TOKYO ELECTRON ANNUAL REPORT 2015

PAGE

12

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
Notes toto Consolidated
Consolidated Financial
Financial Statements
Statements

Independent
Independent Auditor’s
Auditor’s Report
ReportFinancial Review
Sales and Income
Operating Environment

was mainly due to the aforementioned exclusion of TED, which

Research and Development

Other Income (Expenses) and Net Income (Loss)

had a domestic sales ratio of approximately 80%, from the scope

R&D expenses were down 9.3% year on year to ¥71.3 billion. The

During fiscal 2015, main sources of other income were ¥1.8 billionof consolidation.

main cause of this decrease was the withdrawal from the PV pro-in gain on sale of property, plant and equipment including the saleduction equipment business. The ratio of R&D expenses to netof land and buildings related to Tokyo Electron’s withdrawal fromchiefly in the United States, despite slowing growth in some

5.1% compared with the previous fiscal year. This was due to thesales dropped from 12.9% in fiscal 2014 to 11.6% in fiscal 2015.

the PV production equipment business, ¥1.6 billion in foreign

emerging Asian countries.

exclusion of TED from the scope of consolidation, which over-This was because R&D expenses diminished while net sales

exchange gain and ¥1.3 billion in interest and dividend income.

In the electronics industry, in which Tokyo Electron operates,

shadowed an increase in orders received of more than 14% in theremained roughly level with those of the previous fiscal year. As

The Company recorded many other expenses for business reorga-sales of new, high-performance smartphones were strong, and themainstay SPE business. The order backlog at the end of March

Tokyo Electron views R&D as a source of growth, the Company

nization and to improve asset efficiency. These expenses mainly

smartphone markets of China and other emerging countries also2015 was ¥295.8 billion, up 11.6% year on year. For orders received

invested not only in strengthening existing business areas, but also

included ¥2.5 billion in loss on impairment of buildings and pro-

expanded. Markets for electronics and semiconductors were also

and order backlog in the SPE and FPD production equipment seg-in new areas that are expected to support future growth.

duction facilities resulting chiefly from revisions to business plans

firm, reflecting increasing demand for data center servers due toments, see Performance by Segment on page 13.

Orders received during fiscal 2015 came to ¥661.0 billion, down

The overall world economy in fiscal 2015 saw gradual recovery,

R&D investment in semiconductor production equipment wasfor a factory in China in the FPD production equipment business,

focused on cutting-edge technologies in order to improve semicon-¥1.6 billion in loss on sales of affiliates’ shares accompanying thether growth of cloud computing. As a result, capital investment by

Gross Profit, SG&A Expenses and Operating Income

ductor speed, capacity, power consumption and cost effectiveness.

exclusion of TED from the scope of consolidation, ¥1.1 billion insemiconductor manufacturers, Tokyo Electron’s main customers,

Cost of sales during fiscal 2015 decreased 9.7% year on year toEfforts to develop key technologies in the areas of etching, deposi-loss on liquidation of subsidiaries related to the PV production

saw considerable growth of 16% compared with the previous year.

¥370.4 billion, while the cost of sales ratio dropped 6.6 percentage

tion and cleaning, which realize multiple patterning for further minia-

equipment business, and ¥1.0 billion in expenses for restructuring

rapid growth in data transmission volumes accompanying the fur-points to 60.4%. As a result, gross profit was up 20.2% year on

turization, 3D structure devices and new materials, contributed to anof business bases due to the closure of the Technology Center

Sales

year to ¥242.8 billion, and the gross profit margin rose consider-increase in Tokyo Electron’s market share in calendar year 2014.

