Date and Time:	January 23, 2009 (Friday) 18:00-19:00
Place:	Conference Call
Participantst:	Masaru Okazaki, Executive Vice-President & Executive Officer, Representative Executive Officer (Group-Executive, Business Support Group) Shinya Inasaka, General Manager, Accounting Division, Business Support Group Shoichi Kogure, General Manager, Administration Dept., Human Resources & Administration Group Takuya Akiyama,   Group Manager, Corporate Communication Section, Administration Dept., Human Resources & Administration Group
Agenda:	Introduction (Mr. Okazaki) Revisions to Forecasts of Full-Year Business Performance for Fiscal 2009, Ending March 31, 2009 (Mr. Inasaka) Measures for Enhancing Performance (Mr. Okazaki) Questions and Answers

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The information provided herein is only an overview and not a word-for-word transcription of the briefing. The following is a summary of the details of the Explanatory briefing and of the question-and-answer session that followed.

Notes:

Forecasts of numerical performance contained herein (excluding actual accounting figures) were made as of January 23, 2009, and the Company's management has calculated such forecasts based on assumptions and suppositions judged to be sound. Accordingly, actual results may differ greatly from targets and forecasts.
Among the factors influencing results, the most important are as follows:

*Each brand name that appears here is the trademark or registered trademark of their respective owners.

1. Overview of Revisions to Forecasts of Full-Year Business Performance for Fiscal 2009

We have made downward revisions to our consolidated forecasts of full year business performance for fiscal 2009 (April 1, 2008, through March 31, 2009) that were released at our results briefing for the second quarter of fiscal 2009 (announced on October 30, 2008).

We have reduced our net sales forecast by 60 billion yen, from 540 billion yen to 480 billion yen, and reduced the forecast for operating income by 21 billion yen, from operating income of 1billion yen of to an operating loss of 20 billion yen. The forecast for ordinary income has been lowered by 24 billion yen, from ordinary income of 1 billion yen to an ordinary loss of 23billion yen, and the forecast for net income is down 48 billion yen, from a net loss of 5 billion yen to a net loss of 53 billion yen.

The rapid and considerable deterioration of economic conditions since the latter half of the second quarter of fiscal 2009 has been accompanied by an overall drop in the Company's business results. This situation has been further worsening each month, placing the Company in a position where it will have to record an unprecedentedly large operating loss. To the greatest feasible extent, the Company has been implementing diverse measures designed to enable it to escape from this extremely negative situation as quickly as possible. We will continue to do our utmost in this regard.

Revision to Forecasts of Full-Year Business Performance for Fiscal 2009

(billion of yen) (Amounts less than 100 million yen have been rounded off.)

	Previously announced forecasts (A) (Announced on October 30, 2008)	Revised forecast (B) (Announced on January 23, 2009)	Difference(B-A)
Sales	540.0	480.0	-60.0
Operating income	1.0	-20.0	-21.0
Ordinary income	1.0	-23.0	-24.0
Extraordinary Income and extraordinary loss	-4.0	-9.0	-5.0
Net income before taxes and other adjustments	-3.0	-32.05	-29.0
Corporate taxes, etc.	-2.0	-21.0	-19.0
Net income	-5.0	-53.0	-48.0

(1)Net Sales Forecast Revision

The net sales forecast has been reduced by 60 billion yen, from 540 billion yen to 480 billion yen.

Looking at factors that are decreasing net sales, the previously assumed copper price was 600 thousand yen/ton, and we have reduced our assumption to 350 thousand yen/ton. The impact of this reduction had the effect of lowering the net sales forecast by approximately 13 billion yen. By business segment, the impact on the Wires and Cables segment is approximately 9 billion yen, and the impact on the Sophisticated Materials segment's copper strips business is approximately 4 billion yen. Moreover, we have changed our exchange rate assumption from 100 yen = US1 dollar to 90 yen = US1 dollar, and the impact of this appreciation of the yen had the effect of lowering the net sales forecast by approximately 7 billion yen. In addition, the impact of a decrease in real sales due to the deterioration of the business environment reduced the net sales forecast by approximately 40 billion yen. The combined impact of exchange rates and of the deteriorating business environment, etc., lowered the net sales forecast by approximately 47 billion yen. By business segment, this combined impact was approximately 19 billion yen for the Wires and Cables segment, approximately 3.5 billion yen for the Information and Telecommunications Networking segment, and approximately 24 billion yen for the Sophisticated Materials segment.

