TOKYO ELECTRON

July 29, 2014

Consolidated Financial Review
for the First Quarter Ended June 30, 2014
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 three months ended June 30, 2014
Three months ended
June 30, 2013
June 30, 2014
Net sales (Millions of yen)
103,452
151,325
Operating income (Millions of yen)
(9,646)
17,069Ordinary income (Millions of yen)
(9,898)16,913
Net income (Millions of yen)
(2,976)
11,835
Net income per share (Yen)(16.61)
66.04
Fully diluted net income per share (Yen)
65.88
Comprehensive income:Three months ended June 30, 2014: 12,241 million yen
Three months ended June 30, 2013: 2,092 million yen(1) Operating results (Cumulative)(2) Financial position
As ofMarch 31, 2014
Total assets (Millions of yen)
Net assets (Millions of yen)
Equity ratio (%)
Equity: 584,731 million yen (as of June 30, 2014)
578,091 million yen (as of March 31, 2014)

828,591
590,613
69.8

As of
June 30, 2014
768,783
586,605
76.1

2. Dividends
Year ended
March 31, 2014
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)

25.00
25.00
50.00

Year ending
March 31, 2015
10.00-

Note: The effective date of the business combination with Applied Materials, Inc. has not yet been
determined despite this merger having been announced because it is conditional upon the approval
from the relevant authorities in Japan, the U.S., and other countries subject to competition laws. Given
these circumstances, we will not disclose estimates for dividends after the second quarter ended
September 30, 2014.

1

TOKYO ELECTRON

3. Earnings forecasts for the year ending March 31, 2015

Net sales (Millions of yen)
Operating income (Millions of yen)
Ordinary income (Millions of yen)
Net income (Millions of yen)
Net income per share (Yen)
Notes:

Six months ending
September 30, 2014
(Cumulative)
290,000
24,50024,50015,50086.49

Year ending
March 31, 2015-

1. Revision of earnings forecast : Yes
2. Regarding TEL's forecasts for consolidated operating results of the next fiscal
year ending March 31, 2015, we are disclosing provisional estimates forcumulative consolidated operating results through the second quarter because
the date on which the business combination with Applied Materials, Inc. will beeffected has not yet been determined.

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 June 30, 2014:

180,610,911 shares

As of March 31, 2014: 180,610,911 shares
2. Number of shares of treasury stock
As of June 30, 2014:

1,408,363 shares

As of March 31, 2014: 1,408,950 shares
3. Average number of shares outstanding
As of June 30, 2014:

179,203,670 shares

As of June 30, 2013:

179,187,348 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 and Exchange 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 be reasonable 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, July 29, 2014. The
supplementary materials to these financial reports that will be handed out at this meeting will be posted
simultaneously on our company website.

2

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

The first quarter of the current fiscal year saw a gradual rebound in the world economy as a whole, despite
the decelerating pace of growth in China and India. The gradual upward momentum of the economy also
continued in Japan.
In the electronics industry, the primary area of the Tokyo Electron (TEL) Group’s business activities,
demand for mobile devices remained robust as the expansion of the smartphone market continued,
primarily in emerging nations such as China where rapid progress has been made in establishing highspeed communications infrastructure.
Under these circumstances, the Group’s consolidated results (cumulative) for the first quarter were net
sales of 151,325 million yen (a year-on-year growth of 46.3%), operating income of 17,069 million yen (ayear-on-year operating loss of 9,646 million yen), ordinary income of 16,913 million yen (a year-on-year
ordinary loss of 9,898 million yen); and in addition, the quarterly net income stood at 11,835 million yen (ayear-on-year net loss of 2,976 million yen).

The overview of each business segment is as described below.
TEL sold part of the shares held in Tokyo Electron Device Ltd. in April and May of this year. This resulted inTokyo Electron Device Ltd. being switched from a consolidated subsidiary of the group to an affiliate
accounted for under the equity method, and the Electronic Components and Computer Networks segment
overseen by the company and its subsidiaries being removed from segments reported from the current
quarter onward. The 46.3% year on year increase in consolidated net sales mentioned above reflects theimpact of removing Tokyo Electron Device Ltd. from consolidated range.

