Next is an explanation for the causes of increasing and decreasing factors, and which forecasts a reduced operating income from 18.1 billion yen to 5 billion yen. The items, which increase the operating income, are a 3.0 billion yen of reduction in cost of materials, with 1.7 billion yen of this by FHI, and 1.3 billion yen by SIA. Included in this reduction are an estimated about 5.0 billion yen higher raw material prices, due to steel material shortages and other materials such as aluminum and precious metal worsened market conditions. Decrease of SG&A expenses and others add (+2.7 billion yen) to the income. This is broken down into four parts. First, (1) Increased fixed manufacturing cost reduces the income by 2.2 billion yen (FHI -2.7 billion yen, SIA 0.5 billion yen), higher outsourced die procuring cost (-1.3 billion yen) and higher fixed processing cost (-1.4 billion yen) at FHI, and SIA plans to compensate for higher outsourced die procuring cost (-0.6 billion yen) with reduced depreciation expenses (+0.9 billion yen) and others (+0.1 billion yen). (2) Lower SG&A expenses increase the income by 4.5 billion yen. About 1.0 billion yen income reduction in Japan, due to the higher SG&A expenses associated with a release of new vehicles at both FHI (-0.1 billion yen), and the dealerships, etc. (-0.5 billion yen). On the other hand, about 6.0 billion yen added to the income in overseas mainly comes from SOA (5.6 billion yen), which plans to reduce incentives by $700 per vehicle below last calendar year {$49.5M, $2,500 to $1,800}, and also reduced advertising costs ($0.5M). (3) Lower costs associated with accrued warranty claims add 1.2 billion yen to the income, (4) The remaining 0.8 billion yen income reduction comes from other items. Whereas, the causes for reducing the income are: The deterioration of sales volume and mixture reduces income by 17.2 billion yen. This is broken down into three parts. (1) In Japan, reduced income (-6.8 billion yen), with fewer units of all minicar models is forecasted. (2) Overseas, (-10.8 billion yen). Both sales volume and mixture will be worsened. (3) Inventory adjustments, etc. (+0.4 billion yen) {unrealized inventory 1.1 billion yen (domestic -1.1 billion yen, overseas 2.2 billion yen), lower profit at the 3 companies and other items -0.7 billion yen}. Increased R&D, 0.9 billion yen (25.1 billion yen to 26 billion yen). This is due to higher R&D from the planned introduction of a full model change in each year from this fiscal year and on for one car model: Impreza, Forester, Legacy, etc. Loss on currency exchange will occur (-0.7 billion yen). The US dollar is seen almost even with the market rate of last fiscal year, (-0.5 billion yen). A strong 2 yen against the Canadian dollar, export from FHI to Canada will make loss of 0.2 billion yen. The Euro is also seen to be steady, with no impacts. The above items in total reduce the operating income by 1.31 billion yen.