November 13, 2007

Interim Financial Review for the Six Months Ended
September 30, 2007
Company name:
URL:
Telephone number:
Stock exchange listing:Code number:Company representative:
Person-in-charge:
Due date of submitting of semiannual report
Due date of starting delivery of dividends

http://www.tel.com(03) 5561-7000
Tokyo Stock Exchange 1st Section
8035
Kiyoshi Sato, President & COO
Yukio Saeki, Director, Accounting Department
December 7, 2007
December 7, 2007

For reference only: The accompanying financial statements have been prepared in accordance with accounting
principles and practices generally accepted in Japan.
Note: All figures are rounded down to the nearest million yen.
1. Financial highlights for the six months ended September 30, 2007 (4/1/07- 9/30/07)(1) Operating results
Note: Percentages indicated changes from the same period of the previous fiscal year.
Net sales

Six months ended 9/30/07
Six months ended 9/30/06
Year ended 3/31/07

Ordinary income
Millions of yen%

95,79558,204
143,940

64.6
58.4
-

Millions of yen%

Millions of yen

476,377
390,562
851,975

22.0
17.2
-

95,00558,240143,978

Net income

Six months ended 9/30/07
Six months ended 9/30/06
Year ended 3/31/07

Operating income
%
63.1
60.7
-

Yen

Fully diluted net
income per shareYen

349.19208.74511.27348.24208.18509.84

Net income per share

Millions of yen%

62,46337,22591,262

67.8
55.2
-

Reference:
Profit/loss on equity method:
Six months ended 9/30/07: Six months ended 9/30/06: (323) million yen
Year ended 3/31/07:(1,441) million yen(2) Financial position
Total assets
As of 9/30/07
As of 9/30/06
As of 3/31/07

Millions of yen
802,168
673,458
770,513

Net assets
Millions of yen
520,089
414,167
469,810

Reference:
Equity:Six months ended 9/30/07:
Six months ended 9/30/06:
Year ended 3/31/07:

510,432 million yen
408,775 million yen
460,175 million yen
1

Net assets
per share

Equity ratio
%
63.6
60.7
59.7

Yen
2,852.85
2,290.67
2,573.72

(3) Consolidated cash flow

Six months ended 9/30/07
Six months ended 9/30/06
Year ended 3/31/07

Cash flow from Cash flow from Cash flow from Cash and cash
operatinginvestingfinancingequivalents at theactivities
activities
activities
end of the period
Millions of yen Millions of yen Millions of yen
Millions of yen
20,554(8,532)(16,390)
129,938
4,459(39,424)(28,056)
77,06254,296(25,293)(34,719)
134,389

2. Dividend(Base date)Year ended 3/31/07
Year ended 3/31/08
Year ending 3/31/08 (Forecast)

Dividend per share
InterimYear-end
Yen
Yen
42.0
61.0
70.0
55.0

Annual
Yen
103.0
125.0

3. Financial forecast for the year ending March 31, 2008 (4/1/07 - 3/31/08)
Note: Percentages indicated changes from the previous fiscal year.
Net salesYear ending 3/31/08

Millions of yen
900,000

Operating income%
5.6

Net income
Year ending 3/31/08

Millions of yen
104,000

Millions of yen
160,000%
11.1

Ordinary income
Millions of yen
164,000%
13.9

Net income per share
%
14.0

Yen
581.27

4. Others
1) Important changes in subsidiaries. (Changes on specific subsidiaries with changes in scope of consolidati
2) Changes in principles, procedures and display of accounting method concerning consolidated statement p(Listed as changes in basis of presentation of consolidated financial statement )①Changes in accounting policies: Yes②Other changes: None
3)Number of shares outstanding (common stock)①Number of shares of common stock issued as of :September 30, 2007 180,610,911 shares
September 30, 2006 180,610,911 shares
March 31, 2007 180,610,911 shares②Number of shares of treasury stock
September 30, 2007 1,690,885 shares
September 30, 2006 2,158,251 shares
March 31, 2007 1,812,976 shares

2

(Reference) Non-consolidated financial review for the six months ended September 30, 2007
1. Financial highlights for the six months ended September 30, 2007 (4/1/07 - 9/30/07)(1) Operating results
Note: Percentages indicated changes from the same period of the previous fiscal year.
Net sales
Six months ended 9/30/07
Six months ended 9/30/06
Year ended 3/31/07

Millions of yen
415,278
327,277
720,163

Operating income
%
26.9
14.1
-

%
73.0
57.7
-

Millions of yen
55,43832,61876,664

Net income per share

Net income

Millions of yen
35,966Six months ended 9/30/07
21,440Six months ended 9/30/06
51,699Year ended 3/31/07

Millions of yen
49,78528,78571,045

Ordinary income

Yen

%
67.8
55.0
-

201.06120.23289.63(2) Financial position

As of 9/30/07
As of 9/30/06
As of 3/31/07

Total assets

Net assets

Millions of yen
597,560
533,567
594,933

Millions of yen
351,982
301,702327,715

Equity ratio

Net assets
per share

%
58.9
56.4
55.0

Yen
1,965.78
1,687.75
1,829.61

Reference:
Equity:351,716 million yen
301,182 million yen
327,130 million yen

Six months ended 9/30/07
Six months ended 9/30/06
Year ended 3/31/07

The performance forecasts and estimates stated in this Financial Review are based on certain
assumptions judged to be reasonable at the present time in light of information currently available.
Consequently, actual operating results may differ substantially from the projections stated in the
Financial Review.

