C o n s o l i d a t e d S i x - Ye a r S u m m a r yTokyo Electron Limited and its Subsidiaries
Years ended March 31, 2001, 2000, 1999, 1998, 1997 and 1996

Thousands of
U.S. dollars

Millions of yen

2001

2001

2000

1999

1998

1997

1996

Net sales ....................................................... $5,842,455 ¥723,880 ¥440,729 ¥313,820 ¥455,585 ¥432,785 ¥401,775
334,983
Semiconductor production equipment1 ....... 4,995,973 619,001 355,103 242,240 380,184 355,877
113,430
14,054
12,357
12,87815,262
14,40814,314Computer network1...................................
Electronic components ..............................
720,02189,211
72,051
57,73460,13962,50052,478Other.........................................................
13,031
1,614
1,218
968
–
–
–
Operating income.........................................
977,292 121,086
35,816
6,383
63,296
60,38967,754
Income before income taxes .........................
800,094
99,132
29,6896,038
62,83460,48765,098Net income ...................................................
500,499
62,012
19,8481,866
30,00929,97530,964
Domestic sales ..............................................
Overseas sales...............................................

2,415,433
3,427,022

299,272
424,608

183,987
256,742

149,838
163,982

230,550
225,035

256,808
175,977

264,660
137,115

Depreciation and amortization......................
Capital expenditures2 ....................................
R&D expenses...............................................

174,970
398,729
427,043

21,67949,403
52,911

19,44618,99937,135

17,921
23,47826,842

12,65233,302
26,813

10,16718,456
20,9887,730
25,606
17,277

Total assets ...................................................
Total shareholders’ equity .............................

5,887,903
2,689,923

729,511333,281

499,499273,603

414,903257,716

493,600
261,009

387,077
207,476

400,050
180,842

10,236

8,946

7,835

7,287

6,277

5,616

Number of employees ..................................
U.S. dollars

Net income per share of common stock:3
Basic.......................................................... $Diluted4 .....................................................
Cash dividends per share of common stock:
Actual........................................................
Adjusted3 ...................................................

Yen

2.86 ¥ 353.76 ¥ 113.53 ¥2.78
344.75110.6410.70 ¥ 174.68 ¥ 181.97 ¥ 188.05
10.70
168.43172.74178.250.31
0.31

Number of shares outstanding (thousands) ..
Number of shareholders ...............................

38.00
38.00

14.00
14.00

12.00
12.00

30.00
30.00

28.00
25.45

24.00
21.82

175,691
42,781

175,660
7,147

174,624
8,576

174,569
9,562

150,189
11,097

149,706
12,676

15.4
14.0
53.6
1.10

18.5
16.9
45.2
1.12

Percent

ROE ........................................................................................
Operating income margin .......................................................
Shareholders’ equity ratio .......................................................
Asset turnover (times) .............................................................

20.4
16.7
45.7
1.18

7.5
8.1
54.8
0.96

U.S. dollars

0.7
2.0
62.1
0.69

12.8
13.9
52.9
1.03

Thousands of yen

Net sales per employee ................................ $ 570,775 ¥ 70,719 ¥ 49,265 ¥ 40,054 ¥ 62,520 ¥ 68,948 ¥ 71,541
1 Results are retroactively restated due to a structural reorganization in fiscal 1997. The LCD Department, formerly part of Computer Network, has been included in
Semiconductor Production Equipment. The Computer Systems division was renamed the Computer Network division as of April 1, 2000.
2 Capital expenditures before 1999 represent the gross increase in property, plant and equipment, intangible assets and other depreciable assets. Capital expendituresfrom 2000 only represent the gross increase in property, plant and equipment.
3 Per share amounts prior to the year ended March 1998 have been restated to reflect a 1.1-for-1 stock split.
4 Dilution is not assumed for the year ended March 1999.

TOKYO ELECTRON LIMITED

25

Consolidated Balance Sheet
Tokyo Electron Limited and its Subsidiaries
March 31, 2001 and 2000

ASSETS

Thousands of
U.S. dollars

Millions of yen

2001

2000

2001

Current assets:
Cash and cash equivalents (Note 4).................................................
Marketable securities (Note 5).........................................................
Trade notes and accounts receivable...............................................

