ai8008-00-01_Web 用_野村 IR 様_東京ｴﾚｸﾄﾛﾝ㈱ｱﾆｭｱﾙﾚﾎﾟｰﾄ(英文).doc 04/7/13 18 時 23 分 P27

Consolidated Six-Year SummaryTokyo Electron Limited and its Subsidiaries
Years ended March 31,2004, 2003, 2002, 2001, 2000,and 1999

Thousands of
U.S. dollars

Millions of yen

2004
Net sales .................................................................... $ 5,013,762

2004

2003

2002

2001

2000

1999

¥529,654¥460,580-¥417,825-¥723,880-¥440,729-¥313,820-

Semiconductor production equipment1 ..................

4,030,173

425,747

364,689-

325,715-

619,001-

355,103-242,240-

Computer network1................................................

174,629

18,44817,193-

17,031-

14,054-

12,357-

12,878-

Electronic components ..........................................

797,32284,22977,380-73,658-89,211-

72,051-

57,734-

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

11,6381,230

1,318-

1,421-

1,614-

1,218-

968-

Operating income (loss)..............................................

210,902

22,2801,119-(18,310)

121,086-

35,816-

6,383-

Income (loss) before income taxes .............................

141,382

14,936(23,010)(22,919)

99,132-

29,689-6,038-Net income (loss) .......................................................

78,544

8,297(41,554)(19,938)

62,012-

19,848-1,866-

Domestic sales ...........................................................

2,293,810

242,318

190,513-

186,516-

299,272-

183,987-

149,838-

Overseas sales...........................................................

2,719,952

287,336

270,067-

231,309-424,608-

256,742-

163,982-

Depreciation and amortization ....................................

236,302

24,96327,374-

26,294-

21,679-19,446-

17,921-

Capital expenditures2..................................................

104,191

11,007

12,359-30,946-49,403-18,999-23,478-R&D expenses ...........................................................

417,927

44,15050,123-53,827-52,911-37,135-

26,842-

Total assets................................................................

5,316,467

561,632

524,901-

556,915-

729,511-499,499-

414,903-

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

2,610,748

275,800

252,904-

307,579-

333,281-273,603-257,716-

8,870

10,053-

10,171-

10,236-

8,946-

7,835-

Number of employees ................................................
U.S. dollars
Net income (loss) per share of common stock:Yen

3

Basic ..................................................................... $0.44

Diluted4 .................................................................

0.43

¥

46.37

¥ (238.57)¥ (113.85)¥ 353.76-¥ 113.53-

45.78

--

--

344.75-110.64-¥10.70--Cash dividends per share of common stock:
Actual....................................................................

0.09

10.00

8.00-

8.00-

38.00-

14.00-

12.00-

Adjusted3...............................................................

0.09

10.00

8.00-

8.00-

38.00-

14.00-

12.00-

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

180,611

175,698-

175,691-

175,691-

175,660-

174,624-

Number of shareholders .............................................

60,87349,259-37,116-42,781-

7,147-

8,576-

ROE .........................................................................

3.1(14.8)

(6.2)

20.4-

7.5-

0.7-

Percent
Operating income margin ...........................................

4.2

0.2-

(4.4)

16.7-

8.1-

2.0-

Shareholders’ equity ratio ...........................................

49.1

48.2-

55.2-

45.7-

54.8-

62.1-

Asset turnover (times) ................................................

0.97

0.85-

0.65-

1.18-

0.96-

0.69-

¥ 59,713¥ 45,815-¥ 41,080-¥ 49,265-¥ 40,054-

U.S. dollars
Net sales per employee ............................................ $ 565,249

Thousands of yen¥ 70,719-

1 The FPD, Flat Panel Display, Department has been included in Semiconductor Production Equipment. The Computer Systems Division was renamed the Computer Network Division as ofApril 1, 2000.
2 Capital expenditures before 1999 represent the gross increase in property, plant and equipment, intangible assets and other depreciable assets. Capital expenditures from 2000 only represent
the gross increase in property, plant and equipment.
3 From 2003, the Company began applying "Accounting Standards regarding Net Income per Share (Business Accounting Standards No.2)" and "Practical Guidelines for Applying AccountingStandards regarding Net Income per Share (Practical Guidelines for Applying Accounting Standards No.4)" released by the Accounting Standards Board of Japan (ASBJ).
4 Dilution is not assumed for the years ended March 2003, 2002 and 1999.

