded from Konami from the amount of assets of Konami Digital
Entertainment succeeded from Konami, and (ii) the amount of the paid-in capital
set forth in the immediately preceding paragraph hereof, if (i) exceeds (ii).
5. Cash Consideration for the Corporate Split
No cash consideration shall be distributed by Konami Digital Entertainment in
connection with the Corporate Split.
6. Assets and Liabilities and Rights and Obligations Konami Digital
Entertainment should Succeed
(1) Konami Sports Life shall, effective from the Corporate Split Date,
succeed assets from Konami liabilities, rights, obligations and contractual
status as specified in Appendix 2 'Details of Rights, Obligations, etc. to be
Succeeded.'
(2) As to the liabilities succeeded from Konami to Konami Digital
Entertainment by way of the Corporate Split, Konami shall, even on or after the
Corporate Split Date, remain liable jointly and severally with Konami Digital
Entertainment.
(3) As to the liabilities succeeded from Konami to Konami Digital
Entertainment by way of the Corporate Split, Konami Digital Entertainment shall,
as between Konami and Konami Digital Entertainment, solely shoulder any burden
arising from the liabilities set forth in (2) above and, should Konami be
obligated to pay or perform any liability set forth in (2) above, in whole or in
part, Konami Digital Entertainment shall immediately reimburse full amount to
Konami if claimed by Konami.
7. Name of Directors and Corporate Auditors of Konami Digital Entertainment
The directors and corporate auditors of Konami Digital Entertainment shall be:
(1) Directors:
Fumiaki Tanaka
Akira Tamai
Naoyoshi Nozu
(2) Corporate Auditors:
Nagahiro Morimoto
Noboru Onuma
Yasumasa Iwagaki
8. Name of Independent Auditor
The Independent Auditor of Konami Digital Entertainment shall be KPMG AZSA & Co.
9. Registration, Filing and Notification, etc.
If, as a result of the Corporate Split, any cost or expense including
registration fees or taxes is incurred for procedures of registration, filing or
notice required in relation to assets, liabilities, rights and obligations and
contractual status succeeded from Konami to Konami Digital Entertainment, Konami
shall solely be responsible for such expenditures.
10. Change in the Terms and Conditions of the Corporate Split
In case there shall be any material change in the financial conditions or
operational conditions of Konami due to natural disaster or any other reason
during the period from the date of production of the Plan up to the Corporate
Split Date, Konami may amend the terms and conditions of the Corporate Split or
terminate it.
11. Obligation not to Compete
Konami may, even after the Corporate Split becomes effective, engage in a
business that is competitive with the Business.
12. Matters not Specified in the Plan
Any matter necessary for the Corporate Split other than as specified in the Plan
shall be determined by Konami in accordance with the purpose thereof.
January 5, 2006
By: Kagemasa Kozuki (Seal)
Title: Representative Director of Konami Corporation
Address of the Corporation:
4-1, Marunouchi 2-chome, Chiyoda-ku, Tokyo, Japan
Appendix 1: Articles of Incorporation of Konami Digital Entertainment Co., Ltd.
(the 'Company')
Articles of Incorporation
CHAPTER I
GENERAL PROVISIONS
Article 1. (Trade Name)
The name of the Company is Kabushiki Kaisha Konami Digital Entertainment, or
'Konami Digital Entertainment Co., Ltd.' in English.
Article 2. (Purpose)
The purpose of the Company is to engage in the following businesses:
1. Research, production, manufacture and distribution of software and
hardware relating to electronic appliances and electronic components;
2. Provision and distribution of software using communications circuits;
3. Planning, production and distribution on the Internet;
4. Planning, establishment and operation of a shopping complex on the
Internet, provision of know-how thereof and correspondence sales (mail
ordering);
5. Design of character products (with images of people, animals, and such
like, that have unique names or characters);
6. Planning, manufacture and distribution of toys;
7. Planning, production and distribution of audio and video that are
recorded on record, tape, disk, film, or other media;
8. Planning, production and distribution of books, magazines and other
publications;
9. Purchase and sale of antiques;
10. Acquisition and management of copyrights, trademark rights, design rights,
performance rights and rights to produce records and videos related to the
preceding items;
11. Import, export and agency business related to each of the preceding items;
12. Investment in parties in charge of the business specified in the preceding
items; and
13. Any and all businesses incidental to any of the preceding items.
Article 3. (Location of Head Office)
The Company shall have its head office in Minato-ku, Tokyo.
