TOKYO ELECTRON ANNUAL REPORT 2015

PAGE

20

CONTENTSCONTENTS

Financial Highlights

Financial Review

Business Overview

Consolidated Eleven-Year
Eleven-Year Summary
Summary
Consolidated

Consolidated Statements
Statements ofof Changes
Changes inin NetNet Assets
AssetsConsolidated

To Our Stakeholders

Review of Operations
and Business Outlook

Consolidated Balance Sheets

Consolidated Statements of Operations

Consolidated
Consolidated Statements
Statements ofof CashCash Flows
Flows

Corporate Governance

Financial Section

Corporate Data

Consolidated Statements
Statements ofof Comprehensive
Comprehensive Income
Income (loss)(loss)
Consolidated

Notes to Consolidated Financial Statements

Independent
Independent Auditor’s
Auditor’s Report
ReportNotes to Consolidated Financial Statements
Tokyo Electron Limited and Subsidiaries
Years ended March 31, 2015 and 2014

1. Basis of Presentation of Consolidated
Financial Statements

at the contracted rates. Resulting exchange gains and losses areincluded in earnings for the year.
Revenue and expense items are translated at the rates that

The accompanying consolidated financial statements of Tokyo
Electron Limited (hereinafter “the Company”) and its subsidiaries(hereinafter collectively referred to as “Tokyo Electron”) have been
prepared in accordance with the provisions set forth in the
Financial Instruments and Exchange Law of Japan and its related
accounting regulations, and in conformity with accounting principles generally accepted in Japan, which are different in certain
respects as to application and disclosure requirements ofInternational Financial Reporting Standards.
The Company uses financial statements prepared by foreignsubsidiaries in accordance with International Financial ReportingStandards or U.S. generally accepted accounting principles for the
preparation of the consolidated financial statements, together withadjustment for certain items which are required to be adjusted in
the consolidation process.

approximate those prevailing at the time of the transactions.
The balance sheet accounts of foreign subsidiaries are translat-

The accompanying consolidated financial statements have been
restructured and translated into English from the statutory
Japanese language consolidated financial statements. Some supplementary information included in the statutory Japanese language consolidated financial statements is not presented in theaccompanying consolidated financial statements.
U.S. dollar amounts included herein are solely for the convenience of readers and are presented at the rate of ¥120.17 to$1.00, the approximate rate as of March 31, 2015. The translation
should not be construed as a representation that the Japanese
yen amounts shown could be converted into U.S. dollars at that or
any other rate.

2. Summary of Significant Accounting Policies(a) Principles of consolidation
The consolidated financial statements include the accounts of
the Company and its 46 and 53 subsidiaries as of March 31, 2015
and 2014, respectively.
All significant inter-company accounts, transactions and unrealized profits or losses have been eliminated through consolidation
procedures.
The Company transferred a portion of shares of Tokyo Electron
Device Limited on April 1, April 15, 2014 and May 9, 2014. As aresult, effective on April 1, 2014, the classification of Tokyo
Electron Device Limited changed from a consolidated subsidiary toan equity method affiliate. In accordance with this change, seven
affiliates apply equity method. The fiscal year-end of all entities is
March 31, except for 7 consolidated foreign subsidiaries. Financial
statements provisionally closed for the period ending March 31 areused for these subsidiaries.
(b) Foreign currency translation
All assets and liabilities denominated in foreign currencies aretranslated into Japanese yen at the year-end rates, except for
those hedged by forward exchange contracts, which are translated

ed into Japanese yen at the rates of exchange in effect at the balance sheet date, except for shareholders’ equity accounts, which
are translated at the historical rates. Revenue and expense
accounts of foreign subsidiaries are translated at average rates of
exchange in effect during the year. Resulting translation adjustments are presented in net assets as a component of accumulated
other comprehensive income in the consolidated balance sheets.
(c) Cash equivalents
Tokyo Electron considers all highly-liquid instruments purchasedwith original maturities of three months or less to be cash equivalents.
(d) Short-term investments
Short-term investments consist of short term deposits andl­ow-risk financial instruments with original maturities of more than
three months.
(e) Investment securities
Tokyo Electron examines the intent of holding each security andclassifies those securities as trading securities, held-to-maturity
debt securities or other securities. Tokyo Electron has no trading
securities. Held-to-maturity debt securities are stated mainly atamortized cost. Other securities with market prices are valued atfair market value prevailing at the balance sheet date. The differences between the book and market prices of other securities, netof applicable income taxes, are presented in net assets as a component of accumulated other comprehensive income. Other securities without market value are valued at cost using theweighted-average method.
The cost of sold securities is calculated using the weightedaverage method.
(f) Inventories
Inventories other than raw materials are stated at the lower ofcost, determined by principally the specific identification method, or
net realizable value, which is defined as selling price less estimatedadditional manufacturing costs and estimated direct selling expenses. Raw materials are stated at the lower of cost, determined­principally by the moving-average method, or replacement cost.
(g) Property, plant and equipment
Property, plant and equipment are stated at cost. Depreciationof buildings, machinery and equipment of the Company and its
domestic subsidiaries is computed using the declining balancemethod, except for buildings acquired subsequent to March 31,
1998 which are depreciated using the straight-line method, basedon the estimated useful lives of assets. Foreign subsidiaries mainly
apply the straight-line method over the estimated useful lives of assets.
Estimated useful lives of property, plant and equipment are as
follows:   Buildings
2 to 60 years   Machinery and equipment
2 to 17 years(h) Intangible assets
Intangible assets are amortized by the straight-line method over(m) Accrued warranty expenses
Tokyo Electron’s products are generally subject to warranty, andtheir estimated useful lives.
(i) Goodwill
Goodwill is evaluated on an individual basis and amortized by
the straight-line method over a period not exceeding 20 years.

Tokyo Electron accrues such estimated costs when product revenue is recognized. To prepare for future repairs during warranty
periods, estimated after-sale repair expenses over warranty periods are accrued based on the historical ratio of actual repair
expenses to corresponding sales.
(n) Derivatives and hedge accounting
The Company and certain subsidiaries make use of derivatives
in order to manage certain risks arising from adverse fluctuations in(j) Impairment of fixed assets
Tokyo Electron evaluates the carrying value of fixed assets held
for use in the business.
If the carrying value of a fixed asset is impaired, a loss is recognized based on the amount by which the carrying value exceeds
its recoverable amount, being the higher of the net selling price or
the value in use of the assets. Net selling price is determined using
the fair value less disposal costs and value in use is based on the
total amount of discounted cash flows estimated to be generated
from the continuing use of the individual assets or the asset groupand the disposal of the assets.
(k) Allowance for doubtful accounts
The allowance for doubtful accounts is provided at an amountdetermined based on the historical experience of bad debts withrespect to ordinary receivables, and an estimate of uncollectible
amounts determined by reference to specific doubtful receivablesfrom customers which are experiencing financial difficulties.
(l) Employee Benefits
The Company and its domestic subsidiaries provide defined
benefit plans for their employees. Expected benefits are attributed
to accounting periods by a benefit formula basis. Prior service
costs are charged to earnings on a straight-line basis, beginningfrom the fiscal year in which they are incurred, over a fixed numberof years (four years) within the average remaining years of serviceof employees when the changes occur. Actuarial differences arecharged to earnings on a straight-line basis, beginning from thefollowing fiscal year after they are incurred, over a fixed number ofyears (four years) within the average remaining years of service of
employees when the differences occur.
The provision for accrued pension and severance costs for
directors and audit & supervisory board members of the Company
and its domestic subsidiaries is calculated in accordance withinternal regulations.
The Company and certain domestic subsidiaries decided to discontinue the payment of severance pay for directors and audit &supervisory board members after April 1, 2005, and at the generalshareholders’ meeting in June 2005, it was resolved that the severance pay for directors and audit & supervisory board members
until March 31, 2005 would be paid at the termination of their service and the decision regarding the payment amount for eachdirector and audit & supervisory board member was delegated tothe board of directors and audit & supervisory board members.
The accruals for severance costs for directors and audit & supervisory board members are included in Net liability for retirement benefits in the consolidated balance sheets as of March 31, 2015 and2014, respectively.