27

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Consolidated Balance Sheets
Tokyo Electron Limited and its Subsidiaries
March 31, 2004 and 2003

ASSETS

Thousands of
U.S. dollars

Millions of yen

2004

2003

2004

Cash and cash equivalents (Note 3) .....................................................

¥ 42,650-¥ 52,982-$ 403,727-

Trade notes and accounts receivable ...................................................

245,554-

182,218-

2,324,439-

Allowance for doubtful accounts ...........................................................

(155)

(342)

(1,464)Inventories (Note 5)...............................................................................

105,187-

111,810-995,712-Deferred tax assets (Note 9) .................................................................

2,943-

4,152-

27,863-

Prepaid expenses and other current assets .........................................

6,795-

5,619-

64,321-

Total current assets .........................................................................

402,974-

356,439-

3,814,598-

Investments in securities (Note 4).........................................................

10,874-

7,216-

102,931-

Deferred tax assets (Note 9) .................................................................

10,203-9,362-

96,587-

Intangible and other assets .................................................................

28,792-32,273-

272,546-

Total investments and other assets .................................................

49,869-48,851-

472,064-

Land ......................................................................................................

19,577-

19,718-185,319-

Buildings................................................................................................

108,718-

110,950-

1,029,136-

Machinery and equipment.....................................................................

92,379-97,937-874,466-

Construction in progress .......................................................................

2,552-

2,480-

24,162-

Total property, plant and equipment................................................

223,226-

231,085-

2,113,083-

Less: Accumulated depreciation ...........................................................

114,437-

111,474-

1,083,278-

Net property, plant and equipment ..................................................

108,789-

119,611-

1,029,805-

Total assets ...............................................................................................

¥561,632-¥524,901-$5,316,467-

Current assets:

Investments and other assets:

Property, plant and equipment:

See accompanying Notes to Consolidated Financial Statements.

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LIABILITIES AND SHAREHOLDERS' EQUITY

Thousands of
U.S. dollars

Millions of yen

2004

2003

2004

Current liabilities:
Short-term borrowings (Note 7).............................................................

¥

6,815-¥

8,729-$

64,514-Current portion of long-term debt (Note 7) ............................................

21,754-37,404-205,923-

Commercial paper .................................................................................

--

35,000---Trade notes and accounts payable .......................................................

78,009-48,279-738,440-

Accrued income taxes...........................................................................

3,273-

3,645-

30,983-

Allowance for employees’ bonuses .....................................................

6,376-

3,629-

60,357-

Provision for loss on restructuring.........................................................

--

8,577---

Accrued expenses and other current liabilities .....................................

25,245-

15,443-238,975-

Total current liabilities ......................................................................

141,472-

160,706-

1,339,192-

Long-term debt, less current portion (Note 7).......................................

98,476-

70,230-932,181-

Allowance for retirement and severance benefits (Note 8)..................

38,275-36,392-362,319-

Other non-current liabilities ...................................................................

3,662-

1,074-

34,664-

Total liabilities ..................................................................................

281,885-

268,402-2,668,356-

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

3,947-

3,595-

37,363-54,961-47,223-

520,269-

Additional paid-in capital (Note 10) .......................................................

78,023-70,285-738,576-

Retained earnings .................................................................................

154,343-

147,465-

1,461,025-

Unrealized gains on securities ..............................................................

2,396-(59)

22,676-

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

(720)

1,229-(6,815)

Treasury stock at cost (Note 11) ...........................................................

(13,203)(13,239)(124,983)

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

275,800-

252,904-

2,610,748-

Total liabilities and shareholders’ equity...............................................

