Annual Report 2002

TOKYO ELECTRONProfile

Established in 1963, Tokyo Electron (TEL) is a world-leading supplierof semiconductor production equipment (SPE) and related services forthe semiconductor industry. The Company develops, manufactures andmarkets a broad lineup of products, including oxidation/diffusion/LP-CVD
systems, single wafer CVD and PVD systems, coater/developers, spin-on
dielectric (SOD) coaters, etch systems, cleaning systems, wafer probers,
and others.
Tokyo Electron also uses its accumulated expertise in SPE todevelop, manufacture and market coater/developers and etch/ash
systems for the manufacture of Flat Panel Display (FPD). Most of theCompany’s semiconductor and FPD production systems hold the leading
share in their respective markets.
Tokyo Electron also maintains a strong presence as a distributor,
providing a wide array of semiconductor production systems, storage
area network and Internet related products for broadband solutions, andDisclaimer regarding
Forward-looking Statements

electronic components in Japan from other leading suppliers. With aMatters discussed in this annual report, including

network spanning 16 countries on three continents, Tokyo Electron
provides superior products and services to its customers, and superior
returns to its shareholders.

forecasts of future business performance ofTokyo Electron, management strategies, beliefs
and other statements are based on the
Company’s assumption in light of informationthat is currently available. These forward-looking
statements involve known or unknown risks,
uncertainties and other factors that could cause
actual results to differ materially from thosereferred to in the forward-looking statements.

Contents

Factors that have a direct or indirect impact onTokyo Electron’s future performance include, but
are not limited to:

1
2
4
8
12
18
20
24
28
29
40
41

Financial Highlights
TEL at a Glance
To Our Shareholders
Market Review with President Tetsuro Higashi
Generations Ahead
Commitment to the Environment, Health and Safety
Review of Operations
Management’s Discussion and Analysis
Board of Directors, Statutory Auditors and Corporate Senior Staff
Financial Section
Corporate Directory
Investor Information• Economic circumstances in Japan and overseas, consumption trends, and large fluctuations in foreign exchange rates• Changes in semiconductor and FPD markets• Changes in the demand for products and services manufactured or offered by Tokyo
Electron’s customers, such as semiconductor
manufacturers, FPD manufacturers and electronic makers• Tokyo Electron’s capabilities to continue todevelop and provide products and services that
respond to rapid technology innovation andchanging customer needs in a timely manner

Financial Highlights
Tokyo Electron Limited and its Subsidiaries
Years ended March 31, 2002, 2001 and 2000

Thousands of
U.S. dollars (Note 1)

Millions of yen (Note 1)

2002

2001

2000

2002

FOR THE YEAR
¥417,825¥723,880¥440,729$3,136,831

Operating income (loss)

Net sales(18,310)

121,086

35,816(137,467)

Income (loss) before income taxes(22,919)

99,132

29,689(172,070)

Net income (loss)(19,938)

62,012

19,848(149,685)¥ (113.85)¥0353.76¥0113.53–

344.75110.64

–

8.00

38.00

14.00

0.06

Total assets¥556,915¥729,511¥499,499$4,181,046

Total shareholders’ equity

307,579

333,281273,6032,309,148

Net income (loss) per share of common stock (Note 2):
Basic
Diluted (Note 3)
Cash dividends per share of common stock$00(0.85)AT YEAR-END

Notes: 1. U.S. dollar amounts are translated from yen, for convenience only, at the rate of ¥133.20=$1. Per share figures are stated in yen and dollars.
2. Net income per share is computed based on the weighted average number of shares of common stock outstanding during each fiscal year.
3. Dilution is not assumed for the year ended March 2002.

1998 1999 2000 2001 2002

1998 1999 2000 2001 2002

-113.85353.76113.5310.70

174.68Net Income per Share(Basic)
(¥)
–19.9

62.0

19.8

1.9

30.0

417.8

Net Income(¥ Billions)

723.9

440.7

313.8

455.6

Net Sales(¥ Billions)1998 1999 2000 2001 2002

1

TEL at a Glance

Semiconductor Production Equipment
78.0%

Tokyo Electron develops and manufactures a broad range of superior semiconductor production equipment,
and complements its original lineup by distributing high-value-added products from other suppliers.
•Litho-Cell Group

Semiconductor &FPD Production Equipment

Coater/Developer
Spin-on Dielectric Coater
Plasma Etch System•Thin Film & Cleaning Group
Oxidation/Diffusion/LP-CVD System
Single Wafer Rapid Thermal Furnace
Single Wafer CVD System
Plasma Process System
PVD System
Cu ECMD System (NuTool Inc.)
Cleaning System
Scrubber System•Test & Integrated Process
Control Group
Fully Automatic Wafer Prober
Wafer Level Burn-in & Test System
ODP™ System
FIB System (FEI Company)
Film Metrology Tool
(Rudolph Technologies, Inc.)
Yield Management Software(Yield Dynamics, Inc.)

Coater/Developer
CLEAN TRACK ACT®12

Plasma Etch System
Telius™

Oxidation/Diffusion/LP-CVD System
ALPHA-303i

Single Wafer CVD System
Trias™

Cleaning System
UW300Z

Fully Automatic Wafer Prober
P-12XL

Flat Panel Display (FPD) Production Equipment*
Leveraging the technology and expertise accumulated from its semiconductor production equipment business,
Tokyo Electron has created a strong lineup of leading-edge FPD production equipment.
•FPD Coater/Developer•FPD Plasma Etch/Ash System

FPD Coater/Developer
CS800*Formerly called LCD Production Equipment

2 TOKYO ELECTRONFPD Plasma Etch/Ash System
SE1200Computer Network
4.1%

Computer Network

In order to fulfill its goal of providing solutions tailored to user needs, Tokyo Electron distributes storage area
network and Internet related products for broadband solutions to offer comprehensive system solutions.
•Internet solutions•Network security solutions•SAN solutions•Broadband solutions•Aerospace products

Brocade Communications
Systems, Inc.
Fibre Channel Integrated
Fabric Switch•Advanced Digital Information Corp.
•BAE SYSTEMS•Brocade Communications Systems, Inc.
•Caw Networks, Inc.
•Ciprico, Inc.
•Conax Florida Corp.
•Cycomm International Inc.

•Emulex Corporation•Extreme Networks, Inc.
•F5 Networks, Inc.
•Genroco, Inc.
•Goodrich Corp.
•H. Koch & Sons Co.
•Hewlett-Packard Co.

•Hitachi, Ltd.
•ITT Aerospace Controls Corp.
•LuxN, Inc.
•nCipher Corporation Ltd.
•Nishan Systems, Inc.
•Silicon Graphics, Inc.
•Sony Corp.

Extreme Networks, Inc.
Gigabit Ethernet Switch•TimesTen Performance Software, Inc.
•Tivoli Systems Inc.
•VERITAS Software Corp.
•Z Microsystems, Inc.

Electronic Components
17.6%

Electronic Components

Tokyo Electron selects and offers the world’s best products from leading suppliers. With a full product lineup
and flexible technical support, the Company provides total solutions to meet diversified user needs. Operations
are handled by wholly owned subsidiary Tokyo Electron Device Ltd.
•Semiconductor products•Board computer products•Software•Other electronic components

Semiconductor products•Advanced Micro Devices, Inc•Agilent Technologies, Inc.
•Cavium Networks, Inc.
•Conexant Systems, Inc.
•Cosel Co., Ltd.
•Digital Electronics Corp.
•Fujifilm Microdevices Co., Ltd.
•Fujitsu Ltd.
•Fujitsu Media Devices Ltd.
•Fujitsu Quantum Devices Ltd.
•Integrated Device Technology, Inc.

•Infineon Technologies AG•Intersil Corp.
•Intoto Inc.
•Legerity, Inc.
•Linear Technology Corp.
•Metrowerks, Inc.
•Microsoft Corp.
•Mindspeed Technologies•3M•Motion Engineering, Inc.
•Motorola, Inc.

•ON Semiconductor•Phoenix Technologies Ltd.
•Pixelworks, Inc.
•Portwell, Inc.
•Ramtron International Corp.
•Shinko Electric Industries Co., Ltd.
•SiberCore Technologies Inc.
•Silicon Wave, Inc.
•Texas Instruments Inc.
•Tokyo Electron Device Ltd.
•Trillium Digital Systems, Inc.

Board computer products•Tundra Semiconductor Corp.
•Valence Semiconductor, Inc.
•VenturCom, Inc.
•WESTTEK, L. L. C.
•Winchester Electronics•Woodhead Industries, Inc.
•Xicor, Inc.
•Xilinx, Inc.
•Zarlink Semiconductor Inc.

In addition to the sales of our three divisions, others sales contributed 0.3 percent of net sales.
Product names and company names are trademarks or registered trademarks of their respective holders.
3

To Our Shareholders

Tetsuro Higashi
C.E.O., President

During the fiscal year ended March 2002, the global electronics industry, particularly the semiconductor sector, experienced a deep fall in its markets. This decline
occurred amid the worst conditions ever recorded in the history of the industry, brought
about by the bursting of the IT bubble and the downturn in the United States economy.
Facing this extremely harsh business environment, Tokyo Electron (TEL)’s performance
dropped sharply in complete contrast to the record net sales and operating income
posted in the previous fiscal year. Despite various initiatives to improve earnings, consolidated net sales decreased 42.3 percent to ¥417.8 billion. Operating loss totaled¥18.3 billion and net loss for the period amounted to ¥19.9 billion. Regardless of registering a loss, the Company decided to maintain returns to shareholders by declaring
cash dividends of ¥8 per share.
Looking at the performance by division, the sales of the Semiconductor
Production Equipment division decreased 47.4 percent to ¥325.7 billion. The division’s

4 TOKYO ELECTRON

sales were negatively affected by the substantial contraction in the market due to worldwide curtailment in capital investment by semiconductor and liquid crystal display (LCD)
manufacturers. The Electronic Components division was similarly affected by stagnant
semiconductor demand in the Japanese market. Despite efforts to combat this trend by
expanding sales of leading-edge products, the division’s sales declined 17.4 percent to¥73.7 billion.
Conversely, amid this wave of declining performances, the Computer Network
division’s sales jumped 21.2 percent to ¥17.0 billion. This significant growth achieved ina depressed market can be mainly attributed to the use of powerful marketing efforts inconstructing a product lineup focused on products related to the high-growth Internet
technology and storage markets. Having proved the success of its strategies before thefull-fledged start of the broadband era, the division is confident of achieving further
growth.
Implementing Cost Reduction and Restructuring Operations from a Mid-Term
Perspective
During the fiscal year under review, TEL carried out a series of restructuring activities and reductions in fixed costs. These measures were taken not only to improve profits during a downturn, but also to create further growth from a mid-term perspective.
To enable a quick response to fluctuations in production, the Company outsources much of its labor requirements for its design and manufacturing lines.
Numbering 3,000 employees at the beginning of the fiscal year, these contracted
employees were reduced by more than 70% by the end of the fiscal year.
In our domestic operations, we merged the two plants of Tokyo Electron Tohoku,
the center for the Company’s thermal processing systems development and manufacturing business, into one plant. This measure was taken based on the determinationthat the plant scale could be reduced while maintaining adequate production capability.
Proof for this decision is being steadily provided by the higher efficiency of the new production system that has been introduced previously at other plants.
In the United States, the Company also implemented wide-ranging restructuring,closing Tokyo Electron Oregon, its U.S. base for manufacturing thermal processing systems and absorbing Tokyo Electron Phoenix into Tokyo Electron Massachusetts. In
addition, TEL reviewed its global field engineering structure, closing a total of five service
stations in Japan, the United States, and Europe.
Besides restructuring its operations, the TEL Group as a whole concentrated on
cutting material, labor, and other activity expenses, achieving a reduction of more than
¥30 billion in fixed expenses compared with the previous fiscal year. While these efforts
did not prevent the Company from registering a net loss, a structure is progressively being
established that will contribute fully to recovery during the next upturn in the market.
Research and development expenses have not been touched in preparation for
the next upward cycle. As originally planned, they remained at the same high level as in
the previous fiscal year.