foreign currency exchange rates. The amount of derivatives is limited to the extent of foreign currency assets, liabilities and actual
orders, and Tokyo Electron does not trade in derivatives for speculative purposes.
Derivatives are carried at fair value in the consolidated balance
sheet with changes in unrealized gain or loss charged or credited
to earnings, except for those which meet the criteria for hedge
accounting. Unrealized gains or losses on hedging derivative
instruments, net of taxes, are reported in net assets as a component of accumulated other comprehensive income. Receivables
and payables hedged by qualified forward foreign exchange contracts are translated at the corresponding foreign exchange contract rates.
(o) Income taxes
Tokyo Electron records deferred tax assets and liabilities on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used forincome tax purposes, which are measured using the enacted tax
rates and laws which are expected to be in effect when the differences are expected to reverse.
(p) Revenue recognition
Revenue from Semiconductor and FPD (Flat Panel Display) production equipment is principally recognized at the time of the customer confirmation of set-up and testing of products. Revenue
from such equipment not requiring substantial installation is recognized at the time of shipment. Revenue from PV (Photovoltaic
panel) production equipment is mainly recognized based on thepercentage-of-completion method. Service revenue from maintenance is recognized ratably over the term of the maintenance contract.
(q) Per share information
Net income per share and net assets per share are computed
based on the weighted-average number of shares of common
stock outstanding during each year.
Dividends per share has been presented on an accruals basis
and include, in each fiscal year ended March 31, dividends
approved or to be approved after March 31 but applicable to theyear then ended.
(r) Research and development expenses
Research and development expenses are charged to earnings
as incurred and amounted to ¥71,350 million ($593,742 thousand)and ¥78,664 million for the years ended March 31, 2015 and2014, respectively.

TOKYO ELECTRON ANNUAL REPORT 2015

PAGE

21

CONTENTSCONTENTS

Financial Highlights

Financial Review

Business Overview

Consolidated Eleven-Year
Eleven-Year Summary
Summary
Consolidated

Consolidated Statements
Statements ofof Changes
Changes inin NetNet Assets
AssetsConsolidated

To Our Stakeholders

Review of Operations
and Business Outlook

Consolidated Balance Sheets

Consolidated Statements of Operations

Consolidated
Consolidated Statements
Statements ofof CashCash Flows
Flows

Corporate GovernanceCorporate Data

Financial Section

Consolidated Statements
Statements ofof Comprehensive
Comprehensive Income
Income (loss)(loss)
Consolidated

Independent
Independent Auditor’s
Auditor’s Report
ReportNotes to Consolidated Financial Statements

Notes to Consolidated Financial Statements(s) Reclassifications
Certain reclassifications have been made to the prior year’s consolidated financial statements to conform with the presentation
used for the year ended March 31, 2015.

3. Change in Accounting Policies and Adoptionof New Accounting Standards
Effective from the year ended March 31, 2015, the Company
and its consolidated domestic subsidiaries adopted article 35 of
the “Accounting Standard for Retirement Benefits” (ASBJ
Statement No.26, May 17, 2012 (hereinafter, “Statement No.26”))
and article 67 of the “Guidance on Accounting Standard for
Retirement Benefits” (ASBJ Guidance No.25, May 17, 2012 (hereinafter, “Guidance No.25”)), and have changed the determinationof retirement benefit obligations and current service costs. In addition, the Company and its consolidated domestic subsidiaries
have changed the method of attributing expected benefit to periods from straight-line attribution to a benefit formula basis anddetermining the discount rates.
In accordance with article 37 of Statement No.26, the effect ofchanging the determination of retirement benefit obligations andcurrent service costs has been recognized in retained earnings at
the beginning of the current fiscal year.
The effect of the adoption of the accounting standards on the
Company’s consolidated financial statements for the year ending
March 31, 2015 is immaterial.

4. Supplemental Information on
the Consolidated Statements of Cash Flows

5. Securities
Other securities as of March 31, 2015 and 2014 are as follows:
Millions of yen

2015:

Cost

  Equity securities

¥8,282  Other

Millions of yen

Thousands of
U.S. dollars

2015

2015

¥51,578$429,208

Non current assets

6,333

52,699Current liabilities(25,311)(210,627)

Current assets

Non current liabilities(9,222)(76,741)

Minority interests(10,420)(86,710)Equity investment interest after saleof shares(7,983)(66,431)

Accumulated other comprehensive income
Loss on sale of affiliates’ shares

Total

2014:

Carrying value¥ 9,835¥18,247

520

648

1,132

1,132

¥11,487¥20,027  OtherTotalCash and cash equivalents(1,285)(10,692)

Net proceeds from sales ofaffiliates’ shares¥ 1,726$ 14,363

2015

2014

2015

¥112,301¥114,289$  934,518

63,28753,988526,645¥175,588¥168,277$1,461,163

The amounts of change in inventory provision included in cost of
sales in the consolidated statements of operations for the years
ended March 31, 2015 and 2014 were a decrease of ¥582 million($4,843 thousand) and an increase of ¥2,296 million, respectively.

7. Loss on Impairment of Property, Plant andEquipment, Goodwill and Other Assets

Cost

Carrying value

For the years ended March 31, 2015 and 2014, the following
loss on impairment has been recognized:$68,919$184,988

Year ended March 31, 2015
(1) Noncurrent assets of Tokyo Electron (Kunshan) Limited  Unlisted stock

13,49013,689  Other

2,429

2,430

$84,838$201,107

Thousands of U.S. dollars

2015:

Noncurrent
Securities with market prices  Equity securities
Securities without market prices

Loss on impairment

Held-to-maturity securities classified as current assets are¥238,300 million ($1,983,024 thousand) and ¥211,801 million asof March 31, 2015 and 2014, respectively.
Reconciliation of held-to-maturity securities as of March 31,
2015 and 2014 to the amounts of short-term investments in the
consolidated balance sheets are as follows:
Thousands of
U.S. dollars

Millions of yen

2015

2014

2015

Held-to-maturity (current)

¥238,300¥211,801$1,983,024

Deposits and low-risk financial instruments with original
maturities of three months
or less

(238,068)(48,500)(1,981,093)

51

49

424

¥    283¥163,350$    2,355

Short-term investments

(2,014)

Finished products
Work in process, raw materials
and supplies
Total

Cost  Unlisted stock

Deposits with original maturities
of more than three months

25,055¥23,935

Thousands of
U.S. dollars

Millions of yen

Securities without market prices

(940)

(242)

¥9,963

Securities with market prices  Equity securities

(13,389)

3,011

60

Noncurrent(113)

Sales price of shares

1,645

60

Millions of yen(1,609)Loss on change in equity¥22,230

1,621

Net loss on devaluation of investment securities was ¥0 million($3 thousand) and ¥308 million for the years ended March 31,
2015 and 2014, respectively.

impairment has been recognized.
(1) Goodwill and Noncurrent assets of TEL Solar Holding AG
Loss onimpairment

Securities without market prices  Unlisted stock

Year ended March 31, 2014
For the year ended March 31, 2014, the following loss on

6. Inventories
Inventories as of March 31, 2015 and 2014 are as follows:

Securities with market prices

Total

Information of assets and liabilities of a deconsolidated subsidiary and the relationship between the sales price of shares and thenet proceeds, from the sales transaction for the year ended March
31, 2015 are as follows:

Carrying value

Noncurrent

Net gain on sale of investment securities was ¥55 million($458 thousand) and ¥74 million for the years ended March 31,
2015 and 2014, respectively.

