TOKYO ELECTRON

October 30, 2009

Consolidated Financial Review
for the Second Quarter Ended September 30, 2009
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, 2009
Six months ended
September 30, 2008 September 30, 2009
301,225
153,891
26,282(21,620)
28,907(19,212)
17,361(16,161)
97.03(90.30)96.82-(1) Operating results (Cumulative)
Net sales (Millions of yen)
Operating income (Millions of yen)
Ordinary income (Millions of yen)
Net income (Millions of yen)
Net income per share (Yen)
Fully diluted net income per share (Yen)(2) Financial position

Total assets (Millions of yen)
Net assets (Millions of yen)
Equity ratio (%)
Net assets per share (Yen)
Equity: 503,433 million yen (as of September 30, 2009)
518,387 million yen (as of March 31, 2009)

As ofMarch 31, 2009
668,998529,265
77.5
2,896.55

As ofSeptember 30, 2009
653,540
514,51577.0
2,812.52

Year ended
March 31, 2009

Year ending
March 31, 2010

2. Dividends

2Q-end dividend per share (Yen)
Year-end dividend per share (Yen)Annual dividend per share (Yen)
Note: Revision of dividends forecast for during this period: No

20.00
4.00
24.00

4.00
4.00 (Forecast)
8.00 (Forecast)

3. Earnings forecast for the year ending March 31, 2010
Year ending
March 31, 2010
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 for during this period: Yes

1

360,000(35,000)(31,500)(27,000)(150.84)

TOKYO ELECTRON
4. Others(1) Important changes in subsidiaries. : None
(Changes on specific subsidiaries with changes in scope of consolidation)(2) Use of simplified accounting method and special accounting policy for quarterly financial reporting: Yes(3) Changes in principles, procedures and display of accounting method concerning quarterly consolidated
statement policies.
1. Changes in accounting policies: None
2. Other changes: None
(4) Number of shares outstanding (common stock)
1. Number of shares issued
As of September 30, 2009:

180,610,911 shares

As of March 31, 2009:

180,610,911 shares

2. Number of shares of treasury stock
As of September 30, 2009:

1,613,547 shares

As of March 31, 2009:

1,643,398 shares

3. Average number of shares outstanding
Six months ended September 30, 2009:

178,979,828 shares

Six months ended September 30, 2008:

178,938,092 shares

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 from the projections in the Financial Review.

2

TOKYO ELECTRON

Qualitative Information, Financial Statements, etc.

1. Qualitative Information on Consolidated Operating Results

During the first half of the current fiscal year, developments in the global economy included expanding
signs of a recovery in Asia, particularly in China, while the economic decline in some countries in Europe
and North America seemed to have leveled out as a result of the stimulus measures taken there, althoughconditions remained severe, with high levels of unemployment.

The Japanese economy has been

recovering from its worst period, now that exports and production have stopped falling, but the decrease incapital investment continues and the employment situation remains difficult.

In the electronics industry, in which the Tokyo Electron group operates, conditions remained harsh as aresult of impact from the global recession, but there were signs of recovery within the industry, including
the growing market for energy-saving products and multi-function mobile phones as well as the risingdemand in emerging markets for home appliances such as flat-panel televisions.

There were alsofavorable signs in the semiconductor and FPD-related markets, such as the beginning of a price recovery
in conjunction with ongoing inventory adjustments as well as growing demand for semiconductors used inconsumer products.

Facing this situation, the Tokyo Electron group took measures to substantially reduce fixed costs and toincrease efficiency, including a reallocation of manufacturing and development sites; yet net sales still did
not make a full recovery. In the first half of the current fiscal year (the six-month period from April to
September 2009), net sales were 153,891 million yen (down 48.9% compared to the same period of theprevious year), operating losses were 21,620 million yen (compared to operating income of 26,282 million
yen in the same period of the previous year), ordinary losses were 19,212 million yen (compared toordinary income of 28,907 million yen in the same period of the previous year), and net losses were 16,161
million yen (compared to net income of 17,361 million yen in the same period of the previous year).

In addition, during the second quarter (July to September 2009), net sales were 84,975 million yen (down
42.0% compared to the same period of the previous year), operating losses were 7,232 million yen(compared to operating income of 4,852 million yen in the same period of the previous year) ordinary
losses were 5,191 million yen (compared to ordinary income of 6,644 million yen in the same period of theprevious year), and net losses were 5,125 million yen (compared to net income of 4,508 million yen in thesame period of the previous year). Financial results improved from the first quarter (April to June 2009).

