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 August 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 three-month period ended June  30, 2013 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: August 23, 2013	By:	/s/ Takuya Kozuki
	Name:	Takuya Kozuki
	Title:	Representative Director, President

KONAMI CORPORATION filed its Quarterly Securities Report for the three-month period ended June 30, 2013 with the Director of the Kanto Local Finance Bureau of the Ministry of Finance of Japan on August 13, 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, 2013		June 30, 2013
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	¥	63,669	¥	44,427
Trade notes and accounts receivable, net of allowance for doubtful accounts of ¥683 million at March 31, 2013 and ¥674 million at June 30, 2013		33,066		20,745
Inventories		26,349		30,453
Deferred income taxes, net		20,749		19,728
Prepaid expenses and other current assets		9,650		12,631
Total current assets		153,483		127,984
PROPERTY AND EQUIPMENT, net		62,651		79,598
INVESTMENTS AND OTHER ASSETS:
Investments in marketable securities		440		511
Investments in affiliate		2,247		2,252
Identifiable intangible assets		42,225		42,141
Goodwill		21,934		21,956
Lease deposits		26,625		26,555
Deferred income taxes, net		1,875		1,887
Other assets		11,468		11,253
Total investments and other assets		106,814		106,555
TOTAL ASSETS	¥	322,948	¥	314,137

See accompanying notes to consolidated financial statements.

– 1 –

	Millions of Yen
	March 31, 2013			June 30, 2013
LIABILITIES
CURRENT LIABILITIES:
Short-term borrowings	¥	4,681		¥	5,222
Current portion of long-term debt		5,000			5,000
Current portion of capital lease and financing obligations		2,166			2,101
Trade notes and accounts payable		14,443			12,833
Accrued income taxes		4,104			351
Accrued expenses		19,971			17,904
Deferred revenue		5,464			5,736
Other current liabilities		3,683			3,607
Total current liabilities		59,512			52,754
LONG-TERM LIABILITIES:
Capital lease and financing obligations, less current portion		22,588			22,080
Accrued pension and severance costs		1,531			1,526
Deferred income taxes, net		4,424			4,377
Other long-term liabilities		8,894			9,209
Total long-term liabilities		37,437			37,192
TOTAL LIABILITIES		96,949			89,946
COMMITMENTS AND CONTINGENCIES (Note 11)
EQUITY
KONAMI CORPORATION stockholders’ equity:
Common stock, no par value- Authorized 450,000,000 shares; issued 143,500,000 shares at March 31, 2013 and June 30, 2013; outstanding 138,618,060 shares at March 31, 2013 and 138,615,843 shares at June 30, 2013		47,399			47,399
Additional paid-in capital		74,175			74,175
Legal reserve		284			284
Retained earnings		113,808			111,277
Accumulated other comprehensive income		1,009			1,715
Treasury stock, at cost- 4,881,940 shares at March 31, 2013 and 4,884,157 shares at June 30, 2013		(11,250	)		(11,255	)
Total KONAMI CORPORATION stockholders’ equity		225,425			223,595
Noncontrolling interest		574			596
TOTAL EQUITY		225,999			224,191
TOTAL LIABILITIES AND EQUITY	¥	322,948		¥	314,137

See accompanying notes to consolidated financial statements.

– 2 –

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

For the three months ended June 30, 2012 and 2013 Consolidated Statements of Income

	Millions of Yen
	Three months ended June 30, 2012			Three months ended June  30, 2013
NET REVENUES:
Product sales revenue	¥	19,266		¥	15,798
Service and other revenue		29,862			29,791
Total net revenues		49,128			45,589
COSTS AND EXPENSES:
Costs of products sold		10,967			8,915
Costs of services rendered and others		21,420			22,734
Selling, general and administrative		11,361			12,445
Total costs and expenses		43,748			44,094
Operating income		5,380			1,495
OTHER INCOME (EXPENSES):
Interest income		54			60
Interest expense		(345	)		(302	)
Foreign currency exchange gain (loss), net		(329	)		895
Other, net		(115	)		(5	)
Other income (expenses), net		(735	)		648
INCOME BEFORE INCOME TAXES AND EQUITY IN NET INCOME OF AFFILIATED COMPANY		4,645			2,143
INCOME TAXES		1,894			1,221
EQUITY IN NET INCOME OF AFFILIATED COMPANY		3			34
NET INCOME		2,754			956
NET INCOME ATTRIBUTABLE TO THE NONCONTROLLING INTEREST		39			22
NET INCOME ATTRIBUTABLE TO KONAMI CORPORATION	¥	2,715		¥	934

