We would now like to start the meeting of the consolidated financial results for the third quarter ended December 31, 2013 for Hitachi, Ltd. I would now like to introduce the participants for today.

Toyoaki Nakamura, Executive Vice President, Executive Officer and CFO; Mitsuyoshi Toyoshima, General Manager of the Financial Management Division; Ken Mizoguchi, the General Manager of Corporate Brand & Communications Division. I'd like to call upon Mr.

Nakamura.

Please refer to the materials that have been distributed to you. Now please turn to Page 4, 1-1.

This is the third quarter, October to December, fiscal year 2013 financial results. Revenues was JPY 2,303.7 billion, up 9% year-on-year.

Operating income was JPY 122 billion, up 79% or up JPY 53.6 billion year-on-year. As a result, we have achieved the highest third quarter operating income.

Next earnings before interest and taxes, EBIT, was JPY 169.7 billion. Gains on the sales of investment in security such as Western Digital and an improvement in equity in net earnings of affiliated companies were significant.

It was up by JPY 106.8 billion, or increase by 170%.

Net income attributable for Hitachi, Ltd. stockholders was JPY 94.5 billion, up 367% or JPY 74.2 billion increase year-on-year.

We have again achieved the highest third quarter for October, December net income attributable for Hitachi, Ltd. stockholders.

Stockholders' equity ratio was 24.8%, up 1.6 point from the previous term. Core free cash flows.

Because of a bonus payment in December, it was negative JPY 133.2 billion. On an annual basis, we shall revert back to black ink.

1-2. This is the year-to-date to December financial results.

Revenues was JPY 6,774.4 billion, up 5% year-on-year. Operating income, JPY 295.4 billion, up 27%.

EBIT was JPY 311.7 billion, up 67%. Net income attributable to Hitachi, Ltd.

stockholders, JPY 127.2 billion, up 153%.

Now as I mentioned, the operating profit during third quarter, October and December. Now I would like to talk about the factors for change year-on-year.

Continuing the trend of the first quarter and second quarter, lower sales price impact was JPY 30 billion. However, for higher capacity utilization, improvement from third quarter was amounting to JPY 12 billion.

There was effect of the foreign exchange movements of JPY 26 billion. With the cost reduction, we have been able to increase by JPY 53.6 billion year-on-year.

Please refer to the information regarding the Hitachi Smart Transformation Project amounting to JPY 28 billion. This is on a net basis including the impact of the sales price as well as cost reduction, which were positive.

And also JPY 26 billion foreign exchange impact being added on top of the operating profit of the previous year.

Next, I would like to refer to Page 13, 1-10, revenues by market. Left-hand side is the situation for the third quarter.

For Japan, it was JPY 1,239 billion, 99% year-over-year improvement to almost flat level has been achieved. Outside Japan was JPY 1,064.6 billion, 123%.

Significant increase in China, Asia, North America, Europe have contributed. The 123% year-over-year for outside Japan is net of a weak yen impact.

In absence of this, the result was 102%. The total of 109%, by the same token, will become 101%.

Therefore, in the third quarter, we have now entered the stage of increase in revenue.

Now referring to the balance sheet. Please refer to Page 15, 1-12.

This is the breakdown between the manufacturing services and others and Financial Services. Please refer to the balance sheet for the manufacturing services and others, total asset was JPY 9,097.8 billion, which is an increase of JPY 773.4 billion.

Out of which JPY 450 billion is accounted for by the foreign exchange fluctuation mark-to-market valuation of stocks. Other increases include inventories of JPY 230 billion for December.

Interest-bearing debt was JPY 1,627.6 billion, increase of JPY 258.8 billion. Stockholders' equity was JPY 2,254.2 billion, an increase of JPY 321.8 billion.

Our stockholders' equity ratio was 24.8%. D/E ratio was 0.49x and maintaining our standard of 0.5x and below.

Now for the Financial Services. Total assets was JPY 2,417.5 billion, increase of JPY 456.5 billion.