The overview of each business segment is as described below.

(1) Industrial Electronic Equipment BusinessNet sales from external customers in this segment in the first half of the current fiscal year were 113,091
million yen (down 54.6% compared to the same period of the previous year). Net sales from external

3

TOKYO ELECTRON

customers in this segment in the second quarter were 62,621 million yen (down 47.5%).
(a) Semiconductor Production Equipment
Because of curtailed capital investment due to the global downturn that began last year in thesemiconductor industry, net sales from external customers were sluggish in this segment during the firsthalf of the current fiscal year, at 82,136 million yen (down 60.6% compared to the same period of theprevious year).

There were clear signs, however, that the industry’s decline has bottomed out, including a

recovery of semiconductor prices due to inventory adjustments in recent months as well as increases inequipment operating rates by semiconductor manufacturers; and the recovery of orders in this segmentthat began in the first quarter continued into the second quarter.
In addition, net sales from external customers in the second quarter were 51,699 million yen (down 46.2%),
which is an improvement compared to the first quarter.

(b) Flat Panel Display/Photovoltaic Cell (FPD/PV) Production Equipment
Sales for this segment were affected by the curtailment and postponement of capital investment by panel
manufacturers, due to sluggish demand for finished products since last year; as a result, net sales fromexternal customers in this segment during the first half of the current fiscal year were 30,743 million yen(down 23.5% compared to the same period of the previous year). Compared to the first quarter, thebusiness environment has improved, as evidenced by signs that major panel manufacturers wereincreasing production capacity in response to rising demand for liquid crystal panels destined for the China
market. In the photovoltaic cell production equipment, the global financial crisis that began last year hascaused a temporary slowdown, including postponements in investment, but since environmental measures
are being taken on a global scale, substantial market growth is expected over the medium to long term.
In addition, net sales from external customers in this segment during the second quarter were 10,799
million yen (down 52.9%).

(c) Others
Net sales from external customers in this segment during the first half of the current fiscal year were 211
million yen (down 3.2% compared to the same period of the previous year). Meanwhile, net sales fromexternal customers in this segment during the second quarter were 121 million yen (down 2.0%).

(2) Electronic Components and Computer Networks BusinessIn the semiconductor and electronic devices, demand was recovering for products used in consumer
electronics such as digital home appliances, and sales of new products and sales at overseas sites werestrong, but sales of semiconductors for industrial equipment, communications equipment, and computerswere sluggish.

In the computer systems-related, there was a short-term recovery in business confidence,but new IT investment by businesses remained stagnant because of uncertainty regarding the future.

Asa result, the business environment did not make a rapid recovery, even though the performance of
maintenance-related businesses was strong and sales of computer network equipment showed a trend
toward improvement.

Given these circumstances, net sales from external customers in this segment

during the first half of the current fiscal year were 40,799 million yen (down 21.7% compared to the same

4

TOKYO ELECTRON

period of the previous year); and net sales from external customers in this segment during the second
quarter were 22,354 million yen (down 17.8%), which is an improvement compared to the first quarter.

(For reference)
Consolidated(Millions of yen)(Ref.) FY2009

FY2010Net Sales
Industrial Electronic Equipment
Semiconductor Production Equipment
Japan
U.S.
EuropeKorea
TaiwanChina
S.E.Asia
ＦＰＤ/PV Production Equipment
OthersElectronic Components & Computer Networks
Operating Income (Loss)
Ordinary Income (Loss)Net Income (Loss)

1Q

2Q

Total

1H

2H

68,91550,47030,437
4,932
12,430
2,833
2,861
5,917
483
979
19,94389
18,445(14,388)(14,021)(11,035)

84,97562,621
51,69910,812
8,364
2,315
8,823
16,6192,106
2,656
10,799121
22,354(7,232)(5,191)(5,125)

153,891
113,091
82,136
15,745
20,795
5,148
11,684
22,537
2,589
3,635
30,743
211
40,799(21,620)(19,212)(16,161)

301,225
249,100
208,702
66,26534,92014,842
26,63338,884
7,025
20,12940,179218
52,12526,282
28,907
17,361

206,856
164,774
116,680
39,06830,454
15,546
10,912
10,423
4,062
6,213
47,927
166
42,081(11,572)(8,352)(9,818)

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

2. Qualitative Information on Consolidated Financial Conditions(1) Financial Conditions
Current assets at the end of the second quarter decreased by 21,136 million yen compared to the end of
the previous fiscal year, to 484,550 million yen. Major factors included a combined increase of 32,783
million yen in cash and deposits and certificates of deposit in securities; a decrease in trade notes andaccounts receivable of 30,151 million yen; and a decrease in merchandise and finished goods of 10,582
million yen.

