You are planning to increase sales in the Americas region during FY2008. Could you tell us your outlook on the conditions of businesses associated with wireless base stations, mobile phones and optical/IP technology, as well as your business plans for these businesses?

The Americas region includes the Latin America region, and our forecast includes the expected growth of the Service Assurance Business in Latin America. We established a sales company in Mexico last year, in anticipation of the solid growth of the Service Assurance Business. We expect that the telecommunications market will show slightly negative growth, reflecting the concerns over the U.S. economic downturn. While we maintain our conventional businesses in this region including handheld measuring instruments, we are planning to achieve growth in the Service Assurance Business and increase sales by 4.8% year-on-year.

The company holds approximately 70% global market share for measuring instruments for W-CDMA, and has achieved a leading position in the market of third-generation (3G) mobile phone-related measuring instruments. Please tell us how competitive you feel the company will be in the market of measuring instruments for LTE.

While maintaining the close relationships with our core clients, which we have built through the 3G business, we are currently exchanging information with them by disclosing each other's roadmaps. R&D of LTE has been conducted worldwide and therefore, we anticipate that competition in measuring instruments for LTE will intensify in the future. We are planning to concentrate our R&D investments during the first half of FY2008 in order to take the initiative in the LTE business from the beginning of the second half, and thus to gain the leading position in this market.

*LTE: Long Term Evolution, a communication standard evolving further from 3.5G, currently being standardized

With regard to the projections for FY2008, please tell us the factors behind the operating loss in the first half, as well as the expected substantial increase in operating income in the second half.

One of the factors for posting operating loss in the first half is a change in our accounting methods for loss on devaluation of inventories, effective from FY2008. In the first half of FY2008, approximately 0.6 billion yen of loss on devaluation of inventories will be included in cost of goods sold. As we expect decrease in income during the first half, we are to work on improving our profit and loss status through the reduction in costs and selling, general and administrative expenses. However, this is not expected to fully make up for the loss on devaluation of inventories as mentioned above, and therefore we forecast an operating loss for the first half. On the other hand, we anticipate that profits will improve in the second half of FY2008, due to our efforts to increase sales of the high-margin products through new product launch as well as functional enhancement of our new products introduced last year. In addition, we expect strong sales of measuring instruments for LTE, and anticipate that profit margin will recover faster than sales growth.

How much impact do you expect the exchange rate fluctuations to have on operating income?

90% of our products exported from Japan are quoted in non-yen currencies, about half of which are in U.S. dollars. Therefore, our income suffers from the appreciation of the yen against the U.S. dollar. Likewise, U.S. dollar-based financial results of our subsidiaries outside Japan will be adversely affected. The average exchange rate for FY2007 was about 114 yen per dollar, and we assume that the rate will reach 100 yen per dollar for FY2008, reducing our income by a total of approximately 1.2 billion yen year-on-year.

What is the expected degree of reduction in cost of goods sold and selling, general and administrative expenses in FY2008 by implementing the initiatives for organization reform?

As loss on inventory devaluation as well as foreign-exchange loss due to the appreciation of the yen against the U.S. dollar will be recorded in cost of goods sold in FY2008, our initiatives for organization reform will be forced to focus on mitigating these cost increase factors. Therefore, we would not be able to see any improvement in our operating income figure as a result of these initiatives. Also, since our efforts to reduce selling, general and administrative expenses will be made amid declining income, we do not expect to see a substantial reduction effect either. We estimate that costs as a percentage of sales will improve by about 1% during FY2008.