CONSOLIDATED 4) Consolidated results for fiscal 2002 1. Financial highlights Term Items Net sales Operating income (loss) FY2002 FY2001 Change (April 1,2000-Mar. 31,2001) (April 1,2001-March 31,2002) (Yen millions) % (U.S.$ thousands) (Yen millions) % % 575,029 100.0 4,323,526 689,911 100.0 -16.7 (42,094) -7.3 (316,496) 56,323 8.2 - Income (loss) before income taxes (42,069) -7.3 (316,308) 64,516 9.4 - Net income (loss) (24,810) -4.3 (186,541) 43,983 6.4 - Net income (loss) per common share and per ADS Yen (186.68) US$ (1.40) Yen 330.54 Notes: 1. The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America. 2. The figures for net income (loss) per common share are calculated based upon the weighted average number of shares of common stock (the total outstanding number). 3. During this consolidated accounting period, the company had 77 subsidiaries (26 in Japan and 51 overseas). The company also had 7 affiliates whose financial statements are accounted for by the equity method. 4. U.S.$1=Yen 133 2. Sales breakdown Term Products FY2002 FY2001 Change (April 1,2000-Mar. 31,2001) (April 1,2001-March 31,2002) (Yen millions) % (U.S.$ thousands) (Yen millions) % % Electronic materials and components 432,951 75.3 3,255,270 552,195 80.0 -21.6 Electronic materials Electronic devices Recording devices Semiconductors & Others Recording media & systems Total sales Overseas sales 161,846 105,937 147,004 18,164 142,078 575,029 410,117 28.1 18.4 25.6 3.2 24.7 100.0 71.3 1,216,887 796,519 1,105,293 136,571 1,068,256 4,323,526 3,083,586 212,133 145,216 169,140 25,706 137,716 689,911 467,821 30.7 21.1 24.5 3.7 20.0 100.0 67.8 -23.7 -27.0 -13.1 -29.3 3.2 -16.7 -12.3 Note:U.S.$1=Yen 133 15/28 CONSOLIDATED 3. Statements of income Term Items Net sales Cost of sales Gross profit Selling,general and administrative expenses Restructuring cost Operating income (loss) Other income (deductions): Interest and dividend income Interest expense FY2002 (April 1,2001-March 31,2002) FY2001 Change (April 1,2000 Mar. 31,2001) % 575,029 100.0 462,992 80.5 112,037 19.5 128,259 22.3 25,872 4.5 (42,094) -7.3 (Yen millions) (Yen millions) Income (loss) before income taxes Income taxes Income (loss) before minority interests Minority interests 4,323,526 3,481,143 842,383 964,353 194,526 (316,496) 689,911 496,083 193,828 137,505 56,323 % 100.0 71.9 28.1 19.9 8.2 % -16.7 -6.7 -42.2 -6.7 - 2,033 1,264 15,286 9,504 5,089 490 - - 12,518 618 (1,362) 25 - 4,647 (10,241) 188 (1,196) (7,728) 8,193 1.2 -99.7 (42,069) -7.3 (316,308) 64,516 9.4 - (16,327) -2.8 (122,759) 19,792 2.9 - (25,742) -4.5 (193,549) 44,724 6.5 - -0.1 - Gain on contribution of investment securities to pension trust Foreign exchange gain (loss) Other, net Total other income (deductions) (U.S.$ thousands) 932 0.2 7,008 (741) 43,983 (24,810) -4.3 (186,541) 6.4 Net income (loss) Net income (loss) per common share Yen (186.68) US$ (1.40) Yen 330.54 133,064 132,900 thousands thousands Average common shares outstanding Notes: 1. The figures for net income (loss) per common share are calculated based upon the weighted average number of shares of common stock (the total outstanding number). 2. U.S.$1=Yen 133 16/28 - CONSOLIDATED 4. Balance sheets ASSETS Term Items Current assets Cash and cash equivalents Net trade receivables Inventories Prepaid expenses and other current assets As of March 31, 2002 As of Mar.31,2001 Change (Yen millions) % (U.S.