TOKYO ELECTRON

Oct 29, 2013

Consolidated Financial Review
for the Second Quarter Ended September 30, 2013
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 six months ended September 30, 2013
Six months ended
September 30, 2012 September 30, 2013
Net sales (Millions of yen)
266,600
254,500
Operating income (Millions of yen)
12,202(1,822)
Ordinary income (Millions of yen)
15,459588
Net income (Millions of yen)
6,090
2,476
Net income per share (Yen)
33.99
13.82
Fully diluted net income per share (Yen)
33.94
13.79
Comprehensive income:Six months ended September 30, 2013: 8,789 million yen
Six months ended September 30, 2012: 1,898 million yen(1) Operating results (Cumulative)(2) Financial position

Total assets (Millions of yen)
Net assets (Millions of yen)
Equity ratio (%)
Equity: 595,213 million yen (as of September 30, 2013)
593,032 million yen (as of March 31, 2013)

As ofMarch 31, 2013
775,527
605,12776.5

As of
September 30, 2013
798,814607,490
74.5

2. Dividends
Year ended
March 31, 2013
25.00
26.00
51.00

Year ending
March 31, 2014
25.00
25.00 (Forecast)
50.00 (Forecast)

2Q-end dividend per share (Yen)
Year-end dividend per share (Yen)Annual dividend per share (Yen)
Note: Revision of dividends forecast : None
The interim dividend for the second quarter ended September 2012 is made up of ordinary dividend
15 yen and commemorative dividend 10 yen.
The year-end dividend for the year ended March 2013 is made up of ordinary dividend 16 yen andcommemorative dividend 10 yen.

3. Earnings forecasts for the year ending March 31, 2014
Year ending
March 31, 2014
Net sales (Millions of yen)
Operating income (Millions of yen)
Ordinary income (Millions of yen)
Net income (Millions of yen)
Net income per share (Yen)
Note: Revision of earnings forecast : None

605,000
30,00033,00023,000128.36

1

TOKYO ELECTRON

4. Others(1) Important changes in subsidiaries during the current period: None
(2) Adoption of special accounting method in preparing quartely financial statement: Yes(3) Changes in accounting policies, accounting estimation, and restatement
1. Changes in accounting policies along with changes in accounting standards: None
2. Other changes of accounting policies besides number 1 above: None
3. Changes in accounting estimates: None
4. Restatement: None
(4) Number of shares outstanding (common stock)
1. Number of shares issued and outstanding (including treasury stock)
As of September 30, 2013:180,610,911 shares

As of March 31, 2013:180,610,911 shares

2. Number of shares of treasury stock
As of September 30, 2013:

1,422,727 shares

As of March 31, 2013:

1,424,203 shares

3. Average number of shares outstanding
Six months ended September 30, 2013:

179,187,591 shares

Six months ended September 30, 2012:

179,172,561 shares

Notification of the status of quarterly financial review procedures:This quarterly financial report is outside the jurisdiction of auditing procedures outlined in the Financial Instruments and Exchange Act
and remain incomplete at the time of announcing this report.
Explanations on the appropriate use of earnings forecast:
The performance forecast and estimate stated in this Financial Review are based on certain assumptions judged to be reasonable
at the present time in light of information currently available. Consequently, actual operating results may differ substantially.

2

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

During the first half of the current fiscal year, the economies of the United States and Japan were in
recovery trends, and although China’s economy slowed, growth was maintained. In Europe, Germany andthe United Kingdom showed signs of improvement. Overall, the global economy is on a recovery track.
In the electronics industry, the primary area of the Tokyo Electron (TEL) Group’s business activities,
demand for smartphones continues to grow, particularly in emerging economies, and sales of mobile
devices including tablet PCs is firm. As a result of the global expansion of mobile devices, cloud services
are growing, and demand for memory used by data centers is rising.
Given these circumstances, consolidated orders for the TEL Group have been recovering since theprevious fourth quarter, and consolidated net sales for the first half of this current fiscal year were 254,500
million yen (down 4.5% from the same period of the previous fiscal year), consolidated operating loss was
1,822 million yen (compared to operating income of 12,202 million yen for the same period in the previous
fiscal year), and consolidated ordinary income was 588 million yen (down 96.2% from the same period of
the previous fiscal year). Meanwhile, the net income was 2,476 million yen (down 59.3% from the same
period of the previous fiscal year).

