TOKYO ELECTRON

October 28, 2011

Consolidated Financial Review
for the Second Quarter Ended September 30, 2011
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, 2011
Six months ended
September 30, 2010 September 30, 2011
Net sales (Millions of yen)
318,400
326,350
Operating income (Millions of yen)
42,34236,859Ordinary income (Millions of yen)
45,10739,722
Net income (Millions of yen)
33,45426,657
Net income per share (Yen)
186.88148.85
Fully diluted net income per share (Yen)
186.60148.63Comprehensive income:Year ended 9/30/11: 20,048 million yen
Year ended 9/30/10: 28,588 million yen(1) Operating results (Cumulative)(2) Financial position

Total assets (Millions of yen)
Net assets (Millions of yen)
Equity ratio (%)
Equity: 579,266 million yen (as of September 30, 2011)
572,741 million yen (as of March 31, 2011)

As ofMarch 31, 2011
809,205
584,801
70.8

As of
September 30, 2011
782,467
591,21974.0

2. Dividends
Year ended
March 31, 2011
38.00
76.00
114.002Q-end dividend per share (Yen)
Year-end dividend per share (Yen)Annual dividend per share (Yen)
Note: Revision of dividends forecast : Yes

Year ending
March 31, 2012
53.00
27.00 (Forecast)
80.00 (Forecast)

3. Earnings forecasts for the year ending March 31, 2012
Year ending
March 31, 2012
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 : Yes

630,000
57,00060,50040,000223.31

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: Yes
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 (including treasury stock)
As of September 30, 2011:

180,610,911 shares

As of March 31, 2011:

180,610,911 shares

2. Number of shares of treasury stock
As of September 30, 2011:

1,485,306 shares

As of March 31, 2011:

1,554,231 shares

3. Average number of shares outstanding
Six months ended September 30, 2011:

179,086,953 shares

Six months ended September 30, 2010:

179,018,068 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

Qualitative Information on Financial Results for the Second Quarter(1) Qualitative Information on Consolidated Operating Results

During the first half of the current fiscal year, economic stagnation in the United States and other developed
countries sparked by chaos in financial markets in Europe as well as other factors caused the sense of
uncertainty over the future to increase. Domestic demand in China, India, and other emerging market
countries continued to expand, but growth rates have started to slow. The Japanese economy is recoveringfrom the effects of the Great East Japan Earthquake, but the slowdown of the global economy and theprolonged duration of yen remaining at high values compared to other currencies have made the recovery
extremely modest.
In the electronics industry, the field in which the Tokyo Electron Group conducts its business, demand fortelevisions, PCs, and mobile phones was sluggish, and although information terminal devices including
fast-selling smartphones are growing, this growth has not been sufficient to bring about a turnaround in theelectronics component market.
Consequently, consolidated net sales for the first half of the current fiscal year were 326,350 million yen (up2.5% compared to the same period of the previous year). Consolidated operating income and ordinary
income, respectively, were 36,859 million yen (down 12.9% compared to the same period of the previousyear) and 39,722 million yen (down 11.9% compared to the same period of the previous year). Net income
for the first half was 26,657 million yen (down 20.3% compared to the same period of the previous year).

Overviews of each business segment are set forth below.

(i) Semiconductor Production Equipment
The main devices used to connect to the Internet are gradually shifting from PCs to mobile terminal devices
such as smartphones. Although demand for flash memory and processors is expected to increase, thegrowth lacks vigor, and PC sales are slumping. As a result, semiconductor makers in production adjusting
phase are reducing capital investment. Under these circumstances, net sales from external customers inthis segment during the first half of the current fiscal year were 248,394 million yen (up 3.4% compared tothe same period of the previous year).

(ii) FPD/PV (Flat Panel Display/Photovoltaic Cell) Production Equipment
In response to strong demand for small and medium-sized liquid crystal panels used in smartphones andother devices, panel makers are shifting production lines from large-sized to small and medium-sized liquid
crystal panels. Demand for televisions is sluggish because of slumping demand in developed countries, andorders for production equipment were at low levels. Under these circumstances, net sales from external3customers in this segment during the first half of the current fiscal year were 36,677 million yen (up 11.6%
compared to the same period of the previous year).