Factors Accounting for Changes: Net Sales Forecast

(billion of yen) (Amounts less than 100 million yen have been rounded off.)

Growth in impact of drop in copper prices (assumed market price: 600 thousand yen/t => 350 thousand yen/t)	-13.0
Growth in impact of foreign exchange rates (assumed exchange rate: 100 yen/US$1 => 90 yen/US$1)	-7.0
Deteriorating business environment, other	-40.0
Total	-60.0

(2) Operating Income Forecast Revision

The operating income forecast has been reduced by 21 billion yen, from operating income of 1 billion yen of to an operating loss of 20 billion yen.
Looking at factors that are decreasing operating income, the inventory valuation loss accompanying the drop in copper prices is approximately 7 billion yen. The impact of deterioration in semiconductor business (compound semiconductors, Tape Automated Bonding (TAB), lead frames, electronic wires, copper strips, etc.) is approximately 9.5 billion yen. The impact of deterioration in automobile component business is approximately 2 billion yen, while the impact of other factors is approximately 2.5 billion yen. These figures take into account our expectation that the profitability enhancement measures we are implementing will have a profitability enhancement effect of approximately 2.5 billion yen during fiscal 2009.

Factors Accounting for Changes: Operating Income Forecast

(billion of yen) (Amounts less than 100 million yen have been rounded off.)

Growth in impact of drop in copper prices	-7.0
Deterioration of semiconductor business	-9.5
Deterioration of automobile component business	-2.0
Other	-2.5
(Above figures take into account profitability enhancement effect of approximately 2.5 billion yen due to profitability enhancement measures)
Total	-21.0

(3) Ordinary Income Forecast Revision

The forecast for ordinary income has been lowered by 24 billion yen, from ordinary income of 1.0 billion yen of to an ordinary loss of 23 billion yen.

Looking at factors that are decreasing operating income, in addition to our current forecast of an operating loss of approximately 21 billion yen of, we are anticipating that the deterioration of investment income by equity method in Japan and overseas will have an impact on ordinary income of approximately 2 billion yen.

Factors Accounting for Changes: Ordinary Income Forecast

(billion of yen) (Amounts less than 100 million yen have been rounded off.)

Operating income margin factors	-21.0
Deterioration of investment income by equity-method	-2.0
Other factors	-1.0
Total	-24.0

(4) Analysis of Extraordinary Income and Extraordinary Loss

We are forecasting that extraordinary income and loss items will have a net value of approximately negative 9 billion yen.

Factors include our decision during the cumulative third quarter of fiscal 2009 to record approximately 3.2 billion yen in impairment losses and approximately 0.8 billion yen in losses on the retirement of fixed assets. We are also anticipating approximately 5 billion yen in additional expenses associated with the business restructuring measures we are moving forward with.

Analysis of Extraordinary Income and Extraordinary Loss

(billion of yen) (Amounts less than 100 million yen have been rounded off.)

Impairment losses	-3.2
Losses on retirement of fixed assets	-0.8
Other factors	-5.0
Total	-9.0

(5) Analysis of Corporate Taxes, Etc.

Regarding items related to Corporate taxes, etc., we are anticipating that we will eliminate approximately 15.4 billion yen in deferred income tax assets during the third quarter of fiscal 2009. Other factors amounting to approximately 5.6 billion yen include our anticipation of the real tax payments of Group companies on their taxable income as well as our expectation that Group companies will eliminate deferred income tax assets during the fourth quarter.

Analysis of Income Taxes, Etc.

(billion of yen) (Amounts less than 100 million yen have been rounded off.)

Elimination of deferred income tax assets	-15.4
Other factors	-5.6
Total	-21.0

2. Segment Information

(Figures in the segment information section refer to sales to outside customers.)

(1) Wires and Cables

Our forecast for sales in this segment during fiscal 2009 as a whole has been reduced 28.0 billion yen, from the previous forecast of 265.5 billion yen to the new forecast of 237.5 billion yen. Factors behind the decrease include an approximately 9 billion yen drop accompanying the drop in copper prices.

