Earnings Release: First Quarter Ended June 30, 2016 (PDF: 496KB)

CONSOLIDATED FINANCIAL HIGHLIGHTS

Nintendo Co., Ltd.

July 27, 2016

Consolidated Results for the Three Months Ended June 2015 and 2016

11-1 Hokotate-cho, Kamitoba,

Minami-ku, Kyoto 601-8501 Japan

1. Consolidated operating results (Amounts below one million yen are rounded down)

   	Net sales	Operating income	Ordinary income	Profit attributable to owners of parent
   Three months ended June 30, 2016 Three months ended June 30, 2015	million yen % 61,969 (31.3) 90,223 20.8	million yen % (5,134) - 1,149 -	million yen % (38,674) - 14,286 -	million yen % (24,534) - 8,284 -

   [Note]

   Percentages for net sales, operating income etc. show increase (decrease) from the same period of the previous fiscal year.

   	Net income per share
   Three months ended June 30, 2016 Three months ended June 30, 2015	yen (204.23) 68.97

2. Consolidated financial positions

	Total assets	Net assets	Capital adequacy ratio
As of June 30, 2016	million yen	million yen	%
	1,214,642	1,093,719	90.0
As of March 31, 2016	1,296,902	1,160,901	89.5

Dividends

	Dividend per share
	End of 1st quarter		End of 2nd quarter		End of 3rd quarter		Year-end	Annual
Year ended March 31, 2016	-	yen	yen	- -	yen	yen	yen
			30.00			120.00	150.00
Year ending March 31, 2017 (forecast)	- *	- *	150.00

[Note]

*Dividends are paid twice a year after the end of the second quarter and at the fiscal year-end based on profit levels achieved in each fiscal year as our basic policy. As for the dividend forecast for the fiscal year ending March 31, 2017, only the annual dividend is described because the financial forecast for the year is prepared only on a full fiscal year basis and the dividend cannot be separately forecasted between the interim and the fiscal year-end.

Consolidated Financial Forecast for the Fiscal Year Ending March 31, 2017

	Net sales	Operating income	Ordinary income	Profit attributable to owners of parent	Net income per share
Year ending March 31, 2017	million yen % 500,000 (0.9)	million yen % 45,000 36.9	million yen % 45,000 56.3	million yen % 35,000 112.1	yen 291.35

[Note]

Percentages for net sales, operating income etc. show increase (decrease) from the previous period.

Others

1. Changes for important subsidiaries during the three-month period ended June 30, 2016 : Not applicable

2. Application of peculiar methods for accounting procedures : Applicable

3. Changes in accounting procedures:

4. Related to accounting standard revisions etc. : Applicable

5. Other changes : Not applicable

6. Changes in accounting estimates : Not applicable

7. Modified restatements : Not applicable

8. Outstanding shares (common shares)

① Number of shares outstanding (including treasury shares)

As of June 30, 2016 : 141,669,000 shares As of March 31, 2016 : 141,669,000 shares

② Number of treasury shares

As of June 30, 2016 : 21,539,978 shares As of March 31, 2016 : 21,539,677 shares

③ Average number of shares

Three months ended Three months ended

June 30, 2016 :

120,129,162 shares

June 30, 2015 :

120,111,875 shares

[Notes]

1. This earnings release report is not subject to audit procedures based on the Financial Instruments and Exchange Act. At the time of disclosure of this report, the audit procedures for the financial statements are in progress.

2. Forecasts announced by the Company (Nintendo Co., Ltd.) referred to above were prepared based on management's assumptions with information available at this time and therefore involve known and unknown risks and uncertainties. Please note such risks and uncertainties may cause the actual results to be materially different from the forecasts (earnings forecast, dividend forecast, and other forecasts).

1. Consolidated Operating Results

   During the three-month period ended June 30, 2016, for Nintendo 3DS, Kirby: Planet Robobot, which was released globally, showed steady sales. In the U.S., BRAVELY SECOND: END LAYER was released, and in Europe, Fire Emblem Fates: Birthright/Conquest was released and both titles got off to a good start. As a result, the worldwide sales of Nintendo 3DS hardware and software were 0.94 million (7% decrease on a year-on-year basis) and 8.47 million units (7% increase on a year-on-year basis) respectively.