¥ 65,320–
302,953¥ 79,519
835
175,153$ 527,205–
2,445,143

Allowance for doubtful accounts ....................................................
Inventories (Note 6).........................................................................
Deferred tax assets (Note 10) ..........................................................
Prepaid expenses and other current assets ......................................
Total current assets .....................................................................

(1,720)161,981
12,6597,048
548,241(1,029)112,4815,306
2,892
375,157(13,885)
1,307,351
102,169
56,885
4,424,868

Investments and other assets:
Investments in securities (Note 5) ....................................................
Intangible and other assets .............................................................
Total investments and other assets..............................................

11,59944,95056,5499,010
16,512
25,522

93,616
362,796456,412

Foreign currency translation adjustments ....................................

–

1,094

–

Property, plant and equipment:
Land................................................................................................
Buildings .........................................................................................
Machinery and equipment ..............................................................
Construction in progress .................................................................
Total property, plant and equipment...........................................
Less: Accumulated depreciation .....................................................
Net property, plant and equipment .............................................
Total assets ...................................................................................

19,698
106,753
84,607853
211,911
87,190124,721¥729,511

16,554
89,79567,520877
174,746
77,02097,726¥499,499

158,984
861,603682,867
6,887
1,710,341
703,718
1,006,623$5,887,903

See accompanying Notes to Consolidated Financial Statements.

26

TOKYO ELECTRON LIMITEDLIABILITIES AND SHAREHOLDERS’ EQUITY

Thousands of
U.S. dollars

Millions of yen

2001

2000

2001

Current liabilities:
Short-term borrowings (Note 8) ......................................................
Current portion of long-term debt (Note 8) ....................................
Commercial paper ..........................................................................
Trade notes and accounts payable ..................................................

¥ 48,462
2,970
30,00087,350¥ 23,998
32,699–62,574$ 391,139
23,968242,131705,007

Accrued income taxes .....................................................................
Allowance for employees’ bonuses .................................................
Accrued expenses and other current liabilities.................................
Total current liabilities .................................................................

41,44010,94817,271
238,441

11,843
7,375
7,969
146,458

334,464
88,366
139,392
1,924,467

Long-term debt, less current portion (Note 8)...............................
Allowance for retirement and severance benefits (Note 9) .........
Other non-current liabilities ...........................................................
Total liabilities..............................................................................

126,348
29,807
1,576
396,172

67,278
11,581545
225,862

1,019,757
240,570
12,7183,197,512

Minority interest..............................................................................

58

34

468

47,21347,163381,055

70,275214,920
1,658
2,734(3,519)333,281¥729,511

70,225
157,876––(1,661)
273,603¥499,499

567,189
1,734,628
13,38522,071(28,405)
2,689,923$5,887,903

Shareholders’ equity:
Common stock, par value ¥50 per share (Note 11).........................
Authorized: 300,000,000 shares
Issued and outstanding: 175,691,269 at March 31, 2001
175,659,848 at March 31, 2000
Additional paid-in capital (Note 11).................................................
Retained earnings ..........................................................................
Unrealized gains on securities .........................................................
Foreign currency translation adjustments ........................................
Treasury stock at cost (Note 12) ......................................................
Total shareholders’ equity ...........................................................
Total liabilities and shareholders’ equity ..................................

TOKYO ELECTRON LIMITED

27

Consolidated Statement of Income
Tokyo Electron Limited and its Subsidiaries
Years ended March 31, 2001, 2000 and 1999

Thousands of
U.S. dollars

Millions of yen

Net sales ........................................................................
Cost of sales .................................................................
Gross profit ................................................................
Selling, general and administrative expenses ................
Operating income.........................................................

2001

2000

1999

2001

¥723,880
458,902
264,978
143,892
121,086¥440,729
303,839
136,890
101,074
35,816¥313,820
225,962
87,85881,475
6,383$5,842,455
3,703,810
2,138,645
1,161,353
977,292

Other income (expenses):
Interest and dividend income .......................................
Interest expenses ..........................................................
Patent royalties for prior years ......................................
Devaluation of golf memberships.................................
Devaluation of investments in securities .......................
Amortization of discrepancy arising from adoption ofretirement benefit accounting standards (Note 9) .....
Other, net ....................................................................
Income before income taxes .......................................