¥561,632-¥524,901-$5,316,467-

Shareholders’ equity:
Common stock (Note 10) ......................................................................
Authorized: 300,000,000 shares
Issued: 180,610,911 at March 31, 2004
175,697,930 at March 31, 2003

2,022,343 at March 31, 2004
2,034,755 at March 31, 2003

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Consolidated Statements of Operation
Tokyo Electron Limited and its Subsidiaries
Years ended March 31, 2004, 2003 and 2002

Thousands of
U.S. dollars

Millions of yen

2004

2003

2002

2004

Net sales ...............................................................................

¥529,654-¥460,580-¥417,825- $5,013,762-

Cost of sales.....................................................................

389,499-

326,540-

302,270-3,687,037-

Gross profit.....................................................................

140,155-

134,040-

115,555-

1,326,725-

Selling, general and administrative expenses..................

117,875-

132,921-

133,865-

1,115,823-

Operating income (loss) .....................................................

22,280-1,119-(18,310)

210,902-

Interest and dividend income ...........................................

200-

191-

351-

1,894-

Interest expenses .............................................................

(1,326)(1,601)(1,960)(12,557)

Restructuring costs (Note 12) ..........................................

(2,540)(12,055)--(24,050)(Note 13) .....................................................................

--(8,577)----

Devaluation of investments in securities ..........................

(470)

(739)

(1,236)(4,447)

Impairment of goodwill (Note 14) .....................................

(1,933)----(18,300)

Other, net .........................................................................

(1,275)(1,348)(1,764)(12,060)

Income (loss) before income taxes ...................................

14,936-(23,010)(22,919)

141,382-

Current .............................................................................

5,108-

4,806-

2,612-

48,346-

Deferred ...........................................................................

1,016-

13,726-(5,602)9,616-

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

515-

12-

8-

4,876-

8,297-¥ (41,554)

Other income (expenses):

Amount transferred to provision for loss on restructuring

Provision for income taxes (Note 9):

Net income (loss).................................................................

¥Per share of common stock:
Net income (loss) — basic ...............................................

¥ (19,938) $Yen

U.S. dollars

46.37-¥ (238.57)

Net income — diluted.......................................................

45.78-

--

--

0.43-

Cash dividends.................................................................

10.00-

8.00-

8.00-

0.09-

See accompanying Notes to Consolidated Financial Statements.

30¥

78,544-¥ (113.85) $0.44-

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Consolidated Statements of Shareholders' Equity
Tokyo Electron Limited and its Subsidiaries
Years ended March 31, 2004, 2003 and 2002

Thousands of
U.S. dollars

Millions of yen

2004

2003

2002

2004

Balance at beginning of year............................................

¥ 47,223-¥ 47,214-

Conversion of convertible bonds (Note 10)......................

7,738-

9-1-

73,248-

Balance at end of year .....................................................

54,961-47,223-47,214-

520,269-

Balance at beginning of year............................................

70,285-70,276-70,275-665,328-

Conversion of convertible bonds (Note 10)......................

7,738-

9-1-

73,248-

Balance at end of year .....................................................

78,023-70,285-70,276-

738,576-

147,465-

190,195-

214,920-

1,395,918-

result of a public offering by a consolidated subsidiary.......

--

219-

--

--

Net income (loss) for year ................................................

8,297-(41,554)(19,938)

78,544-

Cash dividends.................................................................

(1,409)(1,395)(4,031)(13,338)

Bonuses to directors ........................................................

(10)

--

(756)

(99)

Loss on disposal of treasury stocks .................................

(0)

--

--

(0)

Balance at end of year .....................................................

154,343-

147,465-

190,195-

1,461,025-

the period ....................................................................

2,396-(59)

1,171-

22,676-

Net change in foreign currency translation adjustments(720)

1,229-

3,738-(6,815)

Treasury stock, at cost (Note 11) .......................................