The operating income forecast has been reduced 8.9 billion yen, from operating income of 5.5 billion yen to the new forecast of an operating loss of 3.4 billion yen. This reflects an approximately 4.7 billion yen loss on inventory revaluation accompanying the drop in copper prices.

(2) Information and Telecommunications Networking

The forecast for sales in this segment during fiscal 2009 as a whole has been reduced 3.5 billion yen, from the previous forecast of 79.0 billion yen to the new forecast of 75.5 billion yen.

The segment's operating income forecast has been reduced 1.3 billion yen, from 5 billion yen to 3.7 billion yen.

(3) Sophisticated Materials

The forecast for sales in this segment during fiscal 2009 as a whole has been reduced 28 billion yen, from 192 billion yen to 164 billion yen. Factors behind the decrease include an approximately 4 billion yen drop accompanying the drop in copper prices; so, the segment's real sales, excluding the effect of falling copper prices, are projected to decrease approximately 24 billion yen. Major revisions have been made to forecasts of second-half sales of such products as compound semiconductors, TAB products, lead frames, copper strips, etc.
The segment's operating income forecast has been reduced 11 billion yen, from an operating loss of 10 billion yen to an operating loss of 21 billion yen.
This reflects an approximately 2.5 billion yen increase in the expected revaluation losses on inventory assets accompanying the drop in copper prices, and the decrease on a real basis excluding this factor would be approximately 8.5 billion yen. The growing operating loss of this segment is a large factor behind the overall revision of the Company's performance forecast.

3. Measures for Enhancing Performance in Fiscal 2010

This section explains the performance enhancement measures currently being implemented as well as additional measures expected to be undertaken going forward.

(1) Information and Telecommunications Networking
A. Business Restructuring-Related Measures
(i) TAB (Integration/Consolidation of Chip On Film (COF) Manufacturing Bases)

• Retirement of Kofu site
• Accelerated consolidation of operations within Hitachi Cable Film Device, Ltd.

Regarding COF manufacturing bases, manufacturing operations were previously carried out at three bases—the Densen Works in Hitachi City, Ibaragi Prefecture, the Kofu Facility in Yamanashi Prefecture, and Hitachi Cable Film Device—but operations are to be consolidated within a single base—that of Hitachi Cable Film Device, Ltd.—with the exception of certain operations associated with facilities that are difficult to relocate. These consolidation measures are proceeding approximately on schedule.

(ii) Automotive Parts (Restructuring of North American Manufacturing Bases)

• Consolidation of hose component manufacturing within two companies in Florida and Mexico (halt of manufacturing at Hitachi Cable Indiana, Inc.)
• Concentration of HEV harness and electric component manufacturing within Hitachi Cable Indiana, Inc

Regarding automotive parts, we are currently moving ahead with the restructuring of manufacturing bases in North America. With respect to automotive brake hoses, etc., and other hose products, we are consolidating manufacturing operations in two companies based in Florida and Mexico. In addition, Hitachi Cable Indiana will discontinue the manufacture of these hose products while shifting to a focus on harness for use in HEVs and electric component manufacturing.

(iii) Electronic Wires (Consolidation of Overseas Manufacturing Bases)

• Liquidation of Hungary-based manufacturing subsidiary
• Delay of start of operations at Hitachi Cable Vietnam Co., Ltd., etc.

In electronic wires, we are currently moving ahead with the consolidation of overseas manufacturing bases. In addition to liquidating a manufacturing subsidiary in Hungary, we will delay the start of operations as Hitachi Cable Vietnam Co., Ltd. Regarding Hitachi Cable Vietnam Co ., Ltd., we previously planned to begin the operations of that company in fiscal 2010, but we have decided to reconsider the time of the start of operations while carefully monitoring changes in the business environment. As a result, we will be freezing the start of operations in Vietnam until we determine that conditions in the business environment are suitable.

B. Reduction of Fixed Costs
(i) Personnel Cost Cuts by Reducing the Number of Temporary staff, Implementing Temporary Operational Suspensions, Lowering Director/Administrator Remuneration, Etc.

By the end of March 2009, we intend to reduce the number of temporary staff at the parent company by approximately 600—from the current level of approximately 1,200 to approximately 600. At the same time, we plan to reduce the number of temporary staff at domestic Group companies by approximately 200—from the current level of approximately 800 to approximately 600.