669(2,378)–(35)(1,552)276(1,960)(1,575)(1,253)–898(2,003)
–
–
–

5,400
(19,195)–(285)(12,530)(15,975)(2,683)99,132–(1,615)29,689

–
760
6,038

(128,932)(21,656)
800,094

Provision for income taxes (Note 10):
Current.........................................................................
Deferred.......................................................................

50,589(13,490)

14,545(4,709)4,167–

408,302(108,874)

Minority interest ..............................................................
Net income ....................................................................

21¥ 62,0125¥ 19,848

5
1,866

167
$ 500,499

Per share of common stock:
Net income — basic.....................................................
Net income — diluted..................................................
Cash dividends.............................................................

¥ 353.76
344.7538.00¥ 113.53
110.64
14.00

10.70
10.70
12.00

$

See accompanying Notes to Consolidated Financial Statements.

28

TOKYO ELECTRON LIMITED¥Yen

U.S. dollars

¥

2.86
2.78
0.31

C o n s o l i d a t e d S t a t e m e n t o f S h a re h o l d e r s ’ E q u i t yTokyo Electron Limited and its Subsidiaries
Years ended March 31, 2001, 2000 and 1999

Thousands of
U.S. dollars

Millions of yen

Common stock
Balance at beginning of year........................................
Conversion of convertible bonds (Note 11) ..................
Balance at end of year .................................................
Additional paid-in capital
Balance at beginning of year........................................
Conversion of convertible bonds (Note 11) ..................
Balance at end of year .................................................
Retained earnings
Balance at beginning of year........................................
Increase (decrease) resulting from change inreporting entity, net..................................................
Cumulative effect of applying deferred tax accounting ..
Net income for year .....................................................
Cash dividends ............................................................
Bonuses to directors.....................................................
Balance at end of year .................................................
Unrealized gains on securities
Unrealized holding gains arising during the period ......
Foreign currency translation adjustments .................
Treasury stock, at cost (Note 12) .................................

2001

2000

1999

2001

¥ 47,16350
47,213¥ 45,532
1,631
47,163¥ 45,445
87
45,532$ 380,656
399
381,055

70,22550
70,27568,594
1,631
70,22568,50787
68,594

566,790399
567,189

157,876

144,715

147,082

1,274,218––
62,012(4,734)(234)
214,920(7,309)2,717
19,848(2,095)–
157,876

(210)
–
1,866
(3,665)(358)
144,715––
500,499(38,200)(1,889)1,734,628

1,658
2,734
(3,519)––(1,661)––(1,125)

13,38522,071(28,405)¥333,281¥273,603¥257,716$2,689,923(1999: 247,191 shares; 2000: 303,761 shares
2001: 407,556 shares)

Total shareholders’ equity...........................................
See accompanying Notes to Consolidated Financial Statements.

TOKYO ELECTRON LIMITED

29

Consolidated Statement of Cash Flows
Tokyo Electron Limited and its Subsidiaries
Years ended March 31, 2001 and 2000

