Konami (KNM) 6-K Current report (foreign)

FORM 6-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16 of

the Securities Exchange Act of 1934

For the month of February 2013

Commission File Number: 1-31452

KONAMI CORPORATION

(Translation of registrant’s name into English)

7-2, Akasaka 9-chome

Minato-ku, Tokyo 107-8323

Japan

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F  x             Form 40-F  ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  ¨

Information furnished in this form:

1. English translation of the Quarterly Securities Report (Shihanki Hokokusho) for the nine-month period ended December  31, 2012 pursuant to the Financial Instruments and Exchange Law of Japan

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	KONAMI CORPORATION
Date: February 20, 2013	By:	/s/ Takuya Kozuki
	Name:	Takuya Kozuki
	Title:	Representative Director, President

KONAMI CORPORATION filed its Quarterly Securities Report for the nine-month period ended December 31, 2012 with the Director of the Kanto Local Finance Bureau of the Ministry of Finance of Japan on February 14, 2013. The following is the summary of the Quarterly Securities Report.

I Corporate Information

A. Corporate Overview

1. Selected Financial Data

2. Overview of Business

B. Business

1. Risks Relating to Our Business

2. Significant Contracts

3. Results of Operations and Financial position

C. Information on Reporting Company

1. Share Information

a. Total Number of Shares

b. Stock Acquisition Rights

c. Convertible Bonds Exercise

d. Rights Plan

e. Common Stock and Additional Paid-in Capital

f. Major Shareholders

g. Voting Rights

2. Directors and Corporate Auditors

D. Financial Statements

1. Quarterly Consolidated Financial Statements

2. Others

II Information on Guarantors

1. Consolidated Financial Statements

(1) Consolidated Balance Sheets (Unaudited)

	Millions of Yen
	March 31, 2012		December 31, 2012
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	¥	76,451	¥	58,146
Trade notes and accounts receivable, net of allowance for doubtful accounts of ¥380 million at March 31, 2012 and ¥224 million at December 31, 2012		33,647		24,908
Inventories		22,121		29,293
Deferred income taxes, net		20,503		19,935
Prepaid expenses and other current assets		9,243		13,961
Total current assets		161,965		146,243
PROPERTY AND EQUIPMENT, net		62,251		62,906
INVESTMENTS AND OTHER ASSETS:
Investments in marketable securities		429		394
Investments in affiliate		2,184		2,179
Identifiable intangible assets		41,283		42,213
Goodwill		21,875		21,897
Lease deposits		26,827		26,915
Deferred income taxes, net		976		1,114
Other assets		10,216		10,423
Total investments and other assets		103,790		105,135
TOTAL ASSETS	¥	328,006	¥	314,284

See accompanying notes to consolidated financial statements.

– 1 –

	Millions of Yen
	March 31, 2012			December 31, 2012
LIABILITIES
CURRENT LIABILITIES:
Short-term borrowings	¥	2,300		¥	4,082
Current portion of long-term debt		5,000			5,000
Current portion of capital lease and financing obligations		2,458			2,186
Trade notes and accounts payable		16,290			12,291
Accrued income taxes		10,449			4,354
Accrued expenses		19,993			17,330
Deferred revenue		5,595			6,356
Other current liabilities		5,805			5,977
Total current liabilities		67,890			57,576
LONG-TERM LIABILITIES:
Long-term debt, less current portion		5,000			—
Capital lease and financing obligations, less current portion		24,803			23,192
Accrued pension and severance costs		1,641			1,535
Deferred income taxes, net		4,024			4,200
Other long-term liabilities		8,928			8,624
Total long-term liabilities		44,396			37,551
TOTAL LIABILITIES		112,286			95,127
COMMITMENTS AND CONTINGENCIES (Note 12)
EQUITY
KONAMI CORPORATION stockholders’ equity:
Common stock, no par value- Authorized 450,000,000 shares; issued 143,500,000 shares at March 31, 2012 and December 31, 2012; outstanding 138,620,152 shares at March 31, 2012 and 138,618,639 shares at December 31, 2012		47,399			47,399
Additional paid-in capital		74,175			74,175
Legal reserve		284			284
Retained earnings		107,565			109,455
Accumulated other comprehensive loss		(2,719	)		(1,292	)
Treasury stock, at cost- 4,879,848 shares at March 31, 2012 and 4,881,361 shares at December 31, 2012		(11,246	)		(11,249	)
Total KONAMI CORPORATION stockholders’ equity		215,458			218,772
Noncontrolling interest		262			385
TOTAL EQUITY		215,720			219,157
TOTAL LIABILITIES AND EQUITY	¥	328,006		¥	314,284

