We will now start the financial results for the third Quarter ended December 31, 2015, explanation for Hitachi, Ltd. I'd like to introduce the speakers to you: Toyoaki Nakamura, Executive Vice President and Executive Officer, CFO; Mitsuyoshi Toyoshima, General Manager of the Financial Strategy Division; Ken Mizoguchi, Executive General Manager, Corporate Brand and Communications Division.

I'd like to ask Mr. Nakamura to start his explanation.

I would like to give you the results of the third quarter of fiscal year 2015. Please refer to Page 4.

This is the highlight of the third quarter for fiscal year 2015 October to December. Revenues was JPY 2,423.3 billion, up 1% year-on-year; operating income, JPY 134.3 billion, up JPY 4 billion year-on-year.

As the third quarter, it was the highest performance ever, EBIT was JPY 148.3 billion, up JPY 34.6 billion year-on-year. Bottom line, the net income attributable to Hitachi, Ltd.

stockholders is JPY 75.3 billion, increased by JPY 30.6 billion. For the Manufacturing, Services and Others, stockholders' equity ratio was 27.5%.

With the core free cash flows at JPY 13.8 billion, we have now turned to a positive area, increased by JPY 109.8 billion year-on-year.

Next page, Page 5, is the highlight for the 3 quarters of fiscal year 2015. Revenues, JPY 7,230.2 billion; and because of the weak yen, impact's up 4% year-on-year.

Adjusted operating income, JPY 408.3 billion, up JPY 14.2 billion, and this is also a record high performance. EBIT, JPY 410.9 billion, up JPY 31.8 billion, a record high performance.

Net income attributable to Hitachi, Ltd. stockholders, JPY 172.9 billion, increased by JPY 10.5 billion.

The core free cash flow for Manufacturing, Services and Others, JPY 102.6 billion, increased by JPY 156.4 billion. This is also the record high performance.

Before the mid-term plan 2012, from the first quarter to third quarter, corporate core free cash flow was JPY 134.9 billion. Because of Smart Transformation Project implementation, we have been generating cash.

As a result, for 2015, from first quarter to third quarter, the accumulated amount is the JPY 102.6 billion. We have now entered the positive area.

We have been able to make improvements in terms of cash-generating power.

Please refer to Page 7. This is the factors affecting changes in the operating income.

For the third quarter for fiscal year 2015, lower sale price and cost reduction, net number for Smart Transformation Project was JPY 30 billion; investment in business development, JPY 10 billion; and increase in labor cost and depreciation increased by JPY 12 billion.

Now by increasing the top line -- the plan was to achieve higher top line. But as I mentioned earlier, in terms of revenue, it is bound to increase if you take away the impact of the weak yen; therefore, the capacity utilization is declining.

In dealing with the market declines, we are now in the process of business downsizing as well as the inventory rightsizing started from the third quarter. And as a result, year-over-year, increase was JPY 4 billion.

For the 9 months, Smart Transformation Project impact was JPY 86 billion; and investment business development, JPY 39 billion; and increase in labor cost and depreciation, JPY 52 billion was covered; exchange gain was JPY 17 billion; and the net result was JPY 14.2 billion year-over-year.

And now EBIT on the next page. For 9 months, accumulated numbers is provided, and the impact was JPY 86 billion.

And operating income was improved by JPY 14.2 billion, and there was restructuring expenses of 12 -- structural reform expenses, JPY 12 billion. And we have been able to cover the reorganization and others [ph] of JPY 44 billion, and therefore, we have been able to increase by JPY 31.8 billion year-over-year.

On Page 13, which is the revenues by market. Looking at the right-hand side, the 3 quarters, Japan was JPY 3,609.6 billion, which is 99% year-over-year.

Outside Japan was JPY 3,620.6 billion, 110% year-over-year. And within this context, China, even with the weak yen, the level was 99% year-over-year.

The third quarter decline has had a significant impact. Our total is 104%; but the weak yen impact, if we take that away, it was 100%.

Manufacturing, Services and Others and Financial Services P&L, please refer to Page 14. I would like to compliment some information.

Third quarter and for 9 months, in each of the businesses, we have been able to increase revenues as well as operating income, so up to third quarter, we have done very well.

Page 16, balance sheet for Manufacturing, Services and Others will be mentioned. Our total assets was JPY 10,160.2 billion.

That's an increase of JPY 175.7 billion change from the previous term. On Ansaldo acquisition as well as the HVAC, business restructuring increased to 1 -- by JPY 180 billion as a result.