This includes the acquisition of NBL and foreign exchange translation gain of JPY 290 billion, leading to an increase. As for the stockholders' equity ratio, it was 7.3%, a D/E ratio of 5.31x showing an increase.

However, it is within 7x, which is necessary to maintain the A rating as we implement the growth strategy according to schedule.

Next, 1-14 is capital expenditure. For manufacturing services and others, on accumulated basis, up to the third quarter, was JPY 284.2 billion and 97%.

After an increase in previous year, this year, we are somewhat suppressing CapEx. For consolidated depreciation, manufacturing services and others, JPY 195.5 billion.

Depreciation increased as a result of increase in investment. Therefore, there was an increase by JPY 19 billion.

As for R&D expenditure, JPY 259.2 billion. There was an increase of JPY 11.1 billion.

Investment has been made by generating the source of investment through Smart Transformation Project to implement the growth strategy.

Let us move on to Slide 1-18. This shows information by segment for the 10 segments.

As you can see, for the third quarter and for the 9 months on a cumulative basis, in all segments, we were able to post positive numbers or profit.

Finally, we are breaking away from negative numbers or losses. And today, I'd like to explain about the third quarter performance.

In the Information & Telecommunication Systems segment, storage, ATMs, services businesses were robust, both revenue and income grew. For Power Systems, the nuclear power related work was down, so both revenue and income declined.

In Social Infrastructure & Industrial Systems segment, elevators and escalators business is doing very well in China and Japan. But in the infrastructure assistance-related business, some projects are experiencing cost overruns, resulting in decreased income in Electronic Systems & Equipment segment, semiconductors and medical equipment have became stronger and posted increase in the third quarter.

In the Construction Machinery segment, GPN and cost reduction have led to an JPY 8 billion increase in income. In High Functional Materials & Components segment, revenue in automotive-related business is up, valuation losses in rare earth that we had to post last fiscal year was eliminated this term, so there was a major growth in both revenue and income.

For Automotive Systems, in North America, obviously, Automotive Systems-related business is growing and there's last-minute increase in demand right before the consumption tax hike. Digital Media & Consumer Products, for this as well, related to the tax hike, there has been increased revenue.

And centering around overseas markets, the business for air conditioning systems is also up.

Now moving on to Slide 2-1, Page 24, full year outlook. For the fourth quarter, foreign exchange rates assumed are JPY 98 to the dollar and JPY 130 to the euro.

In the third quarter, because the actual revenue was better than planned, income was improved. But for the fourth quarter, we are being cautious.

For the full year forecast, we made upward revisions for revenue to JPY 9.4 trillion, operating income, JPY 510 billion, net income, JPY 215 billion. As far as the operating income is concerned, we have not been able to post a record high for some time, but now that the market conditions have improved, we are proceeding with expectation to see a record high in operating income for the first time in 23 years since 1990.

Now the situation of each segment is shown on Page 29. The details of each business segment are given.

With respect to revenues, Information & Telecommunication Systems, Power Systems, Social Infrastructure & Industrial Systems, Automotive Systems and Electronic Systems were revised upward as well as logistics and others. And for operating income, upward revisions were made to electronic systems and equipment, Automotive Systems, corporate items and eliminations.

Regarding High Functional Materials & Components, Hitachi Chemicals had a downward revision, and that decline is being reflected. So for the fourth quarter, we are seeing this as the target that we have to meet at a minimum.

And regarding our progress in the third term management plan, it's on Slide 3-1. First, on the progress made in Hitachi Smart Transformation Project.

In terms of production cost reforms, as I explained the last time, global SCM reforms are expanded to 14 more entities. Regarding the introduction of cross docking, our trial has begun in Europe.

On the reforms of direct material costs, we are consolidating electronic component suppliers in China and centralized purchasing is further pursued in fiscal year 2013 to achieve the target ratio of 34%. We are putting structures and systems in place to implement engineered sourcing, conversion to different types of materials and swift utilization of overseas local materials.

