A N N UA L R E P O RT 2 0 0 0Year ended March 31, 2000
Customer
Satisfaction

Established in 1963, Tokyo Electron is a world-leading supplierof semiconductor production equipment (SPE) and related services for the semiconductor industry. The Company develops,
manufactures and markets a broad lineup of products, including
oxidation/diffusion/LP-CVD systems, metal CVD and PVD systems, coater/developers, spin-on dielectric (SOD) systems, etchsystems, cleaning systems, wafer probers and wafer-level burn-in& test systems.
Tokyo Electron also uses its accumulated expertise in SPE todevelop, manufacture and market coater/developers andetch/ash systems for the manufacture of TFT-LCD panels. Mostof the Company’s semiconductor and TFT-LCD 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, computer/networking systems and electronic components
in Japan from other leading suppliers.
With a network spanning 13 countries on three continents,
Tokyo Electron provides superior products and services to its
customers, and superior returns to its shareholders.

CONTENTS
1
2
6
8
16
19
23
33
34
36

Financial Highlights
To Our Shareholders
Tokyo Electron at a Glance
FeatureReview of Operations
Management’s Discussion and Analysis
Financial Section
Board of Directors, Statutory Auditors and Corporate Senior Staff
Corporate Directory
Investor Information

Forward-Looking Statements
This publication contains forward-looking statements basedon projections and estimates that involve many variables.
Tokyo Electron operates in an extremely competitive business environment and in an industry characterized by rapidchanges in technology and supply-demand balance. Certain
risks and uncertainties could cause the Company's results todiffer materially from any projections and estimates presented in this publication.

FINANCIAL HIGHLIGHTSTokyo Electron Limited and its Subsidiaries
Years ended March 31, 2000, 1999 and 1998

Thousands of
U.S. dollars (Note 1)

Millions of yen (Note 1)

2000

1999

1998

2000

FOR THE YEAR
Net sales ................................................................................... ¥440,729
Operating income ....................................................................
35,816
Income before income taxes ...................................................
29,689Net income...............................................................................
19,848¥313,820
6,383
6,038
1,866

¥455,585
63,296
62,83430,009$4,151,945
337,409279,689
186,981Net income per share of common stock (Note 2):
Basic...................................................................................... ¥ 113.53
Diluted (Note 3) ..................................................................
110.64
Cash dividends per share of common stock...........................
14.00¥ 10.70
10.70
12.00

¥ 174.68
168.4330.00$

AT YEAR-END
Total assets............................................................................... ¥499,499
Total shareholders’ equity ....................................................... 273,603¥414,903
257,716¥493,600
261,009$4,705,596
2,577,513

1.07
1.04
0.13

Notes 1: U.S. dollar amounts are translated from yen, for convenience only, at the rate of ¥106.15=$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 not assumed for year ended March 1999.

NET SALESNET INCOME

NET INCOME PER SHARE(¥ Billions)(¥ Billions)(¥)

A recovery in the semiconductor industry
and increased capital investment among manufacturers contributed to a strong rebound in
net sales.

Net income increased to ¥19.8 billion, reflecting the substantial gain in net sales and theCompany’s efforts to control costs.

Shareholder satisfaction remains a Tokyo
Electron priority.

455.6

440.7

432.8

31.0

30.0

188.1

30.0

182.0
174.7

401.8

313.8
19.8
113.5

1.9

1996 1997 1998 1999 2000

1996 1997 1998 1999 2000

10.7

1996 1997 1998 1999 2000

TOKYO ELECTRON LIMITED1TO O U R S H A R E H O L D E R S

For Tokyo Electron, the fiscal year ended March 31, 2000 was a year bearing a
lot of bright news worthy of the dawn of the new millennium. The rapidly accelerating revolution in information and communications moved into high gear
due to the spread of the Internet and mobile phones. In addition, theeconomies of Asia, which now play a large role in the stability of the global
economy, recovered from a prolonged slump. As a result, the semiconductor
and liquid crystal display (LCD) industries in which we participate broke out of
their adjustment phases and turned upward, marking this year as a turning point.
Tokyo Electron’s results also staged a powerful recovery. Consolidated
net sales increased 40.4 percent year-on-year to ¥440.7 billion. Operating income increased from ¥6.4 billion to ¥35.8 billion and net income jumped
from ¥1.9 billion to ¥19.8 billion, or ¥113.5 per share. Cash dividends per
share for the full year were revised up ¥2 from our original forecast to ¥14.
Net sales for the mainstay Semiconductor Production Equipment (SPE) division, supported by a remarkable recovery in the second half, increased 46.6
percent to ¥355.1 billion. In addition, with orders received by the divisionsetting consecutive records in the third and fourth quarters, we were able tocarry over consolidated backlogs of ¥265.3 billion into the current fiscal year.
We believe that Tokyo Electron’s excellent products, highly reliable service
offerings, global operations and a manufacturing organization capable ofpromptly meeting the rapid recovery in demand allowed us to fully benefit
from the upturn in the business environment.

Consistently strong investment in R&D has strengthened our market position, and we continue to focus on core competencies.
We are entering an age where globalization is advancing with incredible
speed, and competition among companies is intensifying. In the midst of thesechanges, the level of development in semiconductor and LCD production
equipment is rising every year, and shortening development cycles is becoming crucial, so only companies that can respond will survive. Tokyo Electron
realizes that the development of products and processes for the next generation and beyond is the key to winning in megacompetition, and we are continuously striving to enhance our development strategies to further improve ourmarket position.
In addition, customers are now demanding that their suppliers provide integrated technologies that offer optimum solutions for their process modules aswell as total support spanning development, manufacturing, sales and service.
Our Process Technology Center constructed in 1998 for 300mm equipment isa base to relentlessly pursue these horizontally and vertically integrated technologies with our customers. The Center has attracted attention worldwide as
one of the foremost facilities of its kind. Our new-concept fast thermal pro-2

TOKYO ELECTRON LIMITEDcessing system that enables in-situ sequential processing and our wafer-levelburn-in & test system also grew out of this philosophy of integration.
Tokyo Electron’s product strategy revolves around focusing on markets
with high barriers to entry and high potential for growth where we can offer
our own original, high-value-added technologies. This approach enables us tomaintain a leading position in the market segments in which we choose tocompete. We are working to offer integrated technologies with our own
competitive core products, while also evaluating alliances with other companies in our industry.
In the past fiscal year, Tokyo Electron invested ¥37.1 billion in researchand development, representing approximately 10 percent of SPE division
sales. This investment was efficiently put toward the development of newversions of seven existing products, 300mm equipment and new business opportunities. We expect that new products brought about by this investment
will account for at least 40 percent of our product portfolio in the next few
years. With our solid financial base, we will continue to win in the global race
to develop new technology.

Tokyo Electron’s low-k toolset is a superior solution for the new
era of interconnect processes.
Today, in order to further advance the performance of semiconductor chips,
solutions to three technical challenges are being demanded: shrinking featuresizes, increasing speed, and reducing power consumption. In the area of
shrinkage, evaluations of 0.13µm design rules have already begun in 2000. In
addition, new materials in the interconnect process — namely copper andlow-k dielectric materials — have been adopted as methods of increasing
speed and lowering power consumption, especially in logic applications.
These new materials will become mainstream in the future.
Tokyo Electron has introduced a breakthrough toolset that will have amajor impact on the interconnect process in the next generation and beyond.
It is an integrated solution realized by the CLEAN TRACK ACT® 8 SOD systemthat spins low-k films on intermetal layers, in conjunction with several othercore products. Today, the superiority of low-k spin coating for 0.13µm andbeyond continues to be demonstrated by leading semiconductor makers,
which has opened up new horizons for our business. By establishing leadership in the processes surrounding the interconnects, we have created an outstanding opportunity in the next generation of interconnect processes.
We are committed to playing a key role in helping customers successfully
execute their own particular device strategies. From that standpoint, by forming alliances with various materials makers, we are making preparations forwhatever low-k materials our customers may choose.

TOKYO ELECTRON LIMITED

3

Challenge toward change – reforming our operating structure
through information technology
In addition to enhancing our product strategy for the future, Tokyo Electron
continues to build a lean business structure that can adapt flexibly to thechanges in the market. As demand for our products is growing, expanding
production capacity is currently a top priority. But even while we find ourselves in this expansion phase, we have taken up the challenge of streamlining
our operations to raise asset efficiency and maximize earnings.
One such initiative is the Total Cost Down Project, which is designed to
drastically shorten lead times from order to delivery. During the past fiscal
year, we thoroughly reevaluated our manufacturing structure, resulting in acomprehensive plan for creating an ideal manufacturing model for Tokyo
Electron. Looking forward, we will work to improve the manufacturing flow itself by combining it with integrated IT tools, with the lofty objective of reducing
lead times by half within two to three years, and thus make a significant contribution to customer satisfaction.
Tokyo Electron is also moving to generate optimum value from its mostvaluable assets — people — by implementing a project to improve efficiency at
the administration level. People are the source of knowledge, so we aim tobuild a structure over the mid term that enables them to make the most of
their talents to create value. In achieving this goal as well, the promotion of an
IT strategy is key. We will continue to implement measures to streamline ourorganization, including making the best use of outside resources.

Further promoting management from the perspective of shareholders
Tokyo Electron was one of the first publicly listed companies in Japan to recognize and embrace modern corporate governance issues. Since 1997, we haveswiftly implemented a wide range of reforms to maximize returns for ourshareholders, including reorganizing the Board of Directors, implementing
stock option and performance-based incentive plans and disclosing compensation of corporate officers.
As a new development, in the current fiscal year, we will expand our stock
option plan on a groupwide basis around the world. The existing JapaneseCommercial Code limits the scope of stock options. However, Tokyo
Electron can widen the scope by introducing quasi stock options with warrants,
and by taking advantage of the Law on Special Measures for Industrial
Revitalization. We expect this system to have a large and positive effect on ourability to hire and retain superior personnel on a global basis.
In order to raise ROE at the tactical level, we have set ROA as a metricusing net utilized assets on a business unit basis for evaluating management

4

TOKYO ELECTRON LIMITEDand its business performance. We firmly believe that this will be an effective
method of instilling awareness of shareholder value through the efficient utilization and control of assets. In doing so, we aim to raise ROE to 20 percent or more as a short-term goal.
Furthermore, we will begin disclosing quarterly results to increase the trustthat we have gained from the global capital markets.