(13,203)(13,239)(5,015)(124,983)¥275,800-¥252,904-

Common stock¥ 47,213- $ 447,021-

Additional paid-in capital

Retained earnings
Balance at beginning of year............................................
Increase due to the change in the equity holding as a

Unrealized gains on securities
Net change in unrealized holding gains arising during(2002: 605,867 shares; 2003: 2,034,755 shares
2004: 2,022,343 shares)
Total shareholders' equity ..................................................

¥307,579- $2,610,748-

See accompanying Notes to Consolidated Financial Statements.

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Consolidated Statements of Cash Flows
Tokyo Electron Limited and its Subsidiaries
Years ended March 31, 2004 and 2003

Millions of yen

Cash flow from operating activities:
Income(loss) before income taxes ..............................................................
Depreciation and amortization ....................................................................
Increase in allowance for retirement and severance benefits.....................
Increase in allowance for employees’ bonuses ..........................................
Interest expenses ........................................................................................
Loss on disposal of fixed assets .................................................................
Devaluation of investments in securities .....................................................
Restructuring costs (Note 12) .....................................................................
Amount transferred to provision for loss on restructuring (Note 13) ...........
(Increase) in trade notes and accounts receivable .....................................
(Increase) in inventories..............................................................................
Increase in accounts payable......................................................................
(Increase) decrease in prepaid consumption tax ........................................
Others..........................................................................................................
Subtotal ......................................................................................................
Receipts from interest and dividends ..........................................................
Interest paid.................................................................................................
Payment for special retirement benefits......................................................
Income taxes paid .......................................................................................
Net cash provided by operating activities..............................................
Cash flow from investing activities:
Payment for purchase of property, plant and equipment............................
Payment for acquisition of intangible assets...............................................
Others..........................................................................................................
Net cash (used in) investing activities....................................................
Cash flow from financing activities:(Decrease) in short-term borrowings ..........................................................
Increase (decrease) in commercial paper...................................................
Proceeds from long-term debt.....................................................................
Repayment of long-term debt......................................................................
Proceeds from issuance of bonds...............................................................
Redemption of unsecured bonds ................................................................
(Increase) decrease in treasury stock .........................................................
Dividends paid.............................................................................................
Proceeds from a public offering of a subsidiary ..........................................
Others..........................................................................................................
Net cash (used in) financing activities....................................................
Effect of exchange rate changes on cash and cash equivalents .....................
Net increase (decrease) in cash and cash equivalents ..............................
Cash and cash equivalents at beginning of year..............................................
Cash and cash equivalents at end of year (Note 3) ....................................
See accompanying Notes to Consolidated Financial Statements.

32

Thousands of
U.S. dollars

2004

2003

2004

¥ 14,93624,9631,8912,7651,3331,2574702,540-(61,789)(5,326)29,1543339,94422,471193(1,307)(6,513)(6,961)
7,883-¥(23,010)
27,3743,4161,1661,6051,70773912,0558,577(13,662)(3,890)10,352(926)(2,103)
23,400191(1,670)-(527)
21,394-$141,382236,30217,90026,17112,61711,8994,44724,050-(584,902)(50,417)275,9733,15894,135212,7151,827(12,369)(61,658)(65,892)
74,623-(7,530)(3,200)2,186(8,544)(7,028)(2,780)2,538(7,270)(71,280)(30,297)
20,695(80,882)(1,464)(35,000)-(1,922)
49,767(20,005)
35(1,409)-(273)(10,271)600(10,332)
52,982¥ 42,650-(4,829)25,0003,000(7,183)-(20,000)(8,224)(1,395)3,751(4)(9,884)3334,57348,409¥ 52,982-(13,860)(331,314)-(18,198)
471,102(189,370)
335(13,338)-(2,582)(97,225)
5,675(97,809)
501,536$403,727-

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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 (hereinafter “the Company”) and its subsidiaries
have been prepared from those that have been filed with the Ministryof Finance of Japan as required by the Securities and Exchange Law
and that conform with accounting principles generally accepted inJapan.
Foreign subsidiaries maintain their books in conformity withfinancial standards of the countries of their domicile.
For the convenience of readers outside Japan, the presentation of
the consolidated financial statements and the information contained
therein have been modified in some respects.

