<HTML>
<HEAD>
<TITLE>TDK CORPORATION</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV style="width: 100%; border-bottom: 2pt solid black; font-size: 1pt">&nbsp;</DIV>
<DIV style="width: 100%; border-bottom: 1pt solid black; font-size: 1pt">&nbsp;</DIV>




<DIV align="center" style="font-size: 14pt; margin-top: 12pt"><B>UNITED STATES<BR>
SECURITIES AND EXCHANGE COMMISSION</B>
</DIV>

<DIV align="center" style="font-size: 12pt"><B>Washington, D.C. 20549</B>
</DIV>

<DIV align="center" style="font-size: 18pt; margin-top: 12pt"><B>Form&nbsp;20-F</B>
</DIV>


<DIV align="center" style="font-size: 12pt; margin-top: 18pt"><B>ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF<BR>
THE SECURITIES EXCHANGE ACT OF 1934</B>
</DIV>


<DIV align="center" style="font-size: 12pt; margin-top: 18pt"><B>For the fiscal year ended <U>March&nbsp;31, 2005</U></B>
</DIV>


<DIV align="center" style="font-size: 12pt; margin-top: 18pt"><B>Commission file number <U>2-76735</U></B>
</DIV>


<DIV align="center" style="font-size: 12pt; margin-top: 18pt"><B><U>TDK KABUSHIKI KAISHA</U><BR>
(Exact name of Registrant as specified in its charter)</B>
</DIV>

<DIV align="center" style="font-size: 24pt; margin-top: 12pt"><B><FONT style="border-bottom: 1px solid #000000">TDK CORPORATION</FONT></B>
</DIV>

<DIV align="center" style="font-size: 10pt">(Translation of Registrant&#146;s name into English)</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><U>Japan</U><BR>
(Jurisdiction of incorporation or organization)</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><U>13-1, Nihonbashi 1-chome, Chuo-ku, Tokyo 103-8272, Japan</U><BR>
(Address of principal executive offices)</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Securities registered pursuant to Section&nbsp;12(b) of the Act.
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="47%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="47%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="center" valign="top">Title of each class
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Name of each exchange on which registered</TD>
</TR>
<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom">
    <TD align="center" valign="top">American Depositary Shares
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">New York Stock Exchange</TD>
</TR>

<TR style="font-size: 1px">
    <TD align="center" valign="top" style="border-top: 1px solid #000000">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">Common stock
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">New York Stock Exchange</TD>
</TR>
<TR style="font-size: 1px">
    <TD align="center" valign="top" style="border-top: 1px solid #000000">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Securities registered or to be registered pursuant to Section&nbsp;12(g) of the Act.
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">None<BR>
<DIV align="center"><DIV style="font-size: 3pt; margin-top: 0pt; width: 26%; border-top: 1px solid #000000">&nbsp;</DIV></DIV>
</DIV>

<DIV align="center" style="font-size: 10pt">(Title of Class)</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Securities for which there is a reporting obligation pursuant to Section&nbsp;15(d) of the Act.
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">None<BR>
<DIV align="center"><DIV style="font-size: 3pt; margin-top: 0pt; width: 26%; border-top: 1px solid #000000">&nbsp;</DIV></DIV>
</DIV>

<DIV align="center" style="font-size: 10pt">(Title of Class)</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indicate the number of outstanding shares of the issuer&#146;s classes of capital or common stock
as of the close of the period covered by the annual report.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Common stock
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Outstanding as of March&nbsp;31, 2005: 132,244,587 shares (excluding treasury stock)
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indicate by a check mark whether the registrant (1)&nbsp;has filed all reports required to be filed
by Section&nbsp;13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12&nbsp;months (or
for such shorter period that the registrant was required to file such reports), and (2)&nbsp;has been
subject to such filing requirements for the past 90&nbsp;days.
<BR>
Yes <FONT face="Wingdings">&#254;</FONT> No <FONT face="Wingdings">&#111;</FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indicate by a check mark which financial statement item the registrant has elected to follow.
<BR>
Item&nbsp;17 <FONT face="Wingdings">&#254;</FONT> Item&nbsp;18 <FONT face="Wingdings">&#111;</FONT>
</DIV>

<DIV style="width: 100%; border-bottom: 1pt solid black; margin-top: 10pt; font-size: 1pt">&nbsp;</DIV>
<DIV style="width: 100%; border-bottom: 2pt solid black; font-size: 1pt">&nbsp;</DIV>







<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left">
<!-- TOC -->
</DIV>
<DIV align="left">
<A name="tocpage"></A>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="100%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#101">PART 1</A></DIV></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px"><A href="#102">Item&nbsp;1. <B>Identity of Directors, Senior Management and Advisers</B></A></DIV></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px"><A href="#103">Item&nbsp;2. <B>Offer Statistics and Expected Timetable</B></A></DIV></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px"><A href="#104">Item&nbsp;3. <B>Key Information</B></A></DIV></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px"><A href="#105">Item&nbsp;4. <B>Information on the Company</B></A></DIV></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px"><A href="#106">Item&nbsp;5. <B>Operating and Financial Review and Prospects</B></A></DIV></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px"><A href="#107">Item&nbsp;6. <B>Directors, Senior Management and Employees</B></A></DIV></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px"><A href="#108">Item&nbsp;7. <B>Major Shareholders and Related Party Transaction</B></A></DIV></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px"><A href="#109">Item&nbsp;8. <B>Financial Information</B></A></DIV></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px"><A href="#110">Item&nbsp;9. <B>The Offer and Listing</B></A></DIV></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px"><A href="#111">Item&nbsp;10. <B>Additional Information</B></A></DIV></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px"><A href="#112">Item&nbsp;11. <B>Quantitative and Qualitative Disclosures about Market Risk</B></A></DIV></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px"><A href="#113">Item&nbsp;12. <B>Description of Securities Other than Equity Securities</B></A></DIV></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#114">PART 2</A></DIV></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px"><A href="#115">Item&nbsp;13. <B>Defaults, Dividend Arrearages and Delinquencies</B></A></DIV></TD>
</TR>
<TR valign="bottom">

<TD><DIV style="margin-left:45px; text-indent:-15px"><A href="#116">Item&nbsp;14.
<B>Material Modifications to the Rights of Security Holders and Use of Proceeds</B></A></DIV></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px"><A href="#117">Item&nbsp;15. <B>Controls and Procedures</B></A></DIV></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px"><A href="#118">Item&nbsp;16A. <B>Audit Committee Financial Expert</B></A></DIV></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px"><A href="#119">Item&nbsp;16B. <B>Code of Ethics</B></A></DIV></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px"><A href="#120">Item&nbsp;16C. <B>Principal Accountant Fees and Services</B></A></DIV></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px"><A href="#121">Item&nbsp;16D. <B>Exemptions from Listing Standards for Audit Committees</B></A></DIV></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px"><A href="#122">Item&nbsp;16E. <B>Purchases of Equity Securities by the Issuer and Affiliated Purchasers</B></A></DIV></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#123">PART 3</A></DIV></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px"><A href="#124">Item&nbsp;17. <B>Financial Statements</B></A></DIV></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px"><B>Report of
Independent Registered Public Accounting Firm</B></DIV></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px"><B>Consolidated Financial Statements</B></DIV></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px"><B>Notes to Consolidated Financial Statements</B></DIV></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px"><B>Schedule&nbsp;II &#151; Valuation and Qualifying Accounts</B></DIV></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px"><A href="#125">Item&nbsp;18. <B>Financial Statements</B></A></DIV></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px"><A href="#126">Item&nbsp;19. <B>Exhibits</B></A></DIV></TD>
</TR>
<!-- End Table Body -->
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="k00986exv1w1.htm">EX-1.1 Articles of Incorporation (English translation)</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="k00986exv1w2.htm">EX-1.2 Share Handling Regulations (English translation)</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="k00986exv11w1.htm">EX-11.1 TDK Code of Ethics (English translation)</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="k00986exv12w1.htm">EX-12.1 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of CEO of the Company</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="k00986exv12w2.htm">EX-12.2 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of CFO of the Company</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="k00986exv13w1.htm">EX-13.1 Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of CEO of the Company</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="k00986exv13w2.htm">EX-13.2 Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of CFO of the Company</A></FONT></TD></TR>
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">- 2 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left">
<!-- /TOC -->
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All information contained in this Report is as of March&nbsp;31, 2005 unless otherwise specified.
Fiscal 2005, fiscal 2004, fiscal 2003 and fiscal 2002 of this Report indicate TDK Corporation&#146;s
fiscal period of the fiscal years ended March&nbsp;31, 2005, 2004, 2003 and 2002, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The figures in this Report are expressed in yen and, solely for the convenience of the reader,
are translated into United States dollars at the rate of &#165;107 = U.S.$1, the approximate exchange
rate prevailing on the Tokyo Foreign Exchange Market as of March&nbsp;31, 2005. (See Note 2 of the
Notes to Consolidated Financial Statements.) On July&nbsp;29, 2005 the noon buying rate for yen cable
transfers in New York City as reported by the Federal Reserve Bank of
New York was &#165;112.25 = $1.
This translation should not be construed as a representation that the amounts shown could be
converted into U.S. dollars at such rate.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">Forward-Looking Statements
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This report contains forward-looking statements, including projections, plans, policies,
management strategies, targets, schedules, understandings and evaluations, about TDK Corporation
(&#147;TDK&#148;) and its group companies (TDK and its group companies are referred to also as &#147;TDK&#148; where
the context so requires) that are not historical facts. These forward-looking statements are based
on current forecasts, estimates, assumptions, plans, beliefs and evaluations in light of
information available to management on the date of this report was prepared.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In preparing forecasts and estimates, TDK has used as their basis, certain assumptions as
necessary, in addition to confirmed historical facts. However, due to their nature, there is no
guarantee that these statements and assumptions will prove to be accurate in the future. TDK
therefore wishes to caution readers that these statements, facts and certain assumptions contained
in this report are subject to a number of risks and uncertainties and may prove to be inaccurate.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The electronics markets in which TDK operates are highly susceptible to rapid changes.
Furthermore, TDK operates not only in Japan, but in many other countries. As such, factors that
can have significant effects on its results include, but are not limited to, shifts in technology,
demand, prices, competition, economic environments and foreign exchange rates.
</DIV>

<P align="center" style="font-size: 10pt">- 3 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left">
<A name="101"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PART 1</B>
</DIV>

<DIV align="left">
<A name="102"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U><B>Item&nbsp;1</B></U><B>. Identity of Directors, Senior Management and Advisers</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">A. Directors and senior management
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">B. Advisers
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">C. Auditors
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</DIV>
<DIV align="left">
<A name="103"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U><B>Item&nbsp;2</B></U><B>. Offer Statistics and Expected Timetable</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">A. Offer statistics
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">B. Method and expected timetable
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</DIV>

<P align="center" style="font-size: 10pt">- 4 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left">
<A name="104"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U><B>Item&nbsp;3</B></U><B>. Key Information</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">A. Selected financial data
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><I>Thousands of</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><I>U.S. dollars,</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><I>except per</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><I>share</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="18" style="border-bottom: 1px solid #000000">Millions of yen, except per share amounts</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><I>amounts (1)</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2002</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2001</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><I>2005</I></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net sales</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">657,853</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">655,792</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">604,865</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">564,286</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">665,867</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><I>$</I></TD>
    <TD align="right"><I>6,148,159</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cost of sales</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">484,323</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">476,407</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">459,552</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">463,331</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">493,068</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>4,526,383</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Gross profit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">173,530</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">179,385</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">145,313</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">100,955</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">172,799</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>1,621,776</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Selling, general and
administrative expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">119,886</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">122,875</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">115,569</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">115,696</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">123,965</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>1,120,430</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Transfer to the government
of the substitutional portion
of Employees&#146; Pension Fund:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Subsidy from the government</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(33,533</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><I>(313,392</I></TD>
    <TD nowrap><I>)</I></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Loss on settlement</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27,347</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>255,579</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Restructuring cost</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,197</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,489</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>&#151;</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">59,830</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">56,510</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,547</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(40,230</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">48,834</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>559,159</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income (loss)&nbsp;from continuing operations before
income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">60,728</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">55,847</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,552</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(40,230</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">61,223</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>567,551</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income (loss)&nbsp;from continuing
operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36,965</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43,355</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,593</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(23,619</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42,214</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>345,467</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Loss (income)&nbsp;from discontinued
operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,665</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,254</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,574</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,152</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,769</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>34,252</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33,300</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42,101</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,019</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(25,771</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43,983</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>311,215</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Per Common Share:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Income
(loss) from continuing
operations per share:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">279.41</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">327.27</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">102.42</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(177.72</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">317.25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><I>$</I></TD>
    <TD align="right"><I>2.61</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">279.25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">327.15</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">102.42</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(177.72</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">317.25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>2.61</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Loss
(income) from discontinued
operations per share:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(27.70</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(9.47</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(11.86</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(16.19</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">13.29</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><I>$</I></TD>
    <TD align="right"><I>(0.26</I></TD>
    <TD nowrap><I>)</I></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(27.69</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(9.46</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(11.86</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(16.19</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13.29</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><I>(0.26</I></TD>
    <TD nowrap><I>)</I></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net income
(loss) per share:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">251.71</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">317.80</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">90.56</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(193.91</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">330.54</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><I>$</I></TD>
    <TD align="right"><I>2.35</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">251.56</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">317.69</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">90.56</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(193.91</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">330.54</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>2.35</I></TD>
    <TD>&nbsp;</TD>
</TR>

<tr><td>&nbsp;</td></tr>

<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Cash dividends</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">60.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">60.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">60.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">U.S. Dollar equivalents (2)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><I>$</I></TD>
    <TD align="right"><I>0.56</I></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><I>$</I></TD>
    <TD align="right"><I>0.47</I></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><I>$</I></TD>
    <TD align="right"><I>0.38</I></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><I>$</I></TD>
    <TD align="right"><I>0.45</I></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><I>$</I></TD>
    <TD align="right"><I>0.55</I></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">- 5 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="18" style="border-bottom: 1px solid #000000">Millions of yen, except per share amounts</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><I>Thousands of</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><I>U.S. dollars (1)</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="18" style="border-bottom: 1px solid #000000">and exchange rate for yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2002</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2001</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><I>2005</I></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net working capital (3)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">379,746</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">360,555</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">315,948</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">288,865</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">306,771</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><I>$</I></TD>
    <TD align="right"><I>3,549,027</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">808,001</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">770,319</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">747,337</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">749,910</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">820,177</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>7,551,411</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Short-term indebtedness</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">103</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">416</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,919</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,312</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,879</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>963</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Long-term indebtedness</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">81</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">94</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">459</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>757</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Retirement and severance
benefits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28,839</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">73,521</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">84,971</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">49,992</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31,755</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>269,523</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">

<TD><DIV style="margin-left:15px; text-indent:-15px">Stockholders&#146; equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">639,067</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">576,219</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">553,885</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">583,927</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">637,749</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>5,972,589</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Number of shares outstanding
(in thousands)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">132,245</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">132,409</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">132,625</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">132,860</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">133,019</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Yen exchange rates per U.S. dollar (4)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Average</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Term end</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">High</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Low</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Year ended March&nbsp;31:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">2001</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">111.64</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">125.54</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">125.54</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">104.19</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">2002</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">125.64</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">132.70</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">134.77</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">115.89</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">2003</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">121.10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">118.07</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">133.40</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">115.71</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">112.75</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">104.18</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">120.55</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">104.18</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">107.28</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">107.22</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">114.30</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">102.26</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">2006 (through July&nbsp;31, 2005)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">108.94</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">112.25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">113.42</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">104.41</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">February, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">105.84</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">103.70</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">March, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">107.49</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">103.87</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">April, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">108.67</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">104.64</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">May, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">108.17</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">104.41</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">June, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">110.91</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">106.64</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">July, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">113.42</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">110.47</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Notes:
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>Translated, except for cash dividend amounts, for convenience of the reader
into U.S. dollars at the rate of &#165;107 = $1, the approximate rate on the
Tokyo Foreign Exchange Market on March&nbsp;31, 2005.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>Translated based on the rates specified in Note (4)&nbsp;below on the respective
dates of semi-annual payments for each year.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(3)</TD>
    <TD>&nbsp;</TD>
    <TD>Net working capital is defined as current assets less current liabilities.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(4)</TD>
    <TD>&nbsp;</TD>
    <TD>Based on the noon buying rate in New York City for cable transfers in
foreign currencies as certified for customs purposes by the Federal Reserve
Bank of New York. The average rates are computed based on the exchange
rates on the last day of each month during the year.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(5)</TD>
    <TD>&nbsp;</TD>
    <TD>In accordance with SFAS No.&nbsp;144, &#147;Accounting for the Impairment or Disposal
of Long-Lived Assets&#148;, certain amounts in the segment information do not
reflect discontinued operations, previous fiscal year&#146;s segment information
has been reclassified to conform to the fiscal 2005 presentation.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">B.&nbsp;Capitalization and indebtedness
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0%">C. Reasons for the offer and use of proceeds
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</DIV>

<P align="center" style="font-size: 10pt">- 6 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 1%">D. Risk factors
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 1%"><U><B><I>Our business is exposed to fluctuations in economic conditions that may adversely affect our
business results.</I></B></U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The world and Japanese economies are grappling with various risk factors. Among these factors
are the status of the recovery of capital expenditures and improvement of employment conditions and
income in the U.S.; a slowing economy due to the stronger euro in Europe; the outlook for the high
economic growth rate in China; and the outlook for improving corporate earnings as well as capital
expenditure and inventory reductions in Japan. Furthermore, the digital consumer products field, a
core business for TDK, is significantly affected by the extremely fast pace of technological
innovation and competition in the development of new products as well as fluctuations in economic
conditions. Changes in the economic environments from TDK&#146;s expectations could significantly affect TDK&#146;s
business results and financial condition.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 1%"><U><B><I>Fluctuations in currency exchange rates could adversely affect our business results and
financial condition.</I></B></U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK imports and exports products between different regions of the world as it conducts its
business activities in countries around the globe. Business results at overseas bases, including
sales, expenditures, assets and other accounts, are converted into Japanese yen for the purpose of
preparing consolidated financial statements. Because of this, sudden changes in foreign currency
exchange rates affect company transactions between regions and costs and prices of TDK&#146;s products
and services at overseas bases in relation to the yen. Such fluctuations also give rise to
conversion differences with respect to TDK&#146;s investments in overseas assets and liabilities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Therefore, sudden fluctuations in foreign currency exchange rates could have a significant
adverse effect on TDK&#146;s business results and financial condition.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 1%"><U><B><I>We are susceptible to risks involved with selling our products in markets outside of
Japan.</I></B></U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;One of TDK&#146;s corporate strategies is to expand in markets outside Japan as it conducts
business in countries around the world. Overseas sales account for more than 70% of total sales on
a consolidated basis.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;However, in many of these markets, TDK may be exposed to international political risks, such
as war, terrorism and other events; economic risks, such as fluctuations in foreign currency
exchange rates and trade friction; and social risks, including labor problems stemming from
differences in cultures and customs, and disease. Such risks may give rise to changes of a far
greater magnitude than TDK anticipates. TDK may also face unexpected barriers in building
relationships with trading partners due to differences in commercial and business customs.
Manifestation of these risks could lower productivity in manufacturing processes, undermining the
competitiveness of products and also hinder sales activities and results in other negative
consequences. These outcomes could in turn have a significant adverse effect on TDK&#146;s business
results and financial condition.
</DIV>

<P align="center" style="font-size: 10pt">- 7 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 1%"><U><B><I>A slow-down of the Chinese economy, adverse changes in political and economic policies
of the Chinese government, or other factors in China may reduce our growth and profitability.</I></B></U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK has many production bases for mainstay products such as HDD heads in China, a country in
the midst of strong economic growth. TDK has also established a system for supplying both local
companies and customers that have been setting up operations in China. Furthermore, TDK plans to
expand business further in this country.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;However, in the event that political factors (such as changes in laws and regulations),
economic factors (such as the continuity of high growth, Renminbi (RMB)&nbsp;application against U.S.
dollars and problems with electric power supply and other infrastructure) and social factors cause
unexpected events in China, there could be a material adverse effect on TDK&#146;s business results and
financial condition.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 1%"><U><B><I>We may not be able to compete effectively with respect to prices, which would have a material
adverse effect on our profitability.</I></B></U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK supplies products in a broad range of fields in an electronics industry defined by intense
competition. These fields include IT and communications devices such as digital home appliances,
PCs and mobiles phones. In all fields, price is a main competitive factor differentiating TDK from
other companies. Furthermore, in the electronic components industry, in addition to leading
Japanese companies, the rapid emergence of Asian companies, particularly those in South Korea and
Taiwan, has fueled intense price-based competition.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;However, pressure continues to mount from customers for price discounts. In the event that
the fall in prices far exceeds TDK expectations or becomes protracted, there could be a material
adverse effect on TDK&#146;s business results and financial condition.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 1%"><U><B><I>Rapid changes in technology could adversely affect our business and hurt our competitive
position.</I></B></U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK believes that its ability to increase sales by developing appealing, innovative products
has an important role to play in its growth. However, it is extremely difficult to predict future
demand in the rapidly changing electronics industry and develop new technologies to meet that
demand. TDK may fail to develop and supply in a timely manner attractive, new products with
innovative technologies for this industry and its markets. In the event that TDK misreads the
industry and market and/or is slow in developing innovative technologies on a cost competitive
basis, actual earnings could differ significantly from its forecasts. At the same time, TDK may
cease to be able to compete in markets, resulting in a significant adverse effect on TDK&#146;s business
results and growth prospects.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 1%"><U><B><I>Claims of product liability and other issues associated with the quality of our products
could adversely affect our business results and brand name.</I></B></U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK manufactures various products at overseas manufacturing bases that it is developing
globally in accordance with ISO (International Organization for Standardization) quality management
standards (ISO 9001) and the strict standards required by customers in the electronics industry,
where technological innovation is remarkable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK cannot be fully certain, however, that all of its products are defect-free and immune from
recalls at some later date. A product recall or a product liability claim against TDK caused by
product defects could result in recall costs or damage claims, lower sales and have a negative
impact on TDK&#146;s reputation and brand, endangering its continued existence. A situation resulting
from poor product quality due to a major product defect could have a materially adverse effect
TDK&#146;s business results and brand name.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 1%"><U><B><I>Our proprietary technology is difficult to protect and unauthorized use of our proprietary
technology by third parties may reduce the value of our products and brand and impair our ability
to compete effectively.</I></B></U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK growth depends to a great extent on its ability to obtain patents, licenses and other
intellectual property rights covering its products, product designs and manufacturing processes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;However, there are cases where TDK intellectual property rights cannot be fully protected in a
particular region for reasons unique to that region. Furthermore, TDK may suffer damages resulting
from the manufacture by a third party of similar products to its own with the unauthorized use of
TDK intellectual property rights. The failure to protect intellectual property rights of others
could have a materially adverse effect on TDK&#146;s business development and business results and
financial condition.
</DIV>