The IT revolution drives progress at Tokyo Electron.
Today, we are in the midst of an information and communications renaissance— an age where the Internet and mobile phones are soon to become as commonplace in everyday life as automobiles, an age where the twentieth century
paradigm of industry classifications will completely change due to the spread ofe-commerce. Furthermore, new and advanced digital consumer electronics
are rapidly emerging, meaning both the number of applications for and quantityof semiconductor chips and LCDs will explode in the future. When thinking
about just how much semiconductor and LCD production equipment will benecessary to make these key devices, you can imagine the great opportunities
Tokyo Electron will enjoy.
Tokyo Electron also participates in the IT revolution as a distributor of theworld’s superior electronic components and computer/networking systems.
Our product lineup is focused on high-value-added and high-potential fields, so
we expect to achieve high growth in these segments as well. By delivering superior products and services, we will both benefit from and support the IT revolution from the ground up.
In April 2000, the list of companies comprising the Nikkei average of 225
companies was revised, and Tokyo Electron’s stock was added to this selectcorporate group. While changes in the industrial structure are spurred on by
the IT revolution, our stock was included because it mirrors the trends of the
new era. Beginning August 1, we will reduce the minimum round lot of sharesfrom 1,000 to 100 so that more people can have the opportunity to become
Tokyo Electron shareholders.
Tokyo Electron is not only being driven by the dynamism of the new era,but is also contributing to it. We are dedicated to creating corporate value
and to sharing the benefits of this dynamism with all of our shareholders andother stakeholders.

Tetsuro Higashi
C.E.O., President
June 2000

TOKYO ELECTRON LIMITED5

T O K YO E L E C T R O N AT A G L A N C E

Semiconductor Production Equipment
Tokyo Electron develops and manufactures a broad
range of superior semiconductor production equipment,
and complements its original lineup by distributing highvalue-added products from other suppliers.

Percentage of consolidated net
sales by sector for the year ended
March 31, 2000

80.6%

Original Products● Oxidation/diffusion/LP-CVD systems● Metal CVD systems● PVD systems (Sputtering systems)● Coater/developer systems● Spin-on dielectric systems● Etch systems● Carrierless cleaning systems● Scrubber systems● Fully automatic wafer probers● Wafer-level burn-in & test systems

Oxidation/Diffusion/ LP-CVD system
TEL - ATP/ATPf - 300

LCD Production Equipment
2.8%

16.3%

Leveraging the technology and expertise accumulated
from its semiconductor production equipment business,
Tokyo Electron has created a strong lineup of leadingedge LCD production equipment.

0.3%

Semiconductor & LCD
Production Equipment
Computer Systems

Computer Systems

Electronic Components
Other

In order to fulfill its goal of providing
solutions tailored to user needs, Tokyo
Electron distributes a comprehensive
range of world-class computer systems
and related products from top suppliers.

● Computer systems● Network products● Data management software● Board test systems

Electronic Components
Tokyo Electron selects and offers theworld’s best products from leading suppliers. With a full product lineup andflexible technical support, the Company
provides total solutions to meet diversifying user needs. Operations are handled
by wholly owned subsidiary Tokyo
Electron Device Ltd.

6TOKYO ELECTRON LIMITED● Semiconductor devices● Board products● Components● Software

Distributed Products
FEI Company● FIB systems
Rudolph Technologies, Inc.
● Film metrology tools
ISOA, Inc.
● Macro Inspection System
Metal CVD system
UNITY®-EP

Etch system
UNITY® Ver. IIe

Carrierless cleaning system
UW200Z

Fully automatic wafer prober
P-12XL

Coater/developer system
CLEAN TRACK ACT®12

Yield Dynamics, Inc.
● Yield Management Software

Wafer-level burn-in & test system
WX-8

Original Products● LCD coater/developer systems● LCD plasma etch/ash systems

LCD Coater/developer system
CS800

Hewlett-Packard Co.
HP Visualize Workstation

Extreme Networks, Inc.
Gigabit ETHERNET Switch

Semiconductor devices
Board products

LCD Plasma etch/ash system
HT-800● Brocade Communications Systems, Inc.
● Ciprico, Inc.
● Conax Florida Corp.
● Cycomm International, Inc.
● Emulex Corporation● Extreme Networks, Inc.
● F5 Networks, Inc.
● Gadzoox Networks, Inc.
● GenRad, Inc.
● Genroco, Inc.
● H. Koch & Sons Co.

● Hewlett-Packard Co.
● Hitachi, Ltd.
● Interstate Electronics Corp.
● ITT Aerospace Controls Corp.
● Marconi Communications, Inc.
● nCipher Corporation Ltd.
● NTT–X, Inc.
● OEA Aerospace, Inc.
● Pathlight Technology, Inc.
● Prisa Networks, Inc.
● Process Dynamics, Inc.

● Sanders, a Lockheed Martin Co.
● Silicon Graphics, Inc.
● Sony Corp.
● VERITAS Software Corp.

● Advanced Micro Devices, Inc● Agilent Technologies, Inc.
● Conexant Systems, Inc.
● Cosel Co., Ltd.
● Dallas Semiconductor Corp.
● Dialogic Corp. (an Intel Company)● Digital Electronics Corp.
● Eicon Technology Corp.
(Trisignal Div.)● Fujifilm Microdevices Co., Ltd.
FujitsuLtd.
●● Fujitsu Quantum Devices Ltd.
● Fujitsu Media Devices Ltd.

● Integrated Device Technology, Inc.
● Intersil Corp.
● Intoto Inc.
● Linear Technology Corp.
● Metrowerks, Inc.
● Microsoft Corp.
● Mitel Corp.
● Motion Engineering, Inc.
● Motorola, Inc.
● ON Semiconductor● Phoenix Technologies Ltd.
● Pixelworks, Inc.
● Portwell, Inc.

● Ramtron International Corp.
● Robinson Nugent, Inc.
● Sharp Semiconductor Corp.
● Siber Core Technologies Inc.
● Tokyo Electron Device Ltd.
● Trillium Digital Systems, Inc.
● Tundra Semiconductor Corp.
● VenturCom, Inc.
● WESTTEK, L. L. C.
● Winchester Electronics● Xicor, Inc.
● Xilinx, Inc.

TOKYO ELECTRON LIMITED

7

Semiconductor Production Equipment
Continuous advances in semiconductors are driving the information andwithout continuous advances in the semiconductor production equipment (SPE)tion by helping chipmakers execute their product strategies successfully.

RAPIDLY EXPANDING END-USE APPLICATIONS DRIVE INDUSTRY GROWTH
At one time, personal computers were the main end-use application for semiconductors. Today,
however, a broad array of products rely on semiconductors to offer increased performance andfunctionality, including mobile phones, personal digital assistants (PDAs), game consoles, DVD players and other digital consumer electronic products. Furthermore, new, yet-to-be-imagined applications will continue to fuel demand for chips.

Thermal Systems
Ion Implantation Systems
TOKYO ELECTRON IS A LEADER IN
WAFER FABRICATION EQUIPMENT

Film Deposition Systems

Wafer fabrication equipment uses mainly physical andchemical processes to create minute, multi-layer circuits on round silicon wafers. While various types ofequipment are used for performing these microscopic

Wafer
Fabrication
Equipment

processes, most of these products can be grouped
into several broad categories. Most equipment sup-Lithography/Patterning Systems

pliers focus on a single market segment, but Tokyo
Electron is a world leader in many of them.

Removal Systems

8

TOKYO ELECTRON LIMITED— The Source of Innovation
communications revolution. This revolution, however, would not be possiblethat is used to make chips. Tokyo Electron operates at the heart of this revolu-

SEMICONDUCTOR PRODUCTION EQUIPMENT – A LARGE AND
INTEGRAL PART OF THE SEMICONDUCTOR INDUSTRY
The semiconductor production equipment industry is a large and integral part of the semiconductor industry. Information and communications products demand higher performance chips from chipmakers, who demand higher performance equipment from equipment suppliers, whose advances drive the information and communications revolution.

Facilities, etc. 20%

WAFER FABRICATION EQUIPMENT IS A PRIMARY SPE MARKET
Semiconductor production equipment is largely segmented into wafer fabrication equip-

Wafer fabricationequipment 55%

ment that is used in the initial stages of semiconductor production, and testing andassembly equipment that is used in the latter stages. Wafer fabrication equipment
accounted for about 55 percent of the $33 billion of total world capital spending for
Testing & assembly equipment 25%

semiconductors in 1999. Tokyo Electron primarily participates in this wafer fabrication

Percent of total capital spending occupied
by wafer fabrication equipment(Source: TEL estimate)equipment market and it maintains a very strong presence globally.

Furnace
Wafer

LP-CVD
RTP
Chemical Vapor Deposition (CVD)
Physical Vapor Deposition (PVD)

Wafer
Wafer

Spin-on Deposition (SOD)Electroplating
Stepper/Scanner
Coater/Developer
Etcher
Asher

Wafer

Wet cleaning
CMP
Tokyo Electron has its own products in these segments
TOKYO ELECTRON LIMITED

9New Mega Trends Drive SPE Demand
Three major trends are taking place simultaneously in the semiconductor industry:– in particular, copper for metalization and low-k (k = dielectric constant) dielectrics
SPE to stay at the leading edge of technology. Tokyo Electron already offers proven
1970
Calculator

1975

1980

1985

Mainframe

Desktop PC

Application

Design Rule

10µm

3µm

0.8µm

Wafer Diameter

50mm

10

75mm

100mm

125mm

Front End of Line
Gate materials

Oxide

Front End of Line
Capacitor materials

Oxide / Nitride

Back End of LineInterconnect andInsulator materials

Aluminum + Silicon Dioxide

LARGER WAFER SIZE
REDUCES UNIT COST OF
CHIPSa particularly strong position to capitallineup of 300mm-ready equipment, andSMALLER FEATURE SIZESINCREASE YIELDS ANDPERFORMANCE

Larger wafers reduce unit costs

a fully dedicated 300mm New Process

Current feature sizes are approxi-

because processing a 300mm wafer

Technology Center to support cus-mately 100 times smaller than they

costs little more than processing thetomers’ demands in their transition towere just three decades ago, allowing

current industry standard 200mm

300mm technology.

for smaller, faster chips with substan-ize on this trend, with a comprehensive

wafer, but the larger wafers yield signifi-

tiallycantly more chips. Tokyo Electron is in

Decreasing chip size by shrinking fea-

TOKYO ELECTRON LIMITED

increased

performance.

the move toward larger 300mm wafers, smaller feature sizes and new materials
as insulators. These trends are driving chipmakers to invest in new, highly advanced
solutions for 300mm wafers, smaller feature sizes and low-k dielectrics.
1990

1995

Notebook PC

Mobile phone

Car navigation system

0.5µm

150mm

0.35µm

2000

2005
PDA

Game console

0.25µm

0.18µm200mm

0.13µm

300mm

SiON, High-k
High-εCopper + Low-k

FEOL (transistor) process, andproduced from the same wafer. As

NEW MATERIALS BOOSTCHIP PERFORMANCE

the world’s leading supplier ofIn the 0.13µm generation and beyond,nect and insulation materials in thecoater/developers and oxide etch sys-

decreasing signal delay will become crit-

BEOL

tems that are directly related toical in creating faster chips. The solu-

Historically strong in providing FEOL

reducing feature sizes, Tokyo Electrontion to this problem is new materials.

solutions, Tokyo Electron is also work-

is well positioned to take advantage ofIn the early 2000s, two dramatic

ing to provide integrated BEOL solu-

this trend.

changes will begin to take place: thetions around its core spin-on dielectric

ture sizes allows more chips to be

adoption of high-k and high-ε materials

copper and low-k materials as intercon(interconnect)

process.

system for low-k materials.

for gate and capacitor formation in the
TOKYO ELECTRON LIMITED11

Tokyo Electron’s Low-k Toolset Offers
Interconnect Processes
Continuous improvements in semiconductor device performance andLaw, which states that chip density doubles approximately every 18 months.
because the signal time delay has become the largest bottleneck.