Location

Tokyo Electron(Kunshan)LimitedUse

Type of Asset

Millions of yen

Thousands of
U.S. dollars

Plant

Buildings andstructures,
machinery andequipment, andother assets¥2,119$17,633

Due to a significant downturn in profitability caused by themarked deterioration in operating conditions, Tokyo Electron(Kunshan) Limited, a subsidiary manufacturing FPD production
equipment, recognized the difference between book value andrecoverable amount of property, plant and equipment as loss on
impairment. The recoverable amount was measured as the net
selling price calculated based on reasonable estimates, such asreal estate appraisals performed by third party valuation experts.
(2) Others
Loss on impairment of ¥388 million ($3,229 thousand) was recognized for other asset groups of Tokyo Electron.

Location

Trübbach, St. Gallen,
Switzerland

Use

Type of Asset

Millions of yen

Plant

Buildings andstructures,
machinery andequipment, andother assets¥32,789

Due to the significant deterioration of the business environment,
sales of TEL Solar Holding AG and its subsidiaries in the PV production equipment business have been below the initial businessplans. Under the current condition, Tokyo Electron performed an
impairment test and recognized the difference between the bookvalue and recoverable amount of property, plant and equipment asloss on impairment. The recoverable amount was measured asvalue in use, but as Tokyo Electron has determined that the­business is not expected to generate any future net cash inflows,
the recoverable amount was assessed at zero.
Further, a loss on impairment was recognized for machinery,equipment and other assets held by TEL Solar Holding AG and its
consolidated subsidiaries, measured as the difference between thebook value and the recoverable amount. The recoverable amount
was measured as the net selling price, but as reutilization or sale ofthese assets would be difficult, the net selling price was assessed atzero.
(2) Goodwill of TEL NEXX, Inc.
Loss onimpairment
Location

Billerica, Massachusetts,
U. S. A.

Use

Type of Asset

Plant

Goodwill, andother assets

Millions of yen¥5,009Under the current condition that sales of TEL NEXX, Inc. in theSPE business have been below the initial business plans, Tokyo
Electron performed an impairment test and recognized the difference between the book value and recoverable amount as loss on
impairment. The recoverable amount was measured as value in
use, and was calculated by discounting future cash flows at
a discount rate of 14.0%.

TOKYO ELECTRON ANNUAL REPORT 2015

PAGE

22

CONTENTSCONTENTS

Financial Highlights

Business Overview

Financial Review

Consolidated Eleven-Year
Eleven-Year Summary
Summary
Consolidated

Consolidated Statements
Statements ofof Changes
Changes inin NetNet Assets
AssetsConsolidated

To Our Stakeholders

Review of Operations
and Business Outlook

Consolidated Balance Sheets

Consolidated Statements of Operations

Consolidated
Consolidated Statements
Statements ofof CashCash Flows
Flows

Corporate GovernanceCorporate Data

Financial Section

Consolidated Statements
Statements ofof Comprehensive
Comprehensive Income
Income (loss)(loss)
Consolidated

Independent
Independent Auditor’s
Auditor’s Report
ReportNotes to Consolidated Financial Statements

Notes to Consolidated Financial Statements(3) Noncurrent assets of business locations to be restructured
Loss onimpairment
Location

Use

Tsukuba, Ibaraki
R&D(Technology Center Tsukuba) center
Sendai, Miyagi(Technology Center Sendai)

R&D
centerOthers—Type of Asset

Buildings andstructures,
machinery andequipment andother assets
Buildings andstructures, landand other assets
Buildings andstructures andother assets

Millions of yen¥4,649Balance at April 1, 2014
and 2013

Restated balance
Service cost¥  293

Tokyo Electron has determined to restructure several domestic
facilities, and as assets within the above asset groups are notexpected to be reutilized in the foreseeable future, Tokyo Electron
performed an impairment test and recognized the difference
between the book value and recoverable amount as loss on
impairment. The recoverable amount for the above asset groups
were measured as the net selling price. For land, buildings andstructures, the net selling price was calculated based on reasonable estimates such as real estate appraisals performed by third
party valuation experts, while for machinery, equipment and otherassets, the recoverable amount was assessed at zero, as reutilization or sale of these assets would be difficult.
(4) Others
Loss on impairment of ¥874 million was recognized for otherasset groups of Tokyo Electron.

Thousands of
U.S. dollars

Millions of yen

Cumulative effect of changes
in accounting policies¥3,355(3) Reconciliation from retirement benefit obligations and plan
assets to liability (asset) for retirement benefits

Defined benefit plans(1) Movement of retirement benefit obligations

2015

2014

2015

¥113,221¥115,296$942,174

2,034—

16,926115,255

115,296

959,100

5,697

6,874

47,4082014

2015

Funded retirement benefit
obligations¥62,213¥60,206$517,709

Plan assets(70,905)(69,540)(590,040)

Funded status(8,692)(9,334)(72,331)

Unfunded retirement benefit
obligations

50,05953,015416,568

Interest cost

1,608

1,785

13,381

Asset ceiling adjustments (note 1)

920

864

7,656

4,793

(9,945)39,885

Benefits paid

(5,138)(3,215)(42,756)

Net liability for retirement benefits at March 31, 2015
and 2014¥42,287¥44,545$351,893(92,328)

Liability for retirement benefits(note 2)

51,10453,449425,264

8,064

Asset for retirement benefits(8,817)(8,904)(73,371)

Net liability for retirement benefits at March 31, 2015
and 2014

Effect of change in scope of
consolidation
Foreign currency exchange
rate changes
Other
Balance at March 31, 2015
and 2014—(11,095)
969

2,031

183

395

1,522

¥112,272¥113,221$934,276(2) Movements of plan assets
Thousands of
U.S. dollars

Millions of yen

Balance at April 1, 2014
and 2013

2015

2014

2015

¥69,540¥60,476$578,680

1,332

1,256

11,084

3,997

3,633

33,261

8. Pledged Assets

Contributions paid by
the employer

3,406

3,306

28,343

Benefits paid

(3,053)(1,726)(25,406)

Tokyo Electron did not hold any assets pledged as collateral asof March 31, 2015 and 2014.

Effect of change in scope of
consolidation(5,542)—(46,118)

Foreign currency exchange
rate changes

952

2,034

7,922

Other

273

561

2,273

¥70,905¥69,540$590,039

Balance at March 31, 2015
and 2014¥42,287$351,893

Thousands of
U.S. dollars

Millions of yen

2015

2014

2015

Service cost

¥5,697¥6,874$47,408

Interest cost

1,608

1,785

13,381

Expected return on plan assets(1,332)(1,256)(11,084)

Net actuarial gain amortization(2,570)(339)(21,386)

528

108

4,393

¥3,931¥7,172$32,712

Other
Total retirement benefit costs for the fiscal years ended
March 31, 2015 and 2014

(5) Remeasurements of defined benefit plants
Millions of yen

Actuarial losses

Thousands of
U.S. dollars

2015

2015

¥(3,572)$(29,725)(6) Accumulated remeasurements of defined benefit plants

10. Employee Benefits

Millions of yen

2015

The Company and its domestic subsidiaries provide for theiremployees a cash balance plan and a noncontributory retirement
and severance benefit plan as defined benefit plans. Further, certain consolidated overseas subsidiaries provide defined benefit
plans for their employees.

