Iwata explains it here:
"Why don’t I explain by using the example of sales made in euro, which has shown an especially big change in its appreciation towards yen. In the 1st quarter of the current fiscal year, we made 1.1 billion Euro in sales, and at that time, the average exchange ratio was 163.43 yen per euro. Nintendo Co., Ltd. accounted for this sales in Euro and converting it to sales in yen by multiplying these numbers. At the end of the 2nd quarter, the 6-month sales were 2.2 billion euros. We came up with the mid-term euro sales result in yen by multiplying this euro sales by 162.68 yen, which was the average exchange ratio for the 6 months.
By subtracting the already-reported 1st quarter sales from this 6-month sales, we came up with the 2nd quarter 3-month sales, as the balance between the cumulative sales until June and the one until September. At this point, the Euro’s fluctuation was too small to give significant impact upon our accounting. At the end of the 3rd quarter, the 9-month euro sales was 4.2 billion euro, and the Euro’s appreciation against yen had significantly changed. The average exchange rate for the 9 months was 150.70 yen per euro. The euro sales were accounted in Japanese yen by multiplying these numbers in order for us to make the financial announcement yesterday. When we compare this average exchange ratio of 9 months with that of the 6 months, a difference of about 12 yen is found per euro. Following the applied accounting method mentioned before, the change in exchange rates had the effect of nominally decreasing the 3rd quarter three-month sales by 26.4 billion yen, based upon the calculation of 12 yen multiplied by 2.2 billion euro. And, in the current 4th quarter, as the yen is anticipated to appreciate even stronger against the euro, we estimate more than 32 billion yen negative effect on the 4.2 billion euro sales already reported as the 9-month result.
And this is just the case for the Euro. Of course, we also had to take into considerations the change in anticipated exchange rates of the other currencies such as U.S. dollars. As I have shown, the fluctuations in exchange rates affect even the sales in the past quarters where the financial reporting of which had already been made. When the yen appreciates as quickly as it does today, it also affects the 4th quarter three month result alone to look as if the sales are down sharply."
People are difficult to govern because they have too much knowledge.
When there are more laws, there are more criminals.
- Lao Tzu