TEL and Applied Materials, Inc. (AMAT) announced a definitive agreement to create a global innovator insemiconductor and display manufacturing technology via an all-stock combination which values the new
combined company on 24th September, 2013. This combination brings together complementary leading
technologies and products to create an expanded set of capabilities that are strategically important forcustomers. The closing of the transaction is subject to customary conditions, including approval by AMAT’sand TEL’s shareholders and review by regulators. The companies expect the transaction to close in mid tosecond half of 2014. For further details, please refer to the release “Notice Regarding the Execution of an
Agreement to Combine Tokyo Electron Limited and Applied Materials, Inc.” on 24th September, 2013.

The overview of each business segment is as described below.
From the first quarter of the current fiscal year, revisions have been made to the reportable segments basedon “Accounting Standards for Disclosures about Segments of an Enterprise and Related Information.”
Figures for the corresponding period of the previous fiscal year listed below for comparison have beenadjusted in accordance with the new business segments.

3

(i) Semiconductor Production Equipment
The balance of supply and demand for DRAM and NAND flash memory is tightening, and investment toincrease production by memory makers that postponed investment in a long while has started to resume,
and as a result, orders are improving. Capital investment in logic semiconductors by semiconductor makers,
particularly for mobile devices, is robust. Consequently, net sales from external customers in this segment
during the first half of the current fiscal year were 194,773 million yen (down 9.3% compared to the same
period of the previous fiscal year).

(ii) FPD (Flat Panel Display) Production Equipment
Capital investment by LCD panel makers was relatively strong, particularly in China, and it appears that the
FPD production equipment market is emerging from the significant correction phase in the previous fiscal
year. Given these circumstances, net sales from external customers in this segment during the first half ofthe current fiscal year were 9,393 million yen (up 2.5% compared to the same period of the previous year).

(iii) PV (Photovoltaic Panel) Production Equipment
The TEL Group made efforts to develop a new customer base in the Sun Belt regions, but new orders were
not obtained during the first half of the current fiscal year. Under these circumstances, the TEL Group is
working to improve the conversion efficiency of thin-film silicon photovoltaic panels. Net sales from externalcustomers in this segment during the first half of the current fiscal year were 3,288 million yen (compared to
net sales of 64 million yen in the same period of the previous fiscal year).

(iv) Electronic Components and Computer Networks
In the electronic components segment, there is recovery in demand for automotive and industrial equipment.
In the computer networks segment, sales of computer system equipment were nearly flat from the previous
year. Given these circumstances, net sales from external customers in this segment during the first half ofthe current fiscal year were 46,786 million yen (up 10.2% compared to the same period of the previousyear).

(v) Others
Net sales from external customers in this segment during the first half of the current fiscal year were 258
million yen (up 8.2% compared to the same period of the previous year).

4

(For reference)

Consolidated Operating Results（ Millions of yen）
FY2013
1H

Net Sales
Semiconductor Production Equipment
Japan
U.S.
EuropeKorea
TaiwanChina
S.E.Asia
FPD Production Equipment
PV Production Equipment
Electronic Components & Computer Networks
OthersOperating Income (Loss)
Ordinary Income (Loss)Net Income (Loss)Note:

FY20132H

266,600
214,666
20,21855,782
23,402
38,677
58,795
11,863
5,927
9,166
64
42,465238
12,202
15,4596,090

FY2014
1H

230,699
177,359
20,05961,31015,29918,833
46,591
8,088
7,177
10,91119
42,199
209
346
1,237
(14)

254,500
194,773
33,23344,817
13,57528,86456,059
9,635
8,587
9,393
3,288
46,786258(1,822)
588
2,476

1Q

2Q

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

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

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

Production and Order Performance
1. Production（ Millions of yen）
FY2013
1H

Semiconductor Production Equipment
FPD Production Equipment
PV Production Equipment
Total

Note:

FY2013
2H

184,976
6,565
67
191,609

158,899
10,432
3
169,335

FY20141H
185,142
10,815
3,358
199,316

1Q

2Q

79,3586,037
2,146
87,542

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

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

2. Orders Received（ Millions of yen）
FY2013
1H

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

Note:

FY2013
2H

142,957
10,85064
43,290238
197,401

199,589
11,031
19
42,376
209
253,225

FY20141H
251,898
20,843
2,286
48,607258
323,893

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

5

1Q

2Q

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

154,189
6,351
1,101
24,735
146
186,524

3. Orders Backlog
FY2013
1H
Semiconductor Production Equipment
FPD Production Equipment
PV Production Equipment
Electronic Components & Computer Networks
Others
Total

Note:

FY2013
2H

118,702
15,885
14,608149,196

141,616
16,0058,421
14,785
180,829（ Millions of yen）
FY2014
1Q

2Q

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

198,948
27,4497,494
16,606
250,499

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 second quarter of the current fiscal year were 543,906 million yen, up
22,405 million yen compared to the end of the previous fiscal year. The major factors influencing this result
were a 17,214 million yen increase in trade notes and accounts receivable, a 20,311 million yen increase ininventories, and a 16,488 million yen decrease in short-term investments included in securities.
Tangible fixed assets decreased by 3,881 million yen from the end of the previous fiscal year, to 131,816
million yen.
Intangible fixed assets increased by 1,394 million yen from the end of the previous fiscal year, to 61,312
million yen.
Investments and other assets increased by 3,368 million yen from the end of the previous fiscal year, to61,779 million yen.
As a result, total assets increased by 23,286 million yen compared to the end of the previous fiscal year, to798,814 million yen.
Current liabilities were up 16,829 million yen compared to the end of the previous fiscal year, to 123,499
million yen. The major factors causing the increase were a 10,033 million yen increase in notes payable andaccounts payable and a 9,086 million yen increase in customer advances.
Long-term liabilities were up 4,094 million yen compared to the end of the previous fiscal year, to 67,824
million yen.
Net assets were 607,490 million yen, up 2,363 million yen from the end of the previous fiscal year. The main
factors were an increase due to a reported quarterly net income of 2,476 million yen, a decrease due topayment of 4,658 million yen in year-end dividends for the previous fiscal year, a decrease of retained
earnings of 3,244 million yen due to changes in accounting periods at consolidated subsidiaries and anincrease of 7,199 million yen from translation adjustments due to effects from the depreciation of the yen
and other factors. The equity ratio was 74.5%.

6

(ii) Cash Flow
Cash and cash equivalents at the end of the second quarter of the current fiscal year increased by 4,668
million yen compared to the end of the previous fiscal year, to 89,982 million yen. The combined balance
including the 140,876 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 230,858 million
yen, down 9,271 million yen from the end of the previous fiscal year. The overall situation regarding cash
flow during the first half of the current fiscal year is as described below.
Cash flow from operating activities decreased by 74,137 million yen compared to the same period of theprevious fiscal year to negative 217 million yen. The main positive factors included 12,749 million yen in
depreciation and amortization, a 9,058 million yen increase in accounts payable, an 8,201 million yen
increase in customer advances, and a 7,529 million yen decrease in prepaid consumption tax. The main
negative factors were a 20,314 million yen increase in inventories and a 16,352 million yen increase in tradenotes and accounts receivables.
Cash flow from investing activities was positive 7,148 million yen, compared to negative 84,218 million yen
in the same period of the previous financial year. This primary positive factor was a 13,935 million yen
decrease in time deposits and short-term investments. The primary negative factor was 5,246 million yen in
payments for purchase of tangible fixed assets.
Cash flow from financing activities was positive 1,102 million yen, compared to negative 6,473 million yen in
the same period of the previous fiscal year. This was primarily the result of a 4,101 million yen increase in
short-term borrowings, a 2,000 million yen increase in long-term borrowings, and payment of 4,658 million
yen in dividends.

7

(3) Description of Financial Estimates Information such as Consolidated Performance Forecasts

For the current fiscal year ending March 31, 2014, since sales for the second half of the fiscal year are
expected to increase principally due to favorable orders of the semiconductor production equipment
business, the consolidated forecast for the full year was revised up as follows in “Announcement on
Financial Forecast Revision” published on October 23, 2013.

