Reassessment of Transfer Pricing of Transactions
between KONAMI CORPORATION and Konami Digital Entertainment GmbH

Konami Corporation ("Konami") received notification from the Tokyo Regional Tax Bureau ("TRTB"), of a reassessment of transfer taxes related to its game software transactions with Konami Digital Entertainment GmbH, its wholly-owned subsidiary in Frankfurt, Germany, for the 6-year period of 2002 - 2007.

Konami believes that its allocation of income as reported to the Japanese and German tax authorities were appropriate and that Konami and Konami Digital Entertainment GmbH have paid the proper amount of taxes to each of the jurisdictions. Thus, it is extremely regrettable and totally unacceptable for Konami to receive such reassessment.

Konami disagrees with the position of the TRTB with respect to the reassessment, and from the standpoint of preventing double taxation, it has immediately filed a formal request for bilateral consultation between the Japanese and German tax authorities based on the Japan-Germany Tax Convention. Additionally, Konami will seek relief from the assessment through administrative and, if necessary, legal proceedings. Konami is confident that its assertion will be fully respected during the course of relevant proceedings and that this case will be resolved in a manner acceptable to Konami.

Transfer pricing was reassessed in accordance with the notification from the TRTB, resulting in additional Japanese income of approximately 1.6 billion yen, which led to Konami Corporation incurring an additional tax (including corporation tax and others) of approximately 0.8 billion yen. Konami believes that double taxation will be avoided through the above procedures, and therefore, Konami does not expect any material impact on our consolidated profit and loss as a result of the reassessment.

In accordance with the tax revisions in 2007, until the procedures above will be settled, it is allowed to postpone the payments of the additional tax resulted from transfer pricing reassessment. Konami Corporation will file an request for the postponement of tax payment based on this rule.