Sendai and Technology Center Tsukuba. As a result, net other

During fiscal 2015, aiming to further increase future profitability,

ably, from 33.0% in fiscal 2014 to a record high of 39.6% in fiscal

Other achievements included progress in the development of pro-income (expenses) came to ¥1.3 billion of net expense in fiscal

Tokyo Electron implemented business reorganization in order to2015. The primary reasons for this improvement were increased

duction equipment for STT-MRAM*, a promising candidate for the2015, compared with ¥44.0 billion of net expense in fiscal 2014.

concentrate management resources on its mainstay semiconduc-competitiveness and profitability in the mainstay SPE business andnext-generation of memory device. Certain products in these areas

tor production equipment (SPE) and flat panel display (FPD) pro-the effect of business reorganization that resulted in the exclusion

were also adopted in customers’ development lines.

duction equipment businesses. As part of this reorganization, theof TED from the scope of consolidation.

As a result, income before income taxes and minority interestscame to ¥86.8 billion, compared with a ¥11.8 billion loss in the

In the advanced packaging field, Tokyo Election has com-previous year. Net income totaled ¥71.9 billion in fiscal 2015, com-

Company sold a portion of its shares of Tokyo Electron Device

SG&A expenses fell 8.9% year on year to ¥154.7 billion. This

menced joint research with the Institute of Microelectronics ofpared with net loss of ¥19.4 billion in fiscal 2014. Net income per

Limited (TED), which operates the electronic components anddecrease consisted of a ¥13.1 billion decrease resulting from theSingapore’s Agency for Science, Technology and Research. This

share was ¥401.08 in fiscal 2015, compared with net loss percomputer networks business, resulting in the reclassification of

exclusion of TED from the scope of consolidation as well as a ¥7.3

research aims to establish a new standard technology in the pack-share of ¥108.31 in fiscal 2014.

TED from a consolidated subsidiary to an equity method affiliate.

billion reduction in R&D expenses reflecting a withdrawal from theaging industry and reduce costs, the greatest remaining obstacle

TED’s exclusion from the scope of consolidation as of fiscal 2015

photovoltaic panel (PV) production equipment business. Althoughto achieving full-fledged high volume manufacturing.

resulted in a year on year decrease in consolidated net sales ofthe exclusion of TED, which had a low ratio of SG&A expenses toapproximately ¥100.7 billion (TED’s net sales in fiscal 2014).

net sales, from the scope of consolidation pushed the consolidat-

accelerating development of inkjet printing systems for manufac-of ¥80.3 billion, compared with loss of ¥10.9 billion in fiscal 2014.

However, buoyed by the favorable market conditions described

ed SG&A expenses ratio up, the ratio of SG&A expenses to net

turing OLED panels. These efforts led to adoptions of such sys-

This was mainly due to income before minority interests of ¥71.9

above, sales in Tokyo Electron’s mainstay SPE and FPD produc-

sales in the mainstay SPE and FPD production equipment seg-tems in a customer’s development lines.

billion, foreign currency translation adjustments of ¥6.6 billion,

tion equipment businesses grew ¥101.8 billion from fiscal 2014.

ments fell considerably due to sales increases. As a result, the ratio

As a result, net sales in fiscal 2015 rose 0.2% year on year toof SG&A expenses to consolidated net sales dropped from 27.7%¥613.1 billion.

in the previous fiscal year to 25.2% in the fiscal year under review.

reflecting the depreciation of the yen, and the ¥3.9 billion gain on* STT-MRAM: Spin Transfer Torque-Magnetoresistive Random Access
Memory (an emerging memory promising for its low power consumption)changes in fair value of investment securities.

234,758

211,445

158,755

201,892

242,774

35.1%

33.4%

31.9%

33.0%

39.6%

Selling, general and administrative expenses

136,888

151,002146,206

169,687

154,661

Operating income

97,87060,443

12,54932,205

88,113Operating margin

14.6%

9.5%

2.5%

5.3%

14.4%

Income (loss) before income taxes and minority interests

99,57960,602

17,767(11,756)

86,828Net income (loss)