<P align="center" style="font-size: 10pt">- 8 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 1%"><U><B><I>Our business may suffer if we are sued for infringing upon the intellectual property rights
of third parties.</I></B></U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There may be cases where it is alleged that TDK products infringe on the intellectual property
rights of third parties. Regarding problems relating to the infringement of such intellectual
property rights, TDK may suffer damages or may be sued for damages. In either case, settlement
negotiations and legal procedures would be inevitable and could be expected to be lengthy and
expensive. If TDK assertions are not accepted in such disputes, it may have to pay damages and
royalties and suffer losses such as the loss of markets.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The failure to prevent infringement on the rights of others could have a materially adverse
effect on TDK&#146;s business development and business results and financial condition.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 1%"><U><B><I>Our success depends on attracting and retaining highly-skilled employees, and we would
suffer material adverse effects if we are unable to do so.</I></B></U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To prevail against fierce competition in the electronics industry, TDK believes that it is
necessary to recruit and retain staff possessing advanced technical skills. Regarding personnel
with superior management ability, such as with respect to the ability to formulate strategy and
organizational management, TDK believes that it is necessary to upgrade skills at an advanced
level.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;However, intense competition to recruit such skilled employees is not limited to the
industries where TDK is active. Moreover, in Japan, there is increasing fluidity in the labor
market caused by revisions to the life-time employment system and other developments. These and
other factors mean there is no guarantee that TDK will continue to be able to recruit and retain
skilled employees. The inability to recruit and train personnel as planned could have a materially
adverse effect on the TDK&#146;s operations, business results and growth prospects.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 1%"><U><B><I>We are dependent on certain raw materials and other products, and our business will
suffer if we are unable to procure such materials.</I></B></U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK&#146;s manufacturing system is premised on deliveries of raw materials, components, equipment
and other supplies in adequate quality and quantity in a timely manner from many external
suppliers. In new product development, TDK may rely on certain irreplaceable suppliers for
materials.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Because of this, there may be cases where supplies of raw materials and other products to TDK
are interrupted by an accident or some other event at a supplier, supply is suspended due to
quality or other issues, or there is a shortage of or instability in supply due to a rapid increase
in demand for finished products that use certain materials and products. If any of these
situations becomes protracted, TDK may have difficulty finding substitutes in a timely manner from
other suppliers, which could have a significant, adverse effect on TDK production and prevent it
fulfilling its responsibilities to supply products to its customers. Furthermore, if an imbalance
arises in the supply-demand equation, there could be a spike in the price of raw materials. In the
event of these or other similar occurrences, there could be a material adverse effect on TDK&#146;s
business results and financial condition.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 1%"><U><B><I>Increased government regulation of our industry or changes in those regulations, whether in
Japan or overseas, may limit our ability to compete effectively.</I></B></U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK is subject to various regulations in Japan and other countries where it conducts business.
These include approval for conducting business and making investments, laws and regulations
governing the safety of electric and electronic products, laws and regulations relating to national
security between nations, and export/import laws and regulations. TDK is also subject to
commercial, antitrust, patent, product liability, environmental, consumer and business taxation
laws and regulations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the event that these laws and regulations become more stringent in the future, TDK business
development could be affected in no small way and it may incur various additional operating costs.
Furthermore, in the event that TDK is unable to respond appropriately to these laws and
regulations, it may be forced to partially withdraw from certain businesses or take other actions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Government laws and regulations in their various forms may thus have a material adverse effect
on TDK&#146;s business results and financial condition.
</DIV>

<P align="center" style="font-size: 10pt">- 9 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 1%"><U><B><I>Fluctuations in interest rates may have an adverse effect on our profitability.</I></B></U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Although TDK attempts to limit its borrowings from third parties, from time to time, TDK or
its subsidiaries may need to borrow funds from such third parties. To the extent that interest
rates increase, TDK or its subsidiaries may be subject to higher interest expenses. In contrast, a
protracted period of low interest rates also may have an adverse effect on TDK by limiting TDK&#146;s
interest income from investments. Low interest rates also may require TDK to make additional
contributions to pension benefit funds since the assets of those funds may become under funded.
Either of these changes could have a material adverse effect on TDK&#146;s business results and
financial condition.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 1%"><U><B><I>We are developing a business strategy whereby we sell to a concentrated number of Original
Equipment Manufacturers (OEMs), and are thus susceptible to adverse changes with respect to the
business of such OEMs.</I></B></U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK is developing on a global scale an OEM business, whereby it supplies mainly electronic
components to electronics manufacturers, personal computer (PC)&nbsp;makers and other customers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;However, supplies to these customers are significantly affected by various factors that are
beyond TDK&#146;s control such as changes in each customer&#146;s business results and management strategies.
A drop-off in purchasing demand due to poor business results at major customers, changes in
customers&#146; purchasing plans and policies, the unexpected termination of contracts and other
occurrences could result in TDK&#146;s profit margins being reduced due to discounting pressure from
customers or TDK being left holding large amounts of inventory.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Customers&#146; business results, changes in management strategy or other factors could thus have a
material adverse effect on TDK&#146;s business results and financial condition.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 1%"><U><B><I>Our operations depend on facilities throughout the world and are subject to forces of nature
that could disrupt our ability to serve our customers.</I></B></U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK has many production sites and R&#038;D facilities in Japan and overseas. These facilities and
plants have taken measures to prevent damage caused by natural disasters. However, these
facilities and plants could still suffer significant damage due to a force majeure event such as a
large earthquake, typhoon or flood that far exceeds any level expected. In the event of
interruption to manufacturing, disruption of transportation routes, damage to or disconnection of
information and communications infrastructure, TDK&#146;s ability to supply its customers could be
affected for a long period of time. This situation could have a material adverse affect on TDK&#146;s
business results and financial condition.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 1%"><U><B><I>If we are unable to comply with the various environmental laws and regulations to which we
are subject, we may have to withdraw from certain business activities, which would have an
adverse effect on our brand and business operations.</I></B></U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK is subject to various environmental laws and regulations with respect to industrial waste
and emissions into the atmosphere and water from its production processes in Japan and overseas.
Furthermore, TDK is required to lower the use in its products of specified hazardous chemical
substances that could harm humans and the natural environment. From the perspective of
environmental protection, environmental regulations are expected to become increasingly stringent
in the future.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK is engaged in various activities to help protect the environment, including complying with
environmental regulations. However, expenses are expected to increase for responding to customer
demands and environmental laws and regulations relating to the non-use of hazardous chemical
substances in products. If TDK has difficulty responding appropriately to these demands and laws
and regulations, it may be forced to withdraw from certain business activities impacting the brand
name of TDK.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Future developments involving environmental regulations could thus have a material adverse
effect on TDK&#146;s business results and financial condition.
</DIV>

<P align="center" style="font-size: 10pt">- 10 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 1%"><U><B><I>Japan&#146;s Unit Share System could affect access to Japanese markets by holders of American
Depositary Shares (&#147;ADSs&#148;), which could adversely affect the price of our shares.</I></B></U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the Articles of Incorporation of TDK, 100 shares of TDK constitute one unit. A
holder who owns ADRs evidencing less than 100 ADSs will indirectly own less than a whole unit of
shares of Common Stock. Although, under the unit share system holders of less than a unit have the
right to require TDK to purchase their shares, holders of ADRs evidencing ADSs that represent other
than integral multiples of whole units are unable to withdraw the underlying shares of Common Stock
representing less than a unit and, therefore, are unable to exercise the rights to require TDK to
purchase such underlying shares at this time. As a result, access to the Japanese markets by
holders of ADRs through the withdrawal mechanism will not be available for dispositions of shares
of Common Stock in lots less than a unit. The unit share system does not affect the
transferability of ADSs, which may be transferred in lots of any size.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 1%"><U><B><I>Holders of American Depositary Shares have limited rights, which could adversely affect the
price of our shares.</I></B></U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The rights of shareholders under Japanese law to take actions, including voting their shares,
receiving dividends and distributions, bringing derivative actions, examining TDK&#146;s accounting
books and records and exercising appraisal rights are available only to shareholders of record.
Citibank, N.A., through its custodian agent, is the record holder of the shares underlying the
ADSs, and therefore only it can exercise the rights of shareholders in connection with the
deposited shares. The depositary has agreed to endeavor to vote the shares underlying ADSs in
accordance with the instructions of ADS holders and to pay the dividends and distributions
collected from TDK. However, ADS holders will not be able to bring a derivative action, examine
TDK&#146;s accounting books and records or exercise appraisal rights through the depositary.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK is incorporated in Japan and a substantial portion of its assets are located outside of
the United States (U.S.). As a result, it may be more difficult for investors to enforce against
TDK judgments obtained in U.S. courts predicated upon the civil liability provisions of the Federal
securities laws of the United States, including the Securities Act of 1933, as amended, and the
Securities Exchange Act of 1934, as amended, or judgments obtained in other courts outside of
Japan. In addition, there is doubt as to the enforceability in Japanese courts, in original
actions or in actions for enforcements of judgments of U.S. courts, of civil liabilities based
solely upon violation of these Federal securities laws of the United States.
</DIV>
<DIV align="left">
<A name="105"></A>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U><B>Item&nbsp;4</B></U><B>. Information on the Company</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 1%">A. History and development of the Company
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 1%"><U>History</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK Corporation (TDK Kabushiki Kaisha) is a corporation formed under the Commercial Code of
Japan. TDK&#146;s principal place of business is at 13-1, Nihonbashi 1-chome, Chuo-ku, Tokyo 103-8272,
Japan and the telephone number is &#043;81-3-5201-7102. The agent in the U.S. for purposes of this Item
4 is TDK U.S.A. Corporation, 901 Franklin Avenue, P.O. Box 9302, Garden City, New York, NY 11530.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK is the world&#146;s leading manufacturer of recording media, ferrite products and recording
device products, and a major producer of inductor, ceramic capacitor, magnet and other components.
TDK is a Tokyo-based company founded on December&nbsp;7, 1935 to commercialize ferrite.
</DIV>

<P align="center" style="font-size: 10pt">- 11 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Historically, TDK&#146;s growth has been centered on ferrite, a material invented in 1933 by Doctor
Yogoro Kato and Doctor Takeshi Takei. Ferrite is indispensable as a magnetic substance in the
manufacture of electronic equipment. It is a magnetic material with a ceramic structure composed
of iron oxide and other metallic oxides. Its advantages over other magnetic materials include
higher resistivity and thus lower eddy current loss while maintaining superior permeability and
flux density. Based on its strong materials knowledge and production technology, TDK expanded into
ceramic capacitors and magnetic recording tapes in the early 1950s, and ferrite magnets and coil
components in the early 1960s. In the early 1980s, TDK began production of a magnetic head,
continuing development to its modern day product the &#147;HDD head&#148;. Since the 1990s, TDK has promoted
the establishment of world-wide research and development organizations and environmental management
efforts. TDK has continued to broaden its product development programs by building up expertise in
materials technology and new recording-related products.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the years ended March&nbsp;31, 2005, 2004 and 2003, TDK&#146;s capital expenditures were &#165;61.0
billion, &#165;44.5&nbsp;billion and &#165;41.0&nbsp;billion, respectively. For further information of TDK&#146;s capital
expenditures, see &#147;Capital Expenditures&#148; included Item&nbsp;5.B. &#147;Liquidity and capital resources&#148;.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK is planning capital expenditures of &#165;65.0&nbsp;billion in fiscal 2006, primarily for the
expansion of production facilities and upgrading of facilities. Regarding TDK&#146;s capital
expenditure plans, TDK&#146;s policy is to invest actively in targeted strategic fields to drive growth.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B.&nbsp;Business overview
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Sales by product category</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK&#146;s sales are generated by two business segments: electronic materials and components, and
recording media and systems. The following is a breakdown of consolidated net sales of TDK and its
consolidated subsidiaries by business segment for fiscal 2005, 2004 and 2003:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>

    <TD width="5%">&nbsp;</TD>

    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>

    <TD width="5%">&nbsp;</TD>

    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>

    <TD width="5%">&nbsp;</TD>

    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>

    <TD width="5%">&nbsp;</TD>

    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><I>2005</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>

    <TD>&nbsp;</TD>


    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

    <TD>&nbsp;</TD>
    <TD align="center" colspan="2">(millions</TD>

    <TD>&nbsp;</TD>

    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

    <TD>&nbsp;</TD>

    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><I>(millions</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">of yen)<br>(%)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><I >of U.S.<br>dollars)</I></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Electronic Materials and
Components:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Electronic materials</DIV></TD>

    <TD align="right">&#165;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">174,800</TD>
    <TD>&nbsp;</TD>

    <TD align="right">&#165;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">166,818</TD>
    <TD>&nbsp;</TD>

    <TD align="right">&#165;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">168,949</TD>
    <TD>&nbsp;</TD>

    <TD align="right"><I>$</I></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>1,633.7</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(26.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(25.4</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(27.9</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Electronic devices</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">116,387</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">107,999</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">112,729</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>1,087.7</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(17.7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(16.5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(18.7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Recording devices</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">234,578</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">230,105</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">175,986</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>2,192.3</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(35.7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(35.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(29.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">

<TD><DIV style="margin-left:45px; text-indent:-15px">Semiconductors
and others</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,449</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,870</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,850</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>181.8</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2.9</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1.8</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Sub total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">545,214</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">519,792</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">468,514</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>5,095.5</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(82.9</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(79.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(77.5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Recording Media and Systems</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">112,639</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">136,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">136,351</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>1,052.7</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(17.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(20.7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(22.5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:75px; text-indent:-15px">Total</DIV></TD>

    <TD align="right">&#165;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">657,853</TD>
    <TD>&nbsp;</TD>

    <TD align="right">&#165;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">655,792</TD>
    <TD>&nbsp;</TD>

    <TD align="right">&#165;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">604,865</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>$</I></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>6,148.2</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(100.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(100.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(100.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Notes:
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>In accordance with SFAS No.&nbsp;144, &#147;Accounting for the Impairment or
Disposal of Long-Lived Assets&#148;, certain amounts in the segment
information do not reflect discontinued operations, previous fiscal
year&#146;s segment information has been reclassified to conform to the
fiscal 2005 presentation.</TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>The business segment information is required by the Japanese
Securities Exchange Law. Segment information is unaudited.</TD>
</TR>



</TABLE>


<P align="center" style="font-size: 10pt">- 12 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">






<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Electronic Materials and Components </B>TDK&#146;s electronic materials and components are divided
into four principal categories: (i)&nbsp;electronic materials; (ii)&nbsp;electronic devices; (iii)&nbsp;recording
devices; and (iv)&nbsp;semiconductors and others. Overall business results of each category in fiscal
2005 compared to fiscal 2004 are as follows.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>(i)&nbsp;Electronic materials </B>The electronics materials sector is broadly divided into two product
sectors: capacitors, and ferrite cores and magnets.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sales of multilayer chip capacitors, a mainstay of capacitor products, increased year over
year. In the first half of fiscal 2005, the Athens Olympics propelled demand for digital home
appliances higher, which had an add-on effect for components used in them. In the second half,
however, demand for components cooled, this time the result of cutbacks in the production of
digital home appliances, and prices also dropped. But, against this market backdrop, TDK absorbed
the sales price declines and the effect of unfavorable foreign exchange movements through
improvements to its product mix.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In ferrite cores, sales declined from the previous fiscal year, despite higher demand for
general-purpose power supply cores for digital home appliances and cores for communications
equipment. This decrease was due to a reduction in output of deflection yoke cores and flyback
transformer cores used in CRT TVs. Magnet sales increased year over year, the result of steadily
rising demand for use in automotive and HDD applications.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>(ii)&nbsp;Electronic devices </B>The electronic devices sector is broken down into three categories:
inductive devices, high-frequency components, and other products.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inductive devices, the largest product category in this sector, posted higher sales, despite
lower sales prices and the negative effect of foreign exchange movements. This increase was
attributed to higher demand spurred by acceleration in the pace at which automobiles are
incorporating electronics and the increasing sophistication of mobile phones, as well as by new
product launches.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sales of high-frequency components declined marginally year over year because higher sales
volume and an improved product mix failed to completely offset persistently strong discounting
pressure from mobile phone handset manufacturers, the main customer for these components. Other
products include power systems and sensors and actuators. In power systems, sales of DC-DC
converters and DC-AC inverters were healthy. Sensors and actuators recorded higher sales due to
growth in demand for use in PCs and peripherals and communications equipment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>(iii)&nbsp;Recording devices </B>The recording devices sector is divided into two categories: heads for
HDDs, the mainstay of the sector, and other types of heads.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sales of HDD heads rose year over year. However, TDK had to overcome the loss of business
from a major customer that started producing heads in house in 2004, as well as the impact of
falling sales prices and unfavorable foreign exchange movements.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cutbacks in HDD inventories at customers in the first half of fiscal 2005 also affected the
sector&#146;s performance. However, demand for HDD heads rose in the second half of the fiscal year
following the end of these cutbacks. Sales of other heads declined year over year due to sluggish
sales of optical pickups.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>(iv)&nbsp;Semiconductors and others </B>In the semiconductors and others sector, the main product is
anechoic chambers.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK recorded slightly higher sales of anechoic chambers for electromagnetic noise control and
equipment used in these chambers. There was also growth in external sales of manufacturing
equipment due to higher investments in semiconductor facilities and equipment by customers.
</DIV>


<P align="center" style="font-size: 10pt">- 13 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Recording Media and Systems </B>In the recording media &#038; systems segment, the main products are
audiotapes, videotapes, optical media and tape-based data storage media for computers.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sales of audiotape and videotapes declined year over year. While TDK maintained a high market
share, demand is declining for these products as a whole. Sales of optical media increased, with
higher DVD sales and lower CD-R sales. Sales of other products decreased year over year. There
was an increase in sales of LTO-standard* (Linear Tape-Open) tape-based data storage media for
computers. However, a decline in sales caused by the sale in the previous fiscal year of a U.S.
software development subsidiary and lower sales of recording equipment brought overall sales of
other products down year over year.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">* Linear Tape-Open, LTO, LTO logo, Ultrium and Ultrium logo are trademarks of HP, IBM and Certance
LLC in the U.S., other countries or both.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Marketing and Distribution
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Marketing channels in Japan</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK markets electronic materials and components in Japan through its sales division, which had
approximately 244 sales representatives at March&nbsp;31, 2005.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In Japan, TDK markets magnetic recording tapes and optical disks through 6 district sales
offices with a staff of 93. Approximately 52&nbsp;percent of domestic sales of TDK brand products are
made to approximately 124 distribution agents. These agents in turn sell TDK brand products to
over 45,000 retailers in Japan. Remaining TDK brand products are sold directly to approximately
5,000 retail stores in Japan. OEM sales are made to certain manufacturers as well.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Operations outside Japan</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK has 53 direct and indirect foreign subsidiaries as follows: 26 manufacture various product
lines and distribute their products in their country of operation and other countries; 17 are sales
subsidiaries which exclusively handle products manufactured by TDK; 1 is a holding company for the
administration of TDK&#146;s U.S. operations; 1 is a holding company for the administration of TDK&#146;s
European operations; 1 is a company for research and development in Ireland; 1 is a company for
research and development in the U.S.; 1 is a company for design and development for semiconductors
in the U.S.; 1 is a company for engineering service for magnetic heads in Singapore; 2 are local
management company for the administration of TDK&#146;s Chinese operations; 1 is a company for
engineering service for magnetic heads in China, and 1 is a company for engineering service for
magnetic heads in Korea. Principal manufacturing or assembly operations are conducted by
subsidiaries in the following countries:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="20%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="74%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:50px; text-indent:-0px">China
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">-
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">GMR heads, inductors, ferrite cores, capacitors,
transformer, power supplies and ferrite magnets</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:50px; text-indent:-0px">United States
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">-
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">GMR heads, capacitors and ferrite magnets</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:50px; text-indent:-0px">Luxembourg
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">-
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Videotapes, CD-Rs and DVDs</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:50px; text-indent:-0px">Taiwan
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">-
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Capacitors, ferrite cores and power supplies</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:50px; text-indent:-0px">Philippines
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">-
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">GMR heads</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:50px; text-indent:-0px">Thailand
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">-
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Audiotapes and rare-earth metal magnets</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:50px; text-indent:-0px">Malaysia
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">-
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Capacitors and high-frequency components</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:50px; text-indent:-0px">Korea
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">-
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Capacitors and inductors</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:50px; text-indent:-0px">Hungary
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">-
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Capacitors and ferrite cores</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:50px; text-indent:-0px">Hong Kong
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">-
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Ferrite cores</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, TDK has sales subsidiaries in Germany, the United Kingdom, the United States,
Hong Kong, Singapore, Australia, Brazil, Poland, China and Philippines.
</DIV>