2. Summary of Significant Accounting Policies(a) Principles of consolidation
The consolidated financial statements include the accounts of theCompany and its 27 subsidiaries.
The investments in affiliates in which the Company's ownership is
20% to 50% are accounted for by the equity method.
All significant inter-company accounts, transactions and unrealized
profits or losses have been eliminated in consolidation.
The fiscal year of all entities ends on March 31, except for two
foreign subsidiaries, which use December 31 year end, and no
significant transactions were noted between the different fiscal year
ends.
U.S. dollar amounts included herein are solely for the convenienceof readers and are presented at the rate of ¥105.64 to $1.00, theapproximate rate at March 31, 2004. The translation should not be
construed as a representation that the Japanese yen amounts shown
could be converted into U.S. dollars at that or any other rate.

(e) Property, plant and equipment
Property, plant and equipment are stated at cost. Depreciation ofbuildings, machinery and equipment is computed on the decliningbalance method for the Company and its consolidated domestic
subsidiaries at rates based on the estimated useful lives of assets,
while the straight-line method is mainly applied for its consolidated
foreign subsidiaries over the estimated useful lives of their assets.

(f) Retirement and severance benefits
The Company and its consolidated domestic subsidiaries provide areserve for employees' retirement benefits based on the projected
benefit obligation and pension assets on the consolidated accountsettlement date. Prior service costs are charged to income on astraight-line basis, beginning from the consolidated fiscal year inwhich they are incurred, over a fixed number of years (four years)
within the average remaining years of service of employees when the
differences occur. Actuarial differences are charged to income on astraight-line basis, beginning from the year after they are recognized,
over a fixed number of years (four years) within the averageremaining years of service of employees when the differences occur.
The annual provision for accrued retirement benefits for directors
and corporate auditors of the Company and its consolidated domestic
subsidiaries is also calculated to state the liability at the amount thatwould be required if all directors and corporate auditors retired at theend of the consolidated fiscal year according to internal regulation.

(g)Proｖision for loss on restructuring
The Company and its consolidated domestic subsidiaries booked
provision for loss on restructuring in the year ended March 31, 2003
in preparation for losses that the companies expected to incur infuture due to the implementation of their business restructuring plan.

(b) Foreign currency translation(h) Leases

All assets and liabilities denominated in foreign currencies aretranslated into Japanese yen at the rate prevailing at the balance
sheet date, except for those hedged by forward exchange contracts,
which are translated at the contracted rates.
Income and expense items are translated at the rates thatapproximate those rates prevailing at the time of the transactions.
The financial statements of foreign subsidiaries have beentranslated in accordance with the accounting standards in Japan.

Finance lease transactions, unless the lessee practically acquires
legal title to the leased asset, are treated as operating leasetransactions.

(i) Income taxes
The Company and its consolidated subsidiaries record deferred tax
assets and liabilities on temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes andthe amounts used for income tax purposes.

(c) Marketable securities and investments in securities
Securities with market prices are valued at market based onmarket prices on the fiscal year-end. Other securities without market
value are valued at cost using the weighted average method.
The differences between the book and market prices of marketablesecurities are charged to shareholders’ equity. The cost of soldsecurities is calculated using the weighted average method.

(j) 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 thefiscal year-end.

(d) Inventories
Inventories other than raw materials are stated principally at cost,which is determined principally by the individual method. Raw
materials are stated principally at cost, which is determined principallyby the moving-average method.

(k) Valuation of assets and liabilities of consolidated
subsidiaries
Assets and liabilities of consolidated subsidiaries are valued using
the full mark-to-market method.

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6. Pledged Assets

Goodwill is evaluated on an individual basis and amortized notexceeding 20 years, and the balance is included in the Intangible andother assets.

The Company and its consolidated subsidiaries did not hold any
assets pledged as collateral at March 31, 2004 and 2003.

