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

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

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

Millions of yen
2002

2001

2000

1999

1998

1997

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

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

2,445,309-

325,715-

619,001-

355,103-242,240-

380,184-

355,877-

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

127,864-

17,031-

14,054-

12,357-

12,878-15,262-

14,408-

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

552,986-

73,658-89,211-

72,051-

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

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

10,672-

1,421-

1,614-

1,218-

968-

--

--

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

(137,467)(18,310)

121,086-

35,816-

6,383-

63,296-

60,389-

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

(172,070)(22,919)

99,132-

29,689-6,038-

62,834-60,487-

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

(149,685)(19,938)

62,012-

19,848-1,866-

30,009-29,975-

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

1,400,277-

186,516-

299,272-

183,987-

149,838-

230,550-

256,808-

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

1,736,554-

231,309-424,608-

256,742-

163,982-

225,035-

175,977-

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

197,406-

26,294-

21,679-19,446-

17,921-

12,652-

10,167-

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

232,327-

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

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

404,105-

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

26,842-

26,813-

20,988-

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

4,181,046-

556,915-

729,511-499,499-

414,903-493,600-

387,077-

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

2,309,148-

307,579-

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

261,009-

207,476-

10,171-

10,236-

8,946-

7,835-

7,287-

6,277-

10.70-¥ 174.68-¥ 181.97---

168.43-172.74-

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

3

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

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

344.75-110.64-¥

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

0.06-

8.00-

38.00-

14.00-

12.00-

30.00-

28.00-

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

0.06-

8.00-

38.00-

14.00-

12.00-

30.00-

25.45-

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

175,691-

175,691-

175,660-

174,624-

174,569-

150,189-

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

37,116-42,781-

7,147-

8,576-

9,562-

11,097-

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

(6.2)

20.4-

7.5-

0.7-

12.8-

15.4-

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

(4.4)

16.7-

8.1-

2.0-

13.9-

14.0-

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

55.2-

45.7-

54.8-

62.1-

52.9-

53.6-

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

0.65-

1.18-

0.96-

0.69-

1.03-

1.10-

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

Percent

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

Thousands of yen¥ 40,054-

1 Results are retroactively restated due to a structural reorganization in fiscal 1997. The FPD, Flat Panel Display, Department has been included in Semiconductor Production Equipment.
The Computer Systems division was renamed the Computer Network division as of April 1, 2000.
2 Capital expenditures before 1999 represent the gross increase in property, plant and equipment, intangible assets and other depreciable assets.
represent the gross increase in property, plant and equipment.

Capital expenditures from 2000 only

3 Per share amounts prior to the year ended March 1998 have been restated to reflect a 1. 1-for-1 stock split.
4 Dilution is not assumed for the years ended March 2002 and 1999.

29

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

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

ASSETS

Thousands of
U.S. dollars

Millions of yen

2002

2001

2002

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

¥ 48,409-¥ 65,320-$ 363,433-

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

10-

--

75-

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

167,982-

302,953-

1,261,128-

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

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

127,352-

161,981-956,099-

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

3,402-

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

6,888-

7,048-

51,711-

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

353,423-548,241-

2,653,329-

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

9,535-

11,599-71,584-

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

22,591-

7,394-

169,605-

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

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

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

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

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

19,908-

19,698-

149,456-

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

114,586-

106,753-

860,255-

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

95,615-84,607-

717,832-

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

5,139-

853-

38,581-

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

235,248-

211,911-

1,766,124-

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

100,737-

87,190-756,282-

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

134,511-

124,721-1,009,842-

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

¥556,915-¥729,511-$4,181,046-

Current assets:

Investments and other assets:

Property, plant and equipment:

See accompanying Notes to Consolidated Financial Statements.