Millions of yen

2001
Cash flow from operating activities:
Income before income taxes................................................................... ¥ 99,132
Depreciation and amortization ...............................................................
21,679
Increase in allowance for retirement and severance benefits ..................
18,228
Increase in allowance for employees’ bonuses........................................
3,482
Interest expenses ....................................................................................
2,381
Loss on disposal of fixed assets...............................................................
2,492
Devaluation of investments in securities .................................................
1,552
Loss from devaluation of golf memberships ...........................................
35
Increase in trade notes and accounts receivable ..................................... (121,669)
Increase in inventories ............................................................................ (53,666)
Increase in accounts payable ..................................................................
9,709
Increase in prepaid consumption tax ......................................................
(4,859)Others ....................................................................................................
13,282
Subtotal..................................................................................................
(8,222)
Receipts from interest and dividends ......................................................
671
Interest paid ...........................................................................................
(2,295)
Income taxes paid................................................................................... (19,596)
Net cash provided by (used in) operating activities ........................ (29,442)
Cash flow from investing activities:
Payment for purchase of property, plant and equipment ....................... (39,155)
Payment for acquisition of intangible assets ...........................................
(4,568)
Payment for purchase of newly consolidated subsidiaries....................... (18,867)
Others ....................................................................................................
231
Net cash used in investing activities ................................................. (62,359)
Cash flow from financing activities:
Increase in short-term borrowings ..........................................................
23,927
Increase (decrease) in commercial paper.................................................
30,000
Proceeds from long-term debt................................................................
8,671
Repayment of long-term debt ................................................................
(3,757)
Proceeds from issuance of bonds ...........................................................
54,938
Redemption of unsecured bonds............................................................ (30,000)
Increase in treasury stock........................................................................
(1,859)Dividends paid........................................................................................
(4,733)
Others ....................................................................................................
(5)
Net cash provided by financing activities.........................................
77,182
Effect of exchange rate changes on cash and cash equivalents ..................
391
Net increase (decrease) in cash and cash equivalents......................... (14,228)
Cash and cash equivalents at beginning of year.........................................
79,519Cash and cash equivalents of newly consolidated subsidiaries at beginning of year..
–
Cash and cash equivalents at end of year (Note 4) .............................. ¥ 65,291
See accompanying Notes to Consolidated Financial Statements.
30

TOKYO ELECTRON LIMITED

Thousands of
U.S. dollars

2000

2001

¥ 29,689
19,446
2,153
3,175
1,964
2,149
–
1,253
(31,675)(27,196)
22,416(3,542)
10,69530,527280(1,923)(3,757)25,127$ 800,094
174,970
147,118
28,103
19,214
20,112
12,530285(981,992)(433,137)
78,365(39,218)
107,197(66,359)
5,413(18,525)(158,160)(237,631)(14,577)(4,100)–2,485(16,192)(316,021)(36,871)(152,282)
1,872(503,302)

13,022(10,000)
5,700(2,477)
19,899–(454)(2,095)(25)
23,570(469)
32,036
46,761722¥ 79,519

193,113242,131
69,986(30,325)
443,406(242,131)(15,001)(38,200)(39)
622,940
3,158(114,835)
641,798–$ 526,963

Notes to Consolidated Financial Statements
Tokyo Electron Limited and its Subsidiaries

1. Basis of Presentation of Consolidated Financial Statements
The accompanying consolidated financial statements of Tokyo
Electron Limited and its subsidiaries (hereinafter “the Company”)
have been prepared from those that have been filed with the
Ministry of Finance of Japan as required by the Securities and(d) Inventories
Inventories other than raw materials are stated principally at cost,
cost being determined principally by the individual method.
Raw materials are stated principally at cost, cost being determinedprincipally by the moving-average method.

Exchange Law and that conform with accounting principles generally
accepted in Japan.

(e) Property, plant and equipment

For the convenience of readers outside Japan, however, theProperty, plant and equipment are stated at cost. Depreciation ofpresentation of the consolidated financial statements and thebuildings, machinery and equipment is computed on the declining-

information contained therein have been modified in some respects.

balance method for the Parent Company and its domestic
subsidiaries at rates based on the estimated useful lives of assets,

2. Summary of Significant Accounting Policies

while the straight-line method is mainly applied for foreign(a) Principles of consolidation

subsidiaries over the estimated useful lives of their assets.

The consolidated financial statements include the accounts of theCompany and all of its 30 subsidiaries (28 in 2000).
All significant inter-company accounts, transactions and unreal-(f) Retirement and severance benefits
The Company and its consolidated domestic subsidiaries provide aized profits or losses have been eliminated in consolidation. The

reserve for employees' retirement benefits based on the projectedfiscal years of all the subsidiaries end on March 31, the fiscal year-

benefit obligation and pension assets on the consolidated accountend of the Parent Company.

settlement date. The entire difference stemming from the accounting

U.S. dollar amounts included herein are solely for the conveniencechange (¥15,975 million) implemented from the fiscal year startingof readers and are made at the rate of ¥123.90 to $1.00, theApril 1, 2000 has been charged to income in the fiscal year ended

approximate current rate at March 31, 2001. The translation should

March 31, 2001. Actuarial differences are charged to income on a

not be construed as a representation that the Japanese yen amounts

straight-line basis, beginning from the year after they are recognized,

shown could be converted into U.S. dollars at that or any other rate.

over a fixed number of years (four years) within the average remaining
years of service of employees when the differences occur.