5Creating Winning Products–The Source of Profitability
With the peaks and troughs in the industry getting steadily larger and the growing
influence of the Chinese market, international competition is expected to intensify further
as companies compete for survival. To be successful in this global megacompetition,equipment manufacturers must pursue the highest technology standards in the world
as well as efficient operations. These are extremely difficult issues for equipment manufacturers, which are easily affected by the market’s ups and downs, to address.
Nevertheless, without achieving both of these requirements simultaneously, it will be
impossible to become a world-class company.
In recognition of these requirements, the Company is focusing its full efforts on
introducing products that are overwhelmingly differentiated and on developing next generation core technologies. To achieve these objectives, it will be important for us to collaborate with leading global chip manufacturers from an early development stage and toquickly bring to market products and technologies that meet our customers’ needs.
Moreover, in support of these goals, the Company will also seek strategic alliances withother suppliers.
Even amid the trying circumstances of the past fiscal year, the Company did not
let up on its research activities, and launched several products. Released at the end of
2001, the Trias™SPA plasma nitridation system incorporates nitrogen in gate dielectricfilms using damage-free microwave plasma. During the short period since its launch,
the product has attracted a great deal of attention from customers. For the next step,
the Company intends to work with customers to develop further applications for thesystem. Among other new product launches, development of TELFORMULA™, a highspeed thermal processing system that features flexible loading of wafers, was completed during the fiscal year. The product has been acknowledged by customers, andorders are expected to start building in earnest during the current year.
In other positive news, our customers have been refitting with next-generationequipment, principally 300mm equipment, and several of our 300mm models havealready gained a larger share of the market than 200mm models.
Structural Reforming Taskforce–Making TEL a Company That Can Respond
Quickly to Change
Over the past few years, thanks to globalization and our technological leadership,
the Company has made a significant leap in global competitiveness. However, in termsof the speed and strength necessary to emerge a victor in global megacompetition, wemust recognize that the Company still harbors some weakness, as has been amply
demonstrated by the sudden downturn in the market. Since it is unlikely that the undulations in the market will cease, we must achieve a structure that can respond flexibly
and quickly to market changes and achieve high profitability under any market conditions. The establishment of a Structural Reforming Taskforce, with myself as its head,signifies that we are taking structural reform seriously.
One of our key reform projects is the Total Cost Down Project, which aims to fundamentally improve our design and manufacturing procedures through the deployment

6 TOKYO ELECTRON

of “state-of-the-art” IT. Its concept is to change our way of thinking about design andmanufacturing through the use of IT, reducing lead time from order to shipment by one
half. The completion of this project will enable us to manufacture products in a highly
efficient manner with far less assets, including human resources. The system is alreadybeing tested in Tokyo Electron Tohoku, where proof of its effectiveness is steadily
emerging. We plan to begin fully introducing the system in our Japanese plants within
the next two years. Among other reform projects, we are considering implementing
measures to reduce cost of manufacturing and to introduce a small but highly efficient
operating system in our administrative divisions. Concrete schemes are firming up andabout to get under way.
Cost reduction involves the reengineering of your processes, and such fundamental reform requires time. Nevertheless, we will speed up the process of reform as
much as possible.
The Fiscal Year Ahead—The Starting Line for New Growth
The past fiscal year was a difficult one for TEL as we restructured our operations,reformed our corporate structure, and implemented various other measures to battle
our sudden change in fortunes. But at the same time, signs of recovery are beginning toemerge in the semiconductor production equipment market. Strategic capital investments by major chip manufacturers took the lead in resumption of investment in plantand equipment in the industry, but a genuine recovery is expected to take some time.
Reflecting the positive trend, however, orders for our semiconductor production equipment are improving. In addition, capital investment in flat panel displays (FPD) production equipment has been revived by the favorable conditions in the FPD market, resulting in strong orders for both types of our FPD production equipment, which enjoy
majority shares of their respective markets.
Clearly, the fiscal year ahead has begun on a brighter note. Nevertheless, theCompany remains in the midst of a process of fundamental change aimed at establishing a high-profitability structure. It is a year, I think, that will require balanced efforts. We
must move forward concurrently with our plans for streamlining our business to getback in the black and for achieving growth in the medium to long term. Firmly convinced of the necessity of realizing true global competitiveness, TEL is wholly committed
to creating winning products and establishing a high-profitability structure. As we standon the starting line to new profitability growth, we hope that you will look forward to our
future performance as we look forward to your continued support.

Tetsuro Higashi
C.E.O., President
June 2002

7

Market Review with President Tetsuro Higashi

Overall, how would you
describe the fiscal year
ended March 2002?

The semiconductor production equipment industry experienced the worst down
cycle since this business began. We have gone through several downward swings in
the past, but none have been as severe as this current down cycle in scale and speed.
In response, we initiated a variety of measures to try and minimize its negative impact,
but still it was the most difficult year the Company has experienced. In fact, it has madeus realize that we have to change to a more responsive and efficient organization.
Despite the difficult conditions throughout the year, we were successful in launching several key products that were in the market spotlight. Furthermore, TEL was recognized as an industry leader in 300mm equipment, which chipmakers are in the processof shifting to. The Company also made good progress in developing next generation
technologies.

In your opinion, whatchanges are going on in theindustry?

Looking at the major trends, the semiconductor industry is moving from a PCcentric age to a pervasive age in product applications. As part of this trend, DRAMs andother chips are becoming much cheaper and lifecycles of chips are becoming much
shorter, reflecting the shorter lifecycles of the end products they are used in. This trend
will have a stronger impact as we leave the PC-centric age and a wide array of communications-enabled information devices, such as personal digital electronics products
and digital household appliances enter the market.
The significance of this trend for semiconductor production equipment suppliersis that we are being asked to supply the semiconductor industry with equipment of thehighest technology and quality that can produce chips at low cost. Moreover, to copewith shortened lifecycles, chipmakers want equipment to ramp-up quickly and to flexibly
adapt to markets. In short, our customers are going to be making much harsher
demands on us regarding tool specifications and product capability.

8 TOKYO ELECTRON

Another major trend among the semiconductor industries of Japan, Europe andthe United States is a significant change in production strategies. Companies are
increasingly outsourcing the production of products that are not considered core business to foundries in Taiwan and other Asian areas. This trend can be viewed as simply
progressive specialization within the industry, but it is going to affect the role of production equipment suppliers like us to some extent. We are being required to support thisstrategy with our process development, process integration, and processes control
capabilities, moving us even closer to the boundary between equipment manufacturers
and chipmakers.

In light of such trends, what
advantages do you havethat can be leveraged inyour business?

The first points that come to mind are our world class technologies and powerfulmarketing capabilities that anticipate the needs of our customers around the world.
Marketing is not the sole domain of our marketing group, our sales and field engineeringgroups cooperate in a unified effort where everyone has a role to play. Developing thecustomer needs recognized through this process into individual products has led to thecreation of our current extensive and highly competitive product lines.
Process integration capabilities will be key to the future success for semiconductor production equipment suppliers. Such capabilities are best realized if one has abroad line up of products, similar to those of TEL. Process integration is a core element
within our products providing a high centripetal force. We have a high degree of flexibility that can incorporate the products of other suppliers providing an optimal solution to
our customers. In addition, our Process Technology Center in Yamanashi Prefecture
has drawn the attention of global customers as one of the most-advanced applicationlaboratories in the industry. This facility combined with a series of key equipment makes
process integration possible, and we have established a competence that provides
powerful support for the product differentiation strategies for each of our customers.

Would you give us someof the highlights from yourproduct development
programs?

Preparations have been completed for the shift to 300mm equipment in almost all
product categories, subsequently our market share of this equipment will exceed thatfor 200mm equipment. One product that is close to volume production is the plasmaetch system Telius™. Compared with the 200mm model, the 300mm model is morecompact and employs a unique platform featuring a parallel transferring system.
Because of its high productivity, Telius™ has made a sensational debut in the market.
Another highly innovative new product is the high-speed thermal processing system TELFORMULA™. Featuring a flexible batch system that can accommodate one to
25 wafers, this equipment is designed to be scalable and adaptable to changes in thevolume and variety of products. TELFORMULA™ has drawn significant attention fromthe market because it provides for the current need in the market by delivering higher
productivity through shortened production cycle time. This is the optimal tool for use in
the manufacture of system on chip (SOC) devices, demand for which is increasing withthe spread of digital consumer appliances in the respective markets.
In addition, we have recently launched a plasma nitridation system that creates9high-quality nitrated gate dielectric films. The system has been very well received byflash memory and logic chip customers, even though it was launched very recently. Its
extensibility to other applications makes this system a highly promising product for newmarket development.

Will you tell us more about
the products you are
currently developing for the
future?

Among the BEOL (interconnect) processes, for which equipment sales are
expected to grow, the intermetal dielectric film formation is a key process within thislarge latent market. Taking advantage of our specialty technologies, we have developed
an SOD coater to address this market. We expect the market for this SOD coater toshow real expansion from the 100-nanometer generation. Additionally, we are working
with customers and materials suppliers to investigate new breakthroughs in this field.
We are also strengthening our advanced process control (APC) technologies. We are in the midst of developing products incorporating Optical
Digital ProfilometryTM, a technology of the recently acquired Timbre
Technologies, into our own products and evaluation by our customers isunderway. Of course, the strategy that we have for APC goes much further—
we have just moved to the starting line. However, I think we have taken thefirst major step into a field that will be an important factor in differentiating
semiconductor production equipment makers in the future.
Work on 70-nanometer and below processes is ongoing. We areresearching and developing ways to put supercritical cleaning technologies
from Supercritical Systems, a company we acquired two years ago, to practical use. Furthermore, through a business alliance with a key stepper manufacturer, we have begun developing lithography processes utilizing F2
excimer lasers.

What are the issues
facing TEL?

If the use of digital consumer products becomes as wide spread a market as thatof personal computers, the increased demand for semiconductors and new semiconductor production equipment will result in the Company having to supply its customers
with innovative products and technologies at lower costs. To rephrase this, for TEL toachieve higher profits, it will be absolutely necessary for us to create added value throughour technological differentiation at a highly competitive price and the lowest cost.
I believe that the semiconductor production equipment market will continue tohave an extremely bright future supported by a huge demand for semiconductors and aneed for advanced technology. There also is no doubt in my mind that the industry willagain experience cyclical downswings of the market, regardless of the magnitude. For
that reason, I am committed to introducing reforms to build operations that can earn
profits and sustain the highest level of R&D even under poor market conditions.
To address such market demands, we are introducing an IT-aided production
system aimed at raising production efficiency. This process will take another two years
to complete at our domestic factories. When completed, however, we will have a structure that can match the maximum amount of demand during times of expansion and

10 TOKYO ELECTRON

can minimize the impact of contractions in the market. It will be able to maximize our
profitability under either good or bad market conditions. To facilitate our transition to ahighly profitability structure, we implemented organization changes in June. On theadministrative side, our focus will be on achieving operational efficiency through a small
but skillful organization. In addition, we plan to optimize our material sourcing on a global basis. Subsequently, we are stepping up our activity to target cost reductions
through the maximization of productivity and production efficiency.

What direction does TEL
intend to take from a global
perspective?

In April of this year, we established a service support base in Shanghai, beginning
direct operations in China. We took this action in consideration of the importance ofChina as a growth market. From this operation, we intend to provide the highest quality
technical support services to our customers in China. The fact that TEL has major R&D
activity in nearby Japan makes TEL extremely attractive to customers in China andAsian countries, positioning TEL as a valuable supplier.
In terms of sales and services, we have already completed the expansion of our
network and are recognized as a global supplier. Now we are seeking out regional
resources with competitive advantages around the world to merge them with our own
corporate resources. Our software-related R&D bases in the United States, a leader in
global software technology, are a good example of our strategy. Deriving new competitive power from global regional strengths, we plan to reinforce our unique identity
throughout the world.

The FPD production
equipment market seems
brisk, doesn’t it?

