TOKYO ELECTRON
Oct 27, 2015

Consolidated Financial Review
for the Second Quarter Ended September 30, 2015
Company name:
URL:
Telephone number:
Stock exchange listing:Tokyo Electron Limited
http://www.tel.com(03) 5561-7000
Tokyo Stock Exchange 1st Section (Code 8035)

Notes: 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. Financial highlights for the six months ended September 30, 2015
Six months ended
September 30, 2014 September 30, 2015
Net sales (Millions of yen)
294,273
340,951
Operating income (Millions of yen)
30,11561,250Ordinary income (Millions of yen)
31,77362,384
Net income attributable to owners of parent (Millions of yen)
20,016
41,376
Net income per share (Yen)
111.68238.10Fully diluted net income per share (Yen)
111.42237.46Comprehensive income:Six months ended September 30, 2015: 35,153 million yen
Six months ended September 30, 2014: 23,321 million yen(1) Operating results (Cumulative)(2) Financial position
As ofMarch 31, 2015
Total assets (Millions of yen)
Net assets (Millions of yen)
Equity ratio (%)
Equity: 573,824 million yen (as of September 30, 2015)
639,483 million yen (as of March 31, 2015)

876,153
641,16273.0

As of
September 30, 2015
794,679
576,007
72.2

2. Dividends
Year ended
March 31, 2015
10.00
30.00
35.00
68.00
143.00

1Q-end dividend per share (Yen)
2Q-end dividend per share (Yen)
3Q-end dividend per share (Yen)
Year-end dividend per share (Yen)Annual dividend per share (Yen)
Note: Revision of dividends forecast : Yes

1

Year ending
March 31, 2016125.0094.00
219.00(Forecast)(Forecast)TOKYO ELECTRON
3. Earnings forecasts for the year ending March 31, 2016
Year ending
March 31, 2016
Net sales (Millions of yen)
Operating income (Millions of yen)
Ordinary income (Millions of yen)
Net income attributable to owners of parent (Millions of yen)
Net income per share (Yen)

666,000
105,000
106,000
72,000423.07

Notes: Revision of earnings forecast : Yes

4. Others(1)

Important changes in subsidiaries: None
(Changes on specific subsidiaries with changes in scope of consolidation)(2)

Changes in accounting principles, accounting estimation and restatement
1. Changes in accounting policies along with changes in accountins 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 issued and outstanding (common stock)
1. Number of shares issued and outstanding (including treasury stock)
As of September 30, 2015:

180,610,911 shares

As of March 31, 2015:

180,610,911 shares

2. Number of shares of treasury stock
As of September 30, 2015:

14,026,217 shares

As of March 31, 2015:

1,344,892 shares

3. Average number of shares outstanding
Six months ended September 30, 2015: 173,781,675 shares
Six months ended September 30, 2014: 179,222,274 shares

Notification of the status of quarterly financial review procedures:This quarterly financial report is outside the jurisdiction of auditing procedures outlined in the Financial Instruments andExchange Act and remain incomplete at the time of announcing this report.
Explanations on the appropriate use of earnings forecast:
The performance forecast and estimate stated in this Financial Review are based on certain assumptions judged to bereasonable at the present time in light of information currently available. Consequently, actual operating results may differ
substantially from the projections in this Financial Review.
The company plans to hold a financial meeting for analysts and investors on Tuesday Oct 27, 2015. The supplementarymaterials to these financial reports that will be handed out at this meeting will be posted simultaneously on our company
website.

2

TOKYO ELECTRON

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

Global economy during the first half of the current fiscal year generally remained on a gradual recovery
trend despite sluggish economic growth in China and other emerging countries. The Japanese economy
also shows signs of a moderate recovery.
In the electronics industry, the primary area of the Tokyo Electron (TEL) Group’s business activities, in spiteof some movements including inventory adjustments in the semiconductors market against a backdrop of
weak demand for PCs and slower economic growth in China, demand for electronic components used inhigh performance smartphones and servers for data centers remained robust overall.
Under such circumstances, the Group’s consolidated results (cumulative) for the first half of the current
fiscal year were net sales of 340,951 million yen (a year-on-year growth of 15.9%), operating income of
61,250 million yen (a year-on-year growth of 103.4%), ordinary income of 62,384 million yen (ayear-on-year growth of 96.3%); and in addition, net income attributable to owners of parent for the first halfof the current fiscal year stood at 41,376 million yen (a year-on-year growth of 106.7%).

