TOKYO ELECTRON

April 27, 2015

Consolidated Financial Review
for the Year Ended March 31, 2015
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 Japan.
2. Amounts are rounded down to the nearest million yen.

1. Consolidated financial highlights for the year ended March 31, 2015
Year ended
March 31, 2014
March 31, 2015
Net sales (Millions of yen)612,170
613,124
Operating income (Millions of yen)
32,204
88,113
Ordinary income (Millions of yen)
35,487
92,949Net income (Millions of yen)
(19,408)
71,888Net income per share (Yen)(108.31)401.08Fully diluted net income per share (Yen)
400.15Return on equity (%)
(3.3)
11.8
Ordinary income to total assets (%)
4.4
10.9
Operating income to net sales (%)
5.3
14.4
Comprehensive income:Year ended March 31, 2015: 80,295 million yen
Year ended March 31, 2014: (10,888) million yen
Profit/loss on equity method:Year ended March 31, 2015: 250 million yen
Year ended March 31, 2014: - million yen(1) Operating results(2) Financial position
As ofMarch 31, 2014
Total assets (Millions of yen)
Net assets (Millions of yen)
Equity ratio (%)
Net assets per share (Yen)
Equity: 639,483 million yen (as of March 31, 2015)
578,091 million yen (as of March 31, 2014)

As ofMarch 31, 2015

828,591
590,61369.8
3,225.92

876,153
641,16273.0
3,567.23(3) Cash flow

(Millions of yen)
Year ended
March 31, 2014
44,449(19,599)(186)
104,797

Cash flow from operating activities
Cash flow from investing activities
Cash flow from financing activities
Cash and cash equivalents at end of period

1March 31, 2015
71,806
155,737(18,213)317,632

TOKYO ELECTRON
2. Dividends
Year ended
March 31, 2014
1Q-end dividend per share (Yen)
2Q-end dividend per share (Yen)
3Q-end dividend per share (Yen)
Year-end dividend per share (Yen)Annual dividend per share (Yen)
Total dividend (Millions of yen)
Payout ratio (%)
Dividend on equity (%)

Year ended
March 31, 2015

25.00
25.00
50.00
8,959
1.5

Year ending
March 31, 2016
(forecast)

10.00
30.00
35.00
68.00
143.0025,633
35.7
4.2

65.00
90.00
155.0035.2-

Note: For more information, please refer to the press release “Announcement on Dividends Forecast
for the Fiscal Year Ended March 31, 2015” published today.

3. Earnings forecasts for the year ending March 31, 2016
Year ending
September 30, 2015
(Cumulative)

Year ending
March 31, 2016

Net sales (Millions of yen)

320,000

675,000

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

47,00047,00033,000112,000
112,000
79,000Net income per share (Yen)

184.08440.694. 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 March 31, 2015:

180,610,911 shares

As of March 31, 2014:

180,610,911 shares

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

1,344,892 shares

As of March 31, 2014:

1,408,950 shares

3. Average number of shares outstanding
As of March 31, 2015:

179,238,551 shares

As of March 31, 2014:

179,192,909 shares

2

TOKYO ELECTRON(Reference) Non-consolidated financial review for the year ended March 31, 2015
(1) Operating results
Note: Percentages indicate changes from the previous fiscal year.
Year ended
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)
Fully diluted net income per share (Yen)462,282
16,23027,839(26,420)(147.44)-

March 31, 2015
%
23.1
183.9
1.9
-

555,092
47,09486,502
63,267352.98352.16(2) Financial position
As ofMarch 31, 2014
Total assets (Millions of yen)
Net assets (Millions of yen)
Equity ratio (%)
Net assets per share (Yen)
Equity: 404,047 million yen (as of March 31, 2015)
355,057 million yen (as of March 31, 2014)

608,206
356,701
58.4
1,981.33

As ofMarch 31, 2015
671,759
405,46860.1
2,253.90* Notes on the status of auditing procedure execution:
This earnings report is outside the jurisdiction of auditing procedures outlined in the Financial Instruments andExchange Act and remain incomplete at the time of announcing this report.
* Explanation of the appropriate use of earnings forecast:
The performance forecasts and estimates stated in this Financial Review are based on certain assumptions
judged to be reasonable at the present time in light of currently available information. 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 Monday, April 27, 2015. The
supplementary materials to these financial reports that will be handed out at this meeting will be posted
simultaneously on our company website.

3

%
20.1
190.2
210.7
-

ファイル名

1.Operating Results(1)Analysis of Operating Results(i) Business Environment during the Fiscal Year Ended March 31, 2015
In the fiscal year under review, the pace of economic growth slowed in some of Asia's emerging countries, but the
global economy as a whole, led by the US, continued to recover at a modest pace. The Japanese economy is also
showing signs of a recovery thanks to the effects of economic and fiscal policies.
The electronics industry, which Tokyo Electron (TEL) Group is part of, enjoyed strong sales of new models ofsmartphones with advanced features, and the smartphone market in emerging countries, especially China, also
expanded. Improved mobile handset performance is boosting data volumes and cloud services are becoming more
evolved, and as a result the electronic components market also remained firm as demand for servers used in data
centers increased.

