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  5. Q&A of Financial Results for the Year Ended March 31, 2007

Q&A of Financial Results for the Year Ended March 31, 2007

The following includes questions and answers at the financial results conference.

Precision Equipment Business

Q:Please tell us about the profitability of Precision Equipment Business for this fiscal year.
A:

We expect sales units for LCD steppers and scanners to come in at half what they were for the previous fiscal year, and both revenue and profit will therefore be significantly lower in the LCD steppers and scanners business. However, total profit levels commensurate with those in the previous fiscal year will be achieved in for IC steppers and scanners due to significant growth in the proportion accounted for by ArF scanners, including immersion scanners.

Q:What is the outlook for immersion scanners?
A:

The NSR-S610C (NA 1.30), which we began shipment in February 2007, has experienced favorable introduction. We are confident that producing tangible results with the S610C will allow us to outstrip the competition. For this fiscal year, we expect to sell four units during the first half, and 17 units during the second. We also have plans to strain to ship our entire production capacity of 30 units. With regard to increases in production capacity, we intend to make such decisions as we move forward based on close examinations of market trends.

Q:What is the outlook for LCD steppers and scanners?
A:

We expect market size to stay flat, hovering around 70 units annually between 2007 and 2009, but depending on increases in demand for big-screen televisions, there is plenty of potential for expectations to be exceeded from 2008 onwards.
We will employ Nikon's unique multi-lens projection optical system to support the even larger 10th generation glass plate sizes.

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Imaging Products Business

Q:Please provide some information about Imaging Products Business in the European market.
A:

By actively pursuing business expansions in the largest market, Europe, which includes the rapidly growing Russian and East European markets, we are placing more emphasis on this region at Nikon.

Q:What is the outlook for shipments of digital SLR cameras and interchangeable lenses?
A:

We have developed fairly solid forecasts for the second half of the year ending March 2008 based on trends at major consumer electronics firms and other companies. The estimated shipments of 2.5 million and 3.5 million units for digital SLRs and interchangeable lenses, respectively, present no concerns in terms of production capacity and will be truly achievable in this regard. Many customers purchase camera bodies together with one or two lenses, and we therefore expect interchangeable lenses to exhibit significant growth.

Q:What are your views regarding compact digital cameras?
A:

The COOLPIX L series of easy operation and simple compact digital cameras accounted for a relatively large proportion of sales during the previous fiscal year. This fiscal year, however, we hope to transform the COOLPIX brand into a premium name by expanding sales of the high performance and stylish COOLPIX P series and S series. Our new products are performing strongly in the market, and we are confident that we will clear the target shipment volume for this fiscal year of 7.5 million units. We anticipate the fall in average unit prices this fiscal year to be around 10%, on par with the rest of the market.