Now in terms of the cash conversion cycle, for third quarter, was 73.6 days, improvement by 8.2 days have been made. D/E ratio is within the 0.5x, which is our financial discipline, at the 0.44x.

Page 17 is the cash flow. The middle table is the Manufacturing, Services and Others.

Our cash flow from operating activities was JPY 446.4 billion and 6.3% for the margin for revenues -- marginal revenues. We have made improvement; and compared to previous year, improvement by JPY 183.2 billion was achieved.

Free cash flow -- with the Ansaldo acquisition, Pentaho acquisition inclusive thereof, free cash flow has been positive. And core free cash flow, as I have mentioned earlier, a positive number, has improved.

Page 18, this is capital expenditure and others. For capital expenditure for Manufacturing, Services and Others, 283.6% or increase by 13%.

Depreciation increased by 6%, and R&D expenditure increased by 1%.

Next, Page 19, please -- 19 and 20. This is by segment performance.

Left side is third quarter. Construction Machinery, due to the adjustment of the production, we are seeing this result, and there is a write-down of the inventory; and therefore, this segment is in the red.

But 6 segment showed increase in revenue, and therefore, it's a JPY 4 billion improvement overall.

Now right side, 9 months, Information & Telecommunication, the Electronic Systems, High Functional, Automotive and Logistics and Financial, these 6 segments had increase of operating income, and so this covered the Social Infrastructure and Construction Machinery's decline, and so a JPY 14.2 billion increase was achieved.

Next, Page 24, this is the full year forecast. Now the underlying business environment, as we see, is China and oil and natural resources-producing countries, economic growth is sluggish, so the uncertain situation is continuing.

That is our underlying premise. Based on that, our revenue, JPY 9,950 billion, which is flat, unchanged.

But with the acquisition of Ansaldo, this JPY 100 billion -- JPY 120 billion, 5 months’ worth of figure is included, so in essence, the revenue is down. Operating income, JPY 630 billion, which is down by JPY 50 billion; EBIT, business restructuring, JPY 26 billion increase, and so including that, we will reduce by JPY 80 billion; and net income attributable to Hitachi, Ltd.

will be down by JPY 70 billion. As a result, against last year, revenue will be up by 2%, and net income bottom line will be up by JPY 22.5 billion.

Next, Page 25 and 26 is by segment -- business segment. Against the previous forecast, in revenue, Information & Telecommunications, Electronic Systems & Equipment, Construction Machinery, these segments have declined revenue.

And in operating profit, Information & Telecommunication, Social Infrastructure & Industrial, Construction Machinery and Automotive, these 4 segments have declined, especially with Information & Telecommunication Systems.

System solutions business, as mentioned in the following slides, is marking the record high. But platform -- in Europe, platform business is strong.

But in storage market, U.S. and other markets are showing rapid change of the market, which is faster than we anticipated, and so high-end storage demand is sluggish.

And AI and analytics service needs is increasing. And therefore, the progress shift to cloud is high.

And we are shifting our resource to IoT, but the market had not been launched as much as we thought, and so the development and the human resource investment, the recovery will probably be in fiscal year 2016, and that is why we have this figure.

Now in Social Infrastructure & Industrial Systems, oil and gas market is declining. It's been declining since December.

Resource price is down, and so oil and gas order is going to go down by about JPY 50 billion in this quarter, and so we are now doing our production adjustment. Chemical plants and industrial plants in the Middle East, we are -- we have been negotiating the price with our customers since the beginning of last year -- or the beginning of this fiscal year, but they do not have enough money, and so we have not come to a conclusion in the negotiation yet.

And the conclusion agreement will probably be in next fiscal year, so we have incorporated that impact. Unfortunately, there were some performance shortcomings in the infrastructure business, and that's why we reduced the number.

Next, Page 29, please. Let me talk about the strengthening of the management structure for the next stage of growth.

First, responding to the challenges. Towards the next medium-term plan, we are promoting our business restructuring.

In order to respond to the market changes, we are charging business restructuring expenses in fiscal 2015 of JPY 80 billion, as I mentioned earlier, and the benefits will increase to JPY 22 billion. But from fiscal year 2016, next medium-term plan onward, we will enjoy benefit of JPY 40 billion to JPY 50 billion.

Especially in IT platform business, we implemented business restructuring in the telecommunications and network businesses. It is a narrowing down of the telecommunication and network business.

And we are also trying to downsize and also strengthening IoT-related businesses, shifting our resource to IoT-related businesses.