Article 4. (Method of Public Notice)
Public notices of the Company shall be carried in the official gazette.
CHAPTER II
SHARES
Article 5. (Total Number of Shares to be Issued and Non-Issuance of Share
Certificates)
1. The total number of shares authorized to be issued by the Company shall
be two million (2,000,000); provided, however, that in case of cancellation the
number shall be reduced by the number of shares so canceled.
2. The Company shall not issue share certificates.
Article 6. (Number of Shares Constituting One Unit)
One (1) unit shall be one hundred shares of the Company.
Article 7. (Limits to Share Transfer)
It is prohibited to transfer the Company's shares unless the Board of Directors
approves it.
Article 8. (Share Handling Regulations)
The registration of transfer of shares, registration of pledges, purchase and
sale of Shares Constituting Less than One Unit and other matters relating to
shares shall be subject to the provisions of the Share Handling Regulations
determined by the Board of Directors as well as these Articles of Incorporation.
Article 9. (Record Date)
1. The Company shall deem that the shareholders, who are listed or
recorded on the shareholders list on March 31 every year are entitled to
exercise their voting rights at the ordinary general meeting of shareholders for
the relevant fiscal year.
2. In addition to the preceding paragraph, the Company may, giving prior
public notice, set a special record date when necessary, by a resolution of the
Board of Directors.
CHAPTER III
GENERAL MEETING OF SHAREHOLDERS
Article 10. (Convocation)
An ordinary general meeting of shareholders of the Company shall be convened
within three (3) months after the day following each account settlement date of
every fiscal year and an extraordinary general meeting of shareholders shall be
convened from time to time whenever necessary. Such general meetings of
shareholders shall be held within metropolitan Tokyo and its surrounding wards.
Article 11. (Convener and Chairperson)
The Chairman or President shall convene the general meeting of shareholders of
the Company and act as a chairperson, unless otherwise provided for by laws or
regulations. If both Chairman and President are unable to act in this capacity,
one of the other Directors shall take his/her place in the order previously
determined by a resolution of the Board of Directors.
Article 12. (Method of Resolution)
1. Unless otherwise provided for by laws, regulations or these Articles of
Incorporation, any resolution at a general meeting of shareholders shall be
approved by a majority decision of shareholders present with voting rights.
2. Extraordinary resolutions, subject to Article 343 of the Commercial
Code of Japan, can be made by a two-thirds majority of the shareholders present,
who possess one-third or more of the total voting rights.
Article 13. (Exercise of Voting Rights by Proxy)
A shareholder may exercise his/her voting right by a proxy who is also a
shareholder having voting rights of the Company; provided, however, that only
one (1) proxy shall be admitted and such proxy shall be required to submit
documents evidencing his/her authority.
CHAPTER IV
DIRECTORS AND THE BOARD OF DIRECTORS
Article 14. (Number of Directors)
There shall be no more than ten (10) Directors of the Company.
Article 15. (Election of Directors)
1. Directors of the Company shall be elected at a general meeting of
shareholders.
2. Directors of the Company shall be elected by a majority decision of the
shareholders present at a general meeting of shareholders where shareholders
having one third (1/3) or more of voting rights of all the shareholders shall be
present.
3. The election of Directors of the Company shall not be made by
cumulative voting.
Article 16. (Term of Office of Directors)
1. The term of office of Directors of the Company shall expire upon the
conclusion of the ordinary meeting of shareholders with respect to the last
fiscal year ending within one (1) year after their assumption of office.
2. The term of office of Directors elected to increase the number of
Directors shall expire at the time of expiration of the term of office of the
other incumbent Directors.
3. The term of office of Directors elected to fill a vacancy of a retired
Director shall be the remaining period of office of such retired Directors.
Article 17. (Representative Directors and Directors with Titles)
Directors who represent the Company, the President and any other Directors with
specific titles shall be appointed at a meeting of the Board of Directors.
Article 18. (Convocation of the Meeting of the Board of Directors and
Chairperson)
1. The Chairman or President shall convene a meeting of the Board of
Directors and act as a chairperson unless otherwise provided for by laws or
regulations. If both Chairman and President are unable to act in this capacity,
one of the other Directors shall take his/her place in the order previously
determined by a resolution of the Board of Directors.
