CONSOLIDATEDFINANCIALSTATEMENTS
FY2022
Year Ended March 31, 2022with Independent Auditor's ReportConsolidated Balance Sheets
Tokyo Electron Limited and Subsidiaries As of March 31, 2022 and 2021

Thousands of
U.S. dollars

Millions of yen

ASSETS

2022

2022

2021

LIABILITIES AND NET ASSETS

Current assets:¥ 335,648¥ 265,993$ 2,742,449

Short-term investments

35,62645,559291,088-

191,700-

433,948-

3,545,617

(160)

(99)

(1,312)Inventories

473,845415,344

3,871,599

Prepaid consumption tax

110,494

82,704

902,804

Other current assets

19,301

14,493

157,707

Total current assets

1,408,703

1,015,696

11,509,953

Notes and accounts receivable - trade, and contract assets
Allowance for doubtful accounts

Property, plant and equipment:Land

31,052

26,929253,716

Buildings

233,553

208,475

1,908,272

Machinery and equipment

225,454

197,982

1,842,102

Construction in progress

20,09522,391

164,193

Other property, plant and equipment

7,628

6,002

62,327517,784

461,780

4,230,613

294,706

264,8122,407,929

223,078

196,967

1,822,683

Total property, plant and equipment
Less: Accumulated depreciation
Net property, plant and equipment

2022

2021

2022

¥ 120,908¥ 90,606$ 987,894

Income taxes payable

107,193

49,272875,833

Customer advances

102,555

81,722

837,937

Accrued employees’ bonuses

44,871

34,254

366,627

Accrued warranty expenses

26,56814,415217,077

Other current liabilities

66,482

57,389543,201

468,578

327,661

3,828,571

Net defined benefit liabilities

62,64362,248511,836

Other liabilities

16,186

10,891

132,250

78,82973,140644,087

547,408

400,801

4,472,658

Common stock
Authorized: 300,000,000 shares
Issued: 157,210,911 and 157,210,911 shares
as of March 31, 2022 and 2021, respectively

54,961

54,961

449,066

Capital surplus

78,01178,011

637,396

1,104,983

835,240

9,028,379(27,418)(30,744)(224,025)

93,492

66,124

763,886

(52)

(79)

(429)

30,64010,441

250,354

535

(978)

4,375

11,895

11,58597,196

1,347,048

1,024,562

11,006,199

Current liabilities:

Cash and cash equivalents

Trade notes and accounts receivable

Trade notes and accounts payable

Total current liabilities
Non-current liabilities:

Total non-current liabilities
Total liabilities

Net assets:
Shareholders’ equity

Retained earnings
Treasury stock, at cost
1,461,581 and 1,659,611 shares
as of March 31, 2022 and 2021, respectively

Investments and other assets:
144,972

105,065

1,184,512

Deferred tax assets

45,654

53,128373,023

Net unrealized gains on investment securities

Net defined benefit assets

16,186

12,021

132,251

Net deferred losses on hedging instruments

Intangible assets

22,54017,163

184,167

Foreign currency translation adjustments

Other assets

34,621

26,728282,878

Accumulated remeasurements of defined benefit plans

Allowance for doubtful accounts(1,298)(1,407)(10,612)262,676

212,699

2,146,221

Total assets
See accompanying Notes to Consolidated Financial Statements.

1

Accumulated other comprehensive income

Investment securities

Total investments and other assets

TOKYO ELECTRON Consolidated Financial Statements FY2022

Thousands of
U.S. dollars

Millions of yen¥ 1,894,457¥ 1,425,364 $ 15,478,858

Share subscription rights
Total net assets
Total liabilities and net assets¥ 1,894,457¥ 1,425,364 $ 15,478,858

See accompanying Notes to Consolidated Financial Statements.
TOKYO ELECTRON Consolidated Financial Statements FY2022

2

Consolidated Statements of Income

Consolidated Statements of Comprehensive Income

Tokyo Electron Limited and Subsidiaries Years ended March 31, 2022 and 2021

Tokyo Electron Limited and Subsidiaries Years ended March 31, 2022 and 2021

Thousands of
U.S. dollars

Millions of yen

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income

2022

2021

2022

¥2,003,805¥1,399,102$16,372,300

1,091,983

834,157

8,922,161

911,822564,945

7,450,139

312,551

244,259

2,553,733

599,271

320,685

4,896,405

Other income (expenses):

2022

2021

2022

¥437,076¥242,941$3,571,176

27,37445,982

223,665

Net deferred gains on hedging instruments

-

32

-

Foreign currency translation adjustments

20,066

14,536

163,957

Remeasurements of defined benefit plans

1,594

2,266

13,031

70

41

579

49,10762,860401,234

486,183

305,801

3,972,410¥486,183¥305,801$3,972,410

Net income
Other comprehensive income:Net unrealized gains on investment securities

Interest and dividend income

1,576

1,300

12,881Share of other comprehensive income of associates accounted for using
the equity method

Share of profit of associates accounted for using the equity method

1,721

1,110

14,064

Total other comprehensive income

Revenue from grants

492

1,130

4,021

Gain on sales of property, plant and equipment

71

24

582

Foreign exchange loss, net(2,447)(3,147)(19,995)

Additional payment of value-added tax(4,577)-(37,396)

Loss on sales and disposal of property, plant and equipment(406)(1,354)(3,321)

Provision for loss on liquidation of subsidiaries and associates-(3,327)-

Other, net

996

615

8,143

596,698

317,038

4,875,384

Current

162,708

82,5681,329,424

Deferred(3,086)(8,471)(25,216)

Net income

437,076

242,941

3,571,176

Net income attributable to owners of parent¥437,076¥242,941$3,571,176

Income before income taxes

Thousands of
U.S. dollars

Millions of yen

Comprehensive income
Total comprehensive income attributable to:
Owners of parent
See accompanying Notes to Consolidated Financial Statements.

Income taxes:

Yen

U.S. dollars

Per share of common stock:
Net income — basic¥2,807.84¥1,562.20$22.94

Net income — diluted

2,793.89

1,553.29

22.83

Net assets

8,572.45

6,512.18

70.04

Cash dividends

1,403.00

781.0011.46

See accompanying Notes to Consolidated Financial Statements.

3

TOKYO ELECTRON Consolidated Financial Statements FY2022

TOKYO ELECTRON Consolidated Financial Statements FY2022

4

Consolidated Statements of Changes in Net Assets

Consolidated Statements of Cash Flows

Tokyo Electron Limited and Subsidiaries Years ended March 31, 2022 and 2021

Tokyo Electron Limited and Subsidiaries Years ended March 31, 2022 and 2021

Millions of yen
Shareholders’ equity

Accumulated other comprehensive income
Net unrealized Net deferredgains onlosses on
investment
hedgingsecurities
instruments

Foreign
AccumulatedSharecurrency
remeasurements
subscription
translationof definedrightsadjustments
benefit plans

2022

2021

2022

Income before income taxes¥ 596,698¥ 317,038$ 4,875,384

Depreciation and amortization

36,727

33,843300,081

206

199

1,687

Increase in accrued employees’ bonuses

9,540

4,612

77,953

Increase (decrease) in accrued warranty expenses

9,614

(176)

78,558Provision for loss on liquidation of subsidiaries and associates

-

3,327

-

Increase in trade notes and accounts receivable-(37,736)-

Increase in notes and accounts receivable trade, and contract assets(195,543)-(1,597,709)

Increase in inventories(100,309)(17,226)(819,588)

Increase (decrease) in trade notes and accounts payable

18,892(8,255)

154,365(27,675)(13,549)(226,123)

311(5,699)2,544

Increase (decrease) in customer advances

32,031(54,851)

261,712

Other, net

6,758

10,46655,221

Subtotal

387,252

231,990

3,164,089

2,232

1,669

18,242

Income taxes paid

(106,098)(87,772)(866,887)

Net cash provided by operating activities

283,387

145,888

2,315,443

Payment for purchases of short-term investments(35,641)(45,568)(291,215)

Proceeds from maturities of short-term investments

45,61890,506

372,734

Payment for purchases of property, plant and equipment(56,153)(53,806)(458,809)

Payment for acquisition of intangible assets(8,950)(7,124)(73,131)(504)(2,281)(4,125)(55,632)(18,274)(454,548)(15)(4,339)(126)(166,252)(109,542)(1,358,383)

(988)

(643)

(8,073)(167,256)(114,525)(1,366,582)

Effect of exchange rate changes on cash and cash equivalents

9,156

4,946

74,812

Net increase in cash and cash equivalents

69,65518,033569,124

Cash and cash equivalents at beginning of year

265,993247,959

2,173,324¥ 335,648¥ 265,993$ 2,742,449

Cash flows from operating activities:

Commonstock

CapitalsurplusRetainedearnings

Treasurystock¥ 54,961¥ 78,011¥ 702,990¥(29,310)¥ 20,126¥(52)¥(4,111)¥(3,313)¥ 10,391¥ 829,692

Cash dividends--(109,542)

-

-

-

-

-

-

(109,542)

Net income attributable toowners of parent--

242,941

-

-

-

-

-

-

242,941

Purchase of treasury stock

-

-

-

(4,339)

-

-

-

-

-

(4,339)

Disposal of treasury stock--(1,149)

2,906

-

-

-

-

-

1,757

Net changes except forshareholders’ equity

-

-

-

-

45,998(26)

14,553

2,335

1,194

64,054¥ 54,961¥ 78,011¥ 835,240¥(30,744)¥ 66,124¥(79)¥ 10,441¥(978)¥ 11,585¥ 1,024,562

-

-

(753)

-

-

-

-

-

-

(753)

Restated balance

54,96178,011

834,486(30,744)

66,124(79)

10,441(978)11,585

1,023,809

Increase in prepaid consumption tax

Cash dividends--(166,252)

-

-

-

-

-

-

(166,252)

Increase (decrease) in accrued consumption tax

Net income attributable toowners of parent--

437,076

-

-

-

-

-

-

437,076

Purchase of treasury stock

-

-

-

(15)

-

-

-

-

-

(15)

Disposal of treasury stock

-

-

(327)

3,341

-

-

-

-

-

3,014

Net changes except forshareholders’ equity

-

-

-

-

27,36726

20,1991,513

310

49,417¥ 54,961¥ 78,011¥ 1,104,983¥(27,418)¥ 93,492¥(52)¥ 30,640¥ 535¥ 11,895¥ 1,347,048

Balance as ofMarch 31, 2020

Balance as ofMarch 31, 2021
Cumulative effects ofchanges in accounting policies

Balance as ofMarch 31, 2022

Thousands of
U.S. dollars

Millions of yen

Total
net assets

Amortization of goodwill

Receipts from interest and dividends

Cash flows from investing activities:
Thousands of U.S. dollars
Shareholders’ equity

