I will now begin my explanation of the financial results from the 3rd quarter of thefiscal year ending March 31, 2018.

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The first main point of the results is that we maintained good momentum despite
the negative impact of the hurricane in Puerto Rico.
We were ableW
bl tot minimizei i i impact
it fromf
theth hhurricane
iththanks
k tto ththe concertedt defforts of associates in Puerto Rico, in addition to global‐level inventory
management and sales coordination. I will give further details later in thepresentation.
First, Cardiac and Vascular drove 17% overall sales growth for a result of 437
Firstbillion yen.
In operating income, all three companies continued to grow in double digits for a
total of 72.4 billion yen.
Net income almost doubled, reaching 63.5 billion yen, due to theaforementioned income growth, as well as other factors including a one‐time 14‐
billion‐yen positive impact from the United States tax reform.
I will explain the impact of the U.S. tax reform on the next slide.

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I will outline the main two aspects of the U.S. tax reform impacting us: The
lowering of the corporate tax rate, and the medical device excise tax.
The corporate
Tht taxt ratet was loweredld fromf35% tot 21%.
21% ThisThi hadh d a one‐timetieffect
ff t
in which deferred tax assets and liabilities are reevaluated at the lower tax rate,
resulting in a reduction of 14 billion yen of corporate taxes. However, this does
not affect cash flow, and is only an adjustment on the balance sheet.
On an ongoing basis,
basis our annual tax burden is reduced due to the lower raterate. Inour current situation, the burden is expected to decrease by 2 billion yenannually.
Regarding the Medical Device Excise Tax: It was under a moratorium during 2016
and 2017
2017, and after some uncertainty whether it would be reinstatedreinstated, themoratorium was extended for two more years, through 2018 and 2019. As aresult, there is no impact because the moratorium continues.
Without the moratorium, we would have seen a 2‐3‐billion‐yen negative impact
on profit annually.

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I will now explain the operating income variance analysis.
The biggest factor raising operating income was higher gross profit throughcontinued
tid salesl growth.
th SalesS l grew wellll again
i in
i theth 3rd quarter,t resulting
lti ini alarge increase in gross profit.
Another factor changing in the 3rd quarter was increased sales force investment
which resulted in higher SG&A, and R&D expenses also increased; these twofactors increased in impact compared with the 1st and 2nd quarters.
quarters
As we have explained previously, this was expected: SG&A and R&D expenses
accelerated in the 3rd quarter after starting slowly in the 1st and 2nd. We expect
this trend to continue into the 4th quarter.
The most notable factor for the 3rd quarter was FX impact, as explained on thenext slide.

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FX impact in the first half totaled just 600 million yen, or relatively no impact.
At the end of the 3rd quarter, FX impact year‐to‐date was 5‐billion‐yen. This
impact was seen on both a flow basis and inventory basis.
On a flow basis, there was impact from yen depreciation against the euro, as youcan see in the first bullet point. This was occurring at a lower rate in the 1st and2nd quarters, but increased in the 3rd quarter.
Emerging market currencies
currencies, especially the Chinese yuan,yuan Thai baht,
baht and Latin
American currencies, appreciated against the yen for more positive impact.
The third point illustrates a more unusual impact. Dollar‐denominatedoperational costs and expenses decreased during the Puerto Rico production
stoppage; while we are usually not affected by yen‐dollar rate fluctuations, thisunforeseen lack of dollar spending had a positive effect on income.
incomeThose are the three flow‐basis effects.
In inventory, we experienced a decrease in unrealized gain of inventories since FX
rates at the end of third quarter periods did not change year‐on‐year
significantly, so the expected negative impact turned out to be smaller.
These factors led to a year‐to‐date FX positive impact of 5 billion yen as of theend of the 3rd quarter.
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Next, net sales by region. There was no major change to the pattern of previousquarters.
IIn Japan,Jtheth year‐on‐year 1% growthth off ththe firstfi t halfh lf was followed
f lld iin theth 3rdquarter by 2% growth. This represents a gradual acceleration of Japan growth.
Overall, sales grew 5% in the 3rd quarter alone.
Overseas, all regions grew sales 20% or more year on year.

6In sales by company, there were no significant changes in trend. However, theGeneral Hospital company posted 2% growth, a turnaround from minus 1%
growth through the first half.
Both Cardiac and Vascular and Blood Management showed double‐digit growth,
continuing from previously.
I will now give an explanation of each company’s results.

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In Cardiac and Vascular, all four business segments had increased sales. Not only in TIS
and Neurovascular, but also in CV and Vascular, sales increased significantly.
The TIS and Neurovascular businesses have grown the most to this point and are
expected to continue to grow going forward.
Regarding the surgically‐oriented CV and Vascular businesses;
This year, the CV business resumed shipments of heart‐lung machines following thelifting of its consent decree last year,
year leading to strong growth this year.
year After thisrestoration of sales, this year’s results will form a base from which the business will thengrow thereafter.
In the Vascular business, the impact of our acquisition, Bolton, is being fully realized thisfiscal year. These results will also form a base for ensuing years, when we do not
anticipatepdrastic ggrowth.
Therefore, while we see major growth in all four Cardiac and Vascular businesses thisyear, we expect that next year and onward we will see the bulk of the growth in just thetwo businesses of TIS and Neurovascular.
In business profit
profit, there was little impact from the hurricanehurricane, and the company overall
maintained its high profitability.