2. Notice of convocation of a meeting of the Board of Directors shall be
dispatched to each Director and Corporate Auditor three (3) days prior to the
date of such meeting; provided, however, that such period may be shortened in
case of emergency.
Article 19. (Regulations of the Board of Directors)
Matters regarding the Board of Directors of the Company shall be determined
pursuant to the Regulations of the Board of Directors unless otherwise provided
for by laws, regulations or these Articles of Incorporation.
Article 20. (Remuneration)
The remuneration of Directors shall be determined at a general meeting of
shareholders.
CHAPTER V
CORPORATE AUDITORS AND THE BOARD OF CORPORATE AUDITORS
Article 21. (Number of Corporate Auditors)
There shall be no more than five (5) Corporate Auditors of the Company.
Article 22. (Election of Corporate Auditors)
1. Corporate Auditors of the Company shall be elected at a general meeting
of shareholders.
2. Corporate Auditors of the Company shall be elected by a majority
decision of shareholders present at a general meeting of shareholders where
shareholders having one third (1/3) or more of voting rights of all the
shareholders shall be present.
Article 23. (Term of Office of Corporate Auditors)
1. The term of office of Corporate Auditors of the Company shall expire
upon the conclusion of the ordinary general meeting of shareholders with respect
to the last fiscal year ending within four (4) years after their assumption of
office.
2. The term of office of the Corporate Auditor elected to fill a vacancy
of a retired Corporate Auditor shall be the remaining period of the term of
office of such retired Corporate Auditor.
Article 24. (Standing Corporate Auditors)
Corporate Auditors shall elect Standing Corporate Auditors from among
themselves.
Article 25. (Notice of Convocation of the Meeting of the Board of Corporate
Auditors)
Notice of convocation of a meeting of the Board of Corporate Auditors shall be
dispatched to each Corporate Auditor three (3) days prior to the date of such
meeting; provided, however, that such period may be shortened in case of
emergency.
Article 26. (Regulations of the Board of Corporate Auditors)
Matters regarding the Board of Corporate Auditors shall be determined pursuant
to the Regulations of the Board of Corporate Auditors unless otherwise provided
for by laws, regulations or these Articles of Incorporation.
Article 27. (Remuneration)
The remuneration of Corporate Auditors shall be determined at a general meeting
of shareholders.
CHAPTER VI
ACCOUNTS
Article 28. (Business Year)
The business year of the Company shall commence on April 1 of every year and end
on March 31 of the following year and the account settlement date shall be the
last day of each business year.
Article 29. (Dividend and Interim Dividend)
1. Dividends shall be paid to the shareholders or the registered pledgees
who are listed or recorded on the shareholders list on the account settlement
date.
2. The Company may, by a resolution of the Board of Directors, distribute
interim dividends to the shareholders or the registered pledgees who are listed
or recorded on the shareholders list on September 30 every year.
Article 30. (Prescription)
If any dividend or any interim dividend remains uncollected after three (3)
years from the day on which such dividends became due and payable, the Company
shall be relieved of the obligation to pay such dividends.
SUPPLEMENTARY PROVISIONS
Article 1. (Shares to be Issued upon Establishment of the Company)
The total number of shares that the Company will issue when it is established
shall be 520,000.
Article 2. (First Business Year)
The first business year of the Company shall commence on the day of its
establishment and end on March 31, 2006.
Article 3. (Term of Office of First Directors and Corporate Directors)
The term of office of the first Directors and Corporate Auditors of the Company
shall expire upon the conclusion of the ordinary general meeting of shareholders
with respect to the last fiscal year ending within one (1) year after their
assumption of office.
Article 4. (Application of Laws and Regulations)
Matters that are not prescribed in these Articles of Incorporation shall be
determined pursuant to the Commercial Code of Japan and other laws and
regulations.
Appendix 2: 'Details of Rights, Obligations, etc. to be Succeeded'
1. Assets to be succeeded
Konami Digital Entertainment shall succeed the following assets that Konami owns
and manages for its operations associated with the digital entertainment
business as of the previous day of the split.
