TOKYO ELECTRON
Jan 29, 2016

Consolidated Financial Review
for the Third Quarter Ended December 31, 2015
Company name:
URL:
Telephone number:
Stock exchange listing:Tokyo Electron Limited
http://www.tel.com(03) 5561-7000
Tokyo Stock Exchange 1st Section (Code 8035)

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

1. Financial highlights for the nine months ended December 31, 2015
Nine months ended
December 31, 2014 December 31, 2015
Net sales (Millions of yen)
431,295
499,722
Operating income (Millions of yen)
52,196
86,763
Ordinary income (Millions of yen)
56,77988,039Net income attributable to owners of parent (Millions of yen)
37,46859,235
Net income per share (Yen)
209.05347.30Fully diluted net income per share (Yen)
208.56346.42Comprehensive income:Nine months ended December 31, 2015: 54,461 million yen
Nine months ended December 31, 2014: 45,978 million yen(1) Operating results (Cumulative)(2) Financial position
As ofMarch 31, 2015
Total assets (Millions of yen)
Net assets (Millions of yen)
Equity ratio (%)
Equity: 555,665 million yen (as of December 31, 2015)
639,483 million yen (as of March 31, 2015)

876,153
641,16273.0

As of
December 31, 2015
768,640
557,717
72.3

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

1Q-end dividend per share (Yen)
2Q-end dividend per share (Yen)
3Q-end dividend per share (Yen)
Year-end dividend per share (Yen)Annual dividend per share (Yen)
Note: Revision of dividends forecast : None1

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

660,000
105,000
106,000
72,000426.25

Notes: Revision of earnings forecast : None

4. Others(1)

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

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

Number of shares issued and outstanding (common stock)
1. Number of shares issued and outstanding (including treasury stock)
As of December 31, 2015:

180,610,911 shares

As of March 31, 2015:

180,610,911 shares

2. Number of shares of treasury stock
As of December 31, 2015:

16,630,134 shares

As of March 31, 2015:

1,344,892 shares

3. Average number of shares outstanding
Nine months ended December 31, 2015:

170,561,309 shares

Nine months ended December 31, 2014:

179,232,134 shares

Notification of the status of quarterly financial review procedures:This quarterly financial report is outside the jurisdiction of auditing procedures outlined in the Financial Instruments
and Exchange Act and remain incomplete at the time of announcing this report.
Explanations on the appropriate use of earnings forecast:
The performance forecast and estimate stated in this Financial Review are based on certain assumptions judged tobe reasonable at the present time in light of information currently available. Consequently, actual operating results
may differ substantially from the projections in this Financial Review.
The company plans to hold a financial meeting for analysts and investors on Friday Jan 29, 2016. The
supplementary materials to these financial reports that will be handed out at this meeting will be posted
simultaneously on our company website.

2

TOKYO ELECTRON

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

Although economic growth was observed to slow in emerging economies such as China, the global
economy during the first three quarters of the current fiscal year generally showed signs of a moderate
recovery.
In the electronics industry, the primary area of the Tokyo Electron (TEL) Group’s business activities, theelectronics components market was robust, as mobile devices gained increased functionality andadvancements made in areas such as cloud services led to soaring demand for servers for data centers.
Under these circumstances, the Group’s consolidated results (cumulative) for the first three quarters were
net sales of 499,722 million yen (a year-on-year growth of 15.9%), operating income of 86,763 million yen(a year-on-year growth of 66.2%), ordinary income of 88,039 million yen (a year-on-year growth of 55.1%)
and net income attributable to owners of parent of 59,235 million yen (a year-on-year growth of 58.1%).

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

(i) Semiconductor Production Equipment
Although demand for smartphones and tablets was sluggish, capital investment by semiconductor
manufacturers was robust due to the increased functionality of smartphones and demand for servers fordata centers. Consequently, net sales to external customers in this segment for the first three quarters of
the current fiscal year were 463,511 million yen (a year-on-year growth of 14.6%).

(ii) Flat Panel Display (FPD) Production Equipment
In the market for FPD production equipment, capital investment in facilities for manufacturing large-sized
flat panel displays increased in China, and investment aimed at small to medium-sized flat panel displays
used for mobile devices showed signs of recovery. As a result, net sales to external customers in thissegment for the first three quarters of the current fiscal year were 30,000 million yen (a year-on-year growthof 31.7%).