(i) Semiconductor Production Equipment
Demand for electronic components such as DRAM and NAND flash memory remained firm as a result ofstrong smartphone and tablet sales, resulting in increased capital investment in facilities among
semiconductor manufacturers. Consequently, net sales to external customers in this segment for the firstquarter of the current fiscal year were 136,126 million yen (a year-on-year growth of 81.6%).

(ii) Flat Panel Display (FPD) Production Equipment
Demand for small to medium-sized flat panel displays used primarily for mobile devices remained steady,and the market for FPD production equipment remained strong, including large-sized flat panel displays in
China. These circumstances resulted in net sales to external customers in this segment of 13,929 million
yen (a year-on-year growth of 183.9%) for the first quarter of the current fiscal year.

3

(iii) Photovoltaic Panel (PV) Production Equipment
We have ceased new sales activities of PV production equipment. However, sales entries for work inprogress to fulfill existing orders and other facts resulted in net sales to external customers in this segmentof 1,102 million yen (a year-on-year loss of 46.6%) for the first quarter of the current fiscal year.

(iv) Others
Net sales to external customers for this segment were 167 million yen (a year-on-year growth of 50.4%) for
the first quarter of the current fiscal year.

(For reference)

Consolidated Operating Results(Millions of yen)
FY 2014Full YearNet Sales
Semiconductor Production Equipment
Japan
U.S.
EuropeKorea
TaiwanChina
S.E.Asia
FPD Production Equipment
PV Production Equipment
Electronic Components & Computer Networks
OthersOperating Income (loss)
Ordinary Income (loss)
Net Income (loss)

Note:

612,170
478,841
76,424
104,363
29,63673,403130,252
48,897
15,86528,317
3,805
100,726
479
32,20435,487(19,408)

1Q

2Q

3Q

4Q

103,452
74,944
11,648
15,101
5,666
11,18424,509
4,711
2,123
4,906
2,062
21,426111(9,646)(9,898)(2,976)

151,048
119,828
21,58529,715
7,909
17,67931,550
4,924
6,463
4,486
1,225
25,359146
7,824
10,487
5,452

138,400
102,284
21,58924,474
3,815
14,66021,504
12,764
3,474
8,813
1,196
26,029
76
9,067
8,502
(38,098)

219,269
181,784
21,60135,071
12,24429,877
52,68826,496
3,803
10,110(679)
27,910144
24,95926,395
16,212

FY 2015
1Q
151,325
136,126
13,42133,79012,53022,451
38,456
13,911
1,565
13,9291,102―
167
17,06916,913
11,835

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

Production and Order Performance
1. Production(Millions of yen)
FY 2014Full Year

Semiconductor Production Equipment
FPD Production Equipment
PV Production Equipment
Total

Note:

470,086
36,0473,876
510,010

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

4

1Q

2Q

3Q

4Q

79,3586,037
2,146
87,542

105,784
4,777
1,212
111,774

145,9449,508
1,226
156,679

138,999
15,724(709)
154,014

FY 2015
1Q
124,318
7,419
1,081
132,818

2. Orders Received(Millions of yen)
FY 2014Full Year

Semiconductor Production Equipment
FPD Production Equipment
PV Production Equipment
Electronic Components & Computer Networks
Others
Total

Note:

546,932
41,336
4,303
103,141479
696,194

1Q

2Q

3Q

4Q

97,70814,491
1,185
23,872
111
137,369

151,322
6,351
1,101
24,735
146
183,657

143,495
3,885
1,447
26,52576
175,431

154,405
16,607569
28,008
144
199,735

FY 2015
1Q
137,297
14,280541―
167
152,286

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

3. Orders Backlog(Millions of yen)
FY 2014

Semiconductor Production Equipment
FPD Production Equipment
PV Production Equipment
Electronic Components & Computer Networks
Others
Total
Note:

1Q

2Q

3Q

4Q

164,587
25,584
7,618
17,231215,022

196,081
27,4497,494
16,606247,632

237,292
22,522
7,744
17,102
284,663

209,91429,0198,994
17,200265,129

FY 20151Q
211,085
29,371
8,433
248,889

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 first quarter of the current fiscal year were 561,660 million yen, down
59,831 million yen compared to the end of the previous fiscal year. The major factors influencing this result
were a 31,614 million yen decrease in trade notes and accounts receivable, and a 27,144 million yen
decrease in inventories.
Tangible fixed assets decreased by 1,680 million yen from the end of the previous fiscal year, to 110,663
million yen.
Intangible fixed assets decreased by 2,689 million yen from the end of the previous fiscal year, to 26,866
million yen.
Investments and other assets increased by 4,393 million yen from the end of the previous fiscal year, to69,593 million yen.
As a result, total assets decreased by 59,808 million yen compared to the end of the previous fiscal year, to768,783 million yen.

5

Current liabilities were down 47,158 million yen compared to the end of the previous fiscal year, to 123,351
million yen.
The major factors causing the decrease were a 12,246 million yen decrease in trade notes and accounts
payable, a 11,531 million yen decrease in short-term borrowings from the removal of Tokyo Electron Device
Ltd. from consolidated accounting, a 10,799 million yen decrease in customer advances and a 8,562 million
yen decrease in accrued income taxes
Long-term liabilities were down 8,642 million yen compared to the end of the previous fiscal year, to 58,826
million yen.
Net assets were down 4,007 million yen compared to the end of the previous fiscal year, to 586,605 million
yen.
The main factors were an increase due to reported quarterly net income of 11,835 million yen, a decrease of
10,671 million yen in minority interests from the removal of Tokyo Electron Device Ltd. from consolidated
accounting and other facts, and a decrease as a result of a payment of 4,480 million yen in year-end
dividends.
The equity ratio was 76.1%.

(ii) Cash Flow
Cash and cash equivalents at the end of the first quarter of the current consolidated fiscal year increased by
34,166 million yen compared to the end of the previous fiscal year, to 138,963 million yen. The combined
balance including a 141,047 million yen in time deposits and short-term investments with periods to maturity
or redemption of at least three months that are not included in cash and cash equivalents, was 280,011
million yen, up 11,864 million yen from the end of the previous fiscal year. The overall situation regarding
cash flow during the first quarter of the current fiscal year was as described below.
Cash flow from operating activities was positive 16,447 million yen, compared to negative 1,370 million yen
in the same period of the previous fiscal year. The main positive factors were 15,022 million yen in quarterly
net income before income taxes, a 10,072 million yen decrease in accrued consumption and other taxes
and a 8,231 million yen decrease in trade notes and accounts receivable. The main negative factors were
the payment of income taxes of 12,560 million yen and a 6,866 million yen decrease in customer advances.
Cash flow from investing activities was positive 21,060 million yen, compared to positive 13,207 million yen
in the same period of the previous financial year. This primary positive factor was a 22,300 million yen
decrease in time deposits and short-term investments. The primary negative factor was 3,059 million yen in
payments for purchase of tangible fixed assets.
Cash flow from financing activities was negative 4,614 million yen, compared to negative 1,442 million yen
in the same period of the previous fiscal year. This was primarily the result of the payment of 4,480 million
yen in dividends.

6

Consolidated Cash Flow (Summary)

Cash flow from operating activities
Income before income taxes (loss)
Depreciation and amortization
Decrease in trade notes and accounts receivable (increase)
Decrease in inventories (increase)
Increase in accounts payable (decrease)
OthersCash flow from investing activities
Decrease in time deposits and short-term investments (increase)
Others (purchase of fixed assets)
Cash flow from financing activities
Effect of exchange rate changes on cash and cash equivalents

Three month ended
June 30, 2013

(Millions of yen)Three month ended
June 30, 2014

(1,370)(9,845)6,307
5,111(15,751)715
12,092
13,207
17,651(4,443)(1,442)(2,134)

16,44715,022
4,717
8,231
4,992
(4,096)(12,420)
21,06022,300(1,239)(4,614)
1,273

Net increase in cash and cash equivalents (decrease)

