2013 Annual Report
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Five-Year Summary ¥ $ Japanese Yen in Millions U.S. Dollars in Thousands Years ended March 31, 2013 2012 2011 2010 2009 2013 For the Period Net sales ¥635,422 ¥647,652 ¥1,014,345 ¥1,434,365 ¥1,838,622 $6,759,818 Operating income (loss) (36,410) (37,320) 171,076 356,567 555,263 (387,340) Net income (loss) 7,099 (43,204) 77,621 228,635 279,089 75,527 At the Period-end Total assets 1,447,878 1,368,401 1,634,297 1,760,986 1,810,767 15,402,966 Property, plant and equipment 86,152 87,856 80,864 79,586 71,064 916,517 Total net assets ¥1,227,520 ¥1,191,025 ¥1,281,861 ¥1,336,585 ¥1,253,931 $13,058,730 ¥ $ Japanese Yen U.S. Dollars Financial Section Years ended March 31, 2013 2012 2011 2010 2009 2013 Per Share Information Net income (loss)A ¥55.52 ¥(337.86) ¥606.99 ¥1,787.84 ¥2,182.32 $0.59 Cash dividendsB ¥100 ¥100 ¥450 ¥930 ¥1,440 $1.06 Five-Year Summary / Stock Price Information 21 [Note] A: The computation of net income per share of common stock is based on the weighted average number of shares outstanding (excluding treasury stock) during each fiscal year. Analysis of Operations and Financial Review 22 B: Cash dividends per share represent the amounts applicable to the respective fiscal years including dividends to be paid after the end of each fiscal year. Report of Independent Auditor 23 Consolidated Balance Sheets 24 Consolidated Statements of Income 25 Consolidated Statements of Comprehensive Income Consolidated Statements of Changes in Net Assets 26 Stock Price Information Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements 27 ¥ $ Japanese Yen U.S. Dollars 2013 2012 2013 Years ended March 31, Highest Lowest Highest Lowest Highest Lowest First Quarter ¥12,690 ¥8,570 ¥22,570 ¥14,460 $135.00 $91.17 Second Quarter 10,200 8,070 16,540 10,780 108.51 85.85 Third Quarter 11,120 8,520 12,530 10,400 118.29 90.63 Fourth Quarter 10,860 8,330 13,120 9,910 115.53 88.61 [Note] The preceding table sets forth the highest and lowest stock prices during the years ended March 31, 2013 and 2012 for Nintendo Co., Ltd. common stock, as reported on the Osaka Securities Exchange, Section 1. Analysis of Operations and Financial Review Overview (2) Risks around business activities t'MVDUVBUJPOPGNBSLFUFOWJSPONFOUBOEDPNQFUJUJPOBHBJOTUPUIFSDPNQBOJFT Nintendo continues to pursue its basic strategy of Gaming Population Expansion by offering compelling products that anyone Nintendo’s business is engaged in one segment of the broad entertainment field. However, its business can be affected by can enjoy, regardless of age, gender or gaming experience. trends in other segments of the entertainment field. If consumer preferences shift to other forms of entertainment, it is possible During the fiscal year ended March 31, 2013, for the Nintendo 3DS hardware (3DS and 3DS XL), Nintendo 3DS XL, with screens that the video game market may shrink. The emergence of new competitors resulting from technological innovation could have approximately 1.9 times larger than those of Nintendo 3DS, was launched as a new size variation of Nintendo 3DS. As regards the a detrimental impact as well. Nintendo 3DS software, New Super Mario Bros. 2 marked a total of 6.42 million units in worldwide sales. In addition, the combined In the video game industry, it may become even more difficult to be profitable due to large investments required in research total of the packaged and downloadable versions of Animal Crossing: New Leaf, a game in which the player character becomes and development, and marketing. In addition, competition may intensify with large-scale companies doing business in the same the mayor of a village and can enjoy customizing the village and communicating with other player characters, marked over three industry or in other segments of the entertainment field. As a result, Nintendo may experience difficulty in maintaining or million units in sales in Japan alone. As a result, the Nintendo 3DS system established itself as the leading platform in Japan. As for expanding its market share as well as sustaining profitability. the overseas markets, although evergreen titles such as New Super Mario Bros. 2 and Paper Mario: Sticker Star, released in this fiscal year, and SUPER MARIO 3D LAND and Mario Kart 7, released in last fiscal year, became hit titles, they did not generate t%FWFMPQNFOUPGOFXQSPEVDUT sufficient sales momentum. The global sales of the Nintendo 3DS hardware and software were 13.95 million units and 49.61 million Although Nintendo continuously makes efforts to develop innovative and attractive products in the field of computer units respectively. entertainment, the development process is complicated and includes many uncertainties. The various risks involved are as Regarding Nintendo DS (DS, DS Lite, DSi and DSi XL), the latest titles from the Pokémon series, Pokémon Black Version follows: 2/Pokémon White Version 2, reached a total of 