I will now explain the financial results for the fiscal year ended March 31, 2017, andguidance for the fiscal year ending March 31, 2018.

1

This slide is an overview of the FY16 results.
Excluding FX impacts, we achieved sales and operating income growth. And, werecorded the highest‐ever net income.
At actual rates, sales growth was minus 2% and operating income was minus 6%;
however when excluding FX impact
however,impact, sales grew 6% and operating income
approached double digits.
These numbers combined with our sale of policy shareholding stocks resulted in a
7% year‐on‐year net income increase from what was our highest‐ever last fiscalyear.

2At our FY16 third‐quarter earnings announcement, we revised our guidance downward, but at thefiscal year
year‐end
end results greatly exceeded that guidance. I will explain the factors behind this.
First, in sales, regarding the 4.2 billion yen above guidance; in the fourth quarter overall sales werevery strong, with the highest ever amount in sales for a single quarter, 139.8 billion yen. There were
two main factors behind this; one was unexpectedly strong sales of access devices and neurovascular
products. The other was the closure device we acquired recently; we began counting sales of thedevice in January, but initially expected it to have a slow start. However, it sold very well and led tohigher sales than we expected.
O
Operatingti iincome exceed
d guidance
idbyb 5.6
5 6 billi
billion yen. 3 billi
billion yen off thisthi was theth result
lt off theth extra
tsales I just mentioned; 2 billion yen was from access devices and neurovascular sales, and 1 billion
was from newly acquired product sales.
Regarding SG&A, since the sales was very strong in the fourth quarter, we controlled the operating
expenses. R&D expenses were 1.5 billion yen less than guidance, but spending was higher in thefourth quarter than in the other three quarters of the fiscal year. That 1.5 billion combined with theother amounts I mentioned to bring operating income 5.5 billion yen higher than guidance.
Regarding ordinary income, owing to higher operating income as well as less FX losses thanexpected, it resulted in higher amountd.
In addition, we expected to undertake permanent financing of acquisitions in March, but thatinstead happened in April. All of those factors together caused a 1 billion yen upward impact on
ordinary income guidance.
Net income was 6.7 billion yen higher than guidance, largely due to the price of sold Olympus shares
being higher than expected.
expected3

There were no major changes in extraordinary gains and losses. After negative FX
impact in the first half, we saw positive FX impact in the second half, which erasedsome of the initial loss.
In extraordinary gains and losses, we had a gain due to the sale of Olympus shares.

4Here is the operating income waterfall graph.
Positive factors were more or less in line with our plans. The increase in sales was the largest upward factor, followed by cost
reduction and business mix improvement.
In downward factors, the Japanese reimbursement price revision had approximately the impact we anticipated; however,price erosion did not occur to the degree we expected.
One reason for this was in the General Hospital Company; as has been mentioned before, we have in recent years improved
our business portfolios in places like Latin America and Asia with the intent of downsizing unprofitable accounts. However,the strategy for doing so was not to directly remove such products from those markets, but rather to raise prices significantly
and facilitate a natural loss of sales. There remained some sales even at the higher prices, though, and these had a positive
impact.
impactIn the Cardiac and Vascular Company as a whole, our strategy in Europe and the Middle East of selling more in countries withhigher prices and less in ones with lower prices led to similar sales amounts, but less price erosion.
In TIS overall, strong sales eliminated our anticipated need to lower prices, resulting in less price erosion.
The SG&A increase, driven by expansion in the US TIS and neurovascular divisions, was less than expected. Within thatamount, as you can see in the breakdown of SG&A included in the reference materials, sales force expansion wasapproximately what we anticipated, but marketing costs were less than the previous year. There are several reasons for this.
One is that less marketing was needed in light of stronger‐than‐expected sales.
Another reason is that there was a recall of the Misago product, as you may be aware; that eliminated some of the marketingcosts we expected for it.
The third reason is that our numerous acquisitions necessitated time and resources to be used in due diligence andintegration instead of marketing.
All of the aforementioned factors led to an organic‐base increase of 13%, from 81.7 billion yen in the previous year to 92
billion in FY16.
FY16 When negative FX impact of 10.910 9 billion yen and acquisition‐related costs of 4.5
4 5 billion yen are included,included wesaw 76.6 billion yen in operating income.

5I will now explain somewhat regarding FX impact on operating income.
We initially expected 8.5 billion yen worth of negative FX impact for FY16; however, as
many of you know, the year was a roller‐coaster for FX rates, with lots of up‐and‐down
fluctuation.
The year ultimately ended up with slight yen appreciation overall. Dollar fluctuation
impacted operating income positively, while the euro and Chinese yuan had negative
impacts, and more than our plan. Against other currencies, there was relatively little
diffdifference
fromfplan;lnegative
ti 6
6.1
1 billibillion yen iin iimpact.
tThe total was therefore 10.9 billion yen in negative FX impact on operating income.
In the reference section of the materials, there is a page regarding foreign exchangesensitivity. Three FX sensitivity items have changed for FY17:First, withFii h theh euro, as we makek acquisitions
iiiandd sales
l iincrease, costs are ddecreasingi alongl
with the transfer away of General Hospital production from euro‐denominated sites; thisincreases our euro sensitivity. This previously had a 300‐million‐yen operating income
impact, but that number is now 500 million yen.
With the Chinese yuan, our sales in China have increased significantly, meaning that oursensitivity does as well, and that is why we have begun to include it in FY17.
It is difficult to show other currencies sensitivities by simple one yen move. We areshowing sensitivity by the amount of impact that would occur if the other currencies of therespective regions were to fluctuate 10% up or down.