<P align="center" style="font-size: 10pt">- 14 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK is pursuing a policy of expanding overseas production, which enables TDK to more easily
adapt to fluctuating exchange rates and potential trade barriers. Production
outside Japan as a percentage of sales outside Japan was 81.9&nbsp;percent in fiscal 2005, 78.9
percent in fiscal 2004 and 76.8&nbsp;percent in fiscal 2003.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Outside of Japan, TDK relies on a combination of its sales force, distribution agents,
retailers and directed sales efforts to market its products.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Consolidated net sales of TDK and consolidated subsidiaries by geographical area for fiscal
2005, 2004 and 2003 were as follows:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="23%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><I>2005</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">(millions of yen)(%)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><I>(millions of U.S.</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><I>dollars)</I></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Japan</DIV></TD>

    <TD align="right">&#165;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">159,487</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(24.2</TD>
    <TD nowrap>)</TD>

    <TD align="right">&#165;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">161,607</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(24.6</TD>
    <TD nowrap>)</TD>

    <TD align="right">&#165;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">172,818</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(28.6</TD>
    <TD nowrap>)</TD>
    <TD align="right"><I></I></TD>
    <TD>&nbsp;</TD>

    <TD align="right"><I>$1,490.5</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">North America</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">58,850</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(9.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">71,224</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(10.9</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">78,777</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(13.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>550.0</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Europe</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">71,085</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(10.8</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">80,233</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(12.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">77,191</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(12.8</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>664.4</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Asia and others</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">368,431</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(56.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">342,728</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(52.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">276,079</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(45.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>3,443.3</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total</DIV></TD>

    <TD align="right">&#165;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">657,853</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(100.0</TD>
    <TD nowrap>)</TD>

    <TD align="right">&#165;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">655,792</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(100.0</TD>
    <TD nowrap>)</TD>

    <TD align="right">&#165;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">604,865</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(100.0</TD>
    <TD nowrap>)</TD>

    <TD align="right"><I></I></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>$6,148.2</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Notes:
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>In accordance with SFAS No.&nbsp;144, &#147;Accounting for the Impairment or
Disposal of Long-Lived Assets&#148;, certain amounts in the segment
information do not reflect discontinued operations, previous fiscal
year&#146;s segment information has been reclassified to conform to the
fiscal 2005 presentation.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>Net sales in each geographic area are based on the location of TDK
entities where the external sales are generated.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Patents and Licenses</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK has a variety of patents in Japan and other countries, and licenses from other companies,
it believes that expiration of any one of its patents or licenses or related group of patents or
licenses would not materially adversely affect its business activities. TDK does not believe that
acquisition of new proprietary patents or other companies&#146; patents would have a material effect on
operating results in the future.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Competition</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In electronic materials and components, rapid technological innovation makes technological
improvement a particularly significant competitive factor in the industry. Product performance
characteristics, reliability, price, and the diversity of product line-ups are also significant
competitive factors. In general, TDK&#146;s ferrite and other products compete with similar products
made of other materials. For many applications in which specific performance characteristics are
required, however, competition with other materials is not significant.
</DIV>


<P align="center" style="font-size: 10pt">- 15 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In Japan and elsewhere, the markets in which TDK sells its products are highly competitive.
TDK believes that the principal elements of competition in recording media and systems are brand
recognition, product quality, and marketing strategy. While the Japanese, American and European
optical disks markets have grown in terms of volume, they have continued to be plagued by severe
price competition. However, TDK has consistently promoted internationalization in manufacturing
and marketing and has maintained strategic sales in regions where high profitability is expected.
Meanwhile, TDK has implemented further cost-reduction programs and is increasing its competitive
strength in other ways, notably through the expansion of overseas production.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Raw Materials and Sources of Supply</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK purchases a wide variety of raw materials, machines, tools and parts for use in the
manufacture of its products. The principal raw materials purchased include plastic resin, used to
mould tape cassette shell and in packaging, magnetic powder of iron oxide, base film for magnetic
tape and various electronic and mechanical parts. For products manufactured in Japan, TDK
purchases such raw materials from approximately 1,900 different sources, primarily in Japan.
However, TDK purchases base tape from mainly three suppliers in Japan, although alternative sources
of supply exist. Recently TDK increased its purchases from overseas and also increased local
procurement of raw materials. No single source accounted for more than 10&nbsp;percent of total
purchases for fiscal 2005.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK monitors the availability of raw materials on a regular basis to ensure that it will not
encounter any shortages. TDK has not experienced any significant difficulty in obtaining raw
materials and believes that it will be able to continue to obtain comparable raw materials in
sufficient quantities to meet its manufacturing needs in the future. TDK also believes that the
effect of price volatility with respect to raw materials that it uses in manufacturing its products
can be managed.
</DIV>


<P align="center" style="font-size: 10pt">- 16 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C.&nbsp;Organizational structure
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of March&nbsp;31, 2005, TDK had 53 overseas subsidiaries and 18 Japanese subsidiaries. The
following table lists the significant subsidiaries owned by TDK.
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="32%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="24%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="31%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Name of company</TD>
    <TD>&nbsp;</TD>

<TD nowrap align="left" style="border-bottom: 1px solid #000000">Head office location</TD>
    <TD>&nbsp;</TD>

<TD nowrap align="left" style="border-bottom: 1px solid #000000">Function</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="3" style="border-bottom: 1px solid #000000">Percentage owned</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">SAE Magnetics (H.K.)
Ltd.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Hong Kong
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Production of electronic
materials and components
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100.0</TD>
    <TD nowrap valign="top">%</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">TDK Taiwan Corporation
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Taipei, Taiwan
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Production of electronic
materials and components
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">83.8</TD>
    <TD nowrap valign="top">%</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">TDK Hong Kong Co., Ltd.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Hong Kong
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Production of electronic
materials and components
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100.0</TD>
    <TD nowrap valign="top">%</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">TDK Xiamen Co., Ltd.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Xiamen, China
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Production of electronic
materials and components
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100.0</TD>
    <TD nowrap valign="top">%</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Headway Technologies, Inc.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">California, U.S.A.
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Production of electronic
materials and components
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100.0</TD>
    <TD nowrap valign="top">%</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">TDK Fujitsu Philippines<BR>
Corporation
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Laguna, Philippines
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Production of electronic
materials and components
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">65.8</TD>
    <TD nowrap valign="top">%</TD>
</TR>
<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Allied Focus Industry Ltd.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Hong Kong
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Production of electronic
materials and components
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100.0</TD>
    <TD nowrap valign="top">%</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">TDK (Malaysia) Sdn. Bhd.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Negeri Sambian, Malaysia
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Production of electronic
materials and components
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100.0</TD>
    <TD nowrap valign="top">%</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">TDK Components U.S.A., Inc.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Georgia, U.S.A.
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Production of electronic
materials and components
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100.0</TD>
    <TD nowrap valign="top">%</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">TDK Dalian Corporation
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Dalian, China
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Production of electronic
materials and components
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100.0</TD>
    <TD nowrap valign="top">%</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">TDK Corporation of America
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Illinois, U.S.A.
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Sale of electronic
materials and components
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100.0</TD>
    <TD nowrap valign="top">%</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">TDK Electronics Europe GmbH
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">D&#252;sseldorf, Germany
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Sale of electronic
materials and components
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100.0</TD>
    <TD nowrap valign="top">%</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">TDK Singapore (Pte) Ltd.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Singapore
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Sale of electronic materials and
components and recording media &#038;
systems
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100.0</TD>
    <TD nowrap valign="top">%</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">TDK Marketing Europe GmbH
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Ratingen, Germany
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Sale of recording media &#038; systems
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100.0</TD>
    <TD nowrap valign="top">%</TD>
</TR>
<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">TDK Electronics Corporation
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">New York, U.S.A.
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Sale of recording media &#038; systems
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100.0</TD>
    <TD nowrap valign="top">%</TD>
</TR>
<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">TDK Recording Media Europe
S.A.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Luxembourg
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Production of recording
media &#038; systems
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100.0</TD>
    <TD nowrap valign="top">%</TD>
</TR>
<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">TDK U.S.A. Corporation
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">New York, U.S.A.
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Others
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100.0</TD>
    <TD nowrap valign="top">%</TD>
</TR>
<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">TDK Europe S.A.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Luxembourg
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Others
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100.0</TD>
    <TD nowrap valign="top">%</TD>
</TR>
<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">TDK-MCC Corporation
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Akita, Japan
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Production of electronic
materials and components
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100.0</TD>
    <TD nowrap valign="top">%</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">TDK Shonai Manufacturing<BR>
Corporation
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Yamagata, Japan
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Production of electronic
materials and components
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100.0</TD>
    <TD nowrap valign="top">%</TD>
</TR>
<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">TDK Akita Manufacturing<BR>
Corporation
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Akita, Japan
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Production of electronic
materials and components
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100.0</TD>
    <TD nowrap valign="top">%</TD>
</TR>
<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Media Technology Corporation
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Yamanashi, Japan
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Production of recording
media &#038; systems
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">70.0</TD>
    <TD nowrap valign="top">%</TD>
</TR>
<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">TDK Marketing Corporation
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Tokyo, Japan
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Sale of recording media &#038;
systems
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100.0</TD>
    <TD nowrap valign="top">%</TD>
</TR>
<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">TDK Core Co., Ltd.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Tokyo, Japan
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Others
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100.0</TD>
    <TD nowrap valign="top">%</TD>
</TR>
<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">TDK Service Corporation
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Tokyo, Japan
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Others
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100.0</TD>
    <TD nowrap valign="top">%</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">- 17 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;D.&nbsp;Property, plants and equipment
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK&#146;s manufacturing operations are conducted primarily at 33 plants in Japan and 21 plants
overseas.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth information, as of March&nbsp;31, 2005, with respect to TDK&#146;s
manufacturing facilities, approximately 79&nbsp;percent (in terms of floor space) of which are owned by
TDK.
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="25%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="46%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Number of</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Floor space</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">principal</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">(thousands of</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Location</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">factories</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">square feet)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Principal products manufactured</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top" align="center"><DIV style="margin-left:0px; text-indent:-0px"><I>Japan</I></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Akita
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="top">16</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="top">2,110</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Capacitors, ferrite cores,
inductors and high-frequency
components</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Nagano
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">4</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">1,146</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">GMR heads and optical disks</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Chiba
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">1</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">663</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Rare-earth metal magnets,
ferrite cores and power
supplies</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Yamanashi
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">3</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">603</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">GMR heads and data storage tapes</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Oita
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">1</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">471</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Videotapes</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Shizuoka
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">2</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">427</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Ferrite magnets</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Yamagata
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">3</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">311</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Inductors</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Iwate
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">1</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">298</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Capacitors</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Ibaraki
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">2</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">112</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Display</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top" align="center"><DIV style="margin-left:0px; text-indent:-0px"><I>Overseas</I></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">China
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="top">7</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="top">2,669</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">GMR heads, inductors, ferrite cores,
capacitors, transformer, power
supplies and ferrite magnets</TD>
</TR>
<TR valign="bottom">

<TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">United States of<BR>
America
</DIV></TD>
    <TD nowrap colspan="3" align="right" valign="top">6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="top">901</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>

    <TD align="left" valign="top">GMR heads, capacitors and ferrite
magnets</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Luxembourg
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">1</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">494</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Videotapes, CD-Rs and DVDs</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Taiwan
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">1</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">345</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Capacitors, ferrite cores and power
supplies</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Philippines
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">1</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">344</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">GMR heads</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Thailand
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">1</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">285</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Audiotapes and rare-earth metal magnets</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Malaysia
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">1</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">211</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Capacitors and high-frequency
components</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Korea
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">1</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">164</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Capacitors and inductors</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Hungary
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">1</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">160</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Capacitors and ferrite cores</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Hong Kong
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">1</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">41</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Ferrite cores</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="11" valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Total
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">54</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">11,755</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK considers all of its principal manufacturing facilities and other significant properties
to be in good condition and adequate to meet the needs of its operations. TDK owns each of its
significant properties.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of March&nbsp;31, 2005, TDK excluded 1 plant (135 thousand square feet) in the Americas, 1 plant
in Europe (2 thousand square feet) and 1 plant (59 thousand square feet) in Asia from the above
table because these plants have ceased operating and are in the process of being sold or otherwise
liquidated, in order to improve TDK&#146;s profitability.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, TDK utilizes additional floor space at the above plants and elsewhere for
laboratories, office buildings, and employee housing and welfare facilities, with an aggregate
floor space of 5,560 thousand square feet, of which approximately 54&nbsp;percent is owned by TDK and
the balance is leased to TDK.
</DIV>


<P align="center" style="font-size: 10pt">- 18 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left">
<A name="106"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U><B>Item&nbsp;5</B></U><B>. Operating and Financial Review and Prospects</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Overview</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK was established in 1935 as the world&#146;s first company to commercialize a magnetic material
called ferrite. In the ensuing years, TDK has developed and commercialized a host of other
materials and products. This drive is based on TDK&#146;s founding spirit of &#147;Contribute to culture and
industry through creativity&#148;.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Looking ahead, TDK is determined to further refine its materials, process, and evaluation &#038;
simulation technologies-its core technologies-aiming to be an Exciting Company, a consummate
e-material solution provider that delivers with perfect timing products imbuing value that
customers want.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK&#146;s operations are affected by the economies of various regions of the world, including
Japan, the United States, Europe and China. Despite rising crude oil prices and other factors that
restricted growth, the U.S. economy generally expanded steadily due in part to an upturn in capital
expenditures and improvements in employment statistics and household incomes. European economies,
while resilient in the first half of fiscal 2005, suffered a slowdown in the second half due to the
effects of a strengthening euro, rising crude oil prices and other negative factors. China,
meanwhile, maintained a high economic growth rate. In comparison, the Japanese economy slowed due
to a drop-off in exports, the result of second-half production cutbacks by manufacturers of IT and
digital products, despite strength in capital expenditures that was supported by strong corporate
earnings.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the electronics industry in the first half of fiscal 2005, demand for digital home
appliances, such as LCD and plasma TVs and DVD recorders, was boosted by the Summer Olympic Games
in Athens and other factors. This resulted in strong demand for the TDK&#146;s electronic components in
the first half. However, demand for these components began to cool in the second half in line with
production cutbacks of finished products that use them.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In this business environment, TDK continued to implement cost structure reforms, for example,
the improvement of variable expenses by reviewing terms of supply and requesting discounts from
purchased materials vendors. TDK also actively made investments to drive growth, such as by
ramping up production capacity of capacitors and forging a strategic alliance in HDD heads.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK posted consolidated net sales of &#165;657,853&nbsp;million in fiscal 2005, up 0.3&nbsp;percent from
&#165;655,792&nbsp;million in fiscal 2004. Operating income rose 5.9&nbsp;percent, from &#165;56,510&nbsp;million in fiscal
2004 to &#165;59,830&nbsp;million in fiscal 2005. Income from continuing operations before income taxes
increased 8.7&nbsp;percent, from &#165;55,847&nbsp;million in fiscal 2004 to &#165;60,728&nbsp;million in fiscal 2005. Net
income downed 20.9&nbsp;percent, from &#165;42,101&nbsp;million in fiscal 2004 to &#165;33,300&nbsp;million in fiscal 2005.
Basic net income per common share was &#165;251.71 in fiscal 2005, down from &#165;317.80 in fiscal 2004.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK&#146;s businesses are broadly classified into two business segments: the electronic materials
and components segment and the recording media &#038; systems segment.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Electronic Materials and Components Segment is made up of four product sectors: (1)electronic
materials, (2)electronic devices, (3)recording devices, and (4)semiconductors &#038; others. Segment
net sales increased 4.9&nbsp;percent, from &#165;519,792&nbsp;million in fiscal 2004 to &#165;545,214&nbsp;million in fiscal
2005.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Recording Media &#038; Systems Segment is made up of four product categories: audiotapes,
videotapes, optical media and other products. Segment sales declined 17.2&nbsp;percent, from &#165;136,000
million in fiscal 2004 to &#165;112,639&nbsp;million in fiscal 2005.
</DIV>


<P align="center" style="font-size: 10pt">- 19 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 12pt">A. Operating Results
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%"><U>Results of Operations</U>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000">Years ended March 31</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2003</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><I>2005</I></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">(millions of yen)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><I>(millions</I></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">(%)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><I>of dollars)</I></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net sales</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">657,853</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">655,792</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">604,865</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>$</I></TD>
    <TD align="right"><I>6,148.2</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(100.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(100.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(100.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cost of sales</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">484,323</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">476,407</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">459,552</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>4,526.4</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(73.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(72.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(76.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Gross profit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">173,530</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">179,385</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">145,313</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>1,621.8</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(26.4</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(27.4</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(24.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Selling, general</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">119,886</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">122,875</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">115,569</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>1,120.4</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">and administrative expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(18.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(18.8</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(19.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Transfer to the government of the
substitutional portion of
Employees&#146; Pension Fund:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Subsidy from the government</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(33,533</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><I>(313.4</I></TD>
    <TD nowrap><I>)</I></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD nowrap align="right">(-5.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Loss on settlement</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27,347</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>255.6</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(4.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Restructuring costs</DIV></TD>

    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,197</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>&#151;</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.9</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">59,830</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">56,510</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,547</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>559.2</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(9.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(8.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(4.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other income (other deductions)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">898</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(663</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(3,995</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>8.4</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD nowrap align="right">(-0.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD nowrap align="right">(-0.7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income taxes and minority interests</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,763</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,492</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,959</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>222.1</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(3.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1.9</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Loss from discontinued operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,665</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,254</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,574</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>34.3</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">33,300</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">42,101</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">12,019</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>$</I></TD>
    <TD align="right"><I>311.2</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(5.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(6.4</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%"><U>Sales by Region</U>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000">Years ended March 31</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2003</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><I>2005</I></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">(millions of yen)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><I>(millions</I></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">(%)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><I>of dollars)</I></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Japan</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">184,025</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">168,623</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">165,484</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>$</I></TD>
    <TD align="right"><I>1,719.9</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(28.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(25.7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(27.4</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Americas</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">77,813</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">88,734</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">104,134</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>727.2</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(11.8</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(13.5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(17.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Europe</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">71,702</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">80,710</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">77,713</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>670.1</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(10.9</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(12.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(12.9</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Asia (excluding Japan) and Oceania</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">321,612</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">314,875</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">254,925</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>3,005.7</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(48.9</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(48.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(42.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Middle East and Africa</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,701</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,850</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,609</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>25.3</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.4</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.4</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net sales</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">657,853</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">655,792</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">604,865</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>$</I></TD>
    <TD align="right"><I>6,148.2</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(100.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(100.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(100.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 18pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This summary of sales by region is based on the location of the customer.
</DIV>



<P align="center" style="font-size: 10pt">- 20 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Segment Information</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following industry and geographic segment information is required by the Japanese
Securities Exchange Law. Segment information is unaudited.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Industry Segment Information
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000">Years ended March 31</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2003</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><I>2005</I></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 0px solid #000000">(millions of yen)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><I>(thousands</I></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><I>of dollars)</I></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ELECTRONIC MATERIALS AND COMPONENTS</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Net sales</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:75px; text-indent:-15px">Unaffiliated customers</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">545,214</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">519,792</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">468,514</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>$</I></TD>
    <TD align="right"><I>5,095,458</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:75px; text-indent:-15px">Intersegment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:90px; text-indent:-15px">Total revenue</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">545,214</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">519,792</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">468,514</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>5,095,458</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(100.0</TD>
    <TD nowrap>%)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(100.0</TD>
    <TD nowrap>%)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(100.0</TD>
    <TD nowrap>%)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><I>(100.0</I></TD>
    <TD nowrap><I>%)</I></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Operating expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">477,694</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">461,077</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">445,511</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>4,464,430</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(87.6</TD>
    <TD nowrap>%)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(88.7</TD>
    <TD nowrap>%)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(95.1</TD>
    <TD nowrap>%)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><I>(87.6</I></TD>
    <TD nowrap><I>%)</I></TD>
</TR>

<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:90px; text-indent:-15px">Operating income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">67,520</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">58,715</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">23,003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>$</I></TD>
    <TD align="right"><I>631,028</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:90px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(12.4</TD>
    <TD nowrap>%)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(11.3</TD>
    <TD nowrap>%)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(4.9</TD>
    <TD nowrap>%)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><I>(12.4</I></TD>
    <TD nowrap><I>%)</I></TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Identifiable assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">537,593</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">505,178</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">495,144</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>5,024,233</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Depreciation and amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">47,409</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46,293</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">52,358</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>443,075</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Capital expenditures</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">57,192</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40,084</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38,457</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>534,505</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">RECORDING MEDIA AND SYSTEMS</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Net sales</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:75px; text-indent:-15px">Unaffiliated customers</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">112,639</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">136,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">136,351</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>$</I></TD>
    <TD align="right"><I>1,052,701</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:75px; text-indent:-15px">Intersegment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:90px; text-indent:-15px">Total revenue</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">112,639</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">136,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">136,351</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>1,052,701</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(100.0</TD>
    <TD nowrap>%)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(100.0</TD>
    <TD nowrap>%)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(100.0</TD>
    <TD nowrap>%)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><I>(100.0</I></TD>
    <TD nowrap><I>%)</I></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Operating expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">120,329</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">138,205</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">134,807</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>1,124,570</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(106.8</TD>
    <TD nowrap>%)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(101.6</TD>
    <TD nowrap>%)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(98.9</TD>
    <TD nowrap>%)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><I>(106.8</I></TD>
    <TD nowrap><I>%)</I></TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:90px; text-indent:-15px">Operating income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&#165;</TD>
    <TD align="right">(7,690</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&#165;</TD>
    <TD align="right">(2,205</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">1,544</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><I>$</I></TD>
    <TD align="right"><I>(71,869</I></TD>
    <TD nowrap><I>)</I></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:90px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD nowrap align="right">(-6.8</TD>
    <TD nowrap>%)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD nowrap align="right">(-1.6</TD>
    <TD nowrap>%)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1.1</TD>
    <TD nowrap>%)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD nowrap align="right"><I>(-6.8</I></TD>
    <TD nowrap><I>%)</I></TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Identifiable assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">84,160</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">97,186</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">96,761</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>786,542</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Depreciation and amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,397</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,433</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,774</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>50,439</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Capital expenditures</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,813</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,387</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,569</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>35,635</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ELIMINATIONS AND CORPORATE</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Corporate assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">186,248</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">167,955</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">155,432</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>$</I></TD>
    <TD align="right"><I>1,740,636</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">TOTAL</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Net sales</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:75px; text-indent:-15px">Unaffiliated customers</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">657,853</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">655,792</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">604,865</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>$</I></TD>
    <TD align="right"><I>6,148,159</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:75px; text-indent:-15px">Intersegment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:90px; text-indent:-15px">Total revenue</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">657,853</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">655,792</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">604,865</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>6,148,159</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(100.0</TD>
    <TD nowrap>%)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(100.0</TD>
    <TD nowrap>%)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(100.0</TD>
    <TD nowrap>%)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><I>(100.0</I></TD>
    <TD nowrap><I>%)</I></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Operating expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">598,023</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">599,282</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">580,318</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>5,589,000</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(90.9</TD>
    <TD nowrap>%)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(91.4</TD>
    <TD nowrap>%)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(95.9</TD>
    <TD nowrap>%)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><I>(90.9</I></TD>
    <TD nowrap><I>%)</I></TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:90px; text-indent:-15px">Operating income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">59,830</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">56,510</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">24,547</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>$</I></TD>
    <TD align="right"><I>559,159</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:90px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(9.1</TD>
    <TD nowrap>%)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(8.6</TD>
    <TD nowrap>%)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(4.1</TD>
    <TD nowrap>%)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><I>(9.1</I></TD>
    <TD nowrap><I>%)</I></TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Identifiable and corporate assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">808,001</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">770,319</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">747,337</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>7,551,411</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Depreciation and amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">52,806</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50,726</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">57,132</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>493,514</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Capital expenditures</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">61,005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44,471</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41,026</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>570,140</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Note:
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%">In accordance with SFAS No.&nbsp;144, &#147;Accounting for the Impairment or
Disposal of Long-Lived Assets&#148;, certain amounts in the segment
information do not reflect discontinued operations, previous fiscal
year&#146;s segment information has been reclassified to conform to the fiscal
2005 presentation.
</DIV>