Yes, I expect demand to remain robust throughout the entire year in 2002.
Because the FPD production equipment market basically demonstrates the same cyclical nature as semiconductor production equipment market, it is possible that the market may soften temporarily, but in the medium- to long-term it is certain that this market
will grow substantially.
One of the reasons for the current boom is that demand for LCD screens for PC
monitors is growing substantially. Another trend is the progressive transition by manufacturers to larger glass panels, the substrate for LCD screens.
As we have been quick to respond to this market trend, shipments of our FPD production equipment for larger glass panels
are steadily growing. Moreover, our equipment is also adaptablefor organic electroluminescent (EL) display manufacture. TEL’s
products account for a major global share of the FPD production
equipment in the areas of FPD coater/developer and etch/ash
systems. We intend to take full advantage of the business
opportunities arising from this emerging market.

11Our Embedded Dream of the“Invisible” Future
Since the invention of semiconductor chips, the evolution of mankind’s culture, society and lifestyle has accelerated at a pace never before experienced.
Information processing and communications networks have benefited from thisevolution, fulfilling an important role as driving forces for the industry.
Progressing from a time when people believed that a minimal number ofcomputers would be sufficient for the world, we have reached the stage where
computers are personally available and sophisticated semiconductor technology
is implemented in a wide-range of equipment, such as mobile phones, personal
digital assistants (PDAs), game consoles, digital televisions, and automobiles. In
the future, computing functions with broadband connections will be invisibly
embedded into the environment surrounding us in our daily lives. It will be a worldof ubiquitous computing where everyone can enjoy information and services anytime and anywhere.
Embedded in our genetic code, our dream of the “invisible” future is driving
us on to the next stage of evolution.

12 TOKYO ELECTRON

The Rapidly Expanding Scale and Scope of
Semiconductor Applications
The world of the “invisible” future will consume a huge volume of semiconductor
chips. Semiconductors will be embedded in everything, and large addressing space formemory and massively parallel processing with a numerous array of processors willrealize intelligent functions. Demand for application-specific system on a chip (SOC) isalready rapidly increasing for a broad range of market segments. We are headed into
the “Semiconductor Big Bang” in both scale and scope of applications.

Expansion of Worldwide Semiconductor Market

$54B

$226B

$300-350B

1990

2000

2010
Source: Dataquest, TEL estimate

Nano-scale, High-speed, andEnergy-saving Requirements
Miniaturization of integrated circuits is progressing toward the nano-scale. In the
future, they will be invisibly embedded in everything, finally realizing ubiquitous computing. This growing demand for intelligent processing for high-speed execution of complicated, large-scale algorithms accelerates chip shrinkage and high-speed capability. But
shrinkage and high-speed requirements create heat dissipation problems. In addition tothese problems, lower energy consumption is required, especially for semiconductor
chips that are used for mobile gears to achieve long hours of battery-powered outdoor
usage. To solve these problems, we are challenged to introduce new technologies.

13

Every Product Demonstrates
Key Process Innovations
Major changes are taking place in processes and materials for semiconductor manufacturing. To meet the technological challenges of greater scales of integration, higher speeds and lower energy consumption, the industry needs stateof-the-art technologies, such as lithography for finer geometries, low-resistanceinterconnect, low-k intermetal dielectric films, and ultra-thin gate dielectric films.
TEL is committed to the development of these cutting-edge technologies, andproviding its customers with “best-of-breed solutions” based on its proprietary
technology and a world-class lineup of products.

Terminology
1. Lithography
This technique is used to transfer the circuit
pattern from a photomask to the wafer’s
surface. A stepper-scanner is used to
expose the pattern onto a photoresist-coated wafer. The exposed wafer is then developed to reveal the pattern.
2. Low-k dielectric film
As design rules become finer and the space
between interconnects becomes narrower,
the speed of electrons traveling throughinterconnects is more easily affected by theamount of parasitic capacitance in the intermetal dielectric film, causing them to slow
down. To solve this problem, it is effective to
use low-k film.

Dielectric Film and Gate Electrode Formation
The transistors used in large scale integrations (LSIs) comprise an electrode anddielectric film stacked on silicon, and a source and drain into which impurities are
doped. In a high-speed logic chip, the main problem that arises is the delay in the electric signal, particularly in the gate section. To try and minimize or eliminate this problem,
development efforts are focusing on further miniaturization of the transistor itself, theuse of low-resistance gate electrodes, formation of ultra-thin gate dielectric film, anddiscovery of materials and processes to support even thinner film formation.

Thermal Processing System(Single Wafer)

Thermal Processing System(Flexible Batch)TM

TELFORMULA

SRTF

Featuring a newly developed
heater capable of high-speed
temperature control, this system
handles a wide range ofoxidation and LP-CVD processes
sequentially. It can flexibly
process one to 25 wafers.

This system is a rapid thermal
process system that uses hot-wall
furnace technology. It achieves
substantial reductions in cost andenergy consumption.

Design Rule=130nm

Coater/ Developer

CLEAN TRACK ACT® series

CoSi

180nm

Poly-Silicon
SiON

SiO2

SourceDrain

Attached to exposure equipment,
this system coats and develops
photoresists on the wafer surface.
The CLEAN TRACK ACT® series ishighly reliable and holds anoverwhelming share of the market.

Old Type Gate
Advanced Gate
(Logic Device)

Cleaning System

Plasma Process System

UW Series

Trias™ SPA

This system cleans particles andcontaminations attached to the surface
of a wafer using acid and ozone
solutions. Its reduced chemical
requirements and smaller footprint lower
the Cost of Ownership.

This system uses plasma to perform
nitridation of gate films. Its damagefree plasma enables chipmakers toform highly reliable and low leakage
gate films.

14 TOKYO ELECTRON

3. Making thinner gate dielectric film
Based on the scaling law, if the gate length
and width and its dielectric film thickness
are made smaller and thinner, the electric
current, voltage, signal delay time, and otherperformance specifications of a transistor
will improve.

Copper Interconnect and Intermetal
Dielectric Film Formation
The most advanced chips exhibit a high degree of integration, with tens of millions
of transistors on a single chip. Interconnect is highly miniaturized and the space between
interconnects is minimal. Consequently, the signal delay in the electric circuitry cannot be
neglected. To combat this problem, the aluminum interconnect and SiO2 dielectric film
are being replaced with copper interconnect and low-k dielectric materials in the latest
processes. With logic chips in particular, multilayer circuitry is an essential technology,
and the industry is actively developing technologies for interconnect integration.

CU ECMD

NuTool™ 2000 (Product of NuTool Inc., U.S.A.)
A copper electroplating system that utilizes special
proprietary technology to greatly reduce the amountof polishing required after copper film deposition.

SOD Coater

CLEAN TRACK ACT® seriesThis system deposits low-k
intermetal dielectric films using thespin-on coating method. The system
is expected to make great inroads
into the intermetal dielectric film
market, beginning with the 100nm
generation.

Aluminum + SiO2Interconnect

Plasma Etch System

Telius™
A plasma etch system for dielectricfilms that demonstrates superior
capabilities for high-end
applications, such as deep trenchand self align contact etching.

Cleaning System

PR Series

Copper + Low-k DielectricInterconnect

The system removes post-etching
polymers using chemical reactions
and spray technology. The unique
double slide chamber achieves highcleaning performance and shortened
process times.

Single Wafer CVD System

Trias™
Using heat and plasma, this systemforms metal films or barrier films.
This system claims the highest shareof the market for DRAM applications.

15

Providing Further Valueas a Leading SupplierAs personal digital electronics and an array of new products become popular in markets, semiconductor demand will progressively shift to products withshort life cycles. Because diversification of IC applications is proceeding simultaneously, chipmakers are anticipated to increasingly specialize in design andincrease their reliance on equipment suppliers for semiconductor manufacturing
processes. Foundries are also expected to expand their commissioning of equipment suppliers for advanced processes for the designs created by fabless makers.

As Chipmakers Orient “What to Make,”
Tool Suppliers Must Come Up with“How to Make It.”
During the dawning of the age of semiconductors, the equipment suppliers’ onlyrole was providing hardware. However, opportunities have increased for equipment
suppliers to contribute a new type of value-added content, in the form of expertise.
Equipment suppliers can offer the total process recipe, and supply integrated solutions
for multiple adjoining processes, or supply the systems that can self-optimize theprocesses with fewer manual operations. Leveraging its expansive product lineup andworld-class R&D capabilities, TEL is concentrating on providing further added value toits customers.

Broadening Spectrum of the Role of Semiconductor Equipment Suppliers

FAB Management
Manufacturing
Technology
Process Control

Process Integration

Process Recipe
Production Tool
Manufacturing
1970s

16 TOKYO ELECTRON

1980s

1990s

2000s

Advanced Process Control
Advanced process control (APC) is the automation of process control functions
performed in individual systems or between systems to keep process stability and higher yield stability. So far, this function has been mainly achieved through the interventionof people in production lines by monitoring the quality of the product or checking
whether mistakes have occurred.

Why Yield Management is Important
Semiconductor manufacturing utilizes state-of-the-art technologies in the fields ofphysics and chemistry. However, due to its technological complexities, there is no guarantee that every chip will be perfect. Since the proportion of good to bad product is aquestion of survival for chipmakers, increasing yield is one of the most important issues
for them from cost and speed-of-launch perspectives. Because APC contributes in lowering chipmakers’ production costs, it will be one of the chief factors in differentiating
semiconductor production equipment in the near future.
Enhanced Yield with APC

Number of chips

With APC
100

Number of chips

Without APC
100

0

0

Higher product yield

Good product yield
increases under APC

TEL’s Integrated Metrology Software —a Solution for APC
In February 2001, TEL purchased Timbre Technologies Inc., of the United States,
acquiring its Optical Digital Profilometry™ metrology software. Compared with conventional SEM, ODPTM greatly reduces the time to measure critical dimensions, cross sectional profile and film thickness. In our R&D efforts, we have vigorous programs under
way to develop APC technologies at the equipment level, incorporating this technology
into our greatest area of strength, lithography processes (Etch and Clean Track) forprocess monitoring.
Scanning
Electron Microscope

Optical Digital Profilometry
550
500
450
400
350
300
250
200
150
100
50
0
-300 -200 -100

Measurement time
About 1 hour

0

100

200

300

Measurement time
A few seconds

Measurement time is for one point cross section on a wafer.

17

Commitment to the Environment, Health and Safety
We believe that, as a business enterprise, Tokyo Electron has an important mission to
fully consider environmental protection in its business activities, giving top priority topeople’s health and safety.

Environmental Activities
Having established the Tokyo Electron (TEL) Group Environmental Committee in 1996 as
the base for our environmental activities, we proceeded to create the TEL Group Credo andPrinciples on Environmental Preservation, which were announced in 1998. Since then, we havebeen fully committed to environmental protection. Among other achievements, we have received
ISO 14001 international environmental management standard certification for seven of our majordomestic facilities. Utilizing this foundation, we are actively working to attain consistent improvement in our environmental performance. Specifically, we have continuously been accomplishing
results in the following types of activities.

Safety First!

• Reduction of wastes and improvement of recycling rate
• Promotion of energy and resource conservation• Proper control of chemical substances• Development of environmentally benign products

Further Emphasis on Products with Reduced Environmental Impact
Our environmental activities have gotten successfully under way and are beginning to yield
results. From the fiscal year under review, we have entered our second phase in which we are
placing particular emphasis on development of products with reduced environmental impact. The
following are a few of those related activities.
•Green Procurement“Green procurement” means sourcing parts based on environmental considerations inaddition to the conventional criteria of quality, cost, and delivery period. We issued the TELGroup’s Green Procurement Guideline in January 2001, distributing it to suppliers throughout
Japan. In addition, around 200 companies were invited to take part in green-procurement seminars to solicit their cooperation in the implementation of our green-procurement policies. Taking
the initiative as an industry leader, our first step in this process involves conducting vendor
assessments of the environmental activities implemented by our suppliers. In the second step, we
assess the environmental considerations for the parts procured by the TEL Group.
Conventional Procurement Criteria

quality+cost+ delivery period

Green Procurement Criteria

quality+cost+ delivery period + environmental considerations•LCA Initiative
Life Cycle Assessment (LCA) is a technique for quantitatively assessing a product’s environmental impact at each stage of the course of its life: from raw materials through manufacture,transport, use, and disposal. We can significantly reduce a product’s overall environmental impact
by analyzing, assessing, and giving priority to rectifying major problems. In the fiscal year ended
March 2001, each business unit implemented LCA with its sights set on reducing global warming.
18 TOKYO ELECTRON

Environmental Accounting
Environmental accounting is a tool for ascertaining the cost and effect of a company’s environmental activities for use within the company’s routine operations. As a Group, we have beenusing environmental accounting since the fiscal year ended March 2001. The results for the fiscal
year under review will be available in the Environmental Report 2002, which will be published infall 2002.

