TOKYO ELECTRON

Oct 28, 2016

Consolidated Financial Review
for the Second Quarter Ended September 30, 2016
Company name:
URL:
Telephone number:
Stock exchange listing:Notes:

Tokyo Electron Limited
http://www.tel.com(03) 5561-7000
Tokyo Stock Exchange 1st Section (Code 8035)

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

1.

Consolidated financial highlights for the six months ended September 30, 2016

(1)

Operating results (Cumulative)

Note: Percentages indicate changes from the same period of the previous fiscal year.
Six months ended
September 30, 2015

September 30, 2016%%

Net sales (Millions of yen)

340,951

15.9

352,722

3.5

Operating income (Millions of yen)

61,250103.4

60,012(2.0)

Ordinary income (Millions of yen)

62,38496.3

62,365(0.0)

Net income attributable to owners of parent (Millions of yen)

41,376106.7

41,966

1.4

Net income per share of common stock (Yen):
Basic
DilutedComprehensive income:(2)

238.10255.83237.46255.16Six months ended September 30, 2016:

32,710 million yen, (7.0%)

Six months ended September 30, 2015:

35,153 million yen, 50.7%

Financial position
As ofMarch 31, 2016

September 30, 2016

Total assets (Millions of yen)793,367

840,047

Total net assets (Millions of yen)

564,239579,712

70.9

68.7

Equity ratio (%)
Equity:576,791 million yen (as of September 30, 2016)
562,369 million yen (as of March 31, 2016)

2.

Dividends
Year ended

Year ending

March 31, 2016

March 31, 2017

1Q-end dividends per share (Yen)--

2Q-end dividends per share (Yen)

125.00128.003Q-end dividends per share (Yen)--

Year-end dividends per share (Yen)

112.00177.00 (Forecast)

Annual dividends per share (Yen)

237.00305.00 (Forecast)

Note: Revision of dividends forecast: Yes

1

TOKYO ELECTRON
3.

Financial forecasts for the fiscal year ending March 31, 2017

Note: Percentages for year ending March 31, 2017 indicate changes from the previous fiscal year.
Year ending
March 31, 2017%

Net sales (Millions of yen)

762,000

14.8

Operating income (Millions of yen)

140,000

19.9

Ordinary income (Millions of yen)

142,000

18.9

Net income attributable to owners of parent (Millions of yen)

100,000

28.4

Net income per share (Yen)

609.57

Note: Revision of financial forecasts: Yes*Notes :(1)

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

(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 outstanding (common s tock)
1. Number of shares outstanding (including treasury stock)
As of September 30, 2016:

165,210,911 shares

As of March 31, 2016:

165,210,911 shares

2. Number of shares of treasury stock
As of September 30, 2016:

1,154,615 shares

As of March 31, 2016:

1,176,800 shares

3. Average number of shares outstanding
As of September 30, 2016:

164,043,016 shares

As of September 30, 2015:

173,781,675 shares*Notification of the status of quarterly financial rev iew procedures:This quarterly financial report is outside the jurisdiction of auditing procedures outlined in the Financial Instruments and Excha nge
Act and remains incomplete at the time of this report’s publication.

*Explanation of the appropriate use of financial forecast:
The financial forecasts and estimates as provided in this Consolidated Financial Review are based on certain assumptions judged
to be reasonable at time of report issuance and in light of currently available information. Consequ ently, actual operating results
may differ substantially from the projections in this Consolidated Financial Review.
The company plans to hold a financial meeting for analysts and investors on October 28, 2016. Supplementary schedules and otherinformation deemed relevant to these financial reports will be handed out at this meeting and posted simultaneously on ourcompany website.