Breakthrough Technology

SOD Materials

Dielectric Constant

3.5

Inorganic

3.0

Organic
Hybrid2.5

Inorganic Porous

2.0

Organic Porous
Hybrid Porous
1.5

1999

2000

2001
Year

12

TOKYO ELECTRON LIMITED

2002

2003

Integrated Solutions for Advanced
functionality have been achieved by scaling devices according to Moore’s
Further improvements, however, cannot be achieved by scaling alone
TEL’S LOW-K
TECHNOLOGY SOLUTIONS

tion level. By employing spin-on dielec-

Copper interconnects recently started

Electron enables numerous materials toto come into use as a partial solution to

be used on its tool platforms for coat-the signal delay barrier. To further im-

ing, curing, etching and cleaning. Our

prove device performance and com-

longstanding collaborative alliances withplete the solution, low-k dielectric ma-leading SOD material suppliers around

terials are currently being developed.

the world also ensure that chipmakers

tric (SOD) low-k technology, Tokyo

Tokyo Electron's low-k toolset pro-

receive the optimum technological so-vides chipmakers with the current-best

lutions with the freedom to choose thedielectric k value at the mass-produc-

chemistry that best suits their needs.

Low-k Materials
4.5

Dielectric Constant

4.0

TEOS (SiO2)

3.5

2.5
SOD

2.0

Etch System• UNITY® Ver. IIe

Furnace• ALPHA (α)-8SE

HDP-FSG

OSG
3.0

1.5
250

180

150

130

100

70

50

Design Rule (nm)

Cleaning System• PR200Z

Spin-on Dielectric System• CLEAN TRACK ACT® 8 SOD
TOKYO ELECTRON LIMITED13

ENVIRONMENTA C O M M I T M E N T TO S O C I A L R E S P O N S I B I L I T YTokyo Electron believes that preserving and constantly improving the global environment are objectives of thehighest priority both for the Company and for humanity, and must be considered in management. Based on
this philosophy, we are determined to remain in harmony with the global environment through a wide range
of environmental protection activities as we expand our business. Doing so will help us retain the trust ofcustomers, shareholders, employees, local communities and society in general.

Milestones in Environmental Protection
To 1995:
Carried out studies for an environmental management system
Eliminated CFC usage
1996:
Established first Tokyo Electron Environmental Committee
Implemented environmental management system
1997-1999:
Obtained ISO 14001 certification of the environmental
management systems at seven main domestic plants
1999:
Created Product EHS Roadmap
2000:
Began environmental accounting

Specific Activities
ISO 14001 Certification
Tokyo Electron has devoted substantial resources to obtaining ISO 14001 certification, an international standard for environmental management systems.
The Company began working to obtain this certification in 1997, and obtained
it for all domestic plants by the end of 1999, with the exception of Tokyo
Electron Miyagi Limited. As the certifying body, Tokyo Electron used Det
Norske Veritas (DNV), which has extensive experience in environmental management and had carried out the Company’s audit for ISO 9001 certification.
Preparations for certification are under way at Tokyo Electron Miyagi Limited,which began operations in 1998, and the Company is aiming for certification in
April 2002. In the future, Tokyo Electron plans to obtain ISO 14001 certification for its U.S. plants.
Development of Environmentally Friendly ProductsTokyo Electron is active in developing products with reduced environmental impact. The CLEAN TRACK ACT® 8 coater/developer and the UW200Z cleaningsystem both incorporate new design concepts that significantly reduce footprint,
energy consumption and chemical usage compared with previous models.
Moreover, the Company is conducting R&D with C5F8, a fluorine gas that reduces the effects that lead to global warming without any sacrifice in technicalspecifications, and is now using it in the etching system process. The C5F8
process received recognition as a method to combat global warming from

14

TOKYO ELECTRON LIMITEDSemiconductor Equipment and Materials International (SEMI) Japan in December
1999. Also in 1999, Tokyo Electron created its Product EHS Roadmap to support concrete measures to reduce the environmental impact of each system theCompany supplies, in an effort to produce products that are even more environmentally friendly.
Chemical Management
The control of chemical substances requires not only compliance with the law,
but also comprehensive management that includes toxicity evaluation and measures for safe storage and dealing with emergencies. Tokyo Electron is therefore
striving to establish a system for reviewing and registering newly purchasedchemical substances, and is moving forward with a rigorous program to stop pollution before it is produced. Moreover, in April 2000, domestic facilities implemented the Pollutant Release and Transfer Register (PRTR) system, which entails computing the amounts of each listed chemical substance released into theenvironment and providing reports to governmental and trade organizations.
Waste Reduction, Recycling and Other Activities
Demonstrating the effectiveness of Tokyo Electron’s efforts to reduce waste
products and consumption of energy and resources and to promote recycling
and green purchasing, domestic facilities produced 21 percent less waste in 1998
than in 1997. The Company’s recycling ratio has increased significantly, from
15.3 percent in 1996 to 40.9 percent in 1997 and 49.7 percent in 1998.
Administrative divisions are promoting the purchase of environmentally friendly
paper products, office supplies and printed matter.
Contribution to Customers, Communities and the Industry
Tokyo Electron’s proactive efforts to develop environmentally friendly products
make a material contribution to our customers’ efforts to protect the environment. We also cooperate with environmental initiatives in every region weserve. In addition, we actively participate at every stage, from planning to implementation, of industry efforts regarding disclosure and standards. We intend tofurther build on our record of corporate citizenship.
Implementation of Environmental Accounting
From the year ending March 2001, Tokyo Electron’s domestic operations will
begin using environmental accounting in order to quantify the effectiveness of environmental protection activities.
Disclosure
Tokyo Electron will promote broader awareness and understanding of its efforts
to protect the environment by publishing an annual environmental report beginning in 2001.

TOKYO ELECTRON LIMITED15

R E V I E W O F O P E R AT I O N S

S E M I C O N D U C TO R P R O D U C T I O N E Q U I P M E N T
During 1999, the semiconductor production equipment industry experienced
a strong turnaround from the previous year’s severe recession, especially inthe latter half of the year. Chipmakers began to invest aggressively in capital
equipment to meet resurgent demand, in what is believed to be the earlystages of a multi-year upturn.
With its global reach and broad lineup of leading-edge products, Tokyo
Electron was well positioned to benefit from this recovery. Consolidated net
sales of the Semiconductor Production Equipment (SPE) division increased
46.6 percent year-on-year to ¥355.1 billion. Moreover, orders for semiconductor production equipment increased steadily in each quarter, particularly inthe second half of the fiscal year.
SPE Sales by Geographic Region(¥ Billions)

Review by Geographic Region

Sales increased in every region in the past fiscal
year. Taiwan accounted for the largest proportion of net sales, signifying Tokyo Electron’s
progress in globalizing its operations.

101.0

99.7

79.5
65.5
56.2
50.5

33.6

36.8

22.7

18.6
15.3

18.1

Japan

North Europe
America■ 1999■ 2000Korea

TaiwanOther

Sales of third-party products
imported into Japan are includedin Japan sales.

SPE division sales expanded in every region in which Tokyo Electron operates.
In Japan, chipmakers began investing in equipment for new SOC and flash
memory fabs, while continuing to invest in equipment for upgrading existinglines. As a result, sales in Japan increased 25 percent to ¥99.7 billion. In North
America, sales rose 17 percent to ¥65.5 billion as Tokyo Electron continued
to make large inroads into the market. In Europe, investment in equipment for
manufacturing communications-related devices increased, leading to a 48 percent gain in sales to ¥33.6 billion. In Taiwan, despite suffering a devastating
earthquake, chipmakers were able to recover quickly. Sales jumped 100 percent to ¥101.0 billion as U.S. and Japanese chipmakers steadily increased outsourcing to Taiwanese foundries. Of note, sales in Taiwan were the highest
among the regions in which Tokyo Electron operates. This was the first timein Company history that a region other than Japan accounted for the largest
proportion of total net sales, highlighting the progress that Tokyo Electron has
made in globalizing its operations. In Korea, chipmakers started to invest heavily in new equipment due to a strong recovery in DRAM and LCD demand,
resulting in a 103 percent increase in sales to ¥36.8 billion.

Review by Product
Sales in all product categories increased year-on-year, with ACT® 8 series
coater/developer systems and UNITY® series etching systems generating particularly strong sales gains. In addition, sales of furnaces/LP-CVD systems
equipped with a Fast Thermal Processing System (FTPS) also showed solid
growth as chipmakers brought new lines onstream. Sales of TFT-LCD production equipment more than doubled as LCD manufacturers in Taiwan,
Korea and Japan raced to add new capacity to meet soaring demand for TFTLCDs. Sales in Taiwan were especially strong as several new fabs were
Note: Years in all graphs refer to fiscal years ended March 31.

16

TOKYO ELECTRON LIMITEDSPE Sales(¥ Billions)
Renewed investment among chipmakers and LCD manufacturers createdbrisk demand for Tokyo Electron’s advanced semiconductor and TFT-LCD
production equipment.

380.2
355.9

355.1

335.0

242.2

1996 1997 1998 1999 2000

brought online.
Tokyo Electron is currently putting its efforts into moving several new
products to volume production, including the CLEAN TRACK ACT® 8 SOD
system, the WX-8 wafer-level burn-in & test system and the UW200Z and
PR200Z cleaning systems. Growth prospects are excellent for the CLEAN
TRACK ACT® 8 SOD system, which uses the same platform as the Company’s
best-selling coater/developer system, as the industry moves toward spin-on
technology to apply new low-k materials as insulators. The WX-8 is a revolutionary new product that enables burn-in and testing at the wafer level.
Hereto considered technologically infeasible, this system is designed to contribute to substantial cost savings compared with conventional burn-in testingat the chip level after packaging. The UW200Z has reduced bath volume, footprint and chemical and D1 water consumption, thus representing a new standard for Front-End-of-Line cleaning applications. The PR200Z incorporates
unique cleaning technology for Back-End-of-Line processes, particularly forcleaning in high aspect ratio via holes. Shipments of all of these systems havecommenced, and evaluations from R&D institutions and customers alike havebeen extremely favorable. Shipments of 300mm tools have also started, which
will contribute to even further growth in the future.