(ii) Overview of Profit and Losses during the Fiscal Year Ended March 31, 2015
In this environment, the consolidated business results for the fiscal year under review are as follows.
Net sales for the fiscal year increased 0.2% from the previous fiscal year to 613,124 million yen. Domestic net sales
decreased 41.2% to 95,045 million yen, while overseas net sales increased 15.0% to 518,078 million yen to accountfor 84.5% of net sales. Orders received during the fiscal year decreased 5.1% to 660,967 million yen, but the orders
backlog grew 11.6%, to 295,771 million yen.
Cost of sales decreased 9.7% compared to the prior year to 370,351 million yen, and gross profit increased 20.2% to242,773 million yen. As a result, gross profit margin widened by 6.6 percentage points to 39.6%.
Selling, general, and administrative (SG&A) expenses decreased 8.9% to 154,660 million yen, and the ratio toconsolidated net sales decreased by 2.5 percentage points to 25.2%.
As a result of the foregoing, operating income increased 173.6% to 88,113 million yen. After non-operating income of
4,985 million yen and non-operating expenses of 149 million yen, ordinary income increased 161.9% to 92,949
million yen.
Extraordinary losses totaled 6,121 million yen (compared to a loss of 47,243 million yen in the previous fiscal year).
Income before income taxes was 86,827 million yen (compared to a loss of 11,756 million yen in the previous fiscal
year), while net income was 71,888 million yen (compared to a loss of 19,408 million yen in the previous fiscal year).
As a result of the foregoing, net income per share was 401.08 yen (compared to a net loss per share of 108.31 yen in
the previous fiscal year).

4

ファイル名(iii) Overview of Operations by Business Segment during the Fiscal Year Ended March 31, 2015
The overview of each business segment is as described below.
TEL sold part of the shares held in Tokyo Electron Device Ltd. in April and May of 2014. This resulted in Tokyo
Electron Device Ltd. being switched from a consolidated subsidiary of the group to an affiliate accounted for underthe equity method, and the Electronic Components and Computer Networks segment overseen by the company andits subsidiaries being removed from segments reported from the fiscal year. The 0.2% year on year increase inconsolidated net sales mentioned above reflects the impact of removing Tokyo Electron Device Ltd. fromconsolidated range.
Semiconductor Production Equipment
Smartphone sales have been strong, demand for servers used in data centers has been expanding, and the numberof chips in a handset has been increasing as mobile handsets become more advanced in terms of performance. As aresult, memory makers continue to invest in increasing production capacity thanks to the robust demand for electronic
components like DRAM and NAND flash memory. Capital investment in logic chips also remains resilient thanks tothe strong demand for servers and replacement demand for personal computers. In this environment, the segment's
net sales to external customers during the fiscal year under review totaled 576,242 million yen (up 20.3% comparedto the previous fiscal year).
A number of new products were introduced to the market in this segment during the fiscal year under review. These
include the NS300Z, a more productive scrubber; the EXIM™ sputtering system for next-generation semiconductors
such as MRAMs; and the Certas LEAGA™ high productivity dry cleaning system.
FPD (Flat Panel Display) Production Equipment
The market for FPD production equipment remained firm. In addition to capital investment for large flat panels in
China, demand for small to medium-sized flat panel displays for mobile devices also grew. In this environment, thesegment's net sales to external customers during the fiscal year under review totaled 32,709 million yen (up 15.5%
compared to the previous fiscal year).

PV (Photovoltaic Panel) Production Equipment
While we have ceased new sales activities for PV production equipment, sales entries for work in progress to fulfill
existing orders and other factors resulted in the segment's sales to external customers during the fiscal year underreview of 3,617 million yen (down 4.9% from the previous fiscal year).

Other
The segment's sales to external customers during the year under review totaled 555 million yen (up 15.8% from theprevious fiscal year).

5

ファイル名(For reference）
Consolidated（Millions of yen）
Year ended March 31, 2015

Year ended
March 31, 2014

1Q

2Q

First
Half

3Q

4Q

SecondHalf

Full YearNet Sales

612,170

151,325

142,948

294,273

137,021

181,829

318,851

613,124

Semiconductor Production Equipment
Japan
U.S.
EuropeKorea
TaiwanChina
S.E.Asia
FPD Production Equipment
PV Production Equipment
Electronic Components & Computer Network s
OthersOperating Income
Ordinary Inc ome
Net Income(loss)

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

136,126
13,42133,79012,53022,451
38,456
13,911
1,565
13,9291,102
167
17,06916,913
11,835

136,500
26,08433,906
12,18914,69538,352
7,069
4,202
5,099
1,223
125
13,045
14,8608,181

272,626
39,50567,696
24,72037,14676,80820,981
5,768
19,0292,325
292
30,11531,77320,016

131,993
19,081
32,041
19,054
18,10328,598
6,322
8,791
3,751
1,146
130
22,081
25,005
17,451

171,622
29,16035,603
14,992
42,11434,017
12,409
3,324
9,928
145
132
35,91636,16934,420303,615
48,241
67,64534,04760,21862,61518,732
12,115
13,6801,292
263
57,997
61,17551,871

576,242
87,747
135,341
58,76897,364
139,423
39,713
17,88332,7093,617
555
88,113
92,94971,888

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

(iv) Projected Operating Results for the Next Fiscal Year Ending March 31, 2016
In our main area of semiconductor production equipment, on the back of strong demand for mobile and servers usedin data centers, capital investment will continue, primarily for memory. The financial forecast for the next fiscal year(the fiscal year ending March 31, 2016) based on these projections is set forth below.