Consolidated Forecast(Billions of yen, Y/Y change)
FY2014(E)Net Sales

605.0

21.7%

Semiconductor Production Equipment
FPD Production Equipment
PV Production Equipment
Electronic Components & Computer Networks
OthersOperating Income
Ordinary Income
Net Income

475.0
26.0
7.0
96.5
0.5
30.0
33.0
23.0

21.2%
29.5%

Note:

14.0%
11.6%
139.1%
97.6%
278.5%

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

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

8

TOKYO ELECTRON

Consolidated Balance Sheet
As ofMarch 31, 2013ASSETS
Current assets
Cash and deposit(Millions of yen)
As of
September 30, 2013

49,632

56,849Trade notes and accounts receivable

100,500

117,715

Securities

190,497

174,009

Merchandise and finished goods

87,397

100,659

Work in process

33,40240,513

Raw materials and supplies

14,898

14,836

Others46,351

39,813

Allowance for doubtful accounts
Total current assets(1,179)(490)

521,501

543,906

135,697

131,816

38,372
21,54559,91838,972
22,34061,31260,522(2,112)58,410254,026
775,527

63,707(1,927)
61,779254,908
798,814Long-term assets
Tangible fixed assets
Intangible fixed assets
Goodwill
OthersTotal intangible fixed assets
Investments and other assets
OthersAllowance for doubtful accounts
Total investments and other assets
Total long-term assets
Total assets

9

TOKYO ELECTRON

Consolidated Balance Sheet
As ofMarch 31, 2013

(Millions of yen)
As of
September 30, 2013

LIABILITIESCurrent liabilities
Trade notes and accounts payable

36,261

46,294

Accrued warranty expenses

8,344

8,732

Other allowance

6,908

6,817

Others55,15561,656

Total current liabilities

106,670

123,499

56,64358,155Long-term liabilities
Accrued pension and severance costs
Other allowance
OthersTotal long-term liabilities
Total liabilities
NET ASSETS
Shareholders' equity
Common stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders' equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Translation adjustments
Total accumulated other comprehensive income
Subscription rights to shares
Minority interests
Total net assets
Total liabilities and net assets

10

580

576

6,505

9,093

63,73067,824

170,400

191,324

54,961
78,023467,920(9,588)591,315

54,961
78,023
462,490(9,576)585,898

4,214(14)(2,483)
1,716
1,374
10,720605,127

4,578
20
4,715
9,314
1,559
10,718607,490775,527

798,814

TOKYO ELECTRON

Consolidated Statement of Income(Millions of yen)Six months ended
September 30, 2013

Six months ended
September 30, 2012

Net sales

266,600

254,500

Cost of sales

180,963

174,453

Gross profit

85,63780,04637,41738,440

Selling, general & administrative expenses
Research and development expenses
Others36,01743,428

Total selling, general & administrative expenses

73,434

81,86912,202(1,822)

Dividend revenue

204

1,747

Revenue from development grants

790

907

Others

2,390

1,327

Total non-operating income

3,385

3,981

127
127
15,459

1,338
232
1,570
588

283

79
18
98

Operating income (loss)
Non-operating income

Non-operating expenses
Foreign currency translation loss
OthersTotal non-operating expenses
Ordinary income (loss)
Unusual or infrequent profit
Gain on sale of fixed assets
OthersTotal unusual or infrequent profit
Unusual or infrequent loss
Loss on impairment
Reorganization costs
OthersTotal unusual or infrequent loss
Income (loss) before income taxes
Income taxes
Prior year’s corporate tax
Income (loss) before minority interests
Minority interests
Net income (loss)

283
4
132
66
203
15,539
7,057
2,194
6,287
196
6,090

11

873
135
1,009
(321)
(2,903)
2,582
105
2,476

Consolidated Statement of Comprehensive Income

TOKYO ELECTRON

Six months ended
September 30, 2012

(Millions of yen)Six months ended
September 30, 2013

6,287

2,582

(1,993)

368

78

65

Translation adjustments(2,474)

5,773

Total other comprehensive income(4,388)

6,206

1,898

8,789

1,681

8,619

217

169

Income (loss) before minority interests
Other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges

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

12

TOKYO ELECTRON

Consolidated Cash Flow

(Millions of yen)Six months ended
September 30,
2012

Six months ended
September 30, 201315,53911,789
689
919
(575)
(1,996)(832)(847)
54,615
14,836(14,319)
10,118(25)(12,318)(2,434)75,156651(20)(1,867)73,920(321)
12,7492,139
1,474(1,014)(328)
99(2,424)(16,352)(20,314)
9,058
7,529
(1,263)8,201(2,043)(2,811)
2,262
(39)
371
(217)

(5,227)(50,499)(11,811)(48)
13,984(5,246)(15,830)-(1,097)248(84,218)(1,540)7,148(1,308)(4,837)(328)(6,473)

4,101
2,000
(4,658)
(339)
1,102

(352)
(17,125)
158,776(2,158)5,875
85,313-(1,206)

141,651

89,982

Cash flow from operating activities
Income (loss) before income taxes
Depreciation and amortization
Amortization of goodwill
Increase in accrued pension and severance costs (decrease)
Increase in allowance for doubtful accounts (decrease)
Increase in accrued employees' bonuses (decrease)
Increase in accrued warranty expenses (decrease)
Interest and dividend revenue
Decrease in trade notes and accounts receivable (increase)
Decrease in inventories (increase)
Increase in accounts payable (decrease)
Decrease in prepaid consumption tax (increase)
Increase in accrued consumption tax (decrease)
Increase in customer advances (decrease)
OthersSubtotal
Receipts from interest and dividends
Interest paid
Income taxes (paid) refund
Net cash generated by operating activities

Cash flow from investing activities
Decrease in time deposits (increase)
Decrease in short-term investments (increase)
Payment for purchase of tangible fixed assets
Purchase of investments in subsidiaries resulting in change in scope of
consolidation
Payments for transfer of business
OthersNet cash used in investing activities

Cash flow from financing activities
Net increase in short-term borrowings (decrease)
Proceeds from long-term borrowings
Dividends paid
OthersNet cash generated by financing activities

Effect of exchange rate changes on cash and cash equivalents
Net increase in cash and cash equivalents (decrease)
Cash and cash equivalents at beginning of period
Increase in cash and cash equivalents from changes inaccounting periods at consolidated subsidiaries (decrease)
Cash and cash equivalents at end of period

13

TOKYO ELECTRON

Segment Information(i) Overview of reportable segments

The reportable segments by the company provide separate financial information pertaining to the various
segments of the company, which is reviewed periodically by the management to evaluate corporate performanceas well as make decisions 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, FPD(Flat Panel Display) Production
Equipment, Photovoltaic Panel (PV) Production Equipment, and Electronic Components and Computer
Networks.
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 provisionof maintenance services, etc. for such products.
The PV Production Equipment segment consists of photovoltaic panel production equipment used in the
manufacturing of thin film silicon photovoltaic panels, and we are engaged in the development, manufacturing,sales and provision of maintenance services, etc. for such products.
The Electronic Components and Computer Networks segment consists of semiconductor products centering on
integrated circuits (IC), other electronic components, computer networks and software, etc., and we are engaged
in the design, development, procurement, and sales, etc. for such products.
(ii) Net sales and income (loss) in reportable segments
Six months ended September 30, 2013

(Millions of yen)
Reportable Segments
Others
Semiconductor
Production
Equipment

FPD Production
Equipment

PV Production
Equipment

Total

Electronic
Components &Computer Networks

Net sales

194,792

9,393

3,288

47,208

5,702

260,385

Segment
income (loss)

21,532(753)(5,722)

226718

16,000Eliminations

Consolidated Total

Net sales(5,885)

254,500

Segment
income (loss)(16,321)(321)

Notes:
1.
The "Others" segment includes all other businesses which are not included in the reported businesssegments, such as the transportation of products, etc. of the Tokyo Electron Group companies,
equipment leasing and insurance, etc.
2.

The eliminations of segment income (loss) amounting to 16,321 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 9,806 million yen, pertaining to fundamental
research and element research conducted by the company not related to any of the reportable segments.

3.

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

14

TOKYO ELECTRON

Segment Information(iii)

Items Related to Changes in Reportable Segments
With the acquisition of TEL Solar Holding AG as a consolidated subsidiary, from the firstquarter of the current fiscal year, the reportable segment has been changed from FPD/PV
Production Equipment to FPD Production Equipment, and PV Production Equipment.

(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: None15