COMPUTER SYSTEMS AND ELECTRONIC COMPONENTS

Brocade Communications Systems, Inc.
Fibre Channel Fabric Switch
Emulex Corp.
Fibre Channel PCI Host Adapter
GenRad, Inc.
Combination Test System

Computer Systems
In the past fiscal year, consolidated net sales decreased 4.0 percent to ¥12.4
billion, due to continued weakness in domestic corporate demand. In thesecond half, however, IT-related investment
by Japanese corporations began to pick up,
fueling an increase in sales of servers andhigh-speed networking systems that form
the backbone of Internet-related business.
Sales of networking equipment, including Extreme Networks’ Gigabit Ethernet switch, increased 1.5 times
year-on-year. In addition, sales of Fibre Channel products for Storage Area
Networks (SANs) more than doubled. The market for SANs is expected to
grow further, and the division will continue to strengthen its product lineup in
the Fibre Channel area as a core segment. Also in the past fiscal year, the division began handling Pathlight Technology router products.
Expansion in the e-commerce market has resulted in growing demand for
security systems. Beginning in the past fiscal year, the division began handlingTOKYO ELECTRON LIMITED17

CS & EC Sales(¥ Billions)
While computer systems sales remained
essentially unchanged, sales of electronic components rose to a record high.
72.1
62.5

60.1

57.7

52.5

14.3

14.4

15.3

12.9

12.4

1996 1997 1998 1999 2000
■ Computer systems■ Electronic components

AMD is a trademark of Advanced Micro
Devices, Inc.
Power PC is a trademark of International
Business Machines Corp. (IBM) and is usedby Motorola, Inc. under license from IBM.

18

TOKYO ELECTRON LIMITED

the products of nCipher, a leader in SSL accelerator products. The divisionalso entered the market for Internet traffic administration products by adding
equipment from F5 Networks to its product lineup.
In addition to distributing hardware, the division is also developing consulting and outsourcing services that enable customers to use their information systems in an optimal environment. For example, the TEL Engineering
Office™ provides a pleasant engineering environment for Hewlett-Packard
users, and the DigiGuard™ data center gives users the option of outsourcing
their IT administration functions. The division also entered a new field by initiating distribution of Cycomm environment-resistant computers.
Electronic Components
The first full year since electronic components operations were transferred
to wholly owned subsidiary Tokyo Electron Device Limited (TED) in July
1998 has passed.
In the past fiscal year, consolidated net sales of the Electronic
Components division increased 24.8 percent to a record ¥72.1 billion. Salesof devices related to communications, networking and personal computers
showed remarkable growth, and sales of digital consumer electronics were
solid. This is a result of increasing our ratio of high-value-added products byfocusing on these high-growth areas over the past few years. In particular,sales generated by the products of four companies that we recently started
dealing with more than doubled year-on-year, and have already come to account for nearly 5 percent of division sales. The division will continue to actively introduce new products in high-potential fields.
The division distributes the
products of nearly 40 leading companies from around the world, andalso provides its own originally designed and developed products.
The latter include the TE4000 series of flash memory controllers, which have high growth prospects as devices that support multimedia applications. In addition, the division deploys
its extensive development skills and top-notch facilities to create more than
100 custom LSIs for customers each year. Recently, the scale of the design
work the division takes in for ASIC devices has been getting larger.
Strengthening and expanding electronic transactions is another objective.
In the past fiscal year, the volume of shipments handled via electronic data interchange (EDI) grew to approximately 80 percent of all shipments, which
has contributed significantly to greater operating efficiency.

M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A LY S I SSales and Income

cal year were ¥198.1 billion and order backlog was¥84.0 billion.

Sales

Because exports from Japan are generally denominated in yen, changes in exchange rates have no material

For the year ended March 31, 2000, consolidated

effect on Tokyo Electron’s results. However, a stronger

net sales increased 40.4 percent from the prior fiscal

yen vis-a-vis the U.S. dollar typically raises prices fromyear to ¥440.7 billion (US$4,152 million), as the semi-

the purchaser’s perspective. The ratio of U.S. dollar-

conductor industry rapidly recovered from the 1998

denominated transactions involving equipment imported

downturn and entered a period of capacity expansion

to Japan is comparatively low and did not have a material

and investment in advanced technology. Geographically,effect in the year ended March 31, 2000.

domestic sales grew 22.8 percent to ¥184.0 billion andoverseas sales jumped 56.6 percent to ¥256.7 billion.
Sales outside of Japan thus exceeded domestic sales for

Cost of Sales and SG&A Expenses

the second consecutive year.
Cost of sales increased 34.5 percent to ¥303.8 bilDomestic andOverseas Sales

455.6

440.7

432.8
401.8

growth. Consequently, cost of sales as a percentage of(¥ Billions)137.1

Net sales outside Japan grew a robust 56.6 percent in the year ended March 2000, surpassing domestic sales for the second
straight year.

lion, a rate of increase well below the rate of sales

176.0

225.0

313.8

256.7

net sales improved to 68.9 percent from 72.0 percent
for the prior fiscal year. Gross profit increased 55.8

164.0

264.7

256.8

rose 3.1 percentage points to 31.1 percent, reflecting

230.6
149.8

■ Overseas■ Japanpercent to ¥136.9 billion and the gross profit margin
184.0

1996 1997 1998 1999 2000

higher business volume and the favorable effects ofTokyo Electron’s drive to improve productivity andreduce costs.

By division, Semiconductor Production Equipment(SPE) sales, which include sales of LCD production equip-

Net Sales & Gross Profit

ment, increased 46.6 percent to ¥355.1 billion.

(¥ Billions)

Computer Systems (CS) sales were essentially unchanged

Higher business volume andTokyo Electron’s efforts to improve productivity contributed toa solid gain in gross profit.

at ¥12.4 billion, and Electronic Components (EC) salesrose 24.8 percent to ¥72.1 billion.
Tokyo Electron now reports orders received andorder backlog on a consolidated basis, beginning with

■ Net sales■ Gross profit

455.6

440.7

432.8
401.8

313.8

131.7

135.2

150.8

136.9
87.9

the year ended March 2000. Orders received for theSPE division increased to ¥520.5 billion as non-memo-

1996 1997 1998 1999 2000

ry chipmakers and foundries ramped up capital invest-

Selling, general and administrative expenses

ment to remain in step with increasing demand.

increased 24.1 percent to ¥101.1 billion, again substan-Consequently, order backlog for the SPE division rose

tially below the rate of sales growth due to Tokyoto ¥249.5 billion. Strong order flow in the fourthElectron’s successful cost-control measures. Research

quarter of the fiscal year indicates continuing sales

and development expenses, which are included in

growth during the year ending March 2001. For refer-

SG&A expenses, increased 38.3 percent to ¥37.1 bil-

ence, non-consolidated orders received in the prior fis-lion. R&D was focused primarily on development of

Note: Years in all graphs refer to fiscal years ended March 31.

TOKYO ELECTRON LIMITED

19

equipment for 0.13µm and beyond, 300mm equip-

past fiscal years. Income before income taxes

ment and new business opportunities. Consistent andincreased nearly five times to ¥29.7 billion. Net

substantial R&D spending, even during market slow-

income totaled ¥19.8 billion, compared to ¥1.9 bil-downs, has been a key factor supporting Tokyo

lion for the prior fiscal year, and fully diluted net

Electron’s ability to maintain a competitive advantage

income per share increased from ¥10.70 to ¥110.64.

in the products and services it provides, and is allow-

Tokyo Electron increased cash dividends by ¥2.00

ing the Company to benefit fully from the current

per share to ¥14.00 per share; the payout ratio wasmarket recovery. Operating income increased more

12.7 percent, which is in line with the Company’s his-than five times to ¥35.8 billion as sales growth strong-

torical norm.

ly outpaced expense increases. The operating margin
was 8.1 percent, compared to 2.0 percent for the178.25Net Income per Share

172.74168.43(¥)

prior fiscal year.
37.1

R&D Expenses

Fully diluted net income per sharerebounded nearly ¥100 to¥110.64.

110.64(¥ Billions)R&D expenses rose significantly,
reflecting Tokyo Electron’s aggressive investment in developing nextgeneration technology.

26.8

26.8

21.0
10.70

17.3

1996 1997 1998 1999 2000

1996 1997 1998 1999 2000

30.00

Cash Dividends per Share& Payout Ratio
24.00(¥ / %)

Other Income (Expenses) and Net Income
Net other expenses increased sharply to ¥6.1 bil-Due to the solid recovery in net
income, Tokyo Electron revised its
original forecast for cash dividends
upward by ¥2 to ¥14 per share forthe full fiscal year.

14.00
12.00

lion, primarily because of non-recurring charges,
which consisted mainly of losses on the sale and dis-

11.60

■ Cash dividends

14.01
17.34

Payout ratio

posal of fixed assets and patent royalty payments for

1999

Net sales............................................ ¥440,729 (100.0)
Cost of sales......................................

20

303,839 (68.9)

12.70

1996 1997 1998 1999 2000

Millions of yen(percentage of net sales)

2000

112.1428.00

Thousands of
U.S. dollars

2000

1998

¥313,820 (100.0)¥455,585 (100.0)$4,151,945

225,962(72.0)

304,825(66.9)

2,862,355

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

136,890 (31.1)

87,858(28.0)

150,760(33.1)

1,289,590

SG&A expenses ................................

101,074 (22.9)

81,475(26.0)

87,464(19.2)

952,181

Operating income.............................

35,816

(8.1)

6,383

(2.0)

63,296(13.9)

337,409

Other income (expenses) ................

(6,127)

—

(345)

–

(462)

–

(57,720)

Income before income taxes............

29,689

(6.7)

6,038

(1.9)

62,834(13.8)

279,689

Provision for income taxes...............

9,836

(2.2)

4,167

(1.3)

32,825(7.2)

92,661

Net income ....................................... ¥ 19,848(4.5)¥ 1,866(0.6)¥ 30,009(6.6)$ 186,981

TOKYO ELECTRON LIMITEDFinancial Position and Cash Flowscent from a year earlier to ¥67.3 billion as ¥30.0 billion in bonds were transferred to current liabilities.