<P align="center" style="font-size: 10pt">- 21 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Geographic Segment Information
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>

    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>

    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>

    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>

    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000">Years ended March 31</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><I>2005</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 0px solid #000000">(millions of yen)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><I>(thousands</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><I>of dollars)</I></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">JAPAN</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Net sales</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">339,493</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">329,782</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">334,882</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><I>$</I></TD>
    <TD align="right"><I>3,172,832</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Operating income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,382</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,538</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,193</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>246,561</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Identifiable assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">305,717</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">316,695</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">326,128</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>2,857,168</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">AMERICAS</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Net sales</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">87,594</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">100,971</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">97,424</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>818,636</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Operating income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,496</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,985</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,439</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>51,364</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Identifiable assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">70,844</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">65,584</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">73,845</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>662,093</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">EUROPE</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Net sales</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">71,682</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">80,641</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">78,462</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>669,925</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Operating income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5,125</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(115</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,547</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><I>(47,897</I></TD>
    <TD nowrap><I>)</I></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Identifiable assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44,961</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">51,797</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">48,108</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>420,196</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ASIA AND OTHERS</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Net sales</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">400,866</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">380,781</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">314,918</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>3,746,411</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Operating income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33,551</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42,912</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,640</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>313,561</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Identifiable assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">263,621</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">228,058</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">193,637</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>2,463,748</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ELIMINATIONS AND CORPORATE</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Net sales</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">241,782</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">236,383</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">220,821</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>2,259,645</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Operating income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">474</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(190</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(822</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>4,430</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Identifiable assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">122,858</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">108,185</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">105,619</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>1,148,206</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">TOTAL</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Net sales</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">657,853</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">655,792</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">604,865</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><I>$</I></TD>
    <TD align="right"><I>6,148,159</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Operating income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">59,830</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">56,510</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,547</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>559,159</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Identifiable and corporate assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">808,001</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">770,319</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">747,337</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>7,551,411</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">OVERSEAS SALES</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Americas</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">77,813</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">88,734</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">104,134</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><I>$</I></TD>
    <TD align="right"><I>727,224</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Europe</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">71,702</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">80,710</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">77,713</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>670,112</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Asia and others</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">324,313</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">317,725</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">257,534</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>3,030,963</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Overseas sales total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">473,828</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">487,169</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">439,381</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><I>$</I></TD>
    <TD align="right"><I>4,428,299</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Percentage of consolidated sales</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">72.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">74.3</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">72.6</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><I>72.0</I></TD>
    <TD nowrap><I>%</I></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Notes:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Net sales in each geographic area are based on the location of TDK
entities where the sales are generated.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(2)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Overseas sales are based on the location of the customers.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(3)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In accordance with SFAS No.&nbsp;144, &#147;Accounting for the Impairment or
Disposal of Long-Lived Assets&#148;, certain amounts in the segment
information do not reflect discontinued operations, previous year&#146;s
segment information has been reclassified to conform to the fiscal
2005 presentation.</TD>
</TR>

</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">- 22 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Fiscal 2005 Compared to Fiscal 2004
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp; <U>Sales</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Consolidated net sales rose 0.3&nbsp;percent from &#165;655.8&nbsp;billion to &#165;657.9&nbsp;billion ($6,148&nbsp;million)
in fiscal 2005, the year ended March&nbsp;31, 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK&#146;s operations are affected by the economies of various regions of the world, including
Japan, the United States, Europe and China. Despite rising crude oil prices and other factors that
restricted growth, the U.S. economy generally expanded steadily due in part to an upturn in capital
expenditures and improvements in employment statistics and household incomes. European economies,
while resilient in the first half of fiscal 2005, suffered a slowdown in the second half due to the
effects of a strengthening euro, rising crude oil prices and other negative factors. China,
meanwhile, maintained a high economic growth rate. In comparison, the Japanese economy slowed due
to a drop-off in exports, the result of second-half production cutbacks by manufacturers of IT and
digital products, despite strength in capital expenditures that was supported by strong corporate
earnings.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the electronics industry in the first half of fiscal 2005, demand for digital home
appliances, such as LCD and plasma TVs and DVD recorders, was boosted by the Summer Olympic Games
in Athens and other factors. This resulted in strong demand for the TDK&#146;s electronic components in
the first half. However, demand for these components began to cool in the second half in line with
production cutbacks of finished products that use them.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In this business environment, TDK continued to implement cost structure reforms, for example,
the improvement of variable expenses by reviewing terms of supply and requesting discounts from
purchased materials vendors. TDK also actively made investments to drive growth, such as by
ramping up production capacity of capacitors and forging a strategic alliance in HDD heads.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As a result, the electronic materials and components segment posted net sales of &#165;545.2
billion ($5,095&nbsp;million), up 4.9&nbsp;percent from &#165;519.8&nbsp;billion in the previous fiscal year.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sales in the electronic materials sector rose 4.8&nbsp;percent from &#165;166.8&nbsp;billion to &#165;174.8
billion ($1,634&nbsp;million). Sales of multilayer chip capacitors, a mainstay of capacitor products,
increased year over year. In the first half of fiscal 2005, the Athens Olympics propelled demand
for digital home appliances higher, which had an add-on effect for components used in them. In the
second half, however, demand for components cooled, this time the result of cutbacks in the
production of digital home appliances, and prices also dropped. But, against this market backdrop,
TDK absorbed the sales price declines and the effect of unfavorable foreign exchange movements
through improvements to its product mix. In ferrite cores, sales declined from the previous fiscal
year, despite higher demand for general-purpose power supply cores for digital home appliances and
cores for communications equipment. This decrease was due to a reduction in output of deflection
yoke cores and flyback transformer cores used in CRT TVs. Magnet sales increased year over year,
the result of steadily rising demand for use in automotive and HDD applications.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sales in the electronic devices sector increased 7.8&nbsp;percent from &#165;108.0&nbsp;billion to &#165;116.4
billion ($1,088&nbsp;million). Inductive devices, the largest product category in this sector, posted
higher sales, despite lower sales prices and the negative effect of foreign exchange movements.
This increase was attributable to higher demand spurred by acceleration in the pace at which
automobiles are incorporating electronics and the increasing sophistication of mobile phones, as
well as by new product launches. Sales of high-frequency components declined marginally year over
year because higher sales volume and an improved product mix failed to completely offset
persistently strong discounting pressure from mobile phone handset manufacturers, the main customer
for these components. In power systems, sales of DC-DC converters and
DC-AC inverters were
healthy. Sensors and actuators recorded higher sales due to growth in demand for use in PCs and
peripherals and communications equipment.
</DIV>

<P align="center" style="font-size: 10pt">- 23 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the recording devices sector, sales rose 1.9&nbsp;percent from &#165;230.1&nbsp;billion to &#165;234.6&nbsp;billion
($2,192&nbsp;million). Sales of HDD heads, the main product in this sector, rose year over year.
However, TDK had to overcome the loss of business from a major customer that started producing
heads in house in 2004, as well as the impact of falling sales prices and unfavorable foreign
exchange movements. Cutbacks in HDD inventories at customers in the first half of fiscal 2005 also
affected the sector&#146;s performance. However, demand for HDD heads rose in the second half of the
fiscal year following the end of these cutbacks. Sales of other heads declined year over year due
to sluggish sales of optical pickups.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sales in the semiconductors &#038; others sector climbed 30.8&nbsp;percent from &#165;14.9&nbsp;billion to &#165;19.4
billion ($182&nbsp;million). TDK recorded slightly higher sales of anechoic chambers for
electromagnetic noise control and equipment used in these chambers. There was also growth in
external sales of manufacturing equipment due to higher investments in semiconductor facilities and
equipment by customers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating income of the electronic materials and components segment in fiscal 2005 was &#165;67.5
billion, up &#165;8.8&nbsp;billion from fiscal 2004. In spite of the deep-rooted pressure for sales price
discounts, operating income increased due to higher sales of capacitors and inductive devices,
discounts in raw materials and cost improvements by rationalization.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the recording media &#038; systems segment, sales declined 17.2&nbsp;percent from &#165;136.0&nbsp;billion to
&#165;112.6&nbsp;billion ($1,053&nbsp;million). Sales of audiotapes and videotapes declined year over year.
While TDK maintained a high market share, demand is declining for these products as a whole. Sales
of optical media increased, with higher DVD sales volume offsetting a sharp fall in DVD prices and
lower CD-R sales. Sales of other products decreased year over year. There was an increase in
sales of LTO-standard* (Linear Tape-Open) tape-based data storage media for computers. However, a
decline in sales caused by the sale in the previous fiscal year of a U.S. software development
subsidiary and lower sales of recording equipment brought overall sales of other products down year
over year.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating loss of the recording media &#038; systems segment in fiscal 2005 was &#165;7.7&nbsp;billion, up
&#165;5.5&nbsp;billion from fiscal 2004. Operating loss increased due to a decline in demand of audiotapes
and videotapes as a whole, decrease in sales as a result of sale of a subsidiary in the United
States of America in fiscal 2004, and continuous drop in sales prices mainly in optical media.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*Linear Tape-Open, LTO, LTO logo, Ultrium and Ultrium logo are trademarks of HP, IBM and
Certance LLC in the U.S., other countries or both.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;By region, sales in Japan rose 9.1&nbsp;percent from &#165;168.6&nbsp;billion to &#165;184.0&nbsp;billion ($1,720
million). Overseas sales declined 2.7&nbsp;percent from &#165;487.2&nbsp;billion to &#165;473.8&nbsp;billion ($4,428
million). Overseas sales accounted for 72.0% of consolidated net sales.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In Japan, sales in the electronic devices sector and recording media &#038; systems segment
declined, while higher sales were recorded in the electronic materials, recording devices and
semiconductors &#038; others sectors. The electronics materials and components segment saw its
operating income increase by &#165;17.6&nbsp;billion due to increase in operating ratio, discount in raw
materials and decrease in cost by rationalization. Although operating loss of the recording media
&#038; systems segment increased slightly, operating income in fiscal 2005 was &#165;25.8&nbsp;billion, up &#165;16.9
billion from fiscal 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In Asia (excluding Japan) and Oceania, sales declined in the recording devices sector and
recording media &#038; systems segment, but sales increased in the electronic materials and electronic
devices sectors. The operating income of the electronic materials and components segment decreased
by &#165;8.8&nbsp;billion. This decrease is due to a significant decline in sales prices mainly in recording
devices and capacitors. Operating income of the recording media &#038; systems segment also decreased
slightly, resulting in operating income for fiscal 2005 of &#165;33.6&nbsp;billion, &#165;9.5&nbsp;billion less than
fiscal 2004.
</DIV>

<P align="center" style="font-size: 10pt">- 24 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the Americas, sales decreased in the electronic materials and recording devices sectors as
well as the recording media &#038; systems segment. The higher yen versus the U.S. dollar also impacted
sales in the Americas. The operating income of the electronic materials and components segment
decreased &#165;0.9&nbsp;billion from fiscal 2004. However, operating income in fiscal 2005 was &#165;5.5
billion, up &#165;0.9&nbsp;billion from fiscal 2004, due to decrease in operating loss of the recording media
&#038; systems segment as a result of sale of a subsidiary engaged in software development.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In Europe, lower sales were recorded in the electronic materials and semiconductors &#038; others
sectors as well as the recording media &#038; systems segment. While operating loss of the electronic
materials and components decreased, operating loss of the recording media &#038; systems segment in
fiscal 2005 reversed from operating income in fiscal 2004 to operating
loss of &#165;4.7&nbsp;billion by decrease of &#165;5.8&nbsp;billion, due to a significant decline in sales prices
mainly in optical media. As a result, operating loss in fiscal 2005 was &#165;5.1&nbsp;billion, &#165;5.0&nbsp;billion
less than fiscal 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;<U>Effect of foreign exchange movements</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In fiscal 2005, overseas sales accounted for 72.0&nbsp;percent of consolidated net sales, down 2.3
percentage points. As a result, fluctuations in foreign exchange rates have a significant effect
on TDK&#146;s consolidated sales and income. During fiscal 2005, the yen appreciated 5.0&nbsp;percent in
relation to the U.S. dollar and depreciated 1.9&nbsp;percent in relation to the euro, based on TDK&#146;s
average internal exchange rates. Overall, TDK estimates that each &#165;1 movement in the exchange
rates during fiscal 2005 had the effect of reducing net sales by about &#165;4.0&nbsp;billion and operating
income by about &#165;1.0&nbsp;billion, in relation to the prior fiscal year.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;By region, foreign exchange fluctuations reduced sales in Japan by about &#165;3.8&nbsp;billion, in Asia
(excluding Japan) and Oceania by about &#165;23.6&nbsp;billion and in the Americas by about &#165;5.5&nbsp;billion, but
increased sales in Europe by about &#165;1.4&nbsp;billion. The effect of foreign exchange fluctuations on
consolidated net sales after the elimination of intersegment transactions was about &#165;20.6&nbsp;billion.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK conducts a large share of business activities outside Japan as one way to offset the
impact of exchange-rate fluctuations. Such activities include manufacturing and sales, as well as
research, design and procurement. In-region production in fiscal 2005 represented 112.1&nbsp;percent of
sales in Asia (excluding Japan) and Oceania, 20.9&nbsp;percent in the Americas, and 23.9&nbsp;percent in
Europe. Overseas production accounted for 59.0&nbsp;percent of total sales in fiscal 2005, compared
with 58.6&nbsp;percent one year earlier, and for 81.9&nbsp;percent of overseas sales, compared with 78.9
percent one year earlier. The rise in the percentage of overseas production in fiscal 2005 is
mainly due to higher production in Asia in the electronic materials and components segment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK and certain overseas consolidated subsidiaries hedge exposure to foreign exchange
movements by entering into forward foreign exchange contracts and swaps for some foreign
currency-denominated obligations. Foreign exchange risk arising in operating activities is hedged
by using forward foreign exchange contracts. In principle, TDK&#146;s policy is to hedge up to 50
percent of expected foreign currency-denominated accounts receivable for each month for the next
six months. Due to the global nature of operations, management realizes that currency movements
continue to have the potential to exert a material influence on consolidated performance.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;<U>Cost and expenses</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The cost of sales increased 1.7&nbsp;percent from &#165;476.4&nbsp;billion in fiscal 2004 to &#165;484.3&nbsp;billion
($4,526&nbsp;million) in fiscal 2005 due to higher sales. Cost of sales increased from 72.6&nbsp;percent to
73.6&nbsp;percent of net sales, respectively. This reflected the negative effects on earnings of strong
discounting pressure in all segments and foreign exchange movements, mainly the appreciation of the
yen relative to the U.S. dollar. These factors outweighed positive influences such as cost
reductions from structural reforms and numerous other actions to cut costs, including the receipt
of discounts on purchased materials. As a result, gross profit decreased 3.3&nbsp;percent year over
year.
</DIV>

<P align="center" style="font-size: 10pt">- 25 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Selling, general and administrative expenses decreased &#165;3.0&nbsp;billion from &#165;122.9&nbsp;billion in
fiscal 2004 to &#165;119.9&nbsp;billion ($1,120&nbsp;million) in fiscal 2005, and decreased from 18.8&nbsp;percent to
18.2&nbsp;percent of net sales, respectively. Selling, general and administrative expenses decreased
despite a 0.3&nbsp;percent rise in net sales due to efforts to strictly manage fixed expenses, such as
by lowering personnel expenses through greater operational efficiency. The main components of this
decrease were reductions in personnel expenses of &#165;3.1&nbsp;billion and marketing expenses of &#165;1.3
billion. Research and development expenses included in selling, general and administrative
expenses increased &#165;3.4&nbsp;billion from &#165;32.9&nbsp;billion in fiscal 2004 to &#165;36.3&nbsp;billion ($340&nbsp;million)
in fiscal 2005, and increased from 5.0&nbsp;percent to 5.5&nbsp;percent of net sales, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, pursuant to the newly enacted Contributed Benefit Pension Plan Law, TDK received
an exemption from the Minister of Health, Labor and Welfare, effective September
25, 2003, from the obligation to pay benefits related to future employee services with respect
to the substitutional portion of its Employees&#146; Pension Fund (EPF). TDK was also granted an
exemption from the obligation to pay benefits in relation to past employee services in October&nbsp;2004
with respect to the substitutional portion of its domestic contributory plan. The transfer of the
substitutional portion of TDK&#146;s EPF liabilities to the government was completed on January&nbsp;31,
2005. As a result of the transfer, TDK recognized as a subsidy from the Japanese government an
amount equal to the difference between the fair value of the obligation deemed &#147;settled&#148; with the
Japanese government and the assets required to be transferred to the government. The subsidy that
TDK recognized amounted to &#165;33.5&nbsp;billion ($313&nbsp;million). In addition, TDK recognized a settlement
loss in an amount equal to the product of (i)&nbsp;the ratio of the obligation settled to the total EPF
obligation outstanding immediately prior to settlement, both of which exclude the effect of future
salary progression relating to the substitutional portion of the EPF obligation, and (ii)&nbsp;the net
unrecognized gain/loss immediately prior to settlement, which amounted to &#165;27.3&nbsp;billion ($256
million). This gain and loss is included in operating income in the accompanying consolidated
statements of income for the year ended March&nbsp;31, 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;<U>Other income and deductions</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other income (deductions)&nbsp;improved &#165;1.6&nbsp;billion from the previous fiscal year, reflecting a
&#165;2.2&nbsp;billion decline in foreign exchange losses and a &#165;1.0&nbsp;billion decrease in loss on securities,
net, as well as other factors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp; <U>Income taxes and minority interests</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The ratio of income taxes to income from continuing operations before income taxes (the
effective tax rate) increased from 21.7&nbsp;percent in fiscal 2004 to 38.3&nbsp;percent in fiscal 2005. The
increase reflects mainly the fact that TDK received a notification and assessment of additional tax
from the Tokyo Regional Tax Bureau (Nihonbashi Tax Office) asserting that prices charged and paid
by TDK in connection with sales and purchases of products involving its overseas subsidiaries have
not been commensurate with the prices of similar transactions involving unrelated third parties.
The period of additional assessments covers tax years ending March&nbsp;1999 through March&nbsp;2003. The
additional tax assessed by the Tokyo Regional Tax Bureau amounted to
&#165;12.0&nbsp;billion including
interest and penalty, which has been reflected as additional tax expense and other expense, net of
deferred income tax benefits, in the accompanying consolidated statements of income for the year
ended March&nbsp;31, 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp; <U>Net income</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK posted net income of &#165;33.3&nbsp;billion ($311&nbsp;million), resulting in net income per diluted
share of &#165;251.56 ($2.35), compared with &#165;317.69 in the previous fiscal year. Return on equity
(ROE)&nbsp;decreased from 7.5&nbsp;percent to 5.5&nbsp;percent. This was due to an approximate &#165;62.8&nbsp;billion
increase in stockholders&#146; equity, which reflected a decrease of about &#165;38.7&nbsp;billion in accumulated
other comprehensive loss due to such factors as a decrease of about &#165;32.9&nbsp;billion in minimum
pension liability adjustments following the transfer of the substitutional portion of EPF
liabilities, as well as an increase in retained earnings.
</DIV>

