TOKYO ELECTRON LIMITEDANNUAL REPORT 06

MANAGEMENT’S DISCUSSION AND ANALYSIS

Financial results in this MD&A refer to fiscal 2006, the year ended March 31, 2006. Percentage comparisons refer to year-on-yearchanges from fiscal 2005.
Effective from fiscal 2005, the Company made certain changes in accounting policies and segment classifications as discussed in thenotes to consolidated financial statements.
■ The policy for revenue recognition of semiconductor and FPD production equipment was changed from the time of shipment of
products to, in principle, the time of confirmation of set-up and testing of products.
■ The accounting treatment of after-sale repair expenses incurred during the warranty period for semiconductor and FPD production
equipment was changed. In the past, the Company charged such expenses to income as incurred. Effective from the fiscal year ended
March 31, 2005, the Company provides accrued warranty expenses for estimated expenses, calculated on the basis of after-salerepair expenses incurred in the past.
■ In past fiscal years, Tokyo Electron’s businesses were classified as a single segment. Effective from the fiscal year ended March 31,
2005, however, Tokyo Electron’s businesses were reclassified into two segments, “Industrial Electronic Equipment” and “Electronic
Components,” based on the similarities between products and services as well as sales methods.

Sales and Income

22

673.7

716.7
635.7

262.5

0

287.3

240.7
232.7

200

02 03 04

05

06

190.5

400

242.3

231.3

270.1

600

411.2

476.0
403.0

800

■ Domestic (Previous policies)■ Overseas (Previous policies)■ Domestic (New policies)■ Overseas (New policies)

Operating Income (Loss) and Operating Margin(Billions of Yen)

(%)

100

80

11.9

75.7

85.2

20

60

16

12
11.2

10.1

40

8
4.2

0

〜

–20

–4.4

4

22.3

1.1

20
–18.3

Gross Profit, SG&A Expenses and Operating Income
The cost of sales was ¥484.0 billion, an increase of 5.3% compared to the previous fiscal
year, and gross profit was ¥189.7 billion, an increase of 7.9% over the previous fiscal year.
As a result, the gross profit margin was 28.2%, an improvement of 0.5 percentage point, due
mainly to higher sales of semiconductor production equipment .
Selling, general and administrative (SG&A) expenses were ¥114.0 billion, an increase of
1.9% from the previous fiscal year, and the ratio of SG&A expenses to net sales was 17.0%.
R&D expenses included in general and administrative expenses increased 12.1% to ¥49.2 billion.

529.7

417.8

1,000

460.6

(Billions of Yen)

64.0

Sales
Consolidated net sales increased 6.0% from the previous fiscal year to ¥673.7 billion.
By region, sales of semiconductor production equipment in Japan and the United States
exceeded the previous year by a wide margin and were also solid in South Korea and Taiwan.
In addition, sales of FPD production equipment in Taiwan remained strong. As a result, net salesin Japan were up 12.8% over the previous fiscal year to ¥262.5 billion, and overseas net sales
were up 2.0% to ¥411.2 billion. Overseas net sales accounted for 61.0% of consolidated net
sales, down from the 63.4% recorded in the previous fiscal year.
Consolidated orders received during the fiscal year increased 7.0% over the previous fiscal
year to ¥721.6 billion, and the consolidated order backlog at the end of the fiscal year
increased 15.3% to ¥361.0 billion. Both figures were historical records.

Domestic and Overseas Sales

186.5

Operating Environment
The overall global economic picture during the past fiscal year was favorable, led by brisk U.S.
and Chinese economies, despite concerns about the economic impact from damage wreakedby major hurricanes in the U.S. and high crude oil prices. In Japan, there were continued signsof a steady recovery, including robust capital expenditure and an improvement in the employment situation bolstered by strong corporate performances.
With regard to the electronics industry, in which the Company participates, sales werestrong of digital consumer electronics, such as portable music players, digital cameras, DVDrecorders and flat panel TVs, expanding demand for semiconductors. PCs and mobile phones
are starting to make rapid inroads into newly developed emerging markets, including the
BRICs countries, which is also lifting semiconductor demand. In response to this favorable
environment, semiconductor manufacturers and LCD panel manufacturers made substantial
capital investments.