Leadership in SEMI’s Global Care™ Program
The semiconductor and LCD industries are attracting global attention for their cutting-edge
technologies and growth. Befitting their technological prowess, there are equally high expectations forthese industries to be on the cutting-edge of activities aimed at preserving the global environment andpromoting human health and safety.
No company can achieve this goal single-handedly, and the semiconductor and FPD industries as a whole—from top to bottom of the supply chain—must cooperate in attaining this goal. As
an industry leader, Tokyo Electron is involved in a wide range of activities focused on this goal under
the Global Care™ Program of Semiconductor Equipment and Materials International (SEMI).
.
The Global Care™ Program focuses on the following five important targets;• Workplace Health & Safety• Resource Conservation• Product Stewardship• Community Service• Excellence
A declaration expressing our endorsementof Global CareTM. It has been submitted to
SEMI.

Safety Activities
Our continued existence as a corporation relies upon the safety and health of our employees, customers, and everyone involved with the TEL Group’s business. During 2000, to set out
our commitment to these areas in a clear and understandable fashion, we drew up the TELGroup Credo and Principles on Safety and Health. According to these guidelines, safety andhealth have top priority in our business activities. Profit considerations and decisions regarding
delivery dates and times must not take precedence over human safety and the safety of facilities
and equipment.
The TEL Group also provides Group-standardized safety training to its officers and employees under its Safety 2000 Program. This system has been developed so that all the employees of the Group acquire the same
safety awareness, regardless of differences between countries
and cultures, based on the Tokyo Electron's corporate policy—
Safety First. The training program is also designed to further
improve our customers’ confidence in the TEL Group.

For further information on our environment, health and safety
activities, please see our Environment Report. (available at
http://www.tel.co.jp/index_e.html)

19

Review of Operations
Semiconductor Production Equipment
The active capital investment in semiconductor production equipment that had continued
through 1999 and 2000 dropped off sharply from the beginning of 2001 under the impact of thedeteriorating semiconductor market. On an annual basis, the global semiconductor production
equipment market suffered significant negative growth. The backdrop to this slump was the weakpersonal computer and mobile phone markets, which drive demand in the semiconductor market.
After recording high growth in 2000, personal computer and mobile phone shipments slowed
down, resulting in a surplus of worldwide semiconductor inventories. Subsequently, the utilization
rate of chip manufacturer’s plants fell notably, minimizing non-critical capital investment.
Sales of the Semiconductor Production Equipment (SPE) division for the fiscal year ended
March 31, 2002, declined 47.4 percent to ¥325.7 billion. Contribution to consolidated net sales
dropped to 78.0 percent from 85.5 percent. Sales of FPD production equipment, which are also
included in the division’s sales, decreased 42.3 percent to ¥41.4 billion because of the reduction inplant and equipment investment in the wake of a softening of the FPD market. Division’s orders
sunk 67.0 percent to ¥207.2 billion, shrinking not only because of the lack of new orders but also
because of order write-offs.
Orders staged a recovery in the fourth quarter, however, supported by a resurgence in capital
investment primarily by major semiconductor manufacturers to build production lines for 300mm
wafers and to upgrade their lines to accommodate finer geometries to 0.13 µm. Although it will taketime for a full-fledged recovery in investment, this trend indicates that the semiconductor production
equipment industry is about to shift into a growth cycle. Orders for FPD production equipment,
which also have a cyclic nature, returned to a high level in spring 2002, reflecting an improvement ina balance between demand and supply in the FPD market.

2001

131.1

North Europe Korea Taiwan
America

22.3

40.9

59.9
23.2

50.5
28.3
Japan

60.5

94.7

96.7

140.2

196.5

SPE division’s Salesby Geographic Region(¥ Billions)

Other

2002

Sales by third-party products imported into
Japan are included in Japan Sales.

Review by Geographic Region
SPE division sales declined in every region during the fiscal year. The drop was significant in
the Asian region, dropping 50.8 percent to ¥96.7 billion in Japan, 61.3 percent to ¥23.2 billion in the
Republic of Korea, 53.9 percent to ¥60.5 billion in Taiwan and 45.5 percent to ¥22.3 billion in other
Asian countries. Sales to the People’s Republic of China, which are included in the other Asian
countries category, increased thanks to sales orders from new customers. In the United States,
sales decreased 32.4 percent to ¥94.7 billion, but total sales contribution for the division reached29.1 percent from 22.6 percent. Excluding FPD production equipment sales, semiconductor production equipment sales in the United States were the highest of all regions. Sales in Europe
amounted to ¥28.3 billion, down 43.9 percent.
Review by Product
Sales fell in every product category year on year. Nevertheless, there were some bright spots.
Although sales of 200mm wafer equipment continued to slide, sales of 300mm equipment grewsteadily. Sales of coaters/developers, etch systems and wafer probers for 300mm wafers were
especially favorable. The division believes that sales of these products earned a larger share of themarket than those for 200mm wafers in what could be recognized as the first real step towards
300mm.
R&D Expenses and New Products
There are three technological transitions concurrently transforming our industry—finer geometries, a shift to new materials, and the larger 300mm wafers. To respond to these challenges, theCompany invested a record ¥53.8 billion in R&D to develop innovative, proprietary products and

20 TOKYO ELECTRON

processes despite the difficult operating environment. One of the areas in which progress wasmade during the fiscal year was a new concept of equipment incorporating the metrology technology of Timbre Technologies, Inc., acquired by the Company in the previous fiscal year, into TEL’s
lithography equipment. Pilot systems have entered the evaluation stage. In other state-of-the-art
research, we are pioneering key 70-nanometer node technologies.

325.7

619.0

355.1

242.2

380.2

SPE division’s Sales(¥ Billions)1998 1999 2000 2001 2002

Major products launched during the fiscal year under review included:• TELFORMULA™
In December 2001, we officially began accepting orders for TELFORMULA™, our new thermal processing system for 300mm wafers providing a flexible load size of up to 25 wafers. This
innovative high-speed thermal processing system has solved conventional batch processing systems issues by providing a significant reduction in production cycle time. With its high-productivity
and cost-advantages, we expect a strong growth in orders for the future.
• Trias™ SPA
In December 2001, we also launched Trias™SPA, a plasma nitridation system that enables
damage-free plasma processing to incorporate nitrogen in gate dielectric films. Use of this producteliminates the need for thermal annealing to remove crystal defects caused by plasma damage.
Trias™SPA has a high sales growth potential due to its extendability to other key processes foradvanced logic, DRAM and flash memory.
• SRTF
Single Wafer Rapid Thermal Furnace, announced in July 2001, is a revolutionary system, featuring superior repeatability and cost-effectiveness of hot-wall thermal processors. It has the flexibility of a single wafer production system, as well as boasting extremely low power consumption.
Commercialization of the 200mm system has been concluded, with a 300mm system currently
under development.
Restructuring of Business Operations
Prompted by the deterioration in earnings during the fiscal year, we reviewed and restructured
our business organizations. In Japan and the United States, we focused on manufacturing operations, reorganizing to achieve better productivity and improve efficiency. Further details on thisrestructuring, please refer to To Our Shareholders in this annual report.
Tokyo Electron (Shanghai) Strengthens Company’s Position in Growing China Market
In view of the high-growth anticipated in the Chinese semiconductor market, we decided tostrengthen our support services in that market for both our semiconductor and FPD production
equipment. Accordingly, Tokyo Electron (Shanghai) Limited was established in Shanghai during the
fiscal year and operations commenced in April 2002. Although we have been providing customer
support services in China since 1996 on an agency basis, we have moved to a direct support service structure to further strengthen local services and increase our presence in the market. We alsoplan to extend our activity to include procurement within China. Tokyo Electron (Shanghai) began
operations with an initial staff of 70, and plans to add more employees according to business conditions in China.

21

Computer Network

17.0

14.1

12.4

12.9

15.3

CN division’s Sales(¥ Billions)1998 1999 2000 2001 2002

F5 Networks, Inc.
• Server Load Balancer

Net sales of the Computer Network (CN) division increased 21.2 percent to ¥17.0 billion supported by the division’s product strategies. The popularization of broadband communications has
raised several major issues for companies. They must achieve higher speed and greater security, as
well as cope with the storage and management of the explosive increase in the volume of data
being transferred via the Internet. One of the first to begin introducing products for these fields, theComputer Network division utilizes its accumulated technical capabilities to provide not only highperformance products but also the best business solutions for its customers.
In the network-related product segment, sales of Gigabit Ethernet switches from Extreme
Networks continued to expand favorably. Sales of Internet traffic management products from F5
Networks also advanced, increasing 1.8 times over the previous fiscal year, partially due to theintroduction of an Internet Protocol (IP) application switch incorporating the latest technology. The
especially strong spotlight on security, an essential component of Internet business, helped triple
sales of securities products from nCipher. During the fiscal year, the division also added the Caw
Networks’ Stress Testing Appliance to its lineup to reinforce its solutions for creating trouble-free
web sites for mission critical environments. This product allows the newly created web site to betested before its launch in a simulated environment that closely approximates real conditions.
The growing volume of data traffic enabled by broadband has brought storage area network(SAN) technology into the realm of practical use. Able to store huge volumes of data without placing
a burden on the network, SANs also allow for easy recovery of data should it become corrupt ordamaged. Accordingly, sales of Brocade Communications Systems’ Fibre Channel Fabric Switches,
which are key to constructing SANs, increased 1.6 times over the previous fiscal year. In responseto the growing interest in remote backups that save data at a distant location in the event of systemproblems, the division began handling the IP storage switches of Nishan Systems, expanding therange of its SAN solutions. These switches make possible the location of a SAN in a remote area.
Growing demand for video and audio transmission through networks prompted by the shift tobroadband on the Internet supported a four-fold increase in sales of Ruff Systems over the previous
fiscal year. Ruff Systems, which was developed jointly with the Communications ResearchLaboratory, an independent administrative institution, enables transmission of high-quality, uncompressed video under WindowsXP in an IPv6 environment, the next-generation Internet environment.
Leveraging capabilities in networks, SANs, and video transmission technologies, which are
the areas of expertise essential to the Internet, the division will continue to utilize its ability to discover and introduce state-of-the-art products in providing indispensable solutions for the Internet age.

nCipher Corporation Ltd.
• Hardware Security Module• SSL Accelerator

Nishan Systems• IP Storage Switch

Note: Product names and company names are trademarks or registered trademarks of their respective holders.

