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[Rösti]

Note: Nintendo's First Quarter Earnings Release for FY 2015 will be released on July 29.

Today, on July 28, 2015, Nintendo Co., Ltd. published the English version of its Annual Report 2015 (for the fiscal year ended March 31, 2015). Information on the subsidiaries I posted about here when the report was first posted in Japanese, but that information will be repeated in this thread. I won't make it too long, most financial information will be omitted. The report in full can be read here, in-depth financial information starts at page 18.

Highlights

• Gross profit increased from the previous fiscal year by ¥51.3 billion to ¥214.5 billion (U.S.$1,788 million; an increase of 31.5% on a year-over-year basis)
• 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.
• Net assets increased by ¥49.1 billion compared to the previous fiscal year to ¥1,167.5 billion (U.S.$9,729 million) due to the increase in foreign currency translation adjustment and retained earnings.
• Net sales were ¥549.7 billion (U.S.$4,581 million; a decrease of 3.8% on a year-on year basis), of which overseas sales were ¥414.7 billion (U.S.$3,455 million; an increase of 5.1% on a year-on-year basis, and 75.4% of total sales).
• Operating income was ¥24.7 billion (U.S.$206 million; compared with an operating loss of ¥46.4 billion in the previous fiscal year)
• GameStop Inc. accounted for 468$ million of net sales (unless I'm mistaken)
  
  
• SiRAS.com Inc is no longer a subsidiary
  [*]Capital of Nintendo RU LLC. increased from RUB104 to RUB336
  [*]Nintendo European Research and Development SAS is now a wholly owned subsidiary
  [*]Nintendo's ownership of Nd Cube Company, Ltd. increased from 96% to 97%

2. Description of business

In the field of home entertainment, Nintendo Co., Ltd., its subsidiaries and associates (composed of 27 subsidiaries
and five associates as of March 31, 2015), primarily engage in the development, manufacture and sale of
entertainment products. Nintendo’s major products are categorized into computer-enhanced “electronic
entertainment products,” playing cards, Karuta and other products. “Electronic entertainment products” are defined
as hardware and software for the handheld devices and home consoles developed by Nintendo Co., Ltd. and its
subsidiaries and associates, manufactured by Nintendo Co., Ltd. and distributed primarily by Nintendo Co., Ltd. in
Japan and by its subsidiaries and associates in overseas markets.
The positions of Nintendo Co., Ltd. and its 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 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 Ltd., Nintendo of Europe GmbH, Nintendo
France S.A.R.L., Nintendo Benelux B.V., Nintendo Ibérica, S.A., Nintendo Australia Pty Limited, Nintendo RU
LLC., Nintendo Phuten Co., Ltd, Nintendo of Korea Co., Ltd., iQue (China) Ltd., Nintendo (Hong Kong) Limited

- Other
Nintendo Network Services Inc.

Significant matters forming the basis of preparing the consolidated financial statements

1. Scope of consolidation
(1) Number of consolidated subsidiaries: 26 companies
The names of significant consolidated subsidiaries are omitted because they are provided in “I. Overview of
the Company, 3. Subsidiaries and associates.”
SiRAS.com Inc. has been excluded from the scope of consolidation from the fiscal year ended March 31,
2015 as its shares held by the Company had been sold.

(2) The unconsolidated subsidiary is as follows:
Fukuei Co., Ltd.
The above is unconsolidated because it is a 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. Application of the equity method

(1) Number of associates accounted for under the equity method: 4 companies
Name of significant associates accounted for under the equity method
The Pokémon Company, WARPSTAR, Inc., PUX Corporation

Silicon Knights Inc. has been excluded from the scope of associates accounted for under the equity method
from the fiscal year ended March 31, 2015, due to the commencement of liquidation proceedings.

(2) The company among the unconsolidated subsidiaries not accounted for under the equity method is Fukuei Co.,
Ltd., and the company among the associates not accounted for under the equity method is Ape inc. This is
because the impact each of said companies has on net income or loss, retained earnings, etc., is negligible, and
it is immaterial as a whole.

(3) With respect to associates accounted for under the equity method whose account closing dates differ from the
consolidated account closing date, the financial statements of each of the companies, either based on their
fiscal year or based on provisional accounts closing, are incorporated.

II. Business Overview

1. Overview of operating results and cash flow

(1) Operating results
Nintendo Co., Ltd. (the“ Company&#8221 and its consolidated subsidiaries (together with the Company, “Nintendo&#8221
continues to pursue its basic strategy of “Gaming Population Expansion” by offering compelling products that
anyone can enjoy, regardless of age, gender or gaming experience.

