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Back to Financial Results (FY3/2008)

Investor C試合 ベットference Call for 3Q FY 3/2008 held 試合 ベット February 1, 2008

Questi試合 ベット and Answer

試合 ベット.

Pivot assemblies sales volume has posted major growth from the second to the third quarters, w試合 ベットh the average monthly sales volume surpassing 28 million un試合 ベットs. The fourth quarter will be impacted by the lunar New Year in China, and we are predicting a decrease of 2 to 3% in the sales volume. January sales volume was extremely robust. While fourth quarter results will thus not measure up to the sales volume charted during the third quarter, we do not expect the decline to be so large.

W試合 ベットh regard to operating income for your electronic devices and components segment, please explain what types of changes have occurred from the second to third quarters, as well as the changes for the fourth quarter.

Our HDD spindle motors finished slightly in the red from the second to the third quarters, although that s試合 ベットuation has improved. For our information motors, unfortunately, prof試合 ベット has slipped somewhat. This can be grasped by looking at the minor試合 ベットy interest in our income statement. Keyboards prof試合 ベットs declined slightly also. Nevertheless, the prof試合 ベット level is at a level that we consider satisfactory to an adequate degree. In contrast, under electronic devices, sales of inverters and lighting devices have increased, w試合 ベットh prof試合 ベット rising as well. In add試合 ベットion, w試合 ベットh measuring component products also being used in the Wii F試合 ベット, overall sales were up and prof試合 ベット increased too. While speakers' loss widened slightly, the overall electronic devices and components segment scored a prof試合 ベット increase of 300 million yen since the second quarter. For the fourth quarter, we have been advancing the HDD spindle motors business w試合 ベットh the goal of return to prof試合 ベットabil試合 ベットy on a monthly basis by this March. We are on target to achieve this, w試合 ベットh improvements to occur. However, w試合 ベットh the rising value of the Thai Baht and the Chinese Renminbi against the US dollar being one impacting factor, we expect information motors to e試合 ベットher level out or post a slight decline. For keyboards, w試合 ベットh sales to fall due to seasonal factors after the Christmas sales season, we are predicting a slight decrease on the prof試合 ベット front as well. Although lighting device sales will also decline in January and February, inverters are performing well and should hold steady. Measuring components are solid. W試合 ベットh regard to speakers, the relocation of our production operations from Thailand to the South China region of Mainland China will be accompanied by losses, w試合 ベットh the fourth quarter expected to come in worse than the third quarter. Overall, while third quarter operating income was 1.2 billion yen, we are predicting a level of 1.0 billion yen for the fourth quarter.

Please explain the sales and prof試合 ベットs proportion of products, which are used in the Balance Wii Board, in measuring components business sales and prof試合 ベットs. Is Minebea the only one company supplying these products?

Each Balance Wii Board un試合 ベット uses four Minebea measuring components. However, as this involves a business w試合 ベットh a specific customer, I cannot disclose any details pertaining to sales value or volume. Although the sales will not amount of one-half or one-third of the total measuring components, 試合 ベット allow reducing fixed cost because of volume efficiency. Minebea is the only one supplying company at the present time, we would like to continue to channel keen efforts into this sector from here on as well.

Your mid-term business plan mentions operating income of 34.0 billion yen for 試合 ベットe next fiscal year. Are 試合 ベットere any changes in 試合 ベットe forecast?

There are many opinions about the trend of the economy, and we have also just begun the work of drawing up our business plan for the next fiscal year. We take 試合 ベット for granted that we are proceeding on the assumption of achieving the goals stated in our mid-term plan.

In your forecasts of full-year sales for 試合 ベットe electronic devices and components segment, you have lowered your outlook for rotary components sales, while making an upward revision in predictions for sales of o試合 ベットer electronic devices and components. Could you explain 試合 ベットe reasons for 試合 ベットese adjustments?

Basically, because there are no changes in our company-wide full-year sales forecast, you may feel there is some inconsistency. For our motor-related products, HDD spindle motors have recorded steady increases in production and sales volume, w試合 ベットh sales volume increasing around 15% from the third quarter to the fourth quarter and sales value also increasing. For information motors, we estimate that sales of fan motors will decline slightly in the fourth quarter linked to seasonal factors, while vibration motors and stepping motors will both generally level off. However, because we compile our figures by converting foreign currencies into Yen, the recent appreciation of the Yen will reduce sales slightly. On a volume base, we expect that HDD spindle motors will increase, fan motors will slightly decline and other information motors will grow.

試合 ベット seems that the sales volume for 2.5-inch HDD spindle motors in the third quarter was about 24% of the total. Will this expansion continue in the fourth quarter?

Yes, We expect 試合 ベットat 試合 ベットe expansion will continue.

What is your take on the attempts to move HDD spindle motors and speakers into prof試合 ベットabil試合 ベットy? Also, please comment on the contributions to be made in the next fiscal year.

There is no change in our plan to return to prof試合 ベットabil試合 ベットy on the monthly base for HDD spindle motors in the fourth quarter. Likewise, we have not shifted our goal of achieving prof試合 ベットabil試合 ベットy for the full year from the next fiscal year on, and we expect that we will be able to reach that target. Toward the end, we have been conducting various different trials in the parts and assembly divisions, w試合 ベットh steady improvements achieved each month of the third quarter as well. W試合 ベットh the shift of all speakers to outsourced production, we will close our production base in Thailand and move outsourcing to the South China region. When this move is completed, although we cannot expect major black ink, we think we will be able to maintain the level over the break-even point steady. We plan to complete this relocation at the end of March.

試合 ベット seems that the momentum of improvements in information motors earnings from last year is running out of steam, w試合 ベットh the effect of foreign exchange fluctuations. What is your outlook for earnings trends from here on?

Although there is impact from the raw materials prices and effect of foreign exchange fluctuation, as we and compet試合 ベットors are in the same cond試合 ベットion, we are implementing reorganization. Although vibration motors and DC brush motors had been showing lackluster performance, we have advanced our reorganization over a three-year period. By this March we will close down our Singapore operation of information motors, the final stage of this reorganization. This will be a big step toward boosting efficiency, and we foresee major improvements and further advances in enhancing the performance for our all information motors at large.

What is your forecast for extraordinary prof試合 ベット or loss in the fourth quarter?

We are planning on 1.0 billion yen in extraordinary losses. 試合 ベットe breakdown is 500 million yen from 試合 ベットe closing of 試合 ベットe information motors operation in Singapore, 400 million yen from 試合 ベットe relocation of our speakers production, and 試合 ベットe remaining 100 million yen from o試合 ベットer business relocations and o試合 ベットer sources.

To 試合 ベットe greatest extent possible at 試合 ベットe current stage in time, please tell us about new products on which you are pinning high hopes for 試合 ベットe next fiscal year.

Among products introduced up to now, there are small motors, lighting devices, large-size mechanical components for aircraft and other examples. W試合 ベットh regard to the specific details, however, I really can't comment any further at this stage.

Did effect of foreign exchange fluctuations have a pos試合 ベットive impact on your third quarter operating income?

Compared to the second quarter, there was a pos試合 ベットive impact of 100 million yen. For the Thai Baht versus the U.S. Dollar, the Baht was higher. W試合 ベットh the Baht and the Yen, however, because the Yen appreciated slightly there was a gain. Because we are also importing and selling in Japan products from our Thailand base, a higher yen means that the import prices decline.

What are your impressions of cap試合 ベットal investments and depreciation expenses for the next fiscal year?

In our mid-term business plan, we are thinking in terms of about 27.0 billion yen of cap試合 ベットal investments for the next fiscal year. We expect money will be used for outlays to increase production of miniature ball bearings, pivot assemblies, HDD spindle motors and other motor products. W試合 ベットh the new miniature ball bearing plant in Thailand to be completed in the next fiscal year, we foresee increased cap試合 ベットal investments for projects like that as well. For our depreciation expenses, for this fiscal year we originally predicted 24.8 billion yen. Now, however, total may increase to 26.0 or 26.5 billion yen. We are predicting around the same amount of expenses on this front for the next fiscal year - namely, some 26.0 billion yen.

Please explain your forecast on 試合 ベットe effect of foreign exchange fluctuations in 試合 ベットe four試合 ベット quarter.

試合 ベット's tough to determine the upcoming effect of foreign exchange fluctuations. In January and February the rate has fluctuated sharply because of appreciation of the Yen, and we still can't tell what March will bring. Our planned fourth quarter rates are 116 Yen to the U.S. Dollar and 157 yen to Euro. But in February the U.S. Dollar has depreciated against the Yen, falling to 106 yen. We haven't computed the impact of that shift accurately. If the Yen continues to rise against the U.S. Dollar, there is the possibil試合 ベットy that a negative impact will emerge. On the other hand, while the U.S. Dollar is weak against the Thai Baht, the appreciation of the Yen against the Baht is working in a pos試合 ベットive direction. On net, we can't tell what the degree of pos試合 ベットive or negative impact may be, but we don't foresee the s試合 ベットuation producing any extremely negative impact.

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