71,92436,726

6,076(19,409)71,888

25

11

12

0

13

14

15

71.9

71.9

88.1

97.9

613.1

612.2

9.5

200

 Domestic
 Overseas

40
10

50

20

5.3

5

-19.4

Gross profit

400

60

6.1

¥613,12580

36.7¥612,170

15

32.2¥497,300

12.5¥633,091(Billions of yen)

14.4

60.4

¥668,722

14.6

518.1

Net sales

95.0

2015

450.5

2014

161.6

2013

378.8

2012

Net Income (Loss)
(%)
20

75

118.5

2011

497.3

100
633.1

(Billions of yen)

800

600

Millions of yen

Operating Income andOperating Margin(Billions of yen)

461.7

10.9 percentage points from 73.6% in fiscal 2014. This change

Domestic and Overseas Sales

171.4

5.3% to 14.4%.

486.6 668.7

to ¥88.1 billion, and the operating margin rose considerably, fromshare of total consolidated sales came to 84.5% in fiscal 2015, up

182.2

overseas sales grew 15.0% to ¥518.1 billion. Overseas sales as a

Gross profit margin

In fiscal 2015, Tokyo Electron recognized comprehensive income

In FPD production equipment, R&D investment concentrated onConsequently, operating income increased 173.6% year on year

Domestic sales fell 41.2% year on year to ¥95.0 billion, while

Sales and Income

Comprehensive Income (Loss)

13

14

0

2.5
0

0

11
 Operating Income Operating Margin

12

13

14

15

-20

11

12

15

TOKYO ELECTRON ANNUAL REPORT 2015

PAGE

13

CONTENTSCONTENTS

Financial Highlights

Business Overview

Consolidated Eleven-Year
Eleven-Year Summary
Summary
Consolidated

Financial Review

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
Notes toto Consolidated
Consolidated Financial
Financial Statements
Statements

Independent
Independent Auditor’s
Auditor’s Report
ReportFinancial Review
Dividend Policy and Dividends

miniaturization and resulting rising demand for production equip-

M PV (Photovoltaic Panel) Production Equipmentfrom ¥3.8 billion to ¥3.6 billion. Segment loss narrowed to ¥8.8 bil-

It is the policy of Tokyo Electron to pay dividends on the basis ofment manufacturers that have strong technical capabilities.

Tokyo Electron announced in January 2014 that it would withdraw

lion in fiscal 2015 from a loss of ¥46.4 billion in fiscal 2014.

business performance and earnings results. The dividend payout

Segment net sales to external customers increased 20.3% fromfrom the PV production equipment business and has since been

Orders received in this segment decreased ¥1.7 billion year on

ratio has been set at approximately 35% of consolidated net

fiscal 2014 to ¥576.2 billion in fiscal 2015, outpacing the 16%

advancing withdrawal procedures. In fiscal 2015, in anticipation ofyear due in large part to changes in sales terms with customers

income. Reflecting the Company’s strong business results, Tokyo

growth rate of the wafer fab equipment market in 2014. Segment

the completion of major work on delivered equipment, the Company

accompanying business withdrawal procedures. The order back-Electron paid annual dividends for fiscal 2015 of ¥143 per share (anet sales including intersegment sales or transfers were also up

decided to begin dissolving and liquidating TEL Solar AG, the con-log as of March 31, 2015 was down 58.9% to ¥3.7 billion.

payout ratio of 35.7%), its highest ever. Going forward, Tokyo

20.3% to ¥576.2 billion. Segment profit rose 83.1% comparedsolidated subsidiary that mainly handled this business, and wrote off

Electron will continue to repay the support of its shareholders

with fiscal 2014 to ¥136.0 billion, and the segment profit margin

the subsidiary’s debt. As a result, Tokyo Electron recorded a ¥1.0

through profit growth. Note that, because the Company was antic-

rose significantly, from 15.5% in fiscal 2014 to a record high levelbillion loss on liquidation of subsidiaries in this segment.

ipating a business combination with Applied Materials, Inc., it spe-of 23.6%.