Net unrealized Net deferredgains onlosses on
investment
hedgingsecurities
instruments

Foreign
AccumulatedSharecurrency
remeasurements
subscription
translationof definedrightsadjustments
benefit plans

Commonstock

CapitalsurplusRetainedearnings

Treasurystock$ 449,066$ 637,396$ 6,824,419$(251,199)$ 540,280$(645)$ 85,310$(7,993)$ 94,661$ 8,371,296--(6,159)

-

-

-

-

-

-

(6,159)449,066

637,396

6,818,259(251,199)

540,280(645)

85,310(7,993)

94,6618,365,137

Cash dividends--(1,358,383)

-

-

-

-

-

-

(1,358,383)

Net income attributable toowners of parent--

3,571,176

-

-

-

-

-

-

3,571,176

Purchase of treasury stock

-

-

-

(126)

-

-

-

-

-

(126)

Disposal of treasury stock--(2,673)27,300

-

-

-

-

-

24,626

Net changes except forshareholders’ equity

-

-

-

-

223,605216

165,044

12,3682,534

403,769$ 449,066$ 637,396$ 9,028,379$(224,025)$ 763,886$(429)$ 250,354$ 4,375

Balance as ofMarch 31, 2021
Cumulative effects of changes
in accounting policies
Restated balance

Balance as ofMarch 31, 2022

Total
net assets

Other, net
Net cash used in investing activities
Cash flows from financing activities:
Payment for purchases of treasury stock
Dividends paid
Other, net
Net cash used in financing activities

Cash and cash equivalents at end of year

See accompanying Notes to Consolidated Financial Statements.

5

Accumulated other comprehensive income

TOKYO ELECTRON Consolidated Financial Statements FY2022$ 97,196 $ 11,006,199
See accompanying Notes to Consolidated Financial Statements.

TOKYO ELECTRON Consolidated Financial Statements FY2022

6

Notes to Consolidated Financial Statements
Tokyo Electron Limited and Subsidiaries
Years ended March 31, 2022 and 2021

1. Basis of Presentation of Consolidated Financial Statements
The accompanying consolidated financial statements ofTokyo Electron Limited (hereinafter “the Company”) and its
subsidiaries (hereinafter collectively referred to as “Tokyo
Electron”) have been prepared in accordance with theprovisions set forth in the Financial Instruments and Exchange
Act of Japan and its related accounting regulations, and in
conformity with accounting principles generally accepted inJapan, which are different in certain respects as to applicationand disclosure requirements of International Financial
Reporting Standards.
The Company uses financial statements prepared byforeign subsidiaries in accordance with International Financial
Reporting Standards or U.S. generally accepted accounting
principles for the preparation of the consolidated financial
statements, together with adjustment for certain items which
are required to be adjusted in the consolidation process.
The accompanying consolidated financial statements
have been restructured and translated into English from thestatutory Japanese language consolidated financial statements.
Some supplementary information included in the statutory
Japanese language consolidated financial statements is
not presented in the accompanying consolidated financial
statements.
The amounts in the consolidated financial statements andassociated notes shown in millions and thousands of yen;
thousands of U.S. dollars; and thousands of shares as of and forthe years ended March 31, 2022 and 2021 are truncated at thenearest unit. Accordingly, totals do not necessarily agree withthe sum of the corresponding individual amounts.
U.S. dollar amounts included herein are solely for theconvenience of readers and are presented at the rate of ¥122.39
to $1.00, the approximate rate as of March 31, 2022. The
translation should not be construed as a representation that
the Japanese yen amounts shown could be converted into U.S.
dollars at that or any other rate.
2. Summary of Significant Accounting Policies(a) Principles of consolidation
The consolidated financial statements include the accountsof the Company and its 26 and 27 subsidiaries as of March
31, 2022 and 2021, respectively. All significant inter-company
transactions and account balances have been eliminatedthrough consolidation procedures.
There is 1 affiliate accounted for using the equity method asof March 31, 2022 and 2021.
The fiscal year-end of all entities is March 31, except for
3 consolidated foreign subsidiaries. Financial statements
provisionally closed for the period ending March 31 are used for
those subsidiaries.
(b) Foreign currency translation
All assets and liabilities denominated in foreign currencies aretranslated into Japanese yen at the year-end rates, except for
those hedged by forward exchange contracts and currency option
contracts, which are translated at the contracted rates. Resulting
7

TOKYO ELECTRON Consolidated Financial Statements FY2022

exchange gains and losses are included in earnings for the year.
Revenue and expense items are translated at the rates thatapproximate those prevailing at the time of the transactions.
The balance sheet accounts of foreign subsidiaries aretranslated into Japanese yen at the rates of exchange in effectat the balance sheet date, except for shareholders’ equity
accounts, which are translated at the historical rates. Revenue
and expense accounts of foreign subsidiaries are translated ataverage rates of exchange in effect during the year. Resulting
translation adjustments are presented in net assets as acomponent of accumulated other comprehensive income(loss) in the consolidated balance sheets.

Estimated useful lives of property, plant and equipment are
as follows:
Buildings
2 to 60 years
Machinery and equipment
2 to 20 years(c) Cash and cash equivalents
Cash and cash equivalents consist of cash, short term
deposits and low-risk financial instruments with original
maturities of three months or less.

(j) Impairment of fixed assets
Tokyo Electron evaluates the carrying value of fixed assets
held for use in the business and idle assets.
If the carrying value of a fixed asset is impaired, a loss isrecognized based on the amount by which the carrying value
exceeds its recoverable amount, being the higher of the net
selling price or the value in use of the assets. Net selling priceis determined using the fair value less disposal costs and value
in use is based on the total amount of discounted cash flows
estimated to be generated from the continuing use of theindividual assets or the asset group and the disposal of the assets.

(d) Short-term investments
Short-term investments consist of short term deposits andlow-risk financial instruments with original maturities of morethan three months.
(e) Investment securities
Tokyo Electron examines the intent of holding each security
and classifies those securities as trading securities, held-to
maturity debt securities or other securities. Tokyo Electron
has no trading securities as of March 31, 2022 and 2021. Heldto-maturity debt securities are stated mainly at amortizedcost. Other securities with market prices are valued at fairvalue at the balance sheet date. The differences between thebook value and fair value of other securities, net of applicable
income taxes, are presented in net assets as a componentof accumulated other comprehensive income (loss) in the
consolidated balance sheets. Other securities without market
prices are valued at cost using the weighted-average method.
The cost of sold securities is calculated using the weighted
average method.
(f) Inventories
Inventories are stated at the lower of cost, determined byprincipally the specific identification method, or net selling
price, which is defined as selling price less estimated additional
manufacturing costs and estimated direct selling expenses.
(g) Property, plant and equipment
Property, plant and equipment are stated at cost.
Depreciation of buildings, machinery and equipment of theCompany and its domestic subsidiaries is computed using
the declining-balance method, except for buildings acquiredsince April 1, 1998 and facilities attached to buildings andstructures acquired since April 1, 2016 which are depreciatedusing the straight-line method, based on the estimateduseful lives of assets. Foreign subsidiaries mainly apply thestraight-line method over the estimated useful lives ofassets.

(h) Intangible assets (excluding goodwill)
Intangible assets are amortized by the straight-line method
over their estimated useful lives.
(i) Goodwill
Goodwill is evaluated on an individual basis and amortized by
the straight-line method over a period not exceeding 20 years.

(k) Allowance for doubtful accounts
The Company and its domestic subsidiaries provide anallowance for doubtful accounts at an amount determinedbased on the historical experience of bad debts with respect toordinary receivables, and an estimate of uncollectible amounts
determined by reference to specific doubtful receivablesfrom customers which are experiencing financial difficulties.
Overseas subsidiaries provide an allowance for doubtful
accounts based on an estimate of uncollectible amounts
determined by reference to specific doubtful receivables from
customers which are experiencing financial difficulties.
(l) Accrued employees’ bonuses
The provision for accrued employees’ bonuses is provided
based on the estimated payments to be made in respect of the
fiscal year.
(m) Employee benefits
The Company and its domestic subsidiaries provide defined
benefit plans for their employees. Expected benefits are
attributed to accounting periods by the benefit formula basis.
Prior service costs are charged to earnings on a straight-line
basis, beginning from the fiscal year in which they are incurred,over a fixed number of years (4 years) within the averageremaining years of service of employees when the changes
occur. Actuarial differences are charged to earnings on astraight-line basis, beginning from the following fiscal year
after they are incurred, over a fixed number of years (4 years)
within the average remaining years of service of employees
when the differences occur.
The provision for accrued pension and severance costs

for directors and audit & supervisory board members of
the Company and its domestic subsidiaries is calculated inaccordance with internal regulations.
The Company and certain domestic subsidiaries decided to
discontinue the payment of severance pay for directors andaudit & supervisory board members after April 1, 2005, and at thegeneral shareholders’ meeting in June 2005, it was resolved thatthe severance pay for directors and audit & supervisory board
members until March 31, 2005 would be paid at the terminationof their service and the decision regarding the payment amountfor each director and audit & supervisory board member was
delegated to the board of directors and audit & supervisoryboard members. The accruals for severance costs for directors
and audit & supervisory board members are included in Net
defined benefit liabilities in the consolidated balance sheets.
(n) Accrued warranty expenses
Tokyo Electron’s products are generally subject to warranty,
and Tokyo Electron accrues estimated warranty costs.
Estimated after-sale repair expenses over warranty periods are
accrued based on the historical ratio of actual repair expenses
to corresponding sales.
(o) Derivatives and hedge accounting
The Company and certain subsidiaries (hereinafter “theGroup”) make use of derivatives in order to manage certain
risks arising from adverse fluctuations in foreign currency
exchange rates. The amount of derivatives is limited to theextent of actual demands, and the Group does not trade inderivatives for speculative purposes.
Derivatives are carried at fair value in the consolidatedbalance sheets with changes in unrealized gain or loss charged
or credited to earnings, except for those which meet the criteria
for hedge accounting. Unrealized gains or losses on hedging
instruments, net of taxes, are reported in net assets as acomponent of accumulated other comprehensive income (loss)
in the consolidated balance sheets. Receivables and payables
hedged by qualified forward foreign exchange contracts andcurrency option contracts are translated at the corresponding
contract rates.
(p) Income taxes
Tokyo Electron records deferred tax assets and liabilities
on temporary differences between the carrying amounts ofassets and liabilities for financial reporting purposes and theamounts used for income tax purposes and net operating loss
carryforwards. Deferred tax assets and liabilities are measured
using the enacted tax rates and laws which are expected to bein effect when net operating loss carryforwards and temporary
differences are expected to be realized.
(q) Revenue recognition
Nature of main performance obligations in the principal businessTokyo Electron principally develops, manufactures, and sells
semiconductor production equipment and flat panel display(FPD) production equipment, and provides field solution services

