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Annual Report 2015
for the fiscal year ended March 31, 2015
Nintendo Co., Ltd.

Table of contents

  • Page 1
    Annual Report 2015 for the fiscal year ended March 31, 2015 Nintendo Co., Ltd.

  • Page 2
    ... Research and development activities ...9 4. Analysis of financial position, operating results and cash flow ...10 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
    Information on the Company I. Overview of the Company 1. Key financial data and trends Consolidated financial data Fiscal year Fiscal year ended March 31 Net sales (Millions of yen) (Millions of dollars) (Millions of yen) (Millions of dollars) 71st 2011 ¥1,014,345 171,076 72nd 2012 ¥647,652 (37,...

  • Page 4
    ... equivalent, calculated, for convenience only, at a rate of ¥120 to U.S.$1, the prevailing exchange rate on March 31, 2015. 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...

  • Page 5
    ...., Nintendo Software Technology Corporation, Retro Studios, Inc., Nintendo European Research and Development SAS, ND CUBE Co., Ltd., 1-UP Studio Inc., MONOLITH SOFTWARE INC., Mario Club Co., Ltd. - Manufacture Nintendo Co., Ltd. - Sale Nintendo Co., Ltd., Nintendo of America Inc., Nintendo of Canada...

  • Page 6
    ... Relationship with Nintendo Co., Ltd. (the "Company") Concurrent positions held by directors Director Employee of the of the Company Company (number) (number) 2 - Loans Business transactions Leasing of fixed assets Name of company Location Capital stock or Investments in capital Description of...

  • Page 7
    ...Total assets (Millions of dollars) 2,159 870 (2) Associates accounted for using equity method Relationship with the Company Name of company Location Capital stock or Investments in capital Description of principal business Percentage of voting rights held by the Company Concurrent positions...

  • Page 8
    ... 3DS family hardware were 8.73 million units. As for the Nintendo 3DS software, Pokémon Omega Ruby/Pokémon Alpha Sapphire and Super Smash Bros. for Nintendo 3DS enjoyed robust sales with 9.94 million units and 6.75 million units sold respectively, while titles such as Tomodachi Life, Mario Kart...

  • Page 9
    ... large-scale companies doing business in the same industry or in other segments of the entertainment field. As a result, Nintendo may experience difficulty in maintaining or expanding its market share as well as sustaining profitability. • Development of new products Although Nintendo continuously...

  • Page 10
    ... 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 may occur, and...

  • Page 11
    ..., Nintendo seeks to promote a unified architecture for its platforms, and expand its software developer base and create a more efficient software development environment by offering the "Nintendo Web Framework," which enables Wii U software development using web-related technologies. In terms of...

  • Page 12
    ... Annual Securities Report (Japanese only). Any forward-looking statements contained in the following overview are made based on information available as of the end of the fiscal year ended March 31, 2015. (1) Important accounting policies and assumptions Consolidated financial statements of Nintendo...

  • Page 13
    (4) Financial position Total assets increased overall by ¥46.5 billion compared with the previous fiscal year, to ¥1,352.9 billion (U.S.$11,274 million) mainly due to an increase in cash and deposits and securities. Total liabilities decreased by ¥2.5 billion compared to the previous fiscal year ...

  • Page 14
    ... and Facilities Overview of capital investments Nintendo develops, manufactures and distributes electronic entertainment products, and in the fiscal year ended March 31, 2015, it invested ¥11.175 billion (U.S.$93 million) which was mainly used for research and development and production facilities...

  • Page 15
    ... Joined the Company November 2007 Appointed as Executive Vice President of Nintendo of America Inc. June 2013 Appointed as Director (to present) General Manager, Finance Administration Division (to present) April 1980 July 2012 Joined the Company Deputy General Manager, Marketing Division Appointed...

  • Page 16
    ... Office Appointed as Full-Time Auditor (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...

