[Foreign Language] At this time, I'd like to start this session to announce the consolidated results for the second quarter for fiscal 2016. My name is Hill, and I'll be your emcee today. And I'd like to introduce our speakers, Deputy President and CFO, Representative Corporate Executive Officer, Kenichiro Yoshida. We have Kazuhiko Takeda, Corporate Executive and Corporate -- responsible for corporate planning and control and accounting. Then we have Ms. Atsuko Murakami, Corporate Executive in Finance and Corporate Development. Mr. Yoshida will make the presentation first, and that will be followed by questions and answers. Altogether, we shall spend 45 minutes. Mr. Yoshida, will you please start?

Thank you. I am Kenichiro Yoshida, CFO of Sony. First, I would like to say a few words about the wrongful conduct that occurred at Sony Design Incorporated, which we announced on Friday of last week. As we said in the announcement, we have discovered that certain former executives and employees of a Sony-affiliated company illegally paid out company money and misappropriated part of the money for themselves. At this point in time, we estimate that JPY 900 million in damages were incurred by LSI due to this wrongful conduct, which was repeated over a period of some 4.5 years. Sony is considering launching criminal charges and pursuing civil liability claims against those individuals responsible for this conduct. It is immensely regretful that this has occurred, and I would like to profoundly apologize to all the parties concerned. We're working to further enhance our internal control and supervisory systems so as to prevent recurrence of an incident of this kind. Now I would explain the 2 topics in the next 15 minutes. As we announced yesterday, we signed a definitive agreement with Murata Manufacturing Co. related to transfer of our battery business. Due to the recording of loss related to this transfer of the business, we have downwardly revised our consolidated results forecast for the fiscal year. In the second quarter ended September 30, 2016, we recorded a JPY 32.8 billion operating loss and JPY 4.5 billion of income tax expense related to this transfer of business. And at this point in time, we expect that these amounts will constitute essentially all of the losses that we will incur as a result of this transaction. And primarily due to the incorporation of these losses, we have revised our forecast for consolidated operating income downward by JPY 30 billion and our…

[Operator Instructions] Now I'd like to invite your questions. Please raise your hand if you have questions.

Ayada, Daiwa Securities. About Semiconductors and Game business, one question each on those segments, first of all, about Semiconductor business, looking at the actual results for the second quarter, in image sensors, revenue is up by JPY 40 billion compared to the first quarter, and there are onetime factors for both first and second quarters, inventory write-downs and the impact of earthquakes, but P&L has improved only by JPY 6 billion or so. So even with the impact from the foreign currency, the profit impact seems rather small. The unit price has been flat, you said. But perhaps the profitability was bad in terms of the mix of the programs or are there any other special reasons for this not-so-great improvement in profitability? And also, I think the current production is 73K per month. The second half, do you have any numbers to the increase in your capacity? And also, the second question concerns PlayStation 4 in the Game business. In the second quarter, the volume is slightly negative year-on-year, the unit volume. And your plan is to increase the sales in the second half, but in the second quarter, it didn't grow as much. Is it a result of the launch of the new console? Or is it because of the lack of large titles that -- because there'll be significant titles to be launched in the third quarter, I wondered, does one have to be concerned about your performance in the third quarter?

Thank you. I will answer your first question and Takeda will speak if there's additional comments. And also, on your second question, Murakami will respond. So first of all, about the Semiconductors business, the profit improvement seems to be small, rather. And also, I think the production -- also touched upon production capacity. First of all, about Semiconductors business, yes, there's impact of the ForEx market. But this period, we tried to increase sales to the Chinese customers. And in this process, more than custom products, but general products sold more and also the impact of the fluctuation of the inventory. I don't have specific numbers, but the inventory peaked in the first half, and our plan is to reduce the inventory afterwards. So at the end of the year, inventory should continue to decline with the peak having been reached in the first quarter. So there are phases where inventory is built up, and there are phases where inventory is reduced, and the profitability of course is different depending on these phases. And on the production capacity, it's a difficult point to answer. But for now, we're actually increasing our production. Because we're receiving good orders, there's been a slight increase in the production. But as to the future what will be our production, well, it's difficult to see what will be the market trend in demand, so we'll take a very cautious attitude. But toward the end of the year, it's likely that we will increase our production.

Regarding your first question [Mr. Takeda speaking], impacts from the ForEx and also fixed cost tends to decrease when the inventory is being reduced. And indeed, in the second quarter, for certain of the models, JPY 9.4 billion of write-down was taken for some of the models' inventories. On your question about the games business and the growth of the hardware, on the 15th of September, a new PS4 was launched for sale -- was launched. And also, PS4 Pro will become available in November. And therefore, the old PS4 model people didn't buy, waiting for the arrival of the new models. And on the 15th of September, yes, we did launch the new PS4. The sales are proceeding as we'd expected. So this new PS4 and also PS Pro (sic) [ PS4 Pro ], between the two of them, the annual sales will be included in our forecast of 20 million. And we are not changing this annual volume, 20 million.

Thank you. Next question. Yes, please.

My name is Nishimura from Crédit Suisse Securities. I have 2 questions. One, for the next fiscal year, the MRP, how do you view the mid-range plan? You made a revision on the battery business side because of the transfer of the business battery and expenses associated with it, for the next fiscal year, more than JPY 500 billion or more. Have you changed, or have you not changed? The exchange rate is fluctuating. And earlier, film or Motion Pictures seems to have some difficulty, so are there any variation among the segments? The second question, about games. PlayStation VR is on track, you said. The new entertainment -- supplying new entertainment is important, and so much expectation is given to PS4 -- or PS VR. After you launch this, what's your take on the market reception of PS VR? In VR, various players can potentially collaborate. This is a new business. Inclusive of the collaboration of the new business, if you can share the progress being made or any speed at which you are making this progress, I would appreciate it very much.

Thank you for your question. The first point is about our take on the next fiscal year's performance by segment, any variations across the segments. Your second question is PS VR games and its prospect. Allow me to answer each. And Takeda and Murakami may supplement my comments later. First, JPY 500 billion or more, we haven't changed that stance. As I said today, for Motion Pictures, on the IR Day, that's the range we announced. And there's a risk of deviating from that range. That's why I dare mention this today. PS VR, the total unit volume I haven't mentioned, but we get a very good feeling about this. From the computer graphics, to other things such as live actions, and if you can expand this -- there is a potential for the expansion of the applications. And there's a corporate-wide effort being made towards this goal. Takeda-san, any additional comments for JPY 500 billion goal?

This fiscal year, because of the earthquakes and the impairment of camera modules and the transfer of battery business. So it's onetime expenses that were recorded this fiscal year, but for the next fiscal year, the JPY 500 billion target, there is no change about that. For our Semiconductors business, we are trying to turn it around. For game and networks and Music, we are going to grow them steadily. For mobile, we try to achieve the black figures and make it to a more stable growth business. IP&S and HE&S, stable resource and stable source of revenue for us, and we are trying to secure a stable profit out of these 2 segments. Thank you.

For PS VR, as you know, on the 13th of October, we launched this product, North America, Europe, Japan and Asia. For every region, very good sales. And some of the stores find it -- a low inventory level. The customers gave us very favorable reputations. We haven't disclosed any numbers and figures. Since the launch, the number of units sold is on track. The second half's plan, production plan, has been revised upward slightly. PS4 -- existing users of PS4, especially core gamers, there are so many of them, we would like to expand the client base. Not only games, but we would like to expand it to other areas, so there's corporate-wide efforts on this. How this will turn out, well, together with the developers, we would like to increase the sale of VR, but we are too early now to say anything definite at this moment. Thank you.

We're going to take the next question.

I'm from Goldman Sachs. My name is Sugiyama. My question is about the Pictures and the games. First, about the Motion Pictures: Ghostbusters was released recently, and Inferno. One is classic, and the other is fairly more recent franchise picture. Seen from outside, the box office revenue is not as high as had been expected. Now you made the statement about the Motion Pictures earlier. How much of that is due to those 2 motion picture titles? And also, I think you said you are going to focus on franchises. And of course, will there be any further revisions to your plan by looking at the recent results? Now about the game, you said that forecast remains unchanged, but the launch of titles, the date might be changed. I think you're referring to Gran Turismo. So I do expect a fairly -- a major negative impact, but you mean -- you continue to do well on the network side, so the upside of the network, I think, is significant to offset the other negative factors. Do I understand the picture correctly?

Thank you very much for your question. Let me first discuss the motion pictures Ghostbusters and Inferno. You shared your observation. And of course, I would like to ask Mr. Takeda to supplement. How much of an impact has those 2 motion pictures had on our forecast? The Ghostbusters did not reach the point that we had expected to reach, but in any case, we would not change our policy to focus on franchise. Rothman, our CEO, is focusing on the augmentation of IP, and I think his direction is right. So his policy or direction will be maintained and respected. Since he became the top of the Motion Pictures, he has set green light signals to some. And we have high expectations on the results that will be delivered next year and thereafter. The game, the change of the launch date for certain software titles or title, I shall refrain from -- not mentioning the monetary impact since -- and we are excluding from our forecast because it will not be launched during this year. In the meantime, PS4 software and network have demonstrated power and good momentum. There is a continued momentum in those areas. That is why our overall forecast remains unchanged.

We'd like to invite another question.

Ezawa, Citigroup Securities. Two questions, please. Your revisions that you've made on your business plans, there are several primary causes or reasons. And onetime reasons, there are some. And excluding those onetime factors, what is the actual revision on your performance? And can you give us some thought on that? I mean my -- according to my understanding, the impact of the earthquakes has been reduced now, so that improved the profit by JPY 20 billion or so. And also, the inventory write-down is also affecting that, and also the battery business transfer. Combining all these, I think the pluses and minuses cancel each other, but you've reduced the forecast to JPY 270 billion. How much is related to the deterioration in fundamentals? Can you tell us that? Another question is about the -- your target to reach JPY 500 billion next year. Are there any hurdles? Because if you are revising the numbers downward, there has to be -- there have to be these hurdles. But you are still saying that the JPY 500 billion will be achievable, so what are the additional new initiatives that you'll be taking to make sure that the original target is still achievable? The second point is about the revisions in the forecast. Excluding the onetime factors, what is the actual situation impact on the profitability? And also, the hurdles to achieve the JPY 500 billion next year may be now higher, so what are the new initiatives to still being able to achieve that target?

Mr. Takeda will explain about the first question, but the -- those challenges and opportunities that are included in others and Corporate eliminations, perhaps that should be explained. As we explained this the previous meeting, we have the JPY 45 billion as an opportunity challenge included in other, All Other, Corporate eliminations, but thereafter there has been a smaller impact than we've calculated from the earthquake. So the challenges partially have indeed been achieved. Therefore, for now, the opportunities that we're calculating now is JPY 20 billion. Excluding that -- or so including that, those opportunities, we'll reach JPY 300 billion, except that, because of the business transfer of batteries, there is JPY 30 billion to be subtracted from that, so that our forecast is now for JPY 270 billion. Regarding your second point, do we see higher hurdles before we can achieve JPY 500 billion? We don't know, but as we've been saying for some time now, JPY 500 billion in profit, we only achieved that level of profit 20 years ago, back in 1997. Only once have we achieved that level. So yes, the target is a challenging target. So the key point I'd like to say here is that we have to eliminate all the businesses which are money-losing businesses. So eliminating any loss-making business is the key thing that we must do. And there are no supplementary remarks from my colleague.

Anyone else? Yes, please.

My name is Miyamoto from Mitsubishi UFJ Morgan Stanley. VR's volume, to me, looks small. Was it intentional that, for the first year, you set the volume at a low level? Or is there any bottleneck for -- bottleneck that you have for the production increase? And the shipment for this year, even if set at one, for next fiscal year, how much more do you think you have the potential to grow in terms of production? It's -- well, in a qualitatively way, if you can answer my question, I would appreciate it.

Thank you. PS VR, the volume seems to be low, you said. Is it intentional, or not? And then the -- our forecast for next fiscal year. Well, PS VR, originally we focused on core gamers. As Murakami said earlier, our target was core gamer, to start with, so rather than pursuing the scale or the volume, we wanted to provide service to the core gamers first. It's not that we decrease or we intentionally lowered the target. It's just that our main target clientele is the core gamers. For the production bottleneck, I do not know any of such. For the next fiscal year, we are in the midst of creating the business plan for the next fiscal year, so allow me to refrain from answering that.

Thank you. We can take the next question.

Ono from Morgan Stanley. I have 2 questions. First, on the mobile. European performance was poor. That resulted in downward revision of the unit sales forecast, but if you apply the foreign exchange simply and excluded that impact, it still suggests that there are some other downside risks. You talked about Europe, but can you talk about the market or sales trends of other regions, give us an update? Now 17 million, was this your trying to maintain profitability? I think this will be subject to arguments from the market. So given that, can you also update us on what you intend to do? On the second point, it's just for the sake of confirmation. Semiconductor, JPY 9.4 billion of write-downs in the semiconductor, and yet you still have JPY 20 billion of inventory. After the write-down, do you believe that the risk for the remaining inventory is limited? Or are you able to reduce the risk for the remaining inventory?

Thank you for your question. Now your question was on the mobile and about the write-down of the semiconductor inventory. Takeda would also -- would supplement me, but let me, in the meantime, say, talk about the unit volume or unit level of the mobile. 17 million was an intended number. Whilst we have not completed discussion about the medium-term plan, but we believe that, next fiscal year and thereafter, we would be aiming for a higher level for the stability of the earnings or profit, medium-term plan. On your question about the regional mobile performance: Japan is the major market. Europe, our product lineup was not well received as we had hoped to in the market. But Asia and other regions, the number that we have achieved is not far from what we have assumed. For India, Brazil, those markets where we were not making money or there were losses, we have managed to reduce our prices. Therefore, there has not been any negative factor from those markets. About the semiconductor inventory, I think there is very limited risk after the write-down of the inventory.

This next one will have to be the last question.

Katsura is my name, SMBC Nikko Securities. About ForEx and also the performance next year, I have 2 questions. First of all, on foreign currency situation, if I heard you right, the impact is negative JPY 63 billion. And how much was felt in the second quarter? I'd like to ask also, has there been any change in terms of ForEx sensitivities? Because I understand there are some other companies which experienced such a change in sensitivity terms. And also, about the second year -- the next year -- this year, the battery business and also inventory write-downs and the impact of the earthquake, these are onetime impact. Altogether, it was JPY 70 billion or so. Next year, one hopes that there would not be such onetime impacts, but if there are any, what should we be prepared for? I mean risks have been taken care of, I think, so there will be no surprises next year. But still, if there are any risks onetime in nature.

Okay, Murakami will talk about the impact of the ForEx market, but are we contemplating any onetime negative impact for the next year? As of now, we are not aware of anything. So incorporating all that, we are still expecting or to pursue JPY 500 billion.

The ForEx business -- ForEx impact, particularly regarding the Semiconductors, when we talked about JPY 63 billion, JPY 63 billion negative year-on-year, that was related to the semiconductor business SSS. And for this year -- sorry, for the second quarter, the negative impact I said is JPY 19.7 billion, but about sensitivity, there is no change. But with the semiconductors, when the dollar is JPY 1 stronger, then the impact is JPY 3.5 billion. If the yen gets stronger against the dollar by JPY 1, the impact is JPY 35 billion. Against euro, there is no significant impact. But for the full, entire company, what's the sensitivity on ForEx? Well, when the yen gets JPY 1 stronger, that's JPY 3.5 billion. Against euro, when the euro is weaker by JPY 1, it's negative JPY 5 billion. But emerging currencies, when emerging currencies go lower, in other word when the yen is stronger against emerging currencies, that's a slight negative on us. And also for entertainment and films and Music business, when the dollar is stronger by JPY 1, it's a negative JPY 1.6 billion. So sensitivity in numbers remain unchanged.

Thank you. With that, we'll conclude our earnings session. Thank you very much for your visit today.