8,260

34,166

Cash and cash equivalents at beginning of period
Increase in cash and cash equivalents from changes in accounting periods at consolidated
subsidiaries (decrease)85,313

104,797(1,206)―

Cash and cash equivalents at end of period

92,367

138,963

Cash and cash equivalents and time deposits and short-term investments with periods tomaturity or redemption of at least three months that are not included in cash and cash
equivalents

229,552

280,0117

(3) Description of Financial Estimates Information such as Consolidated Performance Forecasts
In the market for semiconductors and associated products, robust demand for mobile devices has
stimulated capital investment in facilities among semiconductor manufacturers. In light of this situation, we
anticipate cumulative, consolidated sales and income from our semiconductor production equipment
operations for the first half of the current fiscal year to exceed previous forecasts, and we have therefore
revised the financial forecast for the first half. Note that due to the timing that the effect of the businesscombination is realized, we have not yet disclosed earnings forecasts for the full year; but on a group basis
our previous forecasts for the second half remain unchanged, with net sales of 307 billion yen and operating
income of 48 billion yen.

Consolidated Forecast(Billions of yen, Y/Y change)

Net Sales

FY2015(E)Interim
290.0

Semiconductor Production Equipment
FPD Production Equipment
PV Production Equipment
OthersOperating Income (loss)
Ordinaly Income
Net Income (loss)

270.0
18.0
2.0
0.0
24.5
24.5
15.5

Note:

13.9%
38.6%
91.6%
39.2%

525.8%

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

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 market conditions, competition, the launching of
new products (and their success or failure), and global conditions in the semiconductor related industry. Consequently, actual
sales and profits may differ substantially from the projections stated in this announcement.

8

TOKYO ELECTRON

Consolidated Balance Sheet
As ofMarch 31, 2014

(Millions of yen)
As ofJune 30, 2014ASSETS
Current assets
Cash and deposit

56,34547,521

Trade notes and accounts receivable

129,032

97,417

Securities

211,800

232,489

Merchandise and finished goods

114,289

86,978Work in process

38,07437,326

Raw materials and supplies

15,912

16,827

Others57,53844,517

Allowance for doubtful accounts(1,502)(1,418)621,492

561,660

112,344

110,663

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

9,400

8,675

Others

20,15518,191

Total intangible fixed assets

29,556

26,866

Others

67,06571,459Allowance for doubtful accounts(1,866)(1,866)

Total investments and other assets

65,19969,593207,099

207,123

828,591

768,783

Investments and other assets

Total long-term assets
Total assets

9

TOKYO ELECTRON(Millions of yen)
As ofMarch 31, 2014

As ofJune 30, 2014

LIABILITIESCurrent liabilities
Trade notes and accounts payable

53,66741,421

Accrued warranty expenses

10,072

10,333

Other allowance

8,642

3,996

Others98,12767,600Total current liabilities

170,509

123,351

Long-term liabilities
Other allowance
Net defined benefit liability

582

374

53,44848,610

Others13,436

9,840

Total long-term liabilities

67,46858,826

237,978

182,177

Common stock

54,961

54,961

Capital surplus

78,02378,023Retained earnings

436,174

442,422

Total liabilities
NET ASSETS
Shareholders' equity

Treasury stock
Total shareholders' equity(9,478)(9,473)559,679

565,933

5,592

5,861

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

60

(46)

Translation adjustments

5,777

6,509

Remeasurements of defined benefit plans

6,981

6,473

Total accumulated other comprehensive income

18,411

18,797

Subscription rights to shares

1,643

1,667

Minority interests

10,878206

Total net assets

590,613586,605

828,591

768,783

Total liabilities and net assets

10

TOKYO ELECTRON

Consolidated Statement of Income(Millions of yen)Three months ended Three months ended
June 30, 2013
June 30, 2014
Net sales

103,452

151,325

Cost of sales

73,53595,942Gross profit

29,91655,383

17,993

16,754

Selling, general & administrative expenses
Research and development expenses
Others

21,57021,558

Total selling, general & administrative expenses

39,56338,313(9,646)