cially paid dividends every quarter in fiscal 2015, (per-share

For a business overview of this segment, please see page 8.
M Other
Other sales mainly include group-wide logistics services, facility

Segment net sales to external customers decreased from ¥3.8

Orders received in this segment increased 14.6% to ¥626.8 bil-

million in fiscal 2014 to ¥3.6 billion in fiscal 2015. Segment net

maintenance and insurance. Net sales to external customers

dividends for the first, second and third quarters and the year-end

lion. The order backlog as of March 31, 2015 was up 24.1% year

sales including intersegment sales or transfers also decreased

amounted to ¥0.6 billion, up 15.8% year on year.

were ¥10, ¥30, ¥35 and ¥68, respectively).

on year to ¥260.5 billion.
For a business overview of this segment, please see page 8.

Performance by Segment
M FPD (Flat Panel Display) Production Equipment

Millions of yen
Reportable Segment

smartphones and other mobile devices as well as rising demand

FPD production equipment market grew 20% year on year. In thisfor data center servers. Accordingly, capital investment in wafer fab

context, sales of Tokyo Electron’s inductively coupled plasma (ICP)

equipment for both memory and logic was brisk, growing a con-etch systems, which have a competitive edge among products for2015:

siderable 16% year on year.

high definition, large-sized panels, were favorable.

Net sales

The Company’s market share grew for every product in this seg-

Segment net sales to external customers increased 15.5% year

ment, including etch systems and cleaning systems, which Tokyo

on year to ¥32.7 billion. Segment net sales including intersegment

Electron is focusing on as key areas in which to raise market share.

sales or transfers also increased 15.5% to ¥32.7 billion.

Tokyo Electron’s share of the wafer fab equipment market climbed

Nevertheless, segment loss widened from ¥37 million in fiscal

3.1 percentage points in 2014 to 13.6%. Market share of cleaning2014 to ¥1.3 billion in fiscal 2015, due to additional costs recorded

systems reached 25%, its highest level ever, thanks to sales expan-

for certain products.

sion of strategic products to meet miniaturization needs. In addi-

Orders received in this segment decreased 14.6% year on year

Segment Information

Semiconductor
production
equipment

FPD
production
equipmentPVproduction
equipment

Other¥576,242¥32,710¥3,618———

Total

576,242

32,710

Segment profit (loss)

135,992

Segment assets

305,583

Depreciation and amortization

10,018

Amortization of goodwill

1,150

Sales to external customers
Intersegment sales or transferstion, net sales in the field solutions business, which handles sales ofto ¥35.3 billion. The order backlog as of March 31, 2015 was up

Loss on impairment

parts and used equipment, modifications and maintenance servic-

8.9% to ¥31.6 billion.

Capital expenditures, including
intangible and other assets

es, rose approximately 35% year on year due to the advance of

Selling, General and Administrative
Expenses and Ratio to Net Sales

12

13

14

15

 Selling, General and Administrative Expenses
 Ratio to Net Sales

—

3,618

11,998624,568(11,443)

613,125(1,312)(8,789)1,169

127,060(40,232)

86,82823,751

1,731

1,891

332,956

543,198

876,154

427

6

42

10,493

10,38520,878

—

—

—

1,150

—

1,150

388

509

—

—

897

1,609

2,506

8,530

197

—

23

8,750

5,530

14,280

400

400

200

25

0

0

11

12

13

14

15

3.8

12

13

14

15

The fiscal 2013 annual dividend of ¥51 includes
a commemorative 50 year anniversary dividend of ¥20.

