On July 30, 2004, Tokyo Electron Limited (the Company) announced that the Company would report details of the changes in its accounting policies and the effects of such changes on the financial forecast as soon as they became definite. Today at the meeting of the Board of Directors, decisions were made regarding the changes in accounting policies, and as a result of the changes, the financial forecast was revised in the following manner:



1. Changes in Accounting Policies

Since last year, as part of its structural reforms, the Company has taken various measures to strengthen its corporate structure. These measures are steadily bringing results, such as higher profitability and greater asset efficiency. In the future, in an effort to further strengthen its corporate structure, the Company will implement one further step of more advanced measures in addition to the current structural reforms. As part of such measures, the Company has decided to change some of its accounting policies, while taking into consideration the likelihood that international harmonization of accounting standards will continue to advance in the near future. This change is intended to make the Company's accounting information more appropriate, thereby further bolstering the financial and revenue structures of the Company.



(1) Changes in revenue recognition standards

In the past, revenue from semiconductor and FPD production equipment were recognized at the time of shipment. Starting from the current fiscal year (the term ending March 2005), however, such revenue will in principle be recognized at the time of the completion of start-up. This change is intended to reflect the actual condition of revenue more properly because the process from shipment to the completion of start-up has shown a marked tendency to become longer and post-shipment review of business processes has made it possible to provide a complete set of data upon the completion of start-up.



Due to this change, for the six months ending September 30, 2004, non-consolidated net sales are expected to fall by 73 billion yen, and non-consolidated ordinary income and income before income taxes are expected to fall by 13.5 billion yen, respectively. On a consolidated basis, net sales are expected to decline by 73 billion yen, and ordinary income and income before income taxes are expected to decline by 18.3 billion yen, respectively. For the year ending March 31, 2005, non-consolidated net sales are expected to fall by 80 billion yen and ordinary income and income before income taxes are expected to fall by 17 billion yen, respectively. On a consolidated basis, net sales are expected to decline by 80 billion yen, and ordinary income and income before income taxes are expected to decline by 19.8 billion yen, respectively.



(2) Reporting the accrual for product warranties

Previously, after-sale service expenses incurred during the warranty period for semiconductor and FPD production equipment were reported when such expenses emerged. Starting from the current fiscal year (the year ending March 31, 2005), however, an accrual for product warranties estimated on the basis of after-sale service expenses incurred in the past will be reported. This change is intended to make the periodic profit and loss statements more appropriate by taking into account both after-sale service expenses and revenues when products are sold, because a complete set of data on actual after-sale service expenses for previous years have been compiled and such after-sale services have gained importance from a customer satisfaction perspective.



Due to this change, for the six months ending September 30, 2004, non-consolidated ordinary income is expected to fall by 5 billion yen, and non-consolidated income before income taxes is expected to fall by 12.5 billion yen. On a consolidated basis, ordinary income is expected to decline by 4.2 billion yen, and income before income taxes is expected to decline by 11.2 billion yen. For the year ending March 31, 2005, non-consolidated ordinary income is expected to fall by 6 billion yen, and non-consolidated income before income taxes is expected to fall by 13.5 billion yen. On a consolidated basis, ordinary income is expected to decline by 5.2 billion yen, and income before income taxes is expected to decline by 12.2 billion yen.