TOKYO ELECTRON

October 31, 2008

Consolidated Financial Review
for the Second Quarter Ended September 30, 2008
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 shown in million yen except per share data.
3. Amounts are rounded down to the nearest million yen.

1. Financial highlights for the six months ended September 30, 2008
Six months ended
September 30, 2008 September 30, 2007
301,225
476,377
26,28295,00528,907
95,795
17,361
62,463
97.03
349.1996.82
348.24(1) Operating results (Cumulative)
Net sales
Operating income
Ordinary income
Net income
Net income per share (Yen)
Fully diluted net income per share (Yen)(2) Financial position

As of
September 30, 2008
Total assets
728,536
Net assets
549,093
Equity ratio (%)
73.9
Net assets per share (Yen)
3,008.25
Equity: 538,325 million yen (as of September 30, 2008)
534,953 million yen (as of March 31, 2008)

As ofMarch 31, 2008
792,817545,24467.5
2,989.70

2. Dividends
Year ending
March 31, 2009
2Q-end dividend per share (Yen)
20.00
Year-end dividend per share (Yen)(forecast) 4.00
Annual dividend per share (Yen)(forecast) 24.00
Note: Revision of dividends forecast for during this period: Yes

Year ended
March 31, 2008
70.00
55.00
125.003. Earnings forecasts for the year ending March 31, 2009
Year ending
March 31, 2009
Net sales
Operating income
Ordinary income
Net income
Net income per share (Yen)
Note: Revision of earnings forecast for during this period: Yes

1

540,000
12,00016,5008,000
44.71

TOKYO ELECTRON

4. Others(1) Important changes in subsidiaries: None
(2) Use of simplified accounting method and special accounting policy for quarterly financial reporting: Yes(3) Changes in principles, procedures and display of accounting method concerning quarterly consolidated
statement policies.
1. Changes in accounting policies: Yes
2. Other changes: None
(4) Number of shares outstanding (common stock)
1. Number of shares issued
As of September 30, 2008: 180,610,911 shares
As of March 31, 2008:

180,610,911 shares

2. Number of shares of treasury stock
As of September 30, 2008: 1,661,218 shares
As of March 31, 2008:

1,678,927 shares

3. Average number of shares outstanding
As of September 30, 2008: 178,938,092 shares
As of September 30, 2007: 178,881,840 shares

Explanations on 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 information currently available.
Consequently, actual operating results may differ substantially from the projections in the Financial
Review.

2

Qualitative Information, Financial Statements, etc.
1. Qualitative Information on Consolidated Operating Results
During the first half of the current fiscal year, there were rising concerns of a slowdown in the
global economy as a result of high prices for oil and raw materials and the financial crisis thatspread from the United States.
In addition, in terms of the business environment for semiconductor production equipment, whichis the Company’s main business segment, capital investment by semiconductor manufacturers isheaded towards a contraction due to downturn of the semiconductor memory market
accompanying the deterioration in the balance between supply and demand.
With this situation as the backdrop, in the first half of the current fiscal year (April to September2008), net sales were 301,225 million yen (down 36.8% compared to the same period of theprevious year), operating income was 26,282 million yen (down 72.3%), ordinary income was
28,907 million yen (down 69.8%), and net income was 17,361 million yen (down 72.2%).
In addition, during the second quarter (July to September 2008), net sales were 146,398 million
yen (down 44.5% compared to the same period of the previous year), operating income was
4,852 million yen (down 90.7%), ordinary income was 6,644 million yen (down 87.8%), and net
income was 4,508 million yen (down 87.6%).

The overview of each business segment is as described below.

(1) Industrial Electronic Equipment BusinessNet sales from external customers in this segment in the first half of the current fiscal year were249,100 million yen (down 41.1% compared to the same period of the previous year). Net sales
from external customers in this segment in the second quarter were 119,196 million yen (down
49.4%).

(a) Semiconductor Production Equipment
As a result of falling price due to the deterioration in the balance between supply and demand for
DRAM and flash memory, semiconductor manufacturers adjusted proper backlog/production andrestrained capital investment. Because of this, net sales from external customers in this segment
during the first half were 208,702 million yen (down 45.0% compared to the same period of theprevious year). Also, net sales from external customers in this segment during the second
quarter were 96,156 million yen (down 55.0%).

3

(b) FPD Production Equipment
As a result of expansion of large liquid crystal display (LCD) production lines by LCD panel
manufacturers, net sales from external customers in this segment during the first half of thecurrent fiscal year were 40,179 million yen (down 7.8% compared to the same period of theprevious year). Net sales from external customers in this segment during the second quarter
were 22,915 million yen (up 3.2%).

(c) Others
Net sales from external customers in this segment during the first half of the current fiscal year
were 218 million yen (down 14.4% compared to the same period of the previous year). Also,
net sales from external customers in this segment during the second quarter were 124 million
yen (up 2.1%).

