Consolidated Results for the Third Quarter Ended December 31, 2009

Q&A summary

Click on the appropriate question to view the answer.

Overall

Information-related equipment

Electronic devices


Overall

  • Q1Please explain the background to the improved income outlook?
  • AOur fixed cost cuts exceeded plan. We originally planned cuts to the tune of 60-70 billion yen over the year, but we are currently looking at cuts of around 100 billion yen. Another reason behind our upward revision of our previous outlook of breakeven in ordinary income is that we are seeing steady growth in sales of products for enterprise.
  • Q2Are foreign exchange effects included in the decrease in SGA expenses compared to the previous year?
  • AForeign exchange effects are excluded. However, there is a possibility that foreign exchange may slightly impact a comparison of SGA expenses at overseas subsidiaries.
  • Q3You have revised your previous outlook of negative 4.5 billion yen extraordinary income and loss to negative 13 billion yen. Please give some details about this.
  • AWe are presently implementing structural reforms in our electronic devices businesses in accordance with our medium- to long-range business plan. As part of this, we booked impairments in some businesses at the end of FY2008. This fiscal year in these businesses, we are keeping investments to the minimum level required to maintain operations. We are following the relevant accounting rules and immediately carrying out impairments on these investments.
  • Q4Please give me concrete details of and reasons behind the write-down of deferred tax assets.
  • AThis is an accounting procedure used to adjust accounting processes with policy regarding the payment of taxes.
    Considering the taxable income of Seiko Epson Corporation and its wholly-owned domestic subsidiaries, we determined there was a risk of a review of realizable deferred tax assets as a result of the effects on taxable income of impairments and other taxable charges that had previously been booked in financial accounts. Based on our current forecast, we therefore included in taxation charges a write-down of deferred tax assets.
  • Q5What will be the balance of deferred tax assets at the end of the period?
  • AA small amount.

Information-related equipment

  • Q6I see the information-related equipment business has a high operating margin. Is this because of fixed cost cuts or an improvement in printer hardware profitability?
  • AAlthough fixed cost cuts have a bigger impact, we did achieve some successes in improving consumer inkjet printer hardware profitability, which had been an issue. Measures such as standardizing printer platforms and reducing the cost of molds contributed to the improvement of profitability.
  • Q7Why was income in the information-related equipment segment over plan?
  • AThis was partly due to increased sales volumes of inkjet printer hardware and consumables. Compared to the previous year, we reduced fixed costs and improved the profitability of inkjet printer hardware.
  • Q8Profitability improved in the printer business compared to the previous year, but were there changes in businesses other than inkjet?
  • ABoth page printers and business systems improved compared to the previous year.
  • Q9What is behind the recovery of POS products and other business systems products? Please give an image of this business going forward.
  • AAlthough the market has still not fully recovered, we are seeing signs of improvement in Europe and North America, while in China tax regulations have driven demand for SIDM printers. We think the market will continue to improve steadily.
  • Q10What was behind the big recovery in projectors? Can you also give an idea of how this recovery will proceed and a timeline?
  • AThere was a dramatic improvement in business projectors, in particular for the education market, as economies experienced the benefits of the stimulus packages implemented by various governments. As a result, we achieved record shipments in the third quarter.
    Going forward, we will keep a close eye on the progress of economic stimulus packages. We are also looking toward the education market in developing countries.

Electronic devices

  • Q11How does Epson see the crystal market?
  • AWe believe the market for sensing devices will continue to expand. In addition, the supply situation for tuning fork crystals for timing devices has become tight.
    We are not seeing any significant changes in the competitive environment. However, competition in AT crystals has become fierce as Asian competitors become conspicuous. We plan to ramp up cost cuts to make our products even more cost competitive.
  • Q12Please tell me about current capacity utilization rates and your thinking about future capacity expansion?
  • AAt present, we are operating at full capacity. As for future capital expenditure, we are currently in the process of compiling our plan for the next fiscal year.
  • Q13What is the latest progress in the transfer of certain assets in the small- and medium-sized display business?
  • AEverything is proceeding according to plan.