See accompanying notes to consolidated financial statements.

– 2 –

(2)Consolidated Statements of Income and Consolidated Statements of Comprehensive Income (Unaudited)

For the nine months ended December 31, 2011 and 2012

Consolidated Statements of Income

	Millions of Yen
	Nine months  ended December 31, 2011			Nine months ended December 31, 2012
NET REVENUES:
Product sales revenue	¥	101,287		¥	68,399
Service and other revenue		93,235			91,752
Total net revenues		194,522			160,151
COSTS AND EXPENSES:
Costs of products sold		62,727			40,625
Costs of services rendered and others		62,847			66,782
Selling, general and administrative		37,685			37,824
Earthquake related expenses		342			—
Total costs and expenses		163,601			145,231
Operating income		30,921			14,920
OTHER INCOME (EXPENSES):
Interest income		166			141
Interest expense		(1,081	)		(991	)
Foreign currency exchange gains, net		32			725
Other, net		(20	)		(123	)
Other expenses, net		(903	)		(248	)
INCOME BEFORE INCOME TAXES AND EQUITY IN NET INCOME OF AFFILIATED COMPANY		30,018			14,672
INCOME TAXES		12,879			5,735
EQUITY IN NET INCOME OF AFFILIATED COMPANY		25			7
NET INCOME		17,164			8,944
NET INCOME ATTRIBUTABLE TO THE NONCONTROLLING INTEREST		118			123
NET INCOME ATTRIBUTABLE TO KONAMI CORPORATION	¥	17,046		¥	8,821

Consolidated Statements of Comprehensive Income

	Millions of Yen
	Nine months  ended December 31, 2011			Nine months ended December 31, 2012
Net income	¥	17,164		¥	8,944
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments		(1,955	)		1,375
Net unrealized gains (losses) on available-for-sale securities		(11	)		50
Pension liability adjustment		281			2
Other comprehensive income (loss)		(1,685	)		1,427
Comprehensive income		15,479			10,371
Comprehensive income attributable to the non controlling interest		118			123
Comprehensive income attributable to KONAMI CORPORATION	¥	15,361		¥	10,248
PER SHARE DATA:
	Nine months  ended December 31,��2011			Nine months ended December 31, 2012
Net income attributable to KONAMI CORPORATION per share:
Basic	¥	123.19		¥	63.63
Diluted		123.19			63.63
Weighted-average common shares outstanding		138,377,599			138,619,373
Diluted weighted-average common shares outstanding		138,377,599			138,619,373

See accompanying notes to consolidated financial statements.

