Consolidated Financial Highlights: Three Months Ended June 2006

This report details the consolidated financial results for Nintendo Co., Ltd. for the first quarter ending June 30, 2006, and provides updated earnings forecasts for the fiscal year ending March 31, 2007. The primary objective is to communicate the company’s strong quarterly performance, driven by the global success of the Nintendo DS Lite handheld console and associated software, while adjusting future projections to account for favorable foreign exchange rate shifts and tax-related income reallocations.

For the three-month period ending June 30, 2006, Nintendo reported net sales of 130.9 billion yen, representing an 85.2% increase over the same period in the previous year. Operating income surged to 28.8 billion yen, a 667.1% increase, while net income reached 15.5 billion yen. This growth was largely attributed to the robust performance of the Nintendo DS Lite, which saw strong sales following its Japanese launch in March and subsequent international release in June. Key software titles, including New Super Mario Bros. and the Touch! Generations series, also contributed significantly to revenue. Conversely, the company noted a decline in sales for its legacy console business compared to the previous year’s first quarter.

The company revised its financial forecasts for both the six-month period ending September 2006 and the full fiscal year ending March 2007. The updated full-year consolidated net sales forecast was increased by 40 billion yen to 640 billion yen, with projected net income raised to 83 billion yen. These adjustments reflect higher-than-anticipated hardware and software sales and a strategic revision of estimated foreign exchange rates to 115 yen per dollar and 143 yen per euro. Additionally, the company incorporated the financial impact of an Advance Pricing Agreement regarding tax reallocations between Japanese and U.S. operations, which resulted in adjustments to prior-year income tax calculations.