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Annual Report 2014
for the fiscal year ended March 31, 2014
Nintendo Co., Ltd.

Table of contents

  • Page 1
    Annual Report 2014 for the fiscal year ended March 31, 2014 Nintendo Co., Ltd.

  • Page 2
    ...3. Research and development activities ...9 4. Analysis of financial position, operating results and cash flow ...9 III. Equipment and Facilities ...12 Overview of capital investments ...12 IV. Profile of the Company ...13 Members of the Board of Directors and Auditors ...13 V. Financial Information...

  • Page 3
    ... net income per share (Yen) (Dollars) - 75.89 17.65 17.51 - 78.42 5.93 37.02 - 87.03 - - - 84.77 0.59 182.10 - 85.60 - - - - - - Capital adequacy ratio (%) Return on equity (ROE) (%) Price earnings ratio (PER) (Times) Net cash provided by (used in) operating activities (Millions of yen...

  • Page 4
    ... convenience only, at a rate of ¥103 to U.S.$1, the prevailing exchange rate on March 31, 2014. Net sales do not include consumption taxes. "Diluted net income per share" is not noted because the Company has not issued any dilutive shares. "Return on equity" and "Price earnings ratio" for the 72nd...

  • Page 5
    ... main subsidiaries and associates are described below. Segment information is omitted as Nintendo operates as a single business segment. - Development Nintendo Co., Ltd., Nintendo Technology Development Inc., Nintendo Software Technology Corporation, Retro Studios, Inc., Nintendo European Research...

  • Page 6
    ...S.A. Nintendo RU LLC. Nintendo Australia Pty. Ltd. Nintendo Phuten Co., Ltd. Nintendo of Korea Co., Ltd. *1 iQue (China) Ltd. *1 Nintendo Technology Development Inc. Nintendo Software Technology Corporation SiRAS.com Inc. Retro Studios, Inc. *1 Nintendo (Hong Kong) Limited Nintendo European Research...

  • Page 7
    ... Total assets (Millions of dollars) 2,028 935 (2) Associates accounted for using equity method Relationship with the Company Capital stock Name of company Location or Investments in capital Description of principal business Percentage of voting rights held by the Company Concurrent positions...

  • Page 8
    ... and "New Super Luigi U" became million-seller titles, the "Wii U" business as a whole showed slow growth. The global sales of the "Wii U" hardware and software reached only 2.72 million and 18.86 million units respectively. Regarding "Nintendo DS (DS, DS Lite, DSi and DSi XL)," the global sales of...

  • Page 9
    ...ended March 31, 2014. (1) Risks around economic environment • Fluctuation in foreign exchange rates Nintendo distributes its products globally with overseas sales accounting for about 70% of its total sales. The majority of monetary transactions are made in local currencies. In order to reduce the...

  • Page 10
    ... on Nintendo's future operating results, share price and financial condition. (3) Risks around legal regulations and litigation • Product liability Nintendo manufactures its products in accordance with applicable quality control standards in locations of sale. However, large-scale product recalls...

  • Page 11
    .... Nintendo continues to engage in the development of new products for the future. 4. Analysis of financial position, operating results and cash flow All financial information contained below is based on the consolidated financial statements disclosed in the Annual Securities Report (Japanese...

  • Page 12
    ... As a result, exchange rate fluctuations may have an impact on Nintendo's financial performance. While video game systems and their compatible software, which are Nintendo's main products, represent a majority of total sales, hardware and software have very different profit margins, and fluctuations...

  • Page 13
    ... in) operating activities. Moreover, Nintendo maintains retained earnings that are necessary in order to adapt to changes in the business environment and to pursue further business expansion in the future. Payments into or withdrawals from time deposits with maturities of more than three months, as...

  • Page 14
    ... of the Development Center, and included intangible assets such as internal use computer software. Regarding the required funds, all of the capital investments were self-financed and we did not raise external financing. Segment information is omitted as Nintendo operates as a single business segment...

  • Page 15
    ... Number of shares held (hundreds) *1 67 Senior Managing Director (Representative Director) General Manager, Integrated Research & Development Division July 1972 June 2000 May 2002 Genyo Takeda March 7, 1949 February 2013 *1 2 General Senior Manager, Managing Entertainment Director Analysis...

  • Page 16
    ... (to present) Jointed the Company General Manager, Corporate Communications Department Superintendent, General Affairs Department Appointed as Full-Time Auditor (to present) Term Number of shares held (hundreds) Director General Manager, Software Planning & Development Division Shinya Takahashi...

  • Page 17
    ...Appointed to Representative Partner of Umeyama Certified Tax Accountant LLC (to present) April 2012 Appointed to Inspector (part-time) of Shiga University of Medical Science (to present) June 2012 Appointed as Auditor of the Company (to present) Total Term Number of shares held (hundreds) Auditor...