On indirect cost-related reforms, by sharing warehouses, we are making efforts to enhance efficiencies in logistics. Global logistics reforms, therefore, are underway, and we are also trying to standardize indirect operational processes.

And our steady progress in Mid-term Management Plan, that's described on 3-2. Several examples of global expansion of Social Innovation Business are described here.

One representative example is the acquisition of Prizm Payment Services in India, which provides payment services to financial institutions in India. The closing is planned in February.

We are proceeding with the plan. And Wenco, a Canadian subsidiary of Hitachi Construction, a Proof of Concept Project has started to demonstrate a mind Fleet Management System utilizing cloud services.

U.K.' s Horizon, for its Nuclear Power Construction Project, signed an agreement for infrastructure guarantee scheme with her Majesty's Treasury of the U.K.

government.

For the first time as a Japanese company, we were certified for ETCS in Europe and have developed an onboard ETCS solution as a product. As what we're doing to strengthen global management system and financial base, we are setting up a health care company in April to formulate a strategy to enhance our solution providing capabilities and global competitiveness in this area.

We are proceeding with the formulation of the strategy.

With JCI, a study has begun for potential collaboration in providing building solutions. As part of the group's structural reform, Hitachi Medical Corporation is to become 100% subsidiary as of February 1.

That means Mitsubishi Hitachi Power Systems have begun its operations. And back in December last year, again with JCI, we signed an MOU to establish a JV for air-conditioning business.

As such, to ensure that we meet the targets set out in the Mid-term Management Plan, we are vigorously promoting structural reform.

We would now like to start the Q&A period.

I have 3 questions. The first question is regarding the operating profit for the third quarter.

How did the segments perform vis-à-vis the internal plans in terms of pluses and minuses? Please elaborate.

It isn't as if we have the exact numbers. However, according to our plan, the overall improvement was JPY 24 billion.

Most significant was in the area of Information & Telecommunication Systems at about JPY 8 billion. Also increase, Social Infrastructure & Industrial Systems improved by JPY 4 billion because the Urban Planning and Development was strong.

Automotive Systems, JPY 1 billion and Digital Media & Consumer Products, not so much for Digital Media about JPY 2 billion for consumer products and also corporate items and eliminations of JPY 9 billion. Total was JPY 24 billion.

A question regarding the Vodafone chart slide on Page 7 and 8. A new item of investment in business development was added.

What is the substance and what is the background in which you have introduced this anew? And what is the plan for this year and next year in terms of this item?

In terms of the investment in business development is our effort to provide One Hitachi solution or a flagship solution for Hitachi in the area of Social Infrastructure business. The focus is on providing solution as the Hitachi Group.

We are making proposals to companies such as Rio Tinto and Saudi Aramco. We are providing information about what we can.

We are trying to make progress in this regard. This involves the development of tunnels as well as solutions, as well as research and development.

These are included in terms of investment in business development. To implement the growth strategy, initiatives should not just be limited to in-house companies but effort is made to provide a One Hitachi solution as the Hitachi Group to implement the growth strategy.

This is a company-wide effort, and inflected in the growth strategy. That is the reason why it is being integrated into one.

For 9 months, JPY 14 billion is planned. On an annual basis, for the next fiscal year, for the time being, we have earmarked JPY 25 billion.

Smart Transformation Project has been underway from 2011. This was not just to increase profit, but to implement the growth strategy as well.

In order to implement the growth strategy, in the past, we did not have fund-generating ability. Therefore, we were compelled to reduce cost and withdraw from unnecessary business so that we can nurture our cash.

The business and the Smart Transformation Project was a way to generate such funds. The system is now starting to function in a full-fledged manner.

Therefore, next year, the plan will be decided when we formulate the budget. But we shall make sure there is alignment to the Mid-term Management Plan.

You said that the plan for the year is JPY 25 billion. What is the most significant item in this?