3

%
70.0
59.0
-

Operating Results and Financial Conditions

1. Business Environment during the Period of Interim Consolidated Financial Results
During the period of interim consolidated financial results, the world economy generally
continued to be strong chiefly in the Asian and European regions, despite concerns aboutan economic slow down due to the adverse effects of high oil prices on the prices of raw
materials, decreases in housing investments, the sub-prime loan problem in the UnitedStates, and other factors.

The electronics industry in which the Company operates remained brisk because of thecontinued expansion of the PC and mobile phone markets, the emergence of new
high-function mobile equipment, and other factors.

In the semiconductor industry, meanwhile, manufacturers made strategic capital
investments to reinforce their production capacity because of the expectation that falling
memory prices will create new demand for memory chips by helping increase the capacity of
DRAMs used for PCs and encouraging memory chips to be used for a wider range ofapplications, including the adoption of flash memory for the recording medium of PCs anddigital video cameras.

2. Overview of Profits and Losses for Interim Consolidated Financial Results
For the consolidated interim period, the Company achieved the highest-ever half-year
performance in terms of net sales and operating income margin.

Consolidated net sales

were 476,377 million yen, a 22.0% increase over the same period of the previous fiscal year,with sales of semiconductor production equipment, the key product of the Company,
remaining strong in Taiwan and Japan.

As a result, net sales in Japan and the rest of theworld were 167,164 million yen (up 15.7%) and 309,213 million yen (up 25.7%), respectively,
with a ratio of overseas net sales to consolidated net sales at 64.9%.

Consolidated orders

for the same period were 330,816 million yen (down 33.0%) with consolidated backlog
orders as of the end of the period at 340,711 million yen (down 29.9% compared to the endof the previous fiscal year).

Cost of sales was 311,018 million yen (up 14.7%), and gross profit on sales was 165,359
million yen (up 38.5%), respectively.

As a result, the gross profit margin rose 4.1

percentage points over the previous fiscal year, to 34.7%.

4Selling, general and administrative expenses were 70,354 million yen (up 15.1%), lowering
their percentage to net sales by 0.9 percentage points over the previous fiscal year, to14.8%.

As a result, operating income grew to 95,005 million yen (up 63.1%), boosting the operating
income margin by 5.0 percentage points, to 19.9%.

Ordinary income was 95,795 million

yen (up 64.6%), with non-operating income falling 3.2%, to 2,238 million yen, while
non-operating expenses dropped 38.4%, to 1,447 million yen.

The Company posted an extraordinary income of 2,405 million yen (290 million yen for theprevious consolidated interim period) due to the sale of land and buildings owned byoverseas subsidiaries, gain on reversal of subscription rights to shares, and other factors.

Interim net income before income taxes was 98,201 million yen (up 67.9%), and interim net
income was 62,463 million yen (up 67.8%).

As a result, interim net income per share was349.19 yen (208.74 yen for the same period of the previous fiscal year).

In terms of 2008 estimate, considering the current business circumstance, the company
does not change the original estimate, which was released on 11th May 2007, with net salesof 900.0 billion yen, operating income of 160.0 billion yen, ordinary income of 164.0 billion
yen, and net income of 104.0 billion yen, although the first half results exceeded the original
estimate.

3. Overview of Operations during the Period of Interim Consolidated Financial
Results by Business Segment
1)

Industrial Electronic Equipment Business

Due to the strong sales of the semiconductor production equipment, which are theCompany’s key products, sales from external customers in this segment during the current
consolidated interim period were 423,106 million yen, a 25.5% increase over the same
period of the previous fiscal year.

(a) Semiconductor production equipment
Bolstered by the enhancement of functions for mobile phones, PCs, and digital equipment,
the expectation was that semiconductors are going to offer increasingly high performanceand that demand for semiconductors will grow, and manufacturers made more active
investments centering on DRAMs and flash memory.

5

Under these circumstances, the segment continued to perform well, posting net sales of379,251 million yen (up 33.6%).

(b) FPD production equipment
As the price of flat-panel displays fell and the flat-panel TV market expanded rapidly,
manufacturers pursued even higher definition and thinner TVs.