$ thousands) (Yen millions) % % 125,761 142,827 91,149 945,572 1,073,887 685,331 150,917 156,585 116,423 40,430 303,985 28,988 Total current assets 400,167 53.3 3,008,775 452,913 55.2 -11.6 Investments and advances Net property,plant,and equipment Prepaid pension cost Other assets TOTAL 24,265 265,590 60,849 750,871 3.2 35.4 8.1 100.0 182,444 1,996,917 457,511 5,645,647 21,143 278,625 41,290 26,206 820,177 2.6 34.0 5.0 3.2 100.0 14.8 -4.7 132.2 -8.5 LIABILITIES AND STOCKHOLDERS' EQUITY Term Items Current liabilities Short-term debt Trade payables Accrued expenses and other current liabilities Income taxes Total current liabilities Long-term debt, excluding current installments Retirement and severance benefits and others Total liabilities Minority interests Stockholders' equity Common stock Additional paid-in capital Legal reserve Retained earnings Accumulated other comprehensive income (loss) Treasury stock Total stockholders' equity TOTAL Total common shares outstanding As of March 31, 2002 As of Mar.31,2001 Change (Yen millions) % (U.S.$ thousands) (Yen millions) % % 2,312 52,609 17,384 395,556 5,879 64,673 52,874 397,549 55,952 2,546 110,341 14.7 19,143 829,632 19,638 146,142 17.8 -24.5 459 0.1 3,451 1,004 0.1 -54.3 50,590 6.7 380,376 31,848 3.9 58.8 161,390 21.5 1,213,459 178,994 21.8 -9.8 4,593 0.6 34,534 3,434 0.4 33.8 245,421 474,068 117,917 3,918,075 32,641 63,051 13,409 556,165 (3,592) (27,007) (2,666) 584,888 77.9 4,397,654 637,749 77.8 750,871 100.0 5,645,647 820,177 100.0 132,860 thousands 133,019 thousands -8.3 -8.5 32,641 63,051 15,683 521,104 (43,999) Note:U.S.$1=Yen 133 17/28 (330,820) (24,851) CONSOLIDATED 5. Statements of stockholders' equity Term Items Common stock: Balance at beginning of period Balance at end of period FY2002 FY2001 (April 1,2001 - March 31,2002) (April 1,2000 Mar. 31,2001) (Yen millions) (U.S.$ thousands) (Yen millions) 32,641 32,641 245,421 245,421 32,641 32,641 Additional paid-in capital: Balance at beginning of period Balance at end of period 63,051 63,051 474,068 474,068 63,051 63,051 Legal reserve: Balance at beginning of period Transferred from retained earnings Balance at end of period 13,409 2,274 15,683 100,819 17,098 117,917 13,302 107 13,409 Retained earnings: Balance at beginning of period Net income (loss) Cash dividends Transferred to legal reserve Balance at end of period 556,165 (24,810) (7,977) (2,274) 521,104 4,181,692 (186,541) (59,978) (17,098) 3,918,075 520,276 43,983 (7,987) (107) 556,165 Accumulated other comprehensive income (loss): Balance at beginning of period (24,851) (186,850) (58,257) Other comprehensive income (loss) for the period, net of tax (19,148) (143,970) 33,406 Balance at end of period (43,999) (330,820) (24,851) (2,666) (926) (3,592) (20,045) (6,962) (27,007) (2,666) (2,666) Treasury stock: Balance at beginning of period Acquisition of treasury stock Balance at end of period 4,397,654 637,749 Total stockholders' equity 584,888 Disclosure of comprehensive income (loss): Net income (loss) for the period (24,810) (186,541) 43,983 (19,148) (143,970) 33,406 (43,958) (330,511) 77,389 Other comprehensive income (loss) for the period, net of tax Total comprehensive income (loss) for the period 18/28 CONSOLIDATED 6. Statements of cash flows Term Items Cash flows from operating activities: Net income (loss) FY2002 FY2001 (April 1,2001 - March 31,2002) (April 1,2000 Mar. 31,2001) (Yen millions) (U.S.