¥44,545

Notes: 1. The asset ceiling adjustment represents plan assets exceeding the asset ceiling for overseas subsidiaries that apply International Accounting Standard 19
Employee Benefits.
2. The provision for accrued pension and severance costs for directors and audit& supervisory board members of ¥376 million ($3,129 thousand) and ¥582
million as of March 31, 2015 and 2014 is not included.

(4) Retirement benefit costs

Expected return on plan assets

There is no short-term borrowings classified as current liabilities
as of March 31, 2015.   Short-term borrowings classified as current liabilities as of March 31, 2014 is ¥11,531 million and theiraverage annual rate is 0.39% as of March 31, 2014.
As of March 31, 2015, Tokyo Electron has unused lines of credit
amounting to ¥114,990 million ($956,894 thousand).
As of March 31, 2014,  Tokyo Electron has unused lines of credit
amounting to ¥143,578 million.

2015

Actuarial loss (gain)

Actuarial gain

9. Short-term Borrowings

Thousands of
U.S. dollars

Millions of yen

Net actuarial gains that are yet
to be recognized (before tax)

¥7,1802014¥11,309

Thousands of
U.S. dollars(7) Plan assets
1. Plan assets comprise
2015

2014

Bonds

46%

50%

Equity securities

22

24Life insurance company generalaccount

20

18

Cash and cash equivalents

2

2

Other

10

6

Total

100%

100%

2. Long-term expected rate of return   Current and target asset allocations, and historical and expected
returns on various categories of plan assets have been considered
in determining the long-term expected rate of return.
(8) Actuarial assumptions
The principal actuarial assumptions at and for the years ended
March 31, 2015 and 2014 are as follows:
2015

2014

Discount rate

1.15%

1.51%

Long-term expected rate of return

2.00%

2.00%

11. Income Taxes
Significant components of the deferred tax assets and liabilitiesof Tokyo Electron as of March 31, 2015 and 2014 are as follows:
Millions of yen

Thousands of
U.S. dollars

2015

2014

2015

Deferred tax assets
Net operating loss carryforwards ¥19,842¥17,383$165,116

Net liability for retirement benefits

17,913

21,461

149,064

Elimination of unrealized profit
in inventories

11,582

9,489

96,380Devaluation of inventories

4,149

4,724

34,526

Accrued employees’ bonuses

3,211

2,532

26,720Loss on impairment of property, plant and equipment, goodwill
and other assets

3,026

3,486

25,181

Accrued warranty expenses

2,734

2,709

22,751Other

10,003

12,413

83,241

Total gross deferred tax assets

72,46074,197602,979

Less valuation allowance(13,506)(10,806)(112,390)

Total deferred tax assets

58,954

63,391

490,589

Deferred tax liabilities

2015

Undistributed earningsof subsidiaries(5,620)(6,877)(46,767)$59,749

Intangible assets identified
through business combination(5,255)(6,686)(43,730)

Net unrealized gains on
investment securities(4,510)(3,096)(37,530)

Net asset for retirement benefits(1,758)(1,620)(14,629)

Other(4,105)(5,993)(34,160)

Total deferred tax liabilities(21,248)(24,272)(176,816)

Net deferred tax assets¥37,706¥39,119$313,773

TOKYO ELECTRON ANNUAL REPORT 2015

PAGE

23

CONTENTSCONTENTS

Financial Highlights

Financial Review

Business Overview

Consolidated Eleven-Year
Eleven-Year Summary
Summary
Consolidated

Consolidated Statements
Statements ofof Changes
Changes inin NetNet Assets
AssetsConsolidated

To Our Stakeholders

Review of Operations
and Business Outlook

Consolidated Balance Sheets

Consolidated Statements of Operations

Consolidated
Consolidated Statements
Statements ofof CashCash Flows
Flows

Corporate GovernanceCorporate Data

Financial Section

Consolidated Statements
Statements ofof Comprehensive
Comprehensive Income
Income (loss)(loss)
Consolidated

Notes to Consolidated Financial Statements

Independent
Independent Auditor’s
Auditor’s Report
ReportNotes to Consolidated Financial Statements

Net deferred tax assets are included in the consolidated balance
sheets as of March 31, 2015 and 2014 as follows:
Thousands of
U.S. dollars

Millions of yen

2015

2014

2015

Current assets

¥27,672¥25,174$230,274

Investments and other assets

18,34823,224

152,684

(0)

—

(0)

(8,314)(9,279)(69,185)

Other current liabilities
Non-current liabilities

The ultimate realization of deferred tax assets is dependent
upon the generation of future taxable income during the period inwhich temporary differences become deductible. For assessmentof the realizability of deferred tax assets, management considers
the scheduled reversal of deferred tax liabilities, future estimatedtaxable income, tax planning strategies and level of net operating
loss carryforwards, if any, in accordance with accounting principles
generally accepted in Japan.
Based on the level of historical taxable income and future estimated taxable income over the periods which the temporary differences are deductible, management believes Tokyo Electron willrealize the benefits of these deferred tax assets, net of valuation
allowance, as of March 31, 2015 and 2014.
The Company and its wholly-owned domestic subsidiaries apply
a consolidated tax filing system for corporate tax purposes.
On March 31, 2015, amendments to the Japanese tax regulations were enacted into law. Based on the amendments, the statutory income tax rates utilized for the measurement of deferred tax
assets and liabilities expected to be settled or realized from April 1,2015 to March 31, 2016 and on or after April 1, 2016 are changed
from 35.64% for the fiscal year ended March 31, 2015 to 33.10%
and 32.34%, respectively, as of March 31, 2015.
Due to these changes in statutory income tax rates, net deferred
tax assets (after deducting the deferred tax liabilities) decreased by¥2,134 million ($17,758 thousand), and deferred income tax
expense increased by ¥2,881 million ($23,974 thousand) for the
fiscal year ended March 31, 2015.
Significant components of the difference between the statutory
and effective tax rates for the years ended March 31, 2015 and2014 are as follows:
2015

2014

35.64%

38.01%

Change in valuation allowance(17.51)

17.93

Tax credits(4.35)

38.76

Effect of enacted changes in Japanese
tax rates on net deferred tax assets

3.39(8.68)

Difference in statutory tax rates
of subsidiaries(1.34)(17.72)

Impairment and amortization of goodwill

0.45(130.97)

Statutory tax rate in Japan
Adjustments:

Others, net

0.88(0.76)

Effective tax rate

17.16%(63.43)%

12. Net Assets
Net assets comprises four subsections, which are shareholders’equity, accumulated other comprehensive income, share subscription rights and minority interests.
Under Japanese laws and regulations, the entire amount paid
for new shares is required to be designated as common stock.
However, a company may, by a resolution of the board of directors, designate an amount not exceeding one half of the price ofthe new shares as additional paid-in capital which is included incapital surplus.
In cases where dividend distribution of surplus is made, thelesser of an amount equal to 10% of the dividend or the excess, ifany, of 25% of common stock over the total of additional paid-in
capital and legal reserve must be set aside as additional paid-in
capital or legal reserve. Legal reserve is included in retained earnings in the accompanying consolidated balance sheets.
Both appropriations of legal reserve and additional paid-in capital used to eliminate or reduce a deficit generally require a resolution of the shareholders’ meeting.
Additional paid-in capital and legal reserve may not be distributed as dividends. All additional paid-in capital and legal reserve may
be transferred to other capital surplus and retained earnings,
respectively, which are potentially available for dividends.
The Company is subject to restriction of dividends by theJapanese Corporate Act, which restricts the amount of dividends
to retained earnings on a consolidated basis.
The Company’s articles allow for the distribution of earnings toshareholders on dates other than the mid-term and year-end, by aresolution of the board of directors in accordance with Japaneselaws and regulations.
At the board of directors’ meeting held on May 13, 2015, thedistribution of cash dividends amounting to ¥12,190 million($101,440 thousand) was resolved. Such appropriations have notbeen accrued in the consolidated financial statements as of March
31, 2015 since they are recognized in the period in which they are
resolved at the board of directors’ meeting.