  • Page 17
    ... are Outside Auditors. *1 The term of office of Directors commenced upon election at the Annual General Meeting of Shareholders for the fiscal year ended on March 31, 2015 and expires at the close of the Annual General Meeting of Shareholders for the fiscal year ending March 31, 2016. *2 The term of...

  • Page 18
    ... Information Consolidated financial statements, etc. (1) Consolidated financial statements (i) Consolidated balance sheets Previous fiscal year (As of March 31, 2014) (Millions of yen) Assets Current assets Cash and deposits Notes and accounts receivable - trade Securities Inventories Deferred tax...

  • Page 19
    ... 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 securities Foreign...

  • Page 20
    ... year (From April 1, 2013 to March 31, 2014) (Millions of yen) 571,726 *1, *3 408,506 163,219 *2, *3 Net sales Cost of sales Gross profit Selling, general and administrative expenses Operating income (loss) Non-operating income Interest income Foreign exchange gains Gain on redemption of securities...

  • Page 21
    ... 2015) (Millions of yen) 41,862 2,962 14,468 79 *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 using equity method Total...

  • Page 22
    ...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 income (loss) Purchase of treasury shares Disposal of treasury shares Net changes of items other than shareholders' equity Total...

  • Page 23
    ... year (from April 1, 2014 to March 31, 2015) (Millions of yen) Shareholders' equity Capital stock Balance at beginning of current period Cumulative effects of changes in accounting policies Restated balance Changes of items during period Dividends of surplus Net income Purchase of treasury shares...

  • Page 24
    ... Retained earnings Treasury shares (2,257) Total shareholders' equity 83 97 11,484 13 9,407 13 83 97 11,497 (2,257) 9,421 348 (0) 348 (0) - - 250 11,748 (0) (2,258) 249 9,671 83 97 Accumulated other comprehensive income Valuation difference on available-for-sale securities Balance...

  • Page 25
    ... benefit liability Interest and dividend income Foreign exchange losses (gains) Share of (profit) loss of entities accounted for using equity method Decrease (increase) in notes and accounts receivable trade Decrease (increase) in inventories Increase (decrease) in notes and accounts payable - trade...

  • Page 26
    ... or could 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...

  • Page 27
    ... 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: 4 companies Name of significant...

  • Page 28
    .... Assets or liabilities of overseas consolidated subsidiaries, etc. are translated into yen based on the spot rate of exchange in the foreign exchange market on the account closing date, while revenue and expenses are translated into yen based on the average rate of exchange for the fiscal year...

  • Page 29
    ...Accounting Standard, the effect of the changes in calculation methods for retirement benefit obligations and service costs has been reflected in retained earnings at the beginning of the fiscal year ended March 31, 2015. As a result, net defined benefit liability and net defined asset have increased...

  • Page 30
    ... of "Gain on redemption of securities" and ¥6,271 million of "Other." Notes to consolidated balance sheets *1. Inventories as of March 31, 2014 and 2015 were as follows: Previous fiscal year (As of March 31, 2014) Finished goods Work in process Raw materials and supplies ¥ 141,221 million 5,891...

  • Page 31
    ...statements of income *1. The ending inventory balance is the amount after write-down of book value due to decline in profitability, and the loss on valuation of inventories included in cost of sales for the years ended March 31, 2014 and 2015 were as follows: Previous fiscal year (From April 1, 2013...

  • Page 32
    *6. Restructuring loss Restructuring loss for the year ended March 31, 2015 primarily consisted of impairment loss on non-current assets and severance payment expenses associated with the restructuring of business in Europe. - 30 -

  • Page 33
    ... (2,474 shares), and the decrease is from sales in line with additional purchase requests for shares less than one unit (50 shares). 3. Matters concerning dividends (1) Amount of dividends paid Resolution Annual General Meeting of Shareholders held on June 27, 2013 Type of share Common shares Amount...

  • Page 34
    ...31, 2015 23,297,005 (Summary of causes of changes) The increase is from acquisitions in line with buyback 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 27, 2014 Type of share Common...