Financial Position
Current assets at March 31, 2000 increased 29.0

228.4

Working Capital& Current Ratio

195.1(¥ Billions / Times)

221.7

228.7

4.21

191.2

percent from a year earlier to ¥375.2 billion as both
expanded in reflection of the gain in sales. However,Working capital increased; thecurrent ratio decreased, but continued to signify excellent liquidity.

inventory turnover improved to 4.39 times compared■ Working capitaltrade notes and accounts receivable and inventories

with 3.33 times in the previous fiscal year. Trade notes

2.89
2.58
2.58

2.56

Current ratio

and accounts receivable turnover was 2.79 times, com1996 1997 1998 1999 2000

pared to 1.89 times for the prior fiscal year. Current liabilities more than doubled to ¥146.5 billion, mainly

Shareholders’ equity increased 6.2 percent to ¥273.6

because of increased short-term borrowings outstand-billion, due mainly to an increase in retained earnings.

ing at the balance sheet date and an increase in trade

As a percentage of total assets, shareholders’ equity

notes and accounts payable due to the ramp-up in pro-

was 54.8 percent, compared to 62.1 percent a year

duction to meet higher demand. Working capitalearlier. Return on average total shareholders’ equity

increased to ¥228.7 billion, while the current ratio

improved to 7.5 percent.

decreased to 2.6 to 1 from 4.2 to 1 a year earlier. The
current ratio decreased primarily because of an

(%)

53.6

increase in current liabilities, but still signifies excellent
liquidity. Total assets increased 20.4 percent to ¥499.5
billion, mainly because of the rise in current assets coupled with an increase in fixed assets as capital projects

62.1

Shareholders’ Equity Ratio

Despite higher shareholders’equity, the equity ratio declined
in reflection of the increase incurrent assets resulting fromhigher sales.

45.2

52.9

54.8

came onstream.
Tokyo Electron reduced long-term debt 13.4 per1996 1997 1998 1999 2000

Millions of yen(percentage of total assets)

2000
Total assets ................................................................................. ¥499,499 (100.0)

Thousands of
U.S. dollars

1999

2000

¥414,903 (100.0)$4,705,596

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

175,153(35.0)

140,746(33.9)

1,650,052

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

79,519(15.9)

46,910(11.3)

749,119

Inventories ..................................................................................

112,481(22.5)

88,085(21.2)

1,059,642

Investments and other assets ....................................................

25,522(5.1)

32,063(7.7)

240,433

Property, plant and equipment .................................................

97,726(19.6)

92,092(22.2)

920,641

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

225,862(45.2)

156,885(37.8)

2,127,763

Trade notes and accounts payable ...........................................

62,574(12.5)

35,019(8.4)

589,487

Short-term borrowings..............................................................

23,998(4.8)

21,657(5.2)

226,076

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

11,843

(2.4)

1,488

(0.4)

111,569

Long-term debt ..........................................................................

67,278(13.5)

77,709(18.7)

633,801

Shareholders’ equity................................................................... ¥273,603(54.8)¥257,716(62.1)$2,577,513

TOKYO ELECTRON LIMITED21

The balance of convertible bonds outstanding at

Investing activities used net cash of ¥16.2 billion,

March 31, 2000 was ¥15.6 billion. The potential

down 33.5 percent from ¥24.3 billion in the prior fis-number of shares if all convertible bonds had been

cal year. Payment for purchase of property, plant andconverted at the balance sheet date represented

equipment amounted to ¥14.6 billion. Beginning in the

2.8 percent of total common stock issued and out-year ended March 31, 2000, this item excludes theamount of Tokyo Electron’s own equipment capital-

standing.

ized as fixed assets. Including this amount, capital
Shareholders’ Equity
& ROE

261.0

(¥ Billions / %)Return on equity improved to 7.5
percent due to increased earnings,
while shareholders’ equity increased 6.2 percent.

273.6
257.7

would have totaled ¥19.0 billion. Capital investments

207.5

were mainly directed toward equipment for evalua-

180.8

18.5

expenditures for property, plant and equipmenttion; Tokyo Electron made no major investments in
15.4

buildings or land during the past fiscal year. Tokyo

12.8
7.5

■ Shareholders’ equity

Electron reduced capital investment in response to
the downturn in the semiconductor industry during

Return on equity
0.7

1996 1997 1998 1999 2000

1998 and early 1999, but anticipates additional investment to expand capacity and ensure the continued
availability of innovative technology during the fiscal

Cash Flows

year ending March 2001.

Operating activities generated net cash of ¥25.1 billion, 49.6 percent below the ¥49.8 billion in net cash

Net Cash Flow
& Capital Expendituresgenerated in the prior fiscal year. Net cash flow,(¥ Billions)defined as the sum of net income and depreciation,

Net cash flow consistently outpaces capital expenditures, reflecting Tokyo Electron’s disciplined
approach to financial management.

increased 2 times to ¥39.3 billion, due to the increasein net income. Net changes in assets and liabilities,
however, tend to represent a use of cash during periods of revenue growth because Tokyo Electron gen-

42.7
38.7

40.1

39.3
33.3

25.6

23.5
18.5

19.8
14.6

■ Net cash flow
■ Capital expenditureserally incurs costs and expends cash in advance of1996 1997 1998 1999 2000

receiving cash from its customers. In the past fiscal
year, increases in trade notes and accounts receivableand in inventories were the primary factors reducing

Net cash generated by financing activities totaled¥23.6 billion; in the prior fiscal year, financing activities
used net cash of ¥48.2 billion. Tokyo Electron

net cash generated by operating activities.

increased short-term borrowings by ¥13.0 billion, andissued unsecured bonds of ¥20.0 billion.

Debt-to-Equity Ratio

Cash and cash equivalents at the end of the year

(Times)were ¥79.5 billion, a significant increase from ¥47.7

Strong cash flow allowed Tokyo
Electron to rely less on externalfunding for operations; consequently, the debt-to-equity ratio
improved to 0.42 times.

0.65

billion at the end of the prior fiscal year. Management
0.56

0.52
0.47

0.42

believes that Tokyo Electron’s positive cash flow,
manageable debt and strong working capital give theCompany the liquidity and financial base necessary tocontinue expanding internationally while meeting cus-

1996 1997 1998 1999 2000

tomer demand during the upward cycle of the semiconductor industry.

22

TOKYO ELECTRON LIMITEDC O N S O L I D AT E D S I X - Y E A R S U M M A RYTokyo Electron Limited and its Subsidiaries
Years ended March 31, 2000, 1999, 1998, 1997, 1996 and 1995

Thousands of
U.S. dollars

Millions of yen

2000

2000

1999

1998

1997

1996

1995

Net sales ....................................................... $4,151,945 ¥440,729 ¥313,820 ¥455,585 ¥432,785 ¥401,775 ¥251,683
188,661
Semiconductor production equipment1 ....... 3,345,294 355,103 242,240 380,184 355,877 334,983
116,411
12,357
12,87815,262
14,40814,314
14,071
Computer systems 1 ...................................
Electronic components ..............................
678,766
72,051
57,73460,13962,50052,47848,951Other.........................................................
11,474
1,218
968
–
–
–
–
Operating income.........................................
337,40935,816
6,383
63,296
60,38967,754
24,425
Income before income taxes .........................
279,689
29,6896,038
62,83460,48765,09822,648Net income ...................................................
186,981
19,8481,866
30,00929,97530,964
9,731
Domestic sales ..............................................
Overseas sales...............................................

1,733,274
2,418,671

183,987
256,742

149,838
163,982

230,550
225,035

256,808
175,977

264,660
137,115

187,305
64,378Depreciation and amortization......................
Capital expenditures2 ....................................
R&D expenses...............................................

183,194
221,441
349,835

19,44623,506
37,135

17,921
23,47826,842

12,65233,302
26,813

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

5,911
14,884
12,068

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

4,705,596
2,577,513

499,499273,603

414,903257,716

493,600
261,009

387,077
207,476

400,050
180,842

318,275
153,267

8,946

7,835

7,287

6,277

5,616

4,751

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

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

Yen

1.07 ¥ 113.53 ¥1.04
110.6410.70 ¥ 174.68 ¥ 181.97 ¥ 188.05
10.70
168.43172.74178.25

0.13
0.13

14.00
14.00

12.00
12.00

30.00
30.00

28.00
25.45

24.00
21.82

16.00
14.55

175,660
7,147

174,624
8,576

174,569
9,562

150,189
11,097

149,706
12,676

149,674
12,231

0.7
2.0
62.1
0.69

12.8
13.9
52.9
1.03

18.5
16.9
45.2
1.12

6.5
9.7
48.2
0.86

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

¥

59.11
59.11

Percent

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

7.5
8.1
54.8
0.96

U.S. dollars

15.4
14.0
53.6
1.10

Thousands of yen

Net sales per employee ................................ $ 464,107 ¥ 49,265 ¥ 40,054 ¥ 62,520 ¥ 68,948 ¥ 71,541 ¥ 52,975
1 Results are retroactively restated due to a structural reorganization in fiscal 1997. The LCD Department, formerly part of Computer systems, has been included in
Semiconductor production equipment.
2 Capital expenditures represent the gross increase in property, plant and equipment, intangible assets and other depreciable assets in each fiscal year.
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 years ended March 1995 and March 1999.
TOKYO ELECTRON LIMITED23

C O N S O L I D AT E D B A L A N C E S H E E T
Tokyo Electron Limited and its Subsidiaries
March 31, 2000 and 1999ASSETS

Thousands of
U.S. dollars

Millions of yen

2000

1999

2000

Current assets:
Cash and time deposits...................................................................
Marketable securities (Note 3).........................................................
Trade notes and accounts receivable...............................................

¥ 79,519
835
175,153¥ 46,910
835
140,746$ 749,119
7,866
1,650,052

Allowance for doubtful accounts ....................................................
Inventories (Note 4).........................................................................
Deferred tax assets (Note 7) ............................................................
Prepaid expenses and other current assets1 .....................................
Total current assets .....................................................................

(1,029)112,4815,306
2,892
375,157(1,134)88,085–15,306
290,748(9,694)
1,059,642
49,98627,2453,534,216

Investments and other assets:
Investments in securities (Note 3) ....................................................
Intangible and other assets1 ............................................................
Deferred tax assets (Note 7) ............................................................
Total investments and other assets..............................................

9,010
14,3672,145
25,522

8,633
23,430–32,06384,880135,346
20,207240,433

Foreign currency translation adjustment ..................................

1,094

–

10,306

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

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

17,163
81,527
62,777
97
161,564
69,472
92,092¥414,903

155,949
845,926
636,081
8,262
1,646,218
725,577
920,641$4,705,596

See accompanying Notes to Consolidated Financial Statements.
1 Due to a change in reporting entity, short-term loans to subsidiaries and affiliates in 1999 are included in prepaid expenses and other current assets in 1999. Also,
investments in and advances to subsidiaries and affiliates in 1999 are included in intangible and other assets in 1999.

24

TOKYO ELECTRON LIMITEDLIABILITIES AND SHAREHOLDERS’ EQUITY

Thousands of
U.S. dollars

Millions of yen

2000

1999

2000

Current liabilities:
Short-term borrowings (Note 6) ......................................................
Current portion of long-term debt (Note 6) ....................................
Trade notes and accounts payable ..................................................

¥ 23,998
32,69962,574¥ 21,657
1,536
35,019$ 226,076
308,045589,487

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

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

1,488
4,117
5,238
69,055111,569
69,47775,073
1,379,727

Long-term debt, less current portion (Note 6)...............................
Allowance for retirement and severance benefits.......................
Other non-current liabilities ...........................................................
Total liabilities..............................................................................

