FY2015 Earnings Release Conference Q&A

You resolved to terminate the business combination agreement with Applied Materials. What did you learn from this experience?

Applied Materials has succeeded in maintaining a leading position in this industry. We were able to learn from their utilization of global personnel and their consistent management stance on making profits. We also rediscovered that customers' immeasurable trust to us and our solid teamwork are our strengths. With the assets we have acquired through this experience, we will formulate a new medium term business plan, and we will also strive to grow further by globally utilizing various resources.

What are the positives to be taken from the termination of this business combination agreement?

Since the announcement of the business combination agreement in September 2013, each employee has deeply thought about their career and been working with determination to improve themselves. This led us to record a solid performance in FY2015. We will continue to respond to customers' trust and expectations relating to technology development and this will be the foundation for our growth.

What is the reason for the termination?

There is little overlap with Applied Materials in our product mix so we did not expect this business combination to fall under antitrust regulations. However, it seems that regulators also looked at products under development which are not subject to competition, and this was beyond our expectations.

Will there be a termination fee?

As the termination was based on mutual agreement between both companies, there will not be any termination fee.

Your market share in CY2014 recovered to the CY2012 level. Is this a result of currency exchange rate or your product competitiveness?

Our market share is affected by currency exchange rate and a difference from our competitors in sales recognition standards, so it is difficult to quantitatively categorize individual factors behind the increase in share. However, we are gaining share for sure thanks to our strong product competitiveness.

Is the share buyback a one-off event?

We value dialogue with capital markets. We will also continue to regard share buybacks as an option for shareholder returns, after taking into account our capital policy, cash position and future investment.

Your CY2014 market share in etching systems did not return to the CY2012 level. Have you changed your RLSA etching system strategy aimed at expanding applications in FinFET processes?

The market share calculated in dollars by a research company does not fully reflect our competitiveness because of the weaker yen, and our etching system share has actually grown steadily. We will continue to leverage our comprehensive strengths in patterning processes, where sustained growth is expected. Also, our strategy regarding RLSA etching systems has not changed.

Will your organizational system change after the termination of this business combination agreement?

We will discuss this in detail from now on, as we have just decided on the termination, but we will endeavor to implement further innovative changes.

Was the termination decision reached unanimously by the board of directors?