(1) Movables
(a) Inventories of products, components, and such like
(b) Machinery, tools, instrument and fixtures
(c) Software (except for production management systems)
(d) Others: expendables, utensils, and such like, that are not listed in
account books
(2) Securities
Investments excluding all investment securities and amounts invested in
subsidiaries and affiliates
(3) Monetary credits
(a) Trade accounts receivable and notes receivable
(b) Other receivables
(c) Temporary payment
(d) Others
(4) Other assets
(a) Deferred tax assets and long-term deferred tax assets
(b) Advances, prepaid expenses and long-term prepaid expenses
2. Liabilities to be succeeded
Konami Digital Entertainment shall succeed the following liabilities that Konami
owns and manages for its operations associated with the digital entertainment
business as of the previous day of the split.
(a) Other accounts payable
(b) Accrued expenses
(c) Advances received
(d) Allowance for bonuses
(e) Allowance for retirement benefits
3. Intellectual property rights to be succeeded
Konami Digital Entertainment shall succeed the intellectual property rights that
Konami owns and exercises for its operations associated with the digital
entertainment business as of the previous day of the split. The intellectual
property rights that Konami will continue to own are provided in the end of the
Appendix: Suffix.
4. Contractual status to be succeeded
Konami Digital Entertainment shall succeed contractual status in all contracts
concerning the digital entertainment sector managed by Konami as of the previous
day of the split, as well as incidental rights and obligations.
5. Employment contracts to be succeeded
Konami Digital Entertainment shall succeed Konami's employment contracts with
employees engaged in the digital entertainment business of Konami, incidental
rights and obligations, as well as labor conditions stipulated by working rules.
In addition, Konami's employees who will not be succeeded by Konami Digital
Entertainment are those belonging to the following sectors:
(a) IR Department, Financial Division
(b) Operations Inspection Office, Finance and Accounting Division
(c) President's Office, Headquarters
(d) Public Relations Office
6. Permits and licenses to be succeeded
Konami Digital Entertainment shall succeed from Konami the permits, licenses,
approval, registration, notifications, which Konami had acquired in association
with the business to be succeeded as of the previous day of the split and can be
legally succeeded.
(Suffix)
Intellectual property rights that Konami will continue to own according to Item
3 of Appendix 2:
Trademarks that Konami applies or has registration in each country:
Paste the following link into your web browser to download the related
PDF document:
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3. Directors, Corporate Auditors and Accounting Auditor of the company
established through the corporate split
(1) Directors
Name Brief personal record Number of Company's
stock owned
(Date of Birth)
Fumiaki Tanaka Apr. 1981 Joined the Company 64,693
(March 10, 1961) Jun. 1996 Director
Mar. 1998 Managing Director
Mar. 2000 General Manager of AM Business Division (presently
Amusement Company)
Jun. 2000 Senior Managing Director and Corporate Officer
Nov. 2002 General Manager of IT Supervisory Division
Dec. 2002 Chairman and Representative Director of Konami Sports
Life Corporation
Apr. 2005 Senior Executive Corporate Officer, in charge of Japan
(to present)
Akira Tamai Sep. 1999 Joined the Company 922
(October 14, 1963) Apr. 2001 General Manager of Tax Affairs Office (presently Tax
Affairs Supervisory Division)
Oct. 2002 Manager of IT Strategy Division
Oct. 2004 General Manager of Finance and Accounting Division as
well as Manager of Finance Division (presently Finance
Supervisory Division)
Apr. 2005 Corporate Officer (to present)
Naoyuki Notsu Apr. 2000 Joined the Company, Manager of Administration Division 779
(November 18, 1955) Jan. 2004 General Manager of Business Administration Division
May 2004 Corporate Officer (to present)
(2) Corporate Auditors
Name Brief personal record Number of Company's
stock owned
(Date of Birth)
Nagahiro Morimoto Jul. 1995 Joined the Company 6,438
(February 13, 1947)
Feb. 2002 Corporate Auditor of Konami Olympic Sports Club Co.,
Ltd. (present Konami Sports Corporation)
Jan. 2003 Standing Corporate Auditor of Konami Sports Life
Corporation (to present)
Noboru Onuma Jun. 1999 Standing Corporate Auditor of the Company (to present) 1,285
(January 1, 1948)
Yasumasa Iwagaki Jan. 1999 Corporate Auditor of Konami Computer Entertainment 0
Japan, Inc.
