TOKYO ELECTRON

Jan 31, 2017

Consolidated Financial Review
for the Third Quarter Ended December 31, 2016
Company name:
URL:
Telephone number:
Stock exchange listing:Notes:

Tokyo Electron Limited
http://www.tel.com(03) 5561-7000
Tokyo Stock Exchange 1st Section (Code 8035)

1. The accompanying financial statements have been prepared in accordance with accounting
principles and practices generally accepted in Japan .
2. Amounts are rounded down to the nearest million yen.

1.

Consolidated financial highlights for the nine months ended December 31, 2016

(1)

Operating results (Cumulative)

Note: Percentages indicate changes from the same period of the previous fiscal year.
Nine months ended
December 31, 2015

December 31, 2016%%

Net sales (Millions of yen)499,72215.9

539,087

7.9

Operating income (Millions of yen)

86,763

66.2

94,1608.5

Ordinary income (Millions of yen)

88,03955.1

95,6928.7

Net income attributable to owners of parent (Millions of yen)

59,235

58.1

67,91814.7

Net income per share of common stock (Yen):
Basic
DilutedComprehensive income:(2)

347.30414.01346.42412.90Nine months ended December 31, 2016:

68,563 million yen, 25.9%

Nine months ended December 31, 2015:

54,461 million yen, 18.5%

Financial position
As ofMarch 31, 2016

December 31, 2016

Total assets (Millions of yen)793,367

885,786

Total net assets (Millions of yen)

564,239594,566

70.9

66.8

Equity ratio (%)
Equity:591,636 million yen (as of December 31, 2016)
562,369 million yen (as of March 31, 2016)

2.

Dividends
Year ended

Year ending

March 31, 2016

March 31, 2017

1Q-end dividends per share (Yen)--

2Q-end dividends per share (Yen)

125.00128.003Q-end dividends per share (Yen)--

Year-end dividends per share (Yen)

112.00177.00 (Forecast)

Annual dividends per share (Yen)

237.00305.00 (Forecast)

Note: Revision of dividends forecast: None

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TOKYO ELECTRON
3.

Financial forecasts for the fiscal year ending March 31, 2017

Note: Percentages for year ending March 31, 2017 indicate changes from the previous fiscal year.
Year ending
March 31, 2017%

Net sales (Millions of yen)

762,000

14.8

Operating income (Millions of yen)

140,000

19.9

Ordinary income (Millions of yen)

142,000

18.9

Net income attributable to owners of parent (Millions of yen)

100,000

28.4

Net income per share of common stock (Yen)

609.56

Note: Revision of financial forecasts: None

*Notes:(1)

Important changes in subsidiaries (Changes on specific subsidiaries with changes in scope of consolidation): None

(2)

Changes in accounting principles, accounting estimation and restatement
1. Changes in accounting policies along with changes in accounting standards: Yes
2. Other changes of accounting policies besides number 1 above: None
3. Changes in accounting estimation: None
4. Restatement: None(3)

Number of shares outstanding (common stock)
1. Number of shares outstanding (including treasury stock)
As of December 31, 2016:

165,210,911 shares

As of March 31, 2016:

165,210,911 shares

2. Number of shares of treasury stock
As of December 31, 2016:

1,146,591 shares

As of March 31, 2016:

1,176,800 shares

3. Average number of shares outstanding
As of December 31, 2016:

164,049,252 shares

As of December 31, 2015:

170,561,309 shares*Notification of the status of quarterly financial r eview procedures:This quarterly financial report is outside the jurisdiction of auditing procedures outlined in the Financial Instruments and Excha nge
Act and remains incomplete at the time of this report’s publication.

*Explanation of the appropriate use of financial forecast:
The financial forecasts and estimates as provided in this Consolidated Financial Review are based on certain assumptions judged
to be reasonable by the Company at time of report issuance and in light of currently available inf ormation. Consequently, actual
operating results may differ substantially from the projections in this Consolidated Financial Review.
The Company plans to hold a financial meeting for analysts and investors on January 31, 2017. Supplementary schedules and otherinformation deemed relevant to these financial reports will be handed out at this meeting and posted simultaneously on ourcompany website.

