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| [Questions Regarding First Quarter Results] |
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Q1: |
What were the first quarter results
of each business area? |
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A1: |
Orders were firm for measuring instruments for third
generation (3G) mobile communications systems, but a portion of sales will
be delayed until the second quarter. Performance of measuring instruments
for 2G and 2.5G systems was weak, which is the main cause of the decrease in
income. Results in businesses other than Test and Measurement were more or
less as projected. As for regional performance, sales of the European sales
group were sluggish, particularly because of a downturn in the market for
general purpose measuring instruments. |
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Q2: |
Why were selling, general and
administrative expenses up 900 million yen compared to the same period of
the previous fiscal year? |
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A2: |
This was mainly due to increased costs for enhancing our
overseas sales organization and support services. We are increasing our
overseas staff to offer speedier services to meet customer demand. We are
also accelerating forward investment that was not in our original budgets.
The results of these initiatives are not reflected in current sales, but
should become apparent in the second half. |
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| [Questions regarding the Outlook for the
Year Ending March 31, 2006] |
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Q3: |
In the forecasts for the interim
period, a significant downward revision of 1,400 million yen has been made
in operating income and a 1,000 million yen downward revision in net sales.
What are the reasons for this? |
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A3: |
The details of the downward revisions are as follows: in
the Test & Measurement business, a 500 million yen decrease in net sales and
a 1,200 million yen decrease in operating income; and in Others, a 500
million yen decrease in net sales and a 200 million yen decrease in
operating income. In the Test & Measurement business sales decreased and, as
stated in A2, above, an increase in selling expenses is expected to result
in a reduction in operating income. Sales of measuring instruments for 3G
and 3.5G systems are expected to be as originally forecast, but we foresee a
significant reduction in sales of measuring instruments for 2G and 2.5G
systems. Sales of Site Master and other handheld products, which would
normally compensate for decreases, are firm. However, they are not
sufficient in this case because measuring instruments for 2G and 2.5G
systems have a higher profit ratio. |
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Q4: |
In the Test and Measurement business,
what proportion of sales of measuring instruments for wireless
communications are represented by measuring instruments for 3G systems? |
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A4: |
In the year ended March 31, 2005, measuring instruments for
wireless communications accounted for nearly 60 percent of total sales in
the Test and Measurement business. Of this, measurement instruments for 3G
systems made up approximately 60 percent. These proportions were unchanged
in the first quarter of fiscal 2005, and are projected to remain the same in
our mid-term business plan. |
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Q5: |
Full-year forecasts for the year
ending March 31, 2006 are unchanged. Will downward revisions be necessary? |
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A5: |
We will be reviewing measures for recovery in the second
half as part of our second quarter activities and preparation of second half
forecasts. |
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Q6: |
Selling, general and other fixed
expenses have increased significantly. What effect does this have on the
outlook for the year ending March 31, 2006? |
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A6: |
Fixed expenses in the current fiscal year are projected to
be 10 percent higher than those in the year ended March 31, 2005. Fixed
expenses in the first quarter were somewhat restrained owing in part to
seasonal factors, and fixed expenses in the current quarter are one-quarter
of that. We will control expenses in the second half based on the order
situation. |
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Q7: |
An exchange rate of 100 yen to U.S. $1
was used for the fiscal 2005 projections. How will the weaker yen affect the
financial results? |
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A7: |
The yen is currently weaker than projected with respect to
the U.S. dollar. In the first quarter, however, the net effect on business
results was minimal because the strength of the yen versus the Euro roughly
offset its weakness against the U.S. dollar. |
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| [Questions Regarding the Mid-term Business
Plan] |
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Q8: |
Why does the current mid-term
business plan deviate from the previous plan? |
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A8: |
Our policy of profitable growth has not changed. In fiscal
2004 we set a goal of net sales of 100 billion yen and operating income of
10 billion yen in fiscal 2005. Achievement of this goal has been move ahead
one year. The primary reasons are delays in the launch of 3G services and a
downturn in sales of telecommunications equipment. |
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Q9: |
The product mix for measuring instruments is changing, and may lead to lower profits in the
future. How will you offset this? |
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A9: |
As 3G services become fully established in more countries,
the price of mobile terminals will decrease. We anticipate that this will
increase pressure to lower prices of measuring instruments, thus
reducing profit margins. We will therefore work to secure profitability by
reducing costs, offering higher-value-added products in overseas markets
such as testers for 3G service application software, and providing new
applications that connect with IP networks. |
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