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  5. Q&A of Financial Results for Second Quarter of the Year Ending March 31, 2014

Q&A of Financial Results for Second Quarter of the Year Ending March 31, 2014

The following includes questions and answers at the conference for the financial results for Second Quarter of the Year Ending March 31, 2014.

Precision Equipment Business

Q:What are the prospects for sales of ArF immersion scanners next fiscal year?
A:

We expect that our existing customers continue to invest steadily. Implementation of our equipment delivered to a memory manufacturer who is our new customer is also progressing smoothly. The stability and overlay accuracy of our equipment are both improving, and based on this we will strive to expand our market share and to increase new customers.

Q:What are the prospects for the LCD steppers and scanners market next fiscal year?
A:

In regard to LCD scanners for high-definition panels for smartphones and tablet devices, supply has caught up on some level, therefore there is a possibility that the market may shrink next fiscal year. We expect to be invested in the LCD scanners for large-screen LCD televisions around the end of next fiscal year, if the sales promotions for high-definition televisions with 4K displays succeed. As for the entire market of next fiscal year, we anticipate the market will drop by around 20% compared to this fiscal year.

Imaging Products Business

Q:What is the reason for the lowered market forecast for interchangeable lens-type digital cameras?
A:

As the market for digital cameras expands, sales of digital SLR cameras have expanded among not only professionals and high amateurs, but sales of entry-models such as the D3000 Series have also skyrocketed, expanding the customer base globally. For this reason, sales have been affected greatly by the economy and consumption trends of each country. The market in Japan has been favorable, but the market conditions in the U.S., Europe, China and Asia have been severe, and a downward revision of the market was made from 19.5 million cameras predicted last August, to 18.7 million.

Q:What are the prospects for the interchangeable lens-type digital camera?
A:

Though the annual growth of 20 to 30% experienced previously will be difficult to achieve given the current economic environment and consumer confidence, the penetration level of digital SLR cameras is still quite low in markets in China and other neighboring Asian countries. We believe these markets have a lot of potential when the economy turns bullish.
We are keeping inventory of our digital SLR camera at the extremely low level. In the latter half of the fiscal year, we expect a shift from older products to newer products that have higher profit margins.

Q:What are your future strategies in response to the shrinking compact digital camera market?
A:

We are adjusting production in accordance with the shrinking market. We have an extensive lineup ranging from high-end to entry-level products, and we have secured the leading or nearly top share of the market in various regions around the world since last year or so. We plan to maintain this product mix, but we will cut costs and ensure profitability by reducing the number of models.

Corporate

Q:What can you tell us about the progress being made by the Management Measures Committee?
A:

The Imaging Products Business incorporated a year-on-year cost reduction of 10 billion yen into the forecast made at the beginning of the fiscal year. Furthermore, a goal was set in August to reduce costs by a further 10 billion yen throughout the entire company in order to ensure that the operating income forecast of 65 billion yen would be achieved. The effort to achieve this 20 billion yen cost down is currently progressing on schedule. 30% of the target has already been achieved in the results of the first half, and the remaining 70% will be achieved in the second half as the result of efforts. We believe there is room for further cost down and our efforts will continue.