Outline of consolidated financial results for the six months ended September 30, 2013 and consolidated earnings forecast for the fiscal year ending March 31, 2014

Outline | Presentation by the President | Q & A

Tatsumi Kimishima, Managing Director, Nintendo Co., Ltd.

This outline is based on the documents “Earnings Release” and “Supplementary Information about Earnings Release” for the 2nd quarter of the fiscal year ending March 31, 2014.

1. Briefing of consolidated financial results for the six months ended September 30, 2013

Consolidated operating results for the six months ended September 30, 2012 and 2013

	Six months ended Sep. 30, 2012	Six months ended Sep. 30, 2013	Comparison
Net Sales:	200.9 billion yen	196.5 billion yen	-2.2%
Gross Profit:	44.3 billion yen	62.0 billion yen	39.9%
(Gross Profit Ratio)	(22.1%)	(31.6%)
Operating Income:	-29.1 billion yen	-23.2 billion yen	-
(Operating Income Ratio)	(-14.5%)	(-11.8%)
Ordinary Income:	-47.2 billion yen	1.2 billion yen	-
(Ordinary Income Ratio)	(-23.5%)	(0.6%)
Net Income:	-27.9 billion yen	0.6 billion yen	-
(Net Income Ratio)	(-13.9%)	(0.3%)

(Net sales)
The net sales were down due to a large decrease in the unit sales of the “Wii” and “Nintendo DS” hardware and software, despite the addition of the “Wii U” sales and a growth in “Nintendo 3DS” software sales units in all regions as a result of a strong software lineup.

(Gross profit ratio)
The gross profit ratio of 31.6% was produced by a number of positive and negative factors. Although software, which has a relatively high margin, constituted a higher ratio of the total sales and the profitability of the “Nintendo 3DS” hardware improved, these factors were outweighed by the effects of the production costs of the “Wii U” hardware remaining higher than its selling price and the price reduction of the “Wii U” hardware in the overseas markets.

(Main reason for operating loss)
Though the gross profit increased compared to the same period of the previous fiscal year, as the total of selling, general and administrative expenses including fixed expenses exceeded gross profit, it resulted in a consecutive operating loss situation for this period.

(Main reason for ordinary income)
The 18.3 billion yen of foreign exchange gains were produced as a result of the depreciation of the yen at the end of this period compared with the one at the end of the last fiscal year.

2. Briefing of consolidated earnings forecast for the fiscal year ending March 31, 2014

There is no revision to the financial forecast announced on April 24, 2013.

For “Nintendo 3DS,” “Pokémon X/Pokémon Y,” released globally in October, showed extremely strong initial sales, and "Nintendo 3DS" has gained sales momentum not only in Japan but also in the overseas markets. For “Wii U,” we will release several key first-party titles in the coming year-end sales season and offer the “Wii U” hardware at an affordable price by bundling software with the system. In order to achieve our financial earnings target for the full fiscal year, we strive to further accelerate sales in the coming year-end sales season by carrying out such promotional activities.

Forecasts referred to above are based upon management's assumptions with information available at the time the announcement was made and, therefore, involve known and unknown risks and uncertainties. Please note that such risks and uncertainties may cause actual results to be materially different from the forecasts (earnings forecast, dividend forecast and other forecasts).

Outline | Presentation by the President