FY2013 Financial Announcement meeting Q&A

What is your order forecast for April - June 2013, including order trends by application?

We expect orders for SPE to be the same level as the previous quarter (January - March 2013). With regard to individual applications, we expect orders for memory in Japan and Korea to increase while orders from foundries in Taiwan will decrease. We also expect orders for FPD to be at the same level as the previous quarter.

What is your order forecast for July - September 2013?

We expect that orders will increase.

When looking ahead to orders in the second half of this fiscal year and next fiscal year, is there any possibility that quarterly orders will exceed 150 billion yen?

If the supply-demand balance continues to be sustained, according to customer plans, investment will commence in new plants starting in the second half of this fiscal year. If this occurs, we expect that orders may exceed 150 billion yen.

With regard to the financial forecast for the fiscal year ending March 2014, considering that the market environment is improving, shouldn't sales be a little higher? Also, compared to the increase in sales, operating income is only forecast to improve by 5.5 billion yen; what is the status of the plan to reduce fixed costs?

Recently, customer investment has been undergoing drastic changes, and it might be possible that the sales will increase. With regard to fixed costs, we plan to cut costs by a few billion yen in existing businesses, but we also anticipate increases resulting from acquisitions, and as a result, overall fixed costs will increase by 20 billion yen or more compared to the previous fiscal year.

With regard to the financial forecast for the first half of the fiscal year ending March 2014, in consideration of the level of orders January - March, shouldn't income be a little higher?

In the first half, a loss of around 2.0 billion yen is expected in the FPD business and losses of more than 4.0 billion yen including amortization of goodwill in the PVE business. In addition, we will make a one-time donation to Tohoku University, resulting in a loss for the first half. The loss is not the result of the sale of unprofitable equipments.

With regard to your silicon etching systems, from which process node do you believe expansion is likely? Also, when do you expect to increase your share of the etch system market?

RLSA, our etching system that uses new plasma technology, has been very well received in the market, and use is expanding, particularly by logic manufacturers in the United States. We expect that logic makers will adopt RLSA for FinFet with 20 nm node and beyond. We aim to increase our share to 35% within the next two years.

Concerning the background to the replacement of TEL's CEO, why was Chairman Tetsuro Higashi re-appointed CEO rather than appointing a younger person?

It would be ideal to pass the baton on to the younger generation, but we are currently facing a difficult business environment, making it necessary to take aggressive action in research and development and business strategy implementation. As a result, I (Higashi) was appointed CEO as other executives should continue their current efforts at the frontline. I believe that this provides us with an organization that can maximize frontline efforts with the aim of achieving further corporate growth.

TEL's structures continuously generate cash; as a global corporation, are you considering any medium to long term plans to buy back TEL shares? Please discuss the company's position on this since CEO Higashi took office.

We considered a share buyback, but decided to take action by paying more dividends. For FY2014, we plan to pay dividends that surpass the 35% target payout ratio. We want to maintain a flexible approach in the future.