Although net sales from this segment during the consolidated interim period decreased
17.1% compared to the same period of the previous fiscal year, the level remained high, at
43,600 million yen.

Meanwhile, business negotiations began for the next-generation

systems for large substrates, which will be delivered next year and thereafter.

(c) Other
Net sales from this segment during the consolidated interim period were 254 million yen(down 56.5%).

(2) Electronic Components and Computer Networks Business
The Company strove to bolster sales of and maintenance services for fast-growing network
equipment, storage systems, and IT-related software, while providing the optimal IT
solutions to support corporate strategy.

It also concentrated its efforts on sellinghigh-value-added products––including custom ICs and general-purpose ICs (analogICs)––to the industrial equipment segment, which is a priority strategic market for theCompany, and endeavored to strengthen the sales structure for the Asian market, develop
new products, and acquire new customers, as well as reinforce development business.
However, in the case of semiconductor products, which are the segment’s key item, demandfor custom ICs used at mobile-phone base stations declined, while demand for custom ICs
failed to recover quickly from the phase of inventory adjustments in the second half of lastyear.

As a result, net sales from external customers in this segment during theconsolidated interim period were 53,271 million yen (down 0.4%).

Starting in the second half of the previous fiscal year, “Computer Systems and Networks”(previously classified in the “Industrial Electronic Equipment” segment) have been includedin the “Electronic Components and Computer Networks” segment (former “Electronic
Components” segment).

With this change, the year-on-year comparison of net sales foreach segment are now based on the reorganized segments.

6

(For reference)
Consolidated(Millions of yen)

FY2008 FY2008
FY2008
1Q
2Q
1H
Net Sales
212,494 263,883 476,377
Industrial Electronic Equipment
187,318 235,787 423,106
Semiconductor Production Equipment
165,785 213,465 379,251
Japan
31,61463,015
94,629U.S.
21,111
31,36752,479Europe7,922
6,524
14,447
Korea
21,432
19,68941,122
Taiwan62,517
79,417 141,934
China
13,848
6,677
20,525
S.E.Asia
7,338
6,773
14,112ＦＰＤ Production Equipment
21,40022,20043,600
Other
132
121
254
Electronic Components & Computer Network
25,17528,09553,271
Operating Income
43,034
51,97095,005
Ordinary Income
41,17554,62095,795Net Income
26,192
36,27062,463Note:

FY2007
FY20071H
2H
390,562 461,412
337,060 407,452
283,905 358,719
77,842
97,88953,18452,42924,63823,325
41,17364,99562,404
79,39014,293
15,356
10,36925,33352,56848,197585
535
53,50253,96058,24085,737
58,20485,73637,22554,037

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

4. Financial Conditions and Cash Flow
(1) Financial Conditions
Current assets as of the end of the current consolidated interim period grew by 29,910
million yen compared to the end of the previous fiscal year, to 640,273 million yen. Major
factors included an increase in trade notes and accounts receivable of 38,480 million yen, adecrease in cash on hand (cash and cash equivalents, certificate of deposit) of 4,451 million
yen, and a decrease of 4,418 million yen due to a refund of accrued consumption and othertaxes. In conjunction with revisions to the Accounting Guidelines for Financial Instruments
and other instructions, certificate of deposit will be moved from “cash and cash equivalents”
to “securities” effective as of the end of the consolidated interim period.

Tangible fixed assets increased by 2,060 million yen from the end of the previous fiscal year,
to 106,990 million yen.

Capital investments during the current consolidated interim period

totaled 12,773 million yen.
7

As a result, total assets increased by 31,655 million yen from the end of the previous fiscal
year, to 802,168 million yen.

Current liabilities were 9,492 million yen greater than the end of the previous fiscal year, at
235,347 million yen.

Major factors included a decrease in trade notes and accounts

payable of 17,310 million yen, an increase in customer advances of 14,235 million yen, adecrease due to the redemption of the fifth issue of unsecured corporate bonds with
subscription rights worth 5,500 million yen, and an increase due to transfer from long-term
liabilities of the eleventh issue of unsecured corporate bonds worth 30,000 million yen
because they would reach maturity within one year.

Long-term liabilities fell by 28,115 million yen from the end of the previous fiscal year, to46,732 million yen, mainly due to the transfer to current liabilities of the eleventh issue of
unsecured corporate bonds worth 30,000 million yen because they would reach maturity
within one year.

Net assets obtained by adding an interim net income of 62,463 million yen, and by
subtracting the payment of dividends (distribution of retained earnings) worth 10,906 million
yen at the end of the previous fiscal year, were 520,089 million yen, while the equity ratio
was 63.6%.

(2) Cash flow
Cash flow from operating activities during the consolidated interim period was 16,095 million
yen greater than the end of the previous fiscal year, at 20,554 million yen.

Major positive

factors included interim income before income taxes of 98,201 million yen, depreciation andamortization of 9,801 million yen, and an increase in customer advances of 14,052 million
yen.