67,278
11,581545
225,862

77,7099,344
777
156,885

633,801
109,100
5,135
2,127,763

Foreign currency translation adjustment......................................

–

276

–

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

34

26

320

47,16345,532444,305

70,225
157,876(1,661)
273,603¥499,499

68,594
144,715(1,125)
257,716¥414,903

661,564
1,487,292(15,648)
2,577,513$4,705,596

Shareholders’ equity:
Common stock, par value ¥50 per share (Note 8)...........................
Authorized: 300,000,000 shares
Issued and outstanding: 175,659,848 at March 31, 2000
174,623,995 at March 31, 1999
Additional paid-in capital (Note 8)...................................................
Retained earnings ..........................................................................
Treasury stock at cost (Note 9) ........................................................
Total shareholders’ equity ...........................................................
Total liabilities and shareholders’ equity ..................................

TOKYO ELECTRON LIMITED25

C O N S O L I D AT E D S TAT E M E N T O F I N C O M ETokyo Electron Limited and its Subsidiaries
Years ended March 31, 2000, 1999 and 1998

Thousands of
U.S. dollars

Millions of yen

2000

1999

1998

2000

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

¥440,729
303,839
136,890
101,074
35,816¥313,820
225,962
87,85881,475
6,383¥455,585
304,825
150,760
87,46463,296$4,151,945
2,862,355
1,289,590
952,181
337,409

Other income (expenses):
Interest and dividend income .......................................
Interest expenses ..........................................................
Patent royalties for prior years ......................................
Devaluation of golf memberships.................................
Other, net ....................................................................
Income before income taxes .......................................

276(1,960)(1,575)(1,253)(1,615)29,689898(2,003)
–
–
760
6,038

1,664
(1,640)––(486)
62,834

2,600(18,464)(14,837)(11,804)(15,215)
279,689

Provision for income taxes (Note 7):
Current.........................................................................
Deferred.......................................................................

14,545(4,709)4,167–

32,825–137,023(44,362)

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

5¥ 19,848

5
1,866

–
¥ 30,009

47$ 186,981

Per share of common stock:
Net income — basic.....................................................
Net income — diluted..................................................
Cash dividends.............................................................
See accompanying Notes to Consolidated Financial Statements.

26

TOKYO ELECTRON LIMITED¥Yen¥ 113.53
110.64
14.00

¥

10.70
10.70
12.00

U.S. dollars¥ 174.68
168.43
30.00

$

1.07
1.04
0.13

C O N S O L I D AT E D S TAT E M E N T O F S H A R E H O L D E R S ’ E Q U I T YTokyo Electron Limited and its Subsidiaries
Years ended March 31, 2000, 1999 and 1998

Thousands of
U.S. dollars

Millions of yen

Common stock
Balance at beginning of year........................................
Conversion of convertible bonds (Note 8) ....................
Exercise of warrants .....................................................
Balance at end of year .................................................
Additional paid-in capital
Balance at beginning of year........................................
Conversion of convertible bonds (Note 8) ....................
Exercise of warrants ....................................................
Balance at end of year .................................................
Retained earnings
Balance at beginning of year........................................
Increase (decrease) resulting from change inreporting entity, net..................................................
Cumulative effect of applying deferred tax accounting ..
Net income for year .....................................................
Cash dividends ............................................................
Bonuses to directors.....................................................
Balance at end of year .................................................
Treasury stock, at cost (Note 9) ...................................

2000

1999

1998

2000

¥ 45,532
1,631–
47,163¥ 45,445
87–
45,532¥ 30,755
5,476
9,214
45,445$ 428,940
15,365–444,305

68,594
1,631–
70,22568,50787–
68,59453,823
5,476
9,208
68,507646,199
15,365–661,564

144,715

147,082

122,914

1,363,307(7,309)2,717
19,848(2,095)–
157,876(1,661)

(210)
–
1,866
(3,665)(358)
144,715(1,125)(816)–
30,009(4,689)(336)
147,082(25)(68,856)
25,596
186,981(19,736)–
1,487,292(15,648)¥273,603¥257,716¥261,009$2,577,513(1998: 4,101 shares; 1999: 247,191 shares;
2000: 303,761 shares)

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

TOKYO ELECTRON LIMITED27

C O N S O L I D AT E D S TAT E M E N T O F C A S H F L OW STokyo Electron Limited and its Subsidiaries
Year ended March 31, 2000

Millions of yen

Thousands of
U.S. dollars

2000

2000

Income before income taxes ......................................................................................................
Depreciation and amortization...................................................................................................
Increase in allowance for retirement and severance benefits......................................................
Increase in allowance for doubtful accounts ..............................................................................
Increase in allowance for employees’ bonuses ...........................................................................
Interest and dividend revenue....................................................................................................
Interest expenses .......................................................................................................................
Foreign currency translation loss ................................................................................................
Bond issuance cost ....................................................................................................................
Stock issuance cost ....................................................................................................................
Gain (loss) from prior year adjustment .......................................................................................
Gain (loss) on sale of fixed assets ...............................................................................................
Loss on disposal of fixed assets ..................................................................................................
Loss from devaluation of golf memberships...............................................................................
Increase in trade notes and accounts receivable.........................................................................
Increase in inventories................................................................................................................
Increase in accounts payable......................................................................................................
Increase in prepaid consumption tax..........................................................................................
Others........................................................................................................................................
Subtotal.....................................................................................................................................
Receipts from interest and dividends..........................................................................................
Interest paid...............................................................................................................................
Income taxes paid......................................................................................................................
Net cash generated by operating activities .........................................................................

¥29,689
19,446
2,153
213
3,175
(276)
1,964
747
101
24
(398)
(392)
2,149
1,253
(31,675)(27,196)
22,416(3,542)
10,67630,527280(1,923)(3,757)25,127$279,689
183,194
20,283
2,007
29,911(2,600)18,502
7,037
951
226
(3,749)(3,693)
20,245
11,804(298,398)(256,203)
211,173(33,368)
100,573
287,584
2,638(18,116)(35,394)
236,712

Cash flow from investing activities:
Proceeds from repayment of time deposits ................................................................................
Payment for purchase of property, plant and equipment...........................................................
Proceeds from sale of property, plant and equipment ...............................................................
Payment for acquisition of intangible assets...............................................................................
Proceeds from sale of intangible assets......................................................................................
Payment for acquisition of investment securities ........................................................................
Proceeds from sale of investment securities ...............................................................................
Loans to third parties .................................................................................................................
Collection of loans .....................................................................................................................
Others........................................................................................................................................
Net cash used in investing activities.....................................................................................

150(14,577)
1,566(4,100)
26
(500)
103
(68)
90
1,118
(16,192)

1,413(137,325)
14,753(38,625)
245(4,710)
970
(641)
848
10,533(152,539)

Cash flow from financing activities:
Increase in short-term borrowings .............................................................................................
Decrease in commercial paper ...................................................................................................
Proceeds from long-term debt ...................................................................................................
Repayment of long-term debt....................................................................................................
Proceeds from issuance of bonds...............................................................................................
Increase in treasury stock ...........................................................................................................
Dividends paid ...........................................................................................................................
Others........................................................................................................................................
Net cash generated by financing activities ..........................................................................

13,022(10,000)
5,700(2,477)
19,899(454)(2,095)(25)
23,570122,675(94,206)
53,698(23,335)
187,461(4,277)(19,736)(236)
222,044

Foreign currency translation difference in cash and cash equivalents .............................................
Net increase in cash and cash equivalents ...............................................................................
Cash and cash equivalents at beginning of year.............................................................................
Cash and cash equivalents of newly consolidated subsidiaries at beginning of year .......................
Cash and cash equivalents at end of year................................................................................

(469)
32,036
46,761
722¥79,519(4,418)
301,799
440,518
6,802$749,119

Cash flow from operating activities:

Please refer to Note 2 (k) regarding cash flow data for prior years.

28

TOKYO ELECTRON LIMITEDN O T E S T O C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S
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”) havebeen prepared from those that have been filed with the Minister ofFinance of Japan as required by the Securities and Exchange Law andthat conform with accounting principles generally accepted in Japan.
For the convenience of readers outside Japan, however, 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 28 subsidiaries. Seven subsidiaries reported
as non-consolidated subsidiaries in prior fiscal years are consolidated
in 2000 due to the increasing significance of their aggregatedimpact to the consolidated financial statements. The effect of thischange has been shown as decreasing the cumulative retained earnings of prior years by ¥7,309 million at the beginning of the year
ended March 31, 2000.
All significant inter-company accounts, transactions and unrealized
profits or losses have been eliminated in consolidation. The fiscal yearsof all the subsidiaries end on March 31, the fiscal year-end of the
Parent Company.
U.S. dollar amounts included herein are solely for the convenienceof readers and are made at the rate of ¥106.15 to $1.00, theexchange rate prevailing at March 31, 2000. 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
Current assets and liabilities denominated in foreign currencies aretranslated into Japanese yen at the rate prevailing at the balance sheet
date, except for those hedged by forward exchange contracts, which
are translated at the contracted rates. Non-current assets and liabilities denominated in foreign currencies are translated at historical rates.
The financial statements of foreign subsidiaries have been translated in accordance with current accounting standards in Japan.
(c) Marketable securities and investments in securities
Marketable securities and investments in securities are stated principally at cost, cost being determined principally by 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 ofproperty, plant and equipment is computed on the declining-balancemethod for the Parent Company and its domestic subsidiaries at rates
based on the estimated useful lives of assets as prescribed by Japanese
tax laws, while the straight-line method is mainly applied for foreignsubsidiaries over the estimated useful lives of their assets.
(f) Retirement and severance benefits
The Parent Company and certain of its subsidiaries have fundedpension plans to provide retirement and severance benefits to substantially all directors, statutory auditors, and employees to the extent of
the amount required according to internal regulations for directors
and statutory auditors, and the maximum amount allowable according
to each country’s tax laws or internal regulations for employees.
Under the plans, employees are entitled to lump-sum payments basedon the current rate of pay and the length of service upon retirement or
termination of employment for reasons other than cause for dismissal.
(g) Leases
Finance lease transactions, unless the lessee practically acquires
legal title to the leased asset, are treated as operating lease transactions.
(h) Income taxes
In accordance with the revised accounting standards effective April
1, 1999, 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 investment purposes.
(j) 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.
(k) Statement of cash flows
Beginning from the year ended March 31, 2000, the Company
presents the consolidated statement of cash flows with the format
instructed by the revised Securities and Exchange Law effective April 1,

TOKYO ELECTRON LIMITED29

1999. The Company has not retroactively restated the prior year’s presentation, and therefore prior year figures are not presented so as not
to mislead readers outside Japan. Following is a summary of cash
flows already presented in prior years.
Millions of yen

1999
Net cash generated by operating activities ...... ¥ 49,828
Net cash used in investing activities ................. (24,346)
Net cash generated by (used in)financing activities ...................................... (48,189)
Effect of exchange rate changes......................
(1,440)Net increase (decrease) in cash andcash equivalents ......................................... (24,147)
Cash and cash equivalents at end of year........ ¥47,745

1998¥ 17,473(45,326)
66,878873
39,898¥71,892(l) Cash and cash equivalents
Cash and cash equivalents presented in the statement of cash flows
include cash on hand, cash in banks and time deposits whose expiration dates are within three months.
3. Marketable Securities and Investments in Securities
Marketable securities at March 31, 2000 and 1999 were as follows:
Millions of yen

Listed stock.....................................
Other..............................................
Total ........................................