(Times)(Days)

6

150

5

125

3.6

3.9

4

100

3

75

2

50

1

25

0

0

100

0

11

Receivable Turnover andInventory Turnover

4.9

200
50

20

4.9

500

300

80

40

775.5

600
75

783.6

114

71.3

100

800
809.2

125

80

876.2

600

828.6

(Billions of yen)

1,000
143

(Billions of yen)

60

0

11

¥613,125(11,443)

Working Capital andCurrent Ratio

500¥     —

11,443

150

20

10

¥613,125

11,443

(Yen)

78.7

25.2
154.7

151.0

30

Total Assets¥   555

100

51

50

20.5
136.9

100

27.7
169.7

23.9

146.2

29.4

150

Cash Dividends per Share

Consolidated(Billions of yen)

73.2

40

81.5

200

R&D Expenses

70.6

（%）

(Billions of yen)

For a business overview of this segment, please see page 8.

Total

Eliminations
andCorporate

498.1

tal investment in large-sized LCD panels in China grew, and the

451.0

year to a record high of US$340 billion, reflecting strong sales of

414.8

year, mainly due to expansion in demand for TVs. As a result, capi-

482.3

In 2014, overall LCD panel area demand grew nearly 10% year on

In 2014, global sales of semiconductors grew about 8% year on

476.2

M Semiconductor Production Equipment

0

11

12

13

14

15

11
 Working Capital Current Ratio

12

13

14

15

92

100

100

74

77

13

14

87
86

74

11

105

12

 Receivable Turnover
 Inventory Turnover

66

15

TOKYO ELECTRON ANNUAL REPORT 2015

PAGE

14

CONTENTSCONTENTS

Financial Highlights

To Our Stakeholders

Review of Operations
and Business Outlook

Consolidated Balance Sheets

Consolidated Statements of Operations

Business Overview

Consolidated Eleven-Year
Eleven-Year Summary
Summary
Consolidated

Financial Review

Consolidated Statements
Statements ofof Changes
Changes inin NetNet Assets
AssetsConsolidated

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
Notes toto Consolidated
Consolidated Financial
Financial Statements
Statements

Independent
Independent Auditor’s
Auditor’s Report
ReportFinancial Review
Financial Position and Cash FlowsAs a result, total assets as of March 31, 2015 stood at ¥876.2
billion, up ¥47.6 billion year on year.

Assets, Liabilities and Net Assets¥52.6 billion increase in retained earnings, reflecting the recording

Cash Flowsof ¥71.9 billion in net income and ¥17.9 billion paid in cash divi-

Net cash provided by operating activities came to ¥71.8 billion, up

dends (the total of the fiscal 2014 year-end dividend and the fiscal¥27.4 billion from fiscal 2014. Major contributors were ¥86.8 billion

M Assets

M Liabilities and Net Assets

2015 first, second and third quarter dividends), as well as a ¥6.7

in income before income taxes and minority interests, ¥20.9 billion

Current assets increased by ¥49.4 billion from the end of the previ-

Current liabilities increased ¥2.3 billion from the end of fiscal 2014

billion increase in foreign currency translation adjustments due toin depreciation and amortization, a ¥12.9 billion increase in cus-

ous fiscal year to ¥670.9 billion, reflecting increases of ¥49.5 billion

to ¥172.8 billion at the end of fiscal 2015. This reflected increases

the depreciation of the yen and a ¥10.6 billion decrease in minority

tomer advances and a ¥9.4 billion increase in trade notes andin total liquidity on hand (cash, cash equivalents and short-termof ¥8.5 billion in customer advances, ¥3.5 billion in accrued

interests due partly to the exclusion of Tokyo Electron Device fromaccounts payable. Major negative factors included a ¥26.8 billion

investments with original maturities of less than one year), ¥7.3 bil-

employees’ bonuses and ¥2.8 billion in trade notes and accounts

the scope of consolidation.

increase in inventories, ¥24.2 billion in income taxes paid and alion in inventories and ¥6.9 billion in prepaid expenses and otherpayable, as well as decreases of ¥7.8 billion in income taxes payable

current assets, as well as a decrease of ¥18.2 billion in trade notesand ¥5.1 billion in accrued expenses and other current liabilities.

and accounts receivable. The turnover period for trade notes andNon-current liabilities decreased ¥5.3 billion year on year toaccounts receivable improved from 77 days in fiscal 2014 to 66¥62.2 billion, due mainly to decreases in net liability for retirement

days in fiscal 2015, and the inventory turnover period worsened

benefits of ¥2.6 billion and deferred tax liabilities of ¥1.0 billion.

