Consolidated Results for the Second Quarter Ended September 30, 2011

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FAQ Summary of the Question-and-Answer Session at Seiko Epson's Announcement of Consolidated Results for the Second Quarter (ended September 30, 2011).



Q&A summary

Click on the appropriate question to view the answer.


Overall

Q

Why did you revise your full year operating income outlook?


Q

In addition to foreign exchange effects, we are experiencing a decline in net sales caused by the global economic downturn, an increase in sales promotion expenses, and extra logistics costs associated with air freighting products to market. On the other hand, we will cut fixed costs by reducing R&D expenses, and curtail depreciation charges by rigorously screening our capital expenditures. These measures have also been factored into the outlook.


Q

Why did sales promotion and advertising expenses increase in the second quarter, and what are your plans here in the second half?


Q

These expenses were mainly associated with printers for enterprise, and were pretty much on plan. By reducing other expenses included under SGA, overall expenses in this category declined year over year.
We have not revised our initial sales volume forecasts for inkjet printer hardware or projectors. From the third quarter onwards we will carefully review the market situation while spending efficiently and effectively as we seek to achieve our targets. These expenses have been included in our forecast.


Q

What are the effects of the flooding in Thailand?


Q

We are hearing reports from our supply chain that certain procured components for information-related equipment products are being affected, but are still confirming the extent of the impact and deciding on what actions to take. In the devices and precision segment, our quartz device plant in Thailand has not been directly affected by the flooding. However, we are still confirming if any of our customers have been impacted.
We haven't included these factors in our financial outlook. We will inform you promptly if it becomes clear that this disaster will have a serious impact on our business results.


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Information-related equipment

Q

What will be the growth rate in inkjet printers this year? Do you have any up-to-date information?


Q

Although there is some variety, sales volumes will increase in most regions. Recently there has been some market slowdown as a result of the economic slowdown, and we see the market expanding by 3-4%, which is slightly lower than initially forecasted.


Q

How are Epson inkjet printers selling?


Q

Although second quarter sales declined as a result of production restrictions caused by the earthquake in Japan, the new products we launched this year have earned excellent reviews from the market. Our aim in the second half is to respond flexibly to market fluctuations, and achieve our sales targets.


Q

What measures will you take to boost sales of inkjet printers for enterprise going forward?


Q

Enterprise customers demand both durability and low printing costs, and this year we have put together a lineup that fully answers customer needs. We will continue to boost our lineup, and will increase the proportion of our inkjet printers sold to enterprise.


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Devices and precision

Q

Why do your forecasts get worse in the second half?


Q

Because demand for quartz devices will grow greater than expected as a result of the economic slowdown.


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