   With respect to Wii U, in addition to titles such as Star Fox Zero/Guard and Mario & Sonic at the Rio 2016 Olympic Games, which were released globally, Splatoon and Super Mario Maker which were released during the prior fiscal year showed steady sales. The global sales of Wii U hardware and software were 0.22 million (53% decrease on a year-on-year basis) and 4.68 million units (3% increase on a year-on-year basis) respectively.

   For amiibo, the figure-type and the card-type sales remained at approximately 1.70 million units and 1.30 million units respectively mainly due to a lack of new titles that are compatible with amiibo.

   Download sales decreased year on year because sales of in-game downloadable content were down.

   In addition to these results, due to foreign exchange rates being impacted by significant yen appreciation, net sales were 61.9 billion yen (of which overseas sales were 44.8 billion yen or 72.3% of the total sales) and operating loss was 5.1 billion yen. As a result of exchange losses totaling 35.0 billion yen due to the appreciation of the yen, ordinary loss was 38.6 billion yen and loss attributable to owners of parent was 24.5 billion yen.

2. Consolidated Financial Forecast

   For Nintendo 3DS, we will release Pokémon Sun/Pokémon Moon globally in November. These are the latest titles from the Pokémon series, which has sold 200 million units worldwide since the first title from the series released 20 years ago. We will also release Mario Party Star Rush this fall. Furthermore, multiple titles from third-party publishers are also scheduled for release. With the release of these titles, we will re-energize our Nintendo 3DS business and aim to expand our reach globally to a broad audience, including female and younger consumer demographics.

   The dedicated gaming platform, code-named "NX," which is currently under development and incorporates a brand-new concept, is scheduled for launch in March 2017 globally.

   Furthermore, Nintendo will release Pokémon GO Plus, a peripheral for the mobile game app Pokémon GO(*) developed and distributed by U.S.-based company Niantic, Inc. Pokémon GO Plus interacts with the app and lets players know when Pokémon are detected. In addition, Nintendo plans to launch a miniature replica of the Nintendo Entertainment System, which was a phenomenon in the 1980s, with 30 classic software titles pre-installed in overseas markets this November.

   For our smart-device business, following Miitomo, which launched in March this year, we will release new apps such as Fire Emblem and Animal Crossing. By continuously introducing apps for smart devices, we aim to maximize the population that has access to Nintendo IP. Alongside creating new demand, we aim to increase the synergistic effect on Nintendo's dedicated game system business.

   There is no revision to the consolidated financial forecast for this fiscal year, announced on April 27, 2016.

   *The Pokémon Company, which is Nintendo's affiliated company accounted for by using the equity method, is supporting Niantic, Inc. in the development and operations of Pokémon GO, and licensing the ownership rights of Pokémon.

3. Other Information

   Application of peculiar methods for accounting procedures

   With respect to certain consolidated subsidiaries, corporate income tax amount is calculated by taking the amount of income before income taxes through the three-month period ended June 30, 2016 multiplied by reasonably estimated annual effective tax rate with the effects of deferred taxes reflected.

   Changes in accounting procedures related to accounting standard revisions etc.

   Effective beginning the three-month period ended June 30, 2016, Nintendo has adopted the "Practical Solution on Accounting for Changes in Depreciation Method related to the 2016 Tax Law Changes (PITF No.32 of June 17, 2016)," following the revision of the Corporation Tax Act.Accordingly, the depreciation method of structures and facilities attached to buildings acquired on and after April 1, 2016 was changed from declining-balance method to straight-line method.

   There is a minimal impact to the consolidated financial statements of the three-month period ended June 30, 2016.

   Additional information

   Effective beginning the three-month period ended June 30, 2016, Nintendo has adopted the "Revised Implementation Guidance on Recoverability of Deferred Tax Assets (ASBJ Guidance No.26 of March 28, 2016)."