– 3 –

For the three months ended December 31, 2011 and 2012

Consolidated Statements of Income

	Millions of Yen
	Three months  ended December 31, 2011			Three months ended December 31, 2012
NET REVENUES:
Product sales revenue	¥	39,728		¥	22,434
Service and other revenue		31,698			31,044
Total net revenues		71,426			53,478
COSTS AND EXPENSES:
Costs of products sold		25,720			14,142
Costs of services rendered and others		21,069			23,057
Selling, general and administrative		13,894			13,922
Earthquake related expenses		7			—
Total costs and expenses		60,690			51,121
Operating income		10,736			2,357
OTHER INCOME (EXPENSES):
Interest income		48			50
Interest expense		(355	)		(313	)
Foreign currency exchange gains, net		227			1,094
Other, net		(13	)		(4	)
Other income (expenses), net		(93	)		827
INCOME BEFORE INCOME TAXES AND EQUITY IN NET INCOME OF AFFILIATED COMPANY		10,643			3,184
INCOME TAXES		5,038			1,270
EQUITY IN NET INCOME (LOSS) OF AFFILIATED COMPANY		23			(6	)
NET INCOME		5,628			1,908
NET INCOME ATTRIBUTABLE TO THE NONCONTROLLING INTEREST		44			42
NET INCOME ATTRIBUTABLE TO KONAMI CORPORATION	¥	5,584		¥	1,866

Consolidated Statements of Comprehensive Income

	Millions of Yen
	Three months  ended December 31, 2011			Three months ended December 31, 2012
Net income	¥	5,628		¥	1,908
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments		387			2,917
Net unrealized gains (losses) on available-for-sale securities		(14	)		23
Pension liability adjustment		160			0
Other comprehensive income		533			2,940
Comprehensive income		6,161			4,848
Comprehensive income attributable to the non controlling interest		44			42
Comprehensive income attributable to KONAMI CORPORATION	¥	6,117		¥	4,806
PER SHARE DATA:
	Three months  ended December 31, 2011			Three months ended December 31, 2012
Net income attributable to KONAMI CORPORATION per share:
Basic	¥	40.28		¥	13.46
Diluted		40.28			13.46
Weighted-average common shares outstanding		138,622,530			138,619,012
Diluted weighted-average common shares outstanding		138,622,530			138,619,012

See accompanying notes to consolidated financial statements.

– 4 –

(3) Consolidated Statements of Cash Flows (Unaudited)

	Millions of Yen
	Nine months  ended December 31, 2011			Nine months ended December 31, 2012
Cash flows from operating activities:
Net income	¥	17,164		¥	8,944
Adjustments to reconcile net income to net cash provided by operating activities -
Depreciation and amortization		7,082			7,732
Provision for doubtful receivables		23			(183	)
Loss on sale or disposal of property and equipment, net		256			108
Equity in net income of affiliated company		(25	)		(7	)
Deferred income taxes		1,625			622
Change in assets and liabilities, net of businesses acquired:
Decrease (increase) in trade notes and accounts receivable		(6,431	)		9,791
Increase in inventories		(3,676	)		(7,611	)
Decrease in other receivables		312			338
Decrease (increase) in prepaid expenses		33			(571	)
Decrease in trade notes and accounts payable		(3,719	)		(4,539	)
Increase (decrease) in accrued income taxes, net of tax refunds		2,662			(9,934	)
Increase (decrease) in accrued expenses		2,107			(1,578	)
Increase in deferred revenue		4,608			638
Decrease in advance received		(353	)		(112	)
Increase in deposits		413			281
Other, net		(11	)		(1,158	)
Net cash provided by operating activities		22,070			2,761
Cash flows from investing activities:
Capital expenditures, including interest capitalized		(6,189	)		(8,283	)
Proceeds from sales of property and equipment		7			73
Decrease (increase) in lease deposits, net		493			(10	)
Decrease in term deposits, net		1,412			—
Acquisition of business		—			(1,245	)
Other, net		14			(9	)
Net cash used in investing activities		(4,263	)		(9,474	)
Cash flows from financing activities:
Increase (decrease) in short-term borrowings, net		(1,600	)		1,782
Redemption of bonds		(5,000	)		(5,000	)
Principal payments under capital lease and financing obligations		(1,735	)		(1,933	)
Dividends paid		(5,546	)		(6,774	)
Purchases of treasury stock by parent company		(24	)		(5	)
Proceeds from sale-leaseback transaction		1,547			—
Other, net		2			2
Net cash used in financing activities		(12,356	)		(11,928	)
Effect of exchange rate changes on cash and cash equivalents		(795	)		336
Net increase (decrease) in cash and cash equivalents		4,656			(18,305	)
Cash and cash equivalents, beginning of the period		59,541			76,451
Cash and cash equivalents, end of the period	¥	64,197		¥	58,146

See accompanying notes to consolidated financial statements.