2000
¥825
10
¥835

Thousands of
U.S. dollars

1999
¥825
10
¥835

2000
$7,772
94$7,866

Investments in securities at March 31, 2000 and 1999 were as follows:
Millions of yen

2000
Listed stock..................................... ¥8,086
Mutual funds..................................
810
Other..............................................
114
Total ........................................ ¥9,010

Thousands of
U.S. dollars

1999¥8,107216
310¥8,633

2000$76,175
7,631
1,074$84,880

4. Inventories
Inventories at March 31, 2000 and 1999 were as follows:
Millions of yen

Thousands of
U.S. dollars

2000
1999
2000
Finished products............................ ¥ 38,909 ¥32,595 $ 366,547
Work in process,raw materials and supplies......... 73,572 55,490
693,095
Total ........................................ ¥112,481 ¥88,085 $1,059,642
5. Pledged Assets
The Company did not hold any assets pledged as collateral at
March 31, 2000 and 1999.

30

TOKYO ELECTRON LIMITED

6. Short-Term Borrowings and Long-Term Debt
Short-term bank loans are represented by 365-day notes issued by
the Company to banks and bore interest at the average annual rate of
1.47% at March 31, 2000. Long-term debt at March 31, 2000 and1999 was as follows:
Millions of yen

2000
1999
0.90% unsecured convertible
bonds due 2003 .......................... ¥15,601 ¥18,864
2.45% unsecured bondsdue 2000 ..................................... 30,000 30,000
2.00% unsecured bondsdue 2002 ..................................... 20,000 20,000
1.39% unsecured bondsdue 2004 ..................................... 20,000–
Other loans from banks ............... 14,376 10,381
Current portion............................ (32,699) (1,536)
Total...................................... ¥67,278 ¥77,709

Thousands of
U.S. dollars

2000$146,971
282,619
188,413
188,413
135,430(308,045)$633,801

The 0.90% yen unsecured convertible bonds due 2003 are convertible at the option of holders into common stock through September
29, 2003. At March 31, 2000, the conversion price was ¥3,150.00
per share, subject to adjustment in certain events.
7. Income Taxes
The Parent Company and its domestic subsidiaries are subject toseveral taxes based on income, with an aggregate statutory tax rate of
approximately 42% in 2000 and 48% in 1999.
Significant components of the deferred tax assets and liabilities of
the Company as of March 31, 2000 were as follows:
Millions of yen

Deferred tax assets
Tax loss carryforwards ................................... ¥ 4,882
Elimination of unrealized gain on inventories
3,172
Allowance for bonuses..................................
1,350
Elimination of unrealized gain
on fixed assets............................................
1,173
Enterprise taxes payable ................................
1,007
Allowance for retirement benefits.................
838
Devaluation of golf memberships..................
519
Other ............................................................
2,188
Subtotal of deferred tax assets ...................... 15,129
Valuation allowance...................................... (5,936)
Total amount of deferred tax assets........
9,193
Deferred tax liabilities
Allowance for extraordinary depreciation...... (1,028)
Elimination of unrealized gainon allowance for doubtful accounts...........
(314)
Allowance for domestic market
development for imported products...........
(252)
Other ............................................................
(173)
Total amount of deferred tax liabilities... (1,767)
Net deferred tax assets ............................. ¥ 7,426

Thousands of
U.S. dollars$ 45,992
29,882
12,718
11,050
9,487
7,894
4,889
20,613
142,525(55,921)86,604(9,684)(2,958)(2,374)(1,630)(16,646)$ 69,958

The differences between the aggregate statutory tax rate and theeffective tax rate of the Company for financial statement purposes forthe year ended March 31, 2000 were as follows:
Domestic statutory tax rate..................................................
Non-recognition of temporary differences...........................
Tax credits and others..........................................................
Permanent differences such as non-taxable
dividend income .............................................................
Tax rate difference...............................................................
Expenses not deductible for tax purposes............................
Others .................................................................................
Effective tax rate..................................................................

42.05%
-4.27
-2.57
-1.87
-1.42
0.86
0.35
33.13

8. Shareholders’ Equity
The Company issued 1,035,853 shares and 55,237 sharesof common stock in 2000 and 1999, respectively, in connection withconversion of convertible bonds.
Conversion of convertible bonds into common stock has beenaccounted for in accordance with the provisions of the JapaneseCommercial Code by crediting one-half of the conversion price to boththe common stock account and the additional paid-in capital account.
9. Share Repurchase Under Stock Option Program
At the Annual Shareholders’ Meeting held on June 26, 1998 andon June 29, 1999, stock option plans were approved in order to further increase directors’ incentive and motivation to raise corporate performance with the aim of maximizing corporate value. Pursuant tothis approval, from July 1, 1998 to March 31, 2000, the Company
repurchased 299,000 shares of its common stock with a total value of¥1,612 million.
10. Leases
Information relating to finance leases, excluding those leases forwhich the ownership of the leased assets is considered to be transferred to the lessee, as of and for the years ended March 31, 2000
and 1999, was as follows:
Leased assets not recorded in the consolidated balance sheets:
Millions of yen

2000
Acquisition cost......................................... ¥52
Accumulated depreciation ........................ 37
Net leased property................................... ¥15

1999
¥76
53
¥23

Lease payments and depreciation computed by the straight-line
method over the lease terms with no residual value and imputed interest expense were ¥11 million in the year ended March 31, 2000 and¥16 million in the year ended March 31,1999.
Future minimum operating lease payments:

Due within one year ...................................
Due over one year ......................................
Total ....................................................

Millions of yen

Thousands of
U.S. dollars

2000
¥ 98
76
¥174

2000
$ 923
716
$1,639

11. Segment Information
The Company does not disclose segment information as it operates
in a single segment.
12. Contingent Liabilities
The Company did not hold any contingent liabilities at March 31,
2000 and 1999.
13. Subsequent Event
On June 9, 2000, 1.59% unsecured bonds with warrants due
2006 were issued as approved at the Board Meeting held on May 17,
2000. This was in relation to the stock-based compensation plan
introduced and implemented as of the same date of the issuance ofthe bonds with warrants. Under this plan, the bond portion (¥4,500
million) was sold to the public and the warrant portion (¥715,950
thousand) was repurchased by the Company and granted to its
eligible employees worldwide as an incentive linked to the Company’s
future stake. A summary of terms and conditions of the bonds withwarrants are as follows:
Bond amount .................................... ¥4,500 million
Interest rate ....................................... 1.59%
Issued stocks...................................... Common stock, ¥50 par value
Exercise price ..................................... ¥14,070
Exercise period................................... July 1, 2002 – June 8, 2006

Thousands of
U.S. dollars

2000
$480
339
$141

Future minimum lease payments (Machinery and Equipment) :Due within one year ...................................
Due over one year ......................................
Total ....................................................

Millions of yen

Thousands of
U.S. dollars

2000
¥11
4
¥15

2000
$103
38
$141

TOKYO ELECTRON LIMITED31

I N D E P E N D E N T A U D I TO R S ’ R E P O R T

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, 2000 and 1999, the related statements of income and shareholders’ equity for each of
the three years in the period ended March 31, 2000, and the statement of cash flows for the year ended March
31, 2000, all expressed in yen. Our examinations were made in accordance with auditing standards generally
accepted in Japan and, accordingly, included such tests of the accounting records and 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 andits consolidated subsidiaries at March 31, 2000 and 1999, the results of their operations for each of the three
years in the period ended March 31, 2000, and their cash flows for the year ended March 31, 2000, in conformity with accounting principles generally accepted in Japan applied on a consistent basis.
The amounts expressed in U.S. dollars have been translated on the basis described in Note 2-a.

Tokyo, Japan
June 28, 2000

Masatoshi Yoshino
Certified Public Accountant

32

TOKYO ELECTRON LIMITED

Eiji Miyashita
Certified Public Accountant

Fumihiko Sugiura
Certified Public Accountant

B O A R D O F D I R E C TO R S , S TAT U TO RY A U D I TO R S
A N D C O R P O R AT E S E N I O R S TA F F(as of July 1, 2000)

Corporate Senior Staff
Tetsuro Higashi
C.E.O., President

Tetsuo Tsuneishi
Corporate Officer, Executive Vice President

Takeo Tanaka
Corporate Officer, Senior Vice President

Mitsutaka Yoshida
Corporate Officer, Senior Vice President

Yuichi Honda
Executive Manager, Accounting,
Finance, Order Process, Information Systems

Kousuke Ishii
Corporate Staff, Global Operation of
Administration, Personnel, General Affairs

Yasuyuki Kuriki
General Manager, Diffusion Systems B.U.

Mitsuru Onozato
General Manager, Etch Systems B.U.

Yoshinori Inoue
General Manager, Test Systems B.U.

Hideyuki Takamori
General Manager, Clean Track B.U.

Haruo Iwatsu
General Manager, Cleaning Systems B.U.

Hiroshi Tomita
Left to right: Mitsutaka Yoshida, Tetsuro Higashi, Tetsuo Tsuneishi, Takeo Tanaka

General Manager, LCD Systems B.U.

Kiyoshi Sunohara
General Manager, Sales Promotion,
North America / Europe

Hironobu Sato

Board of Directors

General Manager, Sales Promotion, Asia

Makoto Mizokuchi

Tetsuro Higashi

Hiroshi Takashima*

C.E.O., President
Tokyo Electron Limited

ChairmanTokyo Electron Kyushu Limited

Tetsuo Tsuneishi

Junichi Inoue

Corporate Officer
Executive Vice President
Tokyo Electron Limited

ChairmanTokyo Electron Yamanashi Limited

Satoru Matsumoto

Yukio Sunahara

Kengo Kuroiwa

President
Tokyo Broadcasting System, Inc.