Research related is the most significant item. Furthermore, the social innovation project division is now considering various things, including the key accounts One Hitachi.

We are trying to contemplate what services can be structured. It will also include research and development and channel development.

Hitachi Group has not been strong in investment in sales and marketing from the past. But in implementing the growth strategy, a focus on the investment in sales and marketing will be as important as R&D.

The last question is about the emerging country risk. What risks have you assumed in what timeframe for emerging nations?

And also, please explain in the context of the JPY 35 billion remaining in relation to the corporate items and eliminations.

I don't think there will be a major recession or hard landing inclusive of China, as well as other emerging nations toward March. On the 27th of January, the shadow banking issue was settled.

The credit amounted to JPY 51.5 billion. If this was to default and lead to a contagion, it would have been very serious, which was a concern for us when we were formulating the forecast.

But on the 27th of January, the matter has been settled. The principal will be purchased.

We were concerned also about the business after the Chinese New Year. There was a concern.

However, we have been able to overcome this difficulty this time. When we formulated the forecast, we foresaw some problems.

That is the reason why the plan remains as is. But if the business is expected, after the Chinese New Year, we should be free from risk.

As for the trust products of China, it amounts to JPY 90 trillion to become due in 2014, which is concentrated in terms of maturity in the months of July and December. In China, the first half is free of credit crisis.

However, there seems to be a tightening of credit in the October to December period, and therefore, we were concerned about credit crunch that could have occurred. If China is to have a hard landing, there is possibility it will have repercussions to Europe, U.S.

and Asia. I'm sure that G20 will manage the situation, so this can be avoided.

And compared to Japan, the Chinese government's fiscal situation is favorable. Therefore, risk is limited, I believe, for several years down the road.

2015 is the last year of our Mid-term Management Plan. In the final year, we tend to encounter problems.

We hope that will not be the case this time. For India, in May, the general election will take place.

They have formulated a budget, but it is not being executed. And the budget, if executed from August, I believe that the situation will be stabilized in India.

Therefore, we have high expectations post general elections. In terms of Thailand, there is uncertainty.

However, Thailand is very important within the Asian region. However, in this area, there is uncertainty.

Furthermore, in terms of Indonesia, there is general election as well. And when there is a general election, the economy is often halted in these countries because of political reasons.

However, in the absence of a credit crunch transmitting from emerging nations to developed nations, we believe that the economy should recover as expected. Would there be any other questions?

I see a hand at the corner of the room.

I have a few questions to ask. Question number one, I'm being persistent about the performance in the fourth quarter.

In the third quarter, there was an upside of JPY 24 billion. You have revised there by only JPY 10 billion.

There is a remainder of JPY 14 billion left. With corporate items and eliminations, apparently another JPY 25 billion will be subtracted.

If you add the numbers up, there is potential upside of JPY 30 billion. Is that correct?

I'm not sure if we have another upside of JPY 30 billion or not, although we are assuming some upside. As I said earlier, when we were studying and discussing the outlook, we had concerns that China's market may decline following the lunar New Year's holiday.

But the actual performance in the third quarter was better. So we came up with these numbers based on the factors we felt comfortable with.

So those risks that were eliminated in the third quarter were reflected in the annual numbers. Given the current pace, we may end up with slightly better forecast than now.

That's the expectation, but we do not know by how much. So these are treated as the goals we have to meet at a minimum.

We want to build further.

Question number two, you said that the Smart Transformation Project effect is JPY 28 billion. Is this as expected or was it better than expectation?

If you have any numbers or comments that you can make on that?

As far as the effect from Smart Transformation Project is concerned, it's as expected. It was JPY 28 billion, it was as planned.

In the first quarter, it was JPY 20 billion; in the second quarter, JPY 23 billion; in the third quarter, it was JPY 28 billion. And the target that we have is JPY 100 billion.

I think, we are certainly climbing the steps toward achieving the goal of JPY 100 billion, but we're not expecting to make frog leaps, so it's as planned or expected.