0.2

02 03 04

0

05

06

〜–5

■ Operating Income (Loss) (Previous policies)
Operating Margin (Previous policies)■ Operating Income (New policies)
Operating Margin (New policies)ANNUAL REPORT 06

Despite this increase in R&D expenses, there was only a slight overall increase in total SG&A
expenses due to lower depreciation and tighter control over variable expenses.
As a result of the above and other factors, operating income for fiscal 2006 was ¥75.7
billion, up 18.3% year on year. The operating margin was 11.2%, an increase of 1.1 percentage points.

R&D Expenses(Billions of Yen)

Research and Development
R&D expenses, as noted above, were ¥49.2 billion in fiscal 2006, up 12.1% from the previous
fiscal year.
In semiconductor production equipment, in addition to design rule shrink, customers aredemanding responses to new materials for realizing higher speeds and lower power consumption.
In the past fiscal year, Tokyo Electron focused on the development of technologies and productsthat respond to these customer needs. As a result of ongoing R&D efforts, the Company wasable to launch new products in five of six product categories. In FPD production equipment, thefocus was on the development of equipment designed for large glass substrates. Tokyo Electron
was successful in launching new models for handling eighth-generation glass substrates.
Another important R&D theme was lowering the environmental load of production equipment
based on their individual environmental characteristics. A certain portion of the R&D budget isallocated for this purpose.
In addition to R&D spending to develop new technologies and products in existing areas of operation, the Company also invested in creating new businesses derived from its core technologies.

04

05

49.2

43.9

45

44.2

53.8

60
50.1

30

15

0

02

03

06

Cash Dividend per Share
(Yen)
55

60

45

TOKYO ELECTRON LIMITED

45

Other Income (Expenses) and Net Income
Net non-operating expenses were ¥0.4 billion, since there were no significant extraordinary
gains or losses during fiscal 2006 while the net non-operating expenses of the previous fiscal
year were ¥8.2 billion due to ¥12.5 billion of provision for warranty expenses for the prior year.
Income before income taxes was ¥75.3 billion, up 35.1%.
Net income was ¥48.0 billion, down 22.1%, mainly because of a one-time ¥27.9 billion
reversal of valuation allowance on deferred tax assets that lifted net income in the previous
fiscal year. Net income per share was ¥267.61 (net income per share was ¥343.63 in theprevious fiscal year).

30

8

10

0

8

15

02

03

04

05

06

Dividend Policy and Dividend
The fundamental policy regarding return of profit to shareholders is to pay dividends linked tobusiness performance and backed by earnings. Effective from fiscal 2006, the Company
adopted a new dividend policy that aims at a payout ratio of 20% of consolidated net income.
In line with this policy, the Company declared a cash dividend per share of ¥55, up ¥10 fromthe previous fiscal year. This translates into a dividend payout ratio of 20.6% on aconsolidated basis.
(Millions of Yen)

2002

Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥417,825
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115,555
Gross profit margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
27.7%
Selling, general and administrative expenses . . . . . . . . . . . . . . . . . 133,865
Operating income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(18,310)
Operating margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4.4)%
Income (loss) before income taxes . . . . . . . . . . . . . . . . . . . . . . . . .
(22,919)
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(19,938)

2003

2004

2005

2006

¥460,580
134,040
29.1%
132,9211,119
0.2%(23,010)(41,554)¥529,654
140,155
26.5%
117,875
22,2804.2%
14,9368,297¥635,710
175,91327.7%
111,930
63,983
10.1%
55,77561,601¥673,686
189,732
28.2%
114,02975,70311.2%
75,32848,006

Effective from fiscal 2005, the Company made certain changes in accounting policies as discussed in the notes to consolidated financial statements.