17,069Operating income (loss)
Non-operating income
Interest income

326

275

Dividend revenue

237

305

Others373

282

Total non-operating income

937

863

1,096

852

Non-operating expenses
Foreign currency translation loss
OthersTotal non-operating expenses
Ordinary income (loss)

91

166

1,188

1,019

(9,898)16,913

Unusual or infrequent profit
Gain on sale of fixed assets

74

Gain on sale of investment securities

55-

Total unusual or infrequent profit

74

54
110

Unusual or infrequent loss
Loss on sales of subsidiaries' stocks

-

1,609

Others21392

Total unusual or infrequent loss

21

2,001

Income (loss) before income taxes(9,845)15,022

Income taxes(6,876)

3,169

Income (loss) before minority interests(2,969)11,853

Minority interests
Net income (loss)

11

6

18

(2,976)

11,835

TOKYO ELECTRON

Consolidated Statement of Comprehensive Income(Millions of yen)

Income (loss) before minority interests

Three months ended
June 30, 2013

Three months ended
June 30, 2014

(2,969)11,853

Other comprehensive income
Valuation difference on available-for-sale securities

288

269

Deferred gains or losses on hedges

53

(117)

4,719

739

Remeasurements of defined benefit plans

-

(498)

Share of other comprehensive
income of associates accounted for using equity method-(5)Translation adjustments

Total other comprehensive income
Comprehensive income

5,061

387

2,092

12,241

2,016

12,22175

19(Breakdown)Comprehensive income attributable to owners
Comprehensive income attributable to minority interests

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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
segments of 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), andthe reportable segments are as follows: Semiconductor Production Equipment, Flat Panel Display (FPD)
Production Equipment, and Photovoltaic Panel (PV) Production Equipment.
The Semiconductor Production Equipment segment consists of coaters/developers, plasma etchsystems, 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 the development, manufacturing, sales and provision of maintenanceservices, etc. for such products.
The FPD Production Equipment segment consists of coaters/developers, plasma etch/ash systems usedin the manufacturing of flat panel displays, and we are engaged in the development, manufacturing, sales
and provision of maintenance services, etc. for such products.
The PV Production Equipment segment consisted of photovoltaic panel production equipment used in the
manufacturing of thin film silicon photovoltaic panels, and we were engaged in the development,
manufacturing, sales and provision of maintenance services, etc. for such products. However, we havescaled down our business structure of the PV production equipment, by halting development, production,and sales activities for this business and limit operations to support for equipment already delivered as ofthe end of March, 2014.
(ii) Net sales and income (loss) in reportable segments
Three months ended June 30, 2014

(Millions of yen)
Reportable Segments

Semiconductor
Production
Equipment

FPD Production
Equipment

PV Production
Equipment

OthersTotal

Net sales

136,126

13,929

1,102

2,894

154,052

Segment
income (loss)

32,034(451)(3,042)438

28,978Eliminations

Consolidated Total

Net sales(2,727)

151,325

Segment
income (loss)(13,955)

15,022

Notes:
1.

The "Others" is all other businesses segment which are not included in the reported businesssegments, such as the transportation of products, etc. of the Tokyo Electron Group
companies, equipment leasing and insurance, etc.

2.

The eliminations of segment income or loss amounting to 13,955 million yen includes
corporate expenses pertaining to the corporate account which are not allocated to any specificreportable segments. The corporate account expenses are mainly R&D expenses of 3,869
million yen, pertaining to fundamental research and element research conducted by thecompany not related to any of the reportable segments.

3.

Segment income (loss) is adjusted against income before income taxes in consolidated statement of income.

13

TOKYO ELECTRON

Segment Information(iii)

Items Related to Changes in Reportable Segments
In conjunction with the change of Tokyo Electron Device Limited (TED) from a
consolidated subsidiary to an equity-method affiliate, from the first quarter of thecurrent fiscal year, the“Electronic Components and Computer Networks” handled by
TED and its subsidiaries has been eliminated from the reportable segment, andinvestment profit or loss on equity method relating to TED has been included insegment income or loss adjustment amounts.

(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: None
Significant income related to negative goodwill: None14