30

TOKYO ELECTRON

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

LIABILITIES AND SHAREHOLDERS' EQUITY

Thousands of
U.S. dollars

Millions of yen

2002

2001

2002

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

¥ 13,924-¥ 48,462-$ 104,534-

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

26,387-2,970-

198,104-

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

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

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

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

1,663-

41,440-12,486-

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

2,463-

10,948-18,494-

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

14,012-

17,271-

105,192-

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

109,502-

238,441-

822,087-

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

105,452-

126,348-

791,680-

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

32,984-29,807-

247,625-

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

1,340-

1,576-

10,068-

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

249,278-

396,172-

1,871,460-

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

58-

58-

438-

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

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

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

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

190,195-

214,920-

1,427,892-

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

1,171-

1,658-

8,790-

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

3,738-

2,734-

28,061-

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

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

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

307,579-

333,281-2,309,148-

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

¥556,915-¥729,511-$4,181,046-

Current liabilities:

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

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

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

Thousands of
U.S. dollars

Millions of yen

2002

2001

2000

2002

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

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

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

302,270-

458,902-

303,839-2,269,298-

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

115,555-

264,978-

136,890-

867,533-

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

133,865-

143,892-

101,074-

1,005,000-

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

(18,310)

121,086-

35,816-(137,467)

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

351-

669-

276-

2,635-

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

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

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

----(1,575)--

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

(75)

(35)

(1,253)(565)

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

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

--(15,975)----

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

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

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

(22,919)

99,132-

29,689-(172,070)

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

2,612-

50,589-14,545-

19,610-

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

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

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

8-

21-

5-

62-

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

¥ (19,938)¥ 62,012-

Other income (expenses):

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

Yen

U.S. dollars

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

¥ (113.85)¥ 353.76-¥ 113.53-

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

--

344.75-110.64---

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

8.00-

38.00-

14.00-

0.06-

See accompanying Notes to Consolidated Financial Statements.

32¥ 19,848- $ (149,685)

TOKYO ELECTRON$(0.85)

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

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

Thousands of
U.S. dollars

Millions of yen

2002

2001

2000

2002

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

¥ 47,213-¥ 47,163-

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

1-

50-

1,631-

8-

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

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

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

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

527,588-

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

1-

50-

1,631-

8-

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

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

214,920-

157,876-

144,715-

1,613,516-

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

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

----

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

(19,938)

62,012-

19,848-(149,685)

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

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

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

(756)

(234)

--

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

190,195-

214,920-

157,876-

1,427,892-

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

1,171-

1,658---

8,790-

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

3,738-

2,734---

28,061-

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

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

Common stock¥ 45,532- $ 354,450-

Additional paid-in capital

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

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

¥273,603- $2,309,148-

See accompanying Notes to Consolidated Financial Statements.

33

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

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

Millions of yen

Cash flow from operating activities:
Income (loss) before income taxes .............................................................
Depreciation and amortization ....................................................................
Increase in allowance for retirement and severance benefits.....................
Increase (decrease) in allowance for employees’ bonuses ........................
Interest expenses ........................................................................................
Loss on disposal of fixed assets .................................................................
Devaluation of investments in securities .....................................................
Loss from devaluation of golf memberships ...............................................
(Increase) decrease in trade notes and accounts receivable .....................
(Increase) decrease in inventories ..............................................................
Increase (decrease) in accounts payable ...................................................
(Increase) decrease in prepaid consumption tax ........................................
Others..........................................................................................................
Subtotal ......................................................................................................
Receipts from interest and dividends ..........................................................
Interest paid.................................................................................................
Income taxes paid .......................................................................................
Net cash provided by (used in) operating activities..............................
Cash flow from investing activities:
Payment for purchase of property, plant and equipment............................
Payment for acquisition of intangible assets...............................................
Payment for purchase of newly consolidated subsidiaries .........................
Others..........................................................................................................
Net cash used in investing activities ......................................................
Cash flow from financing activities:
Increase (decrease) in short-term borrowings ............................................
Increase (decrease) in commercial paper...................................................
Proceeds from long-term debt.....................................................................
Repayment of long-term debt......................................................................
Proceeds from issuance of bonds...............................................................
Redemption of unsecured bonds ................................................................
Increase in treasury stock ...........................................................................
Dividends paid.............................................................................................
Others..........................................................................................................
Net cash provided by (used in) financing activities ..............................
Effect of exchange rate changes on cash and cash equivalents .....................
Net increase (decrease) in cash and cash equivalents ..............................
Cash and cash equivalents at beginning of year..............................................
Cash and cash equivalents at end of year (Note 4).....................................

See accompanying Notes to Consolidated Financial Statements.