4. Consolidated Balance Sheets

   million yen

   Description	As of March 31, 2016	As of June 30, 2016
   (Assets) Current assets Cash and deposits Notes and accounts receivable-trade Securities Inventories Other Allowance for doubtful accounts Total current assets Non-current assets Property, plant and equipment Intangible assets Investments and other assets Investment securities Other Total investments and other assets Total non-current assets Total assets	570,448	582,532
   	38,731	25,351
   	338,892	226,375
   	40,433	36,127
   	32,999	45,426
   	(369)	(109)
   	1,021,135	915,703
   	87,752	85,327
   	9,977	9,428
   	125,774	141,926
   	52,262	62,257
   	178,037	204,183
   	275,766	298,938
   	1,296,902	1,214,642
   (Liabilities)	31,857	32,570
   Current liabilities
   Notes and accounts payable-trade
   Income taxes payable	1,878	1,254
   Provision	2,294	802
   Other	62,407	52,442
   Total current liabilities	98,437	87,069
   Non-current liabilities	23,546	20,967
   Net defined benefit liability
   Other	14,017	12,885
   Total non-current liabilities	37,563	33,853
   Total liabilities	136,001	120,923
   (Net assets)	10,065	10,065
   Shareholders' equity
   Capital stock
   Capital surplus	13,256	13,256
   Retained earnings	1,401,359	1,362,409
   Treasury shares	(250,563)	(250,567)
   Total shareholders' equity	1,174,118	1,135,163
   Accumulated other comprehensive income	11,909	13,569
   Valuation difference on available-for-sale securities
   Foreign currency translation adjustment	(25,250)	(55,142)
   Total accumulated other comprehensive income	(13,341)	(41,572)
   Non-controlling interests	124	128
   Total net assets	1,160,901	1,093,719
   Total liabilities and net assets	1,296,902	1,214,642

5. Consolidated Statements of Income

   million yen

   Description	Three months ended June 30, 2015	Three months ended June 30, 2016
   Net sales	90,223	61,969
   Cost of sales	47,537	31,436
   Gross profit	42,685	30,532
   Selling, general and administrative expenses	41,536	35,667
   Operating income (loss)	1,149	(5,134)
   Non-operating income	1,026	1,123
   Interest income
   Dividend income	319	546
   Foreign exchange gains	10,818	-
   Other	1,009	198
   Total non-operating income	13,173	1,869
   Non-operating expenses	18	3
   Sales discounts
   Foreign exchange losses	-	35,003
   Other	17	401
   Total non-operating expenses	35	35,409
   Ordinary income (loss)	14,286	(38,674)
   Extraordinary income	3	5
   Gain on sales of non-current assets
   Total extraordinary income	3	5
   Extraordinary losses	5	18
   Loss on disposal of non-current asset
   Total extraordinary losses	5	18
   Profit (loss) before income taxes	14,285	(38,688)
   Total income taxes	6,003	(14,157)
   Profit (loss)	8,281	(24,530)
   Profit (loss) attributable to non-controlling interests	(2)	4
   Profit (loss) attributable to owners of parent	8,284	(24,534)

6. Consolidated Statements of Comprehensive Income

   million yen

   Description	Three months ended June 30, 2015	Three months ended June 30, 2016
   Profit (loss) Other comprehensive income Valuation difference on available-for-sale securities Foreign currency translation adjustment Share of other comprehensive income of entities accounted for using equity method Total other comprehensive income Comprehensive income (Comprehensive income attributable to) Comprehensive income attributable to owners of parent Comprehensive income attributable to non-controlling interests	8,281	(24,530)
   	11,160	1,675
   	10,123	(29,891)
   	4	(15)
   	21,289	(28,231)
   	29,571	(52,761)
   	29,573	(52,765)
   	(2)	4

7. Others

Category	Three months ended June 30, 2015	Three months ended June 30, 2016
Dedicated video game hardware	44,556	25,104
Dedicated video game software	44,439	34,850
Smart devices, IP related income, etc. *	932	1,649
Playing cards, Karuta, etc.	294	364
Total	90,223	61,969

(1) Consolidated sales information

[Note] Download sales

Three months ended June 30, 2015: 12.0 billion yen Three months ended June 30, 2016: 7.8 billion yen

