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Q&A of Financial Results for the Year Ended March 31, 2013

The following includes questions and answers at the conference for the financial results for the Year Ended March 31, 2013.

Precision Equipment Business

Q:What can you tell us about the precision equipment business in the year ending March 2014?
A:

We expect the IC steppers and scanners market to show signs of recovery in the latter half of the fiscal year. The product competitiveness and stability has been improved by the latest model of our ArF immersion scanner, NSR-S622D. We are expecting increase in the number of new customers and the market share when the market has recovered.
In the LCD steppers and scanners business, we expect the market grows by 20% in CY2013 year-on-year. Demand for the 6th generation panels or high-definition smartphones remains well this fiscal year. In addition, investments in large-screen LCD televisions are also expected to resume in the latter half of this fiscal year, and we have planned to sell seven units of LCD scanners for the 7th generation or larger.

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Imaging Products Business

Q:What can you tell us about your inventory assets?
A:

The inventories balance at the end of March 2013 was 100.1 billion yen decreased by 30 billion yen from the end of September 2012. Although it was inflated by weak Japanese yen at the year end, inventory has been reduced as planned. We will continue striving further to reduce our inventories.

Q:What can you tell us about your imaging products business in the year ending March 2014?
A:

We expect the market volume of digital cameras—interchangeable lens type to grow 9% to 21 million pieces year-on-year, while the market volume of interchangeable lenses over the same period is expected to grow 8% to 32 million pieces. The market volume of compact digital cameras shrank by over 30% last year, but we don’t think it shrinks as much as last fiscal year and have forecasted 60 million pieces in other words a 12% decrease year-on-year.
Based on the above mentioned market sizes, and our assumed exchange rate of 95 yen to the US dollar and 125 yen to the Euro, we anticipate increasing sales by 8% to 810 billion yen and operating income by 55% to 94 billion yen year-on-year. In the latter half of last fiscal year we experienced the deterioration of the profitability caused by the abrupt change of the market. However we are reviewing our business operations focusing on profitability as closely as possible this fiscal year.

Q:What can you tell us about the sales volume of compact digital cameras, and their profitability?
A:

The size of the market of the year ended March 2013 was 68.08 million pieces in terms of the number of cameras shipped, and it shrank by over 30% year-on-year, while our worldwide units sales were 17.14 million pieces remaining at the almost same level as last year (-1.3%). As a result of that we expanded the market share.
We anticipate the market shrinks to around 60 million pieces to be shipped in the year ending March, 2014. Even though the market condition is getting severe, we have planned to remain in the black as we did in the past few years.

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Instruments Business

Q:What can you tell us about your instruments business in the year ending March 2014?
A:

In the bioscience field we are expecting government spending is increased this fiscal year, especially in Japan. In addition to cutting-edge products into which we are currently focusing our investment of resources, we will aim to expand sales by increasing our market share in biological microscopes for research and clinical use targeting general users. In the way of regions, we aim to expand sales in Japan and the rest of Asia.
In the industrial instruments field we will invest human resources and development costs into non-contact 3D measuring systems, which is an area that is expected to grow. We are going to focus on the markets in emerging countries in Asia, such as Indonesia, Vietnam and Thailand, and on automotive and aircraft industries.

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Overall

Q:What can you tell us about your equity ratio?
A:

The equity ratio as of March 31, 2013 rose approx. 6 points year-on-year to 56.7%. The dramatic increase in net assets is partly due to an increase of 26 billion yen in retained earnings, but another big reason was that the revaluation of the retained earnings of our overseas subsidiaries increased the foreign currency translation adjustment account by almost 24 billion yen as the result of depreciation of yen.

Q:What can you tell us about your corporate expenses?
A:

Corporate expenses for the year ending March 2014 are expected to be 26 billion yen, increasing 4.4 billion yen year-on-year. This increase is due to a rise in expenses related to basic research, new businesses, and IT such as information security.

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