22 TOKYO ELECTRONSony Corp.
• High Performance Tape LibraryElectronic Components

73.7

89.2

72.1

57.7

60.1

EC division’s Sales(¥ Billions)1998 1999 2000 2001 2002

Net sales for the Electronic Components (EC) division declined 17.4 percent to ¥73.7 billion
amid weak demand for semiconductors in Japan. The division’s product lineup includes semiconductor products, board computer products, software, and other electronic components.
Semiconductor products accounted for 88 percent of divisional net sales. This category
includes semi-custom ICs, primarily Xilinx’s programmable logic devices (PLDs), that are finding
wider application in the market because of the trend to higher performance in electronic products
and the shortened product cycle; application-specific standard products (ASSPs) for communications-related applications; and other ICs. In its semiconductor product lineup, the division focuseson products with growth potential in information network-related fields and high-value-added products that require technical support. Despite these strategies, their sales fell substantially during the
fiscal year because of deteriorating performance among electronic manufacturers, capital investment restraint, and other factors. Sales of board computer products, software, and other electronic
components also decreased. One of the highlights of this otherwise difficult year was the division’s
reception of an award from Microsoft as the “Windows Embedded Partner of the Year”. Microsoft’s
products accounted for 87% of the division’s software sales.
Against the backdrop of the rapid development of broadband services, the division is seeking
out products focused on information network-related fields and the digital consumer market that is
emerging as a result of the digitization of consumer appliances. During the past fiscal year, the division newly concluded distribution agreements with such global semiconductor companies as Texas
Instruments and Infineon Technologies.
The division operates design & development centers where its broad experience is used todevelop semi-custom ICs on a contract basis that meet the specific needs of customers. During thepast fiscal year, the division opened a new design & development center in Sendai to strengthen its
design and development organization. Design & development centers are also concentrating on thedesign and development of original products based on communication interface and memory control technologies.
Looking forward, the division will continue to emphasize the discovery of new suppliers andproducts. In addition, the division will work to establish a strong foundation as a “technology” trading company by sales and marketing high-value-added products that require technical support, utilizing its technical capabilities to design and develop semi-custom ICs, and strengthening development of original products.

Note: Product names and company names are trademarks or registered trademarks of their respective holders.

23Management’s Discussion and Analysis
Sales and Income
Business Environment

addition to the sales of these three divisions, others sales contributed 0.3

World economic trends during the fiscal year ended March 31,
2002 were marked by signs of a continuing global recession as the impact

percent of net sales, at ¥1.4 billion
Consolidated orders received for the fiscal year under reviewof the economic slowdown triggered by the collapse of the IT bubble in the

totaled ¥295.3 billion, down 59.8 percent from the previous fiscal year,

U.S. rippled out to Europe and Asia. Japan’s economy also faced harsh

and balance of orders at the end of the fiscal year fell 44.5 percent toconditions as corporate performances continued to deteriorate.

¥152.8 billion. Despite the substantial decline, SPE orders rebounded in

In the electronics market, demand was stagnant for IT-related

the fourth quarter after an interval of six quarters .

products, such as personal computers, mobile phones, and others,
resulting in a sharp downturn of the semiconductor market, which provides the main components for these products. Accordingly, semicon-

Cost of Sales, SG&A Expenses and Operating Income
Although cost of sales fell 34.1 percent to ¥302.3 billion, cost of

ductor and LCD manufacturers substantially cut their capital investments.

sales as a percentage of net sales surged to 72.3 percent from 63.4

Entering 2002, however, semiconductor inventory build-ups

percent for the prior fiscal year. This increase was attributed to thecaused by the imbalance in demand and supply began to clear andincrease in the production fixed cost ratio caused by the decline in fac-semiconductor-related markets started to show signs of recovery.

tory utilization together with inventory evaluation losses and inventory
disposals totaling ¥10.3 billion. Consequently, the gross margin fell 8.9

Sales

points to 27.7 percent.
Significantly affected by the worsening global business climate men-

Selling, general and administrative expenses decreased 7.0 per-tioned above, consolidated net sales decreased 42.3 percent from thecent to ¥133.9 billion, primarily due to the reductions in personnel

prior fiscal year to ¥417.8 billion for the fiscal year ended march 31, 2002.

expenses. In consideration of their importance, research and develop-

Geographically, domestic sales declined 37.7 percent to ¥186.5

ment (R&D) expenses, which are included in SG&A expenses, werebillion and overseas sales dropped 45.5 percent to ¥231.3 billion. As a

excluded from cost reduction efforts during the fiscal year. R&D expens-result, the contribution of overseas sales to net sales declined to 55.4

es, therefore, edged up 1.7 percent to ¥53.8 billion, maintaining thepercent from 58.7 percent in the previous fiscal year.

record level as reported in the prior fiscal year. R&D expenses were allo-

By division, Semiconductor Production Equipment (SPE) sales,

cated principally to the development of next generation products andwhich include sales of FPD production equipment, slipped 47.4 percent toprocesses, including 300 mm wafer equipment, and of new business¥325.7 billion. Computer Network sales increased 21.2 percent to ¥17.0

fields. Despite the cost reduction efforts and a decline in SG&A expens-billion, supported by growth in products for high-speed network technolo-es, operating income dropped ¥139.4 billion resulting in an operating

gy and various server products. Electronic Components sales dropped

loss of ¥18.3 billion because of the substantial impact of the drop in

17.4 percent to ¥73.7 billion. For a more detailed description of divisionalgross profit.

performances, please see the Review of Operations (pages 20 to 23). In

417.8

723.9

440.7

313.8

455.6

417.8

723.9

Net Sales &Operating Income(¥ Billions)

1999

Japan

24 TOKYO ELECTRON

2000

2001

Overseas

2002

1998

121.1
1999

Net Sales

2000

-18.3

35.8

6.4

63.8

184.0

186.5

299.3

164.0
149.8

230.6
1998

231.3

256.7

225.0

424.6

440.7

313.8

455.6

Domestic and Overseas Sales(¥ Billions)

2001

2002

Operating Income

Other Income (Expenses) and Net Income

posting a loss, Tokyo Electron continued to return profits to shareholders, paying annual cash dividends of ¥8.00 per share compared with

Net other expenses improved by ¥17.3 billion to ¥4.6 billion,
despite posting an extraordinary loss of ¥2.7 billion related to restructur-¥38.00 per share in the prior fiscal year.

ing expenses, which included the disposal of assets and additional personnel expenses incurred during the restructuring of a part of our

Impact of Fluctuation in Foreign Exchange Rates on

domestic and overseas bases. This improvement resulted from the lack

Performanceof any major expenses, such as the ¥16.0 billion charge related to the

Changes in exchange rates have no material effect on Tokyo

difference due to the application of new accounting standards for retire-

Electron’s results because exports from Japan are generally denominat-

ment benefits recorded in the previous fiscal year. Income before

ed in yen. While some settlements are denominated in U.S. dollars,

income taxes fell ¥122.1 billion from the prior fiscal year to a loss of

exchange risk is hedged by concluding forward exchange contracts¥22.9 billion.

individually at the time of orders are received. Also, contribution of U.S.

Net income reversed from ¥62.0 billion in the prior fiscal year to adollar-denominated transactions involving foreign-made merchandise

loss of ¥19.9 billion in the fiscal year under review. Similarly, net income

imported to Japan is comparatively low and did not have a material

per share slid from ¥353.76 to a net loss per share of ¥113.85. Despite

effect in the year ended March 31, 2002.

Thousands of
U.S. dollars

Millions of yen (percentage of net sales)

2002

2001

2000

2002

Net sales¥417,825 (100.0)¥723,880 (100.0)¥440,729 (100.0)$3,136,831

Cost of sales

302,270(72.3)

458,902(63.4)

303,839(68.9)

2,269,298

Gross profit

115,555(27.7)

264,978(36.6)

136,890(31.1)

867,533

SG&A expenses

133,865(32.0)

143,892(19.9)

101,074(23.0)

1,005,000(137,467)

Operating income (loss)(18,310)–

121,086(16.7)

35,816(8.1)

Other income (expenses)(4,609)–(21,954)–(6,127)–(34,603)

Income (loss) before income taxes(22,919)–

99,132(13.7)

29,689(6.7)(172,070)

Provision for income taxes(2,990)–37,099

(5.1)

9,836

(2.2)

(22,447)

Minority interest

8

(0.0)

21

(0.0)

5

(0.0)

62

Net income (loss)(19,938)–¥ 62,012(8.6)¥ 19,848(4.5)(149,685)

R&D Expenses(¥ Billions)

30.00

2002

1998

8.00

53.8

2001

38.00

52.9

2000

14.00

37.1

1999

12.00

26.8

1998

10.74

2000

2001

-7.02

12.35

17.34

112.14

26.8

Cash Dividends per Share &Payout Ratio(¥ / %)

1999

2002

Cash Dividends per Share
Payout Ratio

25

Financial Position and Cash Flows
Financial Position

less procurement of materials under lower production levels and a

Current assets at March 31, 2002 decreased 35.5 percent year

reduction in short-term borrowings and commercial paper. In addition,

on year to ¥353.4 billion, primarily because of a decrease in trade notes

accrued income taxes fell in line with Tokyo Electron’s lower income as

and accounts receivable and inventories along with the decrease in

did allowance for employees’ bonuses. Working capital contracted tosales. Inventory turnover fell to 2.89 times compared with 5.27 times in¥243.9 billion from ¥309.8 billion in the previous fiscal year, but the cur-the previous fiscal year. Trade notes and accounts receivable turnoverrent ratio improved to 3.2 to 1 from 2.3 to 1 a year earlier.
Tokyo Electron’s long-term debt declined 11.4 percent year on

was 1.77 times, compared with 3.03 times for the prior fiscal year.

year to ¥139.8 billion. Although the Company did receive proceeds ofProperty, plant and equipment increased 7.8 percent to ¥134.5
billion year on year. Gross increase of property, plant and equipment¥5.5 billion from the issue of 5th bonds with warrants, the shift of theduring the fiscal year was ¥30.9 billion, consisting primarily of thecurrent portion of long-term debt to current liabilities and the repayment

increase in measuring equipment for evaluation and capitalization of theof loans resulted in an overall decrease in long-term debt.
Outstanding balance of equity-linked bonds at March 31, 2002

Company’s own products for research and development.

was ¥25.5 billion. The potential number of shares of all convertible

Investments and other assets rose 22.0 percent to ¥69.0 billion.
The main factor in this increase was the ¥15.2 billion rise in deferred tax

bonds and bonds with warrants at the balance sheet date represented

assets compared with the previous fiscal year related to losses carryfor-

3.3 percent of total common stock issued and outstanding.
Shareholders’ equity decreased 7.7 percent to ¥307.6 billion, dueward. Investments in securities decreased ¥2.1 billion from a year earlier. Total assets declined 23.7 percent to ¥556.9 billion, primarily

to the contraction in retained earnings. However, as a percentage of total

because of the drop in current assets.

assets, shareholders’ equity rose to 55.2 percent from 45.7 percent a
year earlier. Return on average total shareholders’ equity fell to minus 6.2

Current liabilities declined 54.1 percent to ¥109.5 billion. Major

percent from a positive 20.4 percent in the previous fiscal year.

factors were a decrease in trade notes and accounts payable due to

0.47

0.42

0.55

0.57

243.9

1998

1999

2000

2001

2002

3.23
2000

2001

Working Capital
Current Ratio

26 TOKYO ELECTRON

Debt-to-Equity Ratio(Times)
0.52

1999

309.8

1998

2.30

2002

228.7

228.4

2001

2.56

30.9

2000

221.7

49.4

1999

4.21

19.0

1998

2.58

16.9

Working Capital & Current Ratio(¥ Billions / Times)

28.7

Capital Expenditures for
Property, Plant and Equipment(¥ Billions)

2002

Cash Flows

equipment totaling ¥31.0 billion mainly comprised the purchase of
equipment for R&D.

Net cash provided by operating activities amounted to ¥77.6 bil-

Net cash used in financing activities amounted to ¥57.2 billion

lion, improving significantly from net cash used of ¥29.4 billion a year
earlier. The sum of net income and depreciation and amortizationcompared with net cash provided by financing activities of ¥77.2 billion

dropped substantially to ¥6.4 billion from ¥83.7 billion, but the decreas-a year earlier. Although Tokyo Electron raised ¥5.5 billion from the issue

es in trade notes and accounts receivable and inventories reducedof 5th bond with warrants, there was no other corporate bond funding,working capital substantially, contributing to an improvement in operat-

and redemption of commercial paper and redemption of borrowings

ing cash flow.

resulted in a net cash use. Cash and cash equivalents at the end of theyear totaled ¥48.4 billion, down 25.9 percent from ¥65.3 billion at theNet cash used in investing activities was ¥35.8 billion, down fromend of the prior fiscal year.