Regarding temporary operational suspensions, based on consideration of the timing of the vigor or slackness of operations at individual departments and Group companies, we have since December 2008 been undertaking temporary operational suspensions of up to five days per month. Moreover, since November 2008, we have reduced the remuneration of directors and administrators, reduced overtime hours worked, and taken other related measures.

(ii) Impairment/Retirement of Fixed Assets

We are moving ahead with the impairment and retirement of fixed assets.

(iii) Freezing of New Capital Investments, Etc.

We are freezing capital investments that amount to approximately 2 billion yen on a disbursal basis and approximately 5 billion yen on an approval basis.

C. Diverse Expense Reductions

We are also moving ahead with other measures to reduce diverse types of expenses.

D. Thorough Cash Flow Management
(i) Reduction of Inventory Balances
(ii) Reduction of Trade Receivables, Etc.

Although we expect to record considerable losses amid an extremely harsh business environment, we are aiming to maintain positive cash flow by taking measures to reduce inventory asset balances, trade receivables, and fixed assets.

As a result of the above-described measures currently being implemented, compared with fiscal 2009, we are anticipating the generation of approximately 8 billion yen of profit-enhancing benefits during fiscal 2010. However, because the approximately 8 billion yen of profit-enhancing benefits appear insufficient in light of current conditions, we believe we must consider such additional measures as those described below.

(2) Measures Requiring Consideration Going Forward
A. Fundamental Measures Regarding Semiconductor-Related Businesses

We are planning additional, more-intensive countermeasures with respect to issues related to compound semiconductors, TAB products, electronic wires and wiring devices, copper products, and lead frames.

B. Acceleration of Manufacturing Base Integration (Including Reevaluation of Distribution of Manufacturing Tasks)

In electronic wires and wiring devices and lead frame operations—which involve numerous manufacturing bases—we plan to further accelerate the pace of the consolidation of manufacturing bases.

C. Integration/Consolidation of Marketing Bases (Including Marketing Companies) and Reevaluation of Unit Roles

While integration measures to date have already considerably consolidated our marketing bases, we plan to move ahead with measures to further integrate and consolidate offices and other units, including marketing companies.

D. Measures to Accelerate Fixed Cost Reductions, Etc.

We plan to identify all kind of items that can be considered fixed costs, move ahead with additional measures designed to deal with those items, and thereby make significant progress toward overcoming the challenges we face.