$ thousands) (Yen millions) (24,810) (186,541) 43,983 Depreciation and amortization Loss on disposal of property and equipment Deferred income taxes Loss (gain) on securities 61,920 6,436 (13,135) 207 465,564 48,391 (98,759) 1,556 63,579 5,144 (10,986) (13,450) Contribution of cash and cash equivalents to pension trust - - (15,315) Changes in assets and liabilities: Decrease in trade receivables Decrease (increase) in inventories Decrease in trade payables Increase (decrease) in income taxes Other-net Net cash provided by operating activities 18,517 28,776 (14,806) (17,181) (4,420) 41,504 139,225 216,361 (111,323) (129,181) (33,233) 312,060 22,365 (23,607) (18,969) 4,766 10,087 67,597 Cash flows from investing activities: Capital expenditures Proceeds from sale of investments Payment for purchase of investments Proceeds from maturities of marketable securities Other-net Net cash used in investing activities (58,777) 323 (3,116) 3,667 (57,903) (441,932) 2,429 (23,429) 27,571 (435,361) (99,452) 2,492 (692) 3,761 1,353 (92,538) Cash flows from financing activities: Proceeds from long-term debt Repayment of long-term debt Increase (decrease) in short-term debt Payment to acquire treasury stock Dividends paid Net cash used in financing activities 46 (777) (3,568) (926) (7,977) (13,202) 346 (5,842) (26,827) (6,962) (59,978) (99,263) 614 (1,536) 2,761 (2,666) (7,987) (8,814) 4,445 33,421 10,153 Adjustments to reconcile net income to net cash provided by operating activities: Effect of exchange rate changes on cash and cash equivalents (25,156) 150,917 125,761 Net decrease in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period 19/28 (189,143) 1,134,715 945,572 (23,602) 174,519 150,917 CONSOLIDATED 7. Summary of Significant Accounting Policies The consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America. (a) Marketable Securities SFAS No. 115, “Accounting for Certain Investments in Debt and Equity Securities” is adopted. (b) Inventories Inventories are stated at the lower of cost or market. Cost is determined principally by the average method. (c) Depreciation Depreciation of property, plant, and equipment is principally computed by the declining-balance method for assets located in Japan and of certain foreign subsidiaries, and by the straight-line method for assets of other foreign subsidiaries based on estimated useful lives. (d) Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. (e) Retirement and Severance Benefits TDK accounts for and provides disclosures about its defined benefit pension and retirement plans in accordance with SFAS No. 87, “Employers’ Accounting for Pensions” and with SFAS No. 132, “Employers’ Disclosures about Pensions and Other Postretirement Benefits”. The weighted-average discount rates used in determining the present value of benefit obligations and expected long-term rate of return on assets were 2.5% and 3.0% for 2002 and 2001,respectively. (f) Derivatives Financial Instruments SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities” and SFAS No. 138, “Accounting for Certain Derivative Instruments and Certain Hedging Activities, an amendment of FASB Statement No. 133” have been adopted from fiscal 2002. (g) Goodwill and Other Intangible Assets SFAS No. 142, “Goodwill and Other Intangible Assets” has been adopted from fiscal 2002. 20/28 CONSOLIDATED 8. Segment Information a) Industry Segment Information Term Items Electronic materials and components Recording media & systems Total Net sales 1)Unaffiliated customers 2)Intersegment Operating expenses Operating income (loss) Net sales 1)Unaffiliated customers 2)Intersegment Operating expenses Operating income (loss) Net sales 1)Unaffiliated customers 2)Intersegment Operating expenses Operating income (loss) FY2002 FY2001 Change (April 1,2001-March 31,2002) (April 1,2000 Mar. 31,2001) (Yen millions) % (U.S.