My third point or question. Personnel transfers are announced among executive offices, but 2 are to be assigned to listed subsidiaries, Mitarai San and Mogami San to Hitachi Transport System and Hitachi High-Technologies.

In the last few years, whenever officers are transferred to listed subsidiaries, new developments occur and major investments. Was that your intention for Hitachi Transport System or Hitachi High-Technologies or is that totally irrelevant?

May I have your comments on that, please?

I don't think that thinking is very relevant or warranted. Mitarai within Hitachi has served as CHRO and he is one of the architects behind global performance management that Hitachi is implementing right now.

Starting from October, we are applying this to managers, and that is something that we would like to apply to group companies starting from next fiscal year as well. Hitachi High-Technologies has business operations on a global basis.

In that regard, I think a solid management system can be introduced with his transfer. It's a good assignment in that regard, I think.

And I'm not aware of any other implications beyond that. As for Mogami to be assigned to Hitachi Transport System, it is operated together with Information & Telecommunication Systems business and third-party logistics business.

They are closely linked in terms of operations. So in that regard, it is a transfer that would create synergies, I believe.

Please elaborate about the orders received situation for Information & Telecommunication Systems. I know that the domestic business has been good for other companies.

What about for Hitachi between Japan and overseas? I understand that storage is strong overseas, but please elaborate on this point.

In terms of storage, when the calculation is made in yen, the business is increasing. But overall, in the United States and in China, the storage business is declining overall, not just for Hitachi, but for others as well.

But on a yen basis, it is increasing. In the overseas market, the ATM business is increasing significantly, especially for China.

These businesses are driving the performance upward. As for the domestic market, the Information & Telecommunication Systems increased by 9% year-on-year for the first 9 months of fiscal year 2013.

Any further questions? I see a hand in the middle.

Please go ahead.

I have 3 questions. My first question is as follows: as was explained before, in the Social Infrastructure Systems business, cost overruns are occurring.

In the Information & Telecommunication Systems, there were cost overruns before. So what is the status of cost overruns in these projects and what's the outlook?

Can we understand that the cost overruns in Information & Telecom Systems are resolved?

In the Information & Telecommunication Systems, cost overruns have finally been resolved. When it comes to these projects, once they encounter problems, in order to address the problems, so we have to reassign competent staff away from other areas into these projects and projects that were supposed to be successful no longer become successful.

But finally, we've resolved the cost overruns in Information & Telecommunication Systems. Now we're experiencing similar problems in Social Infrastructure Systems.

The size, however, is not as large. With increased revenue and income in elevator and escalator business, we have been able to cover the cost overruns.

Is this mainly about overseas air conditioning business?

Yes, that is correct.

Question number two. This may not be directly related to the third quarter performance but starting this month, consolidated thermal power business with Mitsubishi is off to a start.

From Hitachi's perspective, how much EBIT do you expect to capture in this term or next? I think the scheme has been solidified.

What are your expectations, if you have an idea, could you share that with us?

Our equity share in the company is 35%. So the operating income from that business is expected to be equivalent to what we had when the business was kept within Hitachi.

But as to how much exactly, we have not heard about the budget deliberations yet. So it's not going to be very different from what we had before, and it's not going to be reflected, not in operating income, but EBIT.

Is EBIT going to be doubled?

No, not double. Because we only have a 35% stake.

EBIT is 35% after-tax.

Another question is as follows: in the healthcare business, you have announced that you are going to set up a healthcare company. In the meantime, you have turned Hitachi Medical Corporation into a subsidiary.

So what's your thinking behind this? I think you will finish what you started with Hitachi Medical Corporation this year.

And this may be a follow-up to the earlier question, but are you taking another step forward to further consolidate the group structure? If you could elaborate on the announcement that you have made this time.

In our healthcare related business, the revenue is roughly JPY 320 billion if we add up all the businesses related to this area. But when it comes to healthcare sales strategy or development strategy or providing one-stop services to customers, the measures that we have taken have been fragmented.

