Here is an explanation for the projected operating income decline from 18.3 billion yen to operating loss 34.0 billion yen. The factors behind the increase in operating income include a gain of 9.4 billion yen due to decrease of SG&A expenses and others. This amount can be broken down into four areas: (1) A decrease in fixed costs will result in a gain of 0.9 billion yen (-1.7 billion yen at FHI, +2.6 billion yen at SIA). This includes an increase in expenses for suppliers’ dies (-2.7 billion yen) and a decrease in fixed processing costs (+1.0 billion yen) at FHI. SIA is expected to see decreases in expenses for suppliers’ dies (+$23M), labor costs (+$6M) and other expenses (+$1M) once the new models are launched but will experience an increase in depreciation costs (-$5M). (2) A decrease in SG&A expenses will result in a gain of 4.8 billion yen. SG&A expenses will be cut at both FHI (+5.7 billion yen) and domestic dealers (+1.4 billion yen). SOA (-4.1 billion yen, -$39M) will however see a year-on-year increase of $100 in per-unit incentive costs [-$23M, from $1,600 to $1,700)] as well as increases in advertising costs (-$13M) and market development costs (-$3M). SG&A expenses will be cut by 1.3 billion yen at our Canadian subsidiary and by 0.5 billion yen at other subsidiaries. (3) Lower costs associated with accrued warranty claims will add 1.2 billion yen to income. (4) The remaining 2.5 billion yen increase in income will come as a result of other factors. Reduction in cost of materials is expected to result in a gain of 9.3 billion yen, 8.2 billion yen at FHI and 1.1 billion yen at SIA. A gain of 7.6 billion yen, 7.2 billion at FHI and 0.4 billion yen at SIA, is also projected as a result of recouping losses from the previous year’s hike in material prices. Reduction of R&D expenses (from 22.8 billion yen to 21.0 billion yen) will add 1.8 billion yen to income. The reduction in R&D expenses is due to the completion of R&D for new models as well as streamlining of other R&D projects. Looking at the factors leading to reduced operating income, the deterioration of sales volume and mix will reduce operating income by 51.2 billion yen. This is broken down into three parts: (1) In Japan, operating income will go down by 4.2 billion yen while the launch of the Legacy is expected to improve sales mix. (2) Overseas, operating income will decline by 32.2 billion yen. Both the sales volume and mix will deteriorate. (3) A decrease of 14.8 billion is also projected in other business segments. Loss on currency exchange will amount to 21.6 billion yen. A ten-yen appreciation against the U.S. dollar will result in a loss of 11.6 billion yen. A thirty-nine-yen appreciation against the euro will add up to a loss of 5.7 billion yen while a twenty-nine-yen appreciation against the Canadian dollar will result in a loss of 4.3 billion yen. These factors combined will bring operating income down 52.3 billion yen.