2

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

Although the world economy as a whole was still on track towards a gradual recovery during the first half of the current fiscal year,
uncertainty about the future remains, due to the impact of Brexit and the economic slowdown in China.
In the electronics industry, in which the Tokyo Electron (TEL) Group participates, demand for semiconductors and electronic
components remains firm, based on strong demand for servers to meet the rising trend in digital data traffic volumes, as well as
demand for mobile devices to meet the high functionality and the capacity enlargement.
Under these circumstances, the TEL Group’s consolidated results (cumulative) for the first half of the current fiscal year were net
sales of 352,722 million yen (year-on-year growth of 3.5%), operating income of 60,012 million yen (year-on-year decrease of 2.0%),
ordinary income of 62,365 million yen (year-on-year decrease of 0.0%) and net income attributable to owners of parent of 41,966
million yen (year-on-year growth of 1.4%).

The overview of each business segment is as described below.

(i) Semiconductor Production Equipment
Given underlying above-mentioned factors, capital investments for leading-edge technology by logic semiconductor makers and 3D
NAND flash memory business remain strong. Consequently, net sales to external customers in this segment for the first half of thecurrent fiscal year were 327,008 million yen (year-on-year growth of 3.2%).

(ii) Flat Panel Display (FPD) Production Equipment
The market for FPD production equipment has bee n strong with growth in capital investment for small to medium -sized flat panel
displays for use in mobile handsets, as well as continuing capital investment for large -sized flat panel displays. This resulted in net
sales to external customers in this segm ent in the first half of the current fiscal year of 25,479 million yen (year -on-year growth of
39.4%).

(iii) Other
Net sales to external customers in this segment in the first half of the current fiscal year were 234 million yen (year -on-year decreaseof 95.9%).

3

TOKYO ELECTRON(For reference)

Consolidated Operating Results（ Millions of yen）
FY2016
1H

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

FY20162H

FY2017
1H

1Q

2Q

340,951
316,987
62,82060,267
26,67453,351
76,05831,125
6,689
18,275
5,687
61,25062,384

322,997
296,044
53,451
43,193
24,414
46,22385,871
32,48010,41026,411541
55,53857,014

352,722
327,008
44,24851,43911,93048,83788,79454,093
27,66425,479234
60,01262,365

147,976
130,796
17,81917,022
5,234
19,80530,50430,04910,36017,064115
22,09524,083

204,745
196,211
26,42934,416
6,695
29,03158,28924,04417,3048,414
119
37,91638,281

41,37636,514

41,966

12,68429,281

Intersegm ent sales or transfers are eliminated.

Production and Order Performance
1. Production（Millions of yen）
FY2016
1H

Semiconductor Production Equipment
FPD Production Equipment
Other
Total
Note:

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

FY20162H
294,223
27,750321,973

FY20171H
343,732
16,455360,188

1Q

2Q

140,236
9,623
149,860

203,496
6,832
210,328

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

2. Orders Received（Millions of yen）
FY2016
1H

Semiconductor Production Equipment
FPD Production Equipment
Other
Total
Note:

276,291
24,3492,039
302,680

1. Intersegm ent sales or transfers are eliminated.
2. The above amounts do not include consumption taxes.

4

FY20162H
346,643
26,153501
373,299

FY20171H
393,192
30,988231
424,412

1Q

2Q

197,496
15,955
111
213,564

195,695
15,032
119
210,848

TOKYO ELECTRON

3. Orders Backlog（Millions of yen）
FY2016
1H

Semiconductor Production Equipment
FPD Production Equipment
Other
Total
Note:

212,689
37,68644
250,419

FY20162H
263,288
37,4284
300,721

FY2017
1Q

2Q

329,988
36,3191
366,309329,473
42,937
0372,411

1. Intersegm ent sales or transfers are eliminated.
2. The above amounts do not include consumption taxes.

(2) Description of Financial Conditions(i) Financial Conditions
Current assets at the end of the second quarter of the current fiscal year were 670,210 million yen, an increase of 52,794 million yen
compared to the end of the previous fiscal year. Factors contributing to the increase were a 32,779 million yen increase in tradenotes and accounts receivable, a 21,283 million yen increase in cash and deposits, a 9,849 million yen increase in inventories, andan 11,529 million yen decrease in prepaid consumption taxes.
Tangible fixed assets decreased by 125 million yen from the end of the pre vious fiscal year, to 96,191 million yen.
Intangible fixed assets decreased by 2,601 million yen from the end of the previous fiscal year, to 15,001 million yen.
Investment and other assets decreased by 3,387 million yen from the end of the previous fiscal year, to 58,644 million yen.
As a result of the foregoing, total assets increased by 46,679 million yen from the end of the previous fiscal year, to 840,0 47 million
yen.
Current liabilities increased by 31,652 million yen compared to the end of the previo us fiscal year, to 197,713 million yen. This wasprimarily due to a 28,142 million yen increase in customer advances, a 5,566 million yen increase in accrued employee s’ bonuses, a
3,958 million yen increase in trade notes and accounts payable, and a 4,261 million yen decrease in income taxes payable.
Long-term liabilities decreased by 446 million yen compared to the end of the previous fiscal year, to 62,621 million yen.
Net assets increased by 15,473 million yen compared to the end of the previous fiscal y ear, to 579,712 million yen. The primaryfactors were an increase due to reported net income attributable to owners of parent of 41,966 million yen , a decrease resulting fromthe payment of 18,371 million yen in year -end dividends for the previous fiscal y ear and a decrease of 9, 265 million yen inaccumulated other comprehensive income. As a result of the foregoing, the equity ratio was 68.7%.

5

TOKYO ELECTRON(ii) Cash Flows
Cash and cash equivalents at the end of the second quarter of the current fiscal year inc reased by 13,786 million yen compared tothe end of the previous fiscal year, to 109,425 million yen. The combined balance including 146,232 million yen in time depos its andshort-term investments with periods to maturity or redemption of at least three mo nths not included in cash and cash equivalents
was 255,657 million yen, an increase of 18,983 million yen from the end of the previous fiscal year. The overall situation re garding
cash flows during the first half of the current fiscal year was as described below.
Cash flows from operating activities were a positive 52,007 million yen, an increase of 4,431 million yen compared to the same
period of the previous fiscal year. Positive contributors were 54,420 million yen in net income before income taxes, an i ncrease of
29,410 million yen in customer advances, and a decrease of 11,475 million yen in prepaid consumption tax . Negative contributors
were an increase of 37,023 million yen in trade notes and accounts receivable, 20,729 million yen in payment of incom e taxes, anda 15,353 million yen increase in inventories.
Cash flows from investing activities were a negative 15,068 million yen compared to a negative 111,814 million yen in the same
period of the previous fiscal year. The primary negative contributors were 9,631 million yen in the payment for purchase of fixed
assets and 5,201 million yen in outgo associated with an increase in short-term investments.
Cash flows from financing activities were a negative 18,377 million yen, compared to a negative 101,000 million yen in the same
period of the previous fiscal year. This was primarily the result of the payment of 18,371 million yen in dividends.

6

TOKYO ELECTRON(3) Description of Financial Estimates Information such as Consolidated Financial Forecasts
The financial forecast for the fiscal year ending March 31, 2017 announced on May 12, 2016 has been revised up, as we expect
market conditions perform strong continuously in the light of our current orders of our core semiconductor production equipment
segment.

Consolidated Forecast(Billions of yen, Y/Y change)
FY2017(E)Net Sales
Semiconductor Production Equipment
FPD Production Equipment

762.0

14.8%

712.5
49.0

16.2%
9.7%

Other

0.5

-92.0%

Operating Income

140.0

19.9%

Ordinary Income

142.0

18.9%

Net Income Attributable to Owners of Parent

100.0

28.4%

Note:

Intersegm ent sales or transfers are eliminated.

Note: The financial forecasts and estimates stated in this announcement are based on certain assumptions judged to be reasona bleby the Company in light of information currently available concerning econom ic conditions in Japan and overseas, fluctuations inforeign exchange rates, and other factors that may have an impact on performance. The company does not promise that theforecasts or estimates will be accurate.
They are therefore susceptible to the impact of many uncertainties, including market conditions, competition, the launching of new
products (and their success or failure), and global conditions in the semiconductor related industry. Consequently, actual sa les andprofits may differ substantially from the projections stated in this announcement.