<P align="center" style="font-size: 10pt">- 26 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash dividends per share paid during the fiscal year totaled &#165;60 ($0.56). This dividend is
the sum of the June&nbsp;2004&nbsp;year-end dividend of &#165;30 and the December&nbsp;2004 interim dividend of &#165;30.
Shareholders of record on March&nbsp;31, 2005 received a cash dividend of &#165;40 per share at the end of
June&nbsp;2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In fiscal 2005, consolidated net income included loss from discontinued operations of &#165;3,665
million related to TDK Semiconductor Corporation. See discussion at Discontinued
Operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Fiscal 2004 Compared to Fiscal 2003
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp; <U>Sales</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Consolidated net sales increased 8.4&nbsp;percent to &#165;655.8&nbsp;billion in fiscal 2004, the year ended
March&nbsp;31, 2004, from &#165;604.9&nbsp;billion one year earlier.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Japanese economy in fiscal 2004 tended toward recovery, led by IT-related production and
exports. However, with no upturn evident in household incomes, consumer spending failed to
rebound. Meanwhile, the U.S. economy, the driving force for the world economy, expanded compared
with the previous year, with consumer spending, housing investment and capital expenditures all
rising, as the government eased fiscal and monetary policy.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the electronics industry, the year was characterized by the rising popularity of LCD and
plasma flat-screen TVs, digital cameras and DVD recorders, as well as by the increasing
sophistication of mobile phones, replacement demand for PCs, and the growing use of electronics in
automobiles. However, deflationary trends in world markets affected these finished products,
placing unrelenting pricing pressure on electronic materials and components and recording media &#038;
systems, TDK&#146;s main products.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK saw orders drop in the first quarter (April-June&nbsp;2003) of fiscal 2004 due to factors such
as the Severe Acute Respiratory Syndrome (SARS)&nbsp;outbreak and fallout from the Iraq war.
Nevertheless, TDK remained focused on implementing cost structure reforms, carrying on initiatives
from fiscal 2003 to improve asset productivity and concentrate resources on strategic businesses.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the electronic materials and components segment, net sales increased 10.9&nbsp;percent from
&#165;468.5&nbsp;billion to &#165;519.8&nbsp;billion.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sales in the electronic materials sector decreased 1.3&nbsp;percent from &#165;168.9&nbsp;billion to &#165;166.8
billion. Sales of multilayer chip capacitors, a mainstay of capacitor products, increased. Higher
orders for capacitors, which reflected growing demand for communications products, offset falling
sales prices and the negative effect of exchange rate movements. In ferrite cores, deflection yoke
cores and flyback transformer cores saw sales drop due to falling demand and sales prices. The
drop in orders for these cores was a reflection of a rapid shift in consumer demand from CRT TVs to
LCD, plasma and other flat-panel models. Higher sales of small coils and transformer cores, a
category where demand increased, failed to offset this decrease, resulting in a decline in overall
sales of ferrite cores. Magnet sales declined as the effect of falling sales prices outweighed
higher sales volumes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the electronic devices sector, sales decreased 4.2&nbsp;percent from &#165;112.7&nbsp;billion to &#165;108.0
billion. Inductive devices, the largest product category in this sector, posted higher sales as
demand for communications applications increased in line with advances in the performance of mobile
phones. However, sales growth was held back by lower sales prices and foreign currency movements.
Sales of high-frequency components decreased despite an upswing in shipment volumes that resulted
from strong demand for components used in mobile phones, the main market for these components, and
successful activities to win new orders. The decrease reflected the continuing glut in the supply
of high-frequency components in the market as a whole, which prompted customers to demand price
reductions that were greater than in other electronic component categories. Sensors and actuators
recorded higher sales due to growth in demand for communications applications and PCs and
peripherals. However, sales of power systems declined due to lackluster demand associated with the
amusement field, a sector where demand was strong in the previous fiscal year.
</DIV>

<P align="center" style="font-size: 10pt">- 27 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Recording devices sales climbed 30.8&nbsp;percent from &#165;176.0&nbsp;billion to &#165;230.1&nbsp;billion. Sales of
HDD heads, the main product in this sector, were up sharply. This was primarily because of
continuing expansion in the HDD market and the resulting robust HDD sales by major TDK customers.
Sales of other heads also increased.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sales in the semiconductors &#038; others sector climbed 37.1&nbsp;percent from &#165;10.9&nbsp;billion to &#165;14.9
billion. Growth reflected higher sales of anechoic chambers for noise control and equipment used
in these chambers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating income of the electronic materials and components segment in fiscal 2004 was &#165;58.7
billion, up &#165;35.7&nbsp;billion from fiscal 2003. This increase was due to significantly higher sales of
recording devices and cost reductions such as reduced depreciation from reforms to the profit
structure. This increase offset declines in profit due to lower sales of other products and the
negative effect of the appreciation of the yen.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the recording media &#038; systems segment, sales edged down 0.3&nbsp;percent from &#165;136.4&nbsp;billion to
&#165;136.0&nbsp;billion. While TDK continued to command a high share of the audiotape and videotape
markets, sales in these two categories decreased as demand continued to shrink due to structural
changes. Optical media products posted increased sales, with higher sales volumes of CD-Rs and
DVDs in an expanding market offsetting lower sales prices. Sales of other products decreased.
Higher sales of LTO-standard* (Linear Tape-Open) tape-based data storage media for computers failed
to offset lower sales of PC software, recording equipment and other products.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The recording media &#038; systems segment saw some increased profits due to higher sales of
optical media products. However, the segment experienced losses of &#165;2.2&nbsp;billion in fiscal 2004,
down &#165;3.7&nbsp;billion from fiscal 2003, due to falling sales prices of other products and significantly
reduced profits from the negative effect of the appreciation of the yen.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>*</B>&nbsp;Linear Tape-Open, LTO, LTO logo, Ultrium and Ultrium logo are trademarks of HP, IBM and
Certance LLC in the U.S., other countries or both.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;By region, sales in Japan increased 1.9&nbsp;percent to &#165;168.6&nbsp;billion in fiscal 2004 from &#165;165.5
billion in fiscal 2003. There was a 10.9&nbsp;percent rise in overseas sales year over year to &#165;487.1
billion from &#165;439.4&nbsp;billion in fiscal 2003. Overseas sales accounted for 74.3&nbsp;percent of
consolidated net sales.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In Japan, sales edged up from the previous fiscal year as higher sales in the recording
devices sector offset sales decreases caused by lower orders for DC-DC converters for the amusement
field and falling demand for audiotapes. The electronic materials and components segment saw its
operating income increase by &#165;7.2&nbsp;billion due to ongoing cutbacks in expenses and improvements in
cost categories mainly in raw materials price reductions resulting from structural reforms. This
increase offset losses in the recording media &#038; systems segment. Accordingly, operating income for
fiscal 2004 increased to &#165;8.5&nbsp;billion, up &#165;3.3&nbsp;billion from fiscal 2003.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In Asia (excluding Japan) and Oceania, sales increased due to higher sales of recording
devices, as TDK regained market share, and strong sales of electronic materials and electronic
devices. The operating income of the electronic materials and components segment significantly
increased by &#165;22.2&nbsp;billion. This increase accounted for almost the entire increase in operating
income across the region, which was due mainly to increased sales of recording devices. The
profits of the recording media &#038; systems segment remained practically unchanged, resulting in
operating income for fiscal 2004 of &#165;42.9&nbsp;billion, &#165;22.3&nbsp;billion more than fiscal 2003.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the Americas, sales decreased due to the effect of foreign exchange translation resulting
from the appreciation of the yen. Other factors were lower sales in the recording media &#038; systems
segment despite higher sales of optical media products, including DVDs, due to lower sales of other
products; and lower sales in the electronic materials and components segment. The operating income
of the electronic materials and components segment increased by &#165;5.7&nbsp;billion. This increase
resulted mainly from an increase in sales of recording devices. This increase offset losses in the
recording media &#038; systems segment, which resulted from reduced sales of PC software and recording
equipment. Accordingly, operating income for fiscal 2004 was &#165;5.0&nbsp;billion, up &#165;3.6&nbsp;billion from
fiscal 2003.
</DIV>

<P align="center" style="font-size: 10pt">- 28 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In Europe, sales increased. Sales were sluggish in the electronic materials and components
segment, but rose in the recording media &#038; systems segment as sharply higher sales of DVDs and
other optical media products countered falling demand for audiotapes. The operating income of the
recording media &#038; systems segment increased by &#165;2.3&nbsp;billion, due mainly to increased sales of
optical media, which, when combined with increased profits in the electronic materials and
components segment, resulted in operating losses for fiscal 2004 of &#165;0.1&nbsp;billion, an improvement of
&#165;3.4&nbsp;billion on fiscal 2003.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp; <U>Effect of foreign exchange movements</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In fiscal 2004, overseas sales accounted for 74.3&nbsp;percent of consolidated net sales, up 1.7
percentage points. As a result, fluctuations in foreign exchange rates have a significant effect
on TDK&#146;s consolidated sales and income. During fiscal 2004, the yen appreciated 7.2&nbsp;percent in
relation to the U.S. dollar and depreciated 9.7&nbsp;percent in relation to the euro, based on TDK&#146;s
average internal exchange rates. Overall, TDK estimates that each &#165;1 movement in exchange rates
during fiscal 2004 had the net effect of reducing net sales by about &#165;4.0&nbsp;billion and operating
income by about &#165;1.5&nbsp;billion, in relation to the prior fiscal year.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;By region, foreign exchange fluctuations reduced sales in Japan by about &#165;11.0&nbsp;billion, sales
in Asia (excluding Japan) and Oceania by about &#165;31.0&nbsp;billion and sales in the Americas by about
&#165;9.3&nbsp;billion, but increased sales in Europe by about &#165;4.5&nbsp;billion. The negative effect of foreign
exchange fluctuations on consolidated net sales after the elimination of intersegment transactions
was about &#165;25.8&nbsp;billion.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK conducts a large share of business activities outside Japan as one way to offset the
impact of exchange-rate fluctuations. Such activities include manufacturing and sales, as well as
research, design and procurement. In-region production in fiscal 2004 represented 111.6&nbsp;percent of
sales in Asia (excluding Japan) and Oceania, 22.5&nbsp;percent in the Americas, and 23.8&nbsp;percent in
Europe. Overseas production accounted for 58.6&nbsp;percent of total sales in fiscal 2004, compared
with 55.8&nbsp;percent one year earlier, and for 78.9&nbsp;percent of overseas sales, compared with 76.8
percent one year earlier. The rise in the percentage of overseas production in fiscal 2004 is
mainly due to higher production in Asia in the electronic materials and components segment
primarily as a result of an increase in overseas production, which rose in line with sales growth
resulting from a recovery in market share in recording devices.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK and certain overseas subsidiaries hedge exposure to foreign exchange movements by entering
into forward foreign exchange contracts and swaps for some foreign currency-denominated
obligations. Foreign exchange risk arising in operating activities is hedged by using forward
foreign exchange contracts. In principle, TDK&#146;s policy is to hedge up to 50&nbsp;percent of expected
foreign currency-denominated accounts receivable for each month for the next six months. Due to
the global nature of operations, management realizes that currency movements continue to have the
potential to exert a material influence on consolidated performance.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp; <U>Cost and expenses</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The cost of sales increased 3.7&nbsp;percent from &#165;459.6&nbsp;billion in fiscal 2003 to &#165;476.4&nbsp;billion
in fiscal 2004 due to higher sales. Cost of sales decreased from 76.0&nbsp;percent to 72.6&nbsp;percent of
net sales, respectively. This reflected both an improvement in the capacity utilization rate
accompanying higher sales, and cutbacks in expenses and improvements in various cost categories
resulting from structural reforms. These benefits outweighed strong downward pressure on prices
and the adverse effects of foreign exchange movements. As a result, gross profit increased 23.4
percent.
</DIV>

<P align="center" style="font-size: 10pt">- 29 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Selling, general and administrative expenses increased &#165;7.3&nbsp;billion from &#165;115.6&nbsp;billion in
fiscal 2003 to &#165;122.9&nbsp;billion in fiscal 2004, and decreased from 19.1&nbsp;percent to 18.7&nbsp;percent of
net sales, respectively. Selling, general and administrative expenses rose in line with the 8.4
percent rise in net sales as TDK prevented further growth in these
expenses by strictly managing fixed expenses. Personnel, which is the payment of salaries, bonuses and retirement payments,
freight charges, marketing expenses and outsourcing expenses increased &#165;2.6&nbsp;billion, &#165;0.9&nbsp;billion,
&#165;0.7&nbsp;billion, and &#165;0.4&nbsp;billion, respectively. Research and development expenses represented 5.0
percent of net sales, the same as in the previous fiscal year.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp; <U>Other income and deductions</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other income (deductions)&nbsp;improved &#165;3.3&nbsp;billion from the previous fiscal year. While there
was a &#165;1.6&nbsp;billion increase in foreign exchange losses, there was a &#165;2.2&nbsp;billion decrease in loss
on securities, net and increase of &#165;1.3&nbsp;billion in equity in earnings of affiliates.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp; <U>Income taxes and minority interests</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The ratio of income taxes to income from continuing operations before income taxes (the
effective tax rate) decreased from 30.1&nbsp;percent in fiscal 2003 to 21.7&nbsp;percent in fiscal 2004. The
decrease reflects decrease in additional valuation allowance provided during the year and the
higher amounts of income earned in China, etc. during fiscal 2004, which were taxed at rates lower
than TDK&#146;s effective rate for all other jurisdictions in which it pays income taxes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp; <U>Net income</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK posted a net income of &#165;42.1&nbsp;billion, resulting in net income per diluted share of
&#165;317.69, compared with &#165;90.56 in the previous fiscal year. The return on equity increased from 2.1
percent to 7.5&nbsp;percent. Cash dividends per share paid during the fiscal year totaled &#165;50. This
dividend is the sum of the June&nbsp;2003&nbsp;year-end dividend of &#165;25 and the December&nbsp;2003 interim
dividend of &#165;25. Shareholders of record on March&nbsp;31, 2004 received a cash dividend of &#165;30 per
share at the end of June&nbsp;2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In fiscal 2004, consolidated net income included loss from discontinued operations of &#165;1,254
million related to TDK Semiconductor Corporation. See discussion at Discontinued
Operations.
</DIV>


<P align="center" style="font-size: 10pt">- 30 -
</DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Discontinued Operations</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On March&nbsp;31, 2005, TDK entered into an agreement to sell all outstanding stock of its wholly
owned subsidiary, TDK Semiconductor Corporation (&#147;TSC&#148;) for &#165;1,509&nbsp;million ($14,103 thousand) to
Golden Gates Capital (&#147;Buyer&#148;). The sale of TSC is part of TDK&#146;s continuing shift away from
non-core products and technologies. The sale agreement also includes earn-out payments, to be made
by the Buyer to TDK, of up to &#165;3,478&nbsp;million ($32,505 thousand). The payments are contingent upon
certain milestones being met related to future revenue targets extending through 2007. The
transaction was completed on April&nbsp;8, 2005. TDK has accounted for the sale of TSC as a
discontinued operation. The results of operations for this subsidiary have been reported as
discontinued operations for all periods presented and selected financial information for the years
ended March&nbsp;31, 2005, 2004 and 2003 for the discontinued operations, are summarized as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">U.S. Dollars</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000">Yen (Millions)</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">(Thousands)</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2004</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2003</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net sales</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#165;</B></TD>
    <TD align="right"><B>2,242</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,070</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,015</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>20,953</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Loss from operations before
income taxes (including loss on
disposal of &#165;454&nbsp;million in
2005)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>3,509</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">244</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,471</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>32,794</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income tax expense (benefit)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>156</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,010</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(897</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,458</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Loss from discontinued operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#165;</B></TD>
    <TD align="right"><B>3,665</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,254</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,574</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>34,252</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Loss from discontinued operations
per share:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>&#165;</B></TD>
    <TD align="right"><B>(27.70</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(9.47</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(11.86</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>$</B></TD>
    <TD align="right"><B>(0.26</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(27.69</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(9.46</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(11.86</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(0.26</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">See Note 20 to the Consolidated Financial Statements for further discussion.
</DIV>


<P align="center" style="font-size: 10pt">- 31 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B.&nbsp;Liquidity and capital resources
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Operating capital requirements</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK&#146;s requirements for operating capital primarily are for the purchase of raw materials and
parts for use in the manufacture of its products. These expenses are booked as manufacturing
expenses and selling, general and administrative expenses. The payment of payroll expenses,
marketing expenses accompanying sales activities, and distribution-related expenses account for a
significant portion of operating expenses. Personnel expenses account for a significant portion of
R&#038;D expenses. The necessary funds for these expenses are provided from cash generated by
operations.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Capital Expenditures</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In fiscal 2005, capital expenditures on a cash basis rose &#165;16.5&nbsp;billion from &#165;44.5&nbsp;billion to
&#165;61.0&nbsp;billion ($570&nbsp;million). This was the result of aggressive investment in IT home electronics
appliances; high-speed, large-capacity networks; and car electronics, which are fields TDK regards
as strategically important for growth.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the electronic materials and components segment, capital expenditures totaled &#165;57.2
billion. TDK invested in the expansion of production capacity of HDD heads, facilities for
rationalizing these activities and the development of technology for coping with increasing areal
density. These investments centered mainly on China, the U.S. and the Philippines. Furthermore,
investments were made to increase production and rationalize operations in multilayer chip
capacitors and inductors, where growth in sales is expected due to acceleration in the pace at
which electronics are being incorporated in automobiles, the increasingly sophisticated nature of
mobile phones and other factors. These investments were made mainly in Japan and China.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the recording media &#038; systems segment, capital expenditures totaled &#165;3.8&nbsp;billion, mainly
for facilities to increase DVD production.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The funds for these capital expenditures are provided by internal sources generated from
depreciation and amortization and profits.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Capital expenditures for fiscal 2004, which are described in detail below, increased by &#165;3.5
billion, from &#165;41.0&nbsp;billion for fiscal 2003 to &#165;44.5&nbsp;billion.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the electronic materials and components segment, due to the expansion of the market for
recording devices, TDK has made investments principally in Asia, but also in the Americas and
Japan, to increase production and rationalization for its recording devices. Other major
expenditures include investments to increase production and rationalization for electronic
materials and electronic devices (principally capacitors), and investments into the development of
new products. Capital expenditures of this segment increased by &#165;1.7&nbsp;billion from &#165;38.4&nbsp;billion to
&#165;40.1&nbsp;billion.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the recording media and systems segment, investments have been made in Europe and Japan to
increase production and develop optical media products, whose market is expanding. Capital
expenditures of this segment increased by &#165;1.8&nbsp;billion from &#165;2.6&nbsp;billion to &#165;4.4&nbsp;billion.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In principle, the funds for these capital expenditures are provided from cash generated by
operations.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Capital expenditures for fiscal 2003, which are described in detail below, decreased by &#165;17.3
billion, from &#165;58.3&nbsp;billion for fiscal 2002 to &#165;41.0&nbsp;billion.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the electronic materials and components segment, investments have been made in the
Americas, Asia and Japan, for increased production and rationalization mainly of its recording
devices, whose market is expanding. Other major investments have been investments into increased
production and rationalization of electronic materials and electronic devices, such as capacitors
and magnets, and investments into the development of new products. Capital expenditures of this
segment decreased by &#165;16.2&nbsp;billion from &#165;54.6&nbsp;billion to &#165;38.4&nbsp;billion by concentrating on key
sectors.
</DIV>


<P align="center" style="font-size: 10pt">- 32 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the recording media and systems segment, investments have been made mainly in Japan to
increase production and develop optical media products, whose market is expanding. Capital
expenditures of this segment decreased by &#165;1.1&nbsp;billion from &#165;3.7&nbsp;billion to &#165;2.6&nbsp;billion.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In principle, the funds for these capital expenditures are provided from cash generated by
operations.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Financial Management</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating capital and capital expenditures are, in principle, funded by cash generated through
operating activities. To improve capital efficiency, to the extent possible, TDK centralizes
financial management in the Head Office, having introduced a cash management system (CMS)&nbsp;in Japan,
the U.S. and Europe. Surplus funds are invested with an emphasis on low risk and liquidity. Funds
from within the group will be utilized, to the extent possible, to extend financing to subsidiaries
that cannot procure operating capital or funds for capital expenditures themselves.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Cash flows for fiscal 2005, 2004 and 2003 are summarized as follows:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="15" style="border-bottom: 1px solid #000000">Years ended March 31</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2003</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><I>2005</I></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 0px solid #000000">(millions of yen)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><I>(millions</I></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><I>of dollars)</I></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income from continuing operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">36,965</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">43,355</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">13,593</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>$</I></TD>
    <TD align="right"><I>345.5</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Adjustments to reconcile net income to
net cash provided by operating
activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">56,617</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">70,465</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">92,323</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>529.1</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net cash provided by operating activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">93,582</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">113,820</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">105,916</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>874.6</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net cash used in investing activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(60,863</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(37,647</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(46,220</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><I>(568.8</I></TD>
    <TD nowrap><I>)</I></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net cash used in financing activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(9,458</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(9,661</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(7,925</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><I>(88.4</I></TD>
    <TD nowrap><I>)</I></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net cash provided by (used in)
discontinued operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,625</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">761</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,983</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><I>(15.2</I></TD>
    <TD nowrap><I>)</I></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Effect of exchange rate changes on cash
and cash equivalents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,717</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(10,669</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(4,998</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>25.4</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net change in cash and cash equivalents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">24,353</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">56,604</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">44,790</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>$</I></TD>
    <TD align="right"><I>227.6</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Fiscal 2005 cash and cash equivalents increased &#165;24.3&nbsp;billion from &#165;227.2&nbsp;billion to
&#165;251.5&nbsp;billion ($2,351&nbsp;million). Operating activities provided net cash of &#165;93.6&nbsp;billion ($875
million), &#165;20.2&nbsp;billion less than in fiscal 2004. The major component of cash provided by
operating activities was depreciation and amortization of &#165;52.8&nbsp;billion, up &#165;2.1&nbsp;billion. In terms
of changes in assets and liabilities, inventories decreased &#165;11.3&nbsp;billion, the result of efforts to
reduce inventories, while retirement and severance benefits declined &#165;6.8&nbsp;billion due to the
transfer of the substitutional portion of EPF liabilities and changes to the pension system. In
addition, trade payables and accrued expenses decreased &#165;8.0&nbsp;billion and &#165;11.4&nbsp;billion,
respectively, and income taxes payables, net increased &#165;8.8&nbsp;billion.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Investing activities used net cash of &#165;60.9&nbsp;billion ($569&nbsp;million), &#165;23.3&nbsp;billion more than
the &#165;37.6&nbsp;billion used in the previous fiscal year. TDK used &#165;61.0&nbsp;billion for capital
expenditures, &#165;16.5&nbsp;billion more than in fiscal 2004, as a result of making aggressive investments
to drive growth. Furthermore, payment for purchase of investments in securities increased &#165;2.4
billion year over year. Regarding research and development expenses, TDK&#146;s policy is to focus
investments in the strategic fields of IT home electronic appliances, high-speed and large-capacity
networks and car electronics. Funds for research and development will be appropriated from
internal funds.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Financing activities used net cash of &#165;9.5&nbsp;billion ($88&nbsp;million), a decrease of &#165;0.2&nbsp;billion
from the &#165;9.7&nbsp;billion used in fiscal 2004. There was an increase of &#165;1.3&nbsp;billion in dividends paid
due to the increase in the dividend. On the other hand, there was a decline in the repayment of
debt because debt has been virtually eliminated.
</DIV>