The overview of each business segment is as described below.
As of the first quarter of the current fiscal year, the Photovoltaic Panel (PV) Production Equipment business,from which we announced our intention to withdraw, was no longer material as stipulated in the AccountingStandard for Disclosures about Segments of an Enterprise and Related Information. Therefore, it has been
removed from the reportable segments and included in “Others.” The year-on-year comparisons below are
based on figures reclassified into segments after the amendment of year-on-year figures.

(i) Semiconductor Production Equipment
Net sales in this segment remained strong, thanks to vigorous capital investment in facilities amongmemory manufacturers reflecting launch of new smartphones and robust demand for servers.
Consequently, net sales to external customers in this segment for the first half of the current fiscal year were316,987 million yen (a year-on-year growth of 16.3%).

(ii) Flat Panel Display (FPD) Production Equipment
While capital investment in facilities for manufacturing large-sized flat panel displays remained steady in
China, since demand for small to medium-sized flat panel displays for mobile terminals stayed in an
adjustment phase, sales of our FPD production equipment was sluggish. As a result, net sales to externalcustomers in this segment for the first half of the current fiscal year were 18,275 million yen (a year-on-year
decrease of 4.0%).

3

TOKYO ELECTRON(iii) Others
Net sales to external customers in this segment for the first half of the current fiscal year were 5,687 million
yen (a year-on-year growth of 117.3%).

(For reference)

Consolidated Operating Results（ Millions of yen）
FY2015
1H

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

FY20152H

FY2016
1H

1Q

2Q

294,273272,626
39,50567,696
24,72037,14676,80820,981
5,768
19,0292,617
30,11531,773

318,851
303,615
48,241
67,64534,04760,21862,61518,732
12,115
13,6801,555
57,997
61,175340,951
316,987
62,82060,267
26,67453,351
76,05831,125
6,689
18,275
5,687
61,25062,384

155,762
140,365
25,011
30,776
17,05328,14023,13014,084
2,169
10,0705,326
30,27930,207

185,189
176,62237,80929,491
9,620
25,211
52,92817,041
4,520
8,205
361
30,97032,17720,01651,871

41,376

19,481

21,895

Offset elimination has been carried out on the dealing between segments.

Production and Order Performance
1. Production（Millions of yen）
FY2015
1H

Semiconductor Production Equipment
FPD Production Equipment
OthersTotal
Note:247,355
10,4532,272
260,081

FY20152H
312,570
22,777
1,215
336,563

FY20161H
298,007
23,194
5,124
326,325

1Q

2Q

147,830
10,435
5,124
163,390

150,176
12,758
162,935

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

2. Orders Received（Millions of yen）
FY2015
1H

Semiconductor Production Equipment
FPD Production Equipment
OthersTotal

279,771
19,130842
299,7444FY20152H
347,023
16,170△1,971
361,223

FY20161H
279,163
24,3492,039
305,552

1Q

2Q

156,663
11,847
1,835
170,346

122,499
12,502
204
135,206

TOKYO ELECTRON

Note:

1. Offset elimination has been carried out on the dealing between segm ents.
2. The above amounts do not include consumption taxes.

3. Orders Backlog（Millions of yen）
FY2015
1H

Semiconductor Production Equipment
FPD Production Equipment
OthersTotal
Note:

217,059
29,121
7,219
253,399

FY20152H
260,467
31,611
3,692
295,771

FY2016
1Q

2Q

276,766
33,388201
310,355

222,643
37,68644
260,373

1. Offset elimination has been carried out on the dealing between segments.
2. The above amounts do not include consumption taxes.

(2) Description of Financial Conditions(i) Financial Conditions
Current assets at the end of the second quarter of the current fiscal year were 605,854 million yen, down
65,028 million yen compared to the end of the previous fiscal year. The major factors influencing this result
were a 33,805 million yen decrease in short-term investments included in securities, a 23,139 million yen
decrease in cash and deposit, a 13,521 million yen decrease in prepaid consumption taxes, and a 5,171
million yen increase in inventories.
Tangible fixed assets decreased by 5,026 million yen from the end of the previous fiscal year, to 101,870
million yen.
Intangible fixed assets decreased by 6,085 million yen from the end of the previous fiscal year, to 21,481
million yen.
Investment and other assets decreased by 5,334 million yen from the end of the previous fiscal year, to65,473 million yen.
As a result, total assets decreased by 81,474 million yen from the end of the previous fiscal year, to 794,679
million yen.
Current liabilities were down 13,353 million yen compared to the end of the previous fiscal year, to 159,458
million yen. The major factors causing the decrease were an 11,459 million yen decrease in trade notes andaccounts payable, a 4,196 million yen decrease in customer advance, a 2,852 million yen decrease inaccrued consumption taxes, and a 9,814 million yen increase in income taxes payable.
Long-term liabilities were down 2,965 million yen compared to the end of the previous fiscal year, to 59,213
million yen.
Net assets were down 65,154 million yen compared to the end of the previous fiscal year, to 576,007 million
yen. The main factors were an increase due to the reporting of net income attributable to owners of parent