34

TOKYO ELECTRON

Thousands of
U.S. dollars

2002

2001

2002

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

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

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

Notes to Consolidated Financial Statements
Tokyo Electron Limited and its Subsidiaries

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

2. Summary of Significant Accounting Policies(a) Principles of consolidation
The consolidated financial statements include the accounts of theCompany and all of its 30 subsidiaries.
All significant inter-company accounts, transactions and unrealized
profits or losses have been eliminated in consolidation.
The fiscal year of all entities ends on March 31, except for one
foreign subsidiary, which uses December 31 year end, and no
significant transactions were noted between the different fiscal year
ends.
U.S. dollar amounts included herein are solely for the convenienceof readers and are made at the rate of ¥133.20 to $1.00, theapproximate rate at March 31, 2002. The translation should not be
construed as a representation that the Japanese yen amounts shown
could be converted into U.S. dollars at that or any other rate.

(b) Foreign currency translation
In accordance with the revised Japanese accounting standards
effective April 1, 2000, all assets and liabilities denominated in foreign
currencies are translated into Japanese yen at the rate prevailing at
the balance sheet date, except for those hedged by forward
exchange contracts, which are translated at the contracted rates.
Income and expense items are translated at the rates thatapproximate those rates prevailing at the time of the transactions.
The financial statements of foreign subsidiaries have beentranslated in accordance with the accounting standards in Japan.
Foreign currency translation adjustments previously classified in
the Assets section have been reclassified in the Shareholders’ equity
section starting from April 1, 2000 in accordance with the revised
Japanese accounting standards effective April 1, 2000.

(c) Marketable securities and investments in securities
In accordance with the revised Japanese accounting standards
effective April 1, 2000, securities with market prices are valued atmarket based on market prices on the fiscal year-end. Other
securities are valued at cost using the weighted average method.
The differences between the book and market prices of marketablesecurities are charged to shareholders’ equity. The cost of soldsecurities is calculated using the weighted average method.

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

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

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

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

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

(i) Derivatives
The Company makes use of derivatives only to reduce exchange
risk of foreign currencies. The amount of derivatives is limited to theextent of foreign currency assets, debt and actual orders, and theCompany does not trade in derivatives for speculative purposes.
Derivatives are valued at market based on market prices on thefiscal year-end.

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

35

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

6. Inventories

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

(l) Per share information
Net income per share is computed based on the weighted average
number of shares of common stock outstanding during each year.
Dividends per share have been presented on an accrual basis andinclude, in each fiscal year ended March 31, dividends approved or to
be approved after such March 31 but applicable to the year thenended.

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

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

62-

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

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

(216)

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

18,981-

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

(114)

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

¥18,867-

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

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

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

2002

2001

2002

¥ 63,730-¥ 58,878-$478,455-

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

63,622-

103,103-477,644-

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

¥127,352-¥161,981-$956,099-

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

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

Millions of yen
2002

2001

2002

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

¥ 15,500-¥ 15,502-$116,366-

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

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

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

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

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

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

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

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

4,500-

4,500-

33,785-

1.59% unsecured bonds withThousands of
U.S. dollars

Millions of yen

Thousands of
U.S. dollars

Millions of yen

8. Short-Term Borrowings and Long-Term Debt

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

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

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

2002

2001

2002

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

5,500---

41,291-¥48,409-¥65,320-$363,433-

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

16,339-19,316-

122,667-

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

--

(29)

--

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

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

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

¥48,409-¥65,291-$363,433-

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

¥105,452-¥126,348-$791,680-

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

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

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

2002

2001

2002

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

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

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

subject to adjustment
in certain events.

Thousands of
U.S. dollars

Millions of yen
2002

2001

2002

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

¥8,545-¥10,577-$64,150-

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

115-

113-

866-

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

875-

909-

6,568-

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

¥9,535-¥11,599-$71,584-

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

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

36

TOKYO ELECTRON

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

0.86% unsecured bonds with warrants due 2007

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

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

2002

2001

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

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

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

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

3.00%

3.50%

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

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

3.00%

3.00%

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

--

4 years

4 years

9. Retirement and Severance Benefits
The Company and its consolidated domestic subsidiaries havenoncontributory retirement and severance benefit plans that provide
for pension or lump-sum payment benefits to employees who retire or
terminate their employment for reasons other than dismissal forcause. In addition, the majority of the employees of the Company arecovered by a contributory pension plan, whose benefits are based on
length of service and certain other factors and include a portion
representing the government social security welfare pension.
Certain consolidated foreign subsidiaries have a noncontributory
retirement and severance benefit plan that provides for pension or
lump-sum payment benefits to employees who retire or terminate
their employment for reasons other than dismissal for cause.
The funded status of the defined benefit plans, a substantial
portion of which consists of domestic benefit plans, as of March 31,
2002 and 2001 is as follows:
Thousands of
U.S. dollars

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

2002

2001

2002

¥(59,125)¥(46,449)$(443,880)

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

18,021-

15,575-

135,292-

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

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

Unrecognized actuarial difference ........