23

TOKYO ELECTRON LIMITEDANNUAL REPORT 06

Performance by Segment

Semiconductor Production Equipment Sales■ Semiconductor Production Equipment
Sales to external customers were ¥486.9 billion, a 6.5% year-on-year increase.
Despite some slightly pessimistic views at the beginning of the fiscal year, shipments of PCs
and mobile phones remained strong, and portable music players and automotive electronic
products have been experiencing rapid growth. As a result, there was strong demand for
NAND flash memory, DRAM and other semiconductors used in these electronic devices.
Reflecting this demand, semiconductor manufacturers invested heavily in increasing production capacity and developing cutting-edge semiconductors. In turn, this generated brisk
inquiries for the Company’s products.
By equipment type, backed by strong capital investment by semiconductor memory manufacturers, particularly in Asia, sales increased of etch systems, thermal processing systems,
CVD systems, and surface preparation systems. Tokyo Electron saw sales growth of CLEAN
TRACK™ LITHIUS™, a coater/developer compatible with next-generation design rule technologies; of EXPEDIUS, a new auto wet station; and of TeliusTM, a plasma etch systemequipped with SCCM™–JI, the latest etch chamber.
In terms of wafer diameter, 85% of sales were for 300mm wafer plants and 15% of sales
were for 200mm wafer plants.
Division orders declined 2.1% to ¥499.9 billion, and the order backlog at the end of fiscal
2006 was ¥249.2 billion, up 5.5% compared to the end of the previous fiscal year.

200

361.0

303.6

300

284.2

400

100

0

02

03

04

05

06

■ Previous policies■ New policies
Since fiscal 2005, sales of FPD production
equipment have been shown separately from SPE
Division sales, in which they were previously
included. In the above graph, SPE sales for fiscal
2004 and prior years exclude FPD production
equipment sales on a non-consolidated basis forthe convenience of readers. (These figures are
unaudited.)

FPD Production Equipment Sales(Billions of Yen)

60

40

64.8

61.1

75.0

80

81.2

100

41.4

■ FPD Production Equipment
Sales to external customers were ¥81.2 billion, an 8.2% year-on-year increase.
In conjunction with the shift to digital and high-definition broadcasting, large-screen flat
panel TVs, including LCD TVs, are rapidly finding their way into homes. Given this, LCD panel
manufacturers ramped up capital investment to develop cutting-edge display panels andboost production capacity. In this environment, sales rose of FPD production equipment,
particularly in Taiwan. By generation, FPD production equipment for sixth-generation glass
substrates contributed significantly to sales, while sales of FPD production equipment forseventh-generation glass substrates rose sharply.
Division orders received increased 82.2% to ¥113.5 billion, and the order backlog at the endof fiscal 2006 was ¥99.1 billion, up 48.4% compared to the end of the previous fiscal year.

457.2

500

486.9

(Billions of Yen)

Industrial Electronic Equipment Segment
Due to continued strong net sales in the mainstay SPE Division, net sales (including intersegment sales) during the past fiscal year were ¥587.8 billion, an increase of 6.8% over theprevious fiscal year. Operating income rose 19.4% to ¥72.6 billion. The operating margin was
12.3%, up 1.3 percentage points.

20

0

02

03

04

05

06

■ Previous policies■ New policies
Since fiscal 2005, sales of FPD production
equipment have been shown separately from SPE
Division sales, in which they were previously
included. In the above graph, FPD production
equipment sales for fiscal 2004 and prior years areon a non-consolidated basis, while those fromfiscal 2005 are on a consolidated basis.

Computer Network Sales(Billions of Yen)

24

25

17.5

03

18.4

02

16.0

15

17.2

20
17.0

■ Computer Network
Sales to external customers were ¥17.5 billion, an increase of 9.6% compared to the previous
fiscal year.
Among SAN (Storage Area Network)-related products, which account for 40% of net sales
in this division, sales were strong of fibre channel fabric switches and fibre channel host bus
adapters, which form the platform technologies for network construction. With respect tonetwork-related products, the website construction business, centered on products that makepossible the creation of highly secure websites, recorded solid sales, and sales related tosupport and maintenance increased.
Division orders received increased 13.5% to ¥18.7 billion and the order backlog at the endof the fiscal year was ¥5.3 billion, up 28.7%.

10

5

0

04

05

06

ANNUAL REPORT 06

The Computer Network Division (excluding Aero Component Business) is scheduled to betransferred to Tokyo Electron Device Limited by simple separation through absorption in
October 2006.

