At this point, we'll start the earnings announcement for the first quarter of fiscal year 2018. I'd like to introduce our speakers today: We have Executive Vice President, Chief Financial Officer, Hiroki Totoki; Corporate Executive and Senior General Manager of Finance Department, Atsuko Murakami; VP Senior General Manager of the Global Accounting Division, Hirotoshi Korenaga. Today, Mr. Totoki will give you the consolidated financial results for the first quarter of fiscal '18 as well as the forecast for the full year fiscal 2018 to be followed by time for questions and answers. And we shall be spending some 40 minutes altogether. Mr. Totoki, will you please start?

Thank you for your time today. Today I would like to explain these 2 topics in the next 15 minutes. Fiscal '18 Q1 consolidated sales increased 5% year-on-year to JPY 1,953,600,000,000 and consolidated operating income increased 24% year-on-year to JPY 195 billion. Net income attributable to Sony Corporation stockholders for the quarter was JPY 226.4 billion, approximately 2.8x that of the same quarter of the previous year. As is shown in this slide, operating income in the same quarter of the previous year included certain extraordinary items. Excluding these extraordinary items, adjusted operating income would have increased JPY 74.2 billion from the JPY 120.8 billion of the previous year to JPY 195 billion in the current quarter. This slide shows income before income taxes excluding certain extraordinary items. During the current quarter, a total of JPY 112.8 billion was recorded in nonoperating income for unrealized and realized gains on shares of Spotify. Excluding these extraordinary items, the adjusted income before income taxes would have increased JPY 87.2 billion from the JPY 112.1 billion of the same quarter of the previous year to JPY 199.3 billion in the current quarter. This is not shown in slide, but if the impact on income taxes of these extraordinary items was approximated using the effective tax rate of each quarter, then excluding these extraordinary items, adjusted net income would have increased JPY 83.3 billion from the JPY 57.5 billion of the same quarter of the previous fiscal year to JPY 140.8 billion in the current quarter. This slide shows the results by segment for Q1. Next is the consolidated sales forecast for fiscal '18. The consolidated sales forecast has increased JPY 300 billion to JPY 8.6 trillion as a result of upward revisions, primarily in the Game & Network Services segment. There is no…

Now the floor is open to your questions. Those of you with questions, please wait for the microphone and please identify yourself by stating your name and affiliation before asking the questions. Please confine the number of questions to 2 per person.

Ezawa of Citigroup. 3 questions if I may. First...

Confine to 2 please.

Okay, then 2 questions. In the headquarters and elimination JPY 73 billion downward revision, what's the breakdown of it. And you said smartphones, but for one thing, is smartphone all included in this number, or to what extent is it included? And also the downward revision in conjunction with the second half, what do you assume would be some -- [ should in case your ] reduction of business further? Or do you think there'll be another possible impairment, another step of it and have this number here? And the second, PlayStation Plus subscribers number is on the decline based on the [ annex stand out ], and I'd like to find out the reason behind that? And the segment results of Game was very good, but then the profit generation mainly comes from game software. And what is the degree of contribution of PS Plus to the results of this segment?

So first -- the first question about risk buffer of JPY 73 billion, we -- it is included in the headquarters and the elimination -- corporate and elimination. We do not disclose the breakdown of this, but the main part has to do with the mobile communication. Other than that as I mentioned, the Electronics component procurement difficulties in like multilayer ceramic capacitors are macroeconomic situation like China U.S. trade conflict and also the exchange rate. So these are included in that. And the second question, PS Plus subscribers number. Compared to the initial assumption and the current point, there are no such major differences. Especially the fourth quarter of the previous year, the online multiplay hit title was put on the market and so at that timing, the number of subscribers of PS Plus increased substantially. And in view of that, this time the number is on the stay. But from September to October, the major title release is planned and then at that time, there may be another step up upward in the increase of subscribers. And also games profit, we made the upward revision and the major factor there was in terms of contribution to profit, the first-party title was hit and that was the biggest contribution in terms of absolute amount. And then third party title hit as well. But our assumption is that the third-party titles contribution was greater than -- much greater than our expectation and we could not really foresee such contribution.

Please raise your hand if you have questions.

Sugiyama, Goldman Sachs. I would also like to ask 2 questions please. First of all movies. The TV production, so a decline in sales revenue. Can you give us the background as to why there is this decline? And also, in-house production of the programs is happening in the industry. So how does Sony fare in this trend as many peers are producing programs in-house? And secondly about the game market, so first party and third party free-to-play titles were subject to upward revision in profitability. But how do you look at this market midterm, particularly comparing the pipelines from first party and third party game makers. Do you think there's room for further growth after next year over midterm? Two questions therefore, please.

Thank you. About our Picture segment and particularly TV production, the revenue decline and why this is happening, the background situation was what you asked for. Now last year, Last Tycoon, the title which contributed to that was suspended, so we no longer have this, this year. And also last year, Better Call Saul, which we had in the first quarter but there was a delay in the broadcasting. Therefore, it's going to be posted in the second quarter. Therefore the first quarter saw a decline due to these reasons. And for the game business -- as for the game business, we've seen [indiscernible] first quarter, how it will impact to our midterm results will be difficult to measure such impact as yet but as you know, there is shifting to digitalization and also networks obviously is increasing and so-called add-on services. There is a diversity of revenue models on this platform. And therefore, the business composition, the business structure is changing little by little. We're aware of that, but the platform is supported by the hit titles and the business by nature is volatile, so we'll continue to watch this business very carefully.

Next question please. So this block, the fourth row please by the aisle please.

Nakane, Mizuho Securities. I have 2 questions. First Slide Page 18 and 19, cash flow is my question, that is globally. What is the segment breakdown of this cash flow? And then now the revision was made [ of the ] annual outlook forecast, how was it changed after the revision? Could you please be very specific and give us the details about that especially the game in short-term? How was that -- did that bring the impact on the cash flow? The second question is about semiconductor. CMOS sensor demand condition has changed in the last several months, dual as well as triple is likely to increase [ to be adapted at ] Samsung for example. DRAM plant conversion was announced by Samsung. So if -- my personal estimate is that in order to try to keep your major customers maybe 2 years from now, your capacity will be too short during the first half of 2 years from now. So what is the latest analysis of the business environment? As by making use of your currently available space, how can you expand your production capacity 20k or the 15k something was mentioned? But can you further increase your capacity? For example, a new plant that you can consider? And so what is the capacity increase plan?

Thank you. As to the cash flow, Ms. Murakami will comment on this.

Thank you very much. The segment break down cash flow, so the actual result of this January to this period, the first quarter rather, the major positive contribution was thanks to the Game & Network Services, big profit thanks to that section. And necessary operating expenses taking into account but the operating income is positive and the investment cash flow was rather small, so that operating cash flow and then investment cash flow the total positive contribution made by that. The second one, the good one is the Music segment. Because good profit so that the operating cash flow was positive. Spotify, this stock was sold and [ cash stream ] was recorded, even investment cash flow was a major positive. In Spotify, the securities sold [ JPY 832.5 billion ], [ cash stream ]. Except for the Spotify sale, the operating cash flow and then the investment cash flow in total positive figure was recorded and in addition. Semiconductor, for example, semiconductor side, the operating expenses taking into account and then operating cash flow and then I think it was similar to the investment cash flow, so actually it was almost break even state. And other Branded Hardware and others, IP&S, HES, so the operating cash flow was at the end of March, the inventory was rather heavy, a lot of inventory, [ but about ] the inventory stock level. [ HES ], the inventory was slightly heavy. And in semiconductor, we had slightly big inventory. Because of that, for example, in total, however, inventory was not increasing at all. So let me come back to the Branded Hardware. And so because of that impact in the stock inventory was not [ increasing ], so that the cash out level was rather small so that operating cash flow negative…

About my answer to the Mobile Sensor and the semiconductor, which was a part of your question, so let me answer that part of the question on Semiconductor. The demand in the overall market in the fiscal 2017 last year, JPY 3.8 billion. And then for fiscal '18 this year, JPY 4.2 billion, so there's an increase in this fiscal year. So what are the driving forces double and then the multi-lens cameras and so on. But these cameras are to be applied to those cameras and then 30% last fiscal year and that will increase to about 40% or so this year. So that is external analyst view on how that kind of camera will increase. So it's not that different from our own internal forecast. So based upon that assumption what about the future capacity expansion plan that was just I think your question. Specifically, very strategic story is capacity increase so that we [ cannot ] refer to that specifically, but as of now taking into account business environment, in what way we should approach the issue of capacity. Well, at present, that is may be the major challenge for our business management. So the top management is continuing a discussion on this because it is a priority matter in capacity.

Next question please.

Ayada of Deutsche Bank Securities. And 2 points, mobile and music. First about mobile communications. Mr. Totoki earlier mentioned that this year risk may surface and taking counter measures in preparation for that and if you could further expand on that type of risks, you are talking about, is that the market wise risks or internal operation based risks, which is it? And then countermeasures, it may be very difficult to elucidate, but you have risk asset in excess of JPY 60 billion, would you be cutting into that? Or as the result of devising the countermeasures, what do you think the picture you think you like to achieve next fiscal year, if you could share? And the second point Music segment. You talked about the acquisition of equity of Nile and including the equity acquisition of EMI, so you have decided on the investment to the tune of JPY 300 billion in the coming 3 months or so. What is the background to such accelerating investment and yesterday there was an announcement that Vivendi will release half of Universal shares. And if the landscape is changing in a substantial way in the recent months, what do you think would be the opportunity for you and how are you going to capture such opportunity?

First the risks related to mobile communications, so far as current fiscal year is concerned, the biggest possible risk would be a further decline in sales. That would be the biggest risks you -- we would anticipate and assume and therefore the first half, there has been a drop in sales in both Europe and Japan. And as we discussed during the IR day, we are trying to establish a set up so that we can generate stable profit with the sales of about 10 million units. And in this regard, we keep this policy direction. And whether we should accelerate such a policy implementation or not, something we will further verify in the process of working on the countermeasures. And then basically, what is the major challenge for us in this business? As we have been saying, operation itself has been improved substantially, but the product competitiveness is still lagging behind the top class competitors. So this continues to be a challenge for us. So this time we see the change of management so that as a part of Sony's Branded Hardware and generate a good synergy with technology and the Branded Hardware business as a whole to enhance our product competitiveness. And based on that we like to identify how we can maintain a sustainable business on what scale. So we will not be changing a policy direction in a major way, but we will be taking measures for that. You talk about risk asset, for mobile communication segment asset is about JPY 30 billion after the first quarter, and half of that comes from smartphone business -- smartphone asset. About the Music segment, the background to making decision about the substantial investment is that at this timing, we were about to decide whether to acquire the partners equity of EMI or not. And there was the option and in -- when we made this deal in 2012, there was this provision for the option. So this is one of the timings and another factor is the global growth of streaming business and to that market of streaming we are to capture the upside part of that and through that we can achieve major synergy. That's one of the factors. As you know, this asset is really a cash cow type of asset. And low risk and low return type of asset. It is annuity type of asset. So when after we made this decision and announced this investment, our credit rating was upgraded. And that's one of the indicators to see the degree of risk about the sales of this asset at this timing. Next question.

The next question will have to be the last one, we are losing time.

Katsura, SMBC Nikko Securities. Two questions, one on Semiconductors and also about revisions you are making and first of all Semiconductors. I always ask this question. What's the change in regard to wafer business? And also what's your view of the market currently? And as we see is tight and prices being raised and that in your Image Sensors business, I think in the market we hear that prices are being raised. So can you talk about your business situation and also your view of the market? And also the rate of operation of your plant? And the second point is about you have now the buffer of about JPY 70 billion -- JPY 73 billion, but excluding this buffer budget, you've made revisions some up, some down. Can you give us some additional explanation about why you're making these revisions. Because emerging currency is down and you have the buffer of JPY 30 billion for that. And how are you making the revision on that account? And so are you making revisions because of the results you've seen in the first quarter? So what stands out about your revisions that you're planning to make?

So first of all about the current situation in the Semiconductors business, particularly the rate of operations, Mr. Korenaga will answer that question.

So how we're using the capacity. For the master process, we have 100k per month is the capacity for the [ end of the process ] and in the first quarter, the actual results was 910 -- 91,000. And forecast for the second quarter is on average, we produced 99k, which is basically full operation of our capacity. And about price, there is no major change to what you have mentioned here. And we've made some upward revisions in our business segments, we can explain in different terms. And ForEx impact is significant. So Ms. Murakami will talk about that.

The ForEx issue, particularly the impact from emerging currencies in 2018 in our full forecast compared to the results for fiscal 2017 in the Electronics business in total. There is a negative impact of JPY 21 billion from ForEx translations in emerging markets, including China, excluding Japan, Europe and United States, they account for 25% in sales on a consolidated basis. So as we include China this proportion is very significant for us. And our assumption for the emerging currencies between April and July, there is some change made because back in April, Brazil Real was JPY 30.8 but in July, it's JPY 28.7. And so that difference is between the second quarter and fourth quarter. In China, it changed from originally JPY 16.2 to JPY 16.9 and Indian rupee JPY 1.56 to [ JPY 1.61 ]. Russian ruble also changed from JPY 1.71 to upward JPY 1.76. So the assumptions change over time and compared to fiscal 2017, therefore, the results were negative. And dollar yen, in the dollar yen our view, particularly the sensitivity on this remained the same as we have announced in April. JPY 1 higher in yen means positive JPY 30.5 billion. Against euro, if yen is stronger by JPY 1, it's negative JPY 5.6 billion. And also, the big currencies 1% strength in yen is translated to a negative JPY 3.5 billion in the consequence.

And this concludes our session for the earnings announcement. Thank you very much for your participation.