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  5. Q&A of Financial Results for the Year Ended March 31, 2005

Q&A of Financial Results for the Year Ended March 31, 2005

The following includes answers to a number of questions at the conference as well as some submitted to the Company subsequent to the conference.

Earnings

Q:What is the status of R & D costs?
A:

Most of increase - from ¥33.8 billion in the previous period to ¥38 billion during this period - is related to the imaging business. It corresponds with the shift in sales to digital SLR cameras.

Q:What is the status of interest-bearing liabilities?
A:

They decreased ¥25.2 billion from the end of the previous period, to ¥195.3 billion. Nikon is undertaking a further reduction, with plans to trim interest-bearing debt to ¥185 billion by the end of the period.

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Precision Equipment Business

Q:Could you tell us about the immersion stepper?
A:

Nikon's immersion stepper features high throughput because it does not require the purified water to be turned off at the time of wafer exchange. The prototype at our Kumagaya Plant has been highly evaluated by many customers.

Q:Please discuss the LCD stepper business.
A:

The market shows signs of taking a turn for the better and we anticipate shipping about 10 units of next-generation (7- to 8-generation) LCD steppers.

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Imaging Business

Q:Please discuss the market share in digital SLR cameras?
A:

We will expand the market by releasing the D50 for family use during this period. We are also enhancing advertising and publicity, targeting a share of 40% or more in the digital SLR market.

Q:Please discuss the compact digital camera?
A:

Though the average unit price has fallen about 20% compared with a year ago, it has dropped only about 5% in the past half year. We plan to continue improving profitability. We will not recklessly pursue market share, but rather introduce innovative products such as the COOLPIX S1, which combines a slim and stylish body and superior functions such as Face-priority AF.

Q:Please discuss the film compact camera?
A:

As there remain needs in China and other Asian countries, we shall continue the business. The impact on our business, however, is relatively insignificant.