– 5 –

Notes to Consolidated Financial Statements (Unaudited)

1. Basis of Presentation

KONAMI CORPORATION (the “Company”) and its subsidiaries (collectively “KONAMI”) prepared the accompanying consolidated financial statements in accordance with U.S. generally accepted accounting principles (“U.S.GAAP”). KONAMI became publicly traded on the New York Stock Exchange in September 2002, and prepares its consolidated financial statements pursuant to the terminology, forms and preparation methods required in order to issue American Depositary Shares, which are registered with the U.S. Securities and Exchange Commission.

2. Reclassifications

Certain reclassifications have been made to the prior periods’ consolidated financial statements to conform to the presentation used for the current period.

3. New Accounting Pronouncements Adopted

Effective April 1, 2012, KONAMI has adopted Accounting Standards Update (“ASU”) 2011-05 “Comprehensive Income (Topic 220): Presentation of Comprehensive Income”, which was subsequently amended by ASU2011-12 “Comprehensive Income (Topic 220): Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in ASU2011-05”. ASU2011-05 requires the presentation of net income and other comprehensive income in a single continuous statement or in two separate but consecutive statements and eliminates the current option to report comprehensive income in the statement of equity. ASU2011-12 would defer the requirement to separately present within net income reclassification adjustments of items out of accumulated other comprehensive income, a part of which is required in ASU2011-05. The adoption of ASU2011-05 and ASU2011-12 did not have a material impact on KONAMI’s financial position and results.

4. Inventories

Inventories at March 31, 2012 and December 31, 2012 consisted of the following:

	Millions of Yen
	March 31, 2012		December 31, 2012
Finished products	¥	7,158	¥	8,887
Work in process		10,078		15,362
Raw materials and supplies		4,885		5,044
Total	¥	22,121	¥	29,293

5. Property and Equipment

Property and equipment at March 31, 2012 and December 31, 2012 consisted of the following:

	Millions of Yen
	March 31, 2012			December 31, 2012
Property and equipment, at cost:
Land	¥	14,532		¥	14,513
Buildings and structures		75,301			77,161
Tools, furniture and fixtures		25,050			26,106
Construction in progress		182			1,966
Total		115,065			119,746
Less-Accumulated depreciation and amortization		(52,814	)		(56,840	)
Net property and equipment	¥	62,251		¥	62,906

– 6 –

6. Business Combinations

On July 2, 2012, 4K Media Inc. (formerly 4K Acquisition Corp.), a subsidiary of the Company, entered into an asset purchase agreement with 4Kids Entertainment, Inc., which was engaged in the business of production of television and movie programs and licensing-out its content. The purpose of this agreement was to upgrade and extend the content of the Digital Entertainment business. The assets including merchandising rights to its content were acquired for ¥1,164 million in cash. Costs related to the acquisition of these assets of ¥43 million were recorded in the operating expense in the accompanying consolidated statements of income.

The following table summarizes the assets acquired at the acquisition date, with the acquisition cost allocated to each acquired asset:

	Millions of Yen
Current assets	¥	125
Property and equipment		7
Identifiable intangible assets		1,001
Other assets		31
Total assets acquired	¥	1,164

The acquired identifiable intangible assets consist of distribution and merchandising rights of ¥985 million and libraries of ¥16 million, which will be amortized over their estimated useful lives of eight years.

The results of operations of 4K Media Inc. from the acquisition date to this period ended December 31, 2012 were not material. The pro forma condensed combined financial information is not disclosed because the effect of this acquisition on KONAMI’s consolidated financial statements is not material.