Now overseas storage business. I mentioned, in Europe, we are marking record-high business level; but the mainstream U.S., the need is shifting to AI and analytics.

So from high-end storage to all-flash, we are seeing a shift to all-flash storage.

And the shift to cloud is also accelerating. And so Social Innovation Business, resource is being shifted, but the recovery will be later than we anticipated.

In social infrastructure system business, we are withdrawing from low-profitability business from overseas chemical plants and industrial plants in the Middle East. And we are focusing our management resource on the pharmaceutical field, where Hitachi has competitive advantage, and focusing on growing Asian market.

Next, cash generation. In Manufacturing, Services and Others, cash conversion cycle, as of the end of third quarter, is 76 -- 73.6 days.

It's down by 8 days, and so this leads to JPY 200 billion in terms of cash generation. So finally, we are now leading the Smart Transformation Project benefit to cash conversion cycle.

We are finally bearing fruit.

Next, Page 31, please. Smart Transformation Project benefit, up to the third quarter, is JPY 86 billion, as I mentioned earlier.

And we are aiming for the full year target of JPY 110 billion, making steady progress towards that. And with that, the operating cash flow margin to sales in Manufacturing and Services was 106% in the past; but this year, we want to increase to 107%.

Next, lastly, the strengthening in management structure for the next stage of growth. There was a release distributed to you, as of April 1 this year, we are shifting the product-specific in-house company system, which was launched in 2009.

But in the past year, we have been working to prepare for the next structure. We're building a business unit system with strengthened front-office functions in each market.

And with that, we will expand the Social Innovation Business through collaborative creation with customers through a combination of product and services. We will provide valuable innovation through a combination of products and services.

Now the service business units will be sales and engineering and consulting. We will strengthen front-office functions and have a total of 12 front-office business units so that we can create innovation close to our customers and promote business autonomously.

And with that, customers' needs may cut across multiple businesses. We are in a complicated era, and so we are establishing service and platform business units.

So AI, analytics and securities and control technology, which is handled by multiple departments, these sophisticated services, the essential technology will be concentrated in this BU and have open common platform, enhance the value of front BU's customer service by providing open business platform for the front-office BUs and partners. President Higashihara and the heads of BU will be able to share information and collaborate openly and have quick management speed that can deal with market changes.

On product business units. Industrial products BU and group companies, globally competitive products and the components and materials will be provided to our customers.

And the cash recovery will be as calibrated for higher cash-generation capability.

That's all. Thank you very much.

We would now like to open the floor for questions.

Regarding the organization change, I can understand the 12 BUs. But how is that going to be related to the other business segments, the conventional business segment?

Please clarify. Going forward, from April, regarding disclosure, is it going to be by business unit?

Or will the -- how is that going to be related to the previous in-house company disclosure? Now regarding P/L responsibility, obviously, the product business unit, and if it expands over multiple businesses, how will that be accounted for?

Now regarding the organization, I explained how it is going to be reorganized. And so far, one by one in the in-house company, the organizations were to be autonomous.

However, in 2009, after the global financial crisis brought about by the Lehman crisis, autonomous operation was pursued, and that was the structure so far. However, the businesses are becoming more complex.

There are group companies, and there are listed group companies. And within Hitachi, there are also in-house companies as well.

The world around us is undergoing change, and it could transcend over multiple business units. So from the point of view of customer, it is Hitachi, but it is the segment that entered different business organizations.

In order to understand the needs of the customers, this is not appropriate. It has been manifested in several examples in the past.

So we wanted to find the solution to overcome this challenge, and we had some several brainstorming sessions. And for Hitachi, Ltd., within the group, we have our organizations that should be aligned toward our customers in terms of the front-office organization.

And this is not just limited to business permission [ph], but engineering unit will also be enhanced as well. And engineering is -- will also be in conversation with the customers so that the system solutions can be provided.

By so doing, we have come up with this new organization. The head of the BUs and -- with Mr.

Higashihara, there will be a direct linkage, on a monthly basis, information will be shared, and we will have an understanding of the changing market. And they could be co-working with other business units.

And if that is the case, we wanted to expedite such decision-making. So there is no distance with Mr.

Higashihara and the business units. For the listed companies, they are autonomous; therefore, they will be able to have agile management.

In terms of industrial products and the service platform business units, the front-office business units may create their own software, which will increase the time to market. That is the reason why we have decided to have everything -- concentrating the service and platform business units, which can encompass over different areas.

Now all together, there'll be 14 business units. On a monthly basis, the information will be shared for the purpose of decision-making.