(iii) Electronic Components and Computer Networks
Demand for digital appliances including PCs and televisions is declining overall, and as a result,semiconductor and electronic component inventories are being adjusted. In the computer system segment,interest in the use of cloud computing and data centers continues to rise. Under these circumstances, net
sales from external customers in this segment during the first half of the current fiscal year were 41,037
million yen (down 9.0% compared to the same period of the previous year).

(iv) Others
Net sales from external customers in this segment during the first half of the current fiscal year were 241
million yen (up 3.1% compared to the same period of the previous year).

(For reference）（Millions of yen）

Consolidated Operating Results
FY2011
1H
Net Sales
Semiconductor Production Equipment
Japan
U.S.
EuropeKorea
TaiwanChina
S.E.Asia
FPD/PV Production Equipment
Electronic Components & Computer Networks
OthersOperating Income
Ordinary Income
Net Income

318,400
240,229
46,95240,026
9,970
51,571
71,097
9,844
10,76632,86045,075234
42,34245,10733,454FY2011
2H

FY2012
1H

1Q

2Q

350,321271,101
40,98862,871
18,51136,287
79,185
15,74817,50933,86045,140218
55,52856,81238,470326,350
248,394
50,36553,57930,98837,88344,16315,80015,61336,67741,037
241
36,85939,722
26,657

153,117
120,836
20,94329,75613,99916,926
24,7059,115
5,390
12,536
19,64896
23,08823,751
16,636173,232
127,557
29,421
23,823
16,988
20,957
19,458
6,685
10,222
24,141
21,388145
13,77015,97010,021

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

4

Production and Order Performance（Millions of yen）

1. Production

Semiconductor Production Equipment
FPD/PV Production Equipment
Total
Note:

FY2011
1H

FY2011
2H

FY2012
1H

1Q

2Q

238,071
37,955
276,026

269,090
36,061
305,151

232,433
29,957
262,390

127,147
14,115
141,262

105,286
15,841
121,127

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

（Millions of yen）

2. Orders Received

Semiconductor Production Equipment
FPD/PV Production Equipment
Electronic Components & Computer Networks
OthersTotal
Note:

FY2011
1H

FY2011
2H

FY2012
1H

1Q

2Q

283,484
33,89147,602234
365,212284,487
41,54243,433
218
369,681

186,224
10,63342,092
241
239,192

112,6928,920
22,50896
144,21773,531
1,713
19,584
145
94,974

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

3. Orders Backlog

Semiconductor Production Equipment
FPD/PV Production Equipment
Electronic Components & Computer Networks
OthersTotal
Note:

FY2011
1H

FY2011
2H

215,557
57,80916,082
289,449

228,942
65,491
14,375308,809（Millions of yen）
FY2012
1Q

2Q

220,798
61,875
17,235299,909

166,773
39,447
15,430221,651

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

(2) Qualitative Information on Consolidated Financial Conditions(i) Financial Conditions
Current assets at the end of the second quarter of the current fiscal year were 609,907 million yen, down
34,324 million yen compared to the end of the previous fiscal year. The major factors influencing this result
were a 10,764 million yen decrease in prepaid consumption taxes, a 9,730 million yen decrease ininventories, and an 8,558 million yen decrease in short-term investments included in securities.
Tangible fixed assets increased by 10,258 million yen from the end of the previous fiscal year to 122,810

5

million yen.
Intangible fixed assets decreased by 144 million yen from the end of the previous fiscal year to 4,068 million
yen.
Investments and other assets decreased 2,527 million yen from the end of the previous fiscal year to45,681 million yen.
As a result, total assets decreased by 26,737 million yen compared to the end of the previous fiscal year to782,467 million yen.
Current liabilities were down 34,891 million yen compared to the end of the previous fiscal year to 133,146
million yen. Major factors in the decline were a decrease in income taxes payable of 18,200 million yen anda decrease in trade notes and accounts payable of 11,705 million yen.
Long-term liabilities were up 1,736 million yen compared to the end of the previous fiscal year to 58,101
million yen.
Net assets increased because net income of 26,657 million yen was reported for the first half and year-end
dividends for the previous fiscal year of 13,608 million yen were paid, and as a result, net assets at the endof the current second quarter were 591,219 million yen. The equity ratio was 74.0%.

(ii) Cash Flow
Cash and cash equivalents at the end of the second quarter of the current fiscal year decreased by 63,945
million yen from the end of the previous fiscal year to 101,104 million yen.