  • Page 18
    ... assets Cash and deposits Notes and accounts receivable - trade Securities Inventories Deferred tax assets Other Allowance for doubtful accounts Total current assets Non-current assets Property, plant and equipment Buildings and structures, net Machinery, equipment and vehicles, net Tools, furniture...

  • Page 19
    ... benefits Net defined benefit liability Other Total non-current liabilities Total liabilities Net assets Shareholders' equity Capital stock Capital surplus Retained earnings Treasury shares Total shareholders' equity Accumulated other comprehensive income Valuation difference on available-for-sale...

  • Page 20
    ... 2012 to March 31, 2013) (Millions of yen) 635,422 *1, *3 495,068 140,354 *2, *3 Net sales Cost of sales Gross profit Selling, general and administrative expenses Operating loss Non-operating income Interest income Foreign exchange gains Other Total non-operating income Non-operating expenses Sales...

  • Page 21
    ... 1, 2013 to March 31, 2014) (Millions of yen) (23,202) 4,833 36,145 196 *1 Income (loss) before minority interests Other comprehensive income Valuation difference on available-for-sale securities Foreign currency translation adjustment Share of other comprehensive income of entities accounted for...

  • Page 22
    ... 1, 2012 to March 31, 2013) (Millions of yen) Shareholders' equity Capital stock Balance at beginning of current period Changes of items during period Dividends of surplus Net income Purchase of treasury shares Disposal of treasury shares Net changes of items other than shareholders' equity Total...

  • Page 23
    ... 2013 to March 31, 2014) (Millions of yen) Shareholders' equity Capital stock Balance at beginning of current period Changes of items during period Dividends of surplus Net loss Purchase of treasury shares Disposal of treasury shares Net changes of items other than shareholders' equity Total changes...

  • Page 24
    ... 1, 2013 to March 31, 2014) (Millions of dollars) Shareholders' equity Capital stock Balance at beginning of current period Changes of items during period Dividends of surplus Net loss Purchase of treasury shares Disposal of treasury shares Net changes of items other than shareholders' equity Total...

  • Page 25
    ... accounts payable - trade Increase (decrease) in accrued consumption taxes Other, net Subtotal Interest and dividend income received Interest expenses paid Income taxes (paid) refund Net cash provided by (used in) operating activities Cash flows from investing activities Payments into time deposits...

  • Page 26
    ... be converted into U.S. dollars at this or any other rate of exchange. The accompanying consolidated financial statements are not intended to present the consolidated financial position, results of operations and cash flows in accordance with accounting principles and practices generally accepted...

  • Page 27
    ... small-scale company and none of its total assets, net sales, net income or loss, retained earnings or other items have a significant impact on the consolidated financial statements. (2) 2. Application of the equity method (1) Number of associates accounted for under the equity method: 5 companies...

  • Page 28
    ... of net defined benefit liability and retirement benefit expenses. Assets in the Company's defined benefit corporate pension plan are recorded as "Net defined benefit asset" under investments and other assets as the plan assets exceeded the retirement benefit obligations. (5) Standards of...

  • Page 29
    ... consumption taxes are accounted for by the tax exclusion method. (7) (8) Changes in accounting policies Application of accounting standard for retirement benefits, etc. The Company has applied the "Accounting Standard for Retirement Benefits" (Accounting Standards Board of Japan Statement No...

  • Page 30
    ...March 31, 2014. The consolidated financial statements of the previous fiscal year have been reclassified to reflect this change in presentation. As a result, an inflow of ¥65 million of "Proceeds from sales of property, plant and equipment" under cash flows from investing activities in the previous...

  • Page 31
    ... 2014) to March 31, 2013) Loss on retirement Loss on retirement Buildings and structures ¥ 16 million Buildings and structures ¥ 39 million Tools, furniture and Tools, furniture and 27 4 fixtures fixtures Software 1 Land 12 Total ¥ 22 Total ¥ 79 U.S.$ 0 million 0 U.S.$ 0 0 *6. Income taxes...

  • Page 32
    ... unit and the decrease is from sales in line with additional purchase requests for shares less than one unit. 3. Matters concerning dividends (1) Amount of dividends paid Resolution Annual General Meeting of Shareholders held on June 28, 2012 Type of share Common shares Amount of dividends ¥12,787...

  • Page 33
    ... 28, 2013 (2) Dividend payments for which the record date is in the fiscal year ended March 31, 2014 and the effective date is in the following fiscal year Resolution Annual General Meeting of Shareholders held on June 27, 2014 Type of share Amount of dividends Source of dividends Retained earnings...

  • Page 34
    ... exchange risk and market risk. Nintendo closely monitors the market price of such bonds and the financial position of the issuer and reviews their status on a regular basis. Stocks included in investment securities are mainly those of companies with which the Company has business relationships...