Electronic Components Sales(Billions of Yen)

40

86.9

Electronic Components Segment (Tokyo Electron Device Limited)
Net sales in this segment, including intersegment sales, for fiscal 2006 rose 0.2% to ¥88.3
billion. Operating income was flat at ¥3.1 billion, and the operating margin was 3.5%. Sales toexternal customers were ¥86.9 billion, a 0.7% year-on-year increase.
Semiconductor products represented 88.6% of segment sales, board computer products
4.7%, software 3.6% and other electronic components 3.1%. In semiconductor products,
sales of products for factory automation-related equipment and for cell phone base stations
were firm on the back of higher capital investments. Furthermore, sales of products used inflat panel TVs and car navigation systems were solid as consumer spending grew.
This segment is working to expand its customer base by focusing on sales of high valueadded products, such as custom ICs and general-purpose ICs (analog ICs), that require
advanced technical support. At the same time, efforts are being made to expand contract
design services, whereby Tokyo Electron Device Limited undertakes the design of semiconductors while raising the profile of its proprietary products under the inrevium brand.

86.2

80
73.7

■ Others
Other sales largely comprise in-house services, such as insurance and travel services. Sales forfiscal 2006 declined 1.4% year on year to ¥1.2 billion.

84.2

100

77.4

TOKYO ELECTRON LIMITED

04

05

06

60

20

0

02

03

The above graph shows the sales to externalcustomers

Business segment information(Millions of Yen)

2006

Industrial
electronicequipment

Net sales and operating income
Net sales(1) Sales to external customers . . . . . . . . . . . . . . . . . . . . . . . . . . ¥586,805(2) Intersegment sales or transfers . . . . . . . . . . . . . . . . . . . . . . . .
1,004

Total

Eliminations
andcorporate

Consolidated¥86,881
1,409¥673,686
2,413¥–(2,413)¥673,686–

Electronic
components

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

587,80988,290676,099(2,413)

673,686

Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

515,241

85,190600,431(2,448)597,683

Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

72,5683,100

75,66835

75,703

Assets, depreciation and amortization expenses andcapital expenditure
Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥626,838
Depreciation and amortization expenses . . . . . . . . . . . . . . . . . . .
20,512
Loss on impairment of fixed assets . . . . . . . . . . . . . . . . . . . . . . .
419
Capital expenditure, including intangible and other assets . . . . .
16,223¥37,089258–
144¥663,927
20,770419
16,367¥ (684)–––¥663,243
20,770419
16,36725

TOKYO ELECTRON LIMITEDANNUAL REPORT 06

Financial Position and Cash Flows

Working Capital and Current Ratio(Billions of Yen)

4.0
3.2
2.8

600

2.4

03

315.9

288.6

02

261.5

243.9

0

2.0

195.7

200

04

1.0

05

06

0

■ Working Capital
Current Ratio

Shareholders’ Equity and Shareholders’ Equity Ratio(Billions of Yen)

(%)

80

800

600

56.8

55.2
48.2 49.1

60

51.6

0

332.2

275.8

252.9

02

03

40

376.9

400

200

Capital Expenditures and Depreciation
Capital expenditures were ¥13.3 billion, an increase of 35.0% compared to the previous fiscal
year. The cost of evaluation equipment and measuring devices for semiconductor production
equipment and FPD production equipment-related research and development, in addition to
IT-related investments, were the most significant items of capital expenditures. Depreciation
and amortization expenses declined 10.7% to ¥19.2 billion.