<P align="center" style="font-size: 10pt"> - 33 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Regarding procurement costs, TDK has long-term corporate credit ratings of AA- and A1 from
Standard &#038; Poor&#146;s and Moody&#146;s, respectively. Furthermore, Standard &#038; Poor&#146;s gives TDK their
highest short-term credit rating, A-1&#043;, and TDK&#146;s U.S. subsidiaries have been given the highest
short-term rating of P-1 by Moody&#146;s. These ratings allow TDK to procure funds if needed at low
interest rates.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK&#146;s fundamental policy is to give consideration to a consistent increase in dividends based
on factors such as the return on equity (ROE), dividends as a percentage of equity (DOE)&nbsp;and TDK&#146;s
results of operations on a consolidated basis. Funds for paying dividends are allocated from
internal funds.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the dynamically changing electronics industry, it is necessary to make well-timed
investments. Given this need, and the possibility that unstable financial conditions will continue
in Japan, TDK&#146;s policy is to maintain a high level of liquidity. TDK thus has no immediate plans
to repurchase its stock.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK estimates that operating cash flows and other internal resources will provide adequate
liquidity in fiscal 2006. Regarding cash flows for the fiscal years ending March&nbsp;31, 2006 and
onward, TDK expects to provide the necessary funds from operating cash flows by increasing
profitability and improving the return on assets.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Fiscal 2004 cash and cash equivalents increased &#165;56.6&nbsp;billion to &#165;227.2&nbsp;billion from &#165;170.6
billion in the previous fiscal year. Operating activities provided net cash of &#165;113.8&nbsp;billion, a
year-on-year increase of &#165;7.9&nbsp;billion. This reflected mainly a &#165;30.1&nbsp;billion increase in net
income to &#165;42.1&nbsp;billion and a &#165;6.4&nbsp;billion decrease in depreciation and amortization to &#165;50.7
billion, as well as decreases in trade receivables and inventories of &#165;5.0&nbsp;billion and &#165;21.4
billion, respectively. Regarding the shortfall in pension assets, TDK plans to take action in
response to certain recent reforms to the pension system, including transferring the substitutional
portion of Employees&#146; Pension Fund (&#147;EPF&#148;) liabilities.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Investing activities used net cash of &#165;37.6&nbsp;billion, a decrease of &#165;8.6&nbsp;billion from &#165;46.2
billion in the previous fiscal year. The main factor was a &#165;6.2&nbsp;billion decrease in payment for
purchase of other investments to &#165;0.4&nbsp;billion. Regarding research and development expenses, TDK&#146;s
policy is to focus investments in the strategic fields of IT home electronic appliances, high-speed
and large-capacity networks and car electronics. Funds for research and development will be
appropriated from internal funds.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Financing activities used net cash of &#165;9.7&nbsp;billion, &#165;1.8&nbsp;billion more than the &#165;7.9&nbsp;billion in
cash used in the previous fiscal year. This mainly represented an increase of &#165;0.8&nbsp;billion in
repayments of short-term debt and a &#165;0.7&nbsp;billion increase in dividends paid.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Fiscal 2003 cash and cash equivalents increased &#165;44.8&nbsp;billion to &#165;170.6&nbsp;billion, from &#165;125.8
billion in the previous fiscal year. Operating activities provided net cash of &#165;105.9&nbsp;billion, a
year over year increase of &#165;61.7&nbsp;billion. This reflected mainly a &#165;37.8&nbsp;billion increase in net
income to &#165;12.0&nbsp;billion; a decrease of &#165;3.8&nbsp;billion in depreciation and amortization to &#165;57.1
billion; a decrease in inventories of &#165;14.9&nbsp;billion; and an increase of &#165;20.9&nbsp;billion in trade
payables. Regarding the shortfall in pension assets, TDK is currently considering reforms to the
pension system, including transferring the substitutional portion of employee pension fund
liabilities.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Investing activities used net cash of &#165;46.2&nbsp;billion, a decrease of &#165;11.3&nbsp;billion, from &#165;57.5
billion in the previous fiscal year. The main factor was a &#165;17.3&nbsp;billion decrease in capital
expenditures to &#165;41.0&nbsp;billion. Regarding research and development expenses, TDK&#146;s policy is to
focus investments in the strategic fields of IT home electronic appliances, high-speed and
large-capacity networks and car electronics. Funds for research and development will be
appropriated from internal funds.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Financing activities used net cash of &#165;7.9&nbsp;billion, &#165;5.3&nbsp;billion less than the &#165;13.2&nbsp;billion
in cash used in the previous fiscal year. This mainly represented a &#165;3.3&nbsp;billion decrease in
repayments of short-term debt and a &#165;2.0&nbsp;billion decrease in dividends paid.
</DIV>


<P align="center" style="font-size: 10pt"> - 34 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Capital resources as of March&nbsp;31, 2005, 2004 and 2003 are summarized as follows:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="15" style="border-bottom: 1px solid #000000">Years ended March 31</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2003</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><I>2005</I></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 0px solid #000000">(millions of yen)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><I>(millions</I></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">(%)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><I>of dollars)</I></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Short-term debt</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">315</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">1,431</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>$</I></TD>
    <TD align="right"><I>&#151;</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(&#151;</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Current installments of long term debt</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">103</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">101</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">488</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>1.0</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Long-term
debt, excluding current installments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">81</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">94</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>0.7</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px"></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Stockholders&#146; equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">639,067</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">576,219</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">553,885</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>5,972.6</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(100.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(99.9</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(99.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total capital</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">639,251</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">576,662</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">555,898</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>$</I></TD>
    <TD align="right"><I>5,974.3</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(100.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(100.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(100.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK currently has no capital market debt outstanding. However, TDK maintains long-term
corporate credit ratings of AA- and A1 from Standard &#038; Poor&#146;s and Moody&#146;s, respectively.
Furthermore, Standard &#038; Poor&#146;s gives TDK their highest short-term credit rating, A-1&#043; and TDK&#146;s
U.S. subsidiaries have been given the highest rating of P-1 by Moody&#146;s.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total assets amounted to &#165;808.0&nbsp;billion ($7,551&nbsp;million) as of March&nbsp;31, 2005, up &#165;37.7
billion from &#165;770.3&nbsp;billion at the previous fiscal year-end. As of March&nbsp;31, 2005, cash and cash
equivalents were &#165;251.5&nbsp;billion ($2,351&nbsp;million), &#165;24.3&nbsp;billion higher than &#165;227.2&nbsp;billion a year
ago. Trade receivables were &#165;148.0&nbsp;billion ($1,383&nbsp;million), &#165;9.7&nbsp;billion higher than &#165;138.3
billion a year ago. Property, plant and equipment increased &#165;8.1&nbsp;billion from &#165;208.9&nbsp;billion to
&#165;217.0&nbsp;billion ($2,028&nbsp;million) and noncurrent deferred income taxes decreased &#165;25.5&nbsp;billion from
&#165;34.1&nbsp;billion to &#165;8.6&nbsp;billion ($81&nbsp;million).
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities decreased &#165;27.0&nbsp;billion from &#165;190.8&nbsp;billion to &#165;163.8&nbsp;billion ($1,531
million). Trade payables rose &#165;2.2&nbsp;billion from &#165;59.9&nbsp;billion to &#165;62.1&nbsp;billion ($580&nbsp;million), and
income taxes payables increased &#165;14.6&nbsp;billion from &#165;4.7&nbsp;billion to &#165;19.3&nbsp;billion ($180&nbsp;million).
However, retirement and severance benefits declined &#165;44.7&nbsp;billion from &#165;73.5&nbsp;billion to &#165;28.8
billion ($270&nbsp;million) due to the transfer of the substitutional portion of EPF liabilities and
changes to the pension system. Accrued expenses decreased &#165;2.4&nbsp;billion from &#165;33.4&nbsp;billion to &#165;31.0
billion ($290&nbsp;million).
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total stockholders&#146; equity increased &#165;62.9&nbsp;billion from &#165;576.2&nbsp;billion to &#165;639.1&nbsp;billion
($5,973&nbsp;million). Retained earnings increased &#165;24.8&nbsp;billion from &#165;560.8&nbsp;billion to &#165;585.6&nbsp;billion
($5,472&nbsp;million) and accumulated other comprehensive loss decreased &#165;38.7&nbsp;billion from &#165;90.4
billion to &#165;51.7&nbsp;billion ($483&nbsp;million).
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total assets amounted to &#165;770.3&nbsp;billion as of March&nbsp;31, 2004, up &#165;23.0&nbsp;billion from &#165;747.3
billion at the previous fiscal year-end. As of March&nbsp;31, 2004, cash and cash equivalents were
&#165;227.2&nbsp;billion, &#165;56.6&nbsp;billion higher than &#165;170.6&nbsp;billion a year ago. However, property, plant and
equipment decreased &#165;17.0&nbsp;billion to &#165;208.9&nbsp;billion from &#165;225.9&nbsp;billion, and noncurrent deferred
income taxes decreased &#165;9.8&nbsp;billion to &#165;34.1&nbsp;billion from &#165;43.9&nbsp;billion.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities increased &#165;0.7&nbsp;billion, from &#165;190.1&nbsp;billion to &#165;190.8&nbsp;billion. Trade
payables increased &#165;2.9&nbsp;billion, from &#165;57.0&nbsp;billion to &#165;59.9&nbsp;billion, accrued expenses increased
&#165;5.3&nbsp;billion from &#165;28.1&nbsp;billion to &#165;33.4&nbsp;billion, and income taxes payables increased &#165;3.6&nbsp;billion,
from &#165;1.1&nbsp;billion to &#165;4.7&nbsp;billion. Retirement and severance benefits decreased &#165;11.5&nbsp;billion, from
&#165;85.0&nbsp;billion to &#165;73.5&nbsp;billion.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total stockholders&#146; equity increased &#165;22.3&nbsp;billion, from &#165;553.9&nbsp;billion to &#165;576.2&nbsp;billion.
Retained earnings rose &#165;34.9&nbsp;billion, from &#165;525.9&nbsp;billion to &#165;560.8&nbsp;billion, while accumulated
other comprehensive loss rose &#165;11.6&nbsp;billion, from &#165;78.8&nbsp;billion to &#165;90.4&nbsp;billion.
</DIV>


<P align="center" style="font-size: 10pt"> - 35 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total assets amounted to &#165;747.3&nbsp;billion as of March&nbsp;31, 2003, down &#165;2.6&nbsp;billion from &#165;749.9
billion at the previous fiscal year-end. Among current assets, cash and cash equivalents increased
&#165;44.8&nbsp;billion, from &#165;125.8&nbsp;billion to &#165;170.6&nbsp;billion, while net trade receivables decreased &#165;2.8
billion, from &#165;142.8&nbsp;billion to &#165;140.0&nbsp;billion, and inventories were down &#165;17.2&nbsp;billion, from &#165;91.1
billion to &#165;73.9&nbsp;billion. And property, plant and equipment decreased &#165;39.7&nbsp;billion, from &#165;265.6
billion to &#165;225.9&nbsp;billion, as TDK reviewed capital expenditures.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities, meanwhile, increased &#165;28.7&nbsp;billion, from &#165;161.4&nbsp;billion to &#165;190.1&nbsp;billion.
Accrued expenses decreased &#165;7.6&nbsp;billion, from &#165;35.7&nbsp;billion to &#165;28.1&nbsp;billion due to the payment
during the year of retirement allowances to employees who applied for a special voluntary
retirement package offered as part of structural reforms implemented in fiscal 2002. Trade
payables increased &#165;4.4&nbsp;billion, from &#165;52.6&nbsp;billion to &#165;57.0&nbsp;billion, and retirement and severance
benefits increased &#165;35.0&nbsp;billion, from &#165;50.0&nbsp;billion to &#165;85.0&nbsp;billion.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total stockholders&#146; equity declined by a total of &#165;30.0&nbsp;billion, from &#165;583.9&nbsp;billion to &#165;553.9
billion. Accumulated other comprehensive loss rose &#165;34.8&nbsp;billion, from &#165;44.0&nbsp;billion to &#165;78.8
billion, due to a &#165;18.7&nbsp;billion rise in foreign currency translation adjustments and &#165;15.8&nbsp;billion
increase in minimum pension liability adjustments. Offsetting these increases to some extent was a
&#165;5.8&nbsp;billion rise in retained earnings, from &#165;520.1&nbsp;billion to &#165;525.9&nbsp;billion.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For a discussion of financial instruments, see Note 14 &#147;Risk Management Activities and
Derivative Financial Instruments&#148;, Note 15 &#147;Fair Value of Financial Instruments&#148; and Note 6
&#147;Short-Term and Long-Term Debt&#148; in Item&nbsp;17 &#147;Financial Statements&#148;.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C.&nbsp;Research and development, patents and licenses, etc.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;R&#038;D expenditures amounted to &#165;36.3&nbsp;billion ($340&nbsp;million), 5.5&nbsp;percent of net sales in fiscal
2005; &#165;32.9&nbsp;billion, 5.0&nbsp;percent of net sales in fiscal 2004; and &#165;30.1&nbsp;billion, 5.0&nbsp;percent of net
sales in fiscal 2003.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In its R&#038;D activities, the group continues to work on strengthening and expanding development
of new products that respond to diversification in the electronics market. In particular, the
group is concentrating on next-generation recording-related products, micro electronics modules for
mobile communications-related applications, and energy-efficient, environmentally friendly devices
based on materials and design technologies. Furthermore, the group is using its reservoir of
technologies to conduct efficient R&#038;D activities concentrating in three strategic areas: IT home
electronic appliances; high-speed and large-capacity networks and car electronics.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the electronic materials and components field, development themes include commercialization
of optimum ferrite materials for transformers and choke coils that possess both a high saturation
magnetic flux density and a low core loss, commercialization of 100Gbpsi GMR heads for HDDs,
development of next-generation magnetic recording technology and development of
high-frequency-related components for mobile communications applications. In the recording media &#038;
systems field, the group has made progress with research on next-generation DVD-related products,
including commercialization of Blu-ray discs. Furthermore, in EMC-related areas, which draw on
TDK&#146;s materials technologies, TDK is working toward the commercialization of products designed for
the increasingly higher frequencies used in electronic devices.
</DIV>


<P align="center" style="font-size: 10pt"> - 36 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;R&#038;D at TDK is conducted by the Materials R&#038;D Center, Advanced Process Technology Center,
Devices Development Center, Production Engineering Development Center, Materials Analysis Center,
Application Center, Silicon System Development Dept., New Business Development Dept. and the R&#038;D
functions of each operating group. Each facility is developing new products and technologies in
its respective area of responsibility. The Application Center devises the necessary application
technologies with the aim of keeping TDK in step with market trends and customer needs. The
Materials R&#038;D Center is responsible for research in magnetic and dielectric materials that use
powder metallurgy. The Advanced Process Technology Center facilitates the use of cutting-edge
process technologies. The Devices Development Center conducts research in next-generation
recording and communications technologies as well as new devices.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In terms of overseas R&#038;D activities, TDK is conducting R&#038;D in collaboration with leading
universities in the U.S. and U.K., and overseas R&#038;D subsidiaries are making use of local
technological resources. In China, where TDK is aiming to establish and develop an operating base
capable of supporting growth, R&#038;D activities are being carried out in the area of electronic
components and materials. In addition, consolidated subsidiary Headway Technologies, Inc. is
developing next-generation HDD heads.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Although TDK has a variety of patents in Japan and other countries, and licenses from other
companies, it believes that expiration of any one of its patents or licenses or related group of
patents or licenses would not materially adversely affect its business activities. Total income
from patents and licenses was &#165;0.5&nbsp;billion ($5&nbsp;million) in fiscal 2005, &#165;0.1&nbsp;billion in fiscal 2004
and &#165;0.2&nbsp;billion in fiscal 2003. TDK paid &#165;9.3&nbsp;billion ($87&nbsp;million) in fiscal 2005, &#165;8.1&nbsp;billion
in fiscal 2004 and &#165;7.9&nbsp;billion in fiscal 2003 for patents and licenses, mainly royalties for
licenses related to the recording devices business. TDK does not believe that acquisition of new
proprietary patents or other companies&#146; patents would have a material effect on operating results
in the future.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;D.&nbsp;Trend information
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Economic environment</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The world economy is grappling with a host of risk factors such as surging crude oil prices
and raw materials costs, and fluctuations in the foreign exchange rates of major currencies. It is
also being influenced by the effects of developments in the U.S., which is burdened with
current-account and budget deficits, and in China, which continues to achieve a high rate of
growth. With 2005 also the trough of the current semiconductor cycle, there is a persistent sense
of uncertainty about the economic outlook.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Against this economic backdrop, from a medium-term perspective, the electronics industry is
expected to see the growth of digital home appliances, the convergence of information and
communications, as typified by the increasingly diverse functions offered by mobile phones, and the
greater use of electronics in motor vehicles. These trends are expected to result in continued
expansion in demand for the electronic components that the TDK develops, manufactures and sells.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Critical accounting policies</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Critical accounting policies are those that require application of management&#146;s most
difficult, subjective or complex judgments, often as a result of the need to make estimates about
the effect of matters that are inherently uncertain and may change in subsequent periods.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following is not intended to be a comprehensive list of all of TDK&#146;s accounting policies.
TDK&#146;s significant accounting policies are more fully described in Note 1 to the Consolidated
Financial Statements. In many cases, the accounting treatment of a particular transaction is
specifically dictated by U.S. generally accepted accounting principles, with no need for
management&#146;s judgment in their application. There are also areas in which management&#146;s judgment in
selecting an available alternative would not produce a materially different result.
</DIV>


<P align="center" style="font-size: 10pt"> - 37 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK has identified the following as critical accounting policies: impairment of long-lived
assets, valuation of inventories, goodwill and other intangible assets, pension benefit costs, and
deferred tax assets.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Impairment of long-lived assets</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of March&nbsp;31, 2005 and 2004, the aggregate of TDK&#146;s property, plant and equipment and
amortized intangible assets was &#165;229.6&nbsp;billion and &#165;223.1&nbsp;billion, which accounted for 28.4&nbsp;percent
and 29.0&nbsp;percent of the total assets, respectively. TDK believes that impairment of long-lived
assets are critical to TDK&#146;s financial statements because the recoverability of the amounts or lack
thereof, could significantly affect its results of operations.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK&#146;s long-lived assets and certain identifiable intangibles are reviewed for impairment when
events or changes in circumstances indicate that the carrying amount of an asset may not be
recoverable. This review is performed using estimates of future cash flows. If the carrying
amount of the asset is considered to be impaired, an impairment charge is recorded for the amount
by which the carrying value of an asset exceeds its fair value. Management believes that the
estimates of future cash flows and fair values are reasonable; however, changes in estimates
resulting in lower future cash flows and fair value due to unforeseen changes in business
assumptions could negatively affect the valuation of those long-lived assets and significantly
affect TDK&#146;s financial position and results of operations. These unforeseen changes include a
possible further decline in demand and price for optical media products due to a shift in demand
from CD-Rs to DVD related products including Blu-ray discs. TDK makes investments with due
prudence, taking sufficiently into consideration the future profitability of products and the
recoverability of investments.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Valuation of inventories</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventories are stated at the lower of cost or market, with cost determined on the average
cost method. The carrying value of inventory is reduced for estimated obsolescence by the
difference between its cost and the estimated market value based upon assumptions about future
demand. TDK evaluates the inventory carrying value for potential excess and obsolete inventory
exposures by analyzing historical and anticipated demand. In addition, known and anticipated
engineering change orders are evaluated against on-hand quantities for their potential obsolescence
affects. As fluctuations in estimates, which become a standard in recognizing adjustments in the
carrying values of inventory for expected obsolescence, are influential to business results of TDK,
we conclude it as a critical accounting policy. If actual demand were to be substantially lower
than estimated, additional inventory adjustments for excess or obsolete inventory may be required,
which could have a material adverse effect on TDK&#146;s business, financial condition and results of
operations.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Regarding the appropriateness of estimates in the past, TDK does not take a method to assume
various scenarios, but a method to reconsider every quarter by comparing estimate and actual
results. For example, in the operation management of product sector with rapid development in
technological innovation such as the recording devices sector, TDK revises the estimates of
valuation of obsolete inventories arising from the timely response to customers&#146; demands for
high-efficiency products on a quarterly basis.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Goodwill and other intangible assets</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Goodwill and other intangible assets that are determined to have an indefinite life are not
amortized and are tested for impairment on an annual basis and between annual tests if an event
occurs or circumstances change that would more likely than not reduce the fair value of these
assets below their carrying amount. Fair value for these assets is determined using a discounted
cash flow analysis, which is based on an authorized business plan. Management believes that the
estimates of future cash flows and fair value are reasonable; however, changes in estimates
resulting in lower future cash flows and fair value due to unforeseen changes in business
assumptions could negatively affect the valuations.
</DIV>