Tangible fixed assets decreased by 5,688 million yen from the end of the previous fiscal year, to 94,218
million yen.

Intangible fixed assets decreased by 1,594 million yen from the end of the previous fiscal year, to 9,166
million yen.

Investments and other assets increased by 12,961 million yen from the end of the previous fiscal year, to65,605 million yen.
As a result, total assets decreased by 15,457 million yen from the end of the previous fiscal year, to5

TOKYO ELECTRON

653,540 million yen.
Current liabilities decreased by 2,310 million yen from the end of the previous fiscal year, to 86,961 millionyen.

Long-term liabilities increased by 1,603 million yen from the end of the previous fiscal year to 52,063
million yen.

Net assets decreased because a net loss of 16,161 million yen was reported for the first half of the current
fiscal year and year-end dividends for the previous fiscal year of 715 million yen were paid, and as a result
net assets at the end of the second quarter were 514,515 million yen. The equity ratio was 77.0%.

(2) Cash Flow
Balance of cash and cash equivalents at the end of the second quarter of the current fiscal year decreased
by 15,443 million yen from the end of the previous fiscal year, to 50,440 million yen. The combined
balance of cash and cash equivalents, plus 192,500 million yen in time deposits and certificates of depositwith deposit terms of over three months (which are not included in cash and cash equivalents), increased
by 32,783 million yen from the end of the previous fiscal year, to 242,940 million yen. Cash flow fromvarious activities during the first half of the current fiscal year is as described below.

Cash flow from operating activities decreased by 44,237 million yen from the same period of the previous
year, to 40,367 million yen.

Major positive factors included 9,885 million yen in depreciation andamortization, a decrease in trade notes and accounts receivable of 29,918 million yen, a decrease ininventories of 6,249 million yen, an increase in trade notes and accounts payable of 7,151 million yen, adecrease in prepaid consumption tax of 7,725 million yen and refunded income taxes, etc. of 7,178 million
yen. Major negative factors included 26,249 million yen in net loss before income taxes and a decreasein customer advances of 4,978 million yen.

Cash flow from investing activities decreased from 103,915 million yen for the same period of the previous
year, to 57,120 million yen, mainly because of the expenditure of 8,425 million yen for the acquisition of
tangible fixed assets, as well as the expenditure of 48,166 million yen due to a net increase in time
deposits.

Cash flow from financing activities was a positive 936 million yen, compared to negative 41,324 million yen
in the same period of the previous year, mainly as a result of 1,668 million yen in income from an increasein short-term borrowings and payment of 715 million yen in dividends.

In addition, the overall situation affecting cash flow in the second quarter of the current fiscal year was asfollows:

Cash flow from operating activities was a positive 25,994 million yen, down 23,949 million yen from the6

TOKYO ELECTRON

same period of the previous fiscal year. The major positive factors were depreciation and amortization of
4,971 million yen, a decrease in trade notes and accounts receivable of 6,386 million yen, an increase intrade notes and accounts payable of 11,735 million yen, and refunded income taxes, etc. of 8,277 million
yen, while the main negative factor was net loss before income taxes of 7,842 million yen for the second
quarter.

Cash flow from investing activities was a negative 51,747 million yen, compared to negative 103,279
million yen in the same period of the previous fiscal year, primarily as a result of expenditures of 7,093
million yen for acquisition of tangible fixed assets and expenditures of 44,501 million yen for net increases
in time deposits.

Cash flow from financing activities was positive 1,938 million yen compared to negative 31,277 million yen
in the same period of the previous year, mainly as a result of an increase of short-term borrowings of 1,794
million yen.