3.0

2.6

2.2

400

307.6

Assets, Liabilities and Shareholders’ Equity
Total assets as of March 31, 2006 were ¥663.2 billion, ¥18.9 billion higher than as of March 31,
2005.
Current assets at the end of the fiscal year increased by ¥22.3 billion to ¥517.5 billion.
Major changes included increases in cash and cash equivalents of ¥24.6 billion, decreased
trade notes and accounts receivable of ¥3.5 billion, and increased inventories of ¥2.3 billion.
As the Company focused on shortening the asset turnover period, the turnover period of tradenotes and accounts receivable (excluding non-trade accounts receivable) shortened from 99
days to 92 days and inventory turnover improved from 93 days to 89 days.
Net property, plant and equipment decreased by ¥3.7 billion to ¥94.7 billion. The major
reason for this was further equipment depreciation.
Investments and other assets increased by ¥0.3 billion to ¥51.0 billion, the net result of a¥4.5 billion increase in investment securities due to a valuation gain as the stock market
rallied and a decline in deferred income taxes and intangible assets.
Total liabilities as of March 31, 2006 were ¥281.6 billion, ¥26.1 billion lower than as ofMarch 31, 2005.
Continuing from the previous fiscal year, the Company concentrated on reducing interestbearing debt. As a result, interest-bearing debt, including short-term borrowings, the current
portion of corporate bonds, long-term debt and corporate bonds, declined ¥34.4 billion to¥65.1 billion. This reflected a ¥30.0 billion drop in straight corporate bonds and a ¥4.3 billion
decline in bank borrowings. The result was a marked improvement in the debt-to-equity ratio
from 29.9% to 17.3%.
Shareholders’ equity increased ¥44.7 billion to ¥376.9 billion, due mainly to favorable businessresults, which pushed up retained earnings by ¥37.8 billion. As a result, shareholders’ equity,
as a percentage of total assets, improved by 5.2 percentage points to 56.8%, but the returnon average total shareholders’ equity (ROE) declined 6.8 percentage points to 13.5%.

(Times)

800

20

04

05

06

0

■ Shareholders' Equity
Shareholders' Equity Ratio

Capital Expenditures and Depreciation and Amortization(Billions of Yen)

0

02

03

04

05

■ Capital Expenditures■ Depreciation and Amortization

26

13.3

9.9

10

11.0

12.4

20

19.2

21.5

25.0

27.4

26.3

30

30.9

40

06

ANNUAL REPORT 06

Free Cash Flows(Billions of Yen)

106.9

120

68.3

90

60

–0.7

30
14.1

Cash FlowsNet cash provided by operating activities was ¥78.9 billion, ¥35.5 billion lower compared tothe previous fiscal year. The principal sources of cash from operating activities included
income before income taxes of ¥75.3 billion, depreciation and amortization of ¥19.2 billion, adecrease in trade notes and accounts receivable of ¥5.1 billion, and an increase in trade notes
and accounts payable of ¥6.7 billion. The principal uses of cash from operating activities
included a decrease in customer advances of ¥9.5 billion and payment of income taxes of¥19.5 billion.
Net cash used in investing activities was ¥10.5 billion, ¥3.1 billion more than in the previous
fiscal year. The principal use of cash was ¥8.6 billion for the purchase of property, plant andequipment, mainly for the purchase of evaluation, measuring and other equipment for researchand development.
Net cash used in financing activities was ¥43.4 billion, ¥9.1 billion more than in the previous
fiscal year. The principal uses of cash were ¥30.0 billion for the redemption of the 9th series of
unsecured straight bonds, ¥5.5 billion in repayment of long-term debt, and dividend paymentsof ¥9.8 billion.
As a result, cash and cash equivalents at March 31, 2006 were ¥140.0 billion, an increaseof ¥24.6 billion from the end of the previous fiscal year.

41.8

TOKYO ELECTRON LIMITED

03

04

0

〜

–30

02

05

06

Free Cash Flows=Cash Flows From Operating
Activities+Cash Flows From Investing Activities