¥11.4 billion increase in prepaid consumption tax.

As a result, the equity ratio rose 3.2 percentage points from theNet cash provided by investing activities was ¥155.7 billion,

end of March 2014 to 73.0% at the end of March 2015. ROE

compared with ¥19.6 billion used in the previous fiscal year. This

climbed to 11.8% from -3.3% in fiscal 2014.

increase included proceeds of ¥163.3 billion from a net decrease
Capital Expenditures* and Depreciation and Amortization**in short-term investments and ¥11.9 billion used in the payment

slightly from 100 days in fiscal 2014 to 105 days in fiscal 2015.

As of March 31, 2015, Tokyo Electron had no interest-bearing debt

Capital expenditures were ¥13.2 billion in fiscal 2015, a 3.0% year-

for purchase of property, plant and equipment.

Net property, plant and equipment decreased ¥5.4 billion year

(long- and short-term debt), compared with ¥13.5 billion at the end ofon-year increase. The primary factor causing the increase was the

Cash used in financing activities came to ¥18.2 billion, com-on year to ¥106.9 billion due to ¥18.1 billion in depreciation andthe previous fiscal year, due to the exclusion of Tokyo Electron Device,acquisition of process evaluation equipment for R&D, primarily forpared with ¥0.2 billion in fiscal 2014. Major outflows included

amortization and ¥2.1 billion in impairment of fixed assets includingwhich held the debt, from the scope of consolidation.

areas with high growth potential in the SPE business.

¥17.9 billion in dividends paid.
The balance of cash and cash equivalents at the end of Marchproduction facilities at a factory in China in the FPD production

Total liabilities (current liabilities and non-current liabilities) stoodequipment business. These factors more than offset ¥13.2 billion

at ¥235.0 billion, down ¥3.0 billion from the end of the previous fis-due to efforts to restrain capital investment since the previous

2015 stood at ¥317.6 billion, an increase of ¥212.8 billion from thein new fixed asset acquisitions.

cal year.

­fiscal year.

end of fiscal 2014. Total liquidity on hand, which consists of cash,

Investments and other assets increased ¥3.6 billion year on year

Net assets came to ¥641.2 billion at the end of fiscal 2015, up

to ¥98.4 billion, mainly due to a ¥3.9 billion increase in investment¥50.5 billion from the end of fiscal 2014. This was mainly due to asecurities.

Depreciation and amortization decreased 16.1% to ¥20.9 billion

cash equivalents and short-term investments with original maturi-*	Capital expenditures represent only the gross increase in property, plant and equip-

ties of less than one year, increased ¥49.5 billion year on year toment.
**	Depreciation and amortization does not include amortization of goodwill or losses on
impairment.

¥317.7 billion at the end of March 2015.

Millions of yen

Millions of yen

2011

2012

2013

2014

2015

Total current assets¥644,231¥607,051¥521,501¥621,492¥670,883

Financial Position

2011

2012

2013

2014

2015

Cash flows from operating activities¥ 83,239¥ 29,712¥ 84,267¥ 44,449¥ 71,806
155,738

Cash Flows

Net property, plant and equipment

112,552

126,885

135,698

112,344

106,896

Cash flows from investing activities(35,882)(8,352)(141,769)(19,599)

Total investments and other assets

52,422

49,675

118,329

94,756

98,375

Cash flows from financing activities(5,237)(27,335)(10,625)(187)(18,214)

Total assets

809,205

783,611775,528

828,592

876,154

Cash and cash equivalents at end of year

165,051

158,776

85,314

104,797

317,632

ROE

ROA

（%）

(Billions of yen)