¥62.4 billion in the prior fiscal year. Investment in property, plant andThousands of
U.S. dollars

Millions of yen (percentage of total assets)

Total assets

2002

2001

2002

¥556,915 (100.0)¥729,511 (100.0)$4,181,046

Cash and cash equivalents

48,409(8.7)

65,320(9.0)

363,433

Trade notes and accounts receivable

167,982(30.2)

302,953(41.5)

1,261,128

Inventories

127,352(22.9)

161,981(22.2)

956,099

Investments and other assets

68,981(12.4)

56,549(7.8)

517,875

Property, plant and equipment

134,511(24.2)

124,721(17.1)

1,009,842

Total liabilities

249,278(44.8)

396,172(54.3)

1,871,460

Short-term borrowings

13,924(2.5)

48,462(6.6)

104,534

Trade notes and accounts payable

41,053(7.4)

87,350(12.0)

308,202

Accrued income taxes

1,663

(0.3)

41,440(5.7)

12,486Long-term debt, less current portion

105,452(18.9)

126,348(17.3)

791,680

Shareholders’ equity¥307,579(55.2)¥333,281(45.7)$2,309,148

42.7

19.8

39.3

83.7

6.4

1998

307.6

2002

333.3

261.0

2001

Net Cash Flow(¥ Billions)

1998

1999

2000

2001

2002

20.4

55.2

2000

273.6

45.7

1999

257.7

54.8

1998

-6.2

0.7

7.5

12.8

62.1

Shareholders’ Equity & ROE(¥ Billions / %)52.9

Shareholders’ Equity Ratio
(%)

1999

2000

Shareholdes’ Equity
Return on Equity

2001

2002

Net Cash Flow =Net income + Depreciation and Amortization

27

Board of Directors, Statutory Auditors and Corporate Senior Staff(As of June 21, 2002)

Yoshinori Inoue
General Manager, Test Systems BU

Yasuyuki Kuriki
General Manager, Thermal Processing
Systems BU

Haruo Iwatsu
General Manager, Cleaning Systems BU

Masao Kubodera
Global General Manager, Research &Development Group

Takaaki Matsuoka
Global General Manager,
Marketing Group

Takao Kodama
Left to right: Mitsutaka Yoshida, Tetsuro Higashi, Tetsuo Tsuneishi, Takeo Tanaka

Global General Manager, IT Center

Takashi Nakamura

Board of Directors

Statutory Auditors

Corporate Senior Staff

Tetsuro Higashi

Keiichiro Kuriyama

Tetsuro Higashi

C.E.O., President
Tokyo Electron Limited

Tokyo Electron Limited

Tetsuo Tsuneishi

Tokyo Electron Limited

Takanori Suzuki
Fujio Kimura

Takeo Tanaka

Hiroshi Maeda

Corporate Officer
Tokyo Electron Limited

Tetsuo Tsuneishi
Corporate Officer, Executive Vice President

Takeo Tanaka

Corporate Officer
Executive Vice President
Tokyo Electron Limited
12

C.E.O., President

Tokyo Electron Limited

Mitsui, Yasuda, Wani & Maeda

Mitsutaka Yoshida

Corporate Officer
Global General Manager,
Administration Group

Mitsutaka Yoshida
Corporate Officer
Global General Manager,
Manufacturing Group

Makoto Mizokuchi

Corporate Officer
Tokyo Electron Limited

Executive Manager
Global General Manager, Business
Development & Account Management Group

Junichi Inoue 1
Corporate Director
Tokyo Electron AT Limited

Hirosuke Ishibashi 2 3Noriyuki Kuga
Global General Manager,
Finance/Accounting/Order Process

Takayoshi Ida
General Manager, Business Development &Account Management, Japan

Kiyoshi Sunohara
General Manager, Business Development &Account Management, North America/Europe

Hironobu Sato
General Manager, Business Development &Account Management, Asia

Kengo Kuroiwa
President, Tokyo Electron Tohoku Limited

Mamoru Hara
President, Tokyo Electron AT Limited

Mitsuru Onozato

Megumi Yamashiro

Executive Manager
General Manager, Litho-cell Group

President, Tokyo Electron Kyushu Limited

Gerald Thurgood

Tokyo Electron Limited

Global General Manager, Human
Resources/General Affairs/EHS

Hitoshi Katsuyama
President, Tokyo Electron EE Limited

Executive Manager, Corporate Strategy

Mamoru Hara 2

Kousuke Ishii

President
Tokyo Electron AT Limited

General Manager, Test & Integrated Process
Control Group

Yukio Sunahara

Ryuichi Komatsubara

President
Tokyo Broadcasting Systems, Inc.

General Manager, Thin Film & Cleaning Group

Toshiyuki Kondo 1

General Manager, FPD Systems Group

President
SRL, Inc.

Kiyoshi Sato

Hiroshi Tomita

General Manager, Clean Track BU

Hiroki Takebuchi
Notes:
1 Member of Compensation Committee
2 Member of Nomination Committee
3 Chief Business Ethics Director

28 TOKYO ELECTRON

General Manager, Etch Systems BU

Keiichi Furugaki
President, Tokyo Electron FE Limited

Toshiaki Sunagawa
President, Tokyo Electron Device Limited

Barry R. Rapozo
President, Tokyo Electron America, Inc.

David BroughPresident, Tokyo Electron Europe Limited

T. K. Kwak
President, Tokyo Electron Korea Limited

Archie Hwang
President, Tokyo Electron Taiwan Limited

BU indicates Tokyo Electron’s product-specific business unit.

af9375_アニュアルレポート(ワード).doc 02/7/5 16 時 39 分

Consolidated Six-Year SummaryTokyo Electron Limited and its Subsidiaries
Years ended March 31, 2002, 2001, 2000, 1999, 1998 and 1997

Thousands of
U.S. dollars
2002
Net sales .................................................................... $3,136,831-

Millions of yen
2002

2001

2000

1999

1998

1997

¥417,825-¥723,880-¥440,729-¥313,820-¥455,585-¥432,785-

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

2,445,309-

325,715-

619,001-

355,103-242,240-

380,184-

355,877-

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

127,864-

17,031-

14,054-

12,357-

12,878-15,262-

14,408-

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

552,986-

73,658-89,211-

72,051-

57,734-60,139-62,500-

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

10,672-

1,421-

1,614-

1,218-

968-

--

--

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

(137,467)(18,310)

121,086-

35,816-

6,383-

63,296-

60,389-

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

(172,070)(22,919)

99,132-

29,689-6,038-

62,834-60,487-

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

(149,685)(19,938)

62,012-

19,848-1,866-

30,009-29,975-

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

1,400,277-

186,516-

299,272-

183,987-

149,838-

230,550-

256,808-

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

1,736,554-

231,309-424,608-

256,742-

163,982-

225,035-

175,977-

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

197,406-

26,294-

21,679-19,446-

17,921-

12,652-

10,167-

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

232,327-

30,946-49,403-18,999-23,478-33,302-

18,456-R&D expenses ...........................................................

404,105-

53,827-52,911-37,135-

26,842-

26,813-

20,988-

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

4,181,046-

556,915-

729,511-499,499-

414,903-493,600-

387,077-

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

2,309,148-

307,579-

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

261,009-

207,476-

10,171-

10,236-

8,946-

7,835-

7,287-

6,277-

10.70-¥ 174.68-¥ 181.97---

168.43-172.74-

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

3

Basic ..................................................................... $Diluted4 .................................................................

(0.85)¥ (113.85)¥ 353.76-¥ 113.53-----

344.75-110.64-¥

Cash dividends per share of common stock:
Actual....................................................................

0.06-

8.00-

38.00-

14.00-

12.00-

30.00-

28.00-

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

0.06-

8.00-

38.00-

14.00-

12.00-

30.00-

25.45-

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

175,691-

175,691-

175,660-

174,624-

174,569-

150,189-

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

37,116-42,781-

7,147-

8,576-

9,562-

11,097-

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

(6.2)

20.4-

7.5-

0.7-

12.8-

15.4-

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

(4.4)

16.7-

8.1-

2.0-

13.9-

14.0-

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

55.2-

45.7-

54.8-

62.1-

52.9-

53.6-

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

0.65-

1.18-

0.96-

0.69-

1.03-

1.10-

¥ 41,080-¥ 70,719-¥ 49,265-¥ 62,520-¥ 68,948-

Percent

U.S.dollars
Net sales per employee ............................................ $ 308,409-

Thousands of yen¥ 40,054-

1 Results are retroactively restated due to a structural reorganization in fiscal 1997. The FPD, Flat Panel Display, Department 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.
represent the gross increase in property, plant and equipment.

Capital expenditures from 2000 only

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 years ended March 2002 and 1999.

29

af9375_アニュアルレポート(ワード).doc 02/7/5 16 時 39 分

Consolidated Balance Sheets
Tokyo Electron Limited and its Subsidiaries
March 31, 2002 and 2001

ASSETS

Thousands of
U.S. dollars

Millions of yen

2002

2001

2002

Cash and cash equivalents (Note 4) .....................................................

¥ 48,409-¥ 65,320-$ 363,433-

Marketable securities (Note 5) ..............................................................

10-

--

75-

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

167,982-

302,953-

1,261,128-

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

(620)(1,720)(4,656)Inventories (Note 6)...............................................................................

127,352-

161,981-956,099-

Deferred tax assets (Note 10) ...............................................................

3,402-

12,659-25,539-Prepaid expenses and other current assets .........................................

6,888-

7,048-

51,711-

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

353,423-548,241-

2,653,329-

Investments in securities (Note 5).........................................................

9,535-

11,599-71,584-

Deferred tax assets (Note 10) ...............................................................

22,591-

7,394-

169,605-

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

36,855-37,556-276,686-

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

68,981-56,549-517,875-

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

19,908-

19,698-

149,456-

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

114,586-

106,753-

860,255-

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

95,615-84,607-

717,832-

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

5,139-

853-

38,581-

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

235,248-

211,911-

1,766,124-

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

100,737-

87,190-756,282-

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

134,511-

124,721-1,009,842-

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

¥556,915-¥729,511-$4,181,046-

Current assets:

Investments and other assets:

Property, plant and equipment:

See accompanying Notes to Consolidated Financial Statements.

30

TOKYO ELECTRON

af9375_アニュアルレポート(ワード).doc 02/7/5 16 時 39 分

LIABILITIES AND SHAREHOLDERS' EQUITY

Thousands of
U.S. dollars

Millions of yen

2002

2001

2002

Short-term borrowings (Note 8).............................................................

¥ 13,924-¥ 48,462-$ 104,534-

Current portion of long-term debt (Note 8) ............................................

26,387-2,970-

198,104-

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

10,000-30,000-75,075-Trade notes and accounts payable .......................................................

41,053-87,350-308,202-

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

1,663-

41,440-12,486-

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

2,463-

10,948-18,494-

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

14,012-

17,271-

105,192-

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

109,502-

238,441-

822,087-

Long-term debt, less current portion (Note 8).......................................

105,452-

126,348-

791,680-

Allowance for retirement and severance benefits (Note 9)..................

32,984-29,807-

247,625-

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

1,340-

1,576-

10,068-

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

249,278-

396,172-

1,871,460-

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

58-

58-

438-

47,214-47,213-354,458-

Additional paid-in capital (Note 11) .......................................................

70,276-70,275-527,596-

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

190,195-

214,920-

1,427,892-

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

1,171-

1,658-

8,790-

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

3,738-

2,734-

28,061-

Treasury stock at cost (Note 12) ...........................................................

(5,015)(3,519)(37,649)

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

307,579-

333,281-2,309,148-

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

¥556,915-¥729,511-$4,181,046-

Current liabilities:

Shareholders’ equity:
Common stock (Note 11) ......................................................................
Authorized: 300,000,000 shares
Issued and outstanding: 175,691,903 at March 31, 2002
175,691,269 at March 31, 200131

af9375_アニュアルレポート(ワード).doc 02/7/5 16 時 39 分

Consolidated Statements of Operation
Tokyo Electron Limited and its Subsidiaries
Years ended March 31, 2002, 2001 and 2000

Thousands of
U.S. dollars

Millions of yen

2002

2001

2000

2002

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

¥417,825-¥723,880-¥440,729- $3,136,831-

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

302,270-

458,902-

303,839-2,269,298-

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

115,555-

264,978-

136,890-

867,533-

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

133,865-

143,892-

101,074-

1,005,000-

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

(18,310)

121,086-

35,816-(137,467)

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

351-

669-

276-

2,635-

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

(1,960)(2,378)(1,960)(14,713)

Patent royalties for prior years .........................................

