Tokyo Electron Limited (the Company) has revised its financial forecast for the six months ended September 30, 2004 (April 1, 2004 - September 30, 2004), which the Company announced on September 7, 2004 following a change of accounting policies, as specified below. Financial forecast for the current fiscal year (the year ending March 31, 2005) will show no major fluctuations, but the Company will present a more precise forecast when interim financial results are announced (scheduled for November 11, 2004).

2. Major reason for financial forecast revision



[Consolidated financial forecast]

(1) Net sales

The main reason is that sales of FPD production equipment are expected to exceed the previous forecast



(2) Ordinary income

The forecast for ordinary income has been revised because the accruals for product warranties that correspond to sales for the previous fiscal year (12.4 billion yen) including those incurred during the current interim term (4.8 billion yen) will now be reported as unusual losses. In the previous forecast, these accruals were included in the cost of sales.

(3) Income before income taxes

As described in (2), the previous fiscal year's accruals for product warranties (4.8 billion yen) will now be reported as unusual losses, and therefore an increase in ordinary income will be offset. For this reason, it is expected that income before income taxes will not change greatly from the previous forecast.



(4) Net income

As mentioned on September 7, 2004, when the previous financial forecast revision was announced, plans called for re-reporting deferred tax assets at the end of the current fiscal year.

In conjunction with this plan, tax expenses are estimated anew starting with the current interim term. Revised forecast of net income reflect increases in tax expenses due to improved profitability in non-consolidated financial results.

[Non-consolidated financial forecast]

(1) Net sales

The main reason is that sales of FPD production equipment are expected to exceed the previous forecast.



(2) Ordinary income

Reasons include that profits are expected to grow due to increases in net sales and that selling, general and administrative expenses are expected to be smaller than previously forecasted. Another reason is that the accruals for product warranties that correspond to sales for the previous fiscal year (11.6 billion yen) including those incurred during the current interim term (2.5 billion yen) will now be reported as unusual losses. In the previous forecast, these accruals were included in the cost of sales.



(3) Income before income taxes/net income

Of the reasons described in (2), the previous fiscal year's accruals for product warranties (2.5 billion yen) will now be reported as unusual losses, and therefore part of the increase in ordinary income will be offset. However, profits are expected to grow due to increases in net sales, and selling, general and administrative expenses are expected to be smaller than previously forecasted. As a result, both income before income taxes and net income are expected to exceed the previous forecast.



3. Reference information



As announced on September 7, 2004, starting with the current fiscal year, the Company has decided to apply new revenue recognition standards and report accruals for product warranties, as part of the revision of its accounting policies.

In view of the major effects of these changes on financial results, for reference sake, the Company also announced a financial forecast for the current interim term that is based on the previous standards, as specified below.

The previous forecast based on the previous standards utilized the financial forecast announced on July 30, 2004, but even if based on the previous standards, both net sales and profits are expected to exceed the previous forecast.