7. Severance and Retirement Plans

Net periodic cost of KONAMI’s plans for the nine and three months ended December 31, 2011 and 2012 included the following components:

During the fiscal year ended March 31, 2012, KONAMI terminated all of its defined benefit severance and retirement plans. Certain domestic subsidiaries made a transition to the defined contribution plans. Meanwhile, certain domestic subsidiaries encouraged the voluntary retirement plans, resulting in special granting termination benefits for the nine months ended December 31, 2011.

	Millions of Yen
	Nine months  ended December 31, 2011			Nine months  ended December 31, 2012
Service cost – benefits earned during the period	¥	132			—
Interest cost on projected benefit obligation		15			—
Expected return on plan assets		(14	)		—
Recognized actuarial loss		20			—
Settlement loss		288		¥	4
Loss from special termination benefit		678			—
Net periodic cost	¥	1,119		¥	4
	Millions of Yen
	Three months  ended December 31, 2011			Three months  ended December 31, 2012
Settlement loss	¥	288		¥	1
Loss from special termination benefit		30			—
Net periodic cost	¥	318		¥	1

– 7 –

8. Equity

The changes in the carrying amount of KONAMI CORPORATION stockholders’ equity, noncontrolling interest and total equity in the consolidated balance sheets for the nine and three months ended December 31, 2011 and 2012 were as follows:

	Millions of Yen
For the nine months ended December 31, 2011	KONAMI CORPORATION stockholders’ equity			Noncontrolling interest			Total equity
Balance at March 31, 2011	¥	193,914		¥	4,493		¥	198,407
Cash dividends attributable to KONAMI CORPORATION stockholders		(5,697	)		—			(5,697	)
Purchase of treasury stock		5,045			—			5,045
Equity transaction with noncontrolling interests and others		(639	)		(4,356	)		(4,995	)
Comprehensive income:
Net income for the period		17,046			118			17,164
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments		(1,955	)		—			(1,955	)
Net unrealized losses on available-for-sale securities		(11	)		—			(11	)
Pension liability adjustment		281			—			281
Comprehensive income for the period		15,361			118			15,479
Balance at December 31, 2011	¥	207,984		¥	255		¥	208,239
	Millions of Yen
For the nine months ended December 31, 2012	KONAMI CORPORATION stockholders’ equity			Noncontrolling interest			Total equity
Balance at March 31, 2012	¥	215,458		¥	262		¥	215,720
Cash dividends attributable to KONAMI CORPORATION stockholders		(6,931	)		—			(6,931	)
Purchase of treasury stock		(3	)		—			(3	)
Comprehensive income:
Net income for the period		8,821			123			8,944
Other comprehensive income, net of tax:
Foreign currency translation adjustments		1,375			—			1,375
Net unrealized gains on available-for-sale securities		50			—			50
Pension liability adjustment		2			—			2
Comprehensive income for the period		10,248			123			10,371
Balance at December 31, 2012	¥	218,772		¥	385		¥	219,157
	Millions of Yen
For the three months ended December 31, 2011	KONAMI CORPORATION stockholders’ equity			Noncontrolling interest			Total equity
Balance at September 30, 2011	¥	205,335		¥	211		¥	205,546
Cash dividends attributable to KONAMI CORPORATION stockholders		(3,466	)		—			(3,466	)
Purchase of treasury stock		(2	)		—			(2	)
Comprehensive income:
Net income for the period		5,584			44			5,628
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments		387			—			387
Net unrealized losses on available-for-sale securities		(14	)		—			(14	)
Pension liability adjustment		160			—			160
Comprehensive income for the period		6,117			44			6,161
Balance at December 31, 2011	¥	207,984		¥	255		¥	208,239