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TOKYO ELECTRON
1. Qualitative Information on Financial Results for the Current Quarter(1) Description of Operating Results

During the first three quarters of the current fiscal year, the US economy was gradually expanding and there were signs that the
Chinese economy was picking up. In Japan, as well, the economy headed towards recovery while the world economy overall
showed a slow improvement.
In the electronics industry, where the Tokyo Electron (TEL) Group operates, demand for semiconductors and electronic componen ts
remained firm owing to the increasing sophistication of smartphones and strong demand for servers at data centers.
Under these circumstances, the TEL Group’s consolidated results (cumulative) for the first three quarters of the current fiscal year
were net sales of 539,087 million yen (year-on-year growth of 7.9%), operating income of 94,160 million yen (year-on-year growth of
8.5%), ordinary income of 95,692 million yen (year -on-year growth of 8.7%) and net income attributable to owners of parent of
67,918 million yen (year-on-year growth of 14.7%).

The overview of each business segment is as described below.

(i) Semiconductor Production Equipment
The market for semiconductor production equipment has remained robust by continuing active investments for logic semiconductors
in cutting-edge technology and for 3D NAND flash memory. W hat has supported this investment is the increasingly high functionality
and capacity of mobile devices as well as the higher performance of servers that have accompanied the development of cloudcomputing. Consequently, net sales to external customers in this segment for the fi rst three quarters of the current fiscal year were506,382 million yen (year-on-year growth of 9.2%).

(ii) Flat Panel Display (FPD) Production Equipment
In the FPD production equipment market, there has been on -going investment, in equipment for small to medium-sized flat panel
displays used in mobile handsets. Consequently, net sales to external customers in this segment for the first three quarters of thecurrent fiscal year were 32,367 million yen (year-on-year growth of 7.9%).

(iii) Other
Net sales to external customers in this segment were 337 million yen (year -on-year decrease of 94.6%) during the first threequarters of the current fiscal year.

3

TOKYO ELECTRON(For reference)

Consolidated Operating Results（ Millions of yen）
FY2017

Net Sales
Semiconductor Production Equipment
Japan
U.S.
EuropeKorea
TaiwanChina
Southeast Asia
FPD Production Equipment
Other
Operating Income
Ordinary Income
Net Income Attributable to Owners of Parent
Note:

1Q

2Q

3Q

Total

147,976
130,796
17,81917,022
5,234
19,80530,50430,04910,36017,064115
22,09524,083
12,684

204,745
196,211
26,42934,416
6,695
29,03158,28924,04417,3048,414
119
37,91638,281
29,281

186,364
179,373
20,32924,634
15,06133,37662,36013,798
9,812
6,887
103
34,14733,32725,951

539,087
506,382
64,57876,07426,991
82,213
151,155
67,89237,47632,367337
94,16095,692
67,918Intersegm ent sales or transfers are eliminated.

Production and Order Performance
1. Production（ Millions of yen）
FY20171Q
140,236
9,623
149,860

Semiconductor Production Equipment
FPD Production Equipment
Other
Total
Note:

2Q
203,496
6,832
210,328

3Q
174,941
13,271
188,213

Total
518,674
29,727548,402

1. Amounts are based on sales prices.
2. The above amounts do not include consumption taxes .

2. Orders Received（ Millions of yen）
FY2017
1Q
197,496
15,955
111
213,564

Semiconductor Production Equipment
FPD Production Equipment
Other
Total
Note:

1. Intersegm ent sales or transfers are eliminated.
2. The above amounts do not include consumption taxes.

4

2Q
195,695
15,032
119
210,8483Q
267,187
30,484
115
297,787

Total
660,380
61,472
346
722,199

TOKYO ELECTRON

3. Orders Backlog（ Millions of yen）
FY2017
1Q
329,988
36,3191
366,309

Semiconductor Production Equipment
FPD Production Equipment
Other
Total
Note:

2Q
329,473
42,937
0372,4113Q
417,286
66,533
13
483,833

1. Intersegm ent sales or transfers are eliminated.
2. The above amounts do not include consumption taxes.

(2) Description of Financial Conditions(i) Financial Conditions
Current assets at the end of the third quarter of the current fiscal year were 710,330 million yen, an increase of 92,914 mil lion yen
compared to the end of the previous fiscal year. This was largely due to an increase of 39,118 million yen in cash and deposit s, anincrease of 35,244 million yen in inventories, and an increase of 9,686 million yen in trade notes and accounts receivable.
Tangible fixed assets increased by 2,180 million yen from the end of the previous fiscal year, to 98,497 million yen.
Intangible fixed assets decreased by 847 million yen from the end of the previous fiscal year, to 16,756 million yen.
Investments and other assets decreased by 1,829 million yen from the end of the previous fiscal year, to 60,202 million yen.
As a result, total assets increased by 92,418 million yen from the end of the previous fiscal year, to 885,786 million yen.
Current liabilities increased by 61,210 million yen compared to the end of the previous fiscal year, to 227,271 million yen. This wasprimarily due to a 57,595 million yen increase in customer advances, a 6,230 million yen increase in trade notes and accounts
payable, and a 7,347 million yen decrease in income taxes payable.
Long-term liabilities increased by 881 million yen compared to the end of the previous fiscal year, to 63,949 million yen.
Net assets increased by 30,326 million yen compared to the end of the previous fiscal ye ar, to 594,566 million yen. The primaryfactors were an increase stemming from 67,918 million yen in reported net income attributable to owners of parent, and a decr easeresulting from the payment of 39,371 million yen in year -end dividends for the previous fiscal year and interim dividends for thecurrent fiscal year. As a result, the equity ratio was 66.8%.

(ii) Cash Flows
Cash and cash equivalents at the end of the third quarter of the current fiscal year increased by 54,654 million yen compared to theend of the previous fiscal year, to 150,293 million yen. The combined balance including 127,000 million yen in time deposits andshort-term investments with periods to maturity or redemption of at least three months that are not included in cash and cash
equivalents was 277,293 million yen, an increase of 40,619 million yen from the end of the previous fiscal year. The overall status ofcash flows during the first three quarters of the current fiscal year was as described below.
Cash flows from operating activities were positive at 93,310 million yen, an increase of 31,870 million yen compared to the same
period of the previous fiscal year. The main positive factors were 87,632 million yen in net income before income taxes, 12,7 79
million yen in depreciation and amortization, an increase of 56,350 million yen in customer advances, and an increase of 5,428
million yen in trade notes and accounts payable. The main negative factors were a 35,458 million yen increase in inventories, thepayment of income taxes of 32,735 million yen, and an increase of 9,723 million yen in accounts receivable.
Cash flows from investing activities were positive 43 million yen compared to negative 114,084 million yen in the same period of theprevious fiscal year. These were primarily the result of 14,032 million yen in income associated with a decrease in time deposits andshort-term investments, and the payment of 12,548 million yen for purchase of fixed assets.
Cash flows from financing activities were negative 39,378 million yen, compared to negative 138,598 million yen in the same periodof the previous fiscal year. These were primarily attributable to the payment of 39,371 million yen in dividends.

5

TOKYO ELECTRON

Consolidated Statements of Cash Flows (Summary)Nine months ended
December 31, 2015

（Millions of yen）
Nine months ended
December 31, 2016

Cash flows from operating activities
Income before income taxes
Depreciation and amortization
Decrease (increase) in trade notes and accounts receivable
Decrease (increase) in inventories
Increase (decrease) in trade notes and accounts payable

61,43982,657
14,2797,100(9,686)(10,107)

93,31087,632
12,779(9,723)(35,458)
5,428

Other, net
Cash flows from investing activities
Decrease (increase) in time deposits and short-term investments(22,803)(114,084)(107,987)

32,65043
14,032(6,097)(13,989)(138,598)(39,378)

Other (Acquisition of fixed assets)
Cash flows from financing activities
Effect of exchange rate changes on cash and cash equivalents

(617)

679

Net increase (decrease) in cash and cash equivalents(191,861)

54,654

Cash and cash equivalents at beginning of period

317,632

95,638Cash and cash equivalents at end of period

125,770

150,293

Cash and cash equivalents, time deposits and short-term investments with periods tomaturity or redemption of at least three months

233,809277,293(3) Description of Financial Estimates Information such as Consolidated F inancial Forecasts
There are no changes in the forecast of consolidated financial results for the entire fiscal year ending March 31, 2017 from theforecasts released at the time of the previous announcement on October 28, 2016.