(b) Foreign currency translation
In accordance with the revised Japanese accounting standards

The annual provision for accrued retirement benefits for directors
and corporate auditors of the Company and its consolidated

effective April 1, 2000, all assets and liabilities denominated indomestic subsidiaries is also calculated to state the liability at theforeign currencies are translated into Japanese yen at the rate

amount that would be required if all directors and corporate auditors

prevailing at the balance sheet date, except for those hedged byretired at the end of the consolidated fiscal year according toforward exchange contracts, which are translated at the contracted

internal regulation.

rates.
The financial statements of foreign subsidiaries have beentranslated in accordance with the accounting standards in Japan.
Foreign currency translation adjustments previously classified in(g) Leases
Finance lease transactions, unless the lessee practically acquires legal
title to the leased asset, are treated as operating lease transactions.

the Assets section have been reclassified in the Shareholders’ equity
section starting from April 1, 2000 in accordance with the revised
Japanese accounting standards effective April 1, 2000.

(h) Income taxes
The Company records deferred tax assets and liabilities on
temporary differences between the carrying amounts of assets and(c) Marketable securities and investments in securities
In accordance with the revised Japanese accounting standards

liabilities for financial reporting purposes and the amounts used forincome tax purposes.

effective April 1, 2000, securities with market prices are valued atmarket based on market prices on the consolidated account settlement date. Other securities are valued at cost using the weighted
average method.
The differences between the book and market prices ofmarketable securities are charged to shareholders’ equity. The costof sold securities is calculated using the weighted average method.

(i) Derivatives
The Company makes use of derivatives only to reduce exchange
risk of foreign currencies. The amount of derivatives is limited to theextent of foreign currency assets, debt and actual orders, and theCompany does not trade in derivatives for speculative purposes.
Derivatives are valued at market based on market prices on the
consolidated account settlement date.
TOKYO ELECTRON LIMITED31

(j) Valuation of assets and liabilities of consolidated

5. Marketable Securities and Investments in Securities

subsidiaries

Marketable securities at March 31, 2001 and 2000 were as follows:

Assets and liabilities of consolidated subsidiaries are valued using

Thousands of
U.S. dollars

Millions of yen

the full mark-to-market method.
Listed stock ...............................

(k) Amortization of consolidated goodwill

2001

2000

2001

¥

¥825

$

–

$

–

Other ........................................

Consolidated goodwill is evaluated on an individual basis andamortized within a reasonable number of years not exceeding 20
years.

Total...................................

¥

–
–

10

–

¥835

–

Based on the Company’s assessment of the purpose of holding securities, ¥835 million of securities have been reclassified from “Marketable(l) Per share information
Net income per share is computed based on the weighted average
number of shares of common stock outstanding during each year.

securities” to “Investments in securities” as of April 1, 2000.
Investments in securities at March 31, 2001 and 2000 were as follows:

Dividends per share have been presented on an accrual basis andThousands of
U.S. dollars

Millions of yen

include, in each fiscal year ended March 31, dividends approved or

2001

2000

2001

to be approved after such March 31 but applicable to the year then

Listed stock ............................... ¥10,577¥8,086$85,364

ended.

Mutual funds ............................

113

114

916

Other ........................................

909

810

7,336

Total................................... ¥11,599¥9,010$93,616

3. Acquisitions
The Company has acquired all the shares of stock of Supercritical
Systems, Inc. and Timbre Technologies, Inc. The assets and liabilitiesof the newly acquired companies are as follows:

6. Inventories
Inventories at March 31, 2001 and 2000 were as follows:

Supercritical Systems, Inc.:
Millions of yen

Thousands of
U.S. dollars

2001

2001

Current assets ..........................................

¥

5

$

45

Fixed assets ..............................................

3

21

Consolidated goodwill..............................

2,974

24,005

Total acquisition cost of Supercritical Systems, Inc.