TOKYO ELECTRON Consolidated Financial Statements FY2022

8such as spare parts, services and modifications for installed
equipment, and sales of used equipment. Regarding sales ofequipment, transfer of goods, provision of set-up services, salesof spare parts, and provision of modifications and maintenanceservices are identified as major performance obligations.
Timing of satisfaction of performance obligations(Timing of revenue recognition)
Regarding sales of semiconductor and FPD production
equipment, revenue for the transfer of goods and provisionof set-up services is principally recognized when goods aredelivered to customers and provision of set-up services
is completed. Regarding sales of spare parts, revenue isrecognized when spare parts are delivered to customers.
Regarding modifications, revenue is principally recognizedwhen modifications are completed. Regarding maintenanceservices, revenue is principally recognized over the term of thecontracts with customers.
(r) Research and development expenses
Research and development expenses are charged toearnings as incurred and amounted to ¥158,256 million($1,293,048 thousand) and ¥136,648 million for the years ended
March 31, 2022 and 2021, respectively.
(s) Reclassifications
Certain reclassifications have been made to the prioryear’s consolidated financial statements to conform with thepresentation used for the year ended March 31, 2022.
3. Significant Accounting Estimates
1. Valuation of inventories(1) Carrying amounts in the consolidated financial statements
¥473,845 million ($3,871,599 thousand) and ¥415,344 million
as of March 31, 2022 and 2021, respectively.
(2) Information on the nature of significant accounting estimates
Inventories are principally stated at cost on the consolidatedbalance sheets. When the net selling price for inventory decreases
below its cost at the end of the fiscal year, the Company writes
down inventories in an amount equal to the difference between
the cost of the inventory and the net selling price.
Inventories aged over a certain holding period are classified
based on the expected use and salability and are thensystematically written down according to their classification.
The carrying amount of inventories to be disposed of iswritten down to the estimated disposal value.
The valuation of inventories is based on forecasts offuture demand and prospects for the market environment.
The semiconductor industry, where Tokyo Electron operates,
is influenced by the short-term unbalance between supply
and demand, and the market could undergo fluctuations.
Unforeseen rapid contraction of the semiconductor market
could lead to additional write downs of inventories in the
consolidated financial statements for the next fiscal year.

9

TOKYO ELECTRON Consolidated Financial Statements FY2022

2. Accrued warranty expenses(1) Carrying amounts in the consolidated financial statements¥26,568 million ($217,077 thousand) and ¥14,415 million asof March 31, 2022 and 2021, respectively.
(2) Information on the nature of significant accounting estimates
The Company accrues estimated warranty costs. Estimatedafter-sale repair expenses over warranty periods are accrued
based on the historical ratio of actual repair expenses tocorresponding sales.
Tokyo Electron’s products are based on the integration ofnumerous leading-edge technologies. The occurrence of unforeseen
defects could lead to additional after-sale repair expenses in the
consolidated financial statements for the next fiscal year.
4. C hanges in Accounting Policies and Adoption of New
Accounting Standards
Year ended March 31, 2022
Application of Accounting Standard for Revenue Recognition
From the beginning of this fiscal year, The Company and its
consolidated domestic subsidiaries apply “Accounting Standard
for Revenue Recognition” (ASBJ Statement No. 29, March 31,2020) and recognizes revenue based on the amounts expected
to be received in exchange for the promised goods or services
as the control of such goods or services are transferred tocustomers.
Regarding sales of semiconductor and FPD production
equipment, goods and set-up services to be transferred werepreviously identified as a single performance obligation andrevenue was recorded at the time of the confirmation of set-up
in principle. Going forward, performance obligations related
to goods and set-up services to be transferred for equipment
are separately identified and revenue is recognized when eachperformance obligation is satisfied, which is when equipment
is delivered to customers and services related to setting up
equipment are completed.
In addition, in cases where a series of transactions for sales ofequipment are transacted with the same customer, there can be
special prices such as corresponding to total purchase quantities.
For such series of transactions with special prices, revenue waspreviously recognized based on the price for each order. However,on the grounds that the sales prices of transactions fluctuates
based on future purchase quantities, the accounting method ischanged to treat those special prices as variable consideration,and include it in the transaction price only to the extent that it isprobable that a significant reversal in the amount of cumulative
revenue recognized will not occur when the uncertainty
associated with the variable consideration is subsequently
resolved.
The application of such changes in accounting policies follows
the transitional treatment prescribed in the proviso of paragraph
84 of the Accounting Standard for Revenue Recognition. The
cumulative effect of the retrospective application, assuming the
new accounting policy had been applied to periods prior to thebeginning of this fiscal year, was added to or deducted from the
beginning balance of retained earnings of this fiscal year.

In addition, “Trade notes and accounts receivable” presented
under “Current assets” in the consolidated balance sheets
for the prior consolidated fiscal year was included in “Notes
and accounts receivable - trade, and contract assets” fromthis fiscal year. In accordance with the transitional treatmentprescribed in the paragraph 89-2 of the Accounting Standard
for Revenue Recognition, figures for the prior consolidated
fiscal year have not been restated in accordance with the new
approach to presentation.
As a result, in comparison with the method prior to theapplication of the Accounting Standard for Revenue Recognition,
the consolidated balance sheet as of March 31, 2022 changed,
mainly including an increase of ¥176,527 million in notes andaccounts receivable - trade, and contract assets, a decreaseof ¥118,589 million in inventories, and a decrease of ¥47,472
million in customer advances. In the consolidated statement ofincome for the year ended March 31, 2022, net sales increasedby ¥195,058 million, cost of sales increased by ¥88,084 million,
and each of operating income and income before income taxes
increased by ¥106,974 million, accordingly.
The consolidated statement of cash flows for the year ended
March 31, 2022 changed, mainly including an increase of ¥106,974
million in income before income taxes, an increase of ¥69,043
million in increase in inventories, a decrease of ¥139,564 million
in increase in notes and accounts receivable - trade, and contract
assets, and a decrease of ¥35,234 million in increase (decrease) incustomer advances.
Due to the reflection of the cumulative effect on net assets asof April 1, 2021, the beginning balance of retained earnings in the
consolidated statement of changes in net assets decreased by¥753 million.
In addition, the effect on per share information of this fiscal
year is described in Note 20.
Furthermore, in accordance with the transitional treatmentprescribed in paragraph 89-3 of the Accounting Standard for
Revenue Recognition, Note 18. does not include information forthe prior fiscal year.
Application of Accounting Standard for Fair Value Measurement
From the beginning of this fiscal year, Tokyo Electron
applies “Accounting Standard for Fair Value Measurement”(ASBJ Statement No. 30, July 4, 2019). In accordance withthe transitional treatment prescribed in paragraph 19 of
the Accounting Standard for Fair Value Measurement andparagraph 44-2 of “Accounting Standard for Financial
Instruments” (ASBJ Statement No. 10, July 4, 2019), newaccounting policies prescribed by the Accounting Standard
for Fair Value Measurement are adopted prospectively. Thereis no effect from this change on the consolidated financial
statements.
The breakdown of fair value of financial instruments bylevel is stated in Note 16. In accordance with the transitional
treatment prescribed in paragraph 7-4 of “Implementation
Guidance on Disclosures about Fair Value of Financial Instruments”(ASBJ Guidance No. 19, July 4, 2019), the Note does not include
information for the prior fiscal year.

5. Additional Information
Transactions for Delivery of the Company’s Own Stock to
Employees and others through Trusts
Tokyo Electron introduced stock delivery schemes(hereinafter “the Schemes”) from the fiscal year ended March
31, 2019 as a common global incentive plan. The purpose of the
Schemes is to encourage the directors of the Company and its
subsidiaries (excluding outside directors), executive officers
and senior and mid-level employees to contribute to improving
medium-term business performance, as well as to share ashareholder perspective by holding Company shares and raisingawareness towards enhancing corporate value.
For the Company's outside directors, the Company
has introduced non-performance-linked stock-based
compensation from the fiscal year ended March 31, 2021 asa system that is more consistent with their expected role ofadvising management from the perspective of increasing
corporate value over the medium- to long-term, in addition to
management supervision. In accordance with that objective,
the Company's outside directors are now within the scope.
Tokyo Electron adopted the “Practical Solution on
Transactions for Delivery of the Company’s Own Stock to
Employees, and others through Trusts” (PITF No. 30, March 26,2015) for the accounting treatment of the Schemes.
1. E
 xecutive compensation BIP (Board Incentive Plan) Trust(1) Overview of the transactions
The Executive compensation BIP Trust which the Company
established acquires the Company’s shares, and delivers andprovides shares of the Company and monetary compensation
corresponding to the cash conversion value of the Company’s
shares to the directors of the Company and its subsidiaries inaccordance with the share delivery rules.
(2) The Company’s shares held by the trust
Tokyo Electron recorded the Company’s shares held by
the trust in “Treasury stock, at cost” under “Net assets” at thebook value in the trust (excluding ancillary expenses). The bookvalue and the number of such treasury shares were ¥1,744
million ($14,254 thousand) and 80,538 shares, respectively, as
of March 31, 2022, and were ¥1,744 million and 80,538 shares,
respectively, as of March 31, 2021.
2. Share-delivering ESOP (Employee Stock Ownership Plan) Trust(1) Overview of the transactions
The Share-delivering ESOP Trust which the Company
established acquires the Company’s shares, and delivers andprovides shares of the Company and monetary compensation
corresponding to the cash conversion value of the Company’s
shares to the general managers, senior employees and midclass employees of the Company and its subsidiaries basedon their position and attainment of performance targets inaccordance with the share delivery rules.
(2) The Company’s shares held by the trust
Tokyo Electron recorded the Company’s shares held by theTOKYO ELECTRON Consolidated Financial Statements FY202210trust in “Treasury stock, at cost” under “Net assets” at the bookvalue in the trust (excluding ancillary expenses). The book value
and the number of such treasury shares were ¥11,409 million($93,223 thousand) and 529,991 shares, respectively, as ofMarch 31, 2022, and were ¥11,507 million and 534,699 shares,
respectively, as of March 31, 2021.