7.81 million units in sales. However, the worldwide sales of the Nintendo DS a. Despite the substantial costs and time needed for software development, there is no guarantee that all new products will be hardware and software were only 2.35 million units and 33.38 million units respectively due to an accelerated generational change accepted by consumers due to ever shifting consumer preferences. Also, development of certain products may be suspended to Nintendo 3DS in the handheld device segment. or aborted. A new home console, Wii U, with which people can enjoy two-screen gameplay by utilizing a TV and the Wii U controller, Wii U b. While development of hardware is time-consuming, with technology continuously advancing, it is possible that the Company GamePad, was launched as the successor of Wii. As for the Wii U software, New Super Mario Bros. U and Nintendo Land, both of NBZOPUCFBCMFUPFRVJQUFDIOPMPHJFTSFRVJSFEGPSFOUFSUBJONFOU'VSUIFSNPSF EFMBZTPGIBSEXBSFMBVODIFTDPVMEBEWFSTFMZ which were released simultaneously with the Wii U hardware, sold 2.15 million units and 2.6 million units respectively. However, Wii affect market share. U was not able to maintain the initial sales momentum after the beginning of 2013 due to a delay in the development of c. Due to the nature of Nintendo products, it may become difficult to develop or sell the products as planned and the original subsequent software titles. The worldwide sales of the Wii U hardware and software were 3.45 million units and 13.42 million units plan could differ to a large extent. respectively. With respect to the Wii system, although Mario Party 9 sold over one million units, the worldwide sales of the Wii hardware and t1SPEVDUWBMVBUJPOBOEBEFRVBUFJOWFOUPSZQSPDVSFNFOU software were 3.98 million units and 50.61 million units respectively, mainly due to few new title releases. Products in the video game industry have relatively short life cycles, and are significantly impacted by consumers’ preferences Net sales were 635.4 billion yen (US$6,759 million) of which overseas sales were 426.4 billion yen (US$4,537 million) or 67.1% of as well as seasonality. Although production is projected based on the forecasted equilibrium point of supply and demand, it is the total sales. Owing to the fact that the Wii U hardware sales have a negative impact on Nintendo’s profits, the operating loss difficult to forecast demand accurately, which may lead to excess inventory. Obsolete inventory could have an adverse effect on was 36.4 billion yen (US$387 million). As a result of exchange gains totaling 39.5 billion yen (US$420 million) due to the Nintendo’s operations and financial position. depreciation of the yen, ordinary income was 10.4 billion yen (US$111 million) and net income was 7 billion yen (US$75 million). t0WFSTFBTCVTJOFTTFYQBOTJPOBOEJOUFSOBUJPOBMBDUJWJUJFT In addition to Japan, Nintendo engages in business in the United States, Europe, Australia, Asia and other areas in the world. Expansion of business to these overseas markets involves risks such as a) unpredictable enforcement or changes in laws or regulations, b) disadvantages from emergence of political or economic factors, c) disadvantages from inconsistency of Risk Factors multilateral taxation systems and diversity of tax law interpretation, d) difficulty of recruiting and securing human resources, e) social disruption resulting from terrorist attacks, war and other catastrophic events. Listed below are the various risks that could significantly affect Nintendo’s operating performance, share price and financial condition. However, unpredictable risks may exist other than the risks set forth herein. t%FQFOEFODZPOPVUTJEFNBOVGBDUVSFST Note that matters pertaining to the future presented herein are determined by Nintendo as of the end of the annual Nintendo commissions a number of outside manufacturers to produce key components or assemble finished products. In the consolidated fiscal period ended March 31, 2013. event one or more of these businesses fail, Nintendo may have difficulty procuring key components or manufacturing its products. In addition, suppliers may be unable to provide necessary components on a timely basis. A shortage of key (1) Risks around economic environment components could cause marginal decline due to higher costs, shortage of products and quality control issues. These issues may t'MVDUVBUJPOJOGPSFJHOFYDIBOHFSBUFT impair the relationship between Nintendo and its customers. Nintendo distributes its products globally with overseas sales accounting for about 70% of its total sales. The majority of 'VSUIFSNPSF BT NBOZ TVQQMJFST QSPEVDUJPO GBDJMJUJFT BSF MPDBUFE PWFSTFBT QPUFOUJBM QSPEVDUJPO JOUFSSVQUJPOT DBVTFE CZ monetary transactions are made in local currencies. In order to reduce the influence of fluctuations in foreign exchange rates, we societal violence, natural disasters or any other accidents in the area could negatively affect Nintendo’s business.