* includes income for smart-device content and royalty income

Japan	The Americas	Europe	Other	Total
Three months ended June 30, 2016	Net sales	17,149	26,406	15,837	2,574	61,969
	Component ratio	27.7%	42.6%	25.6%	4.1%	100.0%
Three months ended June 30, 2015	Net sales	25,209	39,259	21,596	4,157	90,223
	Component ratio	27.9%	43.5%	23.9%	4.7%	100.0%

1. Geographical sales breakdown

2. Other consolidated information

   million yen

   million yen

   million yen

   Three months ended June 30, 2015	Three months ended June 30, 2016	Year ending March 31, 2017 (Forecast)
   Depreciation of property, plant and equipment		1,659	1,246	6,000
   Research and development expenses		13,878	13,474	65,000
   Advertising expenses		11,022	7,857	50,000
   Average exchange rates	1 USD =	121.36 yen	108.14 yen	110.00 yen
   	1 Euro =	134.16 yen	122.02 yen	125.00 yen

   Consolidated net sales in U.S. dollars	0.2 billion	0.2 billion	-
   Consolidated net sales in Euros	0.1 billion	0.1 billion	-
   Non-consolidated purchases in U.S. dollars	0.1 billion	0.1 billion	-

3. Balance of major assets and liabilities in foreign currencies (non-consolidated)

   million U.S. dollars/euros

   As of March 31, 2016		As of June 30, 2016		As of March 31, 2017
   Balance	Exchange rate	Balance	Exchange rate	Estimated exchange rate
   USD Cash and deposits Accounts receivable-trade Accounts payable-trade	2,196 149 66	1 USD = 112.68 yen	2,133 79 91	1 USD = 102.91 yen	1 USD = 110.00 yen
   Euro Cash and deposits Accounts receivable-trade	665 111	1 Euro = 127.70 yen	725 98	1 Euro = 114.39 yen	1 Euro = 125.00 yen

4. Consolidated sales units, number of new titles, and sales units forecast

Actual Apr. - Jun. '15				Actual Apr. - Jun. '16
Nintendo 3DS	Hardware	Japan	29	31
The Americas	40	35
Other	32	28
of which Nintendo 3DS XL of which Nintendo 2DS of which New Nintendo 3DS of which New Nintendo 3DS XL Software		Total	101	94
		Japan	0	(0)
		The Americas	5	(0)
		Other	3	1
		Total	8	1
		Japan	-	-
		The Americas	2	15
		Other	3	9
		Total	5	24
		Japan	6	4
		The Americas	-	(0)
		Other	9	4
		Total	15	8
		Japan	21	27
		The Americas	33	20
		Other	17	12
		Total	71	59
		Japan	329	209
		The Americas	232	316
		Other	230	322
		Total	792	847
New titles	Japan	25	16
The Americas	10	10
Other	18	10
Wii U	Hardware	Japan	15	7
	The Americas	19	9
	Other	13	5
	Software	Total	47	22
		Japan	101	60
		The Americas	206	246
		Other	148	161
		Total	455	468
	New titles	Japan	6	6
	The Americas	4	7
	Other	6	6

Sales Units in Ten Thousands

Number of New Titles Released Life-to-date Forecast

Jun. '16

2,163

2,011

Apr. '16-Mar. '17

1,805

5,979 500

704

663

592

1,959

10

237

269

517

108

11

74

192

318

229

142

689

10,769

9,481

8,015

28,265

550

420

5,500

471

321

629

353

1,302 80 1,408

4,884

2,579

8,872 1,500

108

157

146

[Notes]

1. Software sales units and the number of new titles for Nintendo 3DS are those of Nintendo 3DS card software (packaged and downloadable versions).

2. Software sales units and the number of new titles for Wii U are those of Wii U disc software (packaged and downloadable versions).

3. Actual software sales units of each platform include the quantity bundled with hardware.

4. Forecasted software sales units do not include the quantity bundled with hardware.

* The dedicated video game hardware codenamed "NX" is scheduled for launch in March of 2017. Its estimated hardware and software sales units are reflected in the financial forecast ending March 31, 2017, however, we are not disclosing the specific information as it is provisional.