Cost

Carrying value

Non-current
Securities with carrying value exceedingacquisition cost
¥7,904Equity securities¥142,831

Securities with carrying value not exceedingacquisition cost
Equity securities
Total

2,023

1,991

¥9,927¥144,822

Millions of yen

2021:

Cost

Carrying value

Non-current
Securities with carrying value exceedingacquisition cost
Equity securities¥8,123¥103,607

Securities with carrying value not exceedingacquisition cost
Equity securities

1,051

Other
Total

1,037

274

274

¥9,449¥104,920

Thousands of U.S. dollars

2022:

Cost

Carrying value

Non-current
Securities with carrying value exceedingacquisition cost
Equity securities$64,582$1,167,017

16,532

16,272$81,115$1,183,289

Securities with carrying value not exceedingacquisition cost
Equity securities
Total

Held-to-maturity securities classified as current assets are¥97,000 million ($792,550 thousand) and ¥125,014 million as ofMarch 31, 2022 and 2021, respectively.
Reconciliation of held-to-maturity securities as of March 31,
2022 and 2021 to the amounts of short-term investments inthe consolidated balance sheets are as follows:
Thousands of
U.S. dollars

Millions of yen

Held-to-maturity (current)

11

2022

2021

2022

¥97,000¥125,014$792,550

Deposits and low-risk financial
instruments with original
maturities of three months or less

(62,000)(80,000)(506,577)

Deposits with original maturities ofmore than three months

626

545

5,115

¥35,626¥45,559$291,088

Short-term investments

TOKYO ELECTRON Consolidated Financial Statements FY2022

Thousands of
U.S. dollars

Millions of yen

Millions of yen(2) Movement of plan assets
2022
Balance at April 1, 2021
and 2020

Finished products

The amounts of change in inventory provision included in costof sales in the consolidated statements of income for the years
ended March 31, 2022 and 2021 were an increase of ¥308 million($2,518 thousand) and ¥3,223 million, respectively.
8. Pledged Assets
Tokyo Electron did not hold any assets pledged as collateral
as of March 31, 2022 and 2021.
9. Short-term Borrowings
There are no short-term borrowings classified as current
liabilities as of March 31, 2022 and 2021.
As of March 31, 2022 and 2021, Tokyo Electron had unusedlines of credit amounting to ¥276,988 million ($2,263,166
thousand) and ¥276,952 million, respectively.
10. Employee Benefits
The Company and its domestic subsidiaries provide a cash
balance plan and a non-contributory retirement and severance
benefit plan as defined benefit plans, and provide a defined
contribution plan as defined contribution plans for their employees.
Further, certain consolidated overseas subsidiaries provide defined
benefit plans and defined contribution plans for their employees.

Thousands of
U.S. dollars

Millions of yen

2022

Service cost

2021

2022

¥124,212¥118,729$1,014,889

6,463

6,179

52,814

Interest cost

842

814

6,887

Actuarial gain (loss)

(484)

1,834

(3,955)(5,075)(4,498)(41,469)

Benefits paid

530

830

4,332

Other

149

322

1,224

Balance at March 31, 2022
and 2021¥126,639¥124,212$1,034,722

1,032

(885)

8,435

¥1,032¥(1,223)$8,435

2022

2021

522

844

4,268

—

(28)

—

¥80,292¥74,095$656,038(3) Reconciliation from defined benefit obligations and plan
assets to net defined benefit liabilities (assets)
Thousands of
U.S. dollars

2022

2021

2022

Funded defined benefit
obligations¥65,330¥63,053$533,790

Plan assets(80,292)(74,095)(656,038)

Funded status(14,961)(11,042)(122,248)Unfunded defined benefit
obligations

61,30961,158500,932Net defined benefit liabilities at
March 31, 2022 and 2021

¥46,347¥50,116$378,684

Net defined benefit liabilities

62,53362,137510,935

Net defined benefit assets(16,186)(12,021)(132,251)

Net defined benefit liabilities at
March 31, 2022 and 2021

¥46,347¥50,116$378,684

Note: The provision for accrued pension and severance costs for directors and audit &supervisory board members of ¥110 million ($900 thousand) and ¥110 million as ofMarch 31, 2022 and 2021 is not included.

(7) Plan assets
1. Plan assets comprise:Life insurance company general account

31%

29%

Alternative investments (Note)

25

13

Bonds

14

30

Equity securities

14

14

Cash and cash equivalents

5

1

Other

11

13

Total

100%

100%

Note: Alternative investments mainly consist of multi-assets, hedge funds, real estate,
infrastructure and insurance-linked securities.

2. Long-term expected rate of return
Current and target asset allocations, and historical andexpected returns on the various categories of plan assets havebeen considered in determining the long-term expected rate of
return.
(8) Actuarial assumptions
The principal actuarial assumptions as of and for the years
ended March 31, 2022 and 2021 are as follows:
2022

2021

Discount rate

0.54%

0.50%

Long-term expected rate of return

2.00%

2.00%

(4) Defined benefit costs
Thousands of
U.S. dollars

Millions of yen

Service cost

2022

2021

2022

¥6,463¥6,179$52,814

842

814

6,887

Expected return on plan assets(1,577)(1,335)(12,887)

Net actuarial gain amortization

952

676

7,783

Prior service cost amortization

338

338

2,766

Other

329

522

2,690

¥7,350¥7,195$60,054Total defined benefit costs forthe years ended March 31, 2022
and 2021(5) Remeasurements of defined benefit plans
Thousands of
U.S. dollars

Millions of yen

Foreign currency exchange
rate changes$—¥(338)

Total

Foreign currency exchange
rate changes

Millions of yen

¥—

2022

2021

4,946
42,577

Interest cost

Defined benefit plans(1) Movement of defined benefit obligations

4,404(14,045)

Balance at March 31, 2022
and 2021$3,871,599

605

Prior service cost that is yet to berecognized (before tax)
Net actuarial gain (loss) that is yet
to be recognized (before tax)

5,042

Other

¥415,344

12,887(1,434)$1,499,408¥473,845$605,404

1,335

5,211

¥269,772

Total¥63,931

1,577(1,719)¥183,512

2,372,190

2022¥74,095

Thousands of
U.S. dollars

Millions of yen

2022

Benefits paid

2022

145,571

2021

Employer contributions

2021

290,332

Balance at April 1, 2021
and 2020

Actuarial gain (loss)

2022
Work in process, raw materials
and supplies(6) Accumulated remeasurements of defined benefit plans
Thousands of
U.S. dollars

Millions of yen

Expected return on plan assets

7. Inventories
Inventories as of March 31, 2022 and 2021 are as follows:

6. Securities
Other securities as of March 31, 2022 and 2021 are as
follows:
2022:

Net loss on devaluation of investment securities was
immaterial and none for the years ended March 31, 2022 and
2021, respectively.
For the year ended March 31, 2022 and 2021, the Company soldavailable-for-sale securities and the amounts were immaterial.

2022

2021

The expected rates of salary increase for the years ended
March 31, 2022 and 2021 are also considered as one of theactuarial assumptions, and are set based on the salary increaseindex by age group as of January 1, 2019.
Defined contribution plans
The contributions of the Company and its subsidiaries tothe defined contribution plans are ¥3,123 million ($25,520
thousand) and ¥2,873 million for the years ended March 31,
2022 and 2021, respectively.
11. Income Taxes
Significant components of the deferred tax assets andliabilities as of March 31, 2022 and 2021 are as follows:

2022

Prior service cost (before tax)

¥338

¥338

$2,766

Actuarial gain (before tax)

1,917

2,997

15,667

Total¥2,256¥3,335$18,433

TOKYO ELECTRON Consolidated Financial Statements FY2022

12

Thousands of
U.S. dollars

Millions of yen

2022

2021

2022

Deferred tax assets
Elimination of unrealized profit ininventories¥21,936¥32,723$179,233

Net defined benefit liabilities

19,25019,305

157,289

Software11,494

7,522

93,916

Accrued employees’ bonuses

9,605

7,480

78,484

Devaluation of inventories

7,908

8,792

64,615

Accrued warranty expenses

7,181

4,023

58,673

Accrued enterprise taxes

6,149

3,720

50,243Other

24,306

20,631

198,596

Total gross deferred tax assets

107,832

104,199

881,053

Less valuation allowance(5,467)(4,762)(44,670)

Total deferred tax assets

102,364

99,436

836,382

Deferred tax liabilities
Net unrealized gains on
investment securities(41,253)(29,164)(337,068)

Significant components of the difference between thestatutory and effective tax rates for the years ended March 31,
2022 and 2021 are as follows:
Statutory tax rate in Japan

(11,506)(10,570)(94,015)

Other(5,397)(6,590)(44,101)

Total deferred tax liabilities(58,157)(46,326)(475,184)

Net deferred tax assets¥44,207¥53,110$361,197

TOKYO ELECTRON Consolidated Financial Statements FY2022

2022

2021

30.62%

30.62%March 31, 2022 since they are recognized in the period in which they are resolved at the board of directors’ meeting. The dividends of¥118,833 million include ¥464 million ($3,791 thousand) related to treasury stock held by the BIP/ESOP Trusts.
13. Other Comprehensive Income
Other comprehensive income for the years ended March 31, 2022 and 2021 is as follows:
Thousands of
U.S. dollars

Millions of yen

2022

2021

2022

¥39,592¥66,262(132)

0(1,086)Sub-total, before tax

39,45966,262

322,407

Tax expense(12,085)(20,279)(98,742)Sub-total, net of tax

27,37445,982

223,665

Net unrealized gains on investment securities
Net unrealized gains arising during the year
Reclassification adjustments$323,494

Net deferred gains on hedging instruments

Adjustments:

Net deferred gains arising during the year

—

47

—

Tax credits(4.14)(7.52)

Reclassification adjustments

—

—

—

Others, net

0.27

0.27

Sub-total, before tax

—

47

—

23.37%Tax expense

—

(14)

—

Sub-total, net of tax

—

32

—

Adjustments during the year

20,105

13,448164,274

Reclassification adjustments

—

69

—

20,105

13,517

164,274

Effective tax rateUndistributed earnings ofsubsidiaries

The ultimate realization of deferred tax assets is dependent
upon the generation of future taxable income during the period
in which temporary differences become deductible and net
operating loss carryforwards are available to be utilized. For
assessment of the realizability of deferred tax assets, management
considers the scheduled reversal of deferred tax liabilities, future
estimated taxable income, tax planning strategies and level of net
operating loss carryforwards, if any, in accordance with accounting
principles generally accepted in Japan.
Based on the level of historical taxable income and future
estimated taxable income over the periods which the temporary
differences are deductible and net operating loss carryforwards
are available to be utilized, management believes Tokyo Electron
will realize the benefits of deferred tax assets, net of valuation
allowance, as of March 31, 2022 and 2021.
The Company and its wholly-owned domestic subsidiaries
apply a consolidated tax filing system for corporate tax
purposes.
The Company and its domestic subsidiaries calculated theamounts of deferred tax assets and deferred tax liabilities
based on the Income Tax Act prior to amendment regarding
the transition to group tax sharing system established in “Actfor Partial Amendment of the Income Tax Act, etc. ” (Act No.8
of 2020) and the items for which the single tax payment
system was amended in line with the transition to group tax
sharing system, in accordance with the treatment specified
by paragraph 3 of “Practical Solution on the Treatment of Tax
Effect Accounting for the Transition from the Consolidated
Taxation System to the Group Tax Sharing System” (PITF No.39,
March 31, 2020) instead of the provision of paragraph 44 of”Implementation Guidance on Tax Effect Accounting” (ASBJ
Guidance No. 28, February 16, 2018).
13

The Company and its domestic subsidiaries will transition
from a consolidated tax filing system to a group tax sharing
system for corporate tax purpose from the next fiscal year.
From the beginning of the next fiscal year, the Company
and its domestic subsidiaries will apply “Practical Solution on
the Accounting and Disclosure Under the Group Tax Sharing
System” (PITF No.42, August 12, 2021) which provides thepractical solution on the accounting and the disclosure ofcorporate tax, local tax, and tax effect accounting.

26.75%

12. Net Assets
Net assets comprises four subsections, which areshareholders’ equity, accumulated other comprehensive
income, share subscription rights and non-controlling interests.
Under Japanese laws and regulations, the entire amount
paid for new shares is required to be designated as common
stock. However, a company may, by a resolution of the board of
directors, designate an amount not exceeding one half of theprice of the new shares as additional paid-in capital which isincluded in capital surplus.
In cases where dividend distribution of surplus is made, thelesser of an amount equal to 10% of the dividend or the excess,if any, of 25% of common stock over the total of additional
paid-in capital and legal reserve must be set aside as additional
paid-in capital or legal reserve. Legal reserve is included inretained earnings in the accompanying consolidated balance
sheets.
Both appropriations of legal reserve and additional paid-in
capital used to eliminate or reduce a deficit generally require aresolution of the shareholders’ meeting.
Additional paid-in capital and legal reserve may not be
distributed as dividends. All additional paid-in capital andlegal reserve may be transferred to other capital surplus andretained earnings, respectively, which are potentially available
for dividends.
The Company is subject to restriction of dividends basedon the Japanese Corporate Act, which restricts the amount ofdividends to retained earnings on a consolidated basis.
The Company’s articles allow for the distribution of earnings
to shareholders on dates other than the mid-term and yearend, by a resolution of the board of directors in accordancewith Japanese laws and regulations.
At the board of directors’ meeting held on May 12, 2022, thedistribution of cash dividends amounting to ¥118,833 million($970,941 thousand) was resolved. Such appropriations havenot been accrued in the consolidated financial statements as ofForeign currency translation adjustments

Sub-total, before tax
Tax expense
Sub-total, net of tax

(38)

1,018

(316)

20,066

14,536

163,957

Remeasurements of defined benefit plans
Adjustments during the year

964

2,321

7,883

Reclassification adjustments

1,291

1,014

10,55018,433Sub-total, before tax

2,256

3,335

Tax expense(661)(1,069)(5,402)Sub-total, net of tax

1,594

2,266

13,031

Share of other comprehensive income of associates accounted for using the equity method
Adjustments during the year
Total other comprehensive income

14. Share Subscription Rights
Stock option plan
The Company’s shareholders have approved annual stock
option plans for directors and selected employees since theyear ended March 31, 1999. The options under the plans vest
immediately or over three-year period with restriction on
exercise up to three years after the date of grant, and have an
exercise period of seventeen years from the date on which the

70

41

579

¥49,107¥62,860$401,234

options become exercisable.
Options to purchase 70,000 shares and 130,800 shares of
the Company were authorized and granted at exercise prices of¥1 ($0.01) and ¥1 for the years ended March 31, 2022 and 2021,
respectively.
A summary of stock options outstanding and exercisable asof March 31, 2022 and 2021 is as follows:

2022
Number ofshares2021

Weightedaverage exercise priceYen

U.S. dollars

Number ofshares

Weightedaverage exercise price
Yen

Outstanding at the beginning of year

828,100¥1$0.01

866,900

Granted70,0001

0.01

130,800

1

Exercised

193,600

1

0.01

169,600

1
—

¥1

—

—

—

—

Outstanding at the end of year

704,500

1

0.01

828,100

1

Exercisable at the end of year

143,300

1

0.01

117,000

1

Expired (forfeited)TOKYO ELECTRON Consolidated Financial Statements FY2022

14

Amounts expensed related to stock options
The amounts expensed related to stock options for theyears ended March 31, 2022 and 2021, are as follows:
Thousands of
U.S. dollars

Millions of yen

2022
Selling, general andadministrative expenses

2022

2021

¥3,226$26,358¥2,884

Valuation method of fair value per unit of stock options
Fair value as of the grant date for stock options granted forthe year ended March 31, 2022 and 2021 were ¥46,086 ($376.55)
and ¥22,054 per unit, which were evaluated as follows:(1) Valuation method used: Black-Scholes model(2) Major underlying assumptions and estimates:
17th Stock
Acquisition Rights

16th Stock
Acquisition Rights

Volatility (Note 1)

34.86%

36.18%

Expected residual period (Note 2)

5.26 years

5.49 years

Expected dividends (Note 3)¥684.50 ($5.59)
per share¥673.00 ($6.08)
per share

Risk-free interest rate (Note 4)(0.10)%(0.12)%

Notes: 1. Calculated based on the stock price performance for the period corresponding
to the expected residual period (from March 2016 to June 2021 and December
2014 to June 2020 for 17th and 16th Stock Acquisition Rights).
2. Calculated based on past actual results and forecast of the exercise of stock
options.
3. Based on the dividends paid for the years ended March 31, 2021 and 2020, and theyears ended March 31, 2020 and 2019, for 17th and 16th Stock Acquisition Rights.
4. Based on Japanese government bond yield corresponding to the
expected residual period.

(3) Method of estimating the number of vested stock options
It is not necessary to estimate the number of vested stock
options as the rights to exercise stock options are vested
immediately when granted.

Fair value of financial instruments
Carrying amount and estimated fair value of financial
instruments as of March 31, 2022 and 2021 are set out below.
Estimated
fair value1

Cash and cash equivalents¥10,000¥10,002

Short-term investments

35,00034,990Investment securities

142,993

142,990

1,358

1,358

—

—

2022:
AssetsDerivatives (see Note 17)
Hedge accounting applied

Millions of yen

Thousands of
U.S. dollars

2021:
AssetsCarrying
amountEstimated
fair value1

2022

2021

2022

Due within one year

¥4,428¥4,601$36,180

Short-term investments¥45,014¥45,016

Due over one year

12,816

10,051

104,716

Investment securities

103,781

103,781

Total¥17,244¥14,653$140,897

Derivatives (see Note 17)

Note: Certain consolidated overseas subsidiaries adopt IFRS 16 “Leases” . Accordingly,
leases as a lessee are not included in the amounts above, since they are recordedon the balance sheets in principle.

Hedge accounting not applied

600

600

Hedge accounting applied——Thousands of U.S. dollars

2022:

Carrying
amountEstimated
fair value1

AssetsCash and cash equivalents$81,706$81,722

Short-term investments

285,972

285,890

Investment securities

1,168,345

1,168,318

11,102

11,102——Derivatives (see Note 17)
Hedge accounting not applied
Hedge accounting applied

15

TOKYO ELECTRON Consolidated Financial Statements FY2022

Notes:1. A part of Cash and cash equivalents and Short-term investments, Trade notes
and accounts receivable, and Notes and accounts receivable - trade, andcontract assets are omitted because they are cash or settled in a short period oftime and the fair values approximate the book values.
2. The following financial instruments classified as stocks without market prices
and similar financial instruments are not included in the above.
Thousandsof U.S.
dollars

Millions of yen

2022

2022

2021

Reported amount in balance sheet
Unlisted stocks¥1,978$16,166¥1,008

Other

—

274

—

Total

¥1,978¥1,283$16,166

Millions of yen

Fair value
2022:

Level 1

Level 2Equity securities¥142,844

After 1 through5 years¥335,648¥—

Short-term investments

35,626—

Trade notes and accounts receivable

415,333——

149

Millions of yen

Within 1 year

After 1 through5 years

Cash and cash equivalents¥265,993¥—

Short-term investments

45,559—Trade notes and accounts receivable

191,700

—

—

144

2021:

Investment securities¥—¥142,844

Currency-Related
Transactions
Total

—

1,358

—

1,358

¥142,844¥1,358¥—¥144,203

Thousands of U.S. dollars

Level 1

Level 2

Level 3

Total

Investment securities

Within 1 year

Investment securities¥—

Derivatives

Fair value

Millions of yen

Cash and cash equivalents

Total

Other securities

2022:

2022:

Level 3

Investment securities

3. Maturities of financial assets and securities are as follows:

Millions of yen

Carrying
amountHedge accounting not applied

15. Leases
Future minimum lease payments on non-cancelable
operating leases are as follows:
Millions of yen

16. Fair Value of Financial Instruments
Policy for financial instruments
Tokyo Electron limits its fund management to short-termbank deposits and low-risk financial instruments.
Trade receivables, which consist of notes and accounts
receivable, are exposed to credit risk in the event of nonperformance by the counterparties. Execution and managementof credit risk, maturity and receivable balance are conductedpursuant to the internal management rules for credit control.
Credit risk of major customers is assessed on a regular basis.
Short-term investments consist of short term deposits andlow-risk financial instruments and Tokyo Electron trade withhighly-rated financial institutions to mitigate credit risks.
Investment securities mainly consist of equity interests inlisted companies exposed to equity market risks. Conditions,
including market prices, for these investment securities aremonitored on a regular basis.
Trade payables, which consist of notes and accounts
payable, mainly mature within one year. Trade payables are
exposed to liquidity risks which are managed through activities
such as implementing cash management plans.
See Note 17 for detailed discussion on derivative financial
instruments.

Thousands of U.S. dollars

Other securities
Equity securities$1,167,122$—$— $1,167,122

DerivativesCurrency-Related
Transactions
Total

—

11,102—$1,167,122$11,102$— $1,178,225

11,102(2) F inancial instruments other than those recorded at fair value
in the consolidated balance sheets
Millions of yen

Fair value
2022:

Level 1

Level 2

Level 3Total

Cash and cash equivalents,
Short-term investments,
and Investment securities

2022:

Within 1 year

After 1 through5 years

Cash and cash equivalents$2,742,449$—

Corporate bonds¥—¥44,991¥—

Short-term investments

291,088

—

Other

—

146

—

146

3,393,521—¥—¥45,138¥—¥45,138—

1,222

Trade notes and accounts receivable
Investment securities

Held-to-maturity
securities

Total¥44,991

Thousands of U.S. dollars

Hierarchy by level for fair value of financial instruments
The fair values of financial instruments are classified into
the following three levels according to the observability andsignificance of the inputs used in fair value measurements:
Level 1: Fair values measured based on quoted prices of theassets or liabilities being measured which are available inactive markets as observable valuation inputs
Level 2: F air values measured based on inputs other than inputs
included within Level 1 as observable valuation inputs
Level 3: Fair values measured based on unobservable valuation
inputsWhen several inputs that have a significant impact
on fair value measurements are used, the fair values are
categorized into the lowest level in the hierarchy for fair value
measurements among the levels to which each of the inputs
belongs.

Fair value
2022:

Level 1

Level 2

Level 3Total

Cash and cash equivalents,
Short-term investments,
and Investment securities
Held-to-maturity
securities

Total

Corporate bonds$—$367,610

$—

Other

—

1,197

—

$367,610
1,197$—$368,807$—$368,807

Note: Explanation of valuation techniques and valuation inputs used in fair value
measurements
Cash and cash equivalents, short-term investments, and investment securities
For equity securities, the fair values are based on quoted market prices thatcan be measured at unadjusted quoted prices in active markets, and areclassified as Level 1.
For corporate bonds, the fair values are based on the price offered by financial
institution and are classified as Level 2.
Derivatives
The fair values of currency-related transactions are based on the price offeredby financial institution and are classified as Level 2.

(1) Financial instruments recorded at fair value in the
consolidated balance sheets

TOKYO ELECTRON Consolidated Financial Statements FY2022

1617. Derivative Financial Instruments
Tokyo Electron and certain subsidiaries are subject torisk from adverse fluctuations in foreign currency exchange
rates in its operating and financing activities. The Group
enters into forward foreign exchange contracts in order tohedge such risks, but do not enter into such transactions andcurrency option contracts for speculative purposes. The Group
implements a ratio analysis of the total cumulative cash flow
fluctuations or market fluctuations for the hedged item or
the hedging instrument to assess effectiveness of hedging
for all derivative transactions, except for transactions where
the critical terms of the hedging instrument and hedged item
match and the Group could conclude that changes in fair value
or cash flows are expected to completely offset. Execution
and management of all derivative transactions are conductedpursuant to the internal management rule.
The estimated fair values of the derivative financial
instruments as of March 31, 2022 and 2021 are as follows:

18. Revenue Recognition
Disaggregation of revenue arising from contracts with customers
Disaggregation of revenue by geographic regions, and types of products and services are as follows:

1. Derivative financial instruments not designated as hedging
instruments
Millions of yen

Contract
amount2022:

Fair value

Gains(losses)Millions of yen

Sell U.S. dollars¥3,660

¥(10)

¥(10)

Buy U.S. dollars

23,250

1,071

1,071

Buy Chinese yuan

6,276

297

297

Reportable Segment

2022:

Semiconductor
production
equipment

FPD
production
equipment

Other(Note 1)Total

Buy EURO

819

0

0

Geographic regions:

Buy Singapore dollars

271

(0)

(0)

Japan

¥228,902¥1,334¥131¥230,368¥34,278¥1,358¥1,358

North America

268,065——

268,065

Europe107,954——

107,954South Korea

377,767

3,407—

381,175

359,225

2,343—

361,569
566,219

Total

Millions of yen

2021:

Contract
amountFair value

Gains(losses)TaiwanChina

513,529

52,689—

Buy U.S. dollars¥12,449

¥551

¥551

Others

88,39854—

88,453

Buy Chinese yuan

2,931

48

48

Total

¥1,943,843¥59,830¥131¥2,003,805

1,499,079

48,610—1,547,689

444,764

11,220131

456,116¥1,943,843¥59,830¥131¥2,003,805

Buy Singapore dollars

328

0

0

Buy EURO77

0

0¥15,786

¥600

¥600

Total

Products and services:
New equipment (Note 2)
Field solution services and Others (Note 2)

Thousands of U.S. dollars

Contract
amount2022:

Fair value

Total
Gains
(losses)Thousands of U.S. dollars

Reportable Segment

Sell U.S. dollars$29,911

$(82)

$(82)

Buy U.S. dollars

189,970

8,753

8,753

Buy Chinese yuan

51,283

2,429

2,429

Buy EURO

6,694

7

7

Geographic regions:Japan$1,870,273$10,901$1,075$1,882,250

North America

2,190,259——

2,190,259

882,049——

882,049

3,086,585

27,844—

3,114,430

2,215

(4)

(4)

$280,074$11,102$11,102

Buy Singapore dollars
Total

2022:

EuropeSouth Korea

2. Derivative financial instruments designated as hedging instruments
The contract amounts of forward foreign exchange contracts, entered into to hedge future transactions and receivables andpayables denominated in foreign currencies that have been translated by the corresponding contracted rates are none and as
follows for the year ended March 31, 2022 and 2021, respectively:

Semiconductor
production
equipment

FPD
production
equipment

Other(Note 1)

Total

Taiwan2,935,090

19,147—2,954,237

China

4,195,845

430,507—4,626,353

722,270448—

722,719$15,882,375$488,849$1,075$16,372,300

New equipment (Note 2)

12,248,382

397,173—

12,645,556

Field solution services and Others (Note 2)

3,633,992

91,676

1,075

3,726,744$15,882,375$488,849$1,075$16,372,300

Others
Total
Products and services:

Millions of yen

2021:

Contract amountContract amount due after
1 yearFair value

Total

Monetary assets and liabilities in foreign currency (Note)
Sell U.S. dollars

1,804

—

—

Total

¥1,804¥—¥—

Note: The fair value of these derivative financial instruments, which is based on the quoted foreign exchange rates, is included in the carrying value of hedged assets and liabilities.

17

TOKYO ELECTRON Consolidated Financial Statements FY2022

Notes: 1. “Other” includes all other operating segments which are not included in the reportable segments, including the group-wide logistic services, facility maintenance and insurance.
2. “New equipment” includes sales of new equipment and set-up services to be transferred for equipment. “Field solution services and Others” includes spare parts, services andmodifications for installed equipment, and sales for used equipment.
3. Net sales amounting to ¥2,003,805 million recorded in the consolidated statements of income for the year ended March 31, 2022 is mainly “Revenue arising from contracts withcustomers”. Revenue arising from other sources is included in the “Disaggregation of revenue arising from contracts with customers” because its amount is immaterial. Most of
the revenue arising from contracts with customers is arising from goods or services transferred to customers at a point in time. Maintenance services included in field solution
services are revenue arising from services provided to customers over time and are recognized revenue over time. However, it is not separately disclosed in the “Disaggregationof revenue arising from contracts with customers” because it is immaterial.

TOKYO ELECTRON Consolidated Financial Statements FY2022

18

Basic information for the understanding of revenue arisingfrom contracts with customers
Information on performance obligations (the nature of
performance obligations (the nature of the goods or services
that Tokyo Electron has promised to transfer to the customer))In the business of semiconductor production equipment
and FPD production equipment, Tokyo Electron delivers
equipment and provides equipment installation at customer’ssites and adjustment to adequately demonstrate equipment
performance to satisfy customers’ specifications.
It also provides field solution services such as spare parts,
services and modifications for installed equipment, and sales
for used equipment.
Regarding sales of semiconductor and FPD production
equipment, performance obligations related to transfer ofgoods and provision of set-up services are separately identified.
Regarding sales of spare parts, performance obligations related
to each spare parts delivery are separately identified. Regarding
modifications, modification parts delivery and modification
operation by using these modification parts are identified
as a single performance obligation. In addition, provision ofmaintenance services is identified as a performance obligation.
Timing of satisfaction of performance obligations (Timing ofrevenue recognition)
Revenue related to equipment delivery is principally
recognized when the equipment is transferred to the customer
because the legal title to the equipment is transferred to thecustomer, the customer obtains control of the equipment, andthe performance obligation is considered satisfied.
Revenue related to provision of set-up services is principally
recognized when the equipment is installed at the customer’ssite and adjustment to adequately demonstrate equipment
performance to satisfy customers’ specification is completed,and the performance obligation is considered satisfied.
Revenue related to spare parts is recognized when spareparts are transferred to the customer because the legal title
to spare parts is transferred to the customer, the customer
obtains control of spare parts, and the performance obligationis considered satisfied.
Revenue related to modifications is principally recognizedwhen the modification is completed, and the performanceobligation is considered satisfied.
Revenue related to maintenance services is recognizedover the term of the contracts with customers because theperformance obligation is satisfied over time.
Payment terms
The transaction consideration is received according to thecontract terms with customers. Since the period between
satisfaction of performance obligations and payments oftransaction consideration generally does not exceed one
year, transaction consideration does not include a significant
financing component. According to the contracts withcustomers, in some cases advance payments are received
before all performance obligations are satisfied.
19

TOKYO ELECTRON Consolidated Financial Statements FY2022

Determination of transaction priceTransaction prices are determined at the time of thecommencement of the transaction with customers.
In cases where a series of transactions for sales ofequipment are transacted with the same customer, there canbe special prices such as corresponding to purchase quantities.
For such series of transactions with special prices, on the
grounds that the sales price of transactions fluctuates basedon future purchase quantities, the special prices are treatedas variable consideration and included in the transaction
price only to the extent that it is probable that a significant
reversal in the amount of cumulative revenue recognized will
not occur when the uncertainty associated with the variableconsideration is subsequently resolved. Transaction prices are
estimated including variable consideration by using customers’planned purchase quantities or planned sales quantities towhich special prices apply, which are indicated when suchseries of transactions with special prices are proposed.
Estimation of variable consideration is periodically revised
based on the status of transactions with customers.
Allocation of transaction price to performance obligations
Allocation of transaction prices to performance obligations
reflects the amount of consideration expected to be received
in exchange for transferring goods or services to customers.
Transaction prices are allocated to each performance obligation
identified in the contracts based on the relative stand-alone
selling prices of goods or services. If the stand-alone selling
price of goods or services is not directly observable, the standalone selling price is estimated based on the cost approach byadding an appropriate margin to expected costs calculated
based on historical actual costs.
Relationship between satisfaction of performanceobligations based on contracts with customers and cash
flows arising from the contracts, and information on theamount and timing of revenue expected to be recognizedfrom the next fiscal year from contracts with customers
existing as of this fiscal year end(1) Balances of contract assets and contract liabilities
Thousands of
U.S. dollars

Millions of yen

Receivables from contracts
with customers

March 31, 2022

April 1, 2021

March 31, 2022

¥415,333¥221,967$3,393,521

Contract assets

18,614

6,695

152,095

Contract liabilities

102,555

69,484

837,937

are satisfied. The contract liabilities are reclassified to revenue
when revenue is recognized.
The revenue recognized during the fiscal year ended March
31, 2022 that was included in the contract liabilities balance asof April 1, 2021 was ¥64,876 million.
Increase / decrease of contract assets are principally due torevenue recognition and reclassification to accounts receivable.
Increase / decrease of contract liabilities are principally due
to advance received and revenue recognition.
The revenue recognized during the year ended March 31,
2022 for which performance obligations were satisfied or
partially satisfied in the previous period was immaterial.
(2) T ransaction prices allocated to remaining performanceobligations
The practical expedient is applied for this Note fortransaction prices allocated to remaining performanceobligations. The contracts for which original expected terms ofthe contract is one year or less are not included in this Note.
The amount of performance obligations not satisfied or
partially not satisfied is ¥171,553 million as of March 31, 2022,
and approximately 80% of such performance obligations are
expected to be recognized as revenue within one year after
March 31, 2022.
The total amount of transaction prices allocated to theremaining performance obligations does not include theestimated amounts of variable consideration described in“Determination of transaction price” above.
19. Segment Information
General information about reportable segments
A reportable segment is a component or an aggregatedcomponent of Tokyo Electron. 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 be allocated to the segment and assess its
performance.
The operation of Tokyo Electron consists of segments byproducts and services based on business units (BUs), and Tokyo
Electron identifies as a reportable segment, “semiconductor
production equipment (SPE)” and “flat panel display (FPD)
production equipment”.

Products of the SPE segment consist of coater/developers,
etch systems, deposition systems, cleaning systems used inwafer processing, wafer probers used in the wafer testingprocess and other semiconductor production equipment, suchas wafer bonders/debonders. The SPE segment principallydevelops, manufactures, and sells such products, and provides
services related to them.
Products of the FPD production equipment segment
consist of coater/developers, etch/ash systems used in the
manufacture of flat panel displays and inkjet printing systems
used in the manufacture of OLED displays. The FPD production
equipment segment principally develops, manufactures, andsells such products, and provides services related to them.
Basis of measurement of reportable segment net sales,
segment profit (loss), segment assets and other items
The accounting policies applied in each reportable segment
are generally consistent with those applied for the preparationof the consolidated financial statements. Intersegment sales
or transfers are determined by negotiation between theTokyo Electron group companies considering current market
prices. Assets in common use have not been allocated to eachreportable segment, while costs associated with those assets
have been allocated to reportable segments on a systematic
basis.
As described in “4. Changes in Accounting Policies andAdoption of New Accounting Standards”, Tokyo Electronchanged the accounting treatment for revenue recognition by
adopting the Accounting Standard for Revenue Recognition fromthe beginning of this fiscal year, and accordingly changed themethods for measuring profits or losses of business segments inthe same manner.
As a result, in comparison with the previous method, net
sales of the semiconductor production equipment segment
and the FPD production equipment segment for the year ended
March 31, 2022 increased by ¥188,757 million and ¥6,301 million,
respectively. In addition, segment profit of the semiconductor
production equipment segment and the FPD production
equipment segment for the year ended March 31, 2022
increased by ¥105,410 million and ¥1,563 million, respectively.

The contract assets principally relate to Tokyo Electron’s
rights to consideration for performance obligations transferred
but not billed at the fiscal year end. The contract assets
are transferred to receivables arising from contracts withcustomers when the rights for the considerations become
unconditional.
The contract liabilities principally relate to advances
received from customers before all performance obligations

TOKYO ELECTRON Consolidated Financial Statements FY2022

20

Information about reportable segment net sales, segment profit (loss), segment assets and other items
Reportable segment information as of and for the years ended March 31, 2022 and 2021 is as follows:

Other information(1) Domestic and overseas net sales by destination for the years ended March 31, 2022 and 2021 are as follows:
Millions of yen

Millions of yen

Reportable Segment

2022:

Semiconductor
production
equipment

FPD
production
equipment¥1,943,843¥59,830

¥131

—

—

28,0001,943,843

59,830

Other(Note 1)

Adjustments(Note 2)

Consolidated¥2,003,805¥—¥2,003,805

28,000(28,000)—

28,132

2,031,806(28,000)

2,003,805

Total

Net sales
Sales to external customers
Intersegment sales or transfers
Total
Segment profit

667,437

3,874

698

672,010(75,312)596,698

Segment assets

949,71425,0193,895

978,629

915,828

1,894,457

Depreciation and amortization

19,1491,258

148

20,556

16,17036,727

206

—

—

206

—

206

25,331

1,592

20

26,94539,936

66,881

Amortization of goodwill
Capital expenditures, including intangible assets

2022:

Japan

North America

EuropeSouth Korea

Taiwan

China

Other

Net sales¥230,368¥268,065¥107,954¥381,175¥361,569¥566,219¥88,453

EuropeSouth Korea

Taiwan

China

Other

¥285,261¥249,766¥398,491¥52,439

Total¥2,003,805

Notes: 1. Sales are classified in countries or regions based on location of customers.
2. Net sales of North America include sales in the U.S.A. of ¥267,999 million.
Millions of yen

2021:

Japan

North America

Net sales¥197,566¥152,073¥63,502

Total¥1,399,102

Notes: 1. Sales are classified in countries or regions based on location of customers.
2. Net sales of North America include sales in the U.S.A. of ¥151,659 million.
Thousands of U.S. dollars

2022:

Japan

North America

Net sales$1,882,250$2,190,259

EuropeSouth Korea

TaiwanChina$882,049$3,114,430$2,954,237$4,626,353

Other

Total

$722,719 $16,372,300

Note: Net sales of North America include sales in the U.S.A. of $2,189,720 thousand.
Millions of yen(2) Net property, plant and equipment by location as of March 31, 2022 and 2021 are as follows:

Reportable Segment

2021:

Semiconductor
production
equipment

FPD
production
equipment¥1,315,200¥83,772

¥129

—

—

21,952

1,315,200

83,772Millions of yen

Other(Note 1)

Adjustments(Note 2)

Consolidated¥1,399,102¥—¥1,399,102

21,952(21,952)—

22,082

1,421,055(21,952)

1,399,102

Total

Net sales
Sales to external customers
Intersegment sales or transfers
Total
Segment profit

362,526

8,823

534

371,884(54,846)

317,038

Segment assets

626,957

29,405

3,276

659,638

765,725

1,425,364

Depreciation and amortization
Amortization of goodwill
Capital expenditures, including intangible assets

17,9191,492

199

19,611

14,231

33,843

199

—

—

199

—

199

23,485

1,256

107

24,84939,91364,7622022:
Property, plant and equipment

Japan

Other

Total

¥173,493¥49,584¥223,078

Millions of yen

2021:
Property, plant and equipment

Japan

Other

Total

¥155,637¥41,330¥196,967

Thousands of U.S. dollars

2022:
Property, plant and equipment

Japan

Other

Total

$1,417,548$405,135$1,822,683(3) Major customer information
Net sales to external customers that represent 10 percent or more of net sales are as follows:

Thousands of U.S. dollars

Millions ofyen

Reportable Segment

2022:

Semiconductor
production
equipment

FPD
production
equipment$15,882,375$488,849

Other(Note 1)

Total

Adjustments(Note 2)Name of customer

Related reportable segment

2022

2022

Consolidated

Samsung Electronics Co., Ltd.

Semiconductor production equipment and FPD production equipment¥312,279$2,551,515

Intel Corporation

Semiconductor production equipment

303,9822,483,722$—$16,372,300

Taiwan Semiconductor Manufacturing Company Ltd.

Semiconductor production equipment

231,393

1,890,627

Net sales
Sales to external customers$1,075$16,372,300——

228,781

228,781(228,781)

—

Total

15,882,375

488,849

229,857

16,601,082(228,781)

16,372,300

Segment profit

5,453,364

31,6595,706

5,490,731(615,346)

4,875,384

Segment assets

7,759,736

204,425

31,828

7,995,989

7,482,868

15,478,858Intersegment sales or transfers

Depreciation and amortization
Amortization of goodwill
Capital expenditures, including intangible assets

156,465

10,2781,214

167,959

132,122300,081

1,687

—

—

1,687

—

1,687

206,976

13,015

166

220,159

326,305

546,464

Notes: 1 . “Other” includes all other operating segments which are not included in the reportable segments, including group-wide logistic services, facility maintenance and insurance.
2. ( 1) “ Adjustments” for segment profit totaling ¥(75,312) million ($(615,346) thousand) and ¥(54,846) million for the years ended March 31, 2022 and 2021, respectively, mainly
consists of research and development costs of ¥(23,075) million ($(188,537) thousand) and ¥(21,669) million for the years ended March 31, 2022 and 2021, respectively,
pertaining to the Company's fundamental research and element research, additional payment of value-added tax of ¥(4,577) million ($(37,396) thousand) for the year ended
March 31, 2022, provision for loss on liquidation of subsidiaries and associates of ¥(3,327) million for the year ended March 31, 2021 and other general and administrative costs
that do not belong to the reportable segments.
(2) “ Adjustments” for segment assets totaling ¥ 915,828 million ($ 7,482,868 thousand) and ¥765,725 million as of March 31, 2022 and 2021, respectively, mainly consist of cash
and cash equivalents, buildings and investment securities not allocated to any of the reportable segments.
(3) “ Adjustments” for capital expenditures totaling ¥ 39,936 million ($ 326,305 thousand) and ¥39,913 million for the years ended March 31, 2022 and 2021, respectively, mainly
consist of capital expenditures for buildings not allocated to any of the reportable segments.

21

TOKYO ELECTRON Consolidated Financial Statements FY2022

Thousands of
U.S. dollars

Note: The amounts include sales to the customer and its subsidiaries.
Millions ofyen

Name of customer

Related reportable segment

Samsung Electronics Co., Ltd.

Semiconductor production equipment and FPD production equipment¥256,656

2021

Intel Corporation

Semiconductor production equipment

193,706

Taiwan Semiconductor Manufacturing Company Ltd.

Semiconductor production equipment

164,340

Note: The amounts include sales to the customer and its subsidiaries.