2,982

24,071

Cash or cash equivalents of Supercritical Systems, Inc.
Net acquisition cost of Supercritical Systems, Inc.

(4)
¥2,978(32)$24,039

Thousands of
U.S. dollars

Millions of yen

2001

2000

2001

Finished products ...................... ¥ 58,878 ¥ 38,909 $ 475,207
Work in process,raw materials and supplies ... 103,103

73,572

832,144

Total................................... ¥161,981 ¥112,481 $1,307,351
7. Pledged Assets
The Company did not hold any assets pledged as collateral at
March 31, 2001 and 2000.

Timbre Technologies, Inc.:
Millions of yen

Thousands of
U.S. dollars

2001

2001

Short-term bank loans are represented by 365-day notes issued

8. Short-Term Borrowings and Long-Term Debt

1,249

by the Company to banks and bore interest at the average annual

Fixed assets ..............................................

59

479

rate of 1.08% at March 31, 2001. Long-term debt at March 31,

Consolidated goodwill..............................

16,001

129,147

Current liabilities. .....................................

(216)(1,742)

Total acquisition cost of Timbre Technologies, Inc.

15,999129,133

Cash or cash equivalents of Timbre Technologies, Inc.
Net acquisition cost of Timbre Technologies, Inc.

(110)
¥15,889(890)$128,243

Current assets ..........................................

¥

155

$

4. Cash and cash equivalents
Cash and cash equivalents at March 31, 2001 were as follows:2001 and 2000 was as follows:
Thousands of
U.S. dollars

Millions of yen

2001

2000

2001

0.90% unsecured convertible
bonds due 2003 ...................... ¥ 15,502 ¥ 15,601 $ 125,117
2.45% unsecured bonds due 2000.

–

30,000–2.00% unsecured bonds due 2002.

20,00020,000161,420

1.39% unsecured bonds due 2004.

20,00020,000161,420

Millions of yen

Thousands of
U.S. dollars

0.85% unsecured bonds due 2003.

20,000–161,420

2001

2001

1.30% unsecured bonds due 2005.

30,000–242,131

Cash and deposits.................................

¥65,320$527,205

1.59% unsecured bonds withTime deposits due over 3 month. ..........
Total .....................................................

(29)¥65,291(242)$526,963

warrants due 2006...................

4,500

–

36,320

Other loans from banks .................

19,316

14,376

155,896

Current portion.............................

(2,970) (32,699)(23,967)

Total...................................... ¥126,348 ¥ 67,278 $1,019,757
32

TOKYO ELECTRON LIMITEDThe 0.90% unsecured convertible bonds due 2003 are convertible
at the option of holders into common stock through September 29,

Significant assumptions of domestic pension plans used todetermine these amounts are as follows:

2003. At March 31, 2000, the conversion price was ¥3,150.00 per

Allocation method of benefit obligation ....... Straight-line method

share, subject to adjustment in certain events.

Discount rate ......................................... 3.50%

A summary of terms and conditions of the bonds with warrants is

Expected rate of return on plan assets ... 3.00%

as follows:

Amortization life of prior service cost .....

Bond amount ................................... ¥4,500 million

Amortization life of unrecognizedactuarial difference ............................. 4 years

Interest rate ...................................... 1.59%
Issued stocks..................................... Common stock, ¥50 par value
Exercise price .................................... ¥14,070
Exercise period.................................. July 1, 2002-June 8, 2006–

Amortization life of unrecognizedtransition obligation............................ Fully recognized in the fiscal year
ended March 31, 2001
10. Income Taxes

9. Retirement and Severance Benefits

Significant components of the deferred tax assets and liabilities of

The Company and its consolidated domestic subsidiaries havenoncontributory retirement and severance benefit plans that provide

the Company as of March 31, 2001 and 2000 were as follows:for pension or lump-sum payment benefits to employees who retire

Thousands of
U.S. dollars

Millions of yen

or terminate their employment for reasons other than dismissal for

2001

2000

2001

cause. In addition, the majority of the employees of the Company

Deferred tax assets

are covered by a contributory pension plan, whose benefits are

Allowance for retirement benefits . ¥ 8,180¥ 838$ 66,024

based on length of service and certain other factors and include a
portion representing the government social security welfare pension.