In the past, we had business units, business segments and companies. And in the previous organization, if there is a significant loss or if there could be significant risk, they could shy away from such business, and one solution could not be provided by Hitachi in the past.

We want to overcome such challenges. In terms of disclosure, whether we're going to have 4 or how many, we have not yet decided yet.

We have to coordinate this further, so more time is required. There will be change from the past, but basically, it will be by business unit, and they will be grouped in the appropriate manner for the purpose of disclosure.

However, we need more time because the P&L accountability will crisscross horizontally and vertically. When we announce to the outside, we want to -- there could be a redundancy, and it cannot all be subject to eliminations -- corporate items and eliminations.

So we need more time to give you clarity.

I understand the framework very well. But in the past -- for the Information & Telecommunication Systems company, in the past, within the 12 front-office BUs, there could be some gap.

Are we going to have horizontal linkage? There could be some difficulty experienced in that area.

For industrial product BU and the -- in that -- and will all these be under Mr. Higashihara?

However, there are also listed companies to consider regarding group companies. If that is the case, will the group companies have their own disclosure?

And if that is the case, if there is a crisscross vertical and horizontally, there could be some complexity.

Yes, you are right. Internally, we can manage this.

But in terms of redundancy or overlaps, how can we manage? Because vertically and horizontally, there could be some overlap, and the profit is not a problem if that is making a profit -- if the business unit is making a profit; but that may not the case when there is losses.

So we need to use the mechanism of IT so that we can manage this vertically as well as horizontally. What it is going to be very difficult is the Information & Telecommunication System.

For example, in May, we had the Pentaho M&A acquisition made for AI, analytics and software, such that it is not just for providing solutions in the Information & Telecommunication Systems, but rather, we are trying to connect and control in IT for Hitachi overall, so all the BUs will be impacted. So we cannot make Information & Telecommunication System solely responsible.

That will be like a separate company, and that is the reason why we have the platform, a service and platforms BU to cut across all the BUs. So Information & Telecommunication Systems will be related to all the areas.

Because system IT were to be merged to grow the business, that is the reason why it will have an impact on all the business units. But how it can be managed is the issue.

For 2016, internally, information will be in one segment for management control. Furthermore, we want to make sure there is less overlap in terms of disclosure.

We are now formulating the Mid-term Management Plan under the new organization. And after this is formulated, we will consider how we are going to disclose information.

We have to make sure there is no misunderstanding.

I have my second question to follow. In terms of Information & Telecommunication Systems, we have -- you have financial institutions as well as public institutions as your customers.

And for financial BU, this is not Hitachi Finance -- Hitachi Capital, please confirm. And in reality, you said that from network, there will be a narrowing down.

How will that be related, network withdrawal or narrowing down? What will be the scope of that?

And is it going to be a dismantling of Information & Telecommunication Systems, ultimately? Please make sure there is no confusion.

Now there is going to be a significant downward revision for Information & Telecommunication Systems. Is there a significant impairment?

Please clarify.

Regarding the Information & Telecommunication System, the financial institutions BU is such that this is going to provide system solutions for financial institutions, and therefore, Hitachi Capital is not related to this area. Regarding the 12 front BUs, we'll have headquarter in Hitachi, Ltd., and therefore, Hitachi Capital is not included.

The financial institutions BU and the government and public corporations BU, beyond that, Social Infrastructure business exists, and that will be in the ICT business. So it will be included in the service and platforms BU.

Regarding the network business, is it just related to Information & Telecommunication System, or does it also include Hitachi Kokusai? And related to that, is there going to be a significant impairment?

Regarding listed companies, it's not included in the BUs' formation here, so they are not relevant. Hitachi Solution and Hitachi Systems, the non-listed companies will be included in this framework.

For the Telecommunications and in these businesses, we are considering impairment.

Regarding the JPY 80 billion, it's included. And the downward revision to the several tens of billion or, I think, JPY 30 billion to JPY 20 billion for Information & Telecommunication System, is that included?

Regarding impairments, that is nonoperating line; therefore, as Mr. Nakamura has mentioned, storage as well as IoT has underperformed against plan, and the operating income decline is expected.

Regarding Hitachi Capital, would that be industrial products BU?

Regarding the new organization, this is related to the circle, the in-house companies, in terms of Information & Telecommunication Systems as well as Power Systems; therefore, for the listed companies, it will be included in the group companies, as shown in the right-hand bottom. In terms of disclosure, the High Functional Materials as well as Construction Machinery will not be impacted.