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

Year ending March 31, 2016

Interim

Net Sales

320.0
300.0
17.5
2.5
0.0
47.0
47.0
33.0

Semiconductor Production Equipment
FPD Production Equipment
PV Production Equipment
OthersOperating Income
Ordinary Income
Net Income Attributable to Owners of Parent

Full Year
8.7%
10.0%
-8.0%
7.5%
56.1%
47.9%
64.9%

675.0
625.0
47.0
3.0
0.0
112.0
112.0
79.0

10.1%
8.5%
43.7%
-17.1%
27.1%
20.5%
9.9%

Note: The financial forecasts and estimates stated in this announcement are based on certain assumptions judged tobe reasonable by the Company in light of information currently available concerning economic conditions in Japanand overseas, fluctuations in foreign exchange rates, and other factors that may have an impact on performance. The
company does not promise that the forecasts or estimates will be accurate.
They are therefore susceptible to the impact of many uncertainties, including market conditions, competition, thelaunching 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.

6ファイル名(2) Qualitative Information on Consolidated Financial Conditions(i) Financial Conditions
Current assets at the end of the fiscal year totaled 670,882 million yen, up 49,390 million yen compared to the end of
the previous fiscal year. This is primarily attributable to increases of 26,499 million yen in short-term investments
included in securities, 23,036 million yen in cash and deposits, 9,376 million yen in prepaid consumption taxes, 7,311
million yen in inventories, and a decrease of 18,186 million yen in trade notes and accounts receivable.
Tangible fixed assets decreased 5,447 million yen from the prior fiscal year end to 106,896 million yen at the end of
the fiscal year.
Intangible fixed assets decreased 1,989 million yen from the prior fiscal year end to 27,566 million yen at the end of
the fiscal year.
Investments and other assets increased 5,608 million yen from the prior fiscal year end to 70,807 million yen at theend of the fiscal year.
As a result of the foregoing, total assets grew 47,562 million yen from the prior fiscal year end to 876,153 million yen
at the end of the fiscal year.
Current liabilities increased 2,302 million yen from the prior fiscal year end to 172,812 million yen at the end of the
fiscal year. This was mainly due to increases of 8,542 million yen in customer advances, 3,527 million yen in accrued
employees' bonuses, 3,504 million yen in accrued expenses, 2,811 million yen in trade notes and accounts payable,
and 2,668 million yen in accrued consumption taxes; as well as decreases of 11,531 million yen in short-termborrowings due to the removal of Tokyo Electron Device Ltd. from consolidated accounting and 7,817 million yen inincome taxes payable.
Long-term liabilities decreased 5,289 million yen from the prior year end to 62,178 million yen at the end of the fiscal
year.
Net assets increased 50,548 million yen from the prior year end to 641,162 million yen at the end of the fiscal year.
This was mainly due, on the plus side, to the 71,888 million yen in net income recorded for the fiscal year underreview, and, on the minus side, to the 17,923 million yen in dividends distributed for the end of the prior fiscal year
and for the 1st, 2nd, and 3rd quarters of the fiscal year under review, as well the 10,620 million yen decrease inminority interests due to the removal of Tokyo Electron Device Ltd. from consolidated accounting. As a result of theforegoing, the equity ratio was 73.0%.

(ii) Cash Flow
Cash and cash equivalents increased 212,835 million yen from the prior fiscal year end to 317,632 million yen at theend of the fiscal year under review. The combined balance including deposits and short-term investments withperiods to maturity or redemption of at least three months, which are not included within cash and cash equivalents,
increased 49,536 million yen to 317,682 million yen. The various cash flows for the fiscal year under review andrelevant factors are described below.
Cash flow from operating activities grew 27,357 million yen from the previous fiscal year to reach 71,806 million yen
in the fiscal year under review. This is mainly attributable to inflows of 86,827 million yen in net income before income

7ファイル名taxes recorded for the fiscal year, 20,878 million yen in depreciation and amortization, a 12,911 million yen increasein customer advances, and a 9,432 million yen increase in accounts payable; and outflows of a 26,849 million yen
increase in inventories, payments of income taxes totaling 24,239 million yen, and a 11,383 million yen increase inprepaid consumption taxes.
Cash flow from investing activities swung from a negative 19,599 million yen in the prior fiscal year to a positive
155,737 million yen in the fiscal year under review. The main factors were an inflow of 163,300 million yen associatedwith a decrease in short-term investments and an outflow of 11,898 million yen associated with the acquisition of
tangible fixed assets.
Cash flow from financing activities increased from 186 million yen in the previous fiscal year to 18,213 million yen,mainly due to 17,923 million yen in dividend distributions.