3. Qualitative Information on Forecasts for Consolidated Financial Results

Although there is a risk of protracted recession because of deteriorating employment conditions in Europe
and North America, it is expected that the overall economy, and Asia in particular, will experience a modest
recovery. In the semiconductor-related market, a full-scale recovery has yet to be achieved, but there are
expectations that capital investment by semiconductor manufacturers will gradually increase, as evidenced
by the recovery in semiconductor prices and the rising operating rates for production equipment. Under
these conditions, the Company expects sales of semiconductor production equipment and FPD production
equipment, its main businesses, to increase during fiscal year compared to the earlier forecast.

Taking these circumstances into account, the Company has revised the forecast of consolidated financial
results for the entire fiscal year announced on July 31, 2009, as follows:

Consolidated forecast(Billions of yen, Y/Y change)
FY2010 (E)Net Sales
360.0-29.1%
Industrial Electronic Equipment
278.2-32.8%
Semiconductor Production Equipment
209.0-35.8%
FPD/PV Production Equipment
69.0-21.7%
Others0.2
Electronic Components & Computer Networks
81.8-13.2%
Operating Income(loss)-35.0
Ordinary Income(loss)-31.5
Net Income(loss)-27.0
Note: The financial forecasts and estimates stated in this financial review are based on certain

7

TOKYO ELECTRON

assumptions judged to be reasonable at the present time in light of information currently available
concerning economic conditions in Japan and overseas, fluctuations in foreign exchange rates, and otherfactors 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 thesemiconductor production equipment business. Consequently, actual sales and profits may differ
substantially from the projections stated in this financial review.

8

TOKYO ELECTRON

Consolidated Balance Sheet(Millions of yen)
As ofMarch 31, 2009

As of
September 30, 2009ASSETS
Current assets
Cash and deposit

51,156

Trade notes and accounts receivable

119,687

89,535

Securities

159,001

190,647

Merchandise and finished goods

88,416

77,833Work in process

29,306

34,695

Raw materials and supplies

16,51815,153

Others41,62024,429Allowance for doubtful accounts

52,292(20)(37)

505,687

484,550

99,906

94,218Others

10,7609,166

Total intangible fixed assets

10,7609,166

60,18973,099Total current assets
Long-term assets
Tangible fixed assets
Intangible fixed assets

Investments and other assets
OthersAllowance for doubtful accounts(7,545)(7,493)

Total investments and other assets

52,64465,605

163,311

168,990668,998

653,540

Total long-term assets
Total assets

9

TOKYO ELECTRON(Millions of yen)
As ofMarch 31, 2009

As of
September 30, 2009

LIABILITIESCurrent liabilities
Trade notes and accounts payable

24,39331,440

Other allowance

11,113

8,345

Others

53,76547,175

Total current liabilities

89,272

86,96147,046

48,478639

606

Others

2,773

2,978

Total long-term liabilities

50,46052,063

139,732

139,025

Common stock

54,961

54,961

Capital surplus

78,11478,051Retained earnings

404,435

387,558

Long-term liabilities
Accrued pension and severance costs
Other allowance

Total liabilities
NET ASSETS
Shareholders' equity

Treasury stock(11,111)(10,907)

Total shareholders' equity

526,398

509,663

(842)

1,335

66

144

Translation adjustments(7,235)(7,709)Total valuation and translation adjustments(8,011)(6,230)

Subscription rights to shares

1,148

1,334

Minority interests

9,729

9,747

Total net assets

529,265

514,515

668,998

653,540

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

Total liabilities and net assets

10

TOKYO ELECTRON

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

Six months ended
September 30, 2009

Net sales

301,225

153,891

Cost of sales

210,170

123,020Gross profit

91,05530,870Research and development expenses

31,57725,173

Others33,19427,317

Total selling, general & administrative expenses

64,77252,49026,282(21,620)

Selling, general & administrative expenses

Operating income (loss)
Non-operating income
Interest income
Revenue from development grants
OthersTotal non-operating income

908

554

1,475

939

948

1,182

3,332

2,676

-

88

Non-operating expenses
Lease expenses of fixed assets
317

Foreign currency translation loss
Others-389

Total non-operating expenses
Ordinary income (loss)

180

707

269

28,907(19,212)-19

Unusual or infrequent profit
Reversal of allowance for doubtful accounts
Gain on sale of fixed assets