(2) Electronic Components and Computer Networks BusinessIn the semiconductor and electronic devices field, demand for memory ICs for use with mobile
phone handsets was sluggish, but sales of products for PCs were strong. In addition, sales ofcustom ICs for mobile phone base stations continued to recover.

In the field related tocomputer systems, sales were affected by restraints on capital investment in anticipation of adeterioration of corporate performance. Given these circumstances, net sales from externalcustomers in this segment during the first half of the current fiscal year were 52,125 million yen(down 2.2% compared to the same period of the previous year). Also, net sales from externalcustomers in this segment during the second quarter were 27,202 million yen (down 3.2%).

(For reference）
Consolidated
1Q
154,827
129,904
112,546
32,896
18,9097,900
14,842
25,724
3,788
8,484
17,26493
24,923
21,43022,263
12,853

Net Sales
Industrial Electronic Equipment
Semiconductor Production Equipment
Japan
U.S.
EuropeKorea
TaiwanChina
S.E.Asia & others
ＦＰＤ Production Equipment
OthersElectronic Components & Computer Networks
Operating Income
Ordinary Income
Net Income

4

FY20092Q
146,398
119,196
96,15633,36916,010
6,942
11,791
13,1603,236
11,64522,915
124
27,202
4,852
6,644
4,508

Total
301,225
249,100
208,702
66,26534,92014,842
26,63338,884
7,025
20,12940,179218
52,12526,282
28,907
17,361（Millions of yen）
(Ref.) FY2008
1H
2H
476,377 429,714
423,106 371,804
379,251 347,188
94,62997,30452,47956,22814,44722,482
41,12232,089141,934 113,037
20,525
9,338
14,112
16,70743,60024,415254
199
53,271
57,90995,00573,492
95,79576,91762,46343,807

2. Qualitative Information on Consolidated Financial Conditions(1) Financial Conditions
Current assets at the end of the second quarter of the current fiscal year were 574,941 million
yen, down 65,291 million yen from the end of the previous fiscal year. The decline was primarily
the result of an increase in cash and deposit and certificate of deposit in securities of 27,842
million yen, a decrease in trade notes and accounts receivable of 77,020 million yen, and adecrease of 10,105 million yen due to refund of accrued consumption and other taxes.
Tangible fixed assets increased by 467 million yen from the end of the previous fiscal year, to104,573 million yen.
Intangible fixed assets fell by 1,177 million yen from the end of the previous fiscal year, to 12,075
million yen.
Investments and other assets increased by 1,720 million yen from the end of the previous fiscal
year, to 36,945 million yen.
As a result, total assets were down 64,280 million yen from the end of the previous fiscal year, to728,536 million yen.
Current liabilities declined by 69,838 million yen from the end of the previous fiscal year to
128,981 million yen. The decline was the result primarily of redemption of the 11th issue of
unsecured corporate bonds worth 30,000 million yen, a decrease of 18,430 million yen in income
taxes payable, and a decrease of 5,384 million yen in trade notes and accounts payable.
Long-term liabilities were up 1,709 million yen from the end of the previous fiscal year, to 50,461
million yen.
As a result of the above, total liabilities decreased by 68,129 million yen from the end of theprevious fiscal year, to 179,443 million yen.
Net assets increased to 549,093 million yen as a result of an increase from reporting net income
for the current quarter of 17,361 million yen and a decrease due to the payment of dividends of
9,841 million yen from surplus earning at the end of the previous fiscal year. The equity ratio
was 73.9%.

(2) Cash Flow
Cash and cash equivalents at the end of the second quarter of the current fiscal year were down
61,438 million yen from the end of the previous fiscal year, to 132,054 million yen. In addition,
cash and deposit at the end of the second quarter of the current fiscal year including time
deposits and certificate of deposit whose deposit term is over three months of 99,351 million yen
increased by 27,842 million yen from the end of the previous fiscal year, to 231,405 million yen.
The overall situation affecting cash flow in the first half of the current fiscal year was as follows.

5Cash flow from operating activities was a positive 84,605 million yen, up 64,050 million yen fromthe same period of the previous fiscal year. Major positive factors included income before
income taxes of 28,693 million yen, depreciation and amortization of 10,740 million yen, and adecrease in trade notes and accounts receivable of 76,460 million yen. The main negative
factor was payment of income taxes of 28,288 million yen.
Cash flow from investing activities was a negative 103,915 million yen, compared to negative
8,532 million yen in the same period of the previous fiscal year, primarily as a result ofexpenditures of 10,772 million yen for acquisition of tangible fixed assets for production and R&D
and expenditures of 89,453 million yen for net increases in time deposits and certificate ofdeposit whose deposit term is over three months.
Cash flow from financing activities was a negative 41,324 million yen compared to a negative
16,390 million yen in the same period of the previous fiscal year, mainly as a result of redemptionof the 11th issue of unsecured corporate bonds worth 30,000 million yen and payment of 9,841
million yen in dividends.