– 8 –

	Millions of Yen
For the three months ended December 31, 2012	KONAMI CORPORATION stockholders’ equity			Noncontrolling interest		Total equity
Balance at September 30, 2012	¥	217,432		¥	343	¥	217,775
Cash dividends attributable to KONAMI CORPORATION stockholders		(3,465	)		—		(3,465	)
Purchase of treasury stock		(1	)		—		(1	)
Comprehensive income:
Net income for the period		1,866			42		1,908
Other comprehensive income, net of tax:
Foreign currency translation adjustments		2,917			—		2,917
Net unrealized income on available-for-sale securities		23			—		23
Pension liability adjustment		0			—		0
Comprehensive income for the period		4,806			42		4,848
Balance at December 31, 2012	¥	218,772		¥	385	¥	219,157

9. Fair Value of Financial Instruments

Cash and cash equivalents, Trade notes and accounts receivable, Trade notes and accounts payable, Accrued expenses, and Short-term borrowings

The carrying amount approximates fair value because of the short maturity of these instruments.

Investments in marketable securities

The fair values of the Company and its domestic subsidiaries’ investments in marketable securities are based on quoted market prices.

Investments in non-marketable securities

For investments in non-marketable securities for which there are no quoted market prices, a reasonable estimate of fair value could not be made without incurring excessive costs. It was not practicable to estimate the fair value of common stock representing certain untraded companies. These investments are carried at cost.

Long-term debt

The fair values of the Company and its domestic subsidiaries’ long-term debt instruments are based on the quoted price in the most active market or the present value of future cash flows associated with each instrument discounted using the Company’s current borrowing rate for similar debt instruments of comparable maturity.

Derivative financial instruments

The fair values of derivative financial instruments, consisting principally of foreign exchange forward contracts, all of which are used for purposes other than trading, are estimated by obtaining quotes from counterparties or third parties.

The estimated fair values of the Company and its domestic subsidiaries’ financial instruments at March 31, 2012 and December 31, 2012 are as follows:

	Millions of Yen
	March 31, 2012						December 31, 2012
	Carrying amount			Estimated fair value			Carrying amount			Estimated fair value
Non-derivatives:
Investment in marketable securities	¥	429		¥	429		¥	394		¥	394
Long-term debt, including current portion		(10,000	)		(10,035	)		(5,000	)		(5,041	)
Derivatives:
Foreign exchange forward contracts:
Assets		—			—			—			—
Liabilities		(0	)		(0	)		(23	)		(23	)

– 9 –

Limitations

Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instruments. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

10. Fair Value Measurements

Fair value is defined as the amount that would be received for selling an asset or paid to transfer a liability in an orderly transaction between market participants and requires that assets and liabilities carried at fair value are classified and disclosed in the following three categories:

Level 1	–	Quoted prices for identical assets or liabilities in active markets
Level 2	–	Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets
Level 3	–	Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable

Assets and Liabilities Measured at Fair Value on a Recurring Basis

As of March 31, 2012 and December 31, 2012, our assets and liabilities measured at fair value on a recurring basis are summarized in the following table by the type of inputs applicable to the fair value measurements.

	Millions of Yen
March 31, 2012	Level 1		Level 2			Level 3		Total
Assets:
Marketable securities	¥	429		—			—	¥	429
Total assets	¥	429		—			—	¥	429
Liabilities:
Derivatives		—	¥	(0	)		—	¥	(0	)
Total liabilities		—	¥	(0	)		—	¥	(0	)
	Millions of Yen
December 31, 2012	Level 1		Level 2			Level 3		Total
Assets:
Marketable securities	¥	394		—			—	¥	394
Total assets	¥	394		—			—	¥	394
Liabilities:
Derivatives		—	¥	(23	)		—	¥	(23	)
Total liabilities		—	¥	(23	)		—	¥	(23	)

Level 1 investments are comprised solely of available-for-sale securities, which is valued using an unadjusted quoted market price in active markets with sufficient volume and frequency of transactions.

