Q&A of Financial Results for the Year Ended March 31, 2008

The following includes questions and answers at the conference for the financial results for the year ended March 31, 2008.

• Precision Equipment Business
• Imaging Products Business

Precision Equipment Business

Q:What is the outlook for the market of IC steppers and scanners?

A:

Currently, expectations in the market are falling, however there is an indication that the fall in memory prices is beginning to level out and at present, it is considered that there is little possibility that numbers will fall under the current expectations (May, 2008). In addition, we anticipate the possibility that the market will recover in the latter half of the year.

Q:What is the outlook for ArF immersion scanners?

A:

Addressing the issuing of increasing the throughput of the NSR-S610C took much longer than expected, however the cause of the problem has been located with the expected throughput being attained. With the future production of immersion scanners expanding from NAND flash memory to DRAM and logic IC, the tolerance of scanner-induced immersion defects will become significantly lower and we believe that the market environment will come to favor the superiority of our products, which in principle, are defect free. In line with the change from a resist with a hydrophilic topcoat to a water repellent resist without a topcoat we believe we will be able to take advantage of the superiority of our local fill nozzle that can accommodate both water repellent and hydrophilic water handling methodologies. As a result, we expect to see an increase in the number of units shipped from 23 units in the previous period to more than 30 units for the current period.

Q:What is the profit outlook for the Precision Equipment business?

A:

Sales of LCD steppers and scanners are expected to increase significantly in comparison to the previous period. We expect sales of immersion scanners to increase but we foresee sales in other IC steppers and scanners to fall significantly due to the steep decrease of the capital investment into semiconductor equipment. As a result, we anticipate sales and operating profit to remain in line with that of the previous year.

Imaging Products Business

Q:What is the outlook for the digital camera market?

A:

We achieved sales that exceeded that of the market in general for all our product groups in the previous term. Up until present, the slow down in consumer spending attributable to the subprime mortgage problem has not been a cause of particular concern however we will be closely watching the influences on consumer spending of the sluggish economy.

Q:What marketing strategies do you have in place for the Imaging Products business?

A:

Last term we concentrated on expanding our product line-up for digital SLR cameras. The new range of products were well received, allowing us to increase our market share, however this term we will be concentrating more to build a brand and the sale of our middle to high-end products. In that context, and in consideration of the effect of a sluggish economy on consumer spending, we anticipate growth in our shipments will fall slightly under that of the general market.

Q:What plans do you have for increasing sales in emerging countries?

A:

We have a very good reputation in emerging countries for our single-lens reflex cameras from the days of conventional film cameras, and we are taking advantage of this reputation in the implementation of brand strategies. We are also working on developing sales bases in each county. We established a sales subsidiary that commenced operations in India last term, and another is scheduled to start business in Russia in the first half of the current term.