7. Short-Term Borrowings and Long-Term Debt(m) Per share information
Net income per share is computed based on the weighted average
number of shares of common stock outstanding during each year.
From 2003, the Company began applying "Accounting Standards
regarding Net Income per Share (Business Accounting Standards
No.2)" and "Practical Guidelines for Applying Accounting Standards
regarding Net Income per Share (Practical Guidelines for Applying
Accounting Standards No.4)" released by the Accounting Standards
Board of Japan (ASBJ)
Dividends per share have been presented on an accrual basis andinclude, in each fiscal year ended March 31, dividends approved or to
be approved after March 31 but applicable to the year then ended.

3. Cash and Cash Equivalents
Cash and cash equivalents at March 31, 2004 and 2003 are as
follows:
Thousands of
U.S. dollars

Millions of yen

Short-term borrowings are represented by 365-day notes issued by
the Company and its consolidated subsidiaries to banks and boreinterest at the average annual rate of 1.13% at March 31, 2004 and1.15% at March 31, 2003. Long-term debt at March 31, 2004 and2003 is as follows:
Thousands of
U.S. dollars

Millions of yen
2004

2003

2004

0.90% unsecured convertible
bonds due 2003 ...............................
1.39% unsecured bonds due 2004......

¥--¥15,481-$

20,000-20,000-189,322---

0.85% unsecured bonds due 2003......

--

20,000---1.30% unsecured bonds due 2005......

30,000-30,000-283,983-

0.42% unsecured bonds due 2006......

20,000---189,322-

0.72% unsecured bonds due 2008......

30,000---283,983-

4,500-

4,500-

42,59852,064-

1.59% unsecured bonds withwarrants due 2006 ...........................
0.86% unsecured bonds with

2004

2003

2004

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

¥ 42,650-¥52,982-$403,727-

warrants due 2007 ...........................

5,500-

5,500-

Time deposits due over 3 month .........

--

--

--

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

10,230-12,153-

96,832-

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

¥ 42,650-¥52,982-$403,727-

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

(21,754)(37,404)(205,923)

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

¥98,476-¥70,230-$932,181-

4. Investments in Securities
Investments in securities at March 31, 2004 and 2003 are as
follows:
Thousands of
U.S. dollars

Millions of yen

A summary of terms and conditions of the bonds with warrants at
March 31, 2004 is as follows:
1.59% unsecured bonds with warrants due 2006
Bond amount ............................................................. ¥4,500 million

2004

2003

2004

Listed stock..........................................

¥ 9,308-¥5,710-$ 88,109-

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

116-

117-

1,099-

Exercise price ............................................................ ¥14,070

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

1,450-

1,389-

13,723-

Exercise period .......................................................... July 1, 2002-June 8, 2006

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

¥ 10,874-¥7,216-$102,931-

Interest rate................................................................ 1.59%
Issued stocks ............................................................. Common stock

0.86% unsecured bonds with warrants due 2007

5. Inventories

Bond amount .............................................................. ¥5,500 million
Interest rate................................................................. 0.86%

Inventories at March 31, 2004 and 2003 are as follows:
Millions of yen
Finished products ................................

Thousands of
U.S. dollars

2004

2003

2004

¥ 49,759-¥ 63,206-$471,022-

Work in process,raw materials and supplies ..............

55,428-48,604-

524,690-

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

¥105,187-¥111,810-$995,712-

34

Issued stocks .............................................................. Common stock
Exercise price ............................................................. ¥9,608
Exercise period ........................................................... July 1, 2003-June 7, 2007