Major negative factors included an increase in accounts receivable of 38,296 million

yen, a decrease in trade payable of 17,430 million yen, and the payment of income andother taxes of 44,169 million yen.

Cash flow from investment activities was a negative 8,532 million yen, mainly due to theacquisition of tangible fixed assets for 10,141 million yen.

Cash flow from financial activities was a negative 16,390 million yen, chiefly due to theredemption of the fifth issue of unsecured corporate bonds with subscription rights worth

8

5,500 million yen and the payment of dividends worth 10,906 million yen at the end of theprevious fiscal year.

As a result, the balance of cash and cash equivalents at the end of the consolidated interim
period was 129,938 million yen, a decrease of 4,451 million yen compared to the end of theprevious fiscal year.
The trends in cash flow indicators are shown below.

Fiscal year ended

6 months ended

March 31, 2007

September 30, 2007

Equity ratio (%)

59.7

63.6

Equity ratio at market value (%)

191.2

162.4

Debt redemption period (number of years)

0.7

0.8

119.90110.30Interest coverage ratio (times)

Equity ratio: (Equity / Total assets) x 100
Equity ratio at market value: (Market capitalization / Total assets) x 100
Ratio of cash flow to interest-bearing debt: Interest-bearing debt / Cash flow from operating activities
Interest coverage ratio: Cash flow from operating activities / Interest expenses* All indicators are calculated using financial figures on a consolidated basis.
* Market capitalization is calculated based on the following formula: Closing stock price at fiscal year-end x
Number of shares outstanding at fiscal year-end.
* Cash flow from operating activities corresponds to the cash flow from operating activities in the
consolidated statement of cash flow.

Interest-bearing debt includes all liabilities for which the Company ispaying interest among the liabilities reported on the consolidated balance sheet.

Interest expenses

correspond to the interest paid in the consolidated statement of cash flow.

5. Basic Policy for Profit Allocation and Payment of Dividends for the Current Period
The dividend policy of the Company is to link dividend payments to business performanceand earnings on an ongoing basis. Its basic policy for returning profits to shareholders is tomaintain a payout ratio of around 20% based on consolidated net income.

In order to expand the Company’s business scope, internal capital reserves are usedeffectively for research and development, capital investment, and global business9expansion. The priority is also placed on sound cash flow management and earnings
growth in order to respond to the support provided to the Company by shareholders.

The Company has decided to pay a dividend of 70 yen per share for the current
consolidated interim period.

It also plans to pay a dividend of 125 yen for the entire fiscal

year (70 yen for the interim period and 55 yen for the whole year). For details see the“Announcement on Distribution of Surpluses (Interim Dividends) and Revision of Dividend
Forecasts” released today.

6. Business-related and Other Risks
The following are possible risks that may have an impact on the Company’s operating
results, stock prices, or financial position.

(1) Impact of Fluctuating Foreign Exchange Rates
By succeeding in actively developing overseas operations, the Company has increased the
proportion of its overseas sales. As a rule, the Company carries out export transactions ona yen-basis in order to avert exchange-related risks, but there are some exports involving
foreign currency.

In these cases, the Company employs an exchange risk hedge, such asa forward exchange contract at the time an order is placed. However, since for overseas
customers, exchange-related risks can arise from fluctuations in prices due to drastic
exchange fluctuations, this may have an indirectly negative impact on the Company’s
performance.

(2) Impact from Research and Development
The Company has created cutting-edge technologies through its ongoing implementation ofproactive R&D investment and activities, including miniaturization, vacuum, plasma,thermal-processing, coating/developing, cleaning, wafer-transfer, and clean technologies.
By promptly introducing new products on the market that are equipped with thesetechnologies, the Company has successfully obtained a large market share in each of the
product fields, along with a high profit margin.

However, the possibility does exist that theill-timed introduction of new products may have a negative impact on the Company’s
performance.

(3) Impact from Changes in the Semiconductor Market
The Company has been able to achieve a high profit margin by concentrating resources in10the high-tech field, including semiconductor production equipment, where technologies
undergo rapid change and the Company is able to display its strength.

The semiconductor

market may enjoy broad growth through technological change, while on the other hand, thesize of the market may temporarily contract due to an imbalance of supply and demand.
Therefore, the Company has been actively involved in business structural reforms to be able
to generate profit even when such rapid changes take place.

However, the possibility does

exist that business results will be negatively impacted by an unexpectedly broad contractionin the size of the market, resulting in order write-offs, excess capacity and head-count, or
increased inventories.

(4) Impact from Transactions Concentrated on Particular Customers
The Company has been successful in expanding its business transactions with the world’s
leading semiconductor manufacturers both inside and outside of Japan by providing
products equipped with superior, cutting-edge technology and offering a service system withhigh customer satisfaction.