Note: The financial forecasts and estimates stated in this announcement are based on certain assumptions judged to be reasonable
by the Company in light of information currently available concerning economic conditions in Japan and overseas, fluctuations inforeign exchange rates, and other factors that may have an impact on performance. The company does not promise that theforecasts or estimates will be accurate.
They are therefore susceptible to the impact of many uncertainties, including market conditions, competition, the laun ching of new
products (and their success or failure), and global conditions in the semiconductor related industry. Consequently, actual sa les andprofits may differ substantially from the projections stated in this announcement.

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TOKYO ELECTRON

Consolidated Balance Sheets(Millions of yen)
As of

As of

March 31, 2016

December 31, 2016

ASSETS
Current assets
Cash and deposit

75,674

114,793

Trade notes and accounts receivable

116,503

126,189

Securities

160,999

162,500

Merchandise and finished goods

130,478

149,702

W ork in process

41,556

51,157

Raw materials and supplies

23,04429,464

Others69,20776,584

Allowance for doubtful accounts

(48)

(61)

617,416710,330

96,316

98,497

Others17,603

16,756

Total intangible fixed assets

17,603

16,756

Others63,85762,035

Allowance for doubtful accounts(1,825)(1,832)

Total investments and other assets

62,03160,202

Total long-term assets

175,951

175,456

793,367

885,786

Total current assets
Long-term assets
Tangible fixed assets
Intangible fixed assets

Investments and other assets

Total assets

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TOKYO ELECTRON

Consolidated Balance Sheets(Millions of yen)
As of

As of

March 31, 2016

December 31, 2016

LIABILITIESCurrent liabilities
Trade notes and accounts payable

55,05061,280

Income taxes payable

22,46015,112Customer advances

33,522

91,118Other allowances

21,731

17,491Others33,29542,267

Total current liabilities

166,060

227,271

Long-term liabilities
Other allowances
Net liability for defined benefit

374

374

55,302

56,643

Others

7,390

6,930

Total long-term liabilities

63,067

63,949229,128

291,220

Common stock

54,961

54,961

Capital surplus

78,02378,023Retained earnings

427,618

456,080

Treasury stock, at cost

(8,050)(7,844)

Total shareholders' equity

552,551

581,220

7,902

8,551

Total liabilities

NET ASSETS
Shareholders' equity

Accumulated other comprehensive income (loss)
Net unrealized gains (losses) on investment securities
Net deferred gains (losses) on hedging

50

(106)

Foreign currency translation adjustments

6,742

6,620

Accumulated remeasurements of defined
benefit plans(4,877)(4,648)

9,817

10,416

1,641

2,654

Total accumulated other comprehensive income (loss)
Share subscription rights
Non-controlling interests

228

275

Total net assets

564,239594,566

Total liabilities and net assets

793,367

885,786

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TOKYO ELECTRON

Consolidated Statements of Income(Millions of yen)
Nine months ended

Nine months ended

December 31, 2015

December 31, 2016

Net sales

499,722539,087

Cost of sales

301,640

327,468

Gross profit

198,082

211,619

Research and development expenses

55,931

58,977

Others55,38658,481

Total selling, general and administrative expenses

111,318

117,458

86,763

94,160

Others

2,301

2,083

Total non-operating income

2,301

2,083

Selling, general and administrative expenses

Operating income
Non-operating income

Non-operating expenses
Foreign exchange loss

7351

Commission for purchase of treasury stock

662-

Others356

200

Total non-operating expenses
Ordinary income

1,025

551

88,03995,692

1,010

50Unusual or infrequent profit
Gain on sales of fixed assets
OthersTotal unusual or infrequent profit

