Consolidated Results for the Third Quarter Ended December 31, 2011

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FAQ Summary of the Question-and-Answer Session at Seiko Epson's Announcement of Consolidated Results for the Third Quarter (ended December 31, 2011).



Q&A summary

Click on the appropriate question to view the answer.


Overall

Q

Why did you revise your full-year outlook?


Q

The main reasons for the revision were the impact of foreign exchange, namely the strength of the yen against the euro, additional logistics costs incurred in meeting demand in the year-end selling season, and the effect of the economic slowdown on each of our businesses.
These factors were to some extent offset by improvement of the variable cost ratio and fixed cost reductions in each business.


Q

What is the situation with sales promotion expenses?


Q

To sell business printers, we had from the very start planned to increase promotion expenditure compared to the previous year, and we proceeded according to plan. In the fourth quarter we will carefully monitor the profit and loss situation as we consider the allocation of expenses.


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Information-related equipment

Q

How do you see the inkjet printer market growing in FY2011?


Q

We originally forecast 3-4% growth for the market overall, but the continuing economic crisis has dulled demand, and we are now looking at around 1% growth.


Q

What is the situation with Epson inkjet printers?


Q

Our sales were basically in line with our plan, despite the worsening market environment. We achieved this by achieving success with strategic products such as business inkjet printers, compact inkjet printers, and models with high-capacity ink tanks.
On the other hand, we experienced manufacturing and supply delays as a result of the earthquake in Japan and the flooding in Thailand. We incurred additional logistics costs as we sought to avoid the risk of missing sales opportunities. Although the market is not growing significantly, we believe we have been successful in the year-end selling season. We will monitor demand in the fourth quarter and act accordingly.


Q

What is the latest situation with strategic products such as business inkjet printers and high-capacity ink tank models?


Q

In the third quarter we generally sell to individual customers. However, this year results were also good for sales to enterprise customers, and we expect to record year-on-year growth. In Asia in particular, the high-capacity ink tank models we began marketing in Indonesia the previous year met customer needs, and continued to sell well as we expanded the sales regions.
We will continue to monitor the situation and act accordingly to meet market demands.


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Devices and precision

Q

What is the position of Epson Toyocom Corporation in the Group? What was the purpose of today's news release?


Q

We intend to pursue synergies between quartz devices and semiconductors.
By transferring Epson Toyocom's sales function to Seiko Epson Corporation, the former will become a manufacturing factory based around the Miyazaki Plant. Epson Toyocom's new mission will be to pursue productivity and raise manufacturing capability.
At the same time, Seiko Epson will be responsible for the development, administrative and sales functions of quartz devices and semiconductors, and will have the task of creating synergies within the microdevices business.


Q

What is the position of the precision products business, and what is the latest situation?


Q

Precision products include the watch, factory automation, powdered metals, and plating businesses, all of which are contributing positively to profitability. Each one will continue to show solid growth, and in some areas we will increase manufacturing capability by investing capital expenditures.


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