However, since the Company’s net sales may at times be

temporarily concentrated on particular customers due to the timing of large-scale capital
investments by major semiconductor manufacturers, there is the possibility of a negative
impact on business results from intensified sales competition.

(5) Safety-related impact
The Company always carries out operations, including development, manufacturing, sales,
services, and administration, with the necessity of paying attention to safety and health inmind.

In accordance with this basic principle, the Company is making an active andcontinued effort to improve the safety of its products and eliminate any harmful impact on
health.

If damage were to be caused to customers or orders were to be canceled, or someother unexpected event were to occur due to a problem arising from the safety of theCompany’s products or other causes, it would likely adversely affect the performance of theCompany.

(6) Impact from Quality Issues
The Company has been proactively developing superior, cutting-edge technologies utilized
in new products that are promptly introduced onto the market, while at the same time
establishing a quality assurance system, including obtaining ISO 9001 certification.

The

Company has also worked to establish a world-class service system, and this has resulted
in a large number of customers adopting our products.

However, because of the

cutting-edge nature of our technologies, in addition to other factors, many of the11technologies developed are in unknown fields, and the possibility exists that businessresults may be negatively affected by the unforeseen appearance of defective products.

(7) Impact of Intellectual Property Rights
In order for the Company to set its products apart from rival products and enhance its
competitive strength, the Company has promoted an R&D strategy for the prompt
development of cutting-edge technologies, together with business and intellectual property
strategies.

This has made it possible for the Company to obtain many of its own

proprietary technologies, thereby successfully ensuring a large market share and high profit
margin in each product field.

However, partly because the Company’s products use manyof the consolidated and optimized cutting-edge technologies, there may be cases where anegative impact on business results arises from avoiding the use of third-party technologies
and intellectual property rights.

(8) Other Risks
The Company has been active in creating new high-growth and high-revenue businesses,
pursuing even higher revenue in existing businesses, and improving its structure so that it
can earn profits even as the market shrinks.

It has also worked to promote environmental

protection activities and restructure its compliance and risk management systems.
However, to the extent that the Company performs its operations, it is subject - just like othercompanies in the same or different industries - to the impact from factors that include theglobal or local economic environment, natural disasters, wars, terrorism, unavoidable
incidents (such as infectious diseases), financial or stock markets, government regulation,
provision systems of suppliers, market conditions for products and real estate, securing of
personnel domestically or overseas, competition over standardization, loss of important
personnel, etc., and thus it can be assumed that the Company’s business performance will
be negatively affected at times by such factors.

Note: The financial forecasts and estimates stated in this interim financial review are basedon certain assumptions judged to be reasonable at the present time 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.

12

They are therefore susceptible to the impact of many uncertainties, including market
conditions, competition, the launching of new products (and their success or failure), andglobal conditions in the semiconductor production equipment business.

Consequently,

actual sales and profits may differ substantially from the projections stated in this interim
financial review.

Management Policy

1. Basic Management Policy
The basic management policy of Tokyo Electron Limited (the Company) is to increase its
corporate value continuously even in any business environment by working to implement
four fundamental management initiatives: (1) a policy of placing customers first; (2)strengthening its product development and technology development capabilities; (3)invigorating its employees; and (4) profit-oriented operations.

Under this policy, the Company intends to promote efforts for creating a powerful, vibrantcompany with high global competitiveness, high growth, and high profitability, and make its
stock attractive to investors.

2. Management Tasks
The Company has gained a high level of trust from customers and has established a strong
reputation as a player in the market by providing the most advanced technology with fullafter-sales technical support.

It has also contributed to worldwide growth of thesemiconductor-related industries as a market leader.

In conjunction with the dramatic development of an information-driven society in recent
years, semiconductor and flat-panel display production equipment, which had traditionallybeen used mainly in PCs and mobile phones, are being applied to key components forvirtually all electronic products, and they can now be seen in every aspect of everyday life.
Meanwhile, the needs of device manufacturers, which are the Company’s customers, havediversified more than ever, requiring production equipment that incorporates differentiation
technology capable of displaying a high level of process and large-scale production
performance.

The Company recognizes it as a major management task to respond swiftly to changes inmarket needs and the business environment in order to improve its profit margin.

13

In order to cope with these tasks, all business units in the Company are working to carry out
mass production and increase sales of high-value-added products, while making a unitedeffort to strengthen their manufacturing capabilities, including upgrading product quality andenhancing cost-competitiveness through high-efficiency production.

In addition to suchmeasures, the Company will further concentrate on bolstering technology development,
developing new businesses, and promoting industrialization of such businesses, with theaim of increasing profitability and growth even further.