In addition, the overall situation affecting cash flow in the second quarter of the current fiscal year
was as follows.
Cash flow from operating activities was a positive 49,944 million yen, down 129 million yen fromthe same period of the previous fiscal year. Major positive factors included net income before
income taxes for the current quarter of 6,439 million yen, depreciation and amortization of 5,630
million yen, and a decrease in trade notes and accounts receivable of 30,795 million yen.
Cash flow from investing activities was a negative 103,279 million yen, compared to negative
3,902 million yen in the same period of the previous fiscal year, primarily as a result ofexpenditures of 4,472 million yen for acquisition of tangible fixed assets for production and R&D
and expenditures of 98,422 million yen for net increases in time deposits.
Cash flow from financing activities was a negative 31,277 million yen compared to negative
2,112 million yen in the same period of the previous fiscal year, primarily as a result ofredemption of the 11th issue of unsecured corporate bonds worth 30,000 million yen.

The figures above indicating year-on-year changes and the explanation of those changes, for the
categories of 1. Qualitative Information on Consolidated Operating Results, 2. Qualitative
Information on Consolidated Financial Conditions, and (2) Cash Flow are for the sake ofreference.

63. Qualitative Information on Forecasts for Consolidated Financial Results
With regard to the future business climate, there are rising concerns about a worsening of the
global financial crisis and a further economic downturn. In semiconductor related markets,
accompanying the deterioration of supply-demand balance for DRAM and flash memory, therestraints on capital investment by semiconductor manufacturers has exceeded expectations.
Given these circumstances, we have revised downward the forecast of consolidated financial
results for the fiscal year announced on August 8, 2008, as follows, due to the fact that sales in
the main semiconductor production equipment segment are expected to be lower than theprevious projection.

Consolidated forecast
Net Sales
Industrial Electronic Equipment
Semiconductor Production Equipment
FPD Production Equipment
OthersElectronic Components & Computer Networks
Operating Income
Ordinary Income
Net Income(Billions of yen)
FY2009 (E)540.0-40.4%
437.0-45.0%
344.0-52.6%
92.5
36.0%
0.5
10.0%
103.0
-7.4%
12.0
-92.9%
16.5-90.4%
8.0-92.5%

Note: The financial forecasts and estimates stated in this financial review are based on certain
assumptions judged to be reasonable at the present time in light of information currently
available concerning economic conditions in Japan and overseas, fluctuations in foreignexchange rates, and other factors that may have an impact on performance.
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 inthe semiconductor production equipment business. Consequently, actual sales and profits may
differ substantially from the projections stated in this financial review.

7

TOKYO ELECTRON

Consolidated Balance Sheet(Millions of yen)
As of
September 30, 2008ASSETS

As ofMarch 31, 2008

Current assets
Cash and deposit

57,27767,540Trade notes and accounts receivable

147,150

224,170

Securities

174,129

136,022

Merchandise and finished goods

98,049101,053Work in process

41,54342,123

Raw materials and supplies

17,43917,974

Others39,396

51,411

Allowance for doubtful accounts

(45)

(62)

574,941

640,233

104,573

104,105

Others12,075

13,253

Total intangible fixed assets

12,075

13,25337,261

35,526

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

Investments and other assets
OthersAllowance for doubtful accounts

(316)

(301)

Total investments and other assets

36,94535,224

153,595

152,584

728,536

792,817

Total long-term assets
Total assets

8

TOKYO ELECTRON(Millions of yen)
LIABILITIES

As of
September 30, 2008

As ofMarch 31, 2008

49,94755,332Current liabilities
Trade notes and accounts payable
Short-term debt

4,747

6,069

Income taxes payable

9,808

28,239Accrued warranty expenses

7,956

9,815

Other allowance

5,438

13,701Others

51,08385,662

Total current liabilities

128,981

198,820

45,32943,704645

665

Long-term liabilities
Accrued pension and severance costs
Other allowance
Others

4,485

4,382

Total long-term liabilities

50,461

48,752

179,443

247,572

Common stock

54,961

54,961

Capital surplus

78,26878,392Retained earnings

417,833

410,866

Total liabilities
NET ASSETS
Shareholders' equity

Treasury stock(11,251)(11,369)

Total shareholders' equity

539,811532,850

525

2,172

Valuation and translation adjustments
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges

384

460

Translation adjustments(2,395)(529)

Total valuation and translation adjustments(1,486)