Currently, we are thinking about the Information & Telecommunication System as well as the Social Infrastructure & Industrial Systems. These are the 2 business segments that will be segmented into other businesses.

Avoiding overlap is what we're considering.

Maybe you are not able to do it this time, but for group company, reorganization may be necessary because you may have a good metrics for the headquarters, but that may not suffice.

Yes. When we have the 2018 Mid-term Management Plan, the restructuring will continue; business of reorganization will continue.

And in this context, when decision is made, I believe we will move toward that direction. However, we don't have a concrete plan today.

I have 2 main questions. First, in the third quarter, JPY 15 billion; but with the inventory optimization and the production adjustment and the write-down, how much have you factored in, in the fourth quarter?

By segment, you mentioned the Construction Machinery and Social Infrastructure in the segments, but what is fourth quarter like? Now you did not mention, but the actuals in the third quarter compared to the internal number, was it lower because of these factors or any other factors?

Could you elaborate?

Third quarter, JPY 15 billion. The production adjustment's impact is about a little over 1/3 of that; and then inventory optimization, a little less than 2/3 of this.

On a full year basis, if we produce too much, we have to dispose them. So if we write down the inventory -- unless we write down the inventory, we have to reduce the production.

So the trade-off, we'd rather not use money, so we will reduce the production.

Fourth quarter, that JPY 50 billion profit revised downward. You mentioned the oil and gas market decline and the Automotive.

You're adjusting the production level. That is about JPY 20 billion out of the JPY 50 billion, a little over JPY 20 billion.

And the remaining, as Mr. Nakamura mentioned, infrastructure-related, Middle East, air conditioning and the plants.

We're still continuing the price negotiation; but the price, by the end of fiscal year 2015, we will not be able to agree on the price, and so this will be carried over to fiscal year 2016. Unless we fix the price, we will not be able to -- we have to do the provision.

So that is a little less than JPY 10 billion included here. And information-related IoT launch was delayed, another factor.

So in the production adjustment, in the third quarter, JPY 15 billion, about 1/3, JPY 10 billion, and the market decline was JPY 20 billion, so that's total JPY 30 billion or JPY 35 billion.

I did not completely follow that. So JPY 10 billion is the production adjustment impact from the third quarter?

No, JPY 50 billion production adjustment; and Hitachi Construction Machinery, that's JPY 10 billion, so you mentioned JPY 20 billion on a full year basis?

Yes, I made a mistake. JPY 10 billion in the third quarter is wrong.

So it's JPY 25 billion, yes, production adjustment.

Yes, I will try hard to understand that. So third quarter production adjustment, JPY 5 billion; and inventory, JPY 10 billion.

In the fourth quarter, JPY 20 billion more, and this is mostly production adjustment?

Yes.

So production adjustment, third quarter is JPY 5 billion, and fourth quarter is JPY 20 billion. That's, for total, JPY 25 billion; plus JPY 10 billion, so that's JPY 35 billion.

So third quarter is mostly Construction Machinery?

Yes, third quarter is mostly Construction Machinery.

Fourth quarter, Construction Machinery or...

There's a little more. Social Infrastructure, AMS and Information & Telecommunications.

Understood. My second question is Social Infrastructure & Industrial Systems.

Similar question, but this time, you reduced by JPY 26 billion. You mentioned price negotiation; that was a little less than JPY 10 billion, and that's fine.

And production adjustment, the amount is unknown, but that is a portion. And you also mentioned the performance, bad performance.

What is that? Could you elaborate?

I will continue my questions.

Our infrastructure company ship products to overseas, and it's that portion. It's mostly overseas deals, overseas projects.

So over time, the technology quality is declining, and so we decided to discontinue this part.

So roughly speaking, out of the JPY 26 billion, the production adjustment, and the price negotiation is JPY 10 billion, and the remaining is the bad performance, performance shortcoming? If you have numbers, please tell us.

It's a bit embarrassing to say. So production adjustment is about JPY 6 billion.

Infrastructure -- so infrastructure is down by JPY 26 billion, infrastructure.

The JPY 10 billion is the discontinuing project in Middle East and chemical plants; the price-related matters, this is JPY 10 billion; oil and gas-related production adjustment, around JPY 67 billion. And the remaining -- remainder is cost increase or the bad performance, and we had to provision for that.

So this is for the bad quality.

So question, so JPY 67 billion in oil and gas; and then JPY 10 billion; and the quality, JPY 10 billion.

It's not just that, but it's not just one-off. It's not one single incident.