14

Consolidated Balance Sheet
As of
September 30, 2006

As of
September 30, 2007

(Millions of yen)
As ofMarch 31, 2007

AmountComposition (%)

AmountComposition (%)

AmountComposition (%)

528,26878.4

640,27379.8

610,363

79.2(Assets)
Current Assets
Cash and cash equivalents
Trade notes and accounts receivable
Securities
Inventries
OthersAllowance for doubtful accounts
Long-term Assets
Tangible fixed assets
Intangible fixed assets
Investments and other assets
Allowance for doubtful accounts
Total Assets

107,062
199,349
182,672
39,382(198)
145,189

58,938267,168
71,019194,499
48,733(85)
21.6

161,895

134,389
228,68819
194,840
52,551(127)
20.2

160,150

96,783
15,30933,409106,990
19,30935,892

104,930
19,39936,118

(312)

(297)

(297)

673,458100.0

15802,168100.0

770,513

20.8

100.0

Consolidated Balance Sheet
As of
As of
September 30, 2006 September 30, 2007
CompoCompoAmountsition (%)
sition (%)

Amount(Millions of yen)
As ofMarch 31, 2007
AmountComposition (%)

225,854

29.3(Liabilities)
Current liabilities
Trade notes and accounts payable
Bonds due within 1 year
Income taxes payable
Customer advances
Accrued employees' bonuses
Accured warranty expenses
OthersLong-term liabilities
Straight bonds
Accrued pension and severance costs
Accrued pension and severance costs
for directors
Others183,176

27.2

71,646
5,500
21,83330,664
8,749
13,561
31,220235,347

29.4

66,52730,00036,41536,192
14,707
14,00037,503

76,113

11.3

46,732

83,8375,500
45,657
21,956
14,131
14,11440,6585.8

74,84830,00038,691

41,95330,00040,018

699
6,722

651
4,128

666
4,162

9.7

259,29038.5

282,07935.2

300,702

39.0

Shareholders' equity
Common stock
Capital surplus
Retained earnings
Treasury Stock
Valuation and translation adjustments
Valuation difference on available-for-salesecurities
Deferred gains or losses on hedges
Translation adjustments
Subscription rights to shares
Minority interests

400,476
54,961
78,159281,483(14,127)
8,298

59.5

62.5

1.1

449,166
54,961
78,346
328,026(12,167)
11,00858.3

1.2

501,495
54,961
78,391
379,583(11,441)
8,937

4,046
(339)
4,591
519
4,872

0.1
0.7

3,752
0
5,184
265
9,391

0.0
1.2

5,853
(177)
5,332
584
9,051

0.1
1.2

Total net assets

414,16761.5

520,08964.8

469,81061.0

Total Liabilities and net assets

673,458

100.0

802,168100.0

770,513100.0

Total liabilities(Net assets)

16

1.4

Consolidated Statement of Income
Six months ended
Six months ended
September 30, 2006 September 30, 2007

Increase(decrease)(Millions of yen)
Year ended
March 31, 2007

AmountRatio tonet sales

AmountRatio tonet sales

Amount(%)

AmountRatio tonet sales

Net sales
Cost of sales
Gross profit

390,562
271,171
119,391

100.0
69.4
30.6

476,377
311,018
165,359

100.0
65.3
34.7

85,81539,84745,967

22.0
14.7
38.5

851,975
579,325
272,649

100.0
68.0
32.0

Selling, general & administrative expenses
Operating income

61,15058,24015.7
14.9

70,35495,005

14.8
19.9

9,203
36,764

15.1
63.1

128,670
143,978

15.1
16.9

Non-operating income
Interest income
Revenue from development grants
OthersNon-operating expenses
Interest expenses
Foreign currency translation loss
Loss on equity method
OthersOrdinary income
Unusual or infrequent profit
Gain on sale of fixed assets
Gain on reversal of subscription rights to shares
OthersUnusual or infrequent loss
Loss on proceeds or disposal of fixed assets
Loss on devalutation of investments in securities
OthersIncome before income taxes
Provision for income taxes and enterprise taxes
Deferred income taxes
Minority interests
Net income

334
1,158
819

596
1,068
574

819
2,640
1,448

221
1,579
323
224
58,204

173
1,058

420
3,374
585
565
143,940

14.9

215
95,795

137
526
9

2,269
466
40

235
146
0

370

37,591

64.6

15.0
5.4
-

834

98,20135,256
-

0.1
9.5

17

1,413
20.6
7.4

482
62,463

16.9

416
526
1,777
-

58,49421,000268
37,22520.1

39,70767.9

25,238

67.8

0.1
13.1

144,41460,132(7,534)553
91,262

17.0
7.1
(0.9)
0.1
10.7

Consolidated Statements of Net Assets(Millions of yen)

4/1/06-9/30/06
Shareholders' equity
Commonstock
Balance 3/31/06

CapitalsurplusRetainedearnings

78,07854,961

Total
shareholders'equityTreasurystock(15,116)

249,938

367,861

Net increase/decrease during
the term under the review
Cash dividends
Bonuses to directors andstatutory auditors
Net income(5,348)(5,348)

(331)

(331)

37,22537,225

Repurchases of treasury stocks
80

Disposal of treasury stocks
Net increase/decreaseduring the term
Total increase/decrease during
the term under the review
Balance 9/30/06

(17)

(17)

1,006

1,086

-

80

31,545989

32,61554,961

78,159281,483(14,127)

400,476

Valuation and Translation Adjustments
Valuationdifference on
available-forsale securities

Balance 3/31/06

5,117

Deferred
gains orlosses onhedgesTranslation
adjustment

Total

Subscription
rightsto shares

3,921

9,038

1,013

-

Minority
interests

Total Net
assets

4,721

382,635

Net increase/decrease during
the term under the review(5,348)Cash dividends
Bonuses to directors andstatutory auditors(331)

Net income

37,225

Repurchases of treasury stocks(17)

Disposal of treasury stocks
Net increase/decreaseduring the term
Total increase/decrease during
the term under the review
Balance 9/30/06

1,086(1,071)

(339)

670

(740)

(494)

151

(1,083)(1,071)

(339)

670

(740)

(494)

151

31,532

4,046

(339)

4,591

8,298

519

4,872

414,16718

Consolidated Statements of Net Assets(Millions of yen)

4/1/07-9/30/07
Shareholders' equity
Commonstock
Balance 3/31/07

Capitalsurplus54,961Retainedearnings

78,346

Total
shareholders'equityTreasurystock

328,026

449,166(12,167)

Net increase/decrease during
the term under the review
Cash dividends(10,906)(10,906)

Net income

62,46362,463

Repurchases of treasury stocks
45

Disposal of treasury stocks
Net increase/decreaseduring the term
Total increase/decrease during
the term under the review
Balance 9/30/07

(29)

(29)

756

801

-

45

51,556726

52,32854,961

78,391

379,583(11,441)

501,495

Valuation and Translation Adjustments

Balance 3/31/07

Valuationdifference on
available-forsale securities

Deferred
gains orlosses onhedgesTranslation
adjustment

5,853

(177)

5,332

Total

Subscription
rightsto shares

Minority
interests

Total Net
assets

11,008584

9,051

469,810Net increase/decrease during
the term under the review
Cash dividends(10,906)

Net income

62,463

Repurchases of treasury stocks(29)

Disposal of treasury stocks

801

Net increase/decreaseduring the term
Total increase/decrease during
the term under the review
Balance 9/30/07(2,100)

177

(148)

(2,071)

(318)

339

(2,050)(2,100)

177

(148)

(2,071)

(318)

339

50,278

3,752

0

5,184

8,937

265

9,391

520,08919

Consolidated Statements of Net Assets(Millions of yen)

4/1/06-3/31/07
Shareholders' equity
Commonstock
Balance 3/31/06

Capitalsurplus54,961

78,078Retainedearnings

Total
shareholders'equityTreasurystock(15,116)

249,938

367,861

Net increase/decrease during
the term under the review
Cash dividends(12,843)(12,843)

(331)

(331)

91,262

91,262

Bonuses to directors andstatutory auditors
Net income
Repurchases of treasury stocks
Disposal of treasury stocks

267

Net increase/decreaseduring the term
Total increase/decrease during
the term under the review
Balance 3/31/07

(64)

(64)

3,013

3,281

-

267

78,0882,949

81,30554,961

78,346

328,026(12,167)

449,166

Valuation and Translation Adjustments
Valuationdifference on
available-forsale securities

Balance 3/31/06

5,117

Deferred
gains orlosses onhedgesTranslation
adjustment

Total

Subscription
rightsto shares

3,921

9,038

1,013

-

Minority
interests

Total Net
assets

4,721

382,635

Net increase/decrease during
the term under the review
Cash dividends(12,843)

Bonuses to directors andstatutory auditors(331)

Net income

91,262

Repurchases of treasury stocks

(64)
3,281

Disposal of treasury stocks
Net increase/decreaseduring the term
Total increase/decrease during
the term under the review
Balance 3/31/07

735

(177)

1,411

1,969

(429)

4,329

5,869

735

(177)

1,411

1,969

(429)

4,329

87,175

5,853

(177)

5,332

11,008584

9,051

469,81020

Consolidated Statement of Cash Flows(Millions of yen)

I

II

III

Six months
ended
September
30, 2006
AmountSix months
ended
September
30, 2007
AmountCash flow from operating activities
Income before income taxes
Depreciation and amortization
Amortization of goodwill
Increase in accrued pension and severance costs
Decrease in prepaid pension expense (increase)
Increase in accured employees' bonuses (decrease)
Increase in accrued warranty expenses (decrease)
Interest and dividend revenue
Interest expenses
Loss on sale of fixed assets (gain)
Loss on disposal of fixed assets
Gain on reversal of subscription rights to shares
Decrease in trade notes and accounts receivable (increase)
Decrease in inventories (increase)
Increase in accounts payable (decrease)
Decrease in prepaid consumption tax (increase)
Increase in customer advances (decrease)
OthersSubtotal
Receipts from interest and dividends
Interest paid
Income taxes paid
Net cash generated by operating activities