13. Other Comprehensive Income
Other comprehensive income for the years ended March 31, 2015 and 2014 is as follows:
Thousands of
U.S. dollars

Millions of yen

2015

2014

2015

¥5,281¥2,199$43,946

0

(78)

0

Sub-total, before tax

5,281

2,121

43,946

Tax expense(1,413)(756)(11,758)

Sub-total, net of tax

3,868

1,365

32,188Deferred gains (losses) arising during the year

95

(269)

791

Reclassification adjustments

3

412

25

Sub-total, before tax

98

143

816

Tax expense

(29)

(51)

(242)

Sub-total, net of tax

69

92

574

Adjustments during the year

6,664

6,867

55,454

Reclassification adjustments

(21)

—

(174)

6,643

6,867

55,280Net unrealized gains on investment securities
Unrealized gains arising during the year
Reclassification adjustments

Net deferred gains (losses) on hedging instruments

Foreign currency translation adjustments

Sub-total, before tax
Tax expense

—

—

—

6,643

6,867

55,280Adjustments during the year

(907)

—

(7,548)

Reclassification adjustments(2,665)—(22,177)

Sub-total, before tax(3,572)—(29,725)

Tax expense

1,302

—

10,835Sub-total, before tax(2,270)—(18,890)

56

—

466

¥8,366¥8,324$69,618

Sub-total, net of tax
Remeasurements of defined benefit plans

Share of other comprehensive income of associates accounted for using equity method
Adjustments during the year
Total other comprehensive income

14. Share Subscription Rights
Stock option plan
The Company’s shareholders have approved annual stock option
plans for directors and selected employees since the year ended
March 31, 1999. The options under the plans vest immediately withrestriction on exercise up to three years after the date of grant, andhave an exercise period of seventeen years from the date of grant.

TOKYO ELECTRON ANNUAL REPORT 2015

PAGE

24

CONTENTSCONTENTS

Financial Highlights

Financial Review

Business Overview

Consolidated Eleven-Year
Eleven-Year Summary
Summary
Consolidated

Consolidated Statements
Statements ofof Changes
Changes inin NetNet Assets
AssetsConsolidated

To Our Stakeholders

Review of Operations
and Business Outlook

Consolidated Balance Sheets

Consolidated Statements of Operations

Consolidated
Consolidated Statements
Statements ofof CashCash Flows
Flows

Corporate GovernanceCorporate Data

Financial Section

Consolidated Statements
Statements ofof Comprehensive
Comprehensive Income
Income (loss)(loss)
Consolidated

Independent
Independent Auditor’s
Auditor’s Report
ReportNotes to Consolidated Financial Statements

Notes to Consolidated Financial Statements

A summary of stock options outstanding and exercisable as of March 31, 2015 and 2014 is as follows:

Millions of yen

2014

2015

Tokyo Electron Limited

Weighted-average exercise price

Number ofsharesOutstanding at the beginning of year

Yen

U.S. dollars

Number ofshares

Weighted-average
exercise price¥104,797

Short-term investments

163,350

163,350

Trade notes and accounts receivable

127,529

127,529

18,247

18,247

Trade notes and accounts payable

53,66853,668

Short-term borrowings

11,531

11,531

(164)

(164)

81

81

¥  661

Granted

—

—

—

—

—

Exercised

88,9001

0.01

20,800

1

Expired (forfeited)

12,2001

0.01

56,8006,468

Outstanding at the end of year

378,200

1

0.01

479,300

1

Exercisable at the end of year

252,100

1

0.01

114,400

1
2014
Weighted-average
exercise priceYen¥3,087
—
—
—
3,087
3,087

Stock options related to Tokyo Electron Device Limited as of March 31, 2015 is excluded because that Tokyo Electron Device Limited
became an equity method affiliate from a consolidated subsidiary.

15. Leases
Future minimum lease payments on non-cancelable operatingleases are as follows:
Millions of yen

Due within one yearThousands of
U.S. dollars

2015

2014

2015

¥3,249¥3,410$27,037

Due over one year

3,660

5,922

30,457

Total

¥6,909¥9,332$57,494

16. Fair Value of Financial Instruments
Policy for Financial Instruments
Tokyo Electron limits its fund management to short-term bankdeposits and low-risk financial instruments, and obtains funds byutilizing bank-loans or liquidating trade-receivables.
Trade receivables, which consist of notes and accounts receivable, are exposed to credit risk in the event of non-performance by
the counterparties. Execution and management of credit risk,
maturity and receivable balance are conducted pursuant to theinternal management rules for credit control. Credit risk of major
customers is assessed on a regular basis.
Short-term investments consist of time deposits and low risk
financial instruments and Tokyo Electron trade with highly-rated
financial institutions to mitigate credit risks.
Investment securities consist of mainly equity interests in listedcompanies exposed to equity market risks. Conditions, including

market prices, for these investment securities are monitored on aregular basis.
Trade payables, which consist of notes and accounts payable,
mainly mature within one year. Trade payables are exposed toliquidity risks which are managed through activities such as implementing cash management plans.
See notes 9 and 17 for detailed discussion on short-term borrowings and derivative financial instruments, respectively.
Fair Value of Financial Instruments
Carrying amount and estimated fair value of financial instruments
as of March 31, 2015 and 2014 are set out below. Fair value offinancial instruments which is practically difficult to estimate areexcluded (see note 5).
Millions of yen
Carrying
amountEstimated
fair value1

Cash and cash equivalents¥317,632¥317,632

Short-term investments

283

283

2015:

Cash and cash equivalents

¥104,797

556,900

65,000———65,00065,000AssetsCash and cash equivalents

$0.01

Outstanding at the beginning of yearGranted
Exercised
Expired (forfeited)
Outstanding at the end of year
Exercisable at the end of year Trade notes and accounts receivable, net of allowance for
doubtful accounts (¥1,503 million)
Investment securities
Liabilities

Derivatives (see note 17)
Hedge accounting not applied
Hedge accounting applied

Thousands of U.S. dollars
Carrying
amountEstimated
fair value1

Cash and cash equivalents$2,643,189$2,643,189

Short-term investments

2,355

2,355

2015:

Assets Trade notes and accounts receivable, net of allowance for
doubtful accounts ($3,154 thousand)
Investment securities

Investment securities

Trade notes and accounts payable

Hedge accounting applied

469,993469,993

Hedge accounting not applied
Hedge accounting applied(17,683)(17,683)

1,681

1,681

Notes: 1. Fair value calculation of financial instruments
Cash and cash equivalents, short-term investments, trade notes and accounts
receivable, trade notes and accounts payable, and short-term borrowings The carrying amounts approximate fair value because of the short maturity ofthese instruments.
Investment securities
The fair values of marketable securities are based on quoted market prices.
     See note 5 for further information by classification of investment securities.
Derivatives      See note 17 for detailed discussion on derivative financial instruments.
2. Maturities of financial assets and securities are as follows:

Cash and cash equivalents
Trade notes and accounts receivable

110,466

110,466

22,23022,23056,47956,479(2,125)(2,125)

202

202

2,355

—

922,402—

1. Derivative financial instruments not designated as hedging
instruments

2015:

Contract
amountFair value

Unrealized gains(losses)¥(1,448)

Sell U.S. dollars¥55,664¥(1,448)

Sell Swiss francs

6,346

34

34

Sell Korean won

1,068

(757)

(757)

Sell Singapore dollars

61

(0)

(0)

Sell Chinese yuan

13

(3)

(3)

Buy U.S. dollars

843

1

1

Buy Taiwan dollars

394

(1)

(1)

Buy Chinese yuan

338

50

50

Buy EURO

135

(1)

(1)

Buy Singapore dollars

33

0

0

Total

¥64,895¥(2,125)¥(2,125)

2014:

Contract
amountWithin 1 year

Fair value

Unrealized gains(losses)¥ 216

Millions of yen

After 1 through5 years¥317,632¥—

Sell U.S. dollars¥55,346

¥ 216

283

—

110,845—

Sell EURO

3,725

(19)

(19)

Sell Korean won

1,068

(508)

(508)

Sell Chinese yuan

102

(7)

(7)

Sell Singapore dollars

57

(0)

(0)
42

Millions of yen
2014:

$—

Millions of yen

Receivables and payables derived from derivative transactions are stated on a net
basis. The figures in parentheses represent net payables.

2015:$2,643,189

Tokyo Electron is subject to risk from adverse fluctuations in foreign currency exchange rates in its operating and financing activities. The Company and certain subsidiaries enter into forward
foreign exchange contracts in order to hedge such risks, but do
not enter into such transactions for speculative purposes. The
Company and its domestic subsidiary implement a ratio analysis of
the total cumulative cash flow fluctuations to assess effectivenessof hedging for all derivative transactions, except for transactions
where the critical terms of the hedging instrument and hedged
item match and the Company could conclude that changes in fairvalue or cash flows are expected to completely offset. Execution
and management of all derivative transactions in charge of financedepartment are conducted pursuant to the internal management rule.
The estimated fair values of the derivative financial instruments
as of March 31, 2015 and 2014 are as follows:

Derivatives (see note 17)

Short-term investments

Derivatives (see note 17)
Hedge accounting not applied

919,248
184,988

After 1 through5 years

17. Derivative Financial Instruments

Millions of yen

Liabilities
Trade notes and accounts payable

919,248
184,988

Liabilities

Assets Trade notes and accounts receivable, net of allowance for
doubtful accounts (¥379 million)

Within 1 year

2015:

Short-term investments

¥1

Number ofshares2014:

Thousands of U.S. dollars

Estimated
fair value1

Yen479,300

Tokyo Electron Device Limited

Carrying
amountWithin 1 year

After 1 through5 years

Cash and cash equivalents

¥104,797¥—

Short-term investments

163,350—

Trade notes and accounts receivable

129,032—

Buy U.S. dollars

6,216

42

Buy Swiss francs

2,213

2

2

Buy Chinese yuan

922

60

60

Buy EURO
Total

385

50

50

¥70,034¥(164)¥(164)

TOKYO ELECTRON ANNUAL REPORT 2015

PAGE

25

CONTENTSCONTENTS

Financial Highlights

Financial Review

Business Overview

Consolidated Eleven-Year
Eleven-Year Summary
Summary
Consolidated

Consolidated Statements
Statements ofof Changes
Changes inin NetNet Assets
AssetsConsolidated

To Our Stakeholders

Review of Operations
and Business Outlook

Consolidated Balance Sheets

Consolidated Statements of Operations

Consolidated
Consolidated Statements
Statements ofof CashCash Flows
Flows

Corporate Governance

Financial Section

Corporate Data

Consolidated Statements
Statements ofof Comprehensive
Comprehensive Income
Income (loss)(loss)
Consolidated

Independent
Independent Auditor’s
Auditor’s Report
ReportNotes to Consolidated Financial Statements

Notes to Consolidated Financial Statements

Thousands of U.S. dollars

Millions of yen

Contract
amountFair value

Unrealized gains(losses)

Sell U.S. dollars$463,210$(12,050)$(12,050)

Sell Swiss francs

52,809283

283

Sell Korean won

8,887(6,299)(6,299)2015:

Sell Singapore dollars

508

0

0

Sell Chinese yuan

108

(25)

(25)

Buy U.S. dollars

7,015

8

8

Buy Taiwan dollars

3,279

(8)

(8)

Buy Chinese yuan

2,813

416

416

Buy EURO

1,123

(8)

(8)

Buy Singapore dollars
Total

275

0

0

$540,027$(17,683)$(17,683)

Note: The fair values are based on the quoted forward foreign exchange rates.

2. Derivative financial instruments designated as hedging instruments(1) Deferred hedge

2014:

Contract
amountFair value

Monetary assets and liabilities in foreign
currency (Note)

Legal form

¥283

Buy U.S. Dollars

162

—

1

—

¥446

¥—

Total

¥—Note: T he fair value of these derivative financial instruments, which is based on the quoted foreign exchange rates, is included in the carrying value of hedged assets and liabilities.

18. Other Income (Expenses)
See note 7 for further discussion regarding loss on impairment
for property, plant and equipment, goodwill and other assets of¥2,506 million ($20,854 thousand) and 46,969 million recognized
for the years ended March 31, 2015 and 2014.

Millions of yen

2014:

Contract
amount

19. Business Combinations

Fair value

Future transactions denominated ina foreign currency

Business Divestitures

Sell U.S. dollars¥ 9,365¥ (47)

Sell Korean won

115

(54)

Buy U.S. dollars

8,207

0

Buy Swiss francs

2,382

145

Buy EURO

488

37

Buy GBP15

0¥20,572

¥ 81

Total

Share transfer of a subsidiary
1. Outline of the share transfer(1) Name of the company and business description
Name of the company: Tokyo Electron Device Limited
Business description: Sale of electronic components andcomputer networks

Millions of yen

2015:

Thousands of U.S. dollars

Fair value

Contract
amountFair value

Future transactions denominated ina foreign currency
Sell U.S. dollars¥  638¥ (37)$ 5,309

Sell Korean won

74

(51)

616

(424)

Buy Chinese yuan

1,808

326

15,0452,713

Buy EURO

406

(45)

3,379

(375)

Buy U.S. dollars

50

9

416

75

Sell U.S. dollars

1,091

—

9,079

—

Buy U.S. dollars

268

—

2,230

—

¥4,335¥202$36,074$1,681$ (308)

Monetary assets and liabilities in foreign
currency (Note)

Total(2) Reason of the share transfer
In the midst of a rapidly changing business environment, Tokyo
Electron has spent a considerable effort investigating future
growth strategies for both Tokyo Electron and Tokyo Electron
Device Limited as both companies look to develop the businesses going forward. As a result, the Company sold a portionof its shares in Tokyo Electron Device Limited in order to improvethe value of both enterprises. This will enable Tokyo Electron andTokyo Electron Device Limited to plan for a greater concentration of management resources in our core equipment business,and for Tokyo Electron Device Limited to actively drive its development business and overseas expansion in addition to existingsales of electronic components and computer network related
products while becoming even more independent and building
its own growth strategies for the future.