Fiscal year ended
March 31, 2014

Fiscal year ended
March 31, 2015

69.8
136.8
0.3
529.8373
171.5-

Equity ratio (%)
Equity ratio at market value (%)
Interest-bearing debt to cash flow ratio (times)
Interest coverage ratio (times)

Equity ratio: (Equity / Total assets) x 100
Equity ratio at market value: (Market capitalization / Total assets) x 100
Interest-bearing debt to cash flow ratio: Interest-bearing debt / Cash flow from operating activities
Interest coverage ratio: Cash flow from operating activities / Interest expenses* All indicators are calculated using financial figures on a consolidated basis.
* Market capitalization is calculated based on the following formula: Closing stock price at fiscal year-end × Numberof shares outstanding at fiscal year-end after deduction of treasury stock.
* Cash flow from operating activities corresponds to the cash flow from operating activities in the consolidated
statement of cash flow. Interest-bearing debt includes all liabilities for which the Company is paying interest among
the liabilities reported on the consolidated balance sheet. Interest expenses correspond to the interest paid in the
consolidated statement of cash flow.

(3) Basic Policy on Profit Allocation and Payment of Dividends for the Current and Next Fiscal Years
The dividend policy of TEL is to link dividend payments to business performance and earnings on an ongoingbasis. Its basic policy for returning profits to shareholders is to maintain a payout ratio of around 35% based on
consolidated net income.
TEL will effectively use internal capital reserves and concentrate investment in growth areas to raise corporate
value through earnings growth, and TEL provides returns directly to shareholders by linking dividend payments tobusiness performance and earnings.
Furthermore, with regard to the fiscal year ended in March, 2015, as the effective date of the business combination8ファイル名has not yet been determined, a quarterly dividend has been announced, and in consideration of theaforementioned 4Q consolidated results (cumulative), we plan to issue a 4Q dividend of JPY 68 per share.
Because of this, the dividend per share for this fiscal year amounts to a yearly dividend of JPY 143 per share withthe addition of the 1Q dividend of JPY 10, the 2Q dividend of JPY 30, and the 3Q dividend of JPY 35 per share.
Furthermore, dividend forecast for the next fiscal year (the fiscal year ending March 31, 2016) to be 155 yen per
share for the entire year (a 65 yen interim dividend and a 90 yen year-end dividend), in accordance with the above
consolidated forecast for the net income pursuant to application of the dividend policy.

Dividend per share
Current fiscal year
(ended March, 2015)
Next fiscal year
(ending March, 2016)

1Q-end2Q-end3Q-end4Q-endTotal

10 yen30 yen35 yen

68 yen

143 yen

2Q-endYear-end

Total

65yen

90 yen155 yen9ファイル名2. Management Policy(1) Basic Management Policy
The basic management policy of the TEL Group is to raise its corporate value through profit-oriented operations byplacing the highest priority on customers, enhancing product and technology development capabilities, andinvigorating its workforce.
Under this fundamental policy, the TEL Group will engage in the development of vibrant and internationallycompetitive companies, with high growth potential and profitability that are attractive to investors.

(2) Management Tasks
The Group, one of the world’s leading suppliers of semiconductor and flat panel display (FPD) production equipment,
engages in dynamic business activities in the electronics industry, a field characterized by rapid technologicalinnovation, with its corporate philosophy that “We strive to contribute to the development of a dream-inspiring society
through our leading-edge technologies and reliable service and support”.

In the electronics market, to which Tokyo Electron (TEL) Group belongs, a higher level of technological requirements
has been sought from semiconductors by companies seeking to become high level network providers, such as higher
speed, greater capacity, higher energy efficiency and lower cost. As we are approaching a tipping point in bothtechnology and the market, a high capacity for technological development, service and technology that responds
quickly to customers’ needs, and globally competitive costs are seen to be important for Tokyo Electron (TEL) Groupmedium-to-long-term growth in the field of technological innovation. Particular attention should be paid to thefollowing strategic policies.

(i) Improving product quality to meet customers’ needs
In order to respond to customers’ issues in fields in which we are already a player, we must further improve
productivity, reliability, and cost competitiveness as well as product process performance. Tokyo Electron (TEL)Group aims to improve technological competitiveness in each of our products, including etching systems, cleaningsystems, coater/developers, and deposition systems in order to further improve our position.
In our main business of semiconductor production equipment, and particularly etching systems, for which market
growth is expected in the near future, we will continue to strengthen development of 3-dimensional NAND flash
memory and logic transistors, which will become increasingly important from now on, as well as multiple exposuretechnology etc. In addition, we plan to improve cost competitiveness by aggressively implementing activities toimprove productivity such as shortening production lead times, as well as quality improvements. Furthermore, withregard to cleaning systems, we are continuing with the adoption of mass production of wafer wet cleaning systems
and dry cleaning systems, and in 2014 we achieved our largest market share in history. As we expect an increase in
the number of applicable processes as miniaturization and 3-dimensional technology continue to progress, we aim tofurther increase profits and market share by creating differentiated and unique technologies in the future.