The combined balance of cash

and cash equivalents plus 175,500 million yen in time deposits and short-term investments with deposit
terms of over three months decreased by 8,445 million yen from the end of the previous fiscal year to276,604 million yen. 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 14,476 million yen compared to the same period of theprevious year to 26,711 million yen. Major positive factors included 39,225 million yen in income before
income taxes, 10,671 million yen decrease in prepaid consumption taxes, and 10,523 million yen in
depreciation and amortization. The major negative factors included the payment of income taxes of 29,126
million yen and a decrease in trade notes and accounts payable of 10,198 million yen.
Cash flow from investing activities was 72,489 million yen compared to 15,986 million yen for the same
period of the previous year, primarily the result of a 15,175 million yen payment for the purchase of tangible
fixed assets and a 60,499 million yen increase in short-term investments.
Cash flow from financing activities was negative 16,750 million yen compared to positive 317 million yen in
the same period of the previous year, mainly as a result of payment of 13,608 million yen in dividends.

6

3. Qualitative Information on Forecasts for Consolidated Financial Results

There is no change to the sales forecast for semiconductor production equipment segment, our main
business, the previous forecasts concerning sales in the FPD/PV production equipment segment and theelectronic components and computer networks segment were revised downward slightly.

Also, income isexpected to improve as a result of measures to maintain and strengthen product competitiveness and to cut
costs. Accordingly, the consolidated financial forecast for the entire fiscal year announced on August 1,
2011 was revised.

Consolidated Forecast(Billions of yen, Y/Y change)
FY2012(E)Net Sales
Semiconductor Production Equipment
FPD/PV Production Equipment
Electronic Components & Computer Networks
OthersOperating Income
Ordinary Income
Net Income

630.0
470.0
71.5
88.0
0.5
57.0
60.5
40.0

-5.8%
-8.1%
7.2%
-2.5%
10.3%
-41.8%-40.6%-44.4%

Note: The financial forecasts and estimates stated in this interim financial review are based on certain assumptions judged to bereasonable at the present time 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.
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 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 ofMarch 31, 2011

As of
September 30, 2011ASSETS
Current assets
Cash and deposit

52,992

53,105Trade notes and accounts receivable

136,385

131,253

Securities

232,057

223,499

Merchandise and finished goods

111,918

107,975

Work in process

43,24637,410Raw materials and supplies

13,76013,808Others55,02444,023

Allowance for doubtful accounts(1,153)(1,168)644,231609,907

112,551

122,810

Others

4,212

4,068

Total intangible fixed assets

4,212

4,068

50,24047,695

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

Investments and other assets
OthersAllowance for doubtful accounts(2,031)(2,013)

Total investments and other assets

48,20945,681

164,973

172,560

809,205

782,467

Total long-term assets
Total assets

8

TOKYO ELECTRON(Millions of yen)
As ofMarch 31, 2011

As of
September 30, 2011

LIABILITIESCurrent liabilities
Trade notes and accounts payable

53,612

41,906

Accrued employees' bonuses

11,13010,689Accrued warranty expenses

7,594

8,179

Other allowance

675

293

Others95,02472,076

Total current liabilities

168,038

133,146

52,23053,508595

606

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

3,538

3,987

Total long-term liabilities

56,365

58,101

224,403191,248

54,961

54,961

Total liabilities
NET ASSETS
Shareholders' equity
Common stock
Capital surplus

78,04578,023Retained earnings

457,658

470,653

Treasury stock(10,484)(10,018)

Total shareholders' equity

580,180

593,618

2,807

882

(12)

16

Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Translation adjustments(10,234)(15,252)

Total accumulated other comprehensive income(7,439)(14,352)

Subscription rights to shares

1,499

1,258

Minority interests

10,56010,694

Total net assets

584,801

591,219809,205

782,467

Total liabilities and net assets

9

TOKYO ELECTRON

Consolidated Statement of Income(Millions of yen)Six months ended
September 30, 2010

Six months ended
September 30, 2011

Net sales

318,400

326,350

Cost of sales

209,683

212,807

Gross profit

108,717

113,543

Research and development expenses

34,12041,148Others32,25435,534

Total selling, general & administrative expenses

66,37576,68342,34236,85986986

Selling, general & administrative expenses

Operating income
Non-operating income
Foreign currency translation gain
Others

2,860

2,109

Total non-operating income

2,947

3,096

104

68

Others77

164

Total non-operating expenses

182

233

45,10739,722-

1,437

Reversal of allowance for doubtful accounts

309-

Others196

184

Total unusual or infrequent profit

506

1,621

Non-operating expenses
Maintenance and operation cost of closed business bases

Ordinary income
Unusual or infrequent profit
Gain on collection written-off claims