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Questions and Answers

Q.	In the case that copper prices remain stable, how much would that contribute to increased profitability?
A.	We expect to record an approximately 10 billion yen revaluation losses on inventory assets for fiscal 2009. If copper prices remain stable, we anticipate that we would not incur such a loss for fiscal 2010.
Q.	Looking at the magnitude of cost reductions, could you compare the benefits of cost reductions in fiscal 2010 compared with fiscal 2009?
A.	In fiscal 2010, we are expecting approximately 8 billion yen of profit-enhancing benefits compared with fiscal 2009.
Q.	Your forecast for performance in the Information and Telecommunications Networking segment has been revised downward. How much has this segment been impacted by the restraint of corporate capital investment?
A.	Our information networks business's sales to ordinary companies have been lower than the original forecast throughout the current fiscal year. Regarding sales to carriers, partly reflecting the concentration of shipments in the first half of the year, the situation has become relatively more problematic in the second half of the year. However, optical submarine cables sales have remained firm in line with our original forecast. We have an order balance to be carried over into fiscal 2010, and we are not expecting a downturn in optical submarine cables operations.
Q.	Could you explain the situation regarding operating income trends in the second half of fiscal 2009 with specific information on the profitability of individual segments in individual quarters?
A.	We are still compiling data on third-quarter performance. In general, however, we estimate that we recorded an overall operating loss of approximately 10 billion yen during the third quarter. We are expecting the loss in the fourth quarter to be in the neighborhood of 13 billion yen; so, the operating loss during the second half of the year is likely to be approximately 23 billion yen. Looking at individual segments' performance, we are forecasting that the Wires and Cables segment will record an operating loss of approximately 3 billion yen to 4 billion yen in each of the third and fourth quarters of the year, while the Information and Telecommunications Networking segment is expected to record a certain positive amount of operating income in each of the third and fourth quarters of the year. The Sophisticated Materials segment is expected to record an approximately 8 billion yen operating loss in the third quarter and an operating loss of somewhat less than 10 billion yen in the fourth quarter.
Q.	Regarding fixed cost reductions, could you give some concrete information regarding the goals and nature of additional cost reductions?
A.	In the fourth quarter, we are expecting a three-month operating loss of approximately 10 billion yen excluding such temporary losses as those associated with the evaluation of copper inventory. If we consider that the loss would be about four times this value on an annual basis, the situation can be seen as extremely critical. During the third quarter, inventory adjustments and other factors led to a sharp drop in demand, but we are not expecting this same situation to continue from April—we are anticipating that there will be some degree of recovery. Even though there is likely to be some recovery, however, we are only expecting a recovery to roughly 70% to 80% of the level of demand seen during fiscal 2008 and the first half of fiscal 2009. In view of this, there is a need to quickly implement additional measures. We will be giving top priority to measures for promoting the recovery of businesses that have fallen into negative cash flow situations. The next stage of measures will be aimed at quickly pulling ourselves out from the red in terms of operating income and ordinary income. At this time, we are not in a situation of just surveying the upcoming six months or year. We think it would be quite difficult to restore our profitability during the first half of fiscal 2010. However, we are aiming to somehow restore our profitability during the second half of fiscal 2010, and we will be taking various measures to realize this goal.
Q.	Regarding your additional performance enhancement measures, would you be considering such measures as the sale of businesses?
A.	At the current stage, we are not considering the sale of businesses. Initially, we will be working to correct situations of excess facilities and human resources. The sharp drop in demand for semiconductor-related businesses is having a major impact on our overall performance; so, we want to right-size our facilities and human resources in light of the current magnitude of demand as quickly as possible. The next step may involve the consideration of such measures as the creation of alliances. Currently, however, we have not made concrete decisions in this regard.
Q.	When do you plan to implement the additional performance enhancement measures?
A.	In general, we have already begun considering the upcoming measures. However, the measures would be implemented during fiscal 2010, and the benefits of the measures can be expected to gradually be generated beginning from a period no earlier than the second half of fiscal 2010.
Q.	The performance-enhancement measures you are currently implementing are expected to generate approximately 8 billion yen of profit-enhancement benefits. Does this figure include extraordinary expenses associated with the performance-enhancement measures?
A.	The figure does include such items as a drop in depreciation cost due to the impairment treatment of assets.
Q.	What are the factors behind the deterioration of the Sophisticated Materials segment's operating income?
A.	Compared with the previous forecast, the business sectors that have shown the greatest growth in losses are compound semiconductors and copper strips for use in semiconductor packaging. Other sectors with expanding losses include the TAB and the electronic wires sector of the Wires and Cables segment.
Q.	Could you explain the business segment distribution of the approximately 8 billion yen of profit-enhancement benefits you are forecasting from your current performance enhancement measures?
A.	The reduction of personnel expenses accounts for a large portion of the approximately 8 billion yen of profit-enhancement benefits we expect from our current performance enhancement measures. Accordingly, we expect the greatest share of benefits to be generated in our semiconductor-related businesses, many of which are discontinuing the employment of temporary staff.