$ thousands) (Yen millions) % % 432,951 100.0 3,255,270 552,195 100.0 -21.6 432,951 3,255,270 552,195 -21.6 0 0 0 88.2 467,669 108.0 3,516,308 486,837 -3.9 (34,718) -8.0 (261,038) 65,358 11.8 142,078 100.0 1,068,256 137,716 100.0 3.2 142,078 1,068,256 137,716 3.2 0 0 0 146,751 106.6 1.8 149,454 105.2 1,123,714 (7,376) -5.2 (55,458) (9,035) -6.6 18.4 575,029 100.0 4,323,526 689,911 100.0 -16.7 575,029 4,323,526 689,911 -16.7 0 0 0 617,123 107.3 4,640,022 633,588 91.8 -2.6 (42,094) -7.3 (316,496) 56,323 8.2 - b) Geographic Segment Information Term Region Japan Americas Europe Asia and others Intersegment eliminations Total Net sales Operating income (loss) Net sales Operating income (loss) Net sales Operating income (loss) Net sales Operating income Net sales Operating income (loss) Net sales Operating income (loss) FY2002 FY2001 Change (April 1,2001-March 31,2002) (April 1,2000 Mar. 31,2001) (Yen millions) % (U.S.$ thousands) (Yen millions) % % 328,322 2,468,586 459,685 -28.6 (31,624) 39,504 8.6 -9.6 (237,774) 105,804 795,519 136,342 -22.4 (1,394) -1.0 (12,712) -12.0 (95,579) 79,329 596,459 100,258 -20.9 (3,184) -4.0 (23,940) 2,236 2.2 268,492 2,018,737 299,015 -10.2 1,700 0.6 12,782 20,982 7.0 -91.9 206,918 1,555,775 305,389 (3,726) (28,015) 5,005 575,029 4,323,526 689,911 -16.7 (42,094) -7.3 (316,496) 56,323 8.2 - Note:The sales are classified by geografic areas of the seller and include transfers between geografic areas. c) Sales by Region Term FY2002 FY2001 Change (April 1,2001-March 31,2002) (April 1,2000 Mar. 31,2001) (Yen millions) % (U.S.$ thousands) (Yen millions) % % 113,346 19.7 852,225 131,219 19.0 -13.6 80,027 13.9 601,707 101,018 14.6 -20.8 216,744 235,584 34.2 -8.0 37.7 1,629,654 410,117 71.3 3,083,586 467,821 67.8 -12.3 164,912 28.7 1,239,940 222,090 32.2 -25.7 575,029 4,323,526 689,911 -16.7 Region Americas Europe Asia and others Overseas sales total Japan Net sales Notes: 1. Sales by region are classified by geographic areas of the buyer. 2. U.S.$1=Yen 133 21/28 CONSOLIDATED 9. Fair Value of Securities Gross Unrealized Holding Gains Cost (Yen millions) As of March 31,2002 Equity securities Debt securities Total As of March 31,2001 Equity securities Debt securities Total Fair Value 4,389 3,274 7,663 596 24 620 - 4,985 3,298 8,283 3,903 2,851 6,754 35 32 67 592 592 3,346 2,883 6,229 Gross Unrealized Holding Gains Cost (U.S.$ thousands) As of March 31,2002 Equity securities Debt securities Total Gross Unrealized Holding Losses 33,000 24,617 57,617 Gross Unrealized Holding Losses 4,481 180 4,661 - Contract Amount Carrying Amount Fair Value 37,481 24,797 62,278 Note:Unlisted stocks are excluded from the above. 10. Fair Value of Derivatives (Yen millions) As of March 31,2002 Forward foreign exchange contracts Currency swap agreements and interest rate and currency swap agreements for loans to its subsidiaries As of March 31,2001 Forward foreign exchange contracts Currency option contracts Purchased Written Currency swap agreements and interest rate and currency swap agreements for loans to its subsidiaries 7,576 (59) (59) 13,268 (315) (315) 16,264 (336) (404) 26,019 18,585 (22) (1,055) (22) (1,055) 20,323 (481) (566) Contract Amount (U.S.$ thousands) As of March 31,2002 Forward foreign exchange contracts Currency swap agreements and interest rate and currency swap agreements for loans to its subsidiaries 22/28 Estimated Fair Value Carrying Amount Estimated Fair Value 56,962 (444) (444) 99,759 (2,368) (2,368)