Share transfer

Number of shares transferred

2,342,600 shares

Sales amounts of the shares¥3,011 million($25,055 thousand)Ownership ratio after the share transfer

35.45%

2. Summary of accounting treatment(1) Carrying value of assets and liabilities and primary information
related to the transferred businessMillions of yen

Current assets
Noncurrent assets

Thousands of
U.S. dollars

2015

2015

¥51,578$429,208

6,333

52,699Total assets¥57,911$481,907

Current liabilities¥25,311$210,627

Noncurrent liabilities
Total liabilities(2) Alternative method
The contract amounts of forward foreign exchange contracts,
entered into to hedge future transactions and receivables and payables denominated in foreign currencies that have been translatedby the corresponding contracted rates, are as follows:
Contract
amountApril 1, 2014, April 15, 2014 and May 9, 2014(4) Share transfer information

Sell U.S. dollars
Buy EURO(3) Share transfer date

9,222

76,741¥34,533$287,368(2) Accounting treatment
Responding to treasury stock repurchase announced by Tokyo
Electron Device Limited, Tokyo Electron recognized loss onchange in equity in the amount of ¥242 million ($2,014 thousand) for the difference between the decrease in equity interestof Tokyo Electron Devise Limited and cash receipt, while Tokyo
Electron recognized loss on sale of affiliates’ shares in the amountof ¥1,609 million ($13,389 thousand) for the share transfer.
3. Business segment of the company transferredElectronic components & computer networks
4. Approximate income recorded in the consolidated statement ofoperations for the fiscal year ended March 31, 2015
Income before income taxes and minority interests
¥250 million ($2,080 thousand)20. Segment Information
General information about reportable segments
A reportable segment is a component or an aggregated component of Tokyo Electron. For each of the components, discrete
financial information is available and the operating result is regularly

reviewed by management to make decisions about resources tobe allocated to the segment and assess its performance.
The operation of Tokyo Electron consists of segments by products and services based on business units (BUs), and Tokyo
Electron identifies as a reportable segment, “semiconductor production equipment (SPE)”, “flat panel display (FPD) production
equipment”, “photovoltaic panel (PV) production equipment” and“electronic components and computer networks”.
Products of the SPE segment consist of coater/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. The SPE segment principallydevelops, manufactures, sells and distributes such products.
Products of the FPD production equipment segment consist ofcoater/developers and plasma etch/ash systems used in the manufacture of flat panel displays. The FPD production equipment
segment principally develops, manufactures, sells and distributes
such products.
Products of the PV production equipment segment consist ofphotovoltaic panel production equipment used in the manufactureof thin-film silicon photovoltaic panels. The segment had principallydeveloped, manufactured, sold and distributed such products, but
in March 2014, Tokyo electron has halted development, production and sales activities for new equipment and limited its operations to provide support for equipment previously delivered.
Changes in reportable segment
The electronic components and computer networks segment
operated by Tokyo Electron Device Limited was excluded from
reportable segment for the year ended March 31, 2015 because
Tokyo Electron Device Limited became an equity method affiliate
from a consolidated subsidiary. The equity in net income of affiliates are included in “Eliminations and Corporate”. The prior year
segment information for the year ended March 31, 2014 was prepared based on the new reportable segmentation and is presented
in the “Information about reportable segment net sales, segment
profit (loss), segment assets and other items” section.  
Basis of measurement of reportable segment net sales,
segment profit (loss), segment assets and other items
The accounting policies applied in each reportable segment are
generally consistent with those applied for the preparation of theconsolidated financial statements. Intersegment sales or transfers
are determined based on current market prices. Assets in common use have not been allocated to each reportable segment,
while costs associated with those assets have been allocated toreportable segments on a systematic basis.

TOKYO ELECTRON ANNUAL REPORT 2015

PAGE

26

CONTENTSCONTENTS

Financial Highlights

Financial Review

Business Overview

Consolidated Eleven-Year
Eleven-Year Summary
Summary
Consolidated

Consolidated Statements
Statements ofof Changes
Changes inin NetNet Assets
AssetsConsolidated

To Our Stakeholders

Review of Operations
and Business Outlook

Consolidated Balance Sheets

Consolidated Statements of Operations

Consolidated
Consolidated Statements
Statements ofof CashCash Flows
Flows

Corporate GovernanceCorporate Data

Financial Section

Consolidated Statements
Statements ofof Comprehensive
Comprehensive Income
Income (loss)(loss)
Consolidated

Notes to Consolidated Financial Statements

Independent
Independent Auditor’s
Auditor’s Report
ReportNotes to Consolidated Financial Statements

Information about reportable segment net sales, segment profit (loss), segment assets and other items
Reportable segment information as of and for the years ended March 31, 2015 and 2014 are as follows:

Thousands of U.S. dollars
Reportable Segment
Semiconductor
production
equipment

FPD
production
equipmentPVproduction
equipment

Other$4,795,223$272,198$30,107$ 4,619———

95,224

95,224(95,224)—

Total

4,795,223

272,198

30,107

99,843

5,197,371(95,224)

5,102,147

Segment profit (loss)

1,131,663(10,918)(73,138)

9,728

1,057,335(334,792)

722,543

Segment assets

2,542,922

197,645

14,405

15,7362,770,708

4,520,247

7,290,955

Depreciation and amortization

83,365

3,553

50

350

87,31886,419173,737

Amortization of goodwill

9,570

—

—

—

9,570

—

9,570

Loss on impairment

3,229

4,235

—

—

7,464

13,39020,854

Capital expenditures, including intangible assets

70,983

1,639

—

191

72,81346,018118,831

Millions of yen

2015:

Reportable Segment

2015:

Semiconductor
production
equipment

FPD
production
equipmentPVproduction
equipment

Other

Total

Eliminations
andCorporate

Consolidated¥32,710¥3,618¥   555¥613,125¥     —

¥613,125———

11,443

11,443(11,443)—

Total

576,242

32,7103,618

11,998624,568(11,443)

613,125

Segment profit (loss)

135,992(1,312)(8,789)1,169

127,060(40,232)

86,828Segment assets

305,583

23,751

1,731

1,891

332,956

543,198

876,154

Depreciation and amortization

10,018427

64210,493

10,38520,878

Amortization of goodwill

1,150

—

—

—

1,150

—

1,150

Loss on impairment
Capital expenditures, including intangible assets

388

509

—

—

897

1,609

2,506

8,530

197

—

23

8,750

5,530

14,280Millions of yen
Reportable Segment

2014:

Semiconductor
production
equipment

FPD
production
equipmentPVproduction
equipment

Other

Total

Eliminations
andCorporate

Consolidated¥478,842¥28,317¥ 3,806¥   479¥511,444¥100,726¥612,170

34——

11,76011,794(11,794)—478,876

28,317

3,806

12,239523,238

88,932

612,170

Net sales
Sales to external customers
Intersegment sales or transfers
Total

Sales to external customers
Intersegment sales or transfers

¥576,242

Intersegment sales or transfers

Consolidated

Net sales

Net sales
Sales to external customers

Total

Eliminations
andCorporate

Segment profit (loss)

74,284(37)(46,426)1,267

29,088(40,844)(11,756)