We're still working on these with our customers, so I'm sorry, I cannot be specific. There are multiple factors that come into play, so I'm sorry, I cannot say more.

In Social Infrastructure & Industrial Systems, chemical plants, Middle East, you said you will withdraw from them. But looking at the global plant demand, if you take out the chemical and Middle East, it means mostly everything.

Of course, the pharmaceuticals, I understand; medical area, I understand. But the demand level is not that big, so it means it will be a smaller -- equilibrium at a smaller level.

How much do you plan to reduce your resource?

Well, overseas, chemical plants, we did reduce or downsize once. While we separated companies, we did it again.

And there are many, many plants to buy overseas, and the responsibility of construction is on our side, and so the risk-return does not pay off. It's not worth it.

So the size is large, but if we get this deal, it makes our customers and vendors happy. And we cry, we suffer, and so we thought we cannot go on with this business.

In the same plant business, water-related, we are strong with water, so we will continue that. So in the industrial plants, we will focus and reinforce our water business, so we will shift our focus on that side.

It's project management, so we will focus on that side. And pharmaceuticals, medical, medical is good.

Our control tower is in Singapore, so close to that, we will focus; so maybe as far as India; we cannot go any further west.

Middle East. Middle East, we're not going to do all Middle East.

It's just that we will not do HVAC in Middle East.

In total, you will not change the level, amount of resource? You will just reallocate the resource?

Well, in Middle East, we -- there are areas we have to expand, so we will not reduce the resource; we will not. HVAC, air conditioning, about 3 to 5 years ago, we got the deal, and we are working on those projects we got 3 to 5 years ago.

We're trying to complete these projects. So basically, engineers -- number of engineers will remain unchanged.

It's just that you will change the target or the focus. We don't make that much anymore.

We make locally, so there's not much value added.

So most plant manufacturers are seeing the same thing. Well, it used to be good days; it was okay in the past.

But now the region is losing money, and it's era of merchants, and so they take everything away. Aramco?

Aramco has good areas and bad areas. Compressors are strong.

Compressor -- they're good with compressors, but something with construction is not bad -- is not good. They don't have much resource.

If we are going to suffer with project management, then we might as well go for water management and medical. We should focus our -- focus on these areas and provide more added value.

We will be reducing material cost, and we will be reducing the red ink, and so this will be good for us. If we leave this unattended, then we will go submit quotation, and then we will sympathize with them and end up doing the business with them.

So we need to have good discipline, good control.

Next question, please.

I have 2 questions. The first question is regarding business restructuring.

You have increased by JPY 26 billion and increasing that to JPY 80 billion. I think it was on Page 30.

Various items have been listed. Now what are -- which areas have you increased in terms of this increase?

For 2016, for the business restructuring expense, how much is it likely to be? And impact, you said JPY 22 billion for 2015.

For 2016, compared to 2014, you said that the impact would be JPY 40 million to JPY 50 million, so that means either JPY 20 billion or JPY 30 billion positive impact for 2016. Am I correct?

In terms of the addition, there are manpower optimization adjustment around JPY 10 billion for manpower adjustment, and another JPY 16 billion is for fixed assets disposal as well as impairment. Impairment as well as goodwill impairment is also included.

Basically, business is downsizing or withdrawing from business. And for these areas, we are decreasing the level of asset because there is no cash flow generated.

In a nutshell, that is what it boils down to be. In terms of people, manpower, we have increased by 500 in terms of retirees.

So in terms of areas for the Information & Telecommunication Systems and for other business segments, we have increased the expenses. Therefore, our next fiscal year and beyond, we should have a certain impact.

But if retirement is taking place from the 1st of April onward, it will have a full year impact. But after retiring, impact will be seen from third quarter and beyond.

Therefore, for next fiscal year, obviously, JPY 40 billion to JPY 50 billion is expected. For next year, it is too early to say.

But in terms of manpower adjustment, it's something that is inevitable and more than we have assumed. The market structure is undergoing significant change.

So in line with these changes, we have to readjust our organization as well. We have to also make that correspond to the business structure as well.

Resource reallocation will be required. There are people who are not appropriate for reallocation, and that is the reason why these people are expected to be active elsewhere.

But we don't know what the scale is going to be if we are to implement such measures. In terms of manpower adjustments, it does take time.

In terms of financial measures, once we decide, estimation can be made. But for manpower adjustment, there is also a lag that we have to consider, so there could be another round in the first half of next year.

But we want to be prudent in this initiative. Actually, my responsibilities will change, so I cannot say for sure.

But on the part of Hitachi, as we have done in 2001, to have average early retirement program is not what we are going to implement at this time. We will decide on the business and decide which areas we want to withdraw, which areas we want to grow and reallocate the human resources accordingly, and manpower adjustment will take place accordingly.

Therefore, for highly capable people and necessary people will not be subject to such a program.

Question regarding cost reduction. In Page 7 and 8, third quarter on accumulated figures are provided.

Third quarter is JPY 73 billion. On accumulated basis, it's JPY 144 billion.

And it seems that in the third quarter, there is acceleration. What is the background to this?

Is it because the resource prices are declining significantly? And what is the procurement cost reduction that is being reflected here?

Please elaborate. Mitsubishi electric on the third quarter, consumer appliances very good.

And they still -- the iron ore price as well as the copper price reduction has benefited them. So how much has been factored in for your fiscal year?

And for next fiscal year, what is the impact in terms of cost reduction because of the reduction in the resource prices?

Regarding resource prices, now for domestic, it's about 1 barrel decline; it's an impact of about JPY 800 million per year. Now in terms of cost reduction, there is a plus alpha [ph] to be considered as well.

What is most significant is the electricity price. I mentioned JPY 800 million.

Half or JPY 400 million is the electricity price, and that is having an impact. For 2015, the overall impact is difficult to identify, but the electricity price is significant, around JPY 10 billion in terms of indirect expenses.

That is how much this is having an impact. Regarding the waterfall chart and the cost reduction, JPY 73 billion is very significant here.

And for the third quarter, steel-maker [ph] acquisition as well as HVAC spinout at Waupaca has been included this fiscal year is -- are also included in the cost reduction and that JPY 4 billion or JPY 5 billion. So within JPY 73 billion, it is also included, and that is the reason why it looks bigger than it actually is.

In terms of cost reduction, regarding JPY 73 billion as well as lower sales price is the net thereof, and other factors are included. So in reality, it's around JPY 62 billion which is cost reduction.

And out of the JPY 62 billion, half is materials cost reduction. Because of the price decline, that is favorable, but the sales price is also declining accordingly.

Therefore, it's good if we can have a good spread, but demand is weakening, so it is making it more difficult for us.

I have 3 questions. First, as always, the third quarter results, compared to the internal target, how was your actual result?

Now the variance by segment basis, this is my first question, centering on operating profit, please.

Third quarter, Information & Telecommunications or overall, it was JPY 8 billion upside, better. I think I responded to your similar question 3 months ago.

Back then, third quarter, on a year-on-year basis, was -- so the revenue and operating income was on a declining training -- declining trend, so I said we expect an increase. But now that it's over, we are in that scope.

So JPY 3 billion in Information & Telecommunications. And Social Infrastructure & Industrial Systems, infrastructure was weak, but transportation and urban development was good, so plus JPY 3 billion.

And the Electronic Systems & Equipment segment was strong, so -- battery was strong, so JPY 2 billion. And Construction Machinery was worse than expected, so minus JPY 2 billion.

Automotive was minus JPY 3 billion. And Smart Life & Ecofriendly System, plus JPY 1 billion, JPY 1 billion.

The benefit was declining material costs, so plus JPY 1 billion. And the Corporate/Eliminations is plus JPY 4 billion.

In Corporate, cost was reduced, and so we benefited from that.

Second question. So based on that, you talked about Social Infrastructure & Industrial Systems breakdown.

But once again, in Information & Telecommunications, down by JPY 21 billion; and Automotive, JPY 7 billion down, so please give us the factors, reasons and the breakdowns, please. That's my second question.

For Information & Telecommunications, JPY 21 billion. It's disappointing.

Solutions was as planned. System solutions, Page 34, you can see some descriptions on Information & Telecommunication Systems segment.

Against the previous forecast, the adjusted operating profit is negative. This is platform, is negative.

This -- eliminations will make up JPY 21 billion, but platform was weak this time. System solutions, as you can see, is marking a record high, and it's improving year-after-year, so it's good.

But the platform side was weak. One factor was the shift to IoT.

We are shifting the manpower from information to IoT under the IoT team. And we're doing proof of concept, POC.

We are -- we have inquiry for POC because it's IoT, so many people think about POC. So on a global basis, they were taking in the data in the CMS and utilizing the information from that.

It's a strategic investment. We thought this will move faster, but customers think very carefully.

And so we cannot close the deal as soon as we want, and so we cannot recover the investment, and so that's JPY 6 billion. And the bigger portion is storage, storage solutions and middle software sales.

Europe is fine. But globally -- global, it's centered on the U.S., and so the needs in the U.S.

is higher-end, large-sized data storage for quick data processing. There's a shift from that.

There's a saturation in that area. Now it's more AI and analytics.

They want to use for more analytics analysis, and so this requires speed. It's not large capacity.

It's more speed, and so the market is now shifting to all flash. So in the third and -- second and third quarter, we had been shipping out our products, but this is increasing.

Market needs is now shifting to cloud. The high-end G1000 was released in February and started posting revenue around May, but this revenue is not growing.

Hardware is now increasing, all flash is increasing, and so the product mix is one factor. And because of the shift to cloud, we are not posting revenue in 1 year.

It's a deferred revenue over 5 years, and so that's what's happening in the U.S. Because of that, storage and middle software is declining by 100 -- JPY 15 billion.

A large financial institution gave us an order overseas, but this is 5-year usage; it's over 5 years. So in total, JPY 21 billion.

Additional question. In Social Infrastructure & Industrial Systems, you did not talk about the elevator, escalator in China.

Maybe I misunderstood you, but I understood that there was a downward revision of elevator, escalator in China?

We reviewed this in the midyear. For third quarter alone, it is a little better than back then.

But in January-March quarter, order is down, so it is just on schedule. We're -- on schedule, we are down on a year-on-year basis.

So escalator, elevators, for fiscal year 2015, we are at an acceptable level, okay level. But going forward, the condominium construction is declining, and so we need to take some fixed cost measures and cost reduction.

My last question is operating profit. Compared to that reduction, the net income reduction is big; downward revision is big.

You talked about the headcount adjustment; you said a reduction of 2,000 on a full year basis. But including that, why did you revise net income downward bigger?

Well, operating income, JPY 50 billion; but we did JPY 26 billion restructuring, so it's an increase in restructuring Hitachi companies and unlisted wholly owned subsidiaries. So that was a direct impact of business restructuring.

So it's JPY 80 billion down; and JPY 70 billion, because of tax effect accounting, the entire amount does not come back, so we suffer an impact.

Are there any other extraordinary factors?

No. The discontinued business, we included some negatives in the second quarter results, but not this time around.

Any reversal of provision? So EBIT, downward revision is JPY 80 billion.

This is Hitachi, Ltd. consolidated taxation group, so including the wholly owned subsidiaries, EBIT declined.

So including the consolidated taxation, we still have the NOL, so this has an impact on the bottom line, so JPY 80 billion -- it's JPY 70 billion. Impact is JPY 70 billion.

The time has passed the allocated schedule, but are there any last questions? There seems to be one more question.

I have a simple question -- 2 simple questions. One, in terms of the business environment, I would like to talk about the fixed cost for next year.

It has been increasing over the years; but next year, how is that going to proceed? Rather than manpower reduction, I'd like to -- you to address the big picture.

That's my first question.

Regarding the fixed cost, capable resources must be secured. And in terms of R&D as well as new product development are important areas, therefore, we will continue to invest, and so there will be increase in these areas.

But beyond that, measures will have to be implemented accordingly. And depending on the substance, the fixed cost -- total fixed cost may not -- will have to be looked at.

And -- but regardless -- but we do have the direction of decreasing fixed cost. 1% decline would be very significant, I don't think that can be achieved.

But gradually, the rate will be reduced.

Second question, which is a detailed question. Regarding China, the elevator orders have been discussed.

And in terms of action for October to December, what is the prevailing level? Please comment.

Regarding China, in terms of revenues, we are reaching appropriate levels. I forget the volumes, but there's -- frankly [ph] there's a decline for January to March.

Up until December, it was mainly the orders received in the past. Shipment and installment took place in that period, therefore, calculation can't be made.

There was a slight decline. But for January and March, the orders have been declining, and it will be manifested 1 year later.

That's the reason why we expect January to March to be difficult.

The orders change, is there signs for a recovery, or is it continuing to decline?

Actually, we don't see any change. We did not engage in price reduction compared to others.

We have started now about 5% to 10% discount has been provided. But overall, from January to December, we have lost shares; about 10% share has been lost.

And in terms of the contract volume for elevators and for China, I think there has been a decline of 1% year-on-year. Now if we engage in low-cost housing, it could undermine our brand, and they have -- and we don't have 2 brands like others.

But perhaps this must be considered going forward. We will continue to be engaged in development.

With this, we'd like to bring this meeting to a close. Thank you very much for your attendance today.