-

6

1,010

57

4,434

-

Unusual or infrequent loss
Loss on impairment of fixed assets, goodwill and other assets
Loss on disaster

-

7,828

Others

1,958

288

Total unusual or infrequent loss

6,393

8,116

Income before income taxes

82,657

87,632

Income taxes

23,392

19,678Net income

59,264

67,95329

35

59,23567,918Net income attributable to non-controlling interests
Net income attributable to owners of parent

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TOKYO ELECTRON

Consolidated Statements of Comprehensive Income(Millions of yen)

Net income

Nine months ended

Nine months ended

December 31, 2015

December 31, 2016

59,264

67,953(1,193)643

Other comprehensive income (loss)
Net unrealized gains (losses) on investment securities
Net deferred gains (losses) on hedging instruments

(146)

(57)

Foreign currency translation adjustments(2,211)(128)

Remeasurements of defined benefit plans(1,224)

189

(26)

(36)

(4,802)609

54,461

68,56354,44268,51619

47

Share of other comprehensive income of associates
accounted for using equity method
Total other comprehensive income (loss)
Comprehensive income(Breakdown)Comprehensive income attributable to owners of parent
Comprehensive income attributable to non-controlling interests

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TOKYO ELECTRON

Notes
Going concern: None
Remarkable changes in shareholders' equity: None
Note on consolidated statements of income:Loss on disaster
These are actual and current estimated expenses relating to the recovery of buildings, production and development facilities a s wellas the disposal of inventories caused by the impact of the Kumamoto earthquake in 2016.

Income taxes
Current income tax expense for the nine months ended December 31, 2016 is net of 405 million yen of estimated tax benefit fromthe expected resolution of the Mutual Agreement Procedure being finalized by the Japanese and US income tax authorities fortransfer pricing adjustments assessed during prior historical periods. The 405 million yen is the difference between the current
projected tax refunds and the estimated amount recorded in prior fiscal year.

Segment information:(i)General information about reportable segments

A reportable segment is a component or an aggregated component of T EL Group. For each of the components, discrete financial
information is available and the operating result is regularly reviewed by management to make decisions about resources to beallocated to the segment and assess its performance.
The operation of TEL Group consists of segments by products and services based on business units (BUs), and TEL Groupidentifies as a reportable segment, “semiconductor production equipment (SPE)” and “flat pane l display (FPD) production
equipment”. Products of the SPE segment consist of coater/developers, plasma etch systems, thermal processing systems, single
wafer deposition systems, cleaning systems used in wafer processing, wafer probers used in the wafer te sting process and othersemiconductor production equipment. The SPE segment principally develops, manufactures, sells and distributes such products.
Products of the FPD production equipment segment consist of coater/developers and etch/ash systems used in the manufacture offlat panel displays. The FPD production equipment segment principally develops, manufactures, sells and distributes such prod ucts.
(ii)

Information about reportable segment net sales, segment profit (loss)

Nine months ended December 31, 2016

(Millions of yen)
Reportable Segments
Semiconductor
Production
Equipment

Net sales

FPD Production

Other *1

Total

Equipment

506,382

32,367

10,555549,305

115,083

2,219

98

117,401

Segment profit(loss)

Eliminations andConsolidated *3
Corporate *2
Net sales(10,217)539,087(29,768)

87,632

Segment profit(loss)

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TOKYO ELECTRON

Notes:*1. “Other” includes all other operating segments which are not included in the reportable segments, including PV Production
Equipment business, group-wide logistic services, facility maintenance and insurance.
*2. “Eliminations and Corporate” segment loss totaling 29,768 million yen includes corporate expenses not allocated to any
reportable segments. The corporate expenses consist of research and development costs of 12,129 million yen, pertaining tofundamental research and element research, and loss on disaster costs of 7,828 million yen.
*3. Segment profit is adjusted to income before income taxes on consolidated statements of Income.
(iii) Impairment losses on fixed assets and information about goodwill in reportable segments
Significant impairment losses related to fixed assets: None
Significant changes in goodwill amount: None
Significant income related to negative goodwill: None12