Elimination of unrealized
gain on inventories ..................

5,283

3,172

42,638

Some consolidated foreign subsidiaries have a noncontributory

Enterprise taxes payable..............

3,912

1,007

31,571

retirement and severance benefit plan that provides for pension orTax loss carryforwards.................

2,447

4,882

19,747lump-sum payment benefits to employees who retire or terminate

Allowance for bonuses ...............

2,101

1,350

16,959their employment for reasons other than dismissal for cause.
The funded status of the defined benefit plans, a substantial

Elimination of unrealized gain
on fixed assets .........................

1,362

1,173

10,992

portion of which consists of domestic benefit plans, as of March 31,

Devaluation of golf memberships.

527

519

4,255

2001 is as follows:

Other..........................................

3,371

2,188

27,210Subtotal of deferred tax assets....

27,183

15,129219,396

Valuation allowance ...................

(2,479)(5,936)(20,010)

Total deferred tax assets ........

24,704

9,193

199,386

Retained earnings offoreign subsidiaries ..................

(1,974)–(15,930)

Revaluation of investment
in securities..............................

(1,455)–(11,742)

Allowance for extraordinary depreciation.

(884)(1,028)(7,136)

Revision of allowance for
doubtful accounts due tooffsetting credits and debts .....

(282)

(314)

(2,281)

Allowance for domestic
market development
for imported products..............

–

(252)

–

Millions of yen

Thousands of
U.S. dollars

2001

2001

Benefit obligation..................................... ¥(46,449)$(374,890)

Fair value of plan assets............................

15,575

125,710

Unrecognized benefit obligation...............

(30,874)(249,180)

Unrecognized net transition obligation .....

––

Unrecognized actuarial difference ............
Unrecognized prior service cost ................

2,175
–

17,554–

Amount recognized in the consolidatedbalance sheets (note).............................

(28,699)

Prepaid benefit cost..................................

––

Allowance for retirement and severance benefits. ¥(28,699)$(231,626)(231,626)

Note: The annual provision for accrued retirement benefits for directors andcorporate auditors (¥1,108 million) is not included.

Net pension cost of the plans is as follows:
Millions of yen

Thousands of
U.S. dollars

2001

2001

Service cost ..............................................

¥ 3,942$ 31,821

Interest cost .............................................

1,418

11,443

Expected return on plan assets .................

(419)(3,383)

Amortization of unrecognized transition obligation

15,975

128,930

Amortization of unrecognized actuarial difference..
Amortization of unrecognized prior service cost .

–
–

–
–

Net pension cost .........................................

¥20,916$168,811

Deferred tax liabilities

Other..........................................

(130)

(173)

(1,049)Total deferred tax liabilities ...

(4,725)(1,767)(38,138)

Net deferred tax assets ........... ¥19,979¥7,426$161,248

TOKYO ELECTRON LIMITED33

The differences between the aggregate statutory tax rate and theLeased assets not recorded in the consolidated balance sheets:

effective tax rate of the Company for financial statement purposes
2001

2000

42.05%

42.05%

carryforward from prior year ...............

(4.42)(4.27)Tax rate difference ...................................

(1.50)(1.42)Tax credits and others ..............................

(1.22)(2.57)

Domestic statutory tax rate.......................
Non-recognition of tax loss

2001

2000

2001

Acquisition cost.........................

¥35

¥52

$280

Accumulated depreciation.........

31

37

247

Net leased property...................

¥ 4

¥15

$ 33

Future minimum lease payments (Machinery and Equipment) :Permanent differences such as non-taxable
dividend income..................................

Thousands of
U.S. dollars

Millions of yen

for the year ended March 31, 2001 and 2000 were as follows:

Thousands of
U.S. dollars

Millions of yen(0.54)(1.87)

Recognition of effective tax rate on retained

2001

2000

2001

Due within one year..................

¥4

¥11

$33

earnings of foreign subsidiaries ...........

1.99

–

Due over one year.....................

–

4

–

Expenses not deductible for tax purposes .

0.53

0.86

Total...................................

¥4

¥15

$33

Others......................................................

0.53

0.35

Effective tax rate ......................................