  • Page 35
    ...(As of March 31, 2013) Book value Cash and deposits Notes and accounts receivable - trade Short-term and long-term investment securities Held-to-maturity debt securities Other securities Total assets Notes and accounts payable - trade Income taxes payable Total liabilities Derivatives 478,761 45,873...

  • Page 36
    ... stocks which do not have market prices and of which future cash flows cannot be estimated are not included in "Short-term and long-term investment securities," since the estimation of the fair value is deemed to be extremely difficult. 3. Redemption schedule for monetary receivables and securities...

  • Page 37
    (Millions of dollars) Due within one year Cash and deposits Notes and accounts receivable - trade Short-term and long-term investment securities Held-to-maturity debt securities Certificate of deposits Money held in trust Corporate and government bonds Other securities with maturity Certificate of ...

  • Page 38
    ...2 20,100 47,727 53 47,780 146,895 47,827 53 47,880 126,894 (99) - (99) 20,000 (Millions of dollars) Difference Book value Securities whose book value on the consolidated balance sheets exceeds their acquisition cost Equity securities Debt securities Other Sub-total Securities whose book value on...

  • Page 39
    ... fiscal year (From April 1, 2013 to March 31, 2014) Amount sold Debt securities Other Total 407,148 60,360 467,508 Total gain 217 1 219 (Millions of yen) Total loss 37 - 37 (Millions of dollars) Total loss 2 0 2 0 - 0 Amount sold Debt securities Other Total 3,952 586 4,538 Total gain - 37 -

  • Page 40
    ...Classification Type of transaction Exchange forward contracts Selling Canadian Dollar Non-deliverable forward contracts Transactions other than market transactions Selling South Korean Won Currency options Written call options Euro [Premium] Purchased put options Euro [Premium] Total 8,895 [136 150...

  • Page 41
    ... on price quoted by correspondent financial institutions. Amounts presented in square parentheses [ ] above are option premiums. Retirement benefits Previous fiscal year (From April 1, 2012 to March 31, 2013) 1. Summary of retirement benefit plans adopted The Company has a defined benefit corporate...

  • Page 42
    ... is mainly contribution amount related to defined contribution plans. 4. Basis for calculation of retirement benefit obligations (i) Method of attributing projected retirement benefits to period Straight-line method Discount rate and expected return rate on plan assets Discount rate Expected return...

  • Page 43
    ...Plan assets a. Main components of plan assets The ratios of components to plan assets by major category are as follows. Stocks Bonds Other Total 45% 40 15 100 b. Method for establishing expected long-term return rate on plan assets In order to determine expected long-term return rate on plan assets...

  • Page 44
    ... of the fiscal year ended March 31, 2014, are as follows. Discount rate 1.5% to 4.3% 1.4% to 7.5% Expected long-term return rate on plan assets 3. Defined contribution plans The amount of contribution required for the defined contribution plans at certain consolidated subsidiaries is ¥973 million...

  • Page 45
    ... 31, 2013) Deferred tax assets Research and development expenses Operating loss carryforwards for tax purposes Unrealized intra-group profit and write-downs on inventory Accounts payable - other and accrued expenses Provision for retirement benefits Net defined benefit liability Revenue recognition...

  • Page 46
    ... Segment information The main business of Nintendo is developing, manufacturing, and distributing handheld and home console hardware machines and related software. Development and manufacturing of products for worldwide use are primarily done by the Company. The Company distributes products in Japan...

  • Page 47
    ...of related segment as Nintendo operates as a single operating segment. Current fiscal year (From April 1, 2013 to March 31, 2014) 1. Information about products and services (Millions of yen) Handheld Hardware Sales to third parties 201,767 Home Console Hardware 89,569 Handheld Software 167,268 Home...

  • Page 48
    ... balances of goodwill by reportable segment The information was omitted as Nintendo operates as a single operating segment. Information about gain on bargain purchase by reportable segment The information was omitted as Nintendo operates as a single operating segment. Related party transactions Not...

  • Page 49
    ...common shareholders Net income (loss) related to common shares Average number of shares (common shares) ¥ 7,099 million - ¥ 7,099 million 127,877 thousand shares Significant subsequent events Not applicable. (v) Supporting schedules to the consolidated financial statements Supplemental schedule...

  • Page 50
    ... or equal to a hundredth of the total of liabilities and net assets as of the beginning and end of the fiscal year ended March 31, 2014. (2) Others Quarterly information of the fiscal year ended March 31, 2014 (Cumulative period) Net sales Income before income taxes and minority interests Net income...

  • Page 51
    ... Information Common Stock Nintendo Co., Ltd. common stock is listed on the Tokyo Stock Exchange, Section 1. Annual General Meeting of Shareholders The Annual General Meeting of Shareholders for the fiscal year ended March 31, 2014 was held on June 27, 2014 at Nintendo Co., Ltd. in Kyoto, Japan...