3

TOKYO ELECTRON(iii) Others
Net sales to external customers in this segment for the first three quarters of the current fiscal year were
6,210 million yen (a year-on-year growth of 59.5%).

(For reference)

Consolidated Operating Results（Millions of yen）
FY2016Net Sales
Semiconductor Production Equipment
Japan
U.S.
EuropeKorea
TaiwanChina
S.E.Asia
FPD Production Equipment
OthersOperating Income
Ordinary Income
Net Income Attributable to Owners of Parent
Note:

1Q

2Q

3Q

Total

155,762
140,365
25,011
30,776
17,05328,14023,13014,084
2,169
10,0705,326
30,27930,207
19,481

185,189
176,62237,80929,491
9,620
25,211
52,92817,041
4,520
8,205
361
30,97032,177
21,895

158,771
146,523
27,02823,42814,856
15,25743,354
17,2195,379
11,724522
25,51325,655
17,858499,722463,51189,84883,69541,53068,609119,413
48,344
12,06930,0006,210
86,76388,03959,235

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

Production and Order Performance
1. Production（ Millions of yen）
FY2016
1Q
147,830
10,435
5,124
163,390

Semiconductor Production Equipment
FPD Production Equipment
Others
Total
Note:

2Q
150,176
12,758
162,935

3Q
131,554
10,295
141,849

Total
429,561
33,4895,124
468,175

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

2. Orders Received（ Millions of yen）
FY2016
1Q
156,663
11,847
1,835
170,346

Semiconductor Production Equipment
FPD Production Equipment
OthersTotal
Note:

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

42Q
122,499
12,502
204
135,206

3Q
159,307
13,947492
173,747

Total
438,470
38,2972,531
479,299

TOKYO ELECTRON

3. Orders Backlog（ Millions of yen）
FY2016

Semiconductor Production Equipment
FPD Production Equipment

1Q
276,766
33,3882Q
222,643
37,686

3Q
235,426
39,908OthersTotal

201
310,35544
260,37313
275,348

Note:

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

(2) Description of Financial Conditions(i) Financial Conditions
Current assets at the end of the third quarter of the current fiscal year were 579,835 million yen, down
91,047 million yen compared to the end of the previous fiscal year. The major factors influencing this result
were a 59,300 million yen decrease in short-term investments included in securities, a 24,573 million yen
decrease in cash and deposits, and an 8,006 million yen decrease in trade notes and accounts receivable.
Tangible fixed assets decreased by 6,562 million yen from the end of the previous fiscal year, to 100,333
million yen.
Intangible fixed assets decreased by 6,853 million yen from the end of the previous fiscal year, to 20,712
million yen.
Investment and other assets decreased by 3,049 million yen from the end of the previous fiscal year, to67,758 million yen.
As a result, total assets decreased by 107,513 million yen from the end of the previous fiscal year, to768,640 million yen.
Current liabilities were down 21,376 million yen compared to the end of the previous fiscal year, to 151,436
million yen. The major factors causing the decrease were a 10,416 million yen decrease in trade notes andaccounts payable, and a 10,231 million yen decrease in customer advances.
Long-term liabilities were down 2,692 million yen compared to the end of the previous fiscal year, to 59,485
million yen.
Net assets were down 83,444 million yen compared to the end of the previous fiscal year, to 557,717 million
yen. The main factors were an increase due to reported net income attributable to owners of parent of
59,235 million yen, a decrease of 105,808 million yen due to the purchase of treasury stock, and adecrease as a result of the payment of 33,013 million yen in year-end dividends for the previous fiscal year
and interim dividends for the current fiscal year. As a result, the equity ratio was 72.3%.