<P align="center" style="font-size: 10pt"> - 38 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Pension benefit costs</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Employee pension benefit costs and obligations are dependent on assumptions used by actuaries
in calculating such amounts. These assumptions include discount rates, retirement rates and
mortality rates which are based upon current statistical data, as well as salary growth, long-term
return on plan assets and other factors. Actual results that differ from the assumptions are
accumulated and amortized over future periods and, therefore, generally affect TDK&#146;s recognized
expense and recorded obligation in future periods. While TDK believes that its assumptions used
are appropriate, differences in actual experience or changes in assumptions may affect TDK&#146;s
benefit obligations and future expense.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In preparing its financial statements for fiscal 2005, TDK established a discount rate of 2.1
percent and an expected long-term rate of return of 2.2&nbsp;percent on plan assets. In estimating the
discount rate, TDK uses available information about rates of return on long-term risk free
governmental and corporate bonds currently available and expected to be available during the period
to the maturity of the pension benefits. TDK established the expected long-term rate of return on
plan assets based on management&#146;s expectations in respect of the long-term returns of the various
plan asset categories in which it invests. Management developed expectations with respect to each
plan asset category based on actual historical returns and its current expectations for future
returns.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A decrease in the discount rate leads to an increase in actuarial pension benefit obligations
that could lead to an increase in net periodic pension cost through amortization of unrecognized
actuarial gain or losses. A 50 basis point decrease in the discount rate would increase the
projected benefit obligation by approximately 10&nbsp;percent.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;An increase in the expected return on plan assets may decrease net periodic pension cost in
the current year. For fiscal 2005, a 50 basis point decrease in the long-term rate of return would
increase net benefit cost by approximately &#165;0.7&nbsp;billion. However, the difference between the
expected return and the actual return on those assets could negatively affect net income in future
years.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Deferred tax assets</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK has significant deferred tax assets, which are subject to realizability assessment. In
assessing the realizability of deferred tax assets, management considers whether it is more likely
than not that some portion or all of the deferred tax assets will not be realized. The ultimate
realization of deferred tax assets is dependent upon the generation of future taxable income during
the periods in which those temporary differences become deductible. Management considers the
planned reversal of deferred tax liabilities, projected future taxable income, and tax planning
strategies in making this assessment. Based upon the level of historical taxable income and
projections for future taxable income over the periods in which the deferred tax assets are
deductible, management believes that it is more likely than not that all of the deferred tax assets
less valuation allowance, will be realized. However, in the event future projections for income
are not realized or are realized in lesser amounts, or in cases where management revises the
assessment of the potential for realization of deferred tax assets based on other factors, deferred
tax assets may be determined not to be realizable, which then would require TDK to increase a
valuation allowance against the deferred tax assets resulting in additional income tax expenses.
</DIV>


<P align="center" style="font-size: 10pt"> - 39 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>New accounting pronouncements</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>New
Accounting Standards</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In March&nbsp;2004, the Emerging Issues Task Force reached a consensus on Issue 03-1 (&#147;EITF 03-1&#148;),
&#147;The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments&#148;. EITF
03-1 provides guidance on other-than-temporary impairment models for marketable debt and equity
securities accounted for under Statement of Financial Accounting Standards No.&nbsp;115 (&#147;SFAS 115&#148;),
&#147;Accounting for Certain Investments in Debt and Equity Securities&#148;, and nonmarketable equity
securities accounted for under the cost method. The EITF developed a basic three-step model to
evaluate whether an investment is other-than-temporarily impaired. The FASB issued a FASB Staff
Position EITF 03-1-1 in September&nbsp;2004 which delayed the effective date of the recognition and
measurement provisions of EITF 03-1. The adoption of EITF 03-1 is not expected to have a material
effect on TDK&#146;s consolidated results of operations and financial position.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In December&nbsp;2004, the FASB issued Statement of Financial Accounting Standards No.&nbsp;123 (revised
2004), &#147;Share Based Payment&#148; (&#147;SFAS 123R&#148;). SFAS 123R is a revision of SFAS 123, &#147;Accounting for
Stock Based Compensation&#148;, and supersedes APB 25. SFAS 123R requires TDK to measure the cost of
employee services received in exchange for equity awards based on the grant date fair value of the
awards. The cost will be recognized as compensation expense over the vesting period of the awards.
In April&nbsp;2005, the Securities and Exchange Commission deferred the effective date of SFAS 123R to
the beginning of the first annual period after June&nbsp;15, 2005. TDK is currently evaluating the
effect that the adoption of SFAS 123R will have on TDK&#146;s consolidated financial position and
results of operations.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In November&nbsp;2004, the FASB issued Statement of Financial Accounting Standards No.&nbsp;151 (&#147;SFAS
151&#148;), &#147;Inventory Costs &#150; an amendment of Accounting Research Bulletin No.&nbsp;43 (&#147;ARB 43&#148;), Chapter
4&#148;. SFAS 151 amends the guidance in ARB 43, Chapter&nbsp;4, &#147;Inventory Pricing&#148;, to clarify the
accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted
material (spoilage). SFAS 151 requires that items such as idle facility expense, excessive
spoilage, double freight and rehandling costs be recognized as current-period charges regardless of
whether they meet the criterion of &#147;so abnormal&#148; as stated in ARB 43. In addition, SFAS 151
requires that allocation of fixed production overheads to the costs of conversion be based on the
normal capacity of the production facilities. SFAS 151 is effective for inventory costs incurred
in fiscal periods beginning after June&nbsp;15, 2005. TDK does not expect the adoption of SFAS 151 to
have a material effect on TDK&#146;s consolidated financial position and results of operations.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;E.&nbsp;Off-Balance Sheet Arrangements
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As part of its ongoing business, TDK does not conduct transactions with unconsolidated
entities or financial partnerships, such as entities often referred to as structured finance or
special purpose entities, which have been established for the purpose of facilitating off-balance
sheet arrangements or other limited purposes.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK has various pension plans covering its employees. The unfunded amount as of March&nbsp;31,
2005 was &#165;42.3&nbsp;billion ($396&nbsp;million). The unfunded amount decreased by &#165;47.7&nbsp;billion as compared
with last year mainly due to the transfer of the substitutional portion of EPF liabilities. As of
March&nbsp;31, 2005, &#165;28.8&nbsp;billion was accrued on the balance sheet as retirement and severance
benefits, &#165;44.7&nbsp;billion less than a year ago.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Regarding loans, TDK essentially uses group funds, based on a policy of, in principle, not
borrowing from banks or other outside sources. However, certain of TDK&#146;s overseas subsidiaries
have their own credit facilities based on commercial paper issuing programs, allowing them to raise
short-term funds should they be required.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Regarding TDK&#146;s capital expenditure plans, TDK&#146;s policy is to invest actively in targeted
strategic fields to drive growth. Capital expenditures will be funded using internally generated
funds.
</DIV>


<P align="center" style="font-size: 10pt"> - 40 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK is planning capital expenditures of &#165;65.0&nbsp;billion in fiscal 2006, primarily for the
expansion of production facilities and upgrading of facilities. Actual capital expenditures could
differ from this forecast as a result of factors such as shifts in technology, demand, prices,
competition, economic environments and foreign exchange rates.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;F.&nbsp;Tabular Disclosure of Contractual Obligations
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On March&nbsp;31, 2005, commitments outstanding for the purchase of property, plant and equipment
approximated &#165;12.3&nbsp;billion ($115&nbsp;million). TDK has entered into several purchase agreements with
certain suppliers whereby TDK is committed to purchase a minimum amount of raw materials to be used
in the manufacture of its products. Future minimum purchases remaining under the agreements
approximated &#165;3.8&nbsp;billion ($36&nbsp;million) at March&nbsp;31, 2005. Contingent liabilities for guarantees
of loans of TDK&#146;s employees and affiliates amounted to approximately &#165;6.3&nbsp;billion ($59&nbsp;million).
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Contractual obligations on March&nbsp;31, 2005 are summarized as follows:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="19" style="border-bottom: 1px solid #000000">Payments Due by Period (Yen in millions)</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Less than</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">1 to 3</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">3 to 5</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">After 5</TD>
</TR>

<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Total</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">1 year</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">years</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>

    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">years</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>

    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">years</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Contractual obligations:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Long-term debt</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">184</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">103</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">74</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Operating leases</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,808</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,355</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,830</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">900</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">723</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Purchase commitment
of raw materials</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,841</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,247</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">291</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">177</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">126</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Purchase commitment
of property, plant and
equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,292</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,292</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="21" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:75px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,125</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,997</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,195</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,084</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">849</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="21" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;G.&nbsp;Safe Harbor
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This report contains forward-looking statements, including projections, plans, policies,
management strategies, targets, schedules, understandings and evaluations, about TDK and its
subsidiaries that are not historical facts. These forward-looking statements are based on current
forecasts, estimates, assumptions, plans, beliefs and evaluations in light of information available
to management on the date of this report.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In preparing forecasts and estimates, TDK and its subsidiaries have used as their basis,
certain assumptions as necessary, in addition to confirmed historical facts. However, due to their
nature, there is no guarantee that these statements and assumptions will prove to be accurate in
the future. TDK therefore wishes to caution readers that these statements, facts and certain
assumptions contained in this report are subject to a number of risks and uncertainties and may
prove to be inaccurate.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The electronics markets in which TDK and its subsidiaries operate are highly susceptible to
rapid changes. Furthermore, TDK and its subsidiaries operate not only in Japan, but in many other
countries. As such, factors that can have significant effects on its results include, but are not
limited to, shifts in technology, demand, prices, competition, economic environments and foreign
exchange rates.
</DIV>


<P align="center" style="font-size: 10pt"> - 41 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left">
<A name="107"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U><B>Item&nbsp;6</B></U><B>. Directors, Senior Management and Employees</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A.&nbsp;Directors and senior management
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Directors, corporate officers and corporate auditors of TDK as of June&nbsp;29, 2005 and their
respective business experience are listed below.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Directors</U>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="88%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" colspan="3" style="border-bottom: 1px solid #000000">Name (Date of birth)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Position, responsibility and brief personal record</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left">Hajime Sawabe<BR></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Representative Director, President and CEO &#150; since June&nbsp;1998</DIV></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left">(Jan. 9, 1942)<BR></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">- Director of TDK since June&nbsp;1996</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left">Jiro Iwasaki<BR></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Director, Senior Vice President &#150; since June&nbsp;2002</DIV></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left">(Dec. 6, 1945)<BR></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">In charge of General Manager of Administration Group and Environment</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">- Director of TDK since June&nbsp;1996</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">- General Manager of Administration Group and Environment since June&nbsp;2002</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left">Shinji Yoko<BR></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Director, Senior Vice President &#150; since June&nbsp;2002</DIV></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left">(Jan. 2, 1948)<BR></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">In charge of General Manager of Electronic Components Sales
and Marketing Group</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">- Director of TDK since June&nbsp;1998</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">- Appointed Deputy General Manager of Electronic Components
Business Group, General Manager of High Frequency Devices
Division in April&nbsp;2000</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">- General Manager of Electronic Components Sales and Marketing Group since June&nbsp;2002</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left">Takeshi Nomura<BR></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Director, Senior Vice President &#150; since June&nbsp;2002</DIV></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left">(Mar. 8, 1952)<BR></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">In charge of General Manager of Ferrite and Magnet Products
Business Group</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">- Director of TDK since 1998</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">- Appointed General Manager of Materials Research Center,
General Manager of Intellectual Properties Center in July&nbsp;2002</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">- Appointed General Manager of Materials Research Center,
General Manager of Intellectual Properties Center, General
Manager of Information Technology Research Center and
Technology in July&nbsp;2003</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">- Appointed General Manager of Technology Group, General
Manager of Intellectual Properties Center and Technology in
January&nbsp;2004</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">- Appointed General Manager of Technology Group, General
Manager of Intellectual Properties Center, General Manager of
Devices Development Center and Technology in July&nbsp;2004</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">- General Manager of Ferrite and Magnet Products Business Group since April&nbsp;2005</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left" nowrap>Yasuhiro Hagihara<BR></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Director* &#150; since June&nbsp;2002</DIV></TD>
</TR>

<TR valign="bottom">
    <TD colspan="3" valign="top" align="left">(Oct. 19, 1937)<BR></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">- Admitted to the bar in Washington D.C., U.S.A. in April&nbsp;1971</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">- Elected Partner of Graham &#038; James L.L.P. in January&nbsp;1979</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">- Partner of Squire, Sanders &#038; Dempsey L.L.P. since July&nbsp;2000</DIV></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"> - 42 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="88%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" colspan="3" style="border-bottom: 1px solid #000000">Name (Date of birth)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Position, responsibility and brief personal record</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left" nowrap>Takehiro Kamigama<BR></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Director, Executive Vice President &#150; since June&nbsp;2004</DIV></TD>
</TR>



<TR valign="bottom">
    <TD colspan="3" valign="top" align="left">(Jan. 12, 1958)<BR></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">In charge of General Manager of Data Storage and Thin
Film Technology Components Business Group</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">- Appointed General Manager of Data Storage Components
Business Group in October&nbsp;2001</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">- Corporate Officer of TDK since June&nbsp;2002</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>

    <TD><DIV style="margin-left:30px; text-indent:-15px">- General Manager of Data Storage and Thin Film
Technology Components Business Group since April 2003</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">- Appointed Senior Vice President of TDK in June&nbsp;2003</DIV></TD>

</TR>

<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left">Seiji Enami<BR></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Director and CFO&#150; since June&nbsp;2005</DIV></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left">(Sep. 14, 1947)<BR></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">In charge of General Manager of Finance and Accounting
Department</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">- Appointed General Manager of Recording Media and
Systems Business Group Industrial Sales Department in
April&nbsp;2000</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">- General Manager of Finance and Accounting Department
since April&nbsp;2001</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">- CFO of TDK since June&nbsp;2004</DIV></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Corporate Officers</U>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="88%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Name (Date of birth)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Position, responsibility and brief personal record</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left">Kiyoshi Ito<BR></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Corporate Officer, Executive Vice President &#150; since June&nbsp;2004</DIV></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left">(May 28, 1944)<BR></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">In charge of General Manager of SCM Group and Production</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">- Appointed General Manager of Electronic Components
Business Group Capacitors Division in March&nbsp;1999</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">- Appointed Director of TDK in June&nbsp;2000</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">- Appointed General Manager of Circuit Devices Business
Group in October&nbsp;2001</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">- Appointed Corporate Officer, Senior Vice President of TDK
in June&nbsp;2002</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">- Appointed General Manager of Circuit Devices Business
Group, General Manager of Ceramic Material Products Division
in June&nbsp;2002</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">- General Manager of SCM Group and Production since April
2005</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left">Takaya Ishigaki<BR></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Corporate Officer, Senior Vice President &#150; since June&nbsp;2005</DIV></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left">(Apr. 10, 1953)<BR></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">In charge of General Manager of Circuit Devices Business
Group, Capacitor Group Senior Manager</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">- Appointed Deputy General Manager of Circuit Devices
Business Group, Capacitor Group Senior Manager, General
Manager of Multilayer Ceramics Manufacturing Department in
October&nbsp;2001</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">- Appointed Corporate Officer of TDK in June&nbsp;2003</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">- General Manager of Circuit Devices Business Group,
Capacitor Group Senior Manager since April&nbsp;2005</DIV></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"> - 43 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="88%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" colspan="3" style="border-bottom: 1px solid #000000">Name (Date of birth)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Position, responsibility and brief personal record</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left" nowrap>Minoru Takahashi<BR></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Corporate Officer, Senior Vice President &#150; since June&nbsp;2005</DIV></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left">(Feb. 12, 1948)<BR></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">In charge of General Manager of Technology Group, General
Manager of Devices Development Center and Technology,
Intellectual Properties</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">- Appointed General Manager of Sensors and Actuators
Business Division, General Manager of Business Promotions
Department in April&nbsp;2002</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">- Corporate Officer of TDK since June&nbsp;2003</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">- Appointed General Manager of Sensors and Actuators
Business Group in November&nbsp;2004</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">- General Manager of Technology Group, General Manager of
Devices Development Center and Technology, Intellectual
Properties since April&nbsp;2005</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left">Yukio Hirokawa<BR></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Corporate Officer &#150; since June&nbsp;2002</DIV></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left">(Feb. 19, 1947)<BR></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">In charge of General Manager of Network Devices Business
Group</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">- Appointed Associate Director, Electronic Components
Sales and Marketing Group East Japan Sales Department
Senior Manager in June&nbsp;2000</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">- Appointed Associate Director, CRM Group Strategic Sales
Department Senior Manager in April&nbsp;2001</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">- Appointed Associate Director, Deputy General Manager of
Network Devices Business Group in October&nbsp;2001</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">- General Manager of Network Devices Business Group since
January&nbsp;2002</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left" nowrap>Masatoshi Shikanai<BR></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Corporate Officer &#150; since June&nbsp;2002</DIV></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left">(Oct. 3, 1949)<BR></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">In charge of General Manager of Recording Media and
Solutions Business Group</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">- Appointed General Manager of Recording Media and
Systems Business Group Europe Division in April&nbsp;2000</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">- Appointed Deputy General Manager of Recording Media and
Systems Business Group in February&nbsp;2001</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">- General Manager of Recording Media and Solutions
Business Group since October&nbsp;2001</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left" nowrap>Michinori Katayama<BR></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Corporate Officer &#150; since June&nbsp;2002</DIV></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left">(Dec. 9, 1946)<BR></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">In charge of General Manager of Corporate Communications
Department</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">- General Manager of Corporate Communications Department
since January&nbsp;1999</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left">Kenryo Namba<BR></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Corporate Officer &#150; since June&nbsp;2002</DIV></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left">(Jan. 6, 1947)<BR></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">In charge of Deputy General Manager of Technology Group,
General Manager of Material Analysis Center and Organic
Materials</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">- Appointed General Manager of Corporate Research and
Development Center in April&nbsp;2001</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">- Appointed Deputy General Manager of Technology Group,
General Manager of Devices Development Center, General
Manager of Material Analysis Center in January&nbsp;2004</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">- Deputy General Manager of Technology Group, General
Manager of Material Analysis Center and Organic Materials
since July&nbsp;2004</DIV></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"> - 44 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="88%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Name (Date of birth)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Position, responsibility and brief personal record</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left">Raymond Leung<BR></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Corporate Officer &#150; since June&nbsp;2004</DIV></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left">(Apr. 18, 1956)<BR></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">In charge of General Manager of China Operation Group, Vice
Chairman of SAE Magnetics (H.K.) Ltd.</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">- Appointed President of SAE Magnetics (H.K.) Ltd. in
October&nbsp;2000</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">- Appointed Deputy General Manager of Data Storage and Thin
Film Technology Components Business Group in June&nbsp;2004</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">- General Manager of China Operation Group, Vice Chairman of
SAE Magnetics (H.K.) Ltd. since April&nbsp;2005</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left">Shunji Itakura<BR></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Corporate Officer &#150; since June&nbsp;2005</DIV></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left">(Nov. 15, 1947)<BR></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">In charge of General Manager of Display Business Department</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">- Appointed President of TDK (Malaysia) Sdn. Bhd. in January
1999</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">- General Manager of Display Business Department since April
2001</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left">Shiro Nomi<BR></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Corporate Officer &#150; since June&nbsp;2005</DIV></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left">(May 8, 1949)<BR></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">In charge of General Manager of Corporate Strategy Corporate
Planning Department</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">- Appointed General Manager of Corporate Planning Department
in October&nbsp;2000</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">- General Manager of Corporate Strategy Corporate Planning
Department since October&nbsp;2001</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left">Shinichi Araya<BR></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Corporate Officer &#150; since June&nbsp;2005</DIV></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left">(Mar. 7, 1952)<BR></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">In charge of Deputy General Manager of Circuit Devices
Business Group, Inductor Group Senior Manager</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">- Appointed General Manager of Mechatronics Division in
January&nbsp;1999</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">- Appointed General Manager of Mechatronics Division,
General Manager of Production Engineering Development
Department in April&nbsp;2000</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">- Appointed Deputy General Manager of Production Engineering
Development Center in April&nbsp;2001</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">- Appointed General Manager of Production Engineering
Development Department in October&nbsp;2001</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:30px; text-indent:-15px">- Deputy General Manager of Circuit Devices Business Group,
Inductor Group Senior Manager since April&nbsp;2002</DIV></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt"> - 45 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Corporate
Auditors</U>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="15%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="82%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Name (Date of birth)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Position, responsibility and brief personal record</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Takuma Otsuka<BR>
(Feb. 23, 1944)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Corporate Auditor &#150; since June&nbsp;2000<BR>
- Appointed Director of TDK in June&nbsp;1998</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Masaaki Miyoshi<BR>
(Sep. 3, 1947)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Corporate Auditor &#150; since June&nbsp;2003<BR>
- Appointed President of Korea TDK Co., Ltd. in July&nbsp;2000</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Kazutaka Kubota<BR>
(Oct. 11, 1942)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Corporate Auditor* &#150; since June&nbsp;2003<BR>
- Appointed Vice President of Asahi Bank, Ltd. in June&nbsp;2000<BR>
- Appointed President of Asahigin Research Institute, Ltd.<BR>
&nbsp;&nbsp;and Corporate Auditor of Saitama Railway Corporation in June
2002</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Kaoru Matsumoto<BR>
(Dec. 8, 1947)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Corporate Auditor* &#150; since June&nbsp;2003<BR>
- Registration as a Certified Public Accountant in March&nbsp;1976<BR>
- Establishment of Kaoru Matsumoto &#038; Co. since November&nbsp;1977</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Ryoichi Ohno<BR>
(Nov. 3, 1958)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Corporate Auditor* &#150; since June&nbsp;2004<BR>
- Registration as a U.S. Certified Public Accountant in<BR>
&nbsp;&nbsp;November&nbsp;1988<BR>
- Senior Vice President and Chief Financial Officer of The<BR>
&nbsp;&nbsp;Gibraltar Life Insurance Co., Ltd. and Finance Vice President<BR>
&nbsp;&nbsp;of Prudential Financial Inc. since September&nbsp;2001</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 5%"><U>Notes(*)</U>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 5%">&nbsp;&nbsp;All of TDK&#146;s Directors (except Yasuhiro Hagihara), Corporate Officers and Corporate
Auditors (except Kazutaka Kubota, Kaoru Matsumoto and Ryoichi Ohno) have been engaged on a
full-time basis.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All Directors and Corporate Auditors are elected by the general meeting of shareholders. The
term of office of Directors is one year. The current term of all Directors expires in June&nbsp;2006.
The term of office of Corporate Auditors is four years. The current
terms for Mr.&nbsp;Otsuka, Mr.
Miyoshi, Mr.&nbsp;Kubota, Mr.&nbsp;Matsumoto and Mr.&nbsp;Ohno expire in June&nbsp;2007.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There are no family relationships between any Director or Corporate Officer or Corporate
Auditor and any other Director or Corporate Officer or Corporate Auditor of TDK.
</DIV>