Unusual or infrequent loss
Loss from earthquake damage
Loss on revaluation of investment securities
OthersTotal unusual or infrequent loss

-

938

-

811

564

368

564

2,118

Income before income taxes

45,04939,225

Provision for income taxes and enterprise taxes

11,193

12,242

Income before minority interests

33,85626,983402

325

33,45426,657

Minority interests
Net income

10TOKYO ELECTRON

Consolidated Statement of Comprehensive Income(Millions of yen)Six months ended
September 30, 2010

Six months ended
September 30, 2011

33,85626,983(1,369)(1,924)

173

51

Translation adjustments(4,071)(5,061)

Total other comprehensive income (loss)(5,267)(6,935)28,58820,04828,187

19,744

401

303

Income before minority interests
Other comprehensive income (loss)
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

11

TOKYO ELECTRON

Consolidated Cash Flow

(Millions of yen)Six months ended
September 30,
2010

Six months ended
September 30,
2011

45,049
7,819
1,344
3,853
1,662
(414)
1,434
(31,377)
6,785
2,512
21
4,827
1,133
44,653446(18)(3,894)
41,18739,225
10,523
1,320
(359)
699
(491)
2,446
6,013
(10,198)
10,671(2,610)891(2,700)55,430425(18)(29,126)
26,71180(13,814)(2,253)(15,986)

5,000(60,499)(15,175)(1,814)(72,489)

1,502(1,431)247
317(2,844)(13,608)(297)(16,750)(1,054)
24,463
123,939
148,403(1,416)(63,945)
165,050
101,104

Cash flow from operating activities
Income before income taxes
Depreciation and amortization
Increase in accrued pension and severance costs (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 or refund (paid)
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
OthersNet cash used in investing activities

Cash flow from financing activities
Net increase in short-term borrowings (decrease)
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
Cash and cash equivalents at end of period

12Segment Information

TOKYO ELECTRON(i) Overview of reportable segments
The reportable segments by the company provide separate financial information pertaining to thevarious segments of 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), andthe reportable segments are as follows: Semiconductor Production Equipment, FPD/PV (Flat Panel
Display and Photovoltaic Cell) Production Equipment, and Electronic Components and Computer
Networks.
The Semiconductor Production Equipment segment consists of coaters/developers, plasma etchsystems, thermal processing systems, single wafer deposition systems, cleaning systems used inwafer 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 ofmaintenance services, etc. for such products.
The FPD/PV (Flat Panel Display and Photovoltaic Cell) Production Equipment segment consists ofcoaters/developers, plasma etch/ash system used in the manufacturing of flat panel displays, andplasma CVD systems used in the manufacturing of thin film silicon PV cells, 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 profit/loss in reportable segments
Six months ended September 30, 2011

( Millions of yen)

Reportable Segment
Semiconductor
Production
Equipment

FPD/PV
Production
Equipment

Electronic
Components &Computer
Networks

Net sales

248,394

36,677

41,787

7,896

Segment income

50,271

2,932

1,249

994

Total Segments

Eliminations*2

Consolidated
Total*3

Net sales

334,754(8,404)

326,350

Segment income

55,447(16,221)

39,225

Others*1

Notes:
1. The "Others" segment includes all other businesses which are not included in the reported
business segments, such as the transportation of products, etc. of the Tokyo Electron Group
companies, equipment leasing and insurance, etc.
2. The eliminations of segment income amounting to 16,221 million yen includes corporate
expenses pertaining to the corporate account which are not allocated to any specific reportablesegments. The corporate account expenses are mainly R&D expenses of 13,440 million yen,pertaining to fundamental research and element research conducted by the company not related
to any of the reportable segments.
Segment
income is adjusted against income before income taxes in the consolidated statement3.
of income.
(iii) Impairment losses on fixed assets and goodwill, etc. in reportable segments
Significant impairment losses related to fixed assets: None
Significant changes in goodwill amount: None
Significant income related to negative goodwill: None13