– 3 –

Consolidated Statements of Comprehensive Income
	Millions of Yen
	Three months ended June 30, 2012			Three months ended June  30, 2013
Net income	¥	2,754		¥	956
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments		(1,268	)		661
Net unrealized gains on available-for-sale securities		42			45
Pension liability adjustment		1			0
Other comprehensive income (loss)		(1,225	)		706
Comprehensive income		1,529			1,662
Comprehensive income attributable to the noncontrolling interest		39			22
Comprehensive income attributable to KONAMI CORPORATION	¥	1,490		¥	1,640
Per Share Data:
	Three months ended June 30, 2012			Three months ended June 30, 2013
Net income attributable to KONAMI CORPORATION per share:
Basic	¥	19.59		¥	6.74
Diluted		19.59			6.74
Weighted-average common shares outstanding		138,619,708			138,616,903
Diluted weighted-average common shares outstanding		138,619,708			138,616,903

See accompanying notes to consolidated financial statements.

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(3) Consolidated Statements of Cash Flows (Unaudited)

	Millions of Yen
	Three months ended June 30, 2012			Three months  ended June 30, 2013
Cash flows from operating activities:
Net income	¥	2,754		¥	956
Adjustments to reconcile net income to net cash provided by operating activities -
Depreciation and amortization		2,317			2,351
Provision for doubtful receivables		(2	)		(46	)
Loss on sale or disposal of property and equipment, net		22			12
Equity in net income of affiliated company		(3	)		(34	)
Deferred income taxes		1,544			930
Change in assets and liabilities, net of businesses acquired:
Decrease in trade notes and accounts receivable		12,342			12,899
Increase in inventories		(1,923	)		(4,234	)
Increase in prepaid expenses		(905	)		(904	)
Decrease in trade notes and accounts payable		(3,937	)		(2,004	)
Decrease in accrued income taxes, net of tax refunds		(11,212	)		(5,797	)
Decrease in accrued expenses		(2,667	)		(2,124	)
Increase in deferred revenue		420			159
Other, net		(179	)		1,039
Net cash provided by (used in) operating activities		(1,429	)		3,203
Cash flows from investing activities:
Capital expenditures, including interest capitalized		(4,402	)		(19,354	)
Decrease (increase) in lease deposits, net		(33	)		117
Other, net		(1	)		102
Net cash used in investing activities		(4,436	)		(19,135	)
Cash flows from financing activities:
Increase in short-term borrowings, net		986			450
Principal payments under capital lease and financing obligations		(646	)		(586	)
Dividends paid		(3,314	)		(3,313	)
Other, net		(2	)		(5	)
Net cash used in financing activities		(2,976	)		(3,454	)
Effect of exchange rate changes on cash and cash equivalents		(362	)		144
Net decrease in cash and cash equivalents		(9,203	)		(19,242	)
Cash and cash equivalents, beginning of the period		76,451			63,669
Cash and cash equivalents, end of the period	¥	67,248		¥	44,427

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. Changes in Accounting Policies

New Accounting Pronouncements Adopted

Effective April 1, 2013, KONAMI has adopted Accounting Standards Update (“ASU”) 2013-02, “Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income”. ASU 2013-02 requires the presentation of the amounts reclassified out of accumulated other comprehensive income by component, and to present, either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income. This ASU only updates disclosure requirements.