5

TOKYO ELECTRON(ii) Cash Flow
Cash and cash equivalents at the end of the third quarter of the current fiscal year decreased by 191,861
million yen compared to the end of the previous fiscal year, to 125,770 million yen. The combined balance
including 108,038 million yen in time deposits and short-term investments with periods to maturity orredemption of at least three months that are not included in cash and cash equivalents was 233,809 million
yen, down 83,873 million yen from the end of the previous fiscal year. The overall situation regarding cash
flow during the first three quarters of the current fiscal year was as described below.
Cash flow from operating activities was positive 61,439 million yen, up 21,369 million yen compared to thesame period of the previous fiscal year. The main positive factors were 82,657 million yen in net income
before income taxes, 14,279 million yen in depreciation and amortization, and a 7,100 million yen decreasein trade notes and accounts receivable. The main negative factors were the payment of income taxes of
12,176 million yen, a decrease of 10,639 million yen in customer advances, a decrease of 10,107 million
yen in accounts payable and a 9,686 million yen increase in inventories.
Cash flow from investing activities was negative 114,084 million yen compared to positive 126,701 million
yen in the same period of the previous year. The primary negative factor was 108,000 million yen in
payments associated with an increase in short-term investments, and 7,529 million yen in payments forpurchase of tangible fixed assets.
Cash flow from financing activities was negative 138,598 million yen, compared to negative 11,922 million
yen in the same period of the previous fiscal year. This was primarily the result of the payment of 105,531
million yen for the purchase of treasury stock, and the payment of 33,013 million yen in dividends.

6

TOKYO ELECTRON

Consolidated Cash Flow (Summary)Nine months ended
December 31, 2014

（ Millions of yen）
Nine months ended
December 31, 2015

Cash flow from operating activities
Income before income taxes
Depreciation and amortization
Loss on impairment
Decrease in trade notes and accounts receivable (increase)
Decrease in inventories (increase)
Increase in accounts payable (decrease)40,07053,852
15,1893,503(15,903)(2,277)61,43982,657
14,2794,434
7,100(9,686)(10,107)

OthersCash flow from investing activities
Decrease in time deposits and short-term investments (increase)(14,294)
126,701
133,300(27,237)(114,084)(107,987)

Others (purchase of fixed assets)
Cash flow from financing activities
Purchase of treasury stock
Others(6,598)(11,922)(168)(11,754)(6,097)(138,598)(105,531)(33,067)

Effect of exchange rate changes on cash and cash equivalents(4,342)(617)

Net increase in cash and cash equivalents (decrease)

150,505(191,861)

Cash and cash equivalents at beginning of period

104,797

317,632

Cash and cash equivalents at end of period

255,303125,770

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

285,359

233,809(3) Description of Financial Estimates Information such as Consolidated Performance Forecasts
There are no changes in the forecast of consolidated financial results for the entire fiscal year ending March
31, 2016 from the forecasts released at the time of the previous announcement on October 27, 2015.

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

7

TOKYO ELECTRON

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

As ofDecember 31, 2015

ASSETS
Current assets
Cash and deposit

79,38254,809Trade notes and accounts receivable

110,845

102,838

Securities

238,532

179,000

Merchandise and finished goods

112,301

115,674

Work in process

41,48344,735

Raw materials and supplies

21,80323,542Others

66,91359,275

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

(378)

(40)

670,882

579,835

106,896

100,333

27,566

20,712

27,566

20,712

72,692

69,610Investments and other assets
OthersAllowance for doubtful accounts(1,884)(1,852)

Total investments and other assets

70,80767,758205,271

188,805

876,153

768,640

Total long-term assets
Total assets

8

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

As ofDecember 31, 2015

LIABILITIESCurrent liabilities
Trade notes and accounts payable

56,47846,062

Income taxes payable

6,196

14,783

Accrued warranty expenses

10,441

9,533

Other allowance

13,151

6,543

Others86,54374,513

Total current liabilities

172,812

151,436374

374

Net defined benefit liability

51,10451,706

Others

10,699

7,404

Total long-term liabilities

62,17859,485234,991

210,922

Common stock

54,961

54,961

Capital surplus

78,02378,023Retained earnings

488,816

514,492(9,064)(113,766)

612,736

533,710

9,463

8,267

Long-term liabilities
Other allowance

Total liabilities
NET ASSETS
Shareholders' equity

Treasury stock
Total shareholders' equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges

122

(2)

Translation adjustments

12,481

10,269Remeasurements of defined benefit plans

4,681

3,419

Total accumulated other comprehensive income

26,747

21,954

1,420

1,827

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

9

257

225

641,162

557,717876,153

768,640

TOKYO ELECTRON

Consolidated Statement of Income(Millions of yen)
Nine months ended
December 31, 2014