10ファイル名In the FPD production systems business, we are engaged in increasing profits by adopting the latest ICP (inductively
coupled plasma) etching systems for the market of displays using components such as low-temperature poly-silicone
and oxide semiconductors.
Furthermore, in March 2014, developments in the photovoltaic panel production business caused us to withdraw fromsales in this area and focus our resources on semiconductor production equipment and FPD production equipment.
By focussing on our core businesses, we aim to further improve profitability.

(ii) Innovation for continued growth (technological innovation)
Tokyo Electron (TEL) Group continues to aggressively pursue technological innovations to reduce device production
costs while seeking improvements in precision and reliability in order to develop new products to respond to thediversification of manufacturing technology and the requirements of next-generation devices. As part of this, we arefocused on next-generation MRAM (magnetic memory), and developing high magnetic field heat treatment
technology with the aim of integration with Tokyo Electron (TEL) Group’s other equipment and mass production inorder to enter the MRAM market. We are also aggressively involved in the development of next-generation devices
by both domestic and overseas research institutions.
Furthermore, in the field of organic EL panels, we have begun shipping ink-jet method production systems for organic
EL panels. We will continue to examine mass production technology with the aim of fully entering the market.
In this fiscal year, we have continued with the consolidation of our development centers, such as by moving
operations conducted at Technology Center Sendai, to Tokyo Electron Miyagi Ltd.’s Taiwa Plant (Taiwa-Cho,
Kurokawa-gun, Miyagi-ken). Looking forward, we aim to increase profits by securing the promising technologies ofthe future, and speeding up development through combining and optimizing resources.

(iii) Seeking the best solutions
Tokyo Electron (TEL) Group aims to strengthen our partnerships with our customers by understanding our customers’
future needs as early as possible and creating systems to work closely with customers in order to undertake
evaluation and development etc., while also taking full advantage of our operations and service structures to rapidly
respond to our customers’ needs and provide the best solutions.
Furthermore, in the field of post-processing, such as testing systems and advanced packaging processes, we
continue to leverage our core technology to provide the best solutions.
Also, in addition to sales of cutting-edge equipment, in our field solutions business, which is engaged in relocation,
improvement, enhancement, spare parts, and authorized second-hand equipment, we strive to expand our businessthrough utilization of information about our equipment which operates throughout the world and knowledge gained in
the field, as well as development of systems to provide effective and efficient products and service.

(iv) Corporate social responsibility
Tokyo Electron (TEL) Group recognizes that it has a social responsibility to its stakeholders, including shareholders,customers, trading partners, and regional companies to generate sustainable growth and medium-to-long-term
corporate value, and based on the CSR policy introduced in 2013, our dedicated organizations designate priority

11

ファイル名issues and monitor progress.
In the field of safety, based on the principle of “Safety First,” we aim to improve the safety and promote the health of
not only our employees and managers, but also our customers and trading partners, and everyone involved with ourbusiness activities.
In the field of the environment, based on the policy entitled “Tackling Environmental Issues through Technology,” inorder to reduce the overall environmental impact of our customers’ plants, Tokyo Electron (TEL) Group promotes
activities to reduce environmental impact through business activities and logistics, while pursuing measures such as
the reduction of energy consumption by equipment and peripheral devices.
In the field of quality assurance, we promote improvements in quality throughout the entire group by engaging withquality improvement, designating priority issues etc., and comprehensively implementing quality assurance guidelinesat all manufacturing plans, whether domestic or overseas.
In procurement activities, we aim to comply with related laws and regulations as well as social norms throughout the
supply chain, and further improve our fair and reasonable business management system through communication with
our trading partners

In addition to the key policies noted above, human resources are the source of our growth and we will continue toallocate human resources in positions and with responsibilities commensurate to their abilities and performance. We
will be proactive in further improving skill development programs, and will tie this into a dramatic leap forward for the
TEL Group. TEL will also put a system into place that provides fair evaluation and compensation according to thedegree of contribution, and will succeed in making this a company filled with dreams and dynamism.

The TEL Group will strive to increase corporate value in the future as well, by making our customers the first priority,
improving our capabilities in developing products and technology, strengthening international competitiveness, andendeavoring to stimulate employees, based on earnings-oriented management.

3. Basic philosophy on selection of accounting standards
Tokyo Electron’s consolidated financial statements have been prepared in accordance with Japanese GAAP, andTokyo Electron had been preparing to adopt U.S. GAAP for the planned business combination with Applied Materials.
However, the business combination has been cancelled as announced in the press release “Notice regarding the
Termination of the Business Combination Agreement and the Cancellation of the Share Exchange with TEL JapanGK” dated April 27, 2015, so Tokyo Electron will consider its future accounting treatment appropriately, observing thetrend of the adoption of IFRS among Japanese companies.

