Outline of consolidated financial results for the six months ended September 30, 2014 and consolidated earnings forecast for the fiscal year ending March 31, 2015

Outline | Presentation by the President | Q & A

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

This outline is based on the documents “Earnings Release,” “Supplementary Information about Earnings Release” for the 2nd quarter of the fiscal year ending March 31, 2015.

1. Briefing of consolidated financial results for the six months ended September 30, 2014

Consolidated operating results for the six months ended September 30, 2013 and 2014

	Six months ended Sep. 30, 2013	Six months ended Sep. 30, 2014	Comparison
Net Sales	196.5 billion yen	171.3 billion yen	-12.8%
Gross Profit	62.0 billion yen	81.0 billion yen	30.7%
(Gross Profit Ratio)	(31.6%)	(47.3%)
Operating Income	-23.2 billion yen	-0.2 billion yen	-
(Operating Income Ratio)	(-11.8%)	(-0.1%)
Ordinary Income	1.2 billion yen	22.1 billion yen	-
(Ordinary Income Ratio)	(0.6%)	(13.0%)
Net Income	0.6 billion yen	14.3 billion yen	-
(Net Income Ratio)	(0.3%)	(8.3%)

(Net sales)
The sales of the “Wi U” hardware and software increased with contribution from “Mario Kart 8,” released globally in May. With respect to “Nintendo 3DS,” though titles such as “Super Smash Bros. for Nintendo 3DS” showed strong sales, the sales of the “Nintendo 3DS” hardware and software were down compared to the same period of the previous fiscal year, when there were more hit titles. As a result, the net sales were down compared to the same period of the previous fiscal year.

(Gross profit ratio)
The gross profit ratio during the same period of the previous fiscal year was significantly lowered due to the effect of the price reduction of the “Wii U” hardware in the overseas markets. For this fiscal year, the gross profit ratio was 47.3%, which is a relatively high level. This situation arose mainly because the loss of the “Wii U” hardware arising due to the production costs being higher than its selling price was taken into account in the previous fiscal year.

(Main reason for operating loss)
Though selling, general and administrative expenses, including fixed expenses, decreased by 4.0 billion yen compared to the same period of the previous fiscal year, they exceeded gross profit, which led to 0.2 billion yen of operating loss.
The balance of revenue and expenses has improved as this second quarter (from July to September) resulted in 9.2 billion yen of operating income in comparison with 9.4 billion yen of operating loss of this first quarter (from April to June).

(Main reason for ordinary income)
The 15.5 billion yen of foreign exchange gains were produced as a result of the depreciation of the yen against the U.S. dollar at the end of this period compared with the one at the end of the last fiscal year.

3. Briefing of consolidated earnings forecast for the fiscal year ending March 31, 2015

For “Nintendo 3DS,” “New Nintendo 3DS” and “New Nintendo 3DS XL,” the new lineup of the “Nintendo 3DS” hardware, were launched in October in Japan and have showed strong initial sales. Moreover, “Super Smash Bros. for Nintendo 3DS” has showed steady sales worldwide. We are also planning to release the key titles “Pokémon Omega Ruby” and “Pokémon Alpha Sapphire” so as to accelerate the momentum for the “Nintendo 3DS” platform.

For “Wii U,” we will release key titles such as “Super Smash Bros. for Wii U” and launch character figures called “amiibo,” which are designed to connect with compatible games. We strive to further stimulate the platform and increase sales.

For the year-end sales season, which is the biggest sales season of the year, we expect to expand sales and restore the balance of revenue and expenses by releasing a number of key titles and launching new products. There are no revisions to the consolidated financial forecast announced on May 7, 2014.

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