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8. Retirement and Severance Benefits
The Company and its consolidated domestic subsidiaries havenoncontributory retirement and severance benefit plans that provide
for pension or lump-sum payment benefits to employees who retire or
terminate their employment for reasons other than dismissal forcause. In addition, the majority of the employees of the Company andits consolidated domestic subsidiaries are covered by a contributory
pension plan, whose benefits are based on length of service andcertain other factors and include a portion representing thegovernment social security welfare pension.
Certain consolidated foreign subsidiaries have a noncontributory
retirement and severance benefit plan that provides for pension or
lump-sum payment benefits to employees who retire or terminate
their employment for reasons other than dismissal for cause.
Based on the enforcement of Defined Benefit Corporate Pension
Law, Tokyo Electron Employees' Pension Fund, established by theCompany, was permitted by the Minister of Health, Labor and Welfare
on January 1, 2004 to be released from its future obligation for
payments for the substitutional portion of the Welfare Pension
lnsurance Scheme.
The funded status of the defined benefit plans, a substantial
portion of which consists of domestic benefit plans, as of March 31,
2004 and 2003 is as follows:
Millions of yen

Thousands of
U.S. dollars

2004

2003

2004

Benefit obligation ..................................
Fair value of plan assets.......................

¥(75,682)
23,686-¥(67,714)
20,631-$(716,413)
224,213-

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

(51,996)(47,083)(492,200)

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

13,929492-

13,622(1,857)

131,8534,658-

Amount recognized in the
consolidated balance sheets (note) ..

¥(37,575)¥(35,318)$(355,689)

Note: The annual provision for accrued retirement benefits for directors and corporate auditors( ¥ 700 million in 2004, and ¥1,074 million in 2003) is not included.

The amount of pension plan assets expected to be transferredback to the government (minimum legal reserve) was measured at¥10,323 million as of March 31, 2004. If the payment of the amount
was made on that date, the expected gain in accordance withparagraph 44-2 of the JICPA Accounting Committee Report No.13,"Practical Guideline for Accounting of Retirement Benefits (Interim
Report)" would be ¥6,032 million.

Millions of yen

Thousands of
U.S. dollars

2004

2003

2004

Service cost ..........................................
Interest cost ..........................................

¥ 5,9091,733-¥5,1641,688-$ 55,93816,401-

Expected return on plan assets............
Amortization of actuarial difference ......

(206)
4,034-(541)
2,456-(1,953)38,193-

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

2004
Allocation method of benefit obligation ......................

2003

Straight-line method

Discount rate...............................................................

2.00%

2.50%

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

1.00%

3.00%

Amortization life of prior service cost..........................

4 years

4 years

Amortization life of actuarial difference ......................

4 years

4 years

Amortization life of transition obligation...................... Fully recognized in the fiscal
year ended March 31, 2001

9. Income Taxes
Significant components of the deferred tax assets and liabilities of
the Company and its consolidated subsidiaries as of March 31, 2004
and 2003 are as follows:
Millions of yen

Thousands of
U.S. dollars

2004

2003

2004

Tax loss carryforwards ........................

¥17,735-¥13,394-$167,880-

Allowance for retirement benefits ......

13,470-11,417-

127,507-

Devaluation of inventories ...................

3,570-

6,993-

33,794-and amortization ..............................

2,963-

2,451-

28,045-

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

2,579-

1,165-

24,413-

1,286-

1,271-

12,1751,970-

Deferred tax assets

Excess of depreciation

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

208-

1,273-

Provision for loss on restructuring .......

--

3,549---

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

3,304-

3,014-

31,278-Subtotal of deferred tax assets............

45,115-44,527-427,062-

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

(31,431)(30,724)(297,526)

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

13,684-

13,803-

129,536-

Deferred tax liabilities
Allowance for extraordinary
depreciation......................................

(1,877)(523)(17,771)

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

(1,894)(407)(17,926)

Total deferred tax liabilities ..............

(3,771)(930)(35,697)

Net deferred tax assets .....................

¥ 9,913-¥12,873-$ 93,839-

10. Shareholders’ Equity

Net pension cost of the plans is as follows:

Amortization of prior service cost

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

(35)

(619)

(333)

¥ 11,435-¥8,148-$108,246-

The Company issued 4,912,981 shares and 6,027 shares ofcommon stock in 2004 and 2003, respectively, in connection with theconversion of convertible bonds.
Conversion of convertible bonds into common stock has beenaccounted for in accordance with the provisions of the JapaneseCommercial Code by crediting one-half of the conversion price to thecommon stock account and the additional paid-in capital accountrespectively.