8Next is the General Hospital company. As we have previously explained, thecompany plans to see positive sales growth across the year. Growth was initiallynegative in the first half, but has now turned positive in the 3rd quarter.
Continuous cost reductions have resulted in the company maintaining highprofitability.
In profit, the continued downsizing of low‐profit accounts over the past few years
has improved profit each quarter
quarter, but that is almost now annualized.
annualized Goingforward, the alliance business will drive the overall General Hospital in making apositive, rather than negative contribution.

9Next is Blood Management. The company continued in its pattern of growing
sales and improving profitability.
S l grew 11% year on year.
Sales
However, this sales number includes growth from demand for next‐generation
therapeutic apheresis console to replace the previous version. The COBE Spectra
therapeutic apheresis system is being discontinued and replaced by Spectra
Optia.
Optia
The original plan was to keep selling COBE Spectra into next year, but thedecision was made to discontinue it this year. This means that sales expected fornext year were instead realized this year, for a positive impact of 1 billion yen.
In business profit, therapeutic apheresis and other high‐profitability products
grew well, resulting in continued overall profitability improvement.

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Next, major topics from the 3rd quarter.
Continuing from previously were our group‐wide CSR activities.
We also held shareholders’ meetings in Nagoya and Osaka.
In the business side, we obtained manufacturing and marketing approval for
Japan’sp
first‐ever insulin ppatch pump.
p p
We also announced construction of a new building at Terumo Yamaguchi.

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The next major topic is resumption of shipments of our closure device. I will give somedetail on this.
We stopped production of our Angio‐Seal product on September 20, just before thearrival of the hurricane.
hurricane As damage from the hurricane continued,continued we remained unable
to manufacture for a time.
Beginning in mid‐October, we were able to gradually resume production using a private
power generator. Production was approximately back to normal by mid‐November, andin December, the local power supply began to stabilize. We then shifted back to using
power from the public utility, and have produced normally thereafter.
In early January, when we had accumulated necessary inventory, we resumed shipments
to customers. We are therefore now operating and shipping normally.
Regarding sales during the production stoppage, as I explained previously, we had
approximately 1.5 months of inventory initially, throughout the world. Needs variedgreatly
l bby region,ihhowever. WeW met approximately
il allll needs
d iin theh JJapan andd EEurope
markets by managing that 1.5‐month inventory, with only very limited impact.
In the largest market, the United States, a backorder did occur in December, but it has
already been resolved through resumption of shipments in early January.
SSalesl were normall in
i October,O b andd thenh ffellll to aboutbhhalflf theh normall global
l b l monthly
hl ratein the two months of November and December. With extra sales to clear that back order,
we saw a jump in growth in January.
Going forward, we realize the need to carefully monitor February and March sales.

12I will skip over the new products pipeline slide.

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The final slide explains our revision of FY17 guidance.
As we have made public, we have revised our sales guidance upward by 13 billion yen, our operating
income by 10 billion yen, and also our ordinary income by 10 billion yen. Reflecting both performance andthe United States tax reform, we have revised our net income guidance upward by 23 billion yen.
That is our guidance revision, and I will explain about operating income in further detail.
At the end of the first half, the operating income had risen approximately 9 billion yen above theguidance. At that time, we received questions regarding why we did not revise our guidance then.
Our reasoning for not doing so at the time was that, comparing the first‐ and second‐half plans, thesecondd halfh lf included
i l d d 4 billion
billi yen more thanth theth firstfi t half
h lf guidance;
idini otherth words,d ththe second‐half
d h lf planl
was already somewhat aggressive.
In addition, the 9 billion yen realized above plan in the first half was partially attributable to delays insome spending; however, it was difficult to foresee at that time when those expenses would occur.
We were also unable to know then what would happen in Puerto Rico.
For these reasons, we decided not to revise upward at that time; however, I did explain that we wereconfident we would achieve the operating income guidance of 82 billion yen no matter what difficulties
might occur in Puerto Rico, due to the 9 billion yen achieved above plan in the first half.
Regarding our current situation, as I explained in the operating income variance analysis, SG&A indeed
began increasing strongly in the 3rd quarter. Sales continue to grow well, and the Puerto Rico impact is notvery large.
Therefore, we have revised our guidance up to 92 billion yen, taking into account the 9 billion yen above
guidance in the first half, and another 1 billion yen anticipating that we will overshoot the second half
guidance, for a total of 10 billion yen.
This concludes my explanation. Thank you.

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