Change in Depreciation Method

Previously, the Company and its domestic subsidiaries had principally used the declining-balance method for computing depreciation expense of property and equipment. Effective April 1, 2013, the Company and its domestic subsidiaries changed their depreciation method to the straight-line method in order to appropriately reflect recent changes in the business environment. In the Health & Fitness Segment, management has decided to limit new capital expenditures for additional facilities and has begun implementing a new strategy to improve retention for longer-term membership. This will enable the Company to achieve a more stable utilization of the existing facilities. In addition, in other segments, the products and services have generally began generating consistent revenue and the centralization and enhancement of the production and manufacturing systems have resulted in a change in pattern of consumption, and it better reflects the future economic benefit from the usage of the property and equipment. The effect of the change in depreciation method is recognized prospectively as a change in accounting estimate in accordance with the FASB Accounting Standards Codification 250 “Accounting Changes and Error Corrections”.

As a result of the change in depreciation method, depreciation expense for the three months ended June 30, 2013 decreased by approximately ¥188 million, and net income attributable to KONAMI CORPORATION and basic net income attributable to KONAMI CORPORATION per common share increased by ¥116 million and ¥0.84, respectively.

4. Inventories

Inventories at March 31, 2013 and June 30, 2013 consisted of the following:

	Millions of Yen
	March 31, 2013		June 30, 2013
Finished products	¥	7,813	¥	8,596
Work in process		13,513		16,851
Raw materials and supplies		5,023		5,006
Total	¥	26,349	¥	30,453

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5. Property and Equipment

Property and equipment at March 31, 2013 and June 30, 2013 consisted of the following:

	Millions of Yen
	March 31, 2013			June 30, 2013
Property and equipment, at cost:
Land	¥	14,542		¥	32,498
Buildings and structures		77,796			78,419
Tools, furniture and fixtures		26,672			27,369
Construction in progress		2,050			722
Total		121,060			139,008
Less-Accumulated depreciation and amortization		(58,409	)		(59,410	)
Net property and equipment	¥	62,251		¥	79,598

6. Equity

The changes in the carrying amount of KONAMI CORPORATION stockholders’ equity, noncontrolling interest and total equity in the consolidated balance sheets for the three months ended June 30, 2012 and 2013 were as follows:

	Millions of Yen
For the three months ended June 30, 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		(3,466	)		—		(3,466	)
Purchase of treasury stock		(2	)		—		(2	)
Comprehensive income:
Net income for the period		2,715			39		2,754
Other comprehensive loss, net of tax		(1,225	)		—		(1,225	)
Comprehensive income for the period		1,490			39		1,529
Balance at June 30, 2012	¥	213,480		¥	301	¥	213,781

	Millions of Yen
For the three months ended June 30, 2013	KONAMI CORPORATION stockholders’ equity			Noncontrolling interest		Total equity
Balance at March 31, 2013	¥	225,425		¥	574	¥	225,999
Cash dividends attributable to KONAMI CORPORATION stockholders		(3,465	)		—		(3,465	)
Purchase of treasury stock		(5	)		—		(5	)
Comprehensive income:
Net income for the period		934			22		956
Other comprehensive income, net of tax		706			—		706
Comprehensive income for the period		1,640			22		1,662
Balance at June 30, 2013	¥	223,595		¥	596	¥	224,191

– 7 –

7. Other Comprehensive Income (Loss)

Changes in accumulated other comprehensive income (loss), net of applicable taxes, for the three months ended June 30, 2013 are as follows:

	Millions of Yen
	Foreign currency translation adjustments		Net unrealized gains on available-for-sale securities		Pension liability adjustment			Total
Balance at March 31, 2013	¥	1,033	¥	25	¥	(49	)	¥	1,009
Other comprehensive income (loss) before reclassifications		661		45		—			706
Amounts reclassified from accumulated other comprehensive income (loss)		—		—		0			0
Changes in accumulated other comprehensive income (loss), net		661		45		0			706
Balance at June 30, 2013	¥	1,694	¥	70	¥	(49	)	¥	1,715

Note: Amounts reclassified from pension liability adjustment are included in the Selling, general and administrative expenses in the consolidated statements of income.