5

TOKYO ELECTRON

of 41,376 million yen, a decrease of 89,033 million yen as a result of purchase of treasury stock, and adecrease due to the payment of 12,190 million yen in year-end dividends for the previous fiscal year. The
equity ratio was 72.2%.

(ii) Cash Flow
Cash and cash equivalents at the end of the second quarter of the current fiscal year decreased by 165,427
million yen compared to the end of the previous fiscal year, to 152,204 million yen. The combined balance
including a 108,533 million yen in time deposits and short-term investments with periods to maturity orredemption of at least three months that are not included in cash and cash equivalents was 260,737 million
yen, down 56,944 million yen from the end of the previous fiscal year. The overall situation regarding cash
flow during the first half of the current fiscal year was as described below.
Cash flow from operating activities was positive 47,576 million yen, up 4,238 million yen compared to thesame period of the previous fiscal year. The main positive factors were 57,519 million yen in net income
before income taxes, a 13,480 million yen decrease in prepaid consumption taxes, and 9,376 million yen in
depreciation and amortization. The main negative factors were an 11,168 million yen decrease in accounts
payable, 7,378 million yen for the payment of income taxes, a 6,195 million yen increase in inventories, anda 4,798 million yen decrease in customer advance.
Cash flow from investing activities was negative 111,814 million yen, compared to positive 85,358 million
yen in the same period of the previous fiscal year. The primary negative factor was 108,492 million yen
associated with an increase in short-term investments and 4,713 million yen in payments for purchase of
tangible fixed assets.
Cash flow from financing activities was negative 101,000 million yen, compared to negative 6,458 million
yen in the same period of the previous fiscal year. This was primarily the result of the payment of 88,756
million yen for purchase of treasury stock and the payment of 12,190 million yen in dividends.

6

TOKYO ELECTRON(3) Description of Financial Estimates Information such as Consolidated Performance Forecasts
The financial forecast for the fiscal year ending March 2016 announced on July 28 2015 has been revised
up in the light of our current orders and sales forecast of our core semiconductor production equipment
segment.

Consolidated Forecast(Billions of yen, Y/Y change)
FY2016(E)Net Sales

660.0

7.6%

Semiconductor Production Equipment

610.0

5.9%

FPD Production Equipment

44.0

34.5%

Others6.0

43.8%

Operating Income
Ordinary Income

105.0
106.0

19.2%
14.0%

Net Income Attributable to Owners of Parent

72.0

0.2%

Note: The financial forecasts and estimates stated in this announcement are based on certain assumptions judged to bereasonable by the Company in light of information currently available concerning economic conditions in Japan and overseas,fluctuations in foreign exchange rates, and other factors that may have an impact on performance. The company does notpromise that the forecasts or estimates will be accurate.
They are therefore susceptible to the impact of many uncertainties, including m arket conditions, competition, the launching of
new products (and their success or failure), and global conditions in the semiconductor related industry. Consequently, actua lsales and profits may differ substantially from the projections stated in this announcement.

7

TOKYO ELECTRON

Consolidated Balance Sheet(Millions of yen)
As ofMarch 31, 2015

As of
September 30, 2015

ASSETS
Current assets
Cash and deposit

79,382

56,242

Trade notes and accounts receivable

110,845

110,292

Securities

238,532

204,495

Merchandise and finished goods

112,301

116,526

Work in process

41,48339,264

Raw materials and supplies

21,80324,968Others

66,91354,135

Allowance for doubtful accounts
Total current assets
Long-term assets
Tangible fixed assets
Intangible fixed assets
OthersTotal intangible fixed assets

(378)

(71)

670,882

605,854

106,896

101,870

27,56621,481

27,56621,481

72,692

67,356

Investments and other assets
OthersAllowance for doubtful accounts(1,884)(1,883)