(August 16, 1947)
Jun. 1999 Corporate Auditor of Konami Computer Entertainment
Tokyo, Inc.
Jun. 1999 Corporate Auditor of Konami Computer Entertainment
Osaka, Inc.
Jun. 2004 Standing Corporate Auditor of Konami Real Estate, Inc.
Jun. 2005 Corporate Auditor of Konami Sports Corporation (to
present)
(3) Accounting Auditors
Overview of Accounting Auditors
(As of November 30, 2005)
Auditors name: KPMG AZSA & Co.
Offices: Main office:
1-2 Tsukudo-cho, Shinjuku-ku, Tokyo
Other offices in:
Sapporo, Morioka, Sendai, Yamagata, Kanazawa, Toyama,
Niigata, Nagano, Takasaki, Mito, Saitama, Chiba, Yokohama,
Shizuoka, Nagoya, Mie, Gifu, Kyoto, Nara, Osaka, Wakayama,
Kobe, Okayama, Hiroshima, Yonago, Matsuyama, Shimonoseki,
Takamatsu, Oita, Fukuoka and Nagasaki
Corporate history: July 1, 1985: Asahi Shinwa Auditing Corporation established
October 1, 1993: Merged with Inoue, Saito & Eiwa Auditing
Corporation (established on April 5, 1978) to form Asahi & Co.
January 2004: Merged with and changed the name to KMPG AZSA &
Co. (established on February 26, 2003)
Number of employees (figures in square brackets include part-time employees):
CPA: 1,459 (1,649) (representative employees: 232; regular employees: 182)
Junior CPA: 786 (806)
Others: 642 (667)
Total: 2,887 (3,122)
Number of clients: 5,665
Audit service: 4,159 corporations
(Statutory audit: 733; Japanese SEC audit: 90; Commercial Code audit: 1,279;
School: 277; Labor union: 74; Others: 307;
Other statutory audit: 307; Other voluntary audit: 1,399)
Other services: 1,506 corporations
Amount of capital: Y3,230 million
4. Documents which describe reasons for new share allocation, as provided in
Item 2, Paragraph 1, Article 374-2 of the Commercial Code of Japan
Statement of Reasons for New Share Allocation
Konami Corporation (hereinafter referred to as the 'Company') plans to split the
digital entertainment business and set up Konami Digital Entertainment Co., Ltd.
(hereinafter referred to as 'Konami Digital Entertainment'), which will take
over this business, on March 31, 2006, based on the split plan approved by the
Board of Directors on January 5, 2006. All 520,000 common stock newly issued by
Konami Digital Entertainment in connection with this split will be allocated to
the Company.
5. Documents which describe the prospect of the fulfillment of obligation to be
borne by each company, as provided in Item 3, Paragraph 1, Article 374-2 of the
Commercial Code of Japan, and the relevant reasons
Statement Regarding the Prospect of the Performance and Discharge of Liabilities
According to the split plan approved by the meeting of the Board of Directors
held on January 5, 2006, the Company plans to split its digital entertainment
business and set up Konami Digital Entertainment Co., Ltd. (hereinafter referred
to as the 'New Company'), which will take over the subject business, on March
31, 2006. With respect to this split, the Company concludes that the Company and
the New Company will be able to perform and discharge the liabilities to be
borne by the respective companies.
(1) Regarding the Company
The assets and liabilities booked on the Balance Sheets of the Company as of
September 30, 2005 amounted to Y203,217 million and Y53,730 million,
respectively, indicating that its assets far outnumbered its liabilities. The
Company absorbed its wholly owned subsidiary Konami Marketing Japan, Inc. on
October 1, 2005, and its assets and liabilities became Y211,851 million and
Y61,618 million, respectively, on the Balance Sheets as of October 1, 2005, and
its assets again far exceeded its liabilities.
From October 1, 2005 until now, no event has occurred that would adversely
affect the performance and discharge by the Company of liabilities to be borne
by the Company, and until the split date, no event is expected to occur that
will adversely affect the performance and discharge by the Company of its
liabilities.
Furthermore, no event is expected to occur that will constitute a hindrance
to the performance and discharge by the Company of the subject liabilities, in
its business activities after the corporate split.
Therefore, the Company concludes that the Company will be able to perform and
discharge all of its liabilities when they become due, to be performed after the
split date.