So we needed a core entity to formulate our healthcare strategy. So we have finally come to a stage where we can set up a healthcare company.

As we do so, we need a business segment within Hitachi that could become a 100% subsidiary. Without a 100% subsidiary, we will not be able to have a group-wide strategy.

And that is why we are using Hitachi Medical Corporation as the core business to set up the health care company. And the overall strategy will be discussed and formulated going forward.

We will come out with a strategy in April. So the question that you have asked will be answered by that time.

We will be working on the strategy in March, so if you could wait a little longer.

My last question is simple. What is your estimate for this fiscal year's free cash flow?

In terms of free cash flow from manufacturing and services, we are thinking of securing around JPY 70 billion.

Don't you have a number for the whole company, including Financial Services?

For our Financial Services business, we are increasing risk assets so it's very difficult to estimate what the free cash flow is. So from manufacturing and services, we are expecting to have JPY 70 billion free cash flow for the year.

That is what we are targeting.

I have 3 questions. The first point is what you explained earlier about the third quarter.

You said that the Information & Telecommunication Systems had the most significant upside. But for the full year, the Information & Telecommunication Systems forecast remains unchanged.

What are the risks you are considering? What is the background of this?

For the third quarter, the performance was JPY 8 billion better than the forecast and the sales increased by JPY 30 billion on a full year basis. However, there is no change in the profit forecast.

You may see this to be strange, however, real life is not always so easy. In the Information & Telecommunication Systems, we can now generate the profit on a constant basis compared to the past.

However, the legacy of the times when we were conducting the semiconductor business remains. Therefore, we are currently implementing the business structural reform, which is leading to the headcount optimization expense to the tune of JPY 2 billion to JPY 3 billion, which has been factored in for March.

Furthermore, unfortunately, the storage has declined on a dollar basis. But on the other hand, ATM is increasing, exceeding the decline in storage.

However, the profit margins are significantly different between storage and the ATM business because of the volume of software involved. So the difference in mix as well as the headcount optimization expense is eroding the improvement of third quarter, which was JPY 8 billion.

This is a detailed question regarding the eliminations and corporate items. There is a significant upside in this area.

I understand that significant buffer is included. You have earmarked this, but nothing bad occurred.

Is this how I should interpret the situation?

That is correct.

For the full year basis, operating profit of JPY 10 billion is being forecast and EBIT of JPY 20 billion is posted. The difference is equal meaning to the corporate and elimination items driving up the EBITDA.

Are you expecting something special?

EBIT is JPY 10 billion and foreign exchange fluctuation stumbling [ph], which is treated as eliminations and corporate item.

Regarding elevators and escalators, in this quarter despite the loss-making projects, this business remained strong. This is a long-term business and, therefore, for the domestic market, I would like to know about the orders received after the consumption tax hike.

There is also the risk in China to be considered. Taking this into consideration and based on the orders received, can we expect an upside going forward similar to what was seen in the third quarter?

For the elevators and escalators, domestically, there are renewals increasing. And furthermore, orders have been recorded for urban condominiums.

So the business is increasing domestically. In China, Mainland, the business is increasing as well, therefore, there is a positive impact.

However, in the case of China, the fiscal year ends in December and December is already behind us in China. Therefore, there should not be any change going forward.

I would like to know about the background of the good performance, not just limited to elevator business but for other business as well. I'm sure that increasing demand before the consumption tax increase is having an impact -- having a favorable impact.

I'm sure it is difficult to discern but please comment.

We have various segments out of which, most significantly impacted is the Automotive Systems, especially for the domestic market. I believe it is increasing.

High Functional Materials & Components for Automotive Systems related business is increasing. Therefore, for the fourth quarter compared to the third quarter, we are expecting lower performance for components because the third quarter was particularly strong.

As for the consumer products, or white goods, if anything, having entered January, business has been strong for white goods. We don't do much television products.