2,102

772

483

Minority interests

9,995

9,807

Total net assets

549,093545,244728,536

792,817

Subscription rights to shares

Total liabilities and net assets

9

TOKYO ELECTRON

Consolidated Statement of Income(Millions of yen)Six months ended
September 30, 2008
Net sales

301,225

Cost of sales

210,170

Gross profit

91,055

Selling, general & administrative expenses
Research and development expenses

31,577

Others33,194

Total selling, general & administrative expenses

64,772
26,282

Operating income
Non-operating income
Interest expenses

908

Revenue from development grants

1,475

Others948

Total non-operating income

3,332

Non-operating expenses
Foreign currency transaction loss

317

Others389

Total non-operating expenses

707
28,907

Ordinary income
Unusual or infrequent profit
Gain on sale of fixed assets

93

Others6

Total unusual or infrequent profit

99

Unusual or infrequent loss
Loss on proceeds or disposal of fixed assets

122

Office relocation expenses

117

Others74

Total unusual or infrequent loss

314

Income before income taxes

28,693

Provision for income taxes and enterprise taxes

10,994

Minority interests

336
17,361

Net income

10TOKYO ELECTRON

Consolidated Cash Flow
(Millions of yen)Six months ended
September 30, 2008

Cash flow from operating activities
Income before income taxes

28,693

Depreciation and amortization

10,740

Increase in accrued pension and severance costs (decrease)

1,678

Increase in accrued employees' bonuses (decrease)(7,435)

Increase in accrued warranty expenses (decrease)(1,782)

Interest and dividend revenue(957)

Decrease in trade notes and accounts receivable (increase)76,460Decrease in inventories (increase)

2,190

Increase in accounts payable (decrease)(4,870)Decrease in prepaid consumption tax (increase)

10,003

Increase in accrued consumption tax (decrease)(4,814)

Increase in customer advances (decrease)

6,521

Others(4,300)Subtotal

112,128

Receipts from interest and dividends

916Interest paid

(151)

Income taxes paid

(28,288)

Net cash generated by operating activities

84,605

Cash flow from investing activities
Decrease in time deposits (increase)(89,453)

Payment for purchase of tangible fixed assets(10,772)

Payment for acquisition of intangible fixed assets(612)

Payment for purchase of investment securities(2,786)

Others(291)

Net cash used in investing activities(103,915)

Cash flow from financing activities
Net increase in short-term borrowings (decrease)(1,322)

Redemption of straight bonds(30,000)

Dividends paid

(9,841)Others(161)

Net cash generated by financing activities(41,324)

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
Cash and cash equivalents from newly consolidated subsidiaries
Cash and cash equivalents at end of period

11

(870)
(61,505)
193,49267
132,054

TOKYO ELECTRON

Segment Information
1. Information by business segment(Millions of yen)Six months ended September 30, 2008
Industrial
electronicequipment
Net sales
Operating income

Electronic components
and computer networks

249,61124,67652,432
1,593

Total

Eliminations andcorporate

Consolidated

(817)
12

301,225
26,282

302,043
26,270Note: 1. Method of classifying businesses: Businesses are classified after considering similarities in type of product,function, or method of sale.
2. Major products in each business segment:(1) Industrial electronic equipment: Semiconductor production equipment, FPD production equipment, other(2) Electronic components and computer networks: Semiconductor products, computer systems andnetworks, middleware and software, other electronic component

2. Information by geographic segment(Millions of yen)Japan
Net sales
Operating income

287,437
22,787Six months ended September 30, 2008
Eliminations andOther regions
Total
corporate

65,036
2,766

352,473
25,554(51,247)
728

Consolidated

301,225
26,282

Note: 1. National and regional categories are determined on the basis of geographic proximity.
2. Main countries and territories in other regions: U.S., Europe, Taiwan

3. Foreign sales(Millions of yen)
TaiwanForeign sales

52,473Six months ended September 30, 2008
Korea
U.S.
Others
43,68934,94751,288

Consolidated net sales
Proportion of foreign
sales in consolidated
net sales ( % )Total
182,398
301,225

17.4

14.5

11.6

Note: 1. National and regional categories are determined on the basis of geographic proximity.
2. Main countries in others: Singapore, China, Israel
3. Foreign sales indicates net sales in countries and territories except Japan.

12

17.1

60.6

(Reference)
Consolidated Statement of Income of the same period of theprevious fiscal year

TOKYO ELECTRON(Millions of yen)Six months ended
September 30, 2007
Net sales

476,377

Cost of sales

311,018

Gross profit

165,359

Selling, general & administrative expenses

70,354

Operating income

95,005Non-operating income

2,238

Non-operating expenses

1,447

Ordinary income

95,795

Unusual or infrequent profit

2,776

Unusual or infrequent loss

370

Income before income taxes

98,201

Provision for income taxes and enterprise taxes

35,256

Minority interests

482
62,463

Net income13