Business-related and Other Risks
The following are possible risks that may have an impact on Tokyo Electron’s business performance, stock price, or financial position.
(1) Impact of Fluctuating Foreign Exchange Rates
Success in the development of overseas operations has increased the share of sales generated overseas. As a rule, Tokyo Electron
conducts export transactions on a yen basis to avert exposure to foreign currency risks. However, some exports are denominated inforeign currencies. In these cases, Tokyo Electron hedges foreign currency risk by using a forward foreign exchange contract when anorder is received or by other means. However, foreign exchange rate risks can arise from fluctuations in prices due to sudden foreignexchange movements, which could have an indirect adverse effect on Tokyo Electron’s business performance.
(2) Impact From Research and Development
Through ongoing and proactive R&D investment and activities in cutting-edge technologies—miniaturization, vacuum, plasma, thermalprocessing, coating/developing, cleaning, wafer-transfer and clean technologies—Tokyo Electron has created advanced technologies.
At the same time, by quickly bringing to market new products incorporating these technologies, Tokyo Electron has successfully captured
a high market share in each of the product fields it has entered and generated a high profit margin. However, delays in the launch of new
products and other factors could adversely affect Tokyo Electron’s business performance.
(3) Impact From Changes in the Semiconductor Market
Tokyo Electron has achieved a high profit margin by concentrating resources in high-tech fields, including semiconductor production
equipment, where technological innovation is rapid but Tokyo Electron can effectively use its strengths. Although technological change is
responsible for the semiconductor market’s rapid growth, Tokyo Electron has actively undertaken structural reforms to be able to generate
profits under any circumstances, such as when the market contracts temporarily due to imbalance of supply and demand. However, ordercancellations, excess capacity and personnel and increased inventories resulting from an unexpectedly large market contraction could
adversely affect Tokyo Electron’s business performance.

27

TOKYO ELECTRON LIMITEDANNUAL REPORT 06(4) Impact From Concentration of Transactions on Particular Customers
Tokyo Electron has been successful at increasing transactions with the leading semiconductor manufacturers worldwide, including thosein Japan, through the provision of products featuring outstanding, cutting-edge technology and of services offering a high level of customer
satisfaction. However, Tokyo Electron’s sales may from time to time be temporarily concentrated on particular customers due to thetiming of large capital investments of major semiconductor manufacturers. The resulting escalation in sales competition could adversely
affect Tokyo Electron’s business performance.
(5) Safety-related Impacts
Tokyo Electron’s basic philosophy is to always bear in mind safety and health in the execution of business activities, including development,
manufacturing, sales, services and management. In accordance with this philosophy, Tokyo Electron works actively and continuously to
improve the safety of its products and to eliminate any harmful impact on health. However, harm to customers, order cancellations orother circumstances resulting from safety problems or other problems related to Tokyo Electron’s products could adversely affect
Tokyo Electron’s business performance.
(6) Impact From Quality Issues
Tokyo Electron actively develops outstanding, cutting-edge technologies for incorporation in new products that are brought quickly tomarket. At the same time, Tokyo Electron works to establish a quality assurance system, efforts that include obtaining ISO 9001 certification, as well as to establish a world-class service system. These actions have resulted in a large number of customers adopting Tokyo
Electron’s products. However, because Tokyo Electron’s products are based on cutting-edge technologies, and due to other factors,
many of the technologies developed are in unfamiliar fields. The occurrence of unforeseen defects or other issues could adversely affect
Tokyo Electron’s business performance.
(7) Impact of Intellectual Property Rights
In order to distinguish its products and make them more competitive, Tokyo Electron has promoted its R&D strategy for the early development of cutting-edge technologies together with its business and intellectual property strategies. This approach has enabled Tokyo
Electron to obtain sole possession of many proprietary technologies that have been instrumental to Tokyo Electron’s ability to capture ahigh market share and generate high profit margins in each of its product fields. However, Tokyo Electron’s products incorporate andoptimize many of these proprietary cutting-edge technologies. There may be cases, whereby avoiding the use of third-party technologies
and intellectual property rights, Tokyo Electron’s business performance could be adversely affected.
(8) Other Risks
Tokyo Electron is actively involved in reforming the corporate structure so that it can generate profits even when markets contract.
These reforms have entailed creating new high-growth, high-return businesses and pursuing higher earnings from existing businesses.
At the same time, Tokyo Electron has promoted activities to preserve the environment and worked to restructure its compliance and risk
management systems. However, as long as it conducts business activities, as with peer companies or companies in different industries,
Tokyo Electron is subject to the effect of many other factors. These include the world and regional economic environments, natural disasters, war, terrorism, unavoidable occurrences (such as infectious diseases), financial or stock markets, government or other regulations,
supply systems of suppliers, market conditions for products and real estate, the ability to recruit personnel in Japan and overseas, competition over standardization, and loss of key personnel. Any of these factors could adversely affect Tokyo Electron’s business performance.

28