Therefore, a limited impact in TV is felt. However, for the premium zone or high-priced white goods, I understand it is selling very well or rather inquiries are increasing from mass merchandisers.

We are now producing at full capacity. And also, the Automotive Systems is also affected.

Any other questions?

I have 3 questions to ask. Question number one, when the interim results were announced, I received the data on overall orders for the first, second and the third quarter.

We received data regarding Social Infrastructure & Industrial Systems, as well as Information & Telecommunication Systems. There may be differences by segment, so may I have the numbers?

The numbers by segment? Or are we to give you the overall order numbers?

Well, as far as overall orders are concerned for the third quarter, they're affected by foreign exchange rates. We are adjusting the numbers because of the fluctuations in foreign exchange rates.

For fiscal year '13 for the third quarter, it's 103% increase.

Excluding Forex impact?

Yes, if we include Forex impact, it's 111% in the third quarter.

My second question is as follows: as far as the third quarter for Japan's business, revenue is down by 1%. Your competitors are seeing a substantial recovery, especially in the Japanese market in terms of revenue.

So why is the difference? What is your latest feel as to what is happening?

May I have a qualitative comment?

Revenue has declined in Japan, and that's because in Hitachi's case, Power Systems business is down. Last year, measures were taken to secure emergency power sources.

That's gone this year and Nuclear Power business is down, so those were the major impacts. As far as Japan's business is concerned, on top of what Nakamura said about the Power Systems business, we have Financial Services segment as well although it's small.

We are intentionally reducing our housing loan business, and that is why there is a decline as well. So those are the main factors behind the decline.

It's not that there's a natural slowdown. Is there a recovery rather?

Yes. Our feel is that our business is recovering in Japan.

My last question. For the full year, you have made a revision from JPY 500 billion to JPY 510 billion.

According to you, the TSE rules, you did not have to make a revision to your guidance. But you did so because you wanted to send a message as a company.

And if we subtract net other income, it seems you are expecting a large net other loss in the fourth quarter. Is that correct?

And are you expecting a large net other loss in the fourth quarter?

Revising from JPY 500 billion to JPY 510 billion according to the rules, we did not have to make that revision. And I think someone asked a similar question the last time.

The goals that are managed internally are applied and used externally as well. In other words, we adopt a management approach.

If there's a disconnect between internally set goals and externally announced numbers, the mindset of the employees will not change. So for the last 22 years, we have not been able to have a record high number in our operating income.

And given that yen is depreciating and that we're in the first year following a structural reform, we need to break away from the loss-making structure and move on to the growth strategy. This is a crucial year for that.

So we shall post a record high in fiscal year 2013, move onto fiscal year '14 and '15 and further achieving targets in the next Mid-term Management Plan, so it's an expression of our strong resolve. In the fourth quarter, are we expecting net other loss a large amount?

That is correct, because we are assuming that the foreign exchange rate is JPY 90 -- JPY 98 to the dollar, JPY 130 to the euro. But as of end of December, it was JPY 105 to the dollar.

So in that regard, foreign exchange conversion losses will appear in the fourth quarter. We are also expecting risks.

If large risks do not materialize, however, the numbers may end up better.

I have 2 questions. In terms of confirmation, what is going to be the impact for the Smart Transformation Project for the next term?

The second question is related to the fact that operating profit was highest ever including the surge in demand before tax increase impact. But for the next fiscal year, in the absence of such a special demand, do you expect a backlash?

Or do you have other expectations for the next fiscal year? Please elaborate on the direction going forward for the next fiscal year.

In terms of the impact of the Smart Transformation Project, inclusive of the sales price decline, we hope to achieve JPY 100 billion, and this is also incorporated into the budget of the in-house companies as well as the group companies. Therefore, this will remain intact.

In terms of the Smart Transformation Project, the capacity utilization will not go down and, therefore, it will continue to accumulate results. However, there will also be a growth strategy investment cost as well as depreciation to the tune of JPY 20 billion per year increase.