TOKYO ELECTRON Consolidated Financial Statements FY2022

22

Information about reportable segment goodwill
Reportable segment information about amortization of goodwill for the years ended March 31, 2022 and 2021, and unamortizedbalances as of March 31, 2022 and 2021 are as follows:
Millions of yen

2022:

Semiconductor
production
equipment

FPD
production
equipment

Total

Amortization of goodwill

¥206

¥—

¥206

Goodwill

531

—

531

Millions of yen

2021:

Semiconductor
production
equipment

FPD
production
equipment

Total

Amortization of goodwill

¥199

¥—

¥199

Goodwill

733

—

733

Thousands of U.S. dollars

2022:

Semiconductor
production
equipment

FPD
production
equipment

Total

Amortization of goodwill$1,687$—$1,687

Goodwill

4,346

—

4,346

20. Per-Share Information
Net income per share and net assets per share are computed based on the weighted-average number of shares of common
stock outstanding during each year. Net income-diluted per share is computed based on the weighted-average number of shares ofcommon stock outstanding during each year after incorporating the dilutive potential effect of shares of common stock to be issued
upon the exercise of stock options.
Dividends per share has been presented on an accruals basis and include, in each fiscal year ended March 31, dividends approved
or to be approved after March 31 but applicable to the year then ended.
The basis for the calculation of net income per share for the fiscal years ended March 31, 2022 and 2021 is as follows:
Thousands of U.S.
dollars

Millions of yen

2022

2022

2021

Net income per share of common stock - Basic¥437,076¥242,941———

Net income pertaining to holders of common stock¥437,076¥242,941$3,571,176

Weighted-average number of shares of common stock outstanding (thousands)

155,662

155,511Net income attributable to owners of parent
Less components not pertaining to holders of common stock$3,571,176

Net income per share of common stock - Diluted
Adjustment of net income attributable to owners of parent——

Increase in number of common stock (Thousands of share)

777

892

777

892

Increase in number of share subscription rights (Thousands of share)—

Note: The shares of the Company held by “Executive compensation BIP Trust” and “Share-delivering ESOP Trust”, which are recorded in “Treasury stock, at cost” under shareholders’ equity,
are included in the treasury stock which is deducted in calculating the per-share information.
The number of treasury shares deducted in the calculation of net assets per share was 610 thousand shares and 615 thousand shares as of March 31, 2022 and 2021, respectively, andthe average number of treasury shares deducted in the calculation of net income per share and fully diluted net income per share was 612 thousand shares and 568 thousand sharesfor the fiscal years ended March 31, 2022 and 2021, respectively.
As described in “4. Change in Accounting Policies and Adoption of New Accounting Standards”, Tokyo Electron applies the Accounting Standard for Revenue Recognition fromthe fiscal year ended March 31, 2022, and the application of such changes in accounting policies follows the transitional treatment prescribed in the proviso of paragraph 84 of thestandard. As a result, net assets per share increased by ¥471.69, net income per share increased by ¥476.79, and fully diluted net income per share increased by ¥474.42, respectively,
for the fiscal year ended March 31, 2022.

23 TOKYO ELECTRON Consolidated Financial Statements FY2022

TOKYO ELECTRON Consolidated Financial Statements FY2022

24

Independent Auditor’s Report
Reasonableness of the valuation of inventories in the semiconductor production equipment business
The key audit matter

How the matter was addressed in our audit

To the Board of Directors of Tokyo Electron Limited:

OpinionWe have audited the accompanying consolidated financial statements of Tokyo Electron Limited (“the Company”) and its
consolidated subsidiaries (collectively referred to as “the Group”), which comprise the consolidated balance sheets as at
March 31, 2022 and 2021, the consolidated statements of income, comprehensive income, changes in net assets and cash
flows for the years then ended, and the related notes to the consolidated financial statements.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated
financial position of the Group as at March 31, 2022 and 2021, and its consolidated financial performance and its consolidated
cash flows for the years then ended in accordance with accounting principles generally accepted in Japan.

Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our responsibilities under thosestandards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our
audit of the consolidated financial statements in Japan, and we have fulfilled our other ethical responsibilities in accordancewith these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.

Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of theconsolidated financial statements of the current period. These matters were addressed in the context of our audit of theconsolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion
on these matters.

In the consolidated balance sheet for the current fiscal year,
the Company recognized Inventories of ¥473,845 million, which
represented approximately 25% of total assets in the consolidated
financial statements. Most of the inventories belonged to thesemiconductor production equipment business.
As described in Note 3 “Significant Accounting Estimates, 1.
Valuation of inventories” to the consolidated financial statements,
inventories are measured in principle at the lower of either theacquisition cost or the net selling price at the end of the fiscal
year. However, inventories aged over a certain holding period
are classified based on the use and salability and are thensystematically written down according to their classification. In
addition, the carrying amount of inventories to be disposed of iswritten down to the estimated disposal value.
The valuation of inventories aged over a certain holding period
and the identification of finished goods and work in process
inventories to be disposed of are based on management’s
forecasts of future demand and prospects of market environment.
Among the markets in which the Group participate, thesemiconductor market is susceptible to fluctuations due to ashort-term imbalance between supply and demand, which could
result in an unforeseen rapid market contraction. Therefore,
the forecasts of future demand and prospects of market
environment involve uncertainty and management’s judgment
thereon may have a significant effect on the valuationof inventories.
We, therefore, determined that our assessment of thereasonableness of the Company’s valuation of inventories inthe semiconductor production equipment business was one of
the most significant in our audit of the consolidated financial
statements for the current fiscal year, and accordingly,
a key audit matter.

The primary procedures we performed to assess whether
the Company’s valuation of inventories in the semiconductor
production equipment business was reasonable included
the following:(1) Internal control testing
We tested the design and operating effectiveness of certainof the Company’s internal controls relevant to the valuationof inventories.
In this assessment, we focused our testing on controls designed todetermine the rates of write-down for each holding period on the
carrying amount of inventories aged over a certain holding period
and to identify finished goods and work in process inventories tobe disposed of in a comprehensive manner.
(2) Assessment of whether the valuation of inventories aged
over a certain holding period was reasonable
The rates of write-down by holding period adopted bymanagement in applying the method that writes down the
carrying amount of inventories on a systematic basis according totheir holding periods were determined based on management’s
forecasts of future demand and prospects of market environment.
In order to assess the appropriateness of assumptions underlying
the rates of write-down determined by management, we:• evaluated the rates of write-down by holding period determinedby management by referencing published demand forecasts forsemiconductor production equipment and the customers’ capital
investment plans; and• compared the amount of the write-down of inventories aged
over a certain holding period, calculated using the rates of writedown by holding period determined by management, with ourown estimate of the write-down of those inventories.
(3) Assessment of whether finished goods and work inprocess inventories to be disposed of were identified in acomprehensive mannerAmong finished goods and work in process inventories aged over acertain holding period, we assessed the accuracy of management’s
sales forecasts by comparing the past forecast for a selection offinished goods and work in process inventories held for a long
period with actual sales results and examining the causes ofvariances between the two. In order to assess the appropriatenessof assumptions related to sales forecasts adopted by management
in identifying finished goods and work in process inventories to bedisposed of, we primarily:• evaluated the basis for management judgment on its sales
forecasts for finished goods and work in process inventories held
for a long period by inquiring of management and inspecting
relevant documents.

25 TOKYO ELECTRON Consolidated Financial Statements FY2022

TOKYO ELECTRON Consolidated Financial Statements FY2022

26

Other Information
The other information comprises the information included in the disclosure documents that contain or accompany the audited
consolidated financial statements, but does not include the consolidated financial statements and our auditor’s report thereon.
We do not perform any work on the other information as we determine such information does not exist.

Responsibilities of Management and Corporate Auditors and the Board of Corporate Auditors for theConsolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance withaccounting principles generally accepted in Japan, and for such internal control as management determines is necessary to enable
the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern in accordance with accounting principles generally accepted in Japan.
Corporate auditors and the board of corporate auditors are responsible for overseeing the directors’ performance of their duties
with regard to the design, implementation and maintenance of the Group’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free frommaterial misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonableassurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with auditing standards
generally accepted in Japan will always detect a material misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these consolidated financial statements.
As part of our audit in accordance with auditing standards generally accepted in Japan, we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:• I dentify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting
from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in thecircumstances, while the objective of the audit is not to express an opinion on the effectiveness of the Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by management.
• Conclude on the appropriateness of management’s use of the going concern basis of accounting and based on the audit
evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on
the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’sreport. However, future events or conditions may cause the Group to cease to continue as a going concern.
• Evaluate whether the presentation and disclosures in the consolidated financial statements are in accordance with accounting
standards generally accepted in Japan, the overall presentation, structure and content of the consolidated financial statements,
including the disclosures, and whether the consolidated financial statements represent the underlying transactions and eventsin a manner that achieves fair presentation.
27

TOKYO ELECTRON Consolidated Financial Statements FY2022• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within theGroup to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision andperformance of the group audit. We remain solely responsible for our audit opinion.
We communicate with corporate auditors and the board of corporate auditors regarding, among other matters, the planned
scope and timing of the audit, significant audit findings, including any significant deficiencies in internal control that we identify
during our audit.
We also provide corporate auditors and the board of corporate auditors with a statement that we have complied with relevant
ethical requirements regarding independence, and communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with corporate auditors and the board of corporate auditors, we determine those matters thatwere of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter orwhen, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse
consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Convenience Translation
The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the year ended March 31, 2022
are presented solely for convenience. Our audit also included the translation of yen amounts into U.S. dollar amounts and, in our
opinion, such translation has been made on the basis described in Note 1 to the consolidated financial statements.

Interest required to be disclosed by the Certified Public Accountants Act of Japan
We do not have any interest in the Group which is required to be disclosed pursuant to the provisions of the Certified Public
Accountants Act of Japan.
/S/ 宍戸 通孝
Michitaka Shishido
Designated Engagement Partner
Certified Public Accountant/S/ 西野 聡人
Akira Nishino
Designated Engagement Partner
Certified Public Accountant/S/ 鈴木 紳
Shin Suzuki
Designated Engagement Partner
Certified Public Accountant
KPMG AZSA LLC
Tokyo Office, Japan
June 21, 2022

Notes to the Reader of Independent Auditor’s Report:
This is a copy of the Independent Auditor’s Report and the original copies are kept separately by the Company and KPMG AZSA LLC.
TOKYO ELECTRON Consolidated Financial Statements FY2022

28

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Minato-ku, Tokyo 107-6325, Japan
Tel: +81-3-5561-7000
www.tel.com

TEL is a registered trademark or a trademark of Tokyo Electron Limited in Japan and/or other countries.

PR60-228