Q.	What is the relationship between the benefits of your additional performance enhancement measures and the extra costs associated with those measures?
A.	We are aiming to achieve roughly 8 billion yen to 10 billion yen in benefits from the additional performance enhancement measures. Since we have not decided on specific measures yet, we cannot currently calculate how much extra costs those measures will entail.
Q.	Regarding the impact on operating income of revaluation losses on inventory assets associated with the drop in copper prices, will you be recording this impact in the third quarter?
A.	Most of the impact will be recorded in the third quarter, but such factors as delays associated with the accounting periods of overseas Group companies will cause some of the impact to be recorded in the fourth quarter.
Q.	What is the size of the prospective fourth quarter operating loss viewed on a real basis excluding the temporary effect of revaluation losses on inventory assets?
A.	Excluding revaluation losses on inventory assets associated with the drop in copper prices, we are forecasting a fourth quarter operating loss of approximately 10 billion yen.
Q.	Regarding your plans to restore profitability, what are your views with respect to such factors as the forecasting of recovery in demand and the determination of specific additional performance enhancement measures?
A.	First, we are thoroughly reevaluating our situations of excess facilities and excess personnel. Next, we are doing our best to determine how much sales volume may recover. If the level of prospective demand recovery is not sufficient, we will have to undertake additional measures. Currently, because we are seeing extremely sharp inventory adjustments, we believe we must view the fourth quarter as an extraordinary period. From fiscal 2010, we forecast that the volume of demand will recover to roughly 70% to 80% of the level seen during the first half of fiscal 2009, and we are right-sizing our facilities and workforce in line with this forecast. If this is insufficient to restore our profitability, then we will have to move forward to the next stage of countermeasures.
Q.	How much was the Wires and Cables segment's third-quarter revaluation losses on inventory assets associated with the drop in copper prices?
A.	For fiscal 2009 as a whole, the Wires and Cables segment's revaluation losses on inventory assets associated with the drop in copper prices has been increased approximately 4.7 billion yen since the previous forecast. The segment is recording slightly less than 4 billion yen in revaluation losses on copper inventory in the third quarter. In the fourth quarter, we anticipate approximately 2 billion yen in revaluation losses on copper inventory , including revaluation losses of overseas companies and other Group units with fiscal years ended? in December. Thus, the Wires and Cables segment's evaluation loss on copper inventory for the second half of fiscal 2009 is forecast to be approximately 6 billion yen.
Q.	What are the trends in the Wires and Cables segment's electronic wires and industrial cables businesses?
A.	Overall, excluding revaluation loss on copper inventory, these businesses are estimated to have restored their operating profitability in the third quarter of fiscal 2009. In the fourth quarter, however, we are anticipating a considerable drop in capital investment-related demand for industrial cables and cables for power use, which had previously been generating profit. In view of this, even if we exclude the impact of the drop in copper prices, we are expecting that fourth-quarter sales will be approximately 20% to 30% lower than third-quarter sales; so, generating a profit in the fourth quarter will become extremely difficult. Similarly, regarding both electronic wires and magnet wires businesses, we expect that fourth-quarter sales will be approximately 10% to 20% lower than third-quarter sales. Accordingly, the fourth quarter will be a quite difficult period regarding both sales and profitability.
Q.	What are your expectations regarding the capacity utilization rate of the Sophisticated Materials segment in the fourth quarter?
A.	Overall, we are anticipating the segment's capacity utilization rate will be roughly 50%. Regarding some products for which demand has dropped drastically, we expect that capacity utilization rates may drop below 50%.
Q.	Regarding TAB and COF businesses, what is the scale of facilities that you consider appropriate?
A.	Regarding sales volume, we are projecting that the Group as a whole will see a recovery in demand to roughly 70% to 80% of the level seen during the first half of fiscal 2009, but we do not expect demand for TAB and COF products to recover to the 70% level. Particularly regarding COF products, we are anticipating that demand may increase only slightly, creating an extremely severe situation. In compound semiconductors, demand has currently dropped to about 40% of the peak level, and we are expecting this demand to return to roughly 60% of the peak level. We are right-sizing facilities and other resources in line with these demand forecasts.
Q.	Regarding revaluation losses on inventory assets due to the drop in copper prices, why has the impact increased to a level higher than originally anticipated?
A.	We have explained that we record approximately 1 billion yen in revaluation losses on copper inventory each time the price of copper drops by 100 thousand yen/ton. This figure takes into account the marginal gains due to the time lag between orders and shipments during a period of falling copper prices. At the end of the previous fiscal year, we had approximately 20,000 tons of copper in our inventories. Based on that level of inventories, a 100 thousand yen/ton drop in the price of copper can be simply calculated to have an impact of approximately 2 billion yen. Currently, however, the drop in shipments of Wires and Cables segment products and copper products has led to an increase in inventories. In this case, there are no marginal gains due to the time lag between orders and shipments, and the simple calculation of the revaluation loss on inventory assets applies. The current copper price is approximately 400 thousand yen/ton lower than our average procurement price during the period, and our inventories rose by approximately 10,000 tons. Thus, our revaluation loss on inventory was expanded by approximately 4 billion yen due to the increase in inventories.

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