7

TOKYO ELECTRON

Consolidated Balance Sheets(Millions of yen)
As of

As of

March 31, 2016

September 30, 2016

ASSETS
Current assets
Cash and deposit

75,67496,957

Trade notes and accounts receivable

116,503

149,283

Securities

160,999

158,700

Merchandise and finished goods

130,478

133,131

W ork in process

41,55646,806

Raw materials and supplies

23,04424,991Others69,20760,395

Allowance for doubtful accounts

(48)

(54)

617,416

670,21096,31696,191Others17,60315,001

Total intangible fixed assets

17,60315,001Others63,85760,420Allowance for doubtful accounts(1,825)(1,776)

Total investments and other assets

62,03158,644

Total long-term assets

175,951

169,836

793,367

840,047

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

Investments and other assets

Total assets

8

TOKYO ELECTRON

Consolidated Balance Sheets(Millions of yen)
As of

As of

March 31, 2016

September 30, 2016

LIABILITIESCurrent liabilities
Trade notes and accounts payable

55,05059,008

Income taxes payable

22,46018,199Accrued employees’ bonuses

11,623

17,190

Other allowances

10,108

8,607

Others

66,81894,707

Total current liabilities

166,060

197,713Long-term liabilities
Other allowances
Net liability for defined benefit

374

374

55,30256,301Others

7,390

5,944

Total long-term liabilities

63,06762,621

229,128

260,334

Common stock

54,961

54,961

Capital surplus

78,02378,023Retained earnings

427,618

451,153

Treasury stock, at cost

(8,050)(7,899)Total shareholders' equity

552,551576,238

7,902

5,889

Total liabilities

NET ASSETS
Shareholders' equity

Accumulated other comprehensive income
Net unrealized gains on investment securities
Net deferred gains on hedging instruments

50

6Foreign currency translation adjustments

6,742

(686)

Accumulated remeasurements of defined
benefit plans(4,877)(4,656)

Total accumulated other comprehensive income
Share subscription rights
Non-controlling interests

9,817

552

1,641

2,683

228

237

Total net assets

564,239579,712

Total liabilities and net assets

793,367

840,047

9

TOKYO ELECTRON

Consolidated Statements of Income(Millions of yen)Six months ended

Six months ended

September 30, 2015

September 30, 2016

Net sales

340,951

352,722

Cost of sales

204,940

214,032

Gross profit

136,010

138,689

Research and development expenses

37,57839,805

Others37,181

38,871

Total selling, general and administrative expenses

74,75978,677

61,25060,01232

946

Others

1,693

1,537

Total non-operating income

1,725

2,483

Maintenance cost for domestic closed facilities

91

55

Commission for purchase of treasury stock

360-

Others139

75

Total non-operating expenses

591

131

62,38462,365

998

43

-

6

998

50

Selling, general and administrative expenses

Operating income
Non-operating income
Foreign exchange gain

Non-operating expenses

Ordinary income
Unusual or infrequent profit
Gain on sales of fixed assets
OthersTotal unusual or infrequent profit
Unusual or infrequent loss
Loss on impairment of fixed assets, goodwill and other assets
Loss on disaster
OthersTotal unusual or infrequent loss

4,434

-

-

7,828

1,429

166

5,864

7,994

Income before income taxes

57,51954,420

Income taxes

16,123

12,426

Net income

41,39641,993

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

10

19

27

41,376

41,966

TOKYO ELECTRON

Consolidated Statements of Comprehensive Income(Millions of yen)

Net income

Six months ended

Six months ended

September 30, 2015

September 30, 2016

41,39641,993(3,376)(2,012)Other comprehensive income (loss)
Net unrealized gains (losses) on investment securities
Net deferred gains (losses) on hedging instruments

(148)

(25)

Foreign currency translation adjustments(1,913)(7,375)Remeasurements of defined benefit plans

(801)

209

(2)

(79)

(6,242)(9,283)35,15332,71035,14632,701

7

8

Share of other comprehensive income of associates
accounted for using equity method
Total other comprehensive income (loss)
Comprehensive income(Breakdown)Comprehensive income attributable to owners of parent
Comprehensive income attributable to non-controlling interests