<P align="center" style="font-size: 10pt">- 46 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B.&nbsp;Compensation
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" nowrap align="left">(1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The aggregate direct remuneration, including bonuses but excluding retirement allowances,
paid by TDK during the years ended March&nbsp;31, 2005 and 2004 to all Directors and Corporate
Auditors of TDK who served during each of those years was approximately &#165;254&nbsp;million ($2,374
thousand) and &#165;326&nbsp;million, respectively. During fiscal 2005, TDK&#146;s Directors and Corporate
Officers as of June&nbsp;29, 2005 received 662 and 461 stock acquisition rights as stock options,
respectively. Each right represents an option to purchase 100 shares of common stock of TDK.
Further details regarding the grants are listed below. For a discussion of other material
terms of the issuance of these stock acquisitions rights, please see Item&nbsp;6.E. &#147;Share
ownership&#148;. TDK does not disclose individual remuneration for each Director and Corporate
Auditor and aggregate direct remuneration for Corporate Officers except for compensation in
the form of stock acquisition rights, because such disclosure is not required under Japanese
regulations.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="19%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Number of stock acquisition rights were </TD>
</TR>

<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Name</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Position</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">granted individually during fiscal 2005</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left"><U>Directors</U></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Hajime Sawabe
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Representative Director, President
and CEO
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">187</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Jiro Iwasaki
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director, Senior Vice President
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">99</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Shinji Yoko
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director, Senior Vice President
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">92</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Takeshi Nomura
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director, Senior Vice President
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">92</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>

</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Yasuhiro Hagihara
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director (outside)
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">10</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Takehiro Kamigama
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director, Executive Vice President
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">137</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Seiji Enami
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director and CFO
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">45</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">662</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left"><U>Corporate Officers</U></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Kiyoshi Ito
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" valign="top">Corporate Officer, Executive
Vice President
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">129</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Takaya Ishigaki
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" valign="top">Corporate Officer, Senior
Vice President
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">59</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Minoru Takahashi
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" valign="top">Corporate Officer, Senior
Vice President
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">52</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Yukio Hirokawa
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Corporate Officer
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">45</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Masatoshi Shikanai
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"> Corporate Officer
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">45</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Michinori Katayama
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"> Corporate Officer
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">52</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Kenryo Namba
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Corporate Officer
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">45</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Raymond Leung
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Corporate Officer
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">10</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Shunji Itakura
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Corporate Officer
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">8</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Shiro Nomi
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Corporate Officer
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">8</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Shinichi Araya
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Corporate Officer
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">8</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">461</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">- 47 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">(2)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>When a Director or Corporate Auditor retires, a proposal to pay a lump sum retirement allowance
is submitted to the general meeting of shareholders for approval. After shareholder approval is
obtained, the amount of the retirement allowance for a Director or Corporate Auditor is
determined in the case of the Director by the Board of Directors, and in the case of the
Corporate Auditor by the Corporate Auditors, and generally reflects his/her prior positions, the
length of his/her service as a Director or Corporate Auditor and his/her contribution to TDK&#146;s
performance. The aggregate amount set aside as lump sum retirement allowance by TDK during
fiscal 2005 and fiscal 2004 for Directors and Corporate Auditors of
TDK totaled approximately &#165;14
million ($131 thousand) and &#165;13&nbsp;million, respectively. In addition, TDK introduced a Corporate
Officer system in June&nbsp;2002 to improve management efficiency and expedite decision-making. With
introduction of a Corporate Officer system (See Item&nbsp;6.C. &#147;Board practices&#148;), the remuneration
system at large was reviewed and a lump sum retirement allowance for Directors was abolished. As
decided by the Directors in office at the meeting of shareholders held on June&nbsp;27, 2002, the
conventional retirement reserve fund has been frozen, and all payments from the fund will require
the consent of a general meeting of shareholders, which vote shall take place at the time of the
Director&#146;s retirement.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK has a stock option plan for Directors, Corporate Officers and all other employees. See
Item&nbsp;6.E. &#147;Share ownership&#148;.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C.&nbsp;Board practices
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK&#146;s Articles of Incorporation provide for a Board of Directors of not more than ten members.
Directors are elected at the general meeting of shareholders for a term of office of one year and
may serve any number of consecutive terms. The Board of Directors has the ultimate responsibility
for the administration of the affairs of TDK.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Board of Directors may appoint from among the Directors referred to above one or more
Representative Directors. Each of the Representative Directors has the authority to represent TDK
generally in the conduct of its affairs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK introduced a Corporate Officer system in June&nbsp;2002 to improve management efficiency and
expedite decision-making. Corporate Officers are elected at the meeting of the Board of Directors
held immediately after the ordinary general meeting of shareholders, for a term of one year, but
may serve any number of terms upon appointment of the Board of Directors each time following the
expiration of the term. With respect to the expiration of the term of office of the respective
Corporate Officers, see Item&nbsp;6.B. &#147;Compensation&#148;. The Board of Directors may elect from among
Corporate Officers one or more Executive Vice Presidents, Senior Vice Presidents and Corporate
Senior Officers. Each of the Corporate Officers has the authority individually to operate
businesses of which he/she is in charge, under the control of the Board of Directors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Corporate Auditors of TDK, who are elected at the general meeting of shareholders and
whose number must not exceed five, are not required to be certified public accountants. One or
more Standing Corporate Auditors is required to be elected from among the Corporate Auditors. Each
Corporate Auditor has the statutory duty to examine the financial statements and business reports
to be submitted by the Board of Directors to the general meeting of shareholders and also to
supervise the administration by the Directors but is not entitled to vote. TDK established a Board
of Corporate Auditors (at least one of which must be from outside TDK) and the term of the
Corporate Auditors is four years.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition to the Corporate Auditors, TDK is required to appoint independent certified public
accountants. The primary duty of certified public accountants is to examine the financial
statements proposed to be submitted by the Board of Directors to the general meetings of
shareholders, and to report their opinion thereon to the Board of Corporate Auditors as well as to
the Board of Directors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There are no family relationships between any Director or Corporate Officer or Corporate
Auditor and any other Director or Corporate Officer or Corporate Auditor of TDK.
</DIV>

<P align="center" style="font-size: 10pt">- 48 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%"><U><I>Significant differences in corporate governance practices between TDK and U.S. listed
companies on the New York Stock Exchange</I></U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">1. Directors&#146; Independence
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the Commercial Code of Japan (the &#147;Code&#148;), TDK is a &#147;Company with Corporate Auditors,&#148;
meaning a company which has corporate auditors (<I>kansayaku</I>). The Law for Special Provisions for the
Commercial Code Concerning Audits, etc., of <I>Kabushiki-Kaisha </I>(stock corporation) (the &#147;Special
Audit Law&#148;) allows a &#147;Large Company&#148; (a company with stated capital of 500,000,000 yen or more or
with a total amount of 20,000,000,000 yen or more stated in the liability section of its latest
balance sheet) and a &#147;Deemed Large Company&#148; (a company with stated capital exceeding 100,000,000
yen with provision in its Article of Incorporation that it is subject to the special provisions
provided in Section&nbsp;2 of the Special Audit Law) to choose to be a &#147;Company with Committees,&#148;
meaning a company which has a nominating committee, audit committee, compensation committee and one
or more executive officers, without having corporate auditors. Although TDK is a Large Company,
TDK has not chosen to be a Company with Committees.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;While the Code requires companies to have a minimum of three directors, the Code does not
demand that companies have outside <FONT style="white-space: nowrap">director(s)</FONT> if a company is a Company with Corporate Auditors
within the meaning of the Code. The Code defines &#147;outside director&#148; as &#147;a non-managing director
who was not a director, executive officer or any other employee who managed the corporate affairs
of the company or any of its subsidiaries at any time in the past and who is not currently a
director or executive officer who manages the corporate affairs of any subsidiary, nor a manager or
any other type of employee of the company or any of its subsidiaries.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Special Audit Law requires Large Companies to have three or more corporate auditors and
provides that at least half or more of such corporate auditors must be outside corporate auditors.
The Special Audit Law defines &#147;outside corporate auditor&#148; as &#147;a corporate auditor who has not been
a director, executive officer, manager or other employee of such Large Company or any of its
subsidiaries at any time before his/her assumption of office as corporate auditor&#148;.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK is fully in compliance with the Code and Special Audit Law. TDK has seven directors and
one of them (Yasuhiro Hagihara) is an outside director. TDK also has five corporate auditors and
three of them (Kazutaka Kubota, Kaoru Matsumoto, and Ryoichi Ohno) are outside corporate auditors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">2. Definition of &#147;Independent Director&#148;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As mentioned above, TDK is not required to have outside directors by law, however, TDK
voluntarily elected one outside director (Yasuhiro Hagihara).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The meaning of &#147;outside director&#148; under the Code is not exactly the same as the meaning of
&#147;independent director&#148; provided in the New York Stock Exchange Corporate Governance Rules (the
&#147;Rules&#148;). The Code provides that an &#147;outside director&#148; is &#147;a non-managing director who was not a
director, executive officer or any other employee who managed the corporate affairs of the company
or any of its subsidiaries at any time in the past and who is not currently a director or executive
officer who manages the corporate affairs of any subsidiary, nor a manager or any other type of
employee of the company or any of its subsidiaries.&#148; Mr.&nbsp;Yasuhiro Hagihara is an outside director
within the meaning of the Code.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK, a Large Company within the meaning of the Special Audit Law, is required to have at least
three corporate auditors and at least a half or more of such corporate auditors must be outside
auditors.
</DIV>

<P align="center" style="font-size: 10pt">- 49 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The meaning of &#147;outside&#148; corporate auditors under the Special Audit Law is not exactly the
same as the meaning of &#147;independence&#148; provided in the Rules with respect to directors. The Special
Audit Law provides that an &#147;outside corporate auditor&#148; is &#147;a corporate auditor who has not been a
director, executive officer, manager or other employee of such Large Company or any of its
subsidiaries at any time before their assumption of office as corporate auditor&#148;.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Of the five TDK corporate auditors, three of them&#151;Mr.&nbsp;Kazutaka Kubota, Mr.&nbsp;Kaoru Matsumoto and
Mr.&nbsp;Ryoichi Ohno&#151;are outside corporate auditors within the meaning of the Special Audit Law.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">3. Regularly Scheduled Sessions without Management
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Japanese law does not require TDK to hold regular meetings without management as mentioned in
the Rules. As TDK is a Company with Corporate Auditors, each of its corporate auditors and the
board of directors monitor the management, and such monitoring by the corporate auditors and the
board of directors functions as TDK&#146;s management-check system.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">4. Nominating / Corporate Governance Committee
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under Japanese law, TDK, as a Company with Corporate Auditors, is not required to establish a
nominating committee. Thus, TDK currently does not have a nominating committee.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The directors and corporate auditors of TDK must be appointed at a shareholders&#146; meeting in
accordance with the Code. The Special Audit Law requires directors of a Large Company to obtain
the consent of the board of corporate auditors if the directors desire to submit to a shareholders&#146;
meeting a proposal concerning the appointment of a corporate auditor. Also, the board of corporate
auditors may, by resolution, demand that the directors include the appointment of a corporate
auditor in the agenda of a shareholders&#146; meeting or that the directors submit a proposal concerning
the appointment of a corporate auditor who is recommended by the board of corporate auditors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">5. Compensation Committee
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Japanese law does not require TDK, a Company with Corporate Auditors, to set up a compensation
committee. TDK has, however, voluntarily established a compensation advisory committee (the
&#147;CAC&#148;). The CAC is responsible for (i)&nbsp;investigating compensation levels for directors and
executive officers, (ii)&nbsp;reviewing compensation systems, performance evaluation standards and the
method of calculating compensation, and (iii)&nbsp;making proposals for compensation level for certain
individuals. The CAC is authorized to make and submit proposals to the board of directors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The CAC has three members: one outside director (Yasuhiro Hagihara), one non-outside director
(Jiro Iwasaki) and an outside expert on compensation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the case of TDK, a Company with Corporate Auditors, the Code requires the following matters
with respect to the amount of compensation for the directors to be determined by the resolution of
a shareholders&#146; meeting unless specifically provided in the Articles of Incorporation:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%">(1)&nbsp;With respect to any item of compensation in a definitive amount, such amount;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%">(2)&nbsp;With respect to any item of compensation not in a definitive amount, a concrete
method for the calculation thereof;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%">(3)&nbsp;With respect to non-monetary items as compensation, the specific contents
thereof.
</DIV>

<P align="center" style="font-size: 10pt">- 50 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">6. Audit Committee
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Japanese law does not require TDK, a Company with Corporate Auditors, to set up an audit
committee, and TDK therefore has not established an audit committee. TDK, however, has established
the board of corporate auditors pursuant to the Code and Special Audit Law (consisting of five
corporate auditors including three outside corporate auditors), which exempts TDK from Rule&nbsp;10A-3
of the Exchange Act requiring companies to have an audit committee. This exemption is specifically
provided by Rule&nbsp;10A-3(c)(3) of the Exchange Act and this rule applies to TDK because TDK meets all
the elements enumerated in the Rule:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(i)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>TDK has a board of corporate auditors (<I>kansayaku-kai</I>) established and selected
pursuant to the Code and the Special Audit Law expressly permitting such a board;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(ii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Code prohibits a corporate auditor from concurrently serving as a director
of the company and thus the Code requires the board of corporate auditors to be
separate from the board of directors;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(iii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The corporate auditors are elected by the shareholders at a shareholders&#146;
meeting under the Code and not by the management of TDK. The Code prohibits a
corporate auditor from concurrently serving as a manager or other employee of the
company, and therefore no executive officer of TDK is a member of the board of
corporate auditors;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(iv)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Code prohibits a corporate auditor from serving as a director, manager or
other employee of the company or any of its subsidiaries, or as an executive officer of
any subsidiary of the company. The Special Audit Law prohibits a corporate auditor of
a Large Company from concurrently serving as a director, executive officer, manager or
other employee of any of its consolidated subsidiaries. The Special Audit Law requires
a Large Company to have three or more corporate auditors, at least half or more of whom
must be a person who has not been a director, executive officer, manager or other
employee of such Large Company or any of its subsidiaries at any time before their
assumption of office as corporate auditor. As such, the Code and the Special Audit Law
provide for the standards for independence of the board of corporate auditors from the
management of TDK;</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">- 51 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(v)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Special Audit Law provides that an accounting auditor (<I>kaikei kansanin</I>) must be
appointed at a shareholders&#146; meeting; however, it also provides that, in order to submit
a proposal concerning an appointment of an accounting auditor to a shareholders&#146; meeting,
the directors must obtain the consent of the board of corporate auditors and that the
board of corporate auditors may, by resolution, demand that the directors include the
appointment of an accounting auditor in the agenda of a shareholders&#146; meeting or demand
that the directors submit a proposal concerning the appointment of a certain accounting
auditor who is recommended by the board of corporate auditors. The Special Audit Law
provides that the board of corporate auditors may, by resolution, dismiss an accounting
auditor for causes enumerated in the Special Audit Law such as breach of his or her
duties. The Special Audit Law also provides that in order to submit a proposal
concerning a dismissal of an accounting auditor to a shareholders&#146; meeting, the directors
must obtain the consent of the board of corporate auditors and that the board of
corporate auditors may, by resolution, demand that the directors include the dismissal of
a certain accounting auditor in the agenda of a shareholders&#146; meeting. The board of
corporate auditors may audit in their own right if it believes that the manner or result
of an audit by the accounting auditors is not reasonable. To this end, a corporate
auditor may, if necessary for the performance of his/her duties, request the accounting
auditors to provide a report on their duties. Further, it is also provided that the
accounting auditors must submit an audit report directly to the board of corporate
auditors and the corporate auditors may demand the accounting auditors to provide an
explanation with respect to their audit report. As such, in accordance with the Special
Audit Law, the board of corporate auditors of TDK is responsible, to the extent permitted
by law, for the appointment, retention and supervision of the work of a registered public
accounting firm engaged for the purpose of preparing or issuing an audit report or
performing other audit, review or attest services for TDK; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(vi)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Under Japanese law, the establishment of the procedures for the receipt,
retention, and treatment of complaints and the confidential, anonymous submission by
employees is a responsibility of the board of directors, not the corporate auditors or
the board of corporate auditors, and thus, the board of directors of TDK has
established such procedures. Each corporate auditor of TDK may, however, investigate
the status of such procedures at any time and state his/her opinion at a meeting of the
board of directors if he/she considers it necessary. Each corporate auditor of TDK has
the authority to engage independent counsel and other advisers if such engagement is
necessary to carry out his/her duties. Each corporate auditor may require TDK to pay
any and all expenses necessary for carrying out of his/her duties, including
compensation of any advisers employed by him/her and ordinary administrative expenses.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As discussed above, TDK has established a board of corporate auditors pursuant to the Code and
Special Audit Law (consisting of five corporate auditors including three outside corporate
auditors), and therefore does not have an audit committee.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">7. Corporate Governance Guidelines
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Japanese law does not require TDK to either adopt or disclose corporate governance guidelines,
and thus TDK has not established such guidelines.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">8. Code of Business Conduct and Ethics
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Although Japanese law does not require TDK to adopt or disclose a code of business conduct and
ethics, TDK has voluntarily adopted and disclosed one. See Item&nbsp;16B. &#147;Code of Ethics&#148;.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">9.&nbsp;Significant Differences in Corporate Governance Practices between TDK and U.S. Companies under
NYSE Listing Standards
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This &#147;TDK corporate governance practice&#148; satisfies the disclosure requirement.
</DIV>

<P align="center" style="font-size: 10pt">- 52 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%"><U><I>New Corporation Code</I></U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Corporation Code (<I>Kaisha-ho</I>) was passed by the Japanese Diet in June&nbsp;2005. The
Corporation Code will integrate into a single code currently effective legislation regarding
companies, including Chapters 2, 3 and 4 of the Commercial Code, the Limited Liability Company
(<I>Yugen-Kaisha</I>) Law and the Law for Special Provisions for the Commercial Code concerning Audits,
etc. of Joint Stock Corporations (<I>Kabushiki-Kaisha</I>). In addition, the Corporation Code will
significantly change traditional concepts and systems under the currently effective Commercial Code
and other laws in many respects. Accordingly, the statements contained in this Report, including,
but not limited to, the statements in Item&nbsp;10 as well as in <I>Significant differences in corporate
governance practices between TDK and U.S. listed companies on the New York Stock Exchange </I>of Item
6.C. may be subject to change once the Corporation Code becomes effective. Before the Corporation
Code can become effective, it must first be officially promulgated. Following promulgation, the
effective date will be determined by cabinet order, which in any event must be within eighteen
months after the date of promulgation. Although the Corporation Code was promulgated on July&nbsp;26,
2005, the cabinet order has not been issued yet. It is generally anticipated, however, that the
effective date of the Corporation Code will be on or after April&nbsp;1, 2006. Among many other
changes, one of the changes which may adversely affect shareholders&#146; rights is that under the
Corporation Code, the strict liability standard currently imposed on directors in many instances
(e.g., conflict of interest transactions) will be changed to a negligence standard.
</DIV>

<P align="center" style="font-size: 10pt">- 53 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">D. Employees
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table lists the number of TDK full-time employees as of March&nbsp;31, 2005, 2004 and
2003.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" >As of March 31, 2005</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Japan</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Overseas</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Total</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Electronic materials and components</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,938</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,112</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33,050</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Recording media and systems</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,128</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,465</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,593</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Corporate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,436</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,472</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,502</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27,613</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37,115</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center">As of March 31, 2004</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Japan</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Overseas</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Total</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Electronic materials and components</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,147</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,204</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32,351</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Recording media and systems</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,173</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,734</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,907</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Corporate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,524</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,546</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,844</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,960</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36,804</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" >As of March 31, 2003</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Japan</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Overseas</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Total</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Electronic materials and components</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,341</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,781</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27,122</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Recording media and systems</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,212</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,867</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,079</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Corporate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,477</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,504</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,030</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,675</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31,705</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK considers its employee relations to be excellent; there have been no significant strikes
or labor disputes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All full-time employees in Japan, except management and certain other personnel, must become
union members. Approximately 80&nbsp;percent of full-time employees of TDK are members of the TDK Labor
Union, which is affiliated with <U>ZENKIN RENGO</U>. About 51&nbsp;percent of the full-time employees
of TDK and its domestic subsidiaries are members of unions affiliated with <U>ZENKIN RENGO</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As is customary in Japan, TDK negotiates with the TDK Labor Union for annual wage increases,
and twice a year for bonuses. TDK also renews the terms and conditions of labor contracts, other
than those relating to wage and bonuses, every year.
</DIV>


<P align="center" style="font-size: 10pt">- 54 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">E. Share ownership
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table lists the number of shares (which exclude shares underlying stock
acquisition rights) and shares underlying stock acquisition rights owned by the Directors,
Corporate Officers and Corporate Auditors of TDK as of June&nbsp;29, 2005. The total number of shares
held is 21,500, and the total number of share underlying acquisition rights held is 360,300, as
shown below, and these numbers constituted 0.3% of all outstanding shares.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="35%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">

<TD nowrap align="center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Number of</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Number of shares underlying</TD>
</TR>


<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Name</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Position</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">shares</TD>
    <TD>&nbsp;</TD>
<TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">stock acquisition rights</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Hajime Sawabe
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Representative Director,
President and CEO
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">8,000</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">71,900</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Jiro Iwasaki
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director, Senior Vice President
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">2,000</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">35,700</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Shinji Yoko
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director, Senior Vice President
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">1,000</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">37,800</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Takeshi Nomura
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director, Senior Vice President
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">1,000</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">37,800</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Yasuhