[Interpreted] Thank you for waiting. At this point, we'd like to begin this earnings announcement session for the fourth quarter of fiscal '18. I'd like to introduce our speakers: Executive Vice President and Chief Financial Officer, Hiroki Totoki; corporate executives, Senior General Manager of Finance Department, Atsuko Murakami; and VP, Senior General Manager of the Global Accounting Division, Hirotoshi Korenaga. Mr. Totoki will present the financial results of fiscal fourth quarter and also give you the outlook for the fiscal '19. And 20 minutes will be spent for speech to be followed by 15 minutes Q&A. Altogether, we will spend 45 minutes. Mr. Totoki?

[Interpreted] I will talk about these 2 topics. The fiscal '18 consolidated sales increased 1% year-on-year to JPY 8,665.7 billion and operating income increased JPY 159.4 billion to JPY 894.2 billion. As is shown in this slide, adjusted operating income excluding extraordinary items increased JPY 99.7 billion to JPY 809.3 billion. Income before income tax has exceeded JPY 1 trillion for the first time in our history, reaching JPY 1,011.6 billion. Net income attributable to our shareholders increased to JPY 425.5 billion to JPY 916.3 billion. Consolidated operating cash flow excluding Financial Services segment for the fiscal year was JPY 753.4 billion. We have begun to disclose cash flow by segment from this earnings announcement. Excluding the Music segment, in which we acquired EMI Music Publishing in fiscal '18, all the business segment generated positive net cash flow. And the Game & Network Services segment and the total of the 3 segments included in the Electronics Product & Solutions segment, which was created on April 1, made significant contributions. This slide shows these results by segment. Now next is the consolidated results forecast for fiscal '19. Consolidated sales is expected to increase slightly year-on-year to JPY 8,800 billion. Operating income is expected to decrease JPY 84.2 billion to JPY 810 billion. But adjusted operating income in the previous fiscal year was JPY 809.3 billion. And assuming no extraordinary item in the current fiscal year, adjusted operating income is expected to be flat year-on-year. Net income attributable to Sony shareholders is expected to decrease JPY 416.3 billion to JPY 500 billion. Consolidated operating cash flow excluding Financial Services segment is expected to be JPY 760 billion. And FY '19 forecast for each segment is shown here, is in that year-on-year increase in loss in All Other, Corporate and elimination is primarily…

Now we'll move on to Q&A session. Those of you with questions, please wait for the microphone and please identify yourself by stating your name and affiliation before asking the question. When the questions are asked in English, the interpreter will interpret the question into Japanese and the answers will be in Japanese. And please, 2 questions per person. Any questions, please?

[Interpreted] Nishimura of Credit Suisse Securities. Thank you. Two questions. First, your perception or view about the plan. Usually, at the beginning of the year as a risk, you set a buffer for the overall company. But what is your forecast here? Looking at the numbers, you have not incorporated a buffer in the current plan. So what's your policy about this? And the second point about semiconductors and increase in development expenditure. If possible, on a quantitative basis, how much for a total increase of JPY 20 billion? So what about the semiconductors and also, the content and substance of it?

[Interpreted] About the risk buffers, we incorporate that in the performance forecast. But for fiscal '19 forecast, we have not incorporated the risk buffers in the semiconductors development expense. In terms of change from fiscal '18, if I may put it that way -- in terms of change from fiscal '18, if we were to indicate that, we do not disclose it on a quantitative basis. But as R&D expenditure, well, I should be very careful about how we respond to this. But compared to the previous year, if there are any changes, I would say no major changes, which means that I earlier mentioned from fiscal '17 to '18, excluding the extraordinary items, I talked about increase in profit. And at this time, that will be flat on year-on-year. So that, I think, may give you some clue. Next question, please?

[Interpreted]Ezawa, Citigroup Securities. Two questions please. Firstly, about gaming business, on the streaming or cloud gaming, I think, once you commented that Sony found it threatening that cloud gaming was appearing. But today, you said Sony was indeed in cloud gaming. So the improvement of the environment for the cloud gaming, is it a threat for Sony or is it a plus cannibalization against the existing business may be one sort of a threat? So what is your view? And secondly, operating income by segment, no longer you will not be announcing the last year figure of the 3-year plans. But in the stock market, people may understand this because your outlook is now probably less favorable than before, that's probably why you decided to cease announcement of this figure. I'm sure it's not that, but can you explain this reason?

[Interpreted] First of all, whether the cloud gaming is an opportunity or a threat, and I talked about the acquisition of Gaikai in 2012. And if I express it in terms of quantitative explanation, I think there may be a threat, but we have to turn the threat into an opportunity. This serves to all kinds of business. The change in threat must be captured accurately and to make sure that business opportunities can be created, so that we can grow in that particular business, which as a matter, of course, something that we had followed. And unless that opportunity becomes truly opportunities and everybody finds that to be an opportunity, then there will be competition. There will be another set of threats. But for us, the game streaming, I don't know how long it'll take, but the growth of the game is not a surprise for us, because there has been the streaming game service from early 2000. So many players have been rising to the challenge of this business. So for us, it's not a new story at all. And it's important, therefore, for us to indicate to you our solid strategy and vision. But we will be presenting our strategy and vision in this -- for this business at corporate strategy meeting and on the IR day. And ceasing of the announcement of the targets we withdrew the number that we already announced. We did it at this time, because the consolidated operating income for fiscal '18 last year, we're talking about JPY 670 billion. At that time, the steeper gains from EMI acquisitions were not included. So -- but that was a one-time factor, but still the guidance we gave you 1 year ago for this year's operating income was JPY 770 billion. But once we…

[Interpreted] Nakane from Mizuho Securities. I have 2 questions. The first question is about games. I'm trying to organize my thoughts about your assumptions, hardware, software, network if we divide into those categories, what you have said is that hardware sales will go down and the profit will go down, will be negative. Software, overall, is a positive growth. But first party will decline. Therefore, in terms of operating income, it will go down. Network, is it positive or are you saying that you'll be conservative, so you're not assuming a big growth? So could you advise us on what might happen? If the software should contribute to the increase of revenue, what will be the reason? How are you going to achieve its growth? And are you incorporating the reduction of SG&A? My other question is how you're going to incorporate it in your results, the reduction operated in your results, the reduction of SG&A? That's the first question. The second is about the cash flow. Thank you very much for giving us segment-specific cash flow numbers. Next year is almost flat and you said you will not disclose by segment. But if you could advise how to look it. And I think the games decline would be offset by other contributions. But I think how much buffer do you have? And you talk about EP&S, but Mobile and Home Entertainment & Sound, how would it change into the next year? The revenue and profit, how are the changes?

[Interpreted] So your question is about fiscal year '18 and '19. The sales revenue compared to '18 is a reduction of JPY 10.9 billion. There are 2 drivers. First is the sales of the PS4 hardware. This will come down JPY 80 million for -- a little less than JPY 80 million, would go down to JPY 60 million in the new fiscal year. Also, there will be ForEx implications and we have incorporated the negative impact of FX. But game software growth would offset some of the impact that I have talked about. Where would it come? How do we achieve the increase of revenue of software? Third-party players, they will have an appealing line-up in the coming fiscal year. There was Spider-Man and God of War was released by third-parties, so that helped. And PS Plus would be increased steadily. So by combining those positive factors, we believe that the revenue would be flat. Now profit, the operating income, the first party, of course. The margin for the first-party software is higher. So in that context, it may push down some of the revenue and profit -- operating profit. And there are some implications of the foreign exchange market. But what is offsetting is the cost improvement of the PS4 hardware. So that remains the developmental cost, the increase of such costs for the next generation. So if you compare with the last year in terms of operating income, I think the difference can be explained by the increase of the development cost for the next generation. Do we incorporate the reduction of SG&A?

[Interpreted] We have not incorporated in any significant way, but the mix has changed. The SG&A for the next generation is bound to increase. Therefore, for the existing business, the PlayStation 4 SG&A would be more efficient and effective, so that we will be better prepared to develop the new generation. Cash flow by segment, this is a new effort. This year, now compared to the last fiscal year and FY '19, if you make comparisons, declines, as you guessed is Game & Network Services, operating income will decrease and so will the cash flow. EP&S, the operating cash flow is expected to decline.

[Interpreted] What is the reason?

[Interpreted] First, the operating cash flow and operating income, if you look at the difference, the EP&S, HE&S and IP&S, if you combine those 3 together, it will be JPY 76.6 billion, whereas the cash flow is JPY 153.8 billion. Why is there such a big difference between the operating cash flow and the operating income there is a reduction of the inventory. And also there could be a valuation type of decline without the cash-out. But in 20 9 out -- some of the cash-out will be deferred. There have been some losses. Therefore, this is a reason for this large gap between the 2 numbers. Now in the meantime in 2019 compared to the operating income, there are no positive factors that we're assuming. As a result, the EP&S cash flow compared to '17 and '18 will be negative. Now where are we generating positive numbers? Music is one. Except for the EMI implications revaluation, we are -- they are increasing the revenue. And also, there's increasing amortization depreciation and therefore the Music will see an increase of the cash flow. Semiconductor, operating income will be flat, but depreciation would increase. As a result, the cash flow would be positive. Therefore, Game, EP&S will be in the negative. Music, Semiconductor would be in the positive. Now we do not anticipate a significant buffer. There are not particularly significant factors that would push up the numbers compared to last year.

[Interpreted] Next question?

[Interpreted] Okazaki of Nomura Securities. The first point concerning the 3 hardware, electronics segment, what is the purpose of integration? And 5G development was taken up to push up the smartphone business. But this time by integrating without the section TV or camera, what is your view about development of next-generation hardware? And then the management efficiency, by consolidating the 3 business segment, are you expecting the cost reduction? The second point has to do with semiconductors. You are talking about investment in a new building. And in the course of coming half a year or the past half year, any differences? Originally, you said that the existing building will be sufficient, but any changes in automotive application or the building application of image sensors is another aspect. And is that another reason for putting up a new building?