8. 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, 2013 and June 30, 2013 are as follows:

	Millions of Yen
	March 31, 2013						June 30, 2013
	Carrying amount			Estimated fair value			Carrying amount			Estimated fair value
Non-derivatives:
Investment in marketable securities	¥	440		¥	440		¥	511		¥	511
Long-term debt, including current portion		(5,000	)		(5,014	)		(5,000	)		(5,027	)
Derivatives:
Foreign exchange forward contracts:
Assets		—			—			—			—
Liabilities		—			—			—			—

– 8 –

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.

9. 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, 2013 and June 30, 2013, 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, 2013	Level 1		Level 2		Level 3		Total
Assets:
Marketable securities	¥	440		—		—	¥	440
Total assets	¥	440		—		—	¥	440
Liabilities:		—		—		—		—
Total liabilities		—		—		—		—
	Millions of Yen
June 30, 2013	Level 1		Level 2		Level 3		Total
Assets:
Marketable securities	¥	511		—		—	¥	511
Total assets	¥	511		—		—	¥	511
Liabilities:		—		—		—		—
Total liabilities		—		—		—		—

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, 2013 and June 30, 2013, KONAMI did not have any Level 3 financial instruments that were measured and recorded at fair value on a recurring basis.

10. 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.

– 9 –

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 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

Three months ended June 30, 2012	Digital Entertainment		Health & Fitness		Gaming & Systems		Pachinko & Pachinko Slot Machines		Corporate and Eliminations			Consolidated
	(Millions of Yen)
Net revenue:
External customers	¥	22,662	¥	19,708	¥	5,205	¥	1,553		—		¥	49,128
Intersegment		158		9		—		0	¥	(167	)		—
Total		22,820		19,717		5,205		1,553		(167	)		49,128
Operating expenses		17,628		19,035		4,176		1,149		1,760			43,748
Operating income (loss)	¥	5,192	¥	682	¥	1,029	¥	404	¥	(1,927	)	¥	5,380

Three months ended June 30, 2013	Digital Entertainment		Health & Fitness		Gaming & Systems		Pachinko & Pachinko Slot Machines			Corporate and Eliminations			Consolidated
	(Millions of Yen)
Net revenue:
External customers	¥	19,862	¥	18,941	¥	6,094	¥	692			—		¥	45,589
Intersegment		143		11		—		1		¥	(155	)		—
Total		20,005		18,952		6,094		693			(155	)		45,589
Operating expenses		18,328		18,616		4,877		1,179			1,094			44,094
Operating income (loss)	¥	1,677	¥	336	¥	1,217	¥	(486	)	¥	(1,249	)	¥	1,495

b. Geographic information

Three months ended June 30, 2012	Japan		United States		Europe			Asia/Oceania			Total		Eliminations			Consolidated
	(Millions of Yen)
Net revenue:
External customers	¥	39,198	¥	7,287	¥	1,469		¥	1,174		¥	49,128		—		¥	49,128
Intercompany		1,682		425		51			21			2,179	¥	(2,179	)		—
Total		40,880		7,712		1,520			1,195			51,307		(2,179	)		49,128
Operating expenses		36,159		6,787		1,788			1,199			45,933		(2,185	)		43,748
Operating income (loss)	¥	4,721	¥	925	¥	(268	)	¥	(4	)	¥	5,374	¥	6		¥	5,380

Three months ended June 30, 2013	Japan		United States		Europe			Asia/Oceania		Total		Eliminations			Consolidated
	(Millions of Yen)
Net revenue:
External customers	¥	35,198	¥	7,545	¥	1,359		¥	1,487	¥	45,589		—		¥	45,589
Intercompany		1,815		941		17			208		2,981	¥	(2,981	)		—
Total		37,013		8,486		1,376			1,695		48,570		(2,981	)		45,589
Operating expenses		36,375		7,416		1,747			1,594		47,132		(3,038	)		44,094
Operating income (loss)	¥	638	¥	1,070	¥	(371	)	¥	101	¥	1,438	¥	57		¥	1,495

– 10 –

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.

11. 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 ¥1,450 million as of June 30, 2013.

12. Subsequent Events

No reportable subsequent events occurred.

– 11 –