----(1,575)--

Devaluation of golf memberships.....................................

(75)

(35)

(1,253)(565)

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

(1,236)(1,552)--(9,278)retirement benefit accounting standards (Note 9) ......

--(15,975)----

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

(1,689)(2,683)(1,615)(12,682)

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

(22,919)

99,132-

29,689-(172,070)

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

2,612-

50,589-14,545-

19,610-

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

(5,602)(13,490)(4,709)(42,057)

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

8-

21-

5-

62-

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

¥ (19,938)¥ 62,012-

Other income (expenses):

Amortization of discrepancy arising from adoption ofProvision for income taxes (Note 10):Per share of common stock:

Yen

U.S. dollars

Net income (loss) — basic ...............................................

¥ (113.85)¥ 353.76-¥ 113.53-

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

--

344.75-110.64---

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

8.00-

38.00-

14.00-

0.06-

See accompanying Notes to Consolidated Financial Statements.

32¥ 19,848- $ (149,685)

TOKYO ELECTRON$(0.85)

af9375_アニュアルレポート(ワード).doc 02/7/5 16 時 39 分

Consolidated Statements of Shareholders' Equity
Tokyo Electron Limited and its Subsidiaries
Years ended March 31, 2002, 2001 and 2000

Thousands of
U.S. dollars

Millions of yen

2002

2001

2000

2002

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

¥ 47,213-¥ 47,163-

Conversion of convertible bonds (Note 11)......................

1-

50-

1,631-

8-

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

47,214-47,213-47,163-354,458-

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

70,275-70,225-68,594-

527,588-

Conversion of convertible bonds (Note 11)......................

1-

50-

1,631-

8-

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

70,276-70,275-70,225-527,596-

214,920-

157,876-

144,715-

1,613,516-

reporting entity, net .....................................................

----(7,309)--Cumulative effect of applying deferred tax accounting ....

----

2,717---Net income (loss) for year ................................................

(19,938)

62,012-

19,848-(149,685)

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

(4,031)(4,734)(2,095)(30,260)

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

(756)

(234)

--

(5,679)Balance at end of year .....................................................

190,195-

214,920-

157,876-

1,427,892-

Unrealized holding gains arising during the period ..........

1,171-

1,658---

8,790-

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

3,738-

2,734---

28,061-

Treasury stock, at cost (Note 12) .......................................

(5,015)(3,519)(1,661)(37,649)¥307,579-¥333,281-

Common stock¥ 45,532- $ 354,450-

Additional paid-in capital

Retained earnings
Balance at beginning of year............................................
Increase (decrease) resulting from change in

Unrealized gains on securities( 2000: 303,761 shares; 2001: 407,556 shares
2002: 605,867 shares)
Total shareholders' equity ..................................................

¥273,603- $2,309,148-

See accompanying Notes to Consolidated Financial Statements.

33

af9375_アニュアルレポート(ワード).doc 02/7/5 16 時 39 分

Consolidated Statements of Cash Flows
Tokyo Electron Limited and its Subsidiaries
Years ended March 31, 2002 and 2001

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 (decrease) in allowance for employees’ bonuses ........................
Interest expenses ........................................................................................
Loss on disposal of fixed assets .................................................................
Devaluation of investments in securities .....................................................
Loss from devaluation of golf memberships ...............................................
(Increase) decrease in trade notes and accounts receivable .....................
(Increase) decrease in inventories ..............................................................
Increase (decrease) in accounts payable ...................................................
(Increase) decrease in prepaid consumption tax ........................................
Others..........................................................................................................
Subtotal ......................................................................................................
Receipts from interest and dividends ..........................................................
Interest paid.................................................................................................
Income taxes paid .......................................................................................
Net cash provided by (used in) operating activities..............................
Cash flow from investing activities:
Payment for purchase of property, plant and equipment............................
Payment for acquisition of intangible assets...............................................
Payment for purchase of newly consolidated subsidiaries .........................
Others..........................................................................................................
Net cash used in investing activities ......................................................
Cash flow from financing activities:
Increase (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 in treasury stock ...........................................................................
Dividends paid.............................................................................................
Others..........................................................................................................
Net cash provided by (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 4).....................................

See accompanying Notes to Consolidated Financial Statements.

34

TOKYO ELECTRON

Thousands of
U.S. dollars

2002

2001

2002

¥(22,919)
26,2943,164(8,501)
1,9808511,23675131,25128,359(34,166)
3,901(8,500)
123,025351(1,970)(43,848)
77,558-¥ 99,13221,67918,2283,4822,3812,4921,55235(121,669)(53,666)
9,709(4,859)
13,282(8,222)
671(2,295)(19,596)(29,442)$(172,070)
197,40623,756(63,820)
14,8626,3889,278565985,370212,909(256,505)
29,290(63,812)
923,6172,632(14,790)(329,189)
582,270-(31,006)(5,390)-607(35,789)(39,155)(4,568)(18,867)
231(62,359)(232,779)(40,468)-4,558(268,689)(34,796)(20,000)
37(3,018)
6,095-(1,496)(4,030)(6)(57,214)(1,437)(16,882)
65,291¥ 48,409-

23,92730,0008,671(3,757)
54,938(30,000)(1,859)(4,733)(5)
77,182391(14,228)
79,519¥ 65,291-(261,231)(150,150)
281(22,656)
45,755-(11,228)(30,260)(44)(429,533)(10,785)(126,737)
490,170$ 363,433-

af9375_アニュアルレポート(ワード).doc 02/7/5 16 時 39 分

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 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 all of its 30 subsidiaries.
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 one
foreign subsidiary, which uses 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 made at the rate of ¥133.20 to $1.00, theapproximate rate at March 31, 2002. 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.

(b) Foreign currency translation
In accordance with the revised Japanese accounting standards
effective April 1, 2000, all assets and liabilities denominated in foreign
currencies are translated 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.
Foreign currency translation adjustments previously classified in
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.

(c) Marketable securities and investments in securities
In accordance with the revised Japanese accounting standards
effective April 1, 2000, securities with market prices are valued atmarket based on market prices on the fiscal year-end. Other
securities 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.

(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.

(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 Parent Company and its domestic
subsidiaries at rates based on the estimated useful lives of assets,
while the straight-line method is mainly applied for foreignsubsidiaries 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. 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) Leases
Finance lease transactions, unless the lessee practically acquires
legal title to the leased asset, are treated as operating leasetransactions.

(h) Income taxes
The Company records deferred tax assets and liabilities on
temporary differences between the carrying amounts of assets andliabilities for financial reporting purposes and the amounts used forincome tax purposes.

(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 thefiscal year-end.

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

35

af9375_アニュアルレポート(ワード).doc 02/7/5 16 時 39 分(k) Amortization of consolidated goodwill

6. Inventories

Consolidated goodwill is evaluated on an individual basis andamortized not exceeding 20 years, and the balance is included in the
Intangible and other assets.

(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.
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 such March 31 but applicable to the year thenended.

3. Acquisitions
The Company during the fiscal year end on March 31, 2001 has
acquired all of the shares of Supercritical Systems, Inc. and Timbre
Technologies, Inc. The assets and liabilities of the acquiredcompanies are as follows:¥160-

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

62-

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

18,975-Current liabilities ...............................................................................

(216)

Total acquisition cost ........................................................................

18,981-

Cash or cash equivalents .................................................................

(114)

Net acquisition cost ..........................................................................

¥18,867-

4. Cash and cash equivalents
Cash and cash equivalents at March 31, 2002 and 2001 are as
follows:

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

Finished products ................................

2002

2001

2002

¥ 63,730-¥ 58,878-$478,455-

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

63,622-

103,103-477,644-

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

¥127,352-¥161,981-$956,099-

7. Pledged Assets
The Company did not hold any assets pledged as collateral at
March 31, 2002 and 2001.

Short-term borrowings are represented by 365-day notes issued by
the Company to banks and bore interest at the average annual rate of
1.12% at March 31, 2002 and 1.08% 2001, Long-term debt at March
31, 2002 and 2001 is as follows:
Thousands of
U.S. dollars

Millions of yen
2002

2001

2002

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

¥ 15,500-¥ 15,502-$116,366-

2.00% unsecured bonds due 2002......

20,000-20,000-150,150-

1.39% unsecured bonds due 2004......

20,000-20,000-150,150-

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

20,000-20,000-150,150-

1.30% unsecured bonds due 2005......

30,000-30,000-225,225-

4,500-

4,500-

33,785-

1.59% unsecured bonds withThousands of
U.S. dollars

Millions of yen

Thousands of
U.S. dollars

Millions of yen

8. Short-Term Borrowings and Long-Term Debt

Millions of yen
Current assets ..................................................................................

Inventories at March 31, 2002 and 2001 are as follows:

warrants due 2006 ...........................
0.86% unsecured bonds with

2002

2001

2002

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

5,500---

41,291-¥48,409-¥65,320-$363,433-

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

16,339-19,316-

122,667-

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

--

(29)

--

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

(26,387)(2,970)(198,104)

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

¥48,409-¥65,291-$363,433-

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

¥105,452-¥126,348-$791,680-

5. Marketable Securities and Investments in Securities
Marketable securities at March 31, 2002 and 2001 are as follows:
Thousands of
U.S. dollars

Millions of yen
Mutual funds ........................................

A summary of terms and conditions of the unsecured convertible
bonds is as follows:
0.90% unsecured convertible bonds due 2003
Bond amount ............................................................. ¥15,500 million

2002

2001

2002

Interest rate................................................................ 0.90%¥10----¥ -----$75----

Issued stocks ............................................................. Common stock
Conversion price........................................................ ¥3,150 per share

Investments in securities at March 31, 2002 and 2001 are as
follows:

subject to adjustment
in certain events.

Thousands of
U.S. dollars

Millions of yen
2002

2001

2002

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

¥8,545-¥10,577-$64,150-

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

115-

113-

866-

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

875-

909-

6,568-

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

¥9,535-¥11,599-$71,584-

Convertible period...................................................... June 1, 1994-September
29, 2003

A summary of terms and conditions of the bonds with warrants is
as follows:
1.59% unsecured bonds with warrants due 2006
Bond amount ............................................................. ¥4,500 million
Interest rate................................................................ 1.59%
Issued stocks ............................................................. Common stock
Exercise price ............................................................ ¥14,070
Exercise period .......................................................... July 1, 2002-June 8, 2006

36

TOKYO ELECTRON

af9375_アニュアルレポート(ワード).doc 02/7/5 16 時 39 分

0.86% unsecured bonds with warrants due 2007

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

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

2002

2001

Issued stocks .............................................................. Common stock

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

Exercise price ............................................................. ¥9,608

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

3.00%

3.50%

Exercise period ........................................................... July 1, 2003-June 7, 2007

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

3.00%

3.00%

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

--

4 years

4 years

9. 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 arecovered by a contributory pension plan, whose benefits are based on
length of service and certain other factors and include a portion
representing the government 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.
The funded status of the defined benefit plans, a substantial
portion of which consists of domestic benefit plans, as of March 31,
2002 and 2001 is as follows:
Thousands of
U.S. dollars

Millions of yen
Benefit obligation ..................................

2002

2001

2002

¥(59,125)¥(46,449)$(443,880)

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

18,021-

15,575-

135,292-

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

(41,104)(30,874)(308,588)

Unrecognized actuarial difference ........

9,390-

2,175-

70,495-

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

¥(31,714)¥(28,699)$(238,093)

Note: The annual provision for accrued retirement benefits for directors and corporate auditors(¥1,270 million in 2002, and ¥1,108 million in 2001) is not included.