[Interpreted] So about the purpose of integration and creating EP&S, the one is making the various functions as platform to achieve higher efficiency, especially for communication or communication technology. The technology is incorporated in all the devices and making the platform so that we can improve the efficiency. And that would give us the upside for us and lead to cost reduction. So we decided to integrate the 3 businesses. And some of the products which may not belong to any of the 3 businesses or by integrating these 3, it will become easier for us to address the B2B market, and we thought there was a good timing to consolidate or integrate these 3 businesses. And concerning the semiconductor so far about the new building, we did not talk about it explicitly. But internally among us, we had a constant review and study of it including simulation. And last time at the earnings announcement for the third quarter, in terms of difference between that time and now, we have been very cautious about looking at the outlook. But now, we feel that demand is very strong and it's becoming more and more certain. Therefore, in terms of wafer number for the fourth quarter, it'll not be at full rate operation, but starting the first quarter, the operation will be full operation. That reflects a strong demand, and we can confirm that.

[Interpreted] Next question, please?

[Interpreted] Ayada, Deutsche Securities. Two points please. First point is about the semiconductors. you are thinking about this year for this business. Mr. Totoki earlier, thank you for hesitating making remarks about this, but this year, sales is about 110 billion increase. So marginal profit will be increased about JPY 50 billion, thanks to that. But offsetting that, the cost of depreciation and R&D cost and foreign exchange, which of these factors will be the large impact in the order of the impact. Can you tell some more? And also about the capacity, sales increased by 13%. So the current capacity of 100,000 per month for this year's plan, is that enough? How does it stand? In terms of operating income, it's going to be flat. But there's a positive factors actually it's the MSS for mobile applications in terms of volume and in terms of pricing the same impact will be felt upside. But then there are some minus negative factors as well in the order of the impact on the depreciation cost followed by R&D expenditures, and also the impact on the cost of business due to the inventory fluctuations. The ForEx impact is about JPY 5 billion. So that's very large. And about the capacity, currently the production capacity is about 100,000. But at the end of 2019, it will be 107,000 on the output basis. Thank you. My second question is rather more technical. There's been change in country to Middle East leasing these assets, so handling the operating lease is now different. What are the impact of that on the balance sheet? And also ROIC by segment will be affected also I think, but how has this affected your ROIC by segment?

[Interpreted] In total, the accounting change, the impact of that, both assets and liabilities will now be on the balance sheet. Currently, the real estate basically between JPY 300 billion and JPY 350 billion is the impact. But with regard to details of the facilities, we don't have the concrete detailed figures. So maybe at the end of the first quarter, we should have these figures available, but that's the general level of impact.

[Interpreted] In the first quarter, yes, we will disclose the numbers regarding cash impact. But as of now between 300 and 350 in real estate, that's the level of impact. Please understand that. And in terms of ROIC by segment, ROIC will be negatively impacted. But the ROIC that we had disclosed this time did not incorporate this impact yet. So for the first quarter, we should be able to make the impact of this more visible. And as this happens, we will be revising our disclosed figures.

[Interpreted] We are running very short of time, so I'm afraid the next question would have to be the last question.

[Interpreted] SMBC Nikko, Katsura. I have one question on the semiconductor for the sake of confirmation, FY risk is being talked much in the market. So have you incorporated that implication? How do you look at the risks in coming up with semiconductor projections? Also, JPY 100 billion of investment if you're indeed going to make such an investment, there are market concerns.

[Interpreted] The cash flow that has been generated by entertainment will be used by semiconductor. That is the view or concern of the market and when we will give the details during the strategy meeting and IR day, so I can only give you sort of a brief explanation. And I think we should draw a distinction between next fiscal year and thereafter. The increase of capacity by constructing new building is to satisfy the demand for 2021 and beyond. So please note that the new building will be constructed to satisfy the needs beyond 2021. Now for 2019, in the first half, I think we are all right. In other words, we have the enough capacity. We'll have to run at a full rate. But about the risks in the second half, yes, we will have to be discrete and cautious. I think we cannot avoid being cautious. But having said so, our customers are diverse. Compared to several years ago, our transaction have diversified. And I think that is a positive development for us and that would positively impact our performance. I'm not singling out any particular customer rather than associating the decline with any particular customer. But shall I say that we are doing businesses with the entirety of the market. And I believe that such a relationship is preferable and will continue and sustain. And the gaming network is generating cash. And you said that, that cash is being used by semiconductor. Now as a way of thought, we talked about the EP&S cash flow. Some of these 3 segments, they will continue to generate a stable cash flow into the future. And ROIC is at a high level. The cash coming out from this should be able to cover the semiconductor investment. Of course, there will be cash flow coming out from semiconductor business, but semiconductor plus the EPS cash flow should be able to cover the investment towards fiscal year 2022. That is my view at this point of time. Should the environment change drastically, of course, we will have to address those changes. But right now, having looked at different factors, we believe that what we believe would be true and feasible.

[Interpreted] Thank you very much. This will conclude our briefing. We would like to thank for your kind attendance. [Statements in English on this transcript were spoken by an interpreter present on the live call.]