12

TOKYO ELECTRON

Consolidated Balance Sheet
As ofMarch 31, 2014

(Millions of yen)
As ofMarch 31, 2015

ASSETS
Current assets
Cash and deposit

56,34579,382

Trade notes and accounts receivable

129,032

110,845

Securities

211,800

238,532

Merchandise and finished goods

114,289

112,301

Work in process

38,074

41,483

Raw materials and supplies

15,91221,803

Deferred income taxes

25,17327,671Others32,36539,241

Allowance for doubtful accounts(1,502)(378)

621,492

670,882

Total current assets
Long-term assets
Tangible fixed assets
Buildings and structures

151,633

152,979

Accumulated depreciation(93,185)(97,910)

Buildings and structures, net

58,44855,06897,055102,295

Accumulated depreciation(76,255)(82,420)

Machinery and carriers, net

20,80019,874Land

25,11225,021Others34,98932,539(27,005)(25,608)

Machinery and carriers

Accumulated depreciation
Others, net
Total tangible fixed assets

7,983

6,931

112,344

106,896

Intangible fixed assets
Goodwill

9,400

9,067

Others

20,155

18,499Total intangible fixed assets

29,556

27,566

Investment securities

20,02623,934

Net defined benefit asset

8,904

8,817

Deferred income taxes

23,223

18,347

Others

14,911

21,591

Allowance for doubtful accounts(1,866)(1,884)

Total investments and other assets

65,19970,807207,099

205,271828,591

876,153

Investments and other assets

Total long-term assets
Total assets

13

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

As ofMarch 31, 2015

LIABILITIESCurrent liabilities
Trade notes and accounts payable

53,667

Short-term borrowings

11,531

56,478

Accrued employees' bonuses

8,584

12,111

Accrued warranty expenses

10,072

10,441

Customer advances

39,90048,442Others

46,75345,337

Total current liabilities

170,509

172,812Net defined benefit liability

53,44851,104

Others14,01911,074

Total long-term liabilities

67,46862,178

237,978

234,991

Common stock

54,961

54,961

Capital surplus

78,02378,023Retained earnings

436,174

488,816-Long-term liabilities

Total liabilities
NET ASSETS
Shareholders' equity

Treasury stock
Total shareholders' equity(9,478)(9,064)

559,679

612,736

5,592

9,463

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

60

122

5,777

12,481Remeasurements of defined benefit plans

6,981

4,681

Total accumulated other comprehensive income

18,411

26,747

Subscription rights to shares

1,643

1,420

Minority interests

10,878257

Total net assets

590,613641,162

828,591

876,153

Total liabilities and net assets

14Consolidated Statement of Income(Millions of yen)
Year ended
March 31, 2014

Year ended
March 31, 2015

Net sales

612,170

613,124

Cost of sales

410,277

370,351

Gross profit

201,892

242,773

Salaries and allowances

28,14024,297

Research and development expenses

78,663

71,349Others

62,88259,013

Total selling, general & administrative expenses

169,687

154,660

32,204

88,113

Selling, general & administrative expenses

Operating income (loss)
Non-operating income
Interest income

1,343

Foreign currency translation income

901
-

1,575

Revenue from grants

1,154

629

Others

2,975

1,880

Total non-operating income

5,473

4,985

Maintenance and operation cost of closed business bases

47

47

Commitment fee

28

18

Non-operating expenses

Foreign currency translation loss

1,229

Loss on revaluation of investment securities

230

Others655

Total non-operating expenses

83

2,191

149

35,487

92,949Gain on sale of fixed assets

433

1,839

Others93

54

Total unusual or infrequent profit

526

1,894

Ordinary income (loss)
Unusual or infrequent profit

Unusual or infrequent loss
Loss on impairment

46,9692,505

Loss on sales of subsidiaries and affiliates' stocks

-

1,609

Loss on liquidation of subsidiaries and affiliates

-

1,069

Expenses for restructuring of business bases

-

1,046

Additional collection of custom tax

-

1,003

Others800

781

Total unusual or infrequent loss

47,7698,015

Income (loss) before income taxes(11,756)

86,827

Provision for income taxes and enterprise taxes

15,994

14,726

Deferred income taxes(8,537)

172

7,456

14,898(19,213)71,928

Total income taxes
Income (loss) before minority interests
Minority interests
Net income (loss)

15

195

40

(19,408)

71,888

TOKYO ELECTRON

Consolidated Statement of Comprehensive Income(Millions of yen)
Year ended
March 31, 2014

Income (loss) before minority interests

Year ended
March 31, 2015

(19,213)71,928

1,365

3,868

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

91

69

6,867

6,642

Remeasurements of defined benefit plans-(2,269)

Share of other comprehensive
income of associates accounted for using equity method-

56

Total other comprehensive income
Comprehensive income

8,324

8,366

(10,888)

80,295(11,150)

80,224261

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

16

TOKYO ELECTRON

Consolidated Statements of Changes in Net Assets
Year ended March 31, 2014

(Millions of yen)
Shareholders' equity

Balance at beginning of period

Common stock

Capital surplus

Retained earnings

54,961

78,023467,920

Increase (decrease) from changes
in accounting periods at
consolidated subsidiaries

Total shareholders'equityTreasury stock(9,588)591,315(3,190)(3,190)Cash dividends(9,138)(9,138)Net income (loss)(19,408)(19,408)

Changes of items during the period

Purchase of treasury stock
Disposal of treasury stock

(29)

(29)

(8)