Net pension cost of the plans is as follows:
Thousands of
U.S. dollars

Millions of yen
2002

2001

2002

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

¥4,3691,621-¥3,9421,418-$32,79712,170-

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

(467)

(419)

(3,508)difference ..........................................
Amortization of unrecognized

544-

Straight-line method

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

10. Income Taxes
Significant components of the deferred tax assets and liabilities of
the Company as of March 31, 2002 and 2001 are as follows:
Thousands of
U.S. dollars

Millions of yen
2002

2001

2002

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

¥17,100-¥2,447-$128,380-

Allowance for retirement benefits ......

9,252-

8,180-

69,462-

gain on inventories ...........................

1,931-

5,283-

14,496-

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

944-

--

7,084-

Deferred tax assets

Elimination of unrealized

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

738-

1,362-

5,544-

Foreign tax credit carryforwards ..........

785-

--

5,896-

Devaluation of golf memberships ........

547-

527-

4,103-

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

--

3,912---

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

--

2,101---

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

3,702-

3,371-

27,792-

Subtotal of deferred tax assets............

34,999-27,183-

262,757-

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

(3,979)(2,479)(29,874)

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

31,020-24,704-

232,883-(2,995)(1,974)(22,488)(1,103)(1,455)(8,280)

(754)

(884)

(5,663)

Deferred tax liabilities
Retained earnings offoreign subsidiaries ..........................
Revaluation of investment
in securities ......................................
Allowance for extraordinary--

4,087-

depreciation......................................
Revision of allowance fortransition obligation ...........................

--

15,975---

doubtful accounts .............................

--

(282)

--

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

¥6,067-¥20,916-$45,546-

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

(217)

(130)

(1,625)

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

(5,069)(4,725)(38,056)

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

¥25,951-¥19,979-$194,827-37

af9375_アニュアルレポート(ワード).doc 02/7/5 16 時 39 分

11. Shareholders’ Equity
The Company issued 634 shares and 31,421 shares of common
stock in 2002 and 2001, respectively, in connection with conversion 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 toboth the 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
summary of share repurchases under the stock option plan during theyear ended March 31, 2002 is as follows:
Number ofsharesMillions ofyen

Thousands of
U.S. dollars

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

407,400-¥3,517-$26,404-

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

215,600-

1,565-

11,751-

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

(20,000)

(91)

(682)

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

603,000-¥4,991-$37,473-

Note: The Company has 2,867 shares (¥2４ million) of treasury stock other than for the purpose of
the stock option plan.

13. 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 leasee on an "as if capitalized" basis for theyears ended March 31, 2002 and 2001 is as follows:
Leased assets not recorded in the consolidated balance sheets:
Thousands of
U.S. dollars

Millions of yen
2002
Acquisition cost.....................................

¥876-

2001
¥35-

2002
$6,582-

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

69-

31-

524-

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

¥807-

¥ 4-

$6,058-Future minimum lease payments :Thousands of
U.S. dollars

Millions of yen
2002
Due within one year..............................

¥171-

2001
¥ 4-

2002
$1,285-Due over one year ................................

636-

--

4,773-

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

¥807-

¥ 4-

$6,058-38

TOKYO ELECTRON

Lease payments and depreciation computed by the straight-line
method over the lease terms with no residual value and imputed
interest expense were ¥69 million in the year ended March 31, 2002and ¥6 million in the year ended March 31, 2001.
Future minimum operating lease payments:
Millions of yen
Due within one year..............................

Thousands of
U.S. dollars

2002

2001

2002

¥ 868-¥ 474-$ 6,520-

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

1,976-

1,503-

14,832-

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

¥2,844-¥1,977-$21,352-

14. Segment Information
The Company operates in a single segment.

15. Contingent Liabilities
The Company did not hold any contingent liabilities at March 31,
2002.

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, 2002 and 2001, the related statements of income and shareholders’ equity foreach of the three years in the period ended March 31, 2002, and the statements of cash flows for the years
ended March 31, 2002 and 2001, all expressed in yen. Our examinations were made in accordance withauditing standards generally accepted in Japan and, accordingly, included such tests of the accounting
records and such other auditing procedures as we considered necessary in the circumstances.
In our opinion, the consolidated statements present fairly the financial position of Tokyo Electron
Limited and its consolidated subsidiaries at March 31, 2002 and 2001, the results of their operations foreach of the three years in the period ended March 31, 2002, and their cash flows for the year ended March
31, 2002 and 2001, 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 21, 2002

Masatoshi Yoshino

Eiji Miyashita

Fumihiko Sugiura

Certified Public Accountant

Certified Public Accountant

Certified Public Accountant

39Corporate Directory(As of June 21, 2002)

JAPANTOKYO ELECTRON LIMITEDWorld Headquarters
TBS Broadcast Center
3-6 Akasaka 5-chome, Minato-ku,
Tokyo 107-8481
Tel: 03-5561-7000
Fax: 03-5561-7400
URL: http://www.tel.co.jp/
Regional Offices
Fuchu Technology Center, Kansai Technology
Center, Osaka Branch Office, Kyushu Branch
Office, Yamanashi Regional Office (Fujii/Hosaka),
Tohoku Regional Office, Nagoya Sales OfficeTOKYO ELECTRON TOHOKU LIMITED
Tohoku Plant
52 Matsunagane, Iwayado
Esashi City, Iwate 023-1101

TOKYO ELECTRON DEVICE LIMITEDTOKYO ELECTRON DEUTSCHLAND GmbH

1 Higashikata-cho, Tsuzuki-ku
Yokohama City, Kanagawa 224-0045
Sales Offices
Sendai, Mito, Saitama, Tachikawa, Yokohama,Matsumoto, Nagoya, Osaka, Fukuoka,
Yokohama Office, Tokyo Office

Carl-Zeiss-Ring 5, 85737, Ismaning, Germany
Branch Offices
Alsdorf, DresdenTOKYO ELECTRON SWITZERLAND LIMITED
Chemin de Buchaux 38, CH-2022
Bevaix, Switzerland

TOKYO ELECTRON LEASING CO., LTD.
30-7 Sumiyoshi-cho 2-chome,
Fuchu City, Tokyo 183-8705

TOKYO ELECTRON NEDERLAND B.V.
Kerkenbos 10-15, Unit C
6546 BB Nijmegen, The Netherlands

TOKYO ELECTRON LOGISTICS LIMITED30-7 Sumiyoshi-cho 2-chome
Fuchu City, Tokyo 183-8705

TOKYO ELECTRON AGENCY LIMITED30-7 Sumiyoshi-cho 2-chome
Fuchu City, Tokyo 183-8705

TOKYO ELECTRON ESPAÑA S.L.
TOKYO ELECTRON IRELAND LIMITED
Collinstown Industrial Park, Leixlip, Co.
Kildare, Ireland

TOKYO ELECTRON ISRAEL LIMITEDTOKYO ELECTRON AT LIMITED
Miyagi Plant
1-1 Nekohazama, Nemawari, Matsushima-machi
Miyagi-gun, Miyagi 981-0203
Fujii Plant
2381-1 Kitagejo, Fujii-cho, Nirasaki City
Yamanashi 407-8511
Hosaka Plant
650 Mitsuzawa, Hosaka-cho
Nirasaki City, Yamanashi 407-0192

TOKYO ELECTRON KYUSHU LIMITED
Saga Plant
1375-41 Nishi-Shinmachi
Tosu City, Saga 841-0074
Kumamoto Plant
2655 Tsukure, Kikuyo-machi
Kikuchi-gun, Kumamoto 869-1197
Ozu Plant
272-4 Takaono, Ozu-machi
Kikuchi-gun, Kumamoto 869-1232
Koshi Plant
1-1 Fukuhara, Koshi-machi
Kikuchi-gun, Kumamoto 861-1116

AMERICATOKYO ELECTRON AMERICA, INC.
2400 Grove Boulevard, Austin,
Texas 78741
Branch Offices
Albuquerque, Boise, Burlington, Colorado
Springs, Dallas, Eugene, Fishkill, Los Angeles,
Manassas, Marlborough, Orlando, Phoenix,
Portland(Oregon), Richmond, Santa Clara

2500 Montopolis Drive, Austin
Texas 78741-6404

TOKYO ELECTRON MASSACHUSETTS, LLC.
123 Brimbal Avenue, Beverly
Massachusetts 01915

TOKYO ELECTRON ARIZONA, INC.
2120 West Guadalupe Road, Gilbert
Arizona 85233-2805

SUPERCRITICAL SYSTEMS, INC.
4160-A technology Drive, Fremont
California 94538

2-41 Machiya 1-chome, Shiroyama-machi
Tsukui-gun, Kanagawa 220-0101

TIMBRE TECHNOLOGIES, INC.

TOKYO ELECTRON SAPPORO LIMITED2953 Bunker Hill Lane, Suite 301
Santa Clara, CA 95054

Marumasu Building No. 18, Nishi 1-chome
Kita 7-jo, Kita-ku, Sapporo City,
Hokkaido 060-0807

EUROPE

30-7 Sumiyoshi-cho 2-chome
Fuchu City, Tokyo 183-8705
District Offices
Iwate, Tsuruoka, Matsushima, Aizuwakamatsu,
Mito, Nirasaki, Toyama, Kuwana, Osaka, HigashiHiroshima, Fukuyama, Saijo, Nagasaki, Kikuyo,
Ozu, Koshi, Oita

40 TOKYO ELECTRONTOKYO ELECTRON FRANCE S.A.R.L.
Grenoble Office
Batiment Alicante 1, Chemin de la Dhuy
38240 Meylan, France
Branch Offices
Paris, Rousset

TOKYO ELECTRON TEXAS, LLC.

TOKYO ELECTRON EE LIMITEDTOKYO ELECTRON FE LIMITED

5 Habarzel St., Gat 2000 Industrial Zone
Kiryat Gat, Israel
Branch OfficeMigdal HaEmek

TOKYO ELECTRON EUROPE LIMITED
Premiere House, Betts Way, London Road
Crawley, West Sussex, RH10 9GB, England U.K.
Branch Offices
European Distribution Centre, Livingston

TOKYO ELECTRON ITALIA S.p.A.
Centro Direzionale Colleoni, Palazzo Astrolabio
Via Cardano 2
20041 Agrate Brianza, Milan, Italy
Branch Offices
Avezzano, Catania

ASIATOKYO ELECTRON KOREA LIMITED
325-230 Dongchun-ri, Suji-up, Yongin-city
Kyonggi-do, 449-840 Korea
Branch Offices
Cheongju, Gumi, Icheon, Kiheung, Pucheon

TOKYO ELECTRON TAIWAN LIMITED
7FI, No.18, Pu-ding Road
Hsin-chu City, Taiwan 300, R.O.C.

TOKYO ELECTRON (SHANGHAI) LIMITED
30FI, No. 28, Xinjinquao Road
Pudong Shanghai, 201206, China
Branch Office
Tian Jin

Investor Information(As of March 31, 2002)

Corporate Name:Tokyo Electron Limited

Common Stock Listed on:
The Tokyo Stock Exchange 1st Section（♯8035）

Established:
November 11, 1963

Transfer Agent for Common Stock
Chuo Mitsui Trust and Banking Co., Ltd.
33-1 Shiba 3-chome, Minato-ku, Tokyo 105-8574, Japan

Annual General Meeting of Shareholders:June
Common Stock:
Stock trading unit
Authorized
Issued and outstanding
Number of shareholders

100 shares
300,000,000 shares
175,691,903 shares
37,116

Distribution of ownership among shareholders
Japanesefinancial institutions
85,089,371 shares(48.43%)

Other Japanese
corporations
15,646,079 shares(8.91%)For further information, contact at:
Investor Relations Department
Tokyo Electron Limited
3-6 Akasaka 5-chome, Minato-ku
Tokyo 107-8481
Tel：81-3-5561-7003
Fax：81-3-5561-7394
E-mail：ir@corp.tel.co.jp
http://www.tel.co.jp

Individuals andothers
15,838,277 shares(9.01%)
Foreign institutions
and others
59,118,176 shares(33.65%)

Quarterly Stock Price Range(¥)
22,000(Calender years)

20,00018,00016,00014,00012,00010,000
8,000
6,000
4,000
2,000
0

1999

2000

2001

2002

41

Printed in Japan on recycled paper
40AG-034