(2) Regarding the New Company
The assets and liabilities, which the New Company is expected to succeed from
the Company upon the planned corporate split, amounted to Y72,943 million and
Y20,943 million, respectively. This indicates that the New Company's assets are
likely to far outnumber its liabilities even if this corporate split is
implemented.
From October 1, 2005 until now, no major change has occurred in the assets
and liabilities that the New Company is expected to succeed from the Company in
the wake of the planned corporate split, and until the split date, no event is
expected to occur that will significantly change the subject assets and
liabilities.
Furthermore, no event is expected to occur that will constitute a hindrance
to the performance and discharge by the New Company of liabilities to be borne
by the New Company, in its business activities after the corporate split.
Therefore, the Company concludes that the New Company will be able to perform
and discharge all of its liabilities when they become due to be performed after
the split date.
6. Balance sheets and statements of operations pursuant to Items 4 to 7,
Paragraph 1, Article 374-2 of the Commercial Code of Japan
(1) Balance sheets and statements of operations prepared six months before
this extraordinary general shareholders meeting
As described in pages 16 to 20, in the section of Reference Materials Concerning
the Exercise of Voting Rights.
(2) Final balance sheets and statements of operations
As described in pages 26 to 30, in the section of Reference Materials Concerning
the Exercise of Voting Rights.
Proposal No. 3: Amendments to the Articles of Incorporation
1. Reasons for the amendments
The Company plans to become the holding entity through the partial split of its
business as presented in Proposal 2: 'To approve Plan for Corporate Split.'
Accordingly, necessary changes to Article 2 of the current Articles of
Incorporation (Purpose) are proposed. The amendments to the Articles shall
become effective as of the effective date of the corporate split, provided that
Proposal 2: 'To approve Plan for Corporate Split' is approved and the corporate
split of the Proposal becomes effective.
2. Details of the amendments
Details of the amendments are as follows:
(The underlined sections are the amendments.)
Current Articles of Incorporation Proposed Amendments
Article 2. (Purpose) Article 2 (Purpose)
The purpose of the Company is to engage in the The purpose of the Company shall be to own shares of
-------------------------
following business: companies which run the following businesses or a
-------------------------------------------------
foreign company which runs equivalent businesses, and
------------------------------------------------------
be engaged in the control and administration of the
--------------------------------------------------
subject companies' business activities as well as
-------------------------------------------------
implementation of operations incidental to such
-------------------------------------------------
activities.
1. Research, development, manufacture and 1-20: No amendments
distribution of software and hardware relating to
electric appliance and electronic components;
2. Planning, production, manufacture, rental and
distribution of music, audio and visual software
(including disks, tape and film, etc.); production and
acquisition of master copies, and transferal or usage
permission thereof;
3. Acquisition, management, promotion of usage
and development of music copyright and related
performance rights, and transferal or usage permission
thereof;
4. Planning, production and distribution of
books, magazines, sheet music and other publications;
5. Development, manufacture and distribution of
toys;
6. Design of character products (with images of
people, animals, etc. which have unique names or
characters);
7. Planning, production and distribution on the
Internet;
8. Planning, establishment and operation of
shopping complex on the Internet, provision of know-how
thereof and correspondence sales;
9. Provision and distribution of software using
communication circuits;
10. Management of sports facilities and amusement
arcades;
11. Distribution of soft drinks, foods, alcoholic
beverages, sports gear, clothing and computer game
machines;
12. Advertising agency, insurance agency,
broadcasting business and leisure business including
tour, sports, etc.;
13. Purchase and sale of antiques;
14. Sale, purchase, lease, blockage and management
of real estate;
15. Job placement;
16. Holding of and investment in securities;
17. Acquisition and management of copyrights,
trademark rights, design rights, performance rights and
rights to produce records and videos related to the
preceding items;
Current articles of incorporation Proposed amendments
18. Import, export and agency business related to
each of the preceding items;
19. Investment in the party in charge of the
business specified in the preceding items; and
20. Any and all business incidental to any of the
preceding items.
To view the full PDF version of this press release, paste the following link
into your web browser:
http://www.konami.co.jp/en/ir/pdf/generalmeeting/060126/syosyu.pdf
This information is provided by RNS
The company news service from the London Stock Exchange
Friday, 17th May 2024
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