Nine months ended
December 31, 2015

Net sales

431,295

499,722

Cost of sales

266,204

301,640

Gross profit

165,090

198,082

51,79455,931

Selling, general & administrative expenses
Research and development expenses
Others61,09955,386

Total selling, general & administrative expenses

112,894

111,318

52,196

86,763Operating income
Non-operating income
Foreign currency translation income

1,796

-

Others

2,879

2,301

Total non-operating income

4,675

2,301

Non-operating expenses
Payment for purchase of treasury stock-

662

Others92363

Total non-operating expenses

92

1,025

56,77988,039Gain on sale of fixed assets

183

1,010

Gain on sale of investment securities

54

Total unusual or infrequent profit

238

Ordinary income
Unusual or infrequent profit

1,010

Unusual or infrequent loss
Loss on impairment-

Expenses for restructuring of business bases

4,434

951

Others2,214

Total unusual or infrequent loss

1,958

3,165

6,393

Income before income taxes

53,85282,657

Income taxes

16,35023,392

Net income

37,501

59,264

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

10

33

29

37,46859,235

TOKYO ELECTRON

Consolidated Statement of Comprehensive Income(Millions of yen)

Net income

Nine months ended
December 31, 2014

Nine months ended
December 31, 2015

37,501

59,2642,370(1,193)

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

143

(146)

Translation adjustments

7,277(2,211)Remeasurements of defined benefit plans(1,321)(1,224)

5(26)

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

8,476(4,802)45,97854,46145,91654,442

61

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

11

TOKYO ELECTRON

Notes
Remarkable Changes in Shareholders' Equity
Tokyo Electron Limited executed the purchase of treasury stock based on the resolution of its Board of Directors dated
April 27, 2015. Due to the purchase and other transactions, the amount of treasury stock of the company increased by
104,702 million yen for the third quarter of the current fiscal year and resulted in 113,766 million yen at the end of thethird quarter of the current fiscal year.

Loss on impairment
The Tokyo Electron Group groups its business assets into small units that generate independent cash flow. For thosebusiness sites we have decided to restructure or handle otherwise, we are grouping assets separately based on eachindividual business.
During the first three quarters of the current fiscal year, we posted a loss on impairment of the following asset groups.

Location

PurposeAccounting treatment

Chaska, Minnesota,
U. S. A.

-

Goodwill, etc.

Loss on impairment(Millions of yen)

4,434

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

12

TOKYO ELECTRON

Segment Information(i) Overview of reportable segments

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

(ii) Net sales and income (loss) in reportable segments
Nine months ended December 31, 2015

(Millions of yen)

Reportable Segments
Semiconductor
Production
Equipment

FPD Production
Equipment

OthersTotal

Net sales

463,51130,00014,663508,175

Segment income(loss)

97,034

2,976

2,168

102,179

Eliminations

Consolidated Total

Net sales(8,453)499,722

Segment income(loss)(19,521)82,657

Notes:
1. The "Others" is all other businesses segment which are not included in the reported business segments,
such as Photovoltaic Panel (PV) Production Equipment and the transportation of products, facility
management and insurance of the Tokyo Electron Group.
2. The eliminations of segment income amounting to 19,521 million yen includes corporate expenses
pertaining to the corporate account which are not allocated to any specific reportable segments. The
corporate account expenses are mainly R&D expenses of 9,647 million yen, pertaining to fundamental
research and element research conducted by the company not related to any of the reportable segments.
3. Segment income is adjusted against income before income taxes in consolidated statement of income.

13

TOKYO ELECTRON

Segment Information(iii)

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

Impairment losses on fixed assets and goodwill, etc. in reportable segments
Significant impairment losses related to fixed assets: None
Significant changes in goodwill amount: None
Significant income related to negative goodwill: None

Note: Significant events after reporting period
Cancellation of treasury stock
At the Board of Directors meeting held on December 21, 2015, Tokyo Electron Ltd. resolved to cancel treasury stock under
the provision of Article 178 of the Companies Act.
The cancellation was put into effect on January 20, 2016, as scheduled. The details are listed below.
1. Type of shares cancelled: Share of common stock
2. Total number of shares cancelled: 15,400,000 shares(8.53% of issued shares before the cancellation)
3. Date of cancellation: January 20, 201614