Derivative financial instruments are comprised of foreign exchange forward contracts. Level 2 derivatives are valued using quotes obtained from counterparties or third parties, which are periodically validated by pricing models using observable market inputs, such as foreign currency exchange rates and interest rates.

As of March 31, 2012 and December 31, 2012, KONAMI did not have any Level 3 financial instruments that were measured and recorded at fair value on a recurring basis.

11. Segment Information

Operating segments are defined as components of an enterprise about which separate financial information is available that is regularly evaluated by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The operating segments are managed separately as each segment represents a strategic business unit that offers different products and serves different markets.

– 10 –

KONAMI operates on a worldwide basis principally with the following four business segments:

1. Digital Entertainment:	Production, manufacture and sale of digital content and related products including Content for social networks, Online games, Computer & Video Games, Amusement and Card Games.
2. Health & Fitness:	Operation of health and fitness clubs, and production, manufacture and sale of health and fitness related goods.
3. Gaming & Systems:	Development, manufacture, sale and service of gaming machines and the Casino Management System for overseas markets.
4. Pachinko & Pachinko Slot Machines:	Production, manufacture and sale of pachinko slot machines and LCDs units for pachinko machines.

Notes:

1. “Corporate” primarily consists of administrative expenses of the Company.

2. “Eliminations” primarily consist of eliminations of intercompany sales and of intercompany profits on inventories.

3. Intersegment sales and revenues are generally recorded at values that represent arm’s-length fair value.

The following tables summarize revenue and operating income (loss) by operating segment which are the primary measures used by KONAMI’s chief operating decision maker to measure KONAMI’s operating results and to measure segment profitability and performance. This information is derived from KONAMI’s management reports which have been prepared based on U.S. GAAP.

a. Segment information

Nine months ended December 31, 2011	Digital Entertainment		Health & Fitness		Gaming & Systems		Pachinko & Pachinko Slot Machines			Corporate and Eliminations			Consolidated
	(Millions of Yen)
Net revenue:
External customers	¥	98,949	¥	61,933	¥	18,103	¥	15,537			—		¥	194,522
Intersegment		515		119		—		22		¥	(656	)		—
Total		99,464		62,052		18,103		15,559			(656	)		194,522
Operating expenses		75,175		60,002		13,038		11,741			3,645			163,601
Operating income (loss)	¥	24,289	¥	2,050	¥	5,065	¥	3,818		¥	(4,301	)	¥	30,921
Nine months ended December 31, 2012	Digital Entertainment		Health & Fitness		Gaming & Systems		Pachinko & Pachinko Slot Machines			Corporate and Eliminations			Consolidated
	(Millions of Yen)
Net revenue:
External customers	¥	80,102	¥	59,998	¥	16,599	¥	3,452			—		¥	160,151
Intersegment		466		24		—		2		¥	(492	)		—
Total		80,568		60,022		16,599		3,454			(492	)		160,151
Operating expenses		64,984		57,956		13,002		4,307			4,982			145,231
Operating income (loss)	¥	15,584	¥	2,066	¥	3,597	¥	(853	)	¥	(5,474	)	¥	14,920
Three months ended December 31, 2011	Digital Entertainment		Health & Fitness		Gaming & Systems		Pachinko & Pachinko Slot Machines			Corporate and Eliminations			Consolidated
	(Millions of Yen)
Net revenue:
External customers	¥	41,182	¥	20,469	¥	7,560	¥	2,215			—		¥	71,426
Intersegment		172		5		—		19		¥	(196	)		—
Total		41,354		20,474		7,560		2,234			(196	)		71,426
Operating expenses		32,172		19,509		5,248		2,105			1,656			60,690
Operating income (loss)	¥	9,182	¥	965	¥	2,312	¥	129		¥	(1,852	)	¥	10,736
Three months ended December 31, 2012	Digital Entertainment		Health & Fitness		Gaming & Systems		Pachinko & Pachinko Slot Machines			Corporate and Eliminations			Consolidated
	(Millions of Yen)
Net revenue:
External customers	¥	27,785	¥	19,677	¥	5,206	¥	810			—		¥	53,478
Intersegment		92		10		—		1		¥	(103	)		—
Total		27,877		19,687		5,206		811			(103	)		53,478
Operating expenses		23,992		18,985		4,459		1,874			1,811			51,121
Operating income (loss)	¥	3,885	¥	702	¥	747	¥	(1,063	)	¥	(1,914	)	¥	2,357