139

131

Net change except shareholders'equityTotal changes of items during theperiodBalance at end of period--(28,555)

110(28,445)

54,961

78,023436,174(9,478)559,679

Accumulated other comprehensive income

Balance at beginning of period

Valuationdifference on
available-for-salesecurities

Deferred gains orlosses on hedges

4,214

(14)

Translation
adjustments

Remeasurementsof defined benefits
plans(2,483)-

Subscription
Total accumulated
rights to shares
othercomprehensive
income
1,716

1,374

Minority
interests

10,720

Increase (decrease) from changes
in accounting periods at
consolidated subsidiaries

Total net
assets605,127(3,190)Changes of items during the period
Cash dividends(9,138)Net income (loss)(19,408)

Purchase of treasury stock(29)

Disposal of treasury stock131

Net change except shareholders'equity

1,378

74

8,260

6,981

16,695269

157

17,122

Total changes of items during theperiod

1,378

74

8,260

6,981

16,695269

157(11,323)

Balance at end of period

5,592

60

5,777

6,981

18,411

1,643

10,878590,613

17

TOKYO ELECTRON

Consolidated Statements of Changes in Net Assets
Year ended March 31, 2015

(Millions of yen)
Shareholders' equity

Balance at beginning of period

Common stock

Capital surplus

Retained earnings

54,961

78,023436,174

Cumulative effect of changes inaccounting policies
Restarted balance

Treasury stock(9,478)(1,102)54,961

78,023435,072

Total shareholders'equity559,679(1,102)(9,478)558,577

Changes of items during the period
Cash dividends(17,923)(17,923)

Net income (loss)

71,88871,888Purchase of treasury stock

(183)

(183)

(220)

598

377

-

53,744414

54,15878,023

488,816(9,064)

612,736

Disposal of treasury stock
Net change except shareholders'equityTotal changes of items during theperiodBalance at end of period

54,961

Accumulated other comprehensive income

Balance at beginning of period

Valuationdifference on
available-for-salesecurities

Deferred gains orlosses on hedges

5,592

60

Translation
adjustments

5,777

Remeasurements Total accumulatedof defined benefit other comprehensive
plansincome
6,981

18,411

Subscription
rights tosharesMinority
interests

Total net
assets

1,643

10,878590,613(210)(1,312)

10,668589,301

Cumulative effect of changes inaccounting policies
Restarted balance

5,592

60

5,777

6,981

18,411

1,643

Changes of items during the period
Cash dividends(17,923)

Net income (loss)

71,888Purchase of treasury stock(183)

Disposal of treasury stock377

Net change except shareholders'equity

3,870

62

6,703

(2,300)

8,336

(223)

(10,410)(2,297)

Total changes of items during theperiod

3,870

62

6,703

(2,300)

8,336

(223)

(10,410)51,861

Balance at end of period

9,463

122

12,481

4,681

26,7471,420

257

641,162

18

TOKYO ELECTRON

Consolidated Cash Flow

(Millions of yen)
Year ended
March 31, 2014

Year ended
March 31, 2015

Cash flow from operating activities
Income (loss) before income taxes
Depreciation and amortization
Loss on impairment(11,756)
24,88886,827
20,87846,9692,505

Amortization of goodwill
Increase (decrease) in net defined benefit liability

4,262

1,150

2,885

2,825

Decrease (increase) in net defined benefit asset
Increase (decrease) in allowance for doubtful accounts

(653)
(228)

(1,601)(1,081)

Increase (decrease) in accrued employees' bonuses

1,396

3,667

Interest and dividend revenue(3,161)(1,280)(303)(1,820)(25,357)

1,609(1,318)(32,088)(26,849)

Loss (gain) on sales of property, plant and equipment
Loss (gain) on sales of shares of subsidiaries and affiliates
Decrease (increase) in trade notes and accounts receivable
Decrease (increase) in inventories
Increase (decrease) in accounts payable

15,605

9,432

Decrease (increase) in prepaid consumption tax(2,912)(11,383)

Increase (decrease) in accrued consumption tax

1,122
19,083

2,706
12,911

Increase (decrease) in customer advances
Others3,301(4,754)

Subtotal

43,052

94,424

Receipts from interest and dividends

3,222

1,621

Interest paid
Income taxes paid or refund (paid)(83)(1,741)(24,239)

Net cash generated by operating activities

44,44971,806

(98)
9,871

5

Cash flow from investing activities
Payment into time deposits-

Proceeds from time deposits
Payment for purchase of short-term investments(192,515)(24,996)

Proceeds from redemption of short-term investments

174,200

188,296

Payment for purchase of tangible fixed assets(9,451)(11,898)

Proceeds from sales of tangible fixed assets
Payment for purchase of intangible fixed assets
Proceeds from sales of investment securities
Proceeds from sales of shares of subsidiaries resulting in change in scope of
consolidation
Others896(1,640)
111

2,548
(422)
1,093

-

1,726

(972)

(615)

Net cash used in investing activities(19,599)

155,737

Cash flow from financing activities
7,551

Net increase (decrease) in short-term borrowings
Proceeds from long-term borrowings