  • Page 35
    ...to foreign currency 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...

  • Page 36
    ... fiscal year (As of March 31, 2014) 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...

  • Page 37
    ... account closing date Previous fiscal year (As of March 31, 2014) (Millions of yen) 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...

  • Page 38
    ... 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 deposits Corporate and government...

  • Page 39
    ... fiscal year (As of March 31, 2014) Book value Acquisition cost (Millions of yen) Difference 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 the consolidated balance sheets...

  • Page 40
    ...Current fiscal year (From April 1, 2014 to March 31, 2015) Amount sold Debt securities Other Total 192,626 78,469 271,096 Total gain 124 2 127 (Millions of yen) Total loss 16 - 16 (Millions of dollars) Total loss 1 0 1 0 - 0 Amount sold Debt securities Other Total 1,605 653 2,259 Total gain - 38...

  • Page 41
    ...hedge accounting Currencies Previous fiscal year (As of March 31, 2014) (Millions of yen) Classification Type of transaction Exchange forward contracts Selling Canadian Dollar Selling British Pound Currency options Written call options Transactions other than market transactions U.S. Dollar [Premium...

  • Page 42
    ...fair value as of March 31, 2014 and 2015 is calculated based on price quoted by correspondent financial institutions. Amounts presented in square parentheses [ ] above are option premiums. Retirement benefits 1. Summary of retirement benefit plans adopted The Company has a defined benefit corporate...

  • Page 43
    ... benefit asset recorded in consolidated balance sheets Previous fiscal year (As of March 31, 2014) Current fiscal year (As of March 31, 2015) (Millions of yen) 35,349 (34,084) 1,264 14,976 16,241 (Millions of dollars) 294 (284) 10 124 135 Retirement benefit obligations for funded plans Plan assets...

  • Page 44
    ... The ratios of components to plan assets by major category are as follows. Previous fiscal year (As of March 31, 2014) Stocks Bonds Other Total 45% 40 15 100 Current fiscal year (As of March 31, 2015) 40% 49 11 100 b. Method for establishing expected long-term return rate on plan assets In order to...

  • Page 45
    ... on inventory Net defined benefit liability Accounts payable - other and accrued expenses Revenue recognition for tax purposes Other Deferred tax assets subtotal Valuation allowance Total deferred tax assets Deferred tax liabilities Valuation difference on available-for-sale securities Undistributed...

  • 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
    ... fiscal year (From April 1, 2014 to March 31, 2015) 1. Information about products and services (Millions of yen) Handheld Hardware Sales to third parties 149,616 Home Console Hardware 105,548 Handheld Software 149,941 Home Console Software 84,742 Other 59,931 Total 549,780 (Millions of dollars...

  • Page 48
    ...,205 Name of related segment - There was no mention of related segment as Nintendo operates as a single operating segment. (Millions of dollars) Net sales Name of related segment 468 - GameStop, Inc. Information about impairment loss of non-current assets by reportable segment The information was...

  • Page 49
    ... gaming applications for smart devices utilizing Nintendo' s intellectual property, including its characters (2) Joint development of a new multi-device membership service Description of capital alliance In addition to the business alliance, the Nintendo and DeNA formed the capital alliance in order...

  • Page 50
    ... to a hundredth of the total of liabilities and net assets as of the beginning and end of the fiscal year ended March 31, 2015. (2) Others Quarterly information of the fiscal year ended March 31, 2015 (Cumulative period) Net sales Income (loss) before income taxes and minority interests Net income...

  • Page 51
    ...General Meeting of Shareholders for the fiscal year ended March 31, 2015 was held on June 26, 2015 at Nintendo Co., Ltd. in Kyoto, Japan. Independent Auditor PricewaterhouseCoopers Kyoto Kyoto, Japan Contact Information Investor Relations Investor Relations Group Corporate Communications Department...