Nintendo 2004 Annual Report Download - page 37

At March 31, 2004, Nintendo’s cash and cash equivalents were ¥720.1 billion ($6,858 million).
Net cash provided by operating activities was ¥120.1 billion ($1,144 million) which was an increase of ¥143.6 billion compared
with the previous fiscal year. The decrease in accounts receivable and inventory contributed to the overall increase.
Net cash used in investing activities was ¥67.0 billion ($638 million). Deposits to time deposits which had exceeded
withdrawals contributed to the overall decrease.
Net cash used in financing activities was ¥24.1 billion ($229 million) with dividend payout accounting for a significant portion.
Cash Flow
Nintendo’s financial position continues to be very strong.
At March 31, 2004 total liabilities were ¥119.6 billion ($1,139 million), and the current ratio was 7.87:1. The balance of cash
and cash equivalents was 6.02 times total liabilities. Working capital was ¥777.5 billion ($7,405 million). The number of days’
sales in receivables decreased by 7 days compared with the previous fiscal year to 28 days. Inventories were ¥31.0 billion ($295
million). The number of days’ sales in inventories decreased substantially to 22 days. Liabilities-to-equity ratio was 0.13:1 at
March 31, 2004.
Financial Position
Various market risks that could significantly affect Nintendo’s operating performance, share price, and financial condition are as
follows:
Note that matters pertaining to the future presented herein are determined by Nintendo as of fiscal year ended March 31, 2004.
(1) Fluctuation in Foreign Exchange Rates
Nintendo distributes its products globally with overseas sales accounting for more than 70% of total sales. The majority of
monetary transactions are made in local currencies. In addition, the Company holds a substantial amount of assets denominated
in foreign currencies without exchange contracts. Thus, the fluctuation in foreign exchange rates would affect these assets if
they were to be converted to Japanese yen or revaluated for financial reporting purposes. Japanese yen appreciation against the
U.S. dollar or Euro would have a negative impact on Nintendo’s performance.
(2) Failure of Financial Institutions
Nintendo holds a substantial amount of deposits in order to respond flexibly to future capital needs. There is no guarantee that
financial institutions that have monetary transactions with Nintendo will not fail.
(3) Collectibility of Accounts Receivable and Notes Receivable
At Nintendo, based on contracts etc., a certain time period is required to collect receivables. During that time period, it is
possible that those receivables may prove to be uncollectible.
(4) Fluctuation of the Market
Nintendo is engaged in a business categorized under the massive entertainment industry. Therefore, the availability of other
forms of entertainment affects Nintendo’s business. If consumer preferences shift to other forms of entertainment, it is possible
that the video game market may shrink.
Risk Factors
During the fiscal year ended March 31, 2004, the Nikkei stock average rose 47% to ¥11,715.39 ($111.58). The Company’s
stock price ended the year at ¥10,510 ($100.10). The Company maintained its annual dividend level at ¥140 ($1.33) per share
for Fiscal 2004. On a consolidated basis, the dividend payout ratio was approximately 57%. Foreign shareholders constituted
39% of total outstanding shares at March 31, 2004.
(Note) The amounts presented herein are stated in Japanese yen and have been translated into U.S. dollars solely for the convenience of readers
outside Japan at the rate of ¥105 to US$1, the approximate rate of exchange at March 31, 2004.
Common Stock Activity
35
Nintendo Co., Ltd. and consolidated subsidiaries