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b. Geographic information

Nine months ended December 31, 2011	Japan		United States		Europe			Asia/Oceania			Total		Eliminations			Consolidated
	(Millions of Yen)
Net revenue:
External customers	¥	154,306	¥	25,033	¥	9,696		¥	5,487		¥	194,522		—		¥	194,522
Intersegment		8,536		2,048		256			162			11,002	¥	(11,002	)		—
Total		162,842		27,081		9,952			5,649			205,524		(11,002	)		194,522
Operating expenses		138,179		22,013		9,538			4,974			174,704		(11,103	)		163,601
Operating income	¥	24,663	¥	5,068	¥	414		¥	675		¥	30,820	¥	101		¥	30,921
Nine months ended December 31, 2012	Japan		United States		Europe			Asia/Oceania			Total		Eliminations			Consolidated
	(Millions of Yen)
Net revenue:
External customers	¥	123,639	¥	24,164	¥	8,485		¥	3,863		¥	160,151		—		¥	160,151
Intersegment		8,088		2,061		103			462			10,714	¥	(10,714	)		—
Total		131,727		26,225		8,588			4,325			170,865		(10,714	)		160,151
Operating expenses		120,298		22,588		8,853			4,330			156,069		(10,838	)		145,231
Operating income (loss)	¥	11,429	¥	3,637	¥	(265	)	¥	(5	)	¥	14,796	¥	124		¥	14,920
Three months ended December 31, 2011	Japan		United States		Europe			Asia/Oceania			Total		Eliminations			Consolidated
	(Millions of Yen)
Net revenue:
External customers	¥	51,811	¥	11,095	¥	5,967		¥	2,553		¥	71,426		—		¥	71,426
Intersegment		4,446		1,381		62			48			5,937	¥	(5,937	)		—
Total		56,257		12,476		6,029			2,601			77,363		(5,937	)		71,426
Operating expenses		49,302		9,895		5,327			2,146			66,670		(5,980	)		60,690
Operating income	¥	6,955	¥	2,581	¥	702		¥	455		¥	10,693	¥	43		¥	10,736
Three months ended December 31, 2012	Japan		United States		Europe			Asia/Oceania			Total		Eliminations			Consolidated
	(Millions of Yen)
Net revenue:
External customers	¥	42,161	¥	7,207	¥	2,830		¥	1,280		¥	53,478		—		¥	53,478
Intersegment		2,749		1,162		28			196			4,135	¥	(4,135	)		—
Total		44,910		8,369		2,858			1,476			57,613		(4,135	)		53,478
Operating expenses		43,156		7,655		3,016			1,478			55,305		(4,184	)		51,121
Operating income (loss)	¥	1,754	¥	714	¥	(158	)	¥	(2	)	¥	2,308	¥	49		¥	2,357

For the purpose of presenting its operations in geographic areas above, KONAMI attributes revenues from external customers to individual countries in each area based on where the Company and its subsidiaries sold products or rendered services.

12. Commitments and Contingencies

KONAMI is subject to pending claims and litigation. After review and consultation with counsel, management considered that any liability that may result from the disposition of such lawsuits would not be material.

KONAMI has placed firm orders for purchases of property and equipment and other assets amounting to approximately ¥17,131 million as of December 31, 2012.

13. Subsequent Events

No reportable subsequent events occurred.

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