Total investments and other assets

70,80765,473

205,271

188,824

876,153794,679

Total long-term assets
Total assets

8

TOKYO ELECTRON(Millions of yen)
As ofMarch 31, 2015

As of
September 30, 2015

LIABILITIESCurrent liabilities
Trade notes and accounts payable

56,47845,019

Income taxes payable

6,196

16,011

Accrued employees’ bonuses

12,111

10,776

Accrued warranty expenses

10,441

10,209Other allowance

1,040

628

Others86,54376,813

Total current liabilities

172,812

159,458

Long-term liabilities
Other allowance

374

374

Net defined benefit liability

51,104

51,635

Others

10,6997,202

Total long-term liabilities

62,17859,213234,991

218,671

Common stock

54,961

54,961

Capital surplus

78,02378,023Retained earnings

488,816

517,582

Total liabilities
NET ASSETS
Shareholders' equity

Treasury stock
Total shareholders' equity(9,064)(97,259)

612,736553,307

9,463

6,084

Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Translation adjustments

122

3

12,481

10,573Remeasurements of defined benefit plans

4,681

3,855

Total accumulated other comprehensive income

26,747

20,516

1,420

1,970

Subscription rights to shares
Non-controlling interests
Total net assets
Total liabilities and net assets

9

257

213

641,162

576,007876,153794,679

TOKYO ELECTRON

Consolidated Statement of Income(Millions of yen)Six months ended
September 30, 2014

Six months ended
September 30, 2015

Net sales

294,273

340,951

Cost of sales

186,825

204,940

Gross profit

107,448

136,010

Research and development expenses

34,951

37,578Others42,381

37,181

Total selling, general & administrative expenses

77,33374,75930,11561,250

Others

2,264

1,725

Total non-operating income

2,264

1,725

Selling, general & administrative expenses

Operating income
Non-operating income

Non-operating expenses
Foreign currency translation loss

535

Payment for purchase of treasury stocks-

360

Others69

231

Total non-operating expenses

605

591

31,77362,384Gain on sale of fixed assets

120

998

Gain on sale of investment securities

54

Total unusual or infrequent profit

175

Ordinary income
Unusual or infrequent profit

998

Unusual or infrequent loss
Loss on impairment-

Expenses for restructuring of business bases

4,434

698

Others2,149

Total unusual or infrequent loss

1,429

2,848

5,864

29,101

57,519

Income taxes

9,058

16,123

Net income

20,042

41,396

Income before income taxes

Net income attributable to non-controlling interests
Net income attributable to owners of parent

10

26

19

20,016

41,376

TOKYO ELECTRON

Consolidated Statement of Comprehensive Income(Millions of yen)Six months ended
September 30, 2014

Six months ended
September 30, 2015

20,042

41,396

Valuation difference on available-for-sale securities(37)(3,376)

Deferred gains or losses on hedges

81

(148)

Translation adjustments

4,178(1,913)Remeasurements of defined benefit plans

(892)

(801)

Share of other comprehensive
income of associates accounted for using equity method

(51)

(2)

Net income
Other comprehensive income

Total other comprehensive income
Comprehensive income

3,278(6,242)

23,32135,15323,28035,14640

7(Breakdown)Comprehensive income attributable to owners of parent
Comprehensive income attributable to non-controlling interests

11

TOKYO ELECTRON

Consolidated Cash Flow
(Millions of yen)Six months ended
September 30, 2014

Six months ended
September 30, 2015

29,101

57,519Cash flow from operating activities
Income before income taxes
Depreciation and amortization

9,737

Loss on impairment

9,376
-

4,434

Amortization of goodwill

544

628

Increase (decrease) in accrued employees' bonuses
Loss (gain) on sales of shares of subsidiaries and affiliats'(592)(1,318)

1,609

1,110

Decrease (increase) in trade notes and accounts receivable

5,327

(420)

Decrease (increase) in inventories

5,186(6,195)

Increase (decrease) in accounts payable(6,535)(11,168)

Decrease (increase) in prepaid consumption tax

4,740

13,480

Increase (decrease) in accrued consumption tax(503)(2,862)

Increase (decrease) in customer advances
Others

4,343(4,798)4,714(5,440)Subtotal

57,671

54,346

Receipts from interest and dividends

984

608

Interest paid

(15)

-

Income taxes paid or refund (paid)(15,302)(7,378)Net cash generated by operating activities

43,33847,576

Cash flow from investing activities-

Decrease (increase) in time deposits

12

Decrease (increase) in short-term investments

89,303(108,492)

Payment for purchase of tangible fixed assets(6,597)(4,713)

Proceeds from sale of tangible fixed assets

157

1,878

Payment for purchase of intangible fixed assets

(128)

(305)