93

Others6

Total unusual or infrequent profit

99

24
43

Unusual or infrequent loss
Loss on retirement or sale of fixed assets

122-

Loss on impairment

-

4,764

Expenses for integration and closure of business bases

-

1,564

Office relocation expenses

117-

Others74751

Total unusual or infrequent loss

314

7,080

Income (loss) before income taxes

28,693(26,249)

Provision for income taxes and enterprise taxes

10,994(10,234)

Minority interests

336

146

Net income (loss)

17,361(16,161)11

TOKYO ELECTRON

Consolidated Cash Flow

(Millions of yen)Six months ended
Six months ended
September 30, 2008 September 30, 2009

Cash flow from operating activities
Income (loss) before income taxes
Depreciation and amortization
Loss on impairment
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

28,693
10,7401,678(7,435)(1,782)(957)
76,4602,190(4,870)10,003(4,814)6,521(4,300)112,128916(151)(28,288)
84,605(26,249)
9,885
4,764
1,416
(1,103)(1,655)(586)
29,918
6,249
7,151
7,725
(4,978)26
32,564
644
(20)
7,178
40,367(89,453)(10,772)(612)(2,786)(291)(103,915)(48,166)(8,425)(329)(199)(57,120)(1,322)(30,000)(9,841)(161)(41,324)

1,668

(870)
(61,505)
193,49267
132,054373(15,443)
65,88350,440Cash flow from investing activities
Decrease in time deposits (increase)
Payment for purchase of tangible fixed assets
Payment for purchase of intangible fixed assets
Payment for purchase of investment securities
OthersNet cash used in investing activities

Cash flow from financing activities
Net increase in short-term borrowings (decrease)
Redemption of straight bonds
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 from newly consolidated subsidiaries
Cash and cash equivalents at end of period

12

(715)
(15)
936

TOKYO ELECTRON

Segment Information
1. Business Segment Information(Millions of yen)Six months ended September 30, 2008
Industrial
Electronic
Equipment
Net sales
Operating income

249,61124,676

Electronic
Components andComputer Networks
52,432
1,593

Total

Eliminations
and Corporate

Consolidated

(817)
12

301,225
26,282

302,043
26,270Note: 1. Method of classifying businesses: Businesses are classified after considering similarities in type of product,function, or method of sale.
2. Major products in each business segment:(1) Industrial Electronic Equipment: Semiconductor Production Equipment, FPD Production Equipment,(2) Electronic Components and Computer Networks: Semiconductor Products, Computer Systems andNetworks, Middleware and Software, Other Electronic Components(Millions of yen)Six months ended September 30, 2009
Industrial
Electronic
Equipment
Net sales
Operating income (loss)

113,481(22,248)

Electronic
Components andComputer Networks
40,923615

Total

Eliminations
and Corporate

Consolidated

(513)
12

153,891(21,620)

154,404(21,632)

Note: 1. Method of classifying businesses: Businesses are classified after considering similarities in type of product,function, or method of sale.
2. Major products in each business segment:(1) Industrial Electronic Equipment: Semiconductor Production Equipment, FPD Production Equipment,
Photovoltaic Cell Production Equipment, Others(2) Electronic Components and Computer Networks: Semiconductor Products, Other Electronic
Components, Computer Systems and Networks, and Software

2. Geographic Segment Information(Millions of yen)Japan
Net sales
Operating income

287,437
22,787Six months ended September 30, 2008
Eliminations
Other Regions
Total
and Corporate

65,036
2,766

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

Consolidated

301,225
26,282

Note: 1. National and regional categories are determined on the basis of geographic proximity.
2. Main countries and territories in other regions: U.S., Europe, Taiwan(Millions of yen)Japan
Net sales
Operating income (loss)

142,843(23,156)

Six months ended September 30, 2009
Eliminations
Other Regions
Total
and Corporate

35,310791

178,154(22,364)(24,262)744

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

13

Consolidated

153,891(21,620)

TOKYO ELECTRON

Segment Information
3. Overseas sales(Millions of yen)
TaiwanOverseas sales

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

Consolidated net sales
Proportion of overseas
sales in consolidated net
sales (%)

Total
182,398
301,225

17.4

14.5

11.6

17.1

60.6

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

29,449Six months ended September 30, 2009
U.S.
Korea
Others20,80817,58018,655

Consolidated net sales
Proportion of overseas
sales in consolidated net
sales (%)

Total
86,493
153,891

19.1

13.5

11.4

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

14

12.2

56.2