9,390-

2,175-

70,495-

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

¥(31,714)¥(28,699)$(238,093)

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

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

Millions of yen
2002

2001

2002

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

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

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

(467)

(419)

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

544-

Straight-line method

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

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

Millions of yen
2002

2001

2002

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

¥17,100-¥2,447-$128,380-

Allowance for retirement benefits ......

9,252-

8,180-

69,462-

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

1,931-

5,283-

14,496-

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

944-

--

7,084-

Deferred tax assets

Elimination of unrealized

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

738-

1,362-

5,544-

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

785-

--

5,896-

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

547-

527-

4,103-

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

--

3,912---

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

--

2,101---

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

3,702-

3,371-

27,792-

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

34,999-27,183-

262,757-

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

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

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

31,020-24,704-

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

(754)

(884)

(5,663)

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

4,087-

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

--

15,975---

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

--

(282)

--

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

¥6,067-¥20,916-$45,546-

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

(217)

(130)

(1,625)

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

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

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

¥25,951-¥19,979-$194,827-37

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

11. Shareholders’ Equity
The Company issued 634 shares and 31,421 shares of common
stock in 2002 and 2001, respectively, in connection with conversion of
convertible bonds.
Conversion of convertible bonds into common stock has beenaccounted for in accordance with the provisions of the JapaneseCommercial Code by crediting one-half of the conversion price toboth the common stock account and the additional paid-in capital
account.

12. Share Repurchase Under Stock Option Program
The Company has a stock option plan to further increase directors’
and corporate senior staff’s incentive and motivation to raise
corporate performance with the aim of maximizing corporate value. A
summary of share repurchases under the stock option plan during theyear ended March 31, 2002 is as follows:
Number ofsharesMillions ofyen

Thousands of
U.S. dollars

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

407,400-¥3,517-$26,404-

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

215,600-

1,565-

11,751-

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

(20,000)

(91)

(682)

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

603,000-¥4,991-$37,473-

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

13. Leases
Pro-forma information of leased property such as acquisition cost,
accumulated depreciation, obligation under finance lease, anddepreciation expense of finance leases that do not transfer ownershipof leased property to the leasee on an "as if capitalized" basis for theyears ended March 31, 2002 and 2001 is as follows:
Leased assets not recorded in the consolidated balance sheets:
Thousands of
U.S. dollars

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

¥876-

2001
¥35-

2002
$6,582-

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

69-

31-

524-

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

¥807-

¥ 4-

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

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

¥171-

2001
¥ 4-

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

636-

--

4,773-

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

¥807-

¥ 4-

$6,058-38

TOKYO ELECTRON

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

Thousands of
U.S. dollars

2002

2001

2002

¥ 868-¥ 474-$ 6,520-

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

1,976-

1,503-

14,832-

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

¥2,844-¥1,977-$21,352-

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

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

Independent Auditors’ Report

To the Board of Directors, Tokyo Electron Limited
We have examined the consolidated balance sheets of Tokyo Electron Limited and its consolidated
subsidiaries as of March 31, 2002 and 2001, the related statements of income and shareholders’ equity foreach of the three years in the period ended March 31, 2002, and the statements of cash flows for the years
ended March 31, 2002 and 2001, all expressed in yen. Our examinations were made in accordance withauditing standards generally accepted in Japan and, accordingly, included such tests of the accounting
records and such other auditing procedures as we considered necessary in the circumstances.
In our opinion, the consolidated statements present fairly the financial position of Tokyo Electron
Limited and its consolidated subsidiaries at March 31, 2002 and 2001, the results of their operations foreach of the three years in the period ended March 31, 2002, and their cash flows for the year ended March
31, 2002 and 2001, in conformity with accounting principles generally accepted in Japan applied on a consistent basis.
The amounts expressed in U.S. dollars have been translated on the basis described in Note 2-a.

Tokyo, Japan
June 21, 2002

Masatoshi Yoshino

Eiji Miyashita

Fumihiko Sugiura

Certified Public Accountant

Certified Public Accountant

Certified Public Accountant

39