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11. Share Repurchase Under Stock Option Program
The Company and its consolidated subsidiaries have a stock
option plan to further increase directors’ and employees' incentive
and motivation to raise corporate performance with the aim of
maximizing corporate value. A summary of share repurchases under
the stock option plan during the year ended March 31, 2004 is asfollows:
Number ofsharesMillions ofyen

Thousands of
U.S. dollars

Outstanding at
beginning of the year ........................

603,000-¥4,991-$47,249-

Purchased.............................................

--

--

--

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

20,000-90-860-

Outstanding at end of the year .............

583,000-¥4,901-$46,389-

Note: The Company has 1,439,343 shares (¥8,302 million) of treasury stock other than the above.

Lease payments and depreciation computed by the straight-line
method over the lease terms with no residual value and imputed
interest expense were ¥178 million in the year ended March 31, 2004and ¥171 million in the year ended March 31, 2003.
Future minimum operating lease payments:
Millions of yen
Due within one year..............................

Thousands of
U.S. dollars

2004

2003

2004

¥ 721-¥ 1,434-$ 6,830-

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

700-

1,582-

6,622-

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

¥ 1,421-¥ 3,016-$13,452-

16. Segment Information
The Company and its consolidated subsidiaries operate in a single
segment.

17. Contingent Liabilities
12. Restructuring Costs
These costs are for the devaluation and disposal, etc. of assets
due to the consolidation or the closure of operating bases inaccordance with the implementation of the business restructuring
plan.

13. Amount Transferred to Provision for Loss on
Restructuring
This amount was transferred to provision for loss on restructuring
in preparation for losses expected to be incurred in future due to theimplementation of the business restructuring plan.

14. Impairment of Goodwill
The impairment of goodwill was fully recognized as an
extraordinary loss in this fiscal year due to the devaluation in thesubsidiary.

15. Leases
Pro-forma information of leased property such as acquisition cost,
accumulated depreciation, obligation under finance lease, anddepreciation expense of finance leases that do not transfer ownershipof leased property to the lessee on an "as if capitalized" basis for theyears ended March 31, 2004 and 2003 is as follows:
Leased assets not recorded in the consolidated balance sheets:
Millions of yen
Acquisition cost.....................................

Thousands of
U.S. dollars

2004

2003

2004

¥ 1,014-¥ 999-$ 9,600-

Accumulated depreciation ....................

412-

255-

3,906-Net leased property ..............................

¥ 602-¥ 744-$ 5,694-

Future minimum lease payments:
Millions of yen
Due within one year..............................

Thousands of
U.S. dollars

2004

2003

2004

¥ 176-¥ 171-$ 1,667-

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

426-

573-

4,027-

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

¥ 602-¥ 744-$ 5,694-

36

The Company and its consolidated subsidiaries did not hold any
contingent liabilities at March 31, 2004.

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, 2004 and 2003, the related statements of income and shareholders’ equity
for each of the three years in the period ended March 31, 2004, and the statements of cash flows for theyears ended March 31, 2004 and 2003, all expressed in yen. Our examinations were made in accordancewith auditing standards generally accepted in Japan and, accordingly, included such tests of theaccounting records and such other auditing procedures as we considered necessary in thecircumstances.
In our opinion, the consolidated statements present fairly the financial position of Tokyo Electron Limited
and its consolidated subsidiaries at March 31, 2004 and 2003, the results of their operations for each of
the three years in the period ended March 31, 2004, and their cash flows for the year ended March 31,
2004 and 2003, in conformity with accounting principles generally accepted in Japan applied on aconsistent basis.
The amounts expressed in U.S. dollars have been translated on the basis described in Note 2-a.

Tokyo, Japan
June 22, 2004

Masatoshi Yoshino

Eiji Miyashita

Fumihiko Sugiura

Certified Public Accountant

Certified Public Accountant

Certified Public Accountant

Annual Report 200437