-

2,000

-

Net decrease (increase) in treasury stock
Dividends paid

(29)

(183)

(9,138)(17,923)

OthersNet cash generated by financing activities

(569)
(186)

(106)
(18,213)(3,973)
20,69085,313

3,505
212,835
104,797

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

19(1,206)
104,797

317,632

TOKYO ELECTRON

Segment Information(i) Overview of reportable segments
The reportable segments by the company provide separate financial information pertaining to the various segmentsof the company, which is reviewed periodically by the management to evaluate corporate performance as well as
make decisions about the allocation of management resources.
The corporate structure consists of product and service segments based on business units (BUs), and thereportable segments are as follows: Semiconductor Production Equipment, Flat Panel Display (FPD) Production
Equipment, and Photovoltaic Panel (PV) Production Equipment.
The Semiconductor Production Equipment segment consists of coaters/developers, plasma 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 thedevelopment, 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 consisted of photovoltaic panel production equipment used in the
manufacturing of thin film silicon photovoltaic panels, and we were engaged in the development, manufacturing,sales and provision of maintenance services, etc. for such products. However, we have scaled down our businessstructure of the PV production equipment, by halting development, production, and sales activities for this businessand limit operations to support for equipment already delivered as of the end of March, 2014.

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

(iii) W ays of estimating net sales, profits or losses, assets, and other amounts in reportable segment
Accounting method used in each reportable segment is almost the same as the method used to prepare
consolidated financial statements. Inter-segment revenues or transfers are based on prevailing market prices.
Moreover, shared assets have not been allotted to each reportable segments, but associated costs have been
distributed among them according to rational standards.

20

TOKYO ELECTRON(iv) Net sales, profits or losses, assets, and other amounts in reportable segment
Year ended March 31, 2015

(Millions of yen)
Reportable Segment
Semiconductor
Production
Equipment

Sales to external customers

FPD Production
Equipment

Others *1

PV Production
Equipment

576,242

32,709

3,617

555

-

-

-

11,442

Net sales

576,242

32,7093,617

11,997

Segment income (loss)

135,991(1,312)(8,789)1,169

Segment assets

305,582

23,750

1,731

1,891

Depreciation and amortization

10,017426

5

42

Amortization of goodwill

1,150

-

-

-

Loss on impairment

387

509

-

-

Increase in the amount of tangible fixed
assets and intangible fixed assets

8,529

197

-

23

Inter-segment sales or transfers

Total Segment

Eliminations *2

Consolidated Total *3

Sales to external customers

613,124-

Inter-segment sales or transfers

11,442(11,442)

Net sales

624,567(11,442)

613,124

Segment income (loss)

127,059(40,231)

86,827

Segment assets

332,956

543,197

876,153

Depreciation and amortization

10,492

10,38520,878

Amortization of goodwill

1,150

Loss on impairment

896

1,609

2,505

Increase in the amount of tangible fixed
assets and intangible fixed assets

8,750

5,530

14,280-613,124-

1,150

Notes:The "Others" segment is all other businesses which are not included in the reported business segments, such as the transportation of*1
products of the Tokyo Electron Group companies, equipment leasing and insurance, etc.
*2 a) The eliminations of segment income or loss amounting to 40,231 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
17,108 million yen, pertaining to fundamental research and element research conducted by the company, and business combination
expenses of 8,529 million yen, etc., not related to any of the reportable segments.
b) The main constituents of the eliminations of segment assets worth 543,197 million yen are cash, savings, securities, buildings andstructures, etc. unallocated to each reportable segment.
c) The eliminations of loss on impairment worth 1,609 million yen are related to buildings and structures, etc. unallocated to each reportablesegment.
d) The main constituent of the eliminations of tangible fixed assets and intangible fixed assets worth 5,530 million yen is capital investments
in buildings, structures, machinery and carriers unallocated to each reportable segment.
*3

Segment income or loss is adjusted against net income before taxes in consolidated income statement.

21

TOKYO ELECTRON(v)

Impairment loss on fixed assets in reportable segments
Refer to (iv) Net sales, profits or losses, assets, and other amounts in reportable segment.

(vi)

Amortization and un-depreciated balance of goodwill in reportable segments
Year ended March 31, 2015

(Millions of yen)
Semiconductor
Production
Equipment

FPD Production
Equipment

PV Production
Equipment

Total Segment

Amortization of goodwill

1,150

-

-

1,150

Balance at end of period

9,067

-

-

9,067

(vii) Income related to negative goodwill in reportable segments
None

Note: Significant events after reporting periodTokyo Electron executed, in relation to the Business Combination, the Business Combination Agreement with Applied Materials on
September 24, 2013 and the share exchange agreement with TEL Japan GK on May 14, 2014. However, as announced in the press
release titled “Notice regarding the Termination of the Business Combination Agreement and the Cancellation of the Share Exchangewith TEL Japan GK” dated April 27, 2015, Tokyo Electron, at its board of directors’ meeting held on April 27, 2015, resolved toterminate the Business Combination Agreement and cancel the share exchange with TEL Japan GK.
This will not have a material impact on Tokyo Electron’s financial condition or its results of operations.

22