Segment assets

273,142

21,252

2,145

1,871

298,410530,182

828,592

Depreciation and amortization

10,114

235

10

49

10,40814,48024,888

Amortization of goodwill

1,473

—

2,686

—

4,159

103

4,262

Loss on impairment

5,009

—

32,789—37,7989,171

46,969

Capital expenditures, including intangible assets

8,109

103

857

41

9,110

5,934

15,044$5,102,147 $       — $5,102,147

Notes: 1. “Other” includes all other operating segments which are not included in the reportable segments, including group-wide logistic services, facility maintenance and insurance.
2. (1) For the year-ended March 31, 2014, as described in “Changes in reportable segment”, sales to external customers ¥100,726 million, intersegment sales or transfers ¥1,075
million, segment profit ¥722 million, segment assets ¥57,465 million, depreciation and amortization ¥476, amortization of goodwill ¥103 million, and capital expenditures,
including intangible assets and other assets ¥825 million reported as “the electronic components and computer networks” were included in “Eliminations and Corporate”.  
(2) “Eliminations and Corporate” segment loss totaling ¥40,232 million ($334,792 thousand) and ¥40,844 million for the years ended March 31, 2015 and 2014, respectively,
includes corporate expenses not allocated to any reportable segments. The corporate expenses consist of research and development costs of ¥17,109 million ($142,373
thousand) and ¥19,735 for the years ended March 31, 2015 and 2014, respectively, pertaining to fundamental research and element research, not allocated to any of thereportable segments. In addition, for the year ended March 31, 2015, expenses related to business combination of ¥8,530 million ($70,983 thousand) is included. Further,
impairment loss of ¥1,609 million ($13,390 thousand) and ¥9,171 million are also included for the years ended March 31, 2015 and 2014, respectively. See (4) for additional
information related to impairment loss.
(3) “Eliminations and Corporate” segment assets totaling ¥543,198 million ($4,520,247 thousand) and ¥530,182 million as of March 31, 2015 and 2014, respectively, consist
mainly of cash and cash equivalents, short-term investments and buildings not allocated to any of the reportable segments.
(4) “Eliminations and Corporate” loss on impairment of ¥1,609 million ($13,390 thousand) for the year ended March 31, 2015 is attributable to corporate assets not to be allocated to any of the reportable segments. “Eliminations and Corporate” loss on impairment of ¥9,171 million for the year ended March 31, 2014 is attributable to corporate buildings and structures and other assets that became idle as a result of facility restructuring. See note 7 for further discussion.
(5) “Eliminations and Corporate” capital expenditures totaling ¥5,530 ($46,018 thousand) and ¥5,934 million for the years ended March 31, 2015 and 2014, respectively, consist
mainly of capital expenditures for buildings, machinery and equipment not allocated to any of the reportable segments.

Other Information(1) Domestic and overseas net sales by destination for the years ended March 31, 2015 and 2014 are as follows:
Millions of yen

2015:

Net sales

TaiwanU.S.A.

Korea

Japan

Europe

Other

Total

¥141,620¥135,425¥101,962¥95,046¥62,466¥76,606¥613,125

Note: Sales are classified in countries or regions based on location of customers.
Millions of yen

2014:

Net salesJapan

TaiwanU.S.A.

China

Korea

Europe

Other

Total

¥161,631¥133,736¥104,617¥81,929¥76,401¥33,861¥19,995¥612,170

TaiwanU.S.A.

Korea

Japan

Europe

Other

Total

$1,178,497$1,126,945$848,481$790,930$519,814$637,480$5,102,147

Note: Sales are classified in countries or regions based on location of customers.
Thousands of U.S. dollars

2015:

Net sales(2) Net property, plant and equipment by location as of March 31, 2015 and 2014 are as follows:
Millions of yen

2015:

Property, plant and equipment

Japan

U.S.A.

Other

Total

¥78,492¥15,496¥12,908¥106,896

Japan

U.S.A.

Other

Total

¥82,364¥15,119¥14,861¥112,344

Millions of yen

2014:

Property, plant and equipment

Thousands of U.S. dollars

2015:

Property, plant and equipment

Japan

U.S.A.

Other

Total

$653,175$128,951$107,414$889,540TOKYO ELECTRON ANNUAL REPORT 2015

PAGE

27

CONTENTSCONTENTS

Financial Highlights

Business Overview

Financial Review

Consolidated Eleven-Year
Eleven-Year Summary
Summary
Consolidated

Consolidated Statements
Statements ofof Changes
Changes inin NetNet Assets
AssetsConsolidated

To Our Stakeholders

Review of Operations
and Business Outlook

Consolidated Balance Sheets

Consolidated Statements of Operations

Consolidated
Consolidated Statements
Statements ofof CashCash Flows
Flows

Corporate Governance

Financial Section

Corporate Data

Consolidated Statements
Statements ofof Comprehensive
Comprehensive Income
Income (loss)(loss)
Consolidated

Notes to Consolidated Financial Statements

Independent
Independent Auditor’s
Auditor’s Report
ReportNotes to Consolidated Financial Statements
21. Subsequent events(3) Major customer information
Net sales to external customers that represent 10 percent or more of net sales are as follows:
Millions of yen

Related reportable segment

Name of customer

Intel Corporation

Semiconductor production equipment

Samsung Electronics Co., Ltd.

Semiconductor production equipment and FPD production equipment

Thousands of
U.S. dollars

2015

2015

¥123,154$1,024,831

97,943815,037

Millions of yen

Related reportable segment

Name of customer

2014

Taiwan Semiconductor
Manufacturing Company Ltd.

Semiconductor production equipment

Intel Corporation

Semiconductor production equipment

84,272Samsung Electronics Co., Ltd.

Semiconductor production equipment and FPD production equipment

80,476¥91,243

Note: The amounts include sales to the customer and its subsidiaries.

Information about reportable segment goodwill
Reportable segment information about amortization of goodwill for the years ended March 31, 2015 and 2014, and unamortized balances
as of March 31, 2015 and 2014 are as follows:
Millions of yen
Semiconductor
production
equipment

2015:

FPD
production
equipmentPVproduction
equipment

Total

Amortization of goodwill¥1,150¥—¥—¥1,150Goodwill

9,067

—

—

9,067

Millions of yen

2014:

Semiconductor
production
equipment

FPD
production
equipmentPVproduction
equipment

Other(Note)

Total

Amortization of goodwill¥1,473¥—¥2,686¥103¥4,262

Goodwill

9,092

—

—

308

9,400

Semiconductor
production
equipment

FPD
production
equipmentPVproduction
equipment

Amortization of goodwill$ 9,570$—$—$ 9,570

Goodwill

75,451——75,451

Note: Other segment is Electronic components & computer networks until fiscal 2014.

Thousands of U.S. dollars

2015:

Total

The termination of the business combination agreement with
Applied Materials, Inc. and the share exchange with TEL Japan GK
In relation to the business combination with Applied Materials, Inc.,Tokyo Electron entered into a Business Combination Agreement on
September 24, 2013 and a Share Exchange Agreement with TEL
Japan GK on May 14, 2014. However, Tokyo Electron, at its board of
directors’ meeting held on April 27, 2015, resolved to terminate theBusiness Combination Agreement and to cancel the Share Exchange
Agreement with TEL Japan GK. This does not have a material impact
on Tokyo Electron’s financial condition or its results of operations.
Share repurchase
At the Board of Directors meeting held on April 27, 2015, Tokyo
Electron resolved to acquire its own shares under Article 156, asapplied pursuant to paragraph 3, Article 165, of the JapaneseCorporation Act as follows.
1. Reason for acquisition of own shares
To enable the implementation of flexible capital policies to meetthe changes in the business environment.
2. Details of acquisition(1) Type of shares to be acquired: Common stock(2) Total number of shares to be acquired: Up to 15.4 million shares(3) Total cost of acquisition: Up to 120 billion yen(4) Period of acquisition: From May 14, 2015 to May 13, 2016(5) Method of acquisition: Acquisition through the market transaction
on Tokyo Stock Exchange