During the fiscal year ended March 31, 2015, for Nintendo 3DS (3DS, 3DS XL, 2DS, New Nintendo 3DS and
New Nintendo 3DS XL), New Nintendo 3DS/New Nintendo 3DS XL, launched as the newest members of the
Nintendo 3DS family, got off to a good start and continued to sell well, while the sales of the Nintendo 3DS
hardware prior to the launch of New Nintendo 3DS/New Nintendo 3DS XL did not grow as anticipated, and the
global sales of the Nintendo 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
7, and The Legend of Zelda: Majora’s Mask 3D also showed steady sales, with all three titles selling more than 2
million units each. There were also a number of hit titles from third-party publishers. As a result, the global sales
of the Nintendo 3DS software were 62.74 million units.

With respect to Wii U, Nintendo released two hit titles, Mario Kart 8 and Super Smash Bros. for Wii U, which
enjoyed robust sales of 5.11 million units and 3.65 million units respectively. These titles continued to perform
well especially overseas, and the global sales of the Wii U hardware and software reached 3.38 million and 24.40
million units respectively.

As a result, net sales were ¥549.7 billion (U.S.$4,581 million; a decrease of 3.8% on a year-on-year basis), of
which overseas sales were ¥414.7 billion (U.S.$3,455 million; an increase of 5.1% on a year-on-year basis, and
75.4% of total sales). Operating income was ¥24.7 billion (U.S.$206 million; compared with an operating loss of
¥46.4 billion in the previous fiscal year). Also, due to depreciation of the yen at the end of this period compared
with the one at the end of the previous fiscal year, foreign exchange gains totaled ¥34.0 billion (U.S.$283
million), leading to an ordinary income of ¥70.5 billion (U.S.$587 million; compared with ¥6.0 billion in the
previous fiscal year) and a net income of ¥41.8 billion (U.S.$348 million; compared with a net loss of ¥23.2
billion in the previous fiscal year).

Segment information is omitted as Nintendo operates as a single business segment.

(2) Cash flow
The ending balance of “Cash and cash equivalents” (collectively, “Cash&#8221 as of March 31, 2015 was ¥281.5
billion (U.S.$2,346 million), with a decrease of ¥59.7 billion during the fiscal year. During the previous fiscal
year, there was a decrease of ¥128.1 billion. Net increase (decrease) of Cash and contributing factors during the
fiscal year ended March 31, 2015 are as follows:

Net cash provided by (used in) operating activities:
There were decreasing factors contributing to ¥72.0 billion (U.S.$600 million) of income before income taxes
and minority interests such as yen depreciation of foreign exchanges, payment of various expenses and income
taxes. However, due to increasing factors such as decrease of inventory, net cash resulted in an increase of ¥60.2
billion (U.S.$502 million) compared to a decrease of ¥23.1 billion last year.

Net cash provided by (used in) investing activities:
Net cash from investing activities decreased by ¥105.3 billion (U.S.$878 million) compared to a decrease of
¥20.0 billion last year mainly due to payments into time deposits and purchase of short-term and long-term
investment securities exceeding proceeds from withdrawal of time deposits, sales of short-term and long-term
investment securities.

Net cash provided by (used in) financing activities:
Net cash from financing activities decreased by ¥11.9 billion (U.S.$99 million) compared to a decrease of ¥127.1
billion last year mainly due to payments of cash dividends.

3. Research and development activities

Nintendo primarily engages in the active development of hardware and software for handheld and home console
video game systems, with support from various companies and organizations, in its effort to put smiles on the faces
of everyone Nintendo touches around the world by offering new and compelling products that anyone can enjoy.

With respect to hardware, Nintendo investigates and undertakes research on fundamental technologies spanning
data storage technology such as semiconductor memories, display technology such as liquid crystal displays, and
electronic components, while it also carries out research and development activities to examine the applicability of
various technologies including interfaces, wireless communication, networks and security to the field of home
entertainment. Moreover, Nintendo continues to enhance the durability, safety, quality and performance of its
products to ensure that consumers can comfortably enjoy them over an extended period, as well as design and
develop various accessories, and pursue cost-cutting and energy conservation initiatives.

With respect to software, Nintendo focuses on taking full advantage of hardware features in planning its products,
designing games whose elements include graphics, music and game scripts, and developing programs.

Also, in order to deal with digital business expansion, Nintendo is promoting the expansion of system infrastructure
that supports networking functions of software and various network services such as Nintendo eShop.

Moreover, in response to increasing system and software complexity, 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 its component procurement and manufacturing processes, Nintendo, with the cooperation and support of
its manufacturing partners, continuously examines, and accumulates relevant technical know-how on, how one can
apply new test methods and technologies in the mass production of components, and complies with various
sustainable procurement standards and relevant regulations.

Research and development expenses for the fiscal year were ¥63.3 billion (U.S.$527 million), with the outcomes of
major research and development activities described below. Segment information is omitted since Nintendo
operates as a single business segment.

In the Nintendo 3DS family, Nintendo released New Nintendo 3DS (not available in the Americas) and New
Nintendo 3DS XL which are new models equipped with functions such as super-stable 3D. In order to ensure that
the Nintendo 3DS family would appeal to a wider range of consumers, Nintendo launched special hardware
editions of each model, and released many interchangeable plates for New Nintendo 3DS so that users could have
fun applying various designs to the hardware. Nintendo released a total of nine compatible titles (figure for the
Japanese market; the same shall apply hereinafter) which included Pokémon Omega Ruby/Pokémon Alpha Sapphire,
a remake of a popular past title with new additional elements, and Super Smash Bros. for Nintendo 3DS, which is
the first in the series developed for handheld video game systems and even allows amiibo characters (i.e.,
game-compatible character figures) to appear in the game.

With respect to Wii U, Nintendo worked on the development of system software, system features and accessories,
and conducted system updates for the hardware as necessary, in order to further enhance the user experience of the
system. Nintendo released a total of 11 compatible titles, including Mario Kart 8, which enables players to enjoy
racing on diverse courses that take advantage of the rich rendering capabilities of Wii U and even upload videos
showing highlights of the race to Miiverse and YouTube via the Internet, and Super Smash Bros. for Wii U, released
simultaneously with amiibo, which enables players to use the amiibo characters they have fostered as figure players
as in the Nintendo 3DS version.

In addition to this, for amiibo, Nintendo is proposing our new form of amusement that brings together figures and
games and making enhancements to compatible software, as well as further enriching the lineup, including
developing new amiibo cards and yarn-knitted amiibo.

Moreover, by redefining entertainment as something that improves people’s QOL (Quality of Life) in enjoyable
ways, Nintendo is working on the development of a new platform business by taking a unique approach that
leverages its strengths as an entertainment company. As the first step, Nintendo has adopted the theme “health” and
is developing sensors that measure sleep and fatigue status, hardware and software that control such sensors, and
server systems and software that realize QOL services. Nintendo’s aim is to enable consumers to make daily efforts
to improve their QOL in a fun manner by making sleep and fatigue status visible and offering various services
based on this information.

Nintendo continues to engage in the development of new products for the future.

 

[Aaronrules380]

Doooooooooooooomed

Spoiler

but seriously nice to see the situation improving

 

[Peltz]

So, overall, a very positive year for Nintendo. They're starting to find their stride again.

 

[alr1ght]

NX will be an Amiibo.

 

[Broken Joystick]

Moreover, in response to increasing system and software complexity, 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.

Moreover, by redefining entertainment as something that improves people’s QOL (Quality of Life) in enjoyable ways, Nintendo is working on the development of a new platform business by taking a unique approach that leverages its strengths as an entertainment company. As the first step, Nintendo has adopted the theme “health” and is developing sensors that measure sleep and fatigue status, hardware and software that control such sensors, and server systems and software that realize QOL services. Nintendo’s aim is to enable consumers to make daily efforts to improve their QOL in a fun manner by making sleep and fatigue status visible and offering various services
based on this information.

I guess those patents that showed up last week will probably be used then.

 

[Jackano]

NX will be an Amiibo.

Yep. One exclusive to GameStop it seems.

 

[Windows RT]

It looks quite positive. So glad to see Nintendo back on the track. Still sad for the pass away of Iwata San

 

[Asd202]

Are there any WiiU numbers?

 

[Mysterious]

President and Director: Satoru Iwata

 

[RamzaIsCool]

Shipment numbers?

 

[Peltz]

I guess those patents that showed up last week will probably be used then.

It's an interesting direction for them. But could you imagine the gameplay impact that these health metrics may have?

"You're fatigued, how about taking a break?"

"You're fatigued, how about this play-assist video to show you how to beat the level?"

"You're fatigued, how about donning this white tanooki suit to make you invincible?"

 

[Rösti]

President and Director: Satoru Iwata

The information is accurate as of June 29, 2015. There's no mention of Mr. Iwata passing away in the report.

 

[BronzeWolf]

So when is Nintendo going third party? /s

Nice year for Nintendo!

This report should instill confidence in share-holders, which is important, given the sad passing away of Iwata-San.

 

[theechrisfox]

Iwata must have worked super hard to turn those losses around. Hope they can keep riding this momentum with a new leader and new console.

 

[Shiggy]

Any reason for why the AR looks as if it's been released in 1981? More recent annual reports had a much better layout.

 

[BD1]

I honestly wonder if Nintendo execs care about Wii U numbers anymore. Certainly doesn't seem like they're too interested in it after E3. I get the impression Wii U is what it is and the company is in the early stages of just moving on.

 

[BronzeWolf]

Any reason for why the AR looks as if it's been released in 1981? More recent annual reports had a much better layout.

Please understand

 

[Rösti]

Any reason for why the AR looks as if it's been released in 1981? More recent annual reports had a much better layout.

Annual reports from 2013 and earlier featured some nice images, but since 2014 the annual report has consisted of text only. Why that is I don't know, could be to make the documents easier to access (older reports were quite heavy in size).

 

[Sir_Crocodile]

Iwata managed to turn things round again.

 

[efyu_lemonardo]

• Capital of Nintendo RU LLC. increased from RUB104 to RUB336

damn Communism, I had no idea things were still that bad in Russia...

 

[EloquentM]

Iwata managed to turn things round again.

For the last time ={

 

[Omega Kirby]

Good for Nintendo, soon the king will return.

 

[TheOnePercent]

Last year Nintendo had the tripple-whammy of Mario Kart, Smash, and Pokemon. I have a hard time believing they will do as well this year when their biggest title is probably going to be Splatoon (or maybe Mario Maker). I guess we'll have the Q1 results soon enough to see how they're doing.

 

[DownGrader]

damn Communism, I had no idea things were still that bad in Russia...

It's 104 and 336 MILLION rubles respectively (look at the table in the document), which is $3 mil to $6 mil, with inflation correction. Pretty rad for subsidiary in a country where even Wii wasn't widespread, and DS was virtually non-existant. Nintendo's brand recognition is still very low here, and the company is making the profits mostly on die-hard Nintendo and JRPG fans.

 

[Grief.exe]

I honestly wonder if Nintendo execs care about Wii U numbers anymore. Certainly doesn't seem like they're too interested in it after E3. I get the impression Wii U is what it is and the company is in the early stages of just moving on.

Nintendo is likely to push out NX holiday 2016.

 

[Fourth Storm]

Iwata managed to turn things round again.

Without having a smash hit console like DS or Wii either. Just by cutting costs here and there, making adjustments where necessary, and amiibo.

He got it done...

 

[CaviarMeths]

But does increased profit, revenue, and operating income translate to sales?

Net sales were ¥549.7 billion (U.S.$4,581 million; a decrease of 3.8% on a year-on year basis), of which overseas sales were ¥414.7 billion (U.S.$3,455 million; an increase of 5.1% on a year-on-year basis, and 75.4% of total sales).

Oh, guess not.

 

[Lingitiz]

I honestly wonder if Nintendo execs care about Wii U numbers anymore. Certainly doesn't seem like they're too interested in it after E3. I get the impression Wii U is what it is and the company is in the early stages of just moving on.

Wii U is definitely on its way out. This holiday is pretty solid for it though, and next year will have at least 3 big games with Pokken, SMTxFE, and Zelda. Not the best, but hey with those sales I don't blame them. It's time to move on and try something new.

I fully expect NX for next November.

 

[akidnamededdy]

Nintendo is likely to push out NX holiday 2017.

Fixed.

 

[Cymbal Head]

Fixed.

Nah.

 

[Fourth Storm]

I honestly wonder if Nintendo execs care about Wii U numbers anymore. Certainly doesn't seem like they're too interested in it after E3. I get the impression Wii U is what it is and the company is in the early stages of just moving on.

They don't. It's an expensive system to manufacture. They are probably just looking to sell through the units they've already made while appeasing their current Wii U/3DS fans and ensuring they make the transition to NX. They cannot afford to lose as many users as they did last time between gens...

 

[EloquentM]

Fixed.

That's highly unlikely imo. At the latest I could see spring 17. It's likely going to be a November 2016 launch though.

 

[Grief.exe]

Fixed.

This has been obvious for years, but now the evidence is strongly there to support it.

Completely stagnated 3DS sales for a couple of years, WiiU titles delayed with a sparse lineup, NX is coming sooner than you think.

Just delusional to think otherwise at this point.

 

[ZhugeEX]

If you guys are expecting shipment numbers. This is the wrong report to look at. They'll come tomorrow

Also there is no new information in this report at all so those who are drawing conclusions from it as of today need to realise this is all public information from two months ago.

 

[Lunar15]

Yeah, there's no way the NX isn't coming out next year.

 

[Sectorseven]

How does their gross profit increase compare to EA and Activision and so on?

 

[Anno]

Yikes at that cash burn since 2011. I'm sure a lot of it was put into assets that may eventually start paying off, and I seem to remember something about a one-time buyout of shares that I'm sure was expensive, but that's a horrible pace to be on. They're back to positive operating cash flow at least so hopefully they're on a more sustainable track now.

 

[Pro from Dover]

NX 2016? 2017?
But it's coming, yes?
I'm still super curious about QoL. I've been on a Joe Rogan binge and feel all QoL, would like a little Nintendo in that mix.

 

[Datschge]

Curious to see Ape Inc. again. I thought that fully went into Creatures Inc. when that was founded. I guess they kept Ape Inc. around for the business matters relating Itoi (like editing all the Iwata Asks)?