11

TOKYO ELECTRON

Consolidated Statements of Cash Flows(Millions of yen)Six months ended

Six months ended

September 30, 2015

September 30, 2016

Cash flows from operating activities
Income before income taxes

57,51954,420Depreciation and amortization

9,376

8,199

Loss on impairment of fixed assets, goodwill and other assets

4,434

-

628

307

Amortization of goodwill
Increase (decrease) in accrued employees’ bonuses(1,318)5,900

Loss (gain) on sales of affiliates’ shares

1,110

-

Decrease (increase) in trade notes and accounts receivable(420)(37,023)

Decrease (increase) in inventories(6,195)(15,353)

Increase (decrease) in trade notes and accounts payable(11,168)

6,634

Decrease (increase) in prepaid consumption tax

13,48011,475

Increase (decrease) in customer advances(4,798)29,410

Others(8,302)

8,106

Subtotal

54,346

72,077

Receipts from interest and dividends

608

659

Income taxes paid or refund (paid)(7,378)(20,729)

Net cash provided by operating activities

47,57652,007

12-(108,492)(5,201)(4,713)(9,631)

Payment for acquisition of intangible assets

(305)

(320)

Others

1,684

85(111,814)(15,068)

Cash flows from investing activities
Decrease (increase) in time deposits
Decrease (increase) in short-term investments
Payment for purchase of fixed assets

Net cash provided by (used in) investing activities
Cash flows from financing activities
Payment for purchase of treasury stock(88,756)(4)

Dividends paid

(12,190)(18,371)

(53)

(1)

(101,000)(18,377)(189)(4,775)

OthersNet cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents(165,427)

13,786

Cash and cash equivalents at beginning of period

317,632

95,638Cash and cash equivalents at end of period

152,204

109,425

12

TOKYO ELECTRON

Notes
Going concern : None
Remarkable changes in shareholders' equity : None
Note on consolidated statements of income :Loss on disaster
These are actual and current estimated expenses relating to the recovery of buildings, production and development facilities as wellas the disposal of inventories caused by the impact of the Kumamoto earthquake in 2016.
Segment information :(i)

General information about reportable segments

A reportable segment is a component or an aggregated component of T EL Group. 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 beallocated to the segment and assess its performance.
The operation of TEL Group consists of segments by products and services based on business units (BUs), and TEL Groupidentifies as a reportable segment, “semiconductor production equipment (SPE)” and “flat panel display (FPD) prod uction
equipment”. Products of the SPE segment consist of coater/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 ot her
semiconductor production equipment. The SPE segment principally develops, manufactures, sells and distributes such products.
Products of the FPD production equipment segment consist of coater/developers and etch/ash systems used in the manufacture offlat panel displays. The FPD production equipment segment principally develops, manufactures, sells and distributes such produ cts.
(ii)

Information about reportable segment net sales, segment profit (loss)

Six months ended September 30, 2016

(Millions of yen)
Reportable Segments
Semiconductor
Production
Equipment

Net sales

FPD Production

Other *1

Total

Equipment

327,008

25,4796,954

359,442

71,6371,733

3173,403

Segment profit(loss)

Eliminations andConsolidated *3
Corporate *2
Net sales(6,719)352,722(18,983)

54,420

Segment profit(loss)
Notes:*1. “Other” includes all other operating segments which are not included in the reportable segments, including PV Production
Equipment business, group-wide logistic services, facility maintenance and insurance.
*2. ”Eliminations and Corporate” segment loss totaling 18,983 million yen includes corporate expenses not allocated to any
reportable segments. The corporate expenses consist of research and development costs of 7,983 million yen, pertaining tofundamental research and element research, and loss on disaster costs of 7,828 million yen.
13

TOKYO ELECTRON*3. Segment profit is adjusted to income before income taxes on consolidated statements of Income.
(iii) Impairment losses on fixed assets and goodwill, etc. in reportable segments
Significant impairment losses related to fixed assets: None
Significant changes in goodwill amount: None
Significant income related to negative goodwill: None14