（%）

（%）

（%）

14

3.5

800

100

15

15

2.0
400

4.4

2

0.8

0

11

12

 Interest-Bearing Debt
 Debt-to-Equity Ratio

69.8

73.0

75

13

25

1.0

0

0.5
0

14

0

0

11
 Equity Equity Ratio

12

13

14

15

10

4.4

0

0

12

13

14

12

13

150
100

1.8

-5

11

200

50

-3.3

15

250

20

7.7
5

200

300

10.5

6.3

5

350

30
10

50

(Billions of yen)

40
13.1

11.8

10

Total Liquidity on Hand

(Billions of yen)

17.7

1.0
0.6
3.8

4

76.5

1.5

1.4
8.0

6

74.9

578.1

8

70.8

593.0

2.5

2.3

600

586.8

10

3.0

572.7

12

13.3

639.5

13.5

(Billions of yen)

Capital Expenditures andDepreciation and Amortization

317.7

Equity and Equity Ratio

39.1

Interest-Bearing Debt,
D/E Ratio

268.1

641,163240.1

590,614247.6

605,127285.1

598,603

20.9

584,802

24.9

Total net assets (Total shareholders' equity)

13.2

172,812234,99126.6

170,510
237,97812.8

106,670
170,401

21.8

124,794
185,008

39.5

168,038
224,403

24.2

Total current liabilities
Total liabilities

15

ROE = (Net income or loss / Average total equity) × 100

11

12

13

14

15

ROA = (Operating income or loss + Interest and dividend income) /Average total assets x 100

0

11

12

13

 Capital Expenditures Depreciation and Amortization

14

15

11

14

15

Total liquidity on hand = Cash and cash equivalents +Short-term investments

TOKYO ELECTRON ANNUAL REPORT 2015

PAGE

15

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
Notes toto Consolidated
Consolidated Financial
Financial Statements
Statements

Independent
Independent Auditor’s
Auditor’s Report
ReportFinancial Review
Business-related and Other Risks(3) Impact from Research and Development(6) Impact of Intellectual Property Rights(9) Impact from Major Lawsuits or Legal Actions

Through ongoing and proactive R&D investment and activities in

In order to distinguish its products and make them more competi-Tokyo Electron is not currently involved in any lawsuits or other

The following risks may have a material impact on Tokyo Electron’s

cutting-edge technologies—miniaturization, vacuum, plasma, ther-tive, Tokyo Electron has promoted its R&D strategy for the early

legal actions that are likely to significantly influence its businessbusiness performance, stock price, or financial position.

mal processing, coating/developing, cleaning, wafer-transfer anddevelopment of cutting-edge technologies together with its busi-

results. However, in the event that the Company’s business orclean technologies—Tokyo Electron has created advanced tech-ness and intellectual property strategies. This approach hasother activities become the subject of a major lawsuit or other legal(1) Impact from Changes in the Semiconductor Market

nologies. At the same time, by quickly bringing to market new

enabled Tokyo Electron to obtain sole possession of many proprie-action, depending on the outcome of such action, Tokyo Electron’sTokyo Electron has achieved a high profit margin by concentratingproducts incorporating these technologies, Tokyo Electron hastary technologies that have been instrumental to the Company’sbusiness results could be adversely affected.

resources in high-tech fields, including semiconductor production

successfully captured a high market share in each of the productability to capture a high market share and generate high profit mar-equipment, where technological innovation is rapid but Tokyo

fields it has entered and generated a high profit margin. However,gins in each of its product fields. Tokyo Electron’s products incor-(10) Other Risks

Electron can effectively use its strengths. Although technologicaldelays in the launch of new products and other factors could

porate and optimize many of these proprietary cutting-edge

Tokyo Electron is actively engaged in reforming its corporate struc-change is responsible for the semiconductor market’s rapid

adversely affect Tokyo Electron’s business performance.

technologies. There may be cases in which, by avoiding the use ofture so that it can generate profits even when markets contract.