58,494
8,800
800
645
(1,481)
1,200
(387)
221
(123)
221
(526)
(29,720)(19,556)
5,491
4,700
(3,510)2,258
27,526345(254)(23,158)
4,459

98,201
9,801
800
1,939
(2,259)
576
(222)
(625)
173
(2,243)343(466)(38,296)(1,479)(17,430)
4,490
14,052(3,044)64,312597(186)(44,169)
20,554

1,293(2,259)2,058(1,422)(237)(47)(2,119)122
59(8,575)
18,076(22,921)(209)
17,562(5,303)36,785252
67(21,010)
16,095

144,414
18,820
1,974
1,975
(965)
3,900
1,613
(910)
420
(302)
719
(526)
(58,352)(31,584)
17,236(1,774)(12,459)
7,482
91,681
853(452)(37,785)
54,296

Cash flow from investing activities
Payment into time deposits
Payment for purchase of tangible fixed assets
Proceeds from sale of tangible fixed assets
Payment for acquisition of intangible fixed assets
OthersNet cash used in investing activities(30,000)(8,725)
474
(891)
(281)
(39,424)(10,141)
4,308(2,458)(240)(8,532)30,000(1,416)
3,833(1,567)41
30,891(30,000)(25,153)
1,068(2,462)
31,254(25,293)

Cash flow from financing activities
Net increase in short-term borrowings (decrease)
Redemption of straight bonds
Net decrease in treasury stock (increase)
Dividends paid
OthersNet cash generated by financing activities

826(24,500)
1,069(5,348)(104)(28,056)(613)(5,500)771(10,906)(141)(16,390)(1,440)19,000(298)(5,558)(36)
11,666(404)(24,500)
3,216(12,843)(188)(34,719)60(62,961)
140,023
77,062(82)(4,451)
134,389
129,938(143)
58,509(5,634)52,87581(5,634)140,023
134,389

Foreign currency translation difference in cash andcash equivalents
V Net increase in cash and cash equivalents (decrease)
VI Cash and cash equivalents at the beginning of the period
VII Cash and cash equivalents at the end of the period

Increase(decrease)

Year ended
March 31,
2007

AmountAmount39,707
1,001

IV

21

Segment Information
Information by business segment(Millions of yen)Six months ended September 30, 2006 (4/1/06 - 9/30/06)
Industrial
electronicequipment

Electronic
components
and computer
networks

337,060

53,502

390,562

-

1,424

593

2,018

(2,018)338,484

54,096

392,581(2,018)

390,562

Operating expenses

282,166

52,150334,317(1,995)332,321

Operating income

56,318

1,945

58,263(23)

58,240Total

Eliminations
andConsolidated
corporate

Net sales(1) Sales to external customers(2) Intersegment sales or transfers
Total

390,562-(Millions of yen)Six months ended September 30, 2007 (4/1/07 - 9/30/07)
Industrial
electronicequipment

Electronic
components
and computer
networks423,106

53,271

476,377

-

542

542

1,084

(1,084)

423,648

53,813

477,462(1,084)476,377

Operating expenses

330,476

51,997

382,473(1,101)

381,372

Operating income

93,172

1,816

94,98816

95,005

Total

Eliminations
andConsolidated
corporate

Net sales(1) Sales to external customers(2) Intersegment sales or transfers
Total

476,377-(Millions of yen)
Year ended March 31, 2007 (4/1/06 - 3/31/07)
Industrial
electronicequipment

Electronic
components
and computer
networks744,512

107,462

851,975

-

2,381

1,247

3,628

(3,628)746,893108,709855,603(3,628)851,975

Operating expenses

606,539

104,739711,279(3,282)707,996

Operating income

140,354

3,969

144,324(345)

143,978

Total

Eliminations
andConsolidated
corporate

Net sales(1) Sales to external customers(2) Intersegment sales or transfers
Total

22

851,975-

Note: 1. Method of classifying businesses: Businesses are classified after considering similarities in type of product,function, or method of sale.
2. Major products in each business segment:
Business segment
Industrial electronic equipment
Electronic components and computer networks

Major products
Semiconductor production equipment, FPD production equipment,
otherSemiconductor products, boards, software, other electronic
components, computer systems and networks

3. Starting from the second half of the previous fiscal year, “Computer Networks”, which previously were included in
the “Industrial Electronic Equipment” segment, was incorporated into the “Electronic Components” segment,
which has been renamed the “Electronic Components and Computer Networks” segment. Also the first half ofprevious fiscal year (4/1/06 - 9/30/06), they are indicated according to the new segmentation.

23