In the past, decline in capacity utilization and cost overrun in projects had a negative impact. But going forward, more positive investments will be made.

And this is what the Smart Transformation Project is all about. Now with respect to backlash for the next fiscal year, I'm sure it will occur, but it is limited to the Japanese market.

It isn't as if the consumption tax is going to increase in the overseas market. Therefore, in the timeframe of April to June, we are expecting backlash to follow the surge in demand before the consumption tax hike.

This is the prevailing view of the analysts as well, therefore, the backlash is inevitable. That is the reason why we have been pursuing the global development of business from the past and also been focused on the Social Infrastructure business.

Because after all, the infrastructure-related business is unrelated to the consumption tax hike. In the case of major companies, the consumption tax is subject to deductions and it is passed on to others.

And therefore, there is no problem here. However, impact will be larger where it is close to the end-user.

Countermeasures in this area will include increase in the overseas production -- overseas operation and front loading of new product introduction. We must provide good products to stimulate demand.

However, one company's effort will not suffice. In the context of economics, the third error, although growth strategy measures are extremely important, companies are sure to link bonus and wages to performance.

If performance is high, a high bonus and wages should be provided. And the reverse is also true as well.

We have to also take into consideration the performance of the companies as well as individuals. Therefore, compensation to reward high performance will be implemented by us in 2014.

This is to be implemented on a nationwide basis by the government as well; we shall also follow suit. We believe that this should serve as the countermeasure.

It is extremely important that financial assets will continue to increase because frugality will lead to deflation, which must be avoided. We must revert back to a developed nation from normal system of increasing value of financial assets.

In fact, we're on the trend -- on this trend, however, the past week underperformed. I hope it will recover from next week onward.

May we accept the last question? I see a hand over there.

As was mentioned earlier, there are rising concerns about the U.S. economic outlook.

Japan's [indiscernible] went down substantially today. There's a possibility that this risk of trend may spread further.

If that may impact your performance, please comment.

On the U.S. economy, between October and December, GDP grew by 3%, I believe.

It was a very high growth. Chairman Bernanke decided on tapering to put a stop to a rise in inflation.

And that judgment, made by the FRB, who has a great deal of data, is unlikely to be very wrong. However, it's true that money from QE3 flowed to many economies around the world.

Now that money is going to be tightened. And that is why people are starting to have concerns and jitters.

On top of that, in January, a big cold wave hit the U.S. Job growth and manufacturing activities slightly went down as well.

And that is why the numbers that we are seeing are worse than expected. That led to the complete risk of trend or mode.

But we will start to see new data going forward. While the U.S.

entered into a recession, we do not assume that, that will happen. I don't think the problems happening are as large.

Various coordination and adjustment will be made by the government. We would like to watch that closely before we decide on what to do.

Will there be another Lehman shock? We do not believe so.

Following the tapering decision, concerns regarding emerging markets economic outlook still linger. And that led to the higher yen.

You said that it's important to increase our financial assets. Will this have an impact on that?

In the past week or so, it's true that there has been a major impact. Will this continue or not, we have to closely monitor.

In the United States, consumer spending accounts for 70% of the GDP. And if the consumers' mindset becomes negative, it will be difficult for the corporate activity to be positive, but I don't think that is going to happen.

For the next month or so, new economic data will come out. We shall monitor that closely as we operate our business.

Just because equity prices are fluctuating, is the end of the world approaching? I don't think so.

The job data that comes out on the 7th, if it deviates from the market expectation, I think the market may go down. If that happens, how would you interpret that?

The January job data will come out on the 7th of February. From what I believe, last year, the winter was very warm.

This year was very cold. So considering that, the job data that will come out is not likely to be very favorable.

But then that will not lead to major fluctuations in the equity prices toward this weekend or next Monday. I think those factors already considered and factored in.

But then, of course, you never know until that happens, so it's not that we have enough money to move the world. There won't be a big positive jump either.

Thank you very much. With that, we would like to close the meeting.