6

Next in the materials are information by region, business segment, and then theindividual companies.
Regionally, there were few major changes. However, in Japan, where sales had beenpreviously in a downward trend, a strong fourth quarter brought growth to an even0%.
Outside Japan, sales shrunk year‐on‐year when including FX impacts, except in
China, where growth was positive even with FX.

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By business segment, sales grew in double‐digits for Cardiac and Vascular, but wereflat for the others.

8By company, in Cardiac and Vascular, little changed other than the increase in sales
owing to acquisitions, in the amount of 6.3 billion yen.

9

In General Hospital, steady profitability improvement continued. Businessprofitability and profit amount both increased.

10

The Blood Management Company experienced lower sales and profit due tonegative FX impact and price declines for major blood center products in U.S., butthe company more or less achieved its plan. We expect to see improvement in FY17.

11

I will skip over the FY16 topics slide.

12Regarding new products pipeline, most scheduled products were released in FY16,
with a few exceptions that were pushed back a few months or less into FY17, but nomajor delays.

13

Next is our FY17 guidance.
We previously announced that we would adopt IFRS accounting in FY17, but this will
only be starting from the end‐FY17 results.
From the first through third quarters, our accounting will be according to Japanese
GAAP. Therefore, the guidance shown in the main box here is also Japanese GAAP‐basis.
basis
Sales guidance is 575 billion yen, or a 12% year‐on‐year increase. Operating income
is a 7% increase, from 76.6 to 82 billion yen, which will be the highest‐ever amountif achieved.
Guidance is also expressed on the right on an IFRS basis,
basis for reference.
reference Sales remain
the same, but operating income and net income will increase because acquisition‐
related goodwill is not amortized in IFRS; operating income is forecast at 95 billion
yen, and net income at 68 billion yen.
However, as Mr. Sato just mentioned, PPA for acquisitions is not yet complete, sothese figures remain tentative.
These numbers are inclusive of acquisition and FX impacts.

14This slide also shows FY17 guidance, excluding acquisition and FX impacts in orderto show organic growth.
The guidance from the previous slide is on the right, and in the blue box are theorganic numbers; the FY17 guidance excluding FX and acquisition impacts is next to
the FY16 numbers with the same exclusions, in order to provide an apples‐to‐apples
comparison.
On this basis, the sales increase is 6%, and the operating income increase is 8%.
Last December we announced our Mid‐ to Long‐term Growth Strategy, and while it
did not include specific numerical targets, it set management indicators of growing
sales faster than the market, which was projected to grow 55‐6%
6% annually, and ofgrowing operating income faster than sales.
In this first year of the strategy, our guidance is for 6% sales growth and 8%
operating income growth, so we feel that FY17 is on track from the perspective of
the mid‐ to long‐term growth strategy.

15

Next is the waterfall for operating income guidance.
The far right and left bars denote the FY17 guidance and FY16 result, respectively.
The 76.6‐billion‐yen FY16 result is adjusted to exclude the 4.5 billion yen inacquisition impact, bringing the “starting line” to 81.1 billion yen. Sales increase,cost reduction, product mix, SG&A increase, and other items are factored in to
result in 87.5 billion yen in operating income guidance, as an apples‐to‐apples
comparison of actual performance.
Then M&A and FX impacts are included to show the guidance of 82 billion yen.
Explaining a little more about the acquisition impact, you can see on the upper rightthat acquisition‐related operating income excluding amortization is 3 billion yen,and the goodwill amortization amount is 10 billion yen. However, theaforementioned
fid PPA iis not yet complete.
lAlso, for operating income, the closure device has a large positive impact; however,the Vado product also acquired from Abbott, Sequent Medical, and Bolton, which
was acquired at the end of last fiscal year, are all businesses in the development
stage, and impact operating income negatively, for a total positive acquisition
impact of 3 billion. The negative impacts of the three development‐stage
acquisitions will be largest in FY17, and then get smaller from FY18 onward.

16

The next slide shows FY17 guidance by company, but these numbers include
acquisition impacts, which are all in the Cardiac and Vascular Company, with theother two companies not having had major acquisitions.
These numbers do not include FX impact.
With these acquisitionacquisition‐inclusive
inclusive numbers
numbers, all companies are projected to achieve
increased sales and profit.
Also, when excluding acquisitions from the Cardiac and Vascular numbers, bothsales and business profit are projected to increase roughly 8%.

17This slide shows the FY17 new product pipeline.
This concludes my presentation. Thank you.

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