Proceeds from sale of investment securities

1,084

-

1,726

-

Proceeds from sale of subsidiaries resulting in change in scope of
consolidation
OthersNet cash used in investing activities

(185)

(193)

85,358(111,814)(85)(88,756)(6,272)(12,190)

Cash flow from financing activities
Payment for purchase of treasury stocks
Dividends paid
OthersNet cash generated by financing activities

Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

12

(101)

(53)

(6,458)(101,000)(1,963)(189)

120,274(165,427)

104,797

317,632

225,071

152,204

TOKYO ELECTRON

Notes
Remarkable Changes in Shareholders' Equity
Tokyo Electron Limited executed the purchase of treasury stock based on the resolution of its Board of Directors dated April 27,
2015. Due to the purchase and other transactions, the amount of treasury stock of the company increased by 88,195 million
yen for the second quarter of the current fiscal year and resulted in 97,259 million yen at the end of the second quarter of thecurrent fiscal year.

Loss on impairment
The Tokyo Electron Group groups its business assets into small units that generate independent cash flow. For those businesssites we have decided to restructure or handle otherwise, we are grouping assets separately based on each individual business.
During the second quarters of the current fiscal year, we are posting a loss on impairment of the following asset groups.

Location

PurposeAccounting treatment

Chaska, Minnesota,
U. S. A.

Plant

Goodwill, etc.

Loss on impairment(Millions of yen)

4,434

Regarding the goodwill and other items posted at the time we acquired the consolidated subsidiary TEL FSI, Inc., in thesemiconductor production equipment (SPE) business, given that sales have been trending below initial plans, we implemented
an impairment test. And as a result, we wrote down this goodwill to a recoverable value and are posting this write-down as an
unusual or infrequent loss. We note that the recoverable book value was gauged in accordance with value in use and applying a
14.0% discount to future cash flow.

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TOKYO ELECTRON

Segment Information(i) Overview of reportable segments

The reportable segments by the company provide separate financial information pertaining to the various segmentsof the company, which is reviewed periodically by the management to evaluate corporate performance as well as
make decisions about the allocation of management resources.
The corporate structure consists of product and service segments based on business units (BUs), and thereportable segments are as follows: Semiconductor Production Equipment and Flat Panel Display (FPD)
Production Equipment.
The Semiconductor Production Equipment segment consists of coaters/developers, plasma etch systems, thermal
processing systems, single wafer deposition systems, cleaning systems used in wafer processing, wafer probers
used in the wafer testing process and other semiconductor production equipment, and we are engaged in thedevelopment, manufacturing, sales and provision of maintenance services, etc. for such products.
The FPD Production Equipment segment consists of coaters/developers, plasma etch/ash systems used in the
manufacturing of flat panel displays, and we are engaged in the development, manufacturing, sales and provision ofmaintenance services, etc. for such products.

(ii) Net sales and income (loss) in reportable segments
Six months ended September 30, 2015

(Millions of yen)
Reportable Segments

Semiconductor
Production Equipment

OthersFPD Production
Equipment

Total

Net sales

316,987

18,275

11,388346,651

Segment income (loss)

65,889

2,360

2,000

70,250Eliminations

Consolidated Total

Net sales(5,700)340,951

Segment income (loss)(12,730)

57,519Notes:
1. The "Others" is all other businesses segment which are not included in the reported business segments, such as
Photovoltaic Panel (PV) Production Equipment and the transportation of products, facility management andinsurance of the Tokyo Electron Group.
2. The eliminations of segment income amounting to 12,730 million yen includes corporate expenses pertaining to thecorporate account which are not allocated to any specific reportable segments. The corporate account expenses
are mainly R&D expenses of 6,536 million yen, pertaining to fundamental research and element research
conducted by the company not related to any of the reportable segments.
3. Segment income is adjusted against income before income taxes in consolidated statement of income.

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TOKYO ELECTRON

Segment Information(iii)

Items Related to Changes in Reportable Segments
As of the first quarter of the current fiscal year, the Photovoltaic Panel (PV) Production
Equipment business was no longer material as stipulated in the Accounting Standard
for Disclosures about Segments of an Enterprise and Related Information. Therefore, it
has been removed from the reportable segments and included in “Others.”(iv)

Impairment losses on fixed assets and goodwill, etc. in reportable segments
Significant impairment losses related to fixed assets: None
Significant changes in goodwill amount:
During the second quarter of the current consolidated fiscal year, goodwill for the semiconductor
production equipment, as a result of recording a loss on impairment, decreased 4,363 million yen
compared to the end of the previous fiscal year.
Significant income related to negative goodwill: None15