third-party technologies and intellectual property rights, Tokyo

These reforms have entailed creating new high-growth and high-Electron’s business performance could be adversely affected.

return businesses and pursuing higher earnings from existing busi-

growth, Tokyo Electron has actively undertaken structural reforms
to be able to generate profits under any circumstances, including(4) Safety-related Impact

when the market contracts temporarily due to imbalance of supply

Tokyo Electron’s basic philosophy is to always bear in mind safetyand demand. However, order cancellations, excess capacity andand health in the execution of business activities, including devel-(7) Impact of Fluctuating Foreign Exchange Rates

to preserve the environment and worked to restructure its compli-

personnel and increased inventories resulting from an unexpected-

opment, manufacturing, sales, services and management. In

Success in the development of overseas operations has increased

ance, risk management and information security management sys-

ly large market contraction, losses from bad debts resulting fromaccordance with this philosophy, Tokyo Electron works actively

the share of sales generated overseas. As a rule, Tokyo Electrontems. However, as long as it conducts business activities, as withthe worsening of a customer’s financial position, and supply short-and continuously to improve the safety of its products and to elimi-

conducts export transactions on a yen basis to avert exposure topeer companies or companies in different industries, Tokyo Electron

ages resulting from the worsening of a supplier’s management sit-nate any harmful impact on health. However, harm to customers,

foreign currency risks. However, some exports are denominated inis subject to the effect of many other factors. These include theuation, could adversely affect Tokyo Electron’s businessorder cancellations or other circumstances resulting from safety or

foreign currencies. In these cases, Tokyo Electron hedges foreign

world and regional economic environments, natural disasters, war,

performance considerably.

other problems related to Tokyo Electron’s products could

currency risk by using a forward foreign exchange contract whenterrorism, infectious diseases and other unavoidable occurrences,adversely affect Tokyo Electron’s business performance.

an order is received or by other means. However, foreign

financial or stock markets, government or other regulations, supply

exchange rate risks can arise from fluctuations in prices due tochains, market conditions for products and real estate, the ability(5) Impact from Quality Issues

sudden foreign exchange movements, which could have an indi-

to recruit personnel in Japan and overseas, competition over stan-Tokyo Electron has been successful at increasing transactions with

Tokyo Electron actively develops outstanding, cutting-edge tech-rect adverse effect on Tokyo Electron’s business performance.

dardization, and loss of key personnel. Any of these factors could

the leading semiconductor manufacturers worldwide, including

nologies for incorporation in new products that are brought quickly

those in Japan, through the provision of products featuring out-

to market. At the same time, Tokyo Electron works to establish(8) Influence of Corporate Acquisitions

standing, cutting-edge technology and of services offering a higha quality assurance system, efforts that include obtaining ISO 9001

As part of its business strategy, Tokyo Electron conducts corpo-

level of customer satisfaction. However, Tokyo Electron’s sales may

certification, as well as to establish a world-class service system.

rate acquisitions in order to expand into new business areas,from time to time be temporarily concentrated on particular custom-

These actions have resulted in a large number of customers

secure new technologies and business platforms, and strengthen

ers due to the timing of large capital investments of major semicon-

adopting Tokyo Electron’s products. However, because Tokyo

the competitiveness of existing businesses. The Company con-ductor manufacturers. The resulting escalation in sales competition

Electron’s products are based on cutting-edge technologies, andducts due diligence and carefully deliberates each specific acquisi-

could adversely affect Tokyo Electron’s business performance.

due to other factors, many of the technologies developed are intion. However, in the event that the results following an acquisition

unfamiliar fields. The occurrence of unforeseen defects or other

do not meet expectations, Tokyo Electron’s business performanceissues could adversely affect Tokyo Electron’s business performance.

could be adversely affected.

(2) Impact from Concentration of Transactions on
Particular Customers

nesses. At the same time, Tokyo Electron has promoted activities

adversely affect Tokyo Electron’s business performance.