Yasuo Inoue

Takeo Tanaka*
Corporate Officer
Senior Vice President
Tokyo Electron Limited

General Manager, Sales Promotion, Japan

Ryuichi Komatsubara
General Manager, Corporate Marketing

Takaaki Matsuoka
Corporate Technology Strategist
Corporate Staff, Corporate Technology
Development
President, Tokyo Electron Tohoku Limited
President, Tokyo Electron Yamanashi Limited

Megumi Yamashiro
President, Tokyo Electron Kyushu Limited

Mitsutaka Yoshida

Statutory Auditors

Masao Kubodera

Corporate Officer
Senior Vice President
Tokyo Electron Limited

Hirosuke Ishibashi

Mamoru Hara

Keiichiro Kuriyama*

Yoriaki Miyoshi

ChairmanTokyo Electron Device Limited

Tokyo Electron Limited

Toshiaki Sunagawa

Takanori Suzuki

Barry R. Rapozo

Kuniyuki Matsuba**

Tokyo Electron Limited

ChairmanTokyo Electron FE Limited

Hiroshi Shiho

Tokyo Electron Limited

ChairmanTokyo Broadcasting System, Inc.

President, Tokyo Electron Miyagi Limited
President, Tokyo Electron EE Limited

Keiichi Furugaki
President, Tokyo Electron FE Limited
President, Tokyo Electron Device
President, Tokyo Electron America, Inc.

Gerald Thurgood
President, Tokyo Electron Europe Limited

T. K. Kwak
President, Tokyo Electron Korea Limited

Archie Hwang
President, Tokyo Electron Taiwan Limited* Compensation Committee** Chief Business Ethics Director“B.U.” indicates Tokyo Electron’s productspecific business unit.

TOKYO ELECTRON LIMITED33

C O R P O R AT E D I R E C TO RY(as of June 28, 2000)

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/tel-e/
Regional Offices
Fuchu Technology Center, Osaka Branch Office,
Kyushu Branch Office, Tohoku Regional Office,Yamanashi Regional Office, Central ResearchLaboratory/Process Technology Center
Sales Offices
Sendai, Nagoya

TOKYO ELECTRON TOHOKU LIMITED
Tohoku Plant
52 Matsunagane, Iwayado
Esashi City, Iwate 023-1101
Tel: 0197-35-5101
Sagami Plant
2-41 Machiya 1-chome, Shiroyama-machi
Tsukui-gun, Kanagawa 220-0101
Tel: 042-782-8111

TOKYO ELECTRON YAMANASHI LIMITED
Fujii Plant
2381-1 Kitagejo, Fujii-cho
Nirasaki City, Yamanashi 407-8511
Tel: 0551-22-8611
Hosaka Plant
650 Mitsusawa, Hosaka-cho
Nirasaki City, Yamanashi 407-0192
Tel: 0551-22-8611

TOKYO ELECTRON KYUSHU LIMITEDTOKYO ELECTRON FE LIMITED

Saga Plant
1375-41 Nishi-Shinmachi
Tosu City, Saga 841-0074
Tel: 0942-81-1800
Kumamoto Plant
2655 Tsukure, Kikuyo-machi
Kikuchi-gun, Kumamoto 869-1197
Tel: 096-292-3111
Ozu Plant
272-4 Takaono, Ozu-machi
Kikuchi-gun, Kumamoto 869-1232
Tel: 096-292-1600
Koshi Plant
1-1 Fukuhara, Koshi-machi
Kikuchi-gun, Kumamoto 861-1116
Tel: 096-349-5500

30-7 Sumiyoshi-cho 2-chome
Fuchu City, Tokyo 183-8705
Tel: 042-333-8411
District Offices
Osaka, Kumamoto, Iwate, Tsuruoka, Sendai,
Aizuwakamatsu, Takasaki, Mito, Nirasaki, Toyama,
Kuwana, Fukuyama, Higashi-Hiroshima, Saijo, Oita,
Nagasaki, Kikuyo, Kagoshima

TOKYO ELECTRON MIYAGI LIMITEDTOKYO ELECTRON LEASING CO., LTD.

1-1 Nekohazama, Nemawari, Matsushima-machi
Miyagi-gun, Miyagi 981-0203
Tel: 022-355-1500

30-7 Sumiyoshi-cho 2-chome
Fuchu City, Tokyo 183-8705
Tel: 042-333-8337

TOKYO ELECTRON EE LIMITEDTOKYO ELECTRON LOGISTICS LIMITED

2-41 Machiya 1-chome, Shiroyama-machi
Tsukui-gun, Kanagawa 220-0101
Tel: 042-783-1331

30-7 Sumiyoshi-cho 2-chome
Fuchu City, Tokyo 183-8705
Tel: 042-333-8100

TOKYO ELECTRON SAPPORO LIMITEDTOKYO ELECTRON AGENCY LIMITED

Marumasu Building No.18
Nishi 1-chome, Kita 7-jo, Kita-ku
Sapporo City, Hokkaido 060-0807
Tel: 011-700-2211

30-7 Sumiyoshi-cho 2-chome
Fuchu City, Tokyo 183-8705
Tel: 042-333-8300

TOKYO ELECTRON DEVICE LIMITED
1 Higashikata-cho, Tsuzuki-ku
Yokohama City, Kanagawa 224-0045
Tel: 045-474-7000
Sales Offices
Utsunomiya, Mito, Kumagaya, Kanda, Tachikawa,
Yamanashi, Matsumoto, Nagoya, Osaka, Fukuoka

Tokyo Electron Limited
World Headquarters(TBS Broadcast Center, Floors 15-18)

Tokyo Electron Europe Limited
Crawley Office●●●

Tokyo Electron Taiwan Limited

34

TOKYO ELECTRON LIMITEDTokyo Electron Korea Limited
Pundang Office●AMERICAEUROPETOKYO ELECTRON AMERICA, INC.

TOKYO ELECTRON EUROPE LIMITED

Austin Office
2400 Grove Boulevard
Austin, Texas 78741
Tel: 512-424-1000
Branch Offices
Albuquerque Office, Boise Office, Burlington Office,Dallas Office, Fishkill Office, Eugene Office,Los Angeles Office, Manassas Office, Orlando Office,Phoenix Office, Portland Office, Richmond Office,Roseville Office, Santa Clara Office, South Portland
OfficeCrawley OfficePremiere House
Betts Way, London Road
Crawley, West Sussex, RH10 2GB England
Tel: 1293-655800
Branch Offices
European Distribution Centre, Livingston OfficeTOKYO ELECTRON FRANCE S.A.R.L.

TOKYO ELECTRON ITALIA S.p.A.

5350 N.E. Dawson Creek Drive
Hillsboro, Oregon 97124
Tel: 503-615-2100

TOKYO ELECTRON TEXAS, INC.

TOKYO ELECTRON DEUTSCHLAND GmbH

2500 Montopolis Drive
Austin, Texas 78741
Tel: 512-486-4000

Munich Office
Office-Center-Ismaning
Carl-Zeiss-Ring 585737, Ismaning, Germany
Tel: 89-96278-0
Branch OfficeDresden OfficeTOKYO ELECTRON MASSACHUSETTS, INC.
123 Brimbal Avenue
Beverly, Massachusetts 01915
Tel: 978-921-0031
Branch Office
Santa Clara Office1829 W. Drake Drive, Suite 103
Tempe, Arizona 85283
Tel: 480-345-6470

TOKYO ELECTRON ARIZONA, INC.
2120 West Guadalupe Road
Gilbert, Arizona 85233
Tel: 480-507-8100

S Habarzel St.
Gat 2000 Industrial Zone
Kiryat Gat, Israel
Tel: 7-681-0860

TOKYO ELECTRON IRELAND LIMITED
c/o Intel Ir5 Mfg.
Collinstown Industrial Park
Leixlip, Co. Kildare, Ireland
Tel: 1-606-7923

ASIATOKYO ELECTRON KOREA LIMITEDTOKYO ELECTRON SWITZERLAND LIMITEDTOKYO ELECTRON PHOENIX LABORATORIES, INC.

TOKYO ELECTRON ISRAEL LIMITEDTOKYO ELECTRON ESPAÑA S.L.

Milan OfficeCentro Direzionale Colleoni
Via Paracelso 26
20041 Agrate Brianza, Milan, Italy
Tel: 039-656081
Branch Offices
Avezzano Office, Catania OfficeTOKYO ELECTRON OREGON, INC.

1, Chemin de la Dhuy
Batiment Alicante
38240 Meylan, France
Tel: 4760-41244

Chemin de Buchaux 38
CH-2022, Bevaix, Switzerland
Tel: 32-846-20-60

Pundang Office325-230, Dongchun-ri
Suji-up, Yongin-city
Kyonggi-do, 449-840 Korea
Tel: 0331-260-5000
Branch Offices
Cheongju Office, Gumi Office, Icheon Office,Kiheung Office, Pucheon OfficeTOKYO ELECTRON TAIWAN LIMITEDTOKYO ELECTRON NEDERLAND B.V.
Kerkenbos 10-15, Unit C
6546 BB Nijmegen,
The Netherlands
Tel: 243-726630

2Fl, No. 346, Pei Da Road
Hsin-chu, Taiwan, R.O.C.
Tel: 3-525-3400

TOKYO ELECTRON LIMITEDSHANGHAI REPRESENTATIVE OFFICE
Suite 1004
777 Zhao Jia Bang Road
Shanghai 200032, China
Tel: 21-6443-8067

Tokyo Electron Oregon, Inc.

Tokyo Electron Massachusetts, Inc.

●

●
●

●
●

Tokyo Electron Arizona, Inc.

Tokyo Electron America, Inc.
Austin Office

Tokyo Electron Texas, Inc.

TOKYO ELECTRON LIMITED35

I N V E S TO R I N F O R M AT I O N(as of March 31, 2000)

Corporate Name:Tokyo Electron Limited

Established:

November 11, 1963

Common Stock:

Par value¥50
Authorized 300,000,000 shares
Issued and outstanding 175,659,848 shares

Number of Shareholders:

7,147

Transfer Agent for
Common Stock:

Chuo Mitsui Trust and Banking Co., Ltd.
1-7-1 Kyobashi, Chuo-ku, Tokyo 104-8345, Japan

Common Stock Listed on:

The Tokyo Stock Exchange 1st Section (#8035)

Quarterly Stock Price Range(¥)
20,000(Years ended March 31)

18,00016,00014,00012,00010,000
8,000
6,000
4,000
2,000
0

FY 98/Q1

Q2

Q3

Q4

FY 99/Q1

Investor Relations:

36

TOKYO ELECTRON LIMITED

Q2

Q3

Q4

FY 00/Q1

Tokyo Electron Limited
Investor Relations Group
3-6 Akasaka 5-chome
Minato-ku, Tokyo 107-8481
Tel: 81-3-5561-7003
Fax: 81-3-5561-7365
E-mail: ir@corp.tel.co.jp

Q2

Q3

Q4

World Headquarters
TBS Broadcast Center, 3-6 Akasaka 5-chome, Minato-ku,
Tokyo 107-8481 Tel: 03-5561-7000 Fax: 03-5561-7400
Visit TEL on the World Wide Web at http://www.tel.co.jp/tel-e/Printed in Japan on recycled paper
38AG-016