37.42%

33.13%

Lease payments and depreciation computed by the straight-line
method over the lease terms with no residual value and imputed
interest expense were ¥6 million in the year ended March 31, 2001

11. Shareholders’ Equity
The Company issued 31,421 shares and 1,035,853 shares ofand ¥11 million in the year ended March 31, 2000.

common stock in 2001 and 2000, respectively, in connection with

Future minimum operating lease payments:

conversion of convertible bonds.
accounted for in accordance with the provisions of the JapaneseCommercial Code by crediting one-half of the conversion price to boththe common stock account and the additional paid-in capital account.
12. Share Repurchase Under Stock Option Program
The Company has a stock option plan to further increase directors’
and corporate senior staff’s incentive and motivation to raise corporate
performance with the aim of maximizing corporate value. A summaryof share repurchases under the stock option plan during the year
ended March 31, 2001 is as follows:

Thousands of
U.S. dollars

Millions of yen

Conversion of convertible bonds into common stock has been

2001

2000

2001

Due within one year..................

¥ 474

¥ 98

$ 3,825

Due over one year.....................

1,503

76

12,136

Total...................................

¥1,977¥174$15,961

14. Segment Information
The Company does not disclose segment information as it
operates in a single segment.
15. Contingent Liabilities
The Company did not hold any contingent liabilities at March 31,

Number ofsharesMillions ofyen

Thousands of
U.S. dollars

2001 and 2000.
16. Subsequent Event

Outstanding at
beginning of the year........... 299,000¥1,612$13,006

Purchased ................................. 144,000

2,104

16,978On June 8, 2001, 0.86% unsecured bonds with warrants due

Exercised...................................

(32,000)(146)(1,174)2007 were issued as approved at the Board Meeting held on May

Expired or forfeited ...................

(3,600)

(53)

(424)

16, 2001. This was in relation to the stock-based compensation plan

Outstanding at end of the year ... 407,400¥3,517$28,386

introduced and implemented as of the same date of the issuance ofNote: The Company has 156 shares (¥2 million) of treasury stock other than for the
purpose of the stock option plan.

the bonds with warrants. Under this plan, the bond portion (¥5,500
million) was sold to the public and the warrant portion (¥631,950
thousand) was repurchased by the Company and granted to its

13. Leases
Information relating to finance leases, excluding those leases for

eligible employees worldwide as an incentive linked to theCompany’s future stake. A summary of terms and conditions of thewhich the ownership of the leased assets is considered to bebonds with warrants are as follows:transferred to the lessee, as of and for the years ended March 31,

Bond amount ................................... ¥5,500 million

2001 and 2000, was as follows:

Interest rate ...................................... 0.86%
Issued stocks..................................... Common stock, ¥50 par value
Exercise price .................................... ¥9,608
Exercise period.................................. July 1, 2003 – June 7, 2007

34

TOKYO ELECTRON LIMITEDIndependent Auditors’ Report

To the Board of Directors, Tokyo Electron Limited
We have examined the consolidated balance sheets of Tokyo Electron Limited and its consolidated
subsidiaries as of March 31, 2001 and 2000, the related statements of income and shareholders’ equity for eachof the three years in the period ended March 31, 2001, and the statements of cash flows for the years ended
March 31, 2001 and 2000, all expressed in yen. Our examinations were made in accordance with auditing
standards generally accepted in Japan and, accordingly, included such tests of the accounting records and suchother auditing procedures as we considered necessary in the circumstances.
In our opinion, the consolidated statements present fairly the financial position of Tokyo Electron Limited andits consolidated subsidiaries at March 31, 2001 and 2000, the results of their operations for each of the three
years in the period ended March 31, 2001, and their cash flows for the year ended March 31, 2001 and 2000, in
conformity with accounting principles generally accepted in Japan applied on a consistent basis.
The amounts expressed in U.S. dollars have been translated on the basis described in Note 2-a.

Tokyo, Japan
June 27, 2001

Masatoshi Yoshino
Certified Public Accountant

Eiji Miyashita
Certified Public Accountant

Fumihiko Sugiura
Certified Public Accountant

TOKYO ELECTRON LIMITED35