Earnings Release: Six Months Ended September 30, 2016 (PDF: 503KB)

Nintendo Co., Ltd.

October 26, 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
   Six months ended September 30, 2016 Six months ended September 30, 2015	million yen % 136,812 (33.0) 204,182 19.1	million yen % (5,947) - 8,977 -	million yen % (30,883) - 16,436 (25.9)	million yen % 38,299 234.0 11,466 (19.8)

   [Note]

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

   	Net income per share
   Six months ended September 30, 2016 Six months ended September 30, 2015	yen 318.82 95.46

2. Consolidated financial positions

[Note]

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

1. Changes for important subsidiaries during the three-month period ended September 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 Sept. 30, 2016 : 141,669,000 shares As of March 31, 2016 : 141,669,000 shares

② Number of treasury shares

As of Sept. 30, 2016 : 21,540,510 shares As of March 31, 2016 : 21,539,677 shares

③ Average number of shares

Six months ended Six months ended

Sept. 30, 2016 :

120,128,975 shares

Sept. 30, 2015 : 120,121,206 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 six months ended September 30, 2016, we saw strong trends for the global release of Kirby: Planet Robobot. On the hardware side, Nintendo 2DS saw sales growth. The release of the smart device application Pokémon GO led to increased sales of software in the Pokémon series released in the past and drove the Nintendo 3DS family hardware sales growth, particularly outside of Japan. The sales volume for hardware this period was 2.71 million units (19% increase on a year- on-year basis) , while software held steady with the previous year at 19.23 million units sold.

   For the Wii U console, we have decided to ship 0.8 million units this fiscal year, based on our forecasts of comprehensive demand for Nintendo hardware. Activity has conformed to our expectations from the start of the fiscal year, with hardware sales volume of

   0.56 million units (53% decrease on a year-on-year basis). There were no hit titles this period to compare with Splatoon and Super

   Mario Maker last year, so the software sales were 8.3 million units (33% decrease on a year-on-year basis).

   As there were few new software titles offering amiibo functionality, amiibo sales were reduced to 3.8 million units for figure-type and 1.7 million units for card-type. In addition, there were relatively fewer offerings of downloadable content during this period, so download sales were down on the same period last year.

   Along with this background, we felt the impacts of a strengthening yen, resulting in an operating loss of 5.9 billion yen against net sales of 136.8 billion yen (of which overseas sales were 97.3 billion yen or 71.1% of the total sales). We have also included 12.0 billion yen of share of profit of entities accounted for using the equity method related to The Pokémon Company and other companies, but we incurred foreign exchange losses totaling 39.9 billion yen, resulting in an ordinary loss of 30.8 billion yen. However, due to the sale of part of our ownership in the company that manages the Seattle Mariners Major League Baseball team, we recorded gain on sales of investment securities totaling 62.7 billion yen as extraordinary income, meaning that profit attributable to owners of parent was 38.2 billion yen.

2. Consolidated Financial Forecast

   For the Nintendo 3DS system, we are planning global release of the latest titles in the Pokémon series, Pokémon Sun/Moon, in November, as well as the Nintendo 3DS version of last year's major hit for Wii U, Super Mario Maker for Nintendo 3DS, in December. We also have a range of strong third-party titles expected during this year.

   We have also revealed that our new-concept gaming system, previously referred to using the development codename NX, will be released under the official name of Nintendo Switch. Nintendo Switch offers a wholly new concept as a home gaming system that can switch between different styles of play. We are planning to release it worldwide in March 2017.

   We are also bringing back the NES home consoles that were popular in the 1980s in a palm-sized version. Nintendo Entertainment System: NES Classic Edition will launch with 30 well-loved pre-installed titles worldwide in November.

   On the smart device front, Super Mario Run, a new action game featuring Mario optimized for smart devices, is set to launch globally in December. Fire Emblem and Animal Crossing applications will follow the release of Super Mario Run in series.

   We have revised the financial forecast originally published on April 27, 2016. For details, see the Notice of Full-Year Financial Forecast Modifications issued today (October 26, 2016).

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 six-month period ended September 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 six-month period ended September 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 September 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	584,545
   	38,731	32,850
   	338,892	286,016
   	40,433	49,056
   	32,999	45,172
   	(369)	(68)
   	1,021,135	997,572
   	87,752	84,368
   	9,977	12,074
   	125,774	168,854
   	52,262	67,033
   	178,037	235,888
   	275,766	332,331
   	1,296,902	1,329,904
   (Liabilities)	31,857	62,886
   Current liabilities
   Notes and accounts payable-trade
   Income taxes payable	1,878	8,503
   Provision	2,294	2,529
   Other	62,407	59,864
   Total current liabilities	98,437	133,784
   Non-current liabilities	23,546	19,117
   Net defined benefit liability
   Other	14,017	13,073
   Total non-current liabilities	37,563	32,191
   Total liabilities	136,001	165,975
   (Net assets)	10,065	10,065
   Shareholders' equity
   Capital stock
   Capital surplus	13,256	13,256
   Retained earnings	1,401,359	1,425,243
   Treasury shares	(250,563)	(250,580)
   Total shareholders' equity	1,174,118	1,197,985
   Accumulated other comprehensive income	11,909	28,216
   Valuation difference on available-for-sale securities
   Foreign currency translation adjustment	(25,250)	(62,403)
   Total accumulated other comprehensive income	(13,341)	(34,187)
   Non-controlling interests	124	130
   Total net assets	1,160,901	1,163,928
   Total liabilities and net assets	1,296,902	1,329,904

5. Consolidated Statements of Income

   million yen

   Description	Six months ended September 30, 2015	Six months ended September 30, 2016
   Net sales	204,182	136,812
   Cost of sales	110,495	75,232
   Gross profit	93,687	61,580
   Selling, general and administrative expenses	84,709	67,527
   Operating income (loss)	8,977	(5,947)
   Non-operating income	2,170	2,582
   Interest income
   Foreign exchange gains	719	-
   Share of profit of entities accounted for using equity method	1,500	12,024
   Other	3,146	971
   Total non-operating income	7,536	15,578
   Non-operating expenses	44	3
   Sales discounts
   Foreign exchange losses	-	39,911
   Other	32	599
   Total non-operating expenses	77	40,514
   Ordinary income (loss)	16,436	(30,883)
   Extraordinary income	6 -	181
   Gain on sales of non-current assets
   Gain on sales of investment securities		62,771
   Total extraordinary income	6	62,953
   Extraordinary losses	23	25
   Loss on disposal of non-current assets
   Total extraordinary losses	23	25
   Profit before income taxes	16,419	32,043
   Total income taxes	4,966	(6,261)
   Profit	11,452	38,305
   Profit attributable to non-controlling interests	(13)	5
   Profit attributable to owners of parent	11,466	38,299

6. Consolidated Statements of Comprehensive Income

   million yen

   Description	Six months ended September 30, 2015	Six months ended September 30, 2016
   Profit 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	11,452	38,305
   	6,873	16,457
   	3,228	(36,665)
   	(0)	(636)
   	10,101	(20,845)
   	21,554	17,459
   	21,568	17,454
   	(13)	5

7. Others

(1) Consolidated sales information

million yen

Category	Six months ended September 30, 2015	Six months ended September 30, 2016
Dedicated video game hardware	103,002	65,869
Dedicated video game software	97,737	66,703
Smart devices, IP related income, etc. *	2,725	3,408
Playing cards, Karuta, etc.	716	830
Total	204,182	136,812

[Note] Download sales

Six months ended September 30, 2015: 21.0 billion yen Six months ended September 30, 2016: 14.7 billion yen

* includes income for smart-device content and royalty income

Japan	The Americas	Europe	Other	Total
Six months ended September 30, 2016	Net sales	39,504	54,388	37,329	5,590	136,812
	Component ratio	28.9%	39.8%	27.3%	4.0%	100.0%
Six months ended September 30, 2015	Net sales	59,504	88,408	48,288	7,981	204,182
	Component ratio	29.1%	43.3%	23.6%	4.0%	100.0%

1. Geographical sales breakdown

2. Other consolidated information

   million yen

   million yen

   Six months ended September 30, 2015	Six months ended September 30, 2016	Year ending March 31, 2017 (Forecast)
   Depreciation of property, plant and equipment		3,251	2,551	6,000
   Research and development expenses		28,872	28,498	65,000
   Advertising expenses		21,482	13,530	50,000
   Average exchange rates	1 USD =	121.80 yen	105.29 yen	102.64 yen
   	1 Euro =	135.07 yen	118.15 yen	116.57 yen

   Consolidated net sales in U.S. dollars	0.6 billion	0.4 billion	-
   Consolidated net sales in Euros	0.3 billion	0.3 billion	-
   Non-consolidated purchases in U.S. dollars	0.6 billion	0.3 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 September 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	2,162 223 251	1 USD = 101.12 yen	1 USD = 100.00 yen
   Euro Cash and deposits Accounts receivable-trade	665 111	1 Euro = 127.70 yen	731 160	1 Euro = 113.36 yen	1 Euro = 115.00 yen

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

Actual Apr. - Sep. '15				Actual Apr. - Sep. '16
Nintendo 3DS	Hardware	Japan	83	82
The Americas	75	97
Other	70	92
of which Nintendo 3DS XL of which Nintendo 2DS of which New Nintendo 3DS of which New Nintendo 3DS XL Software		Total	228	271
		Japan	1	(0)
		The Americas	11	(0)
		Other	3	3
		Total	16	3
		Japan	-	18
		The Americas	9	31
		Other	8	37
		Total	16	85
		Japan	16	7
		The Americas	5	9
		Other	20	10
		Total	40	27
		Japan	60	57
		The Americas	50	57
		Other	36	39
		Total	146	154
		Japan	912	624
		The Americas	548	660
		Other	460	639
		Total	1,920	1,923
New titles	Japan	50	30
The Americas	29	25
Other	32	17
Wii U	Hardware	Japan	32	16
	The Americas	55	22
	Other	31	18
	Software	Total	119	56
		Japan	205	107
		The Americas	669	424
		Other	364	300
		Total	1,237	830
	New titles	Japan	10	7
	The Americas	15	9
	Other	16	10

Sales Units in Ten Thousands

Number of New Titles Released Life-to-date Forecast

Sep. '16

2,214

2,073

Apr. '16-Mar. '17

1,869

6,157 600

704

663

593

1,961

28

253

297

578

111

20

80

211

348

266

169

783

11,184

9,825

8,331

29,340

564

435

5,500

478

330

641

365

1,336 80 1,455

5,062

2,718

9,235 1,400

109

159

150

[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. While forecasted software sales units include the quantity bundled with hardware for six months ended September 30, 2016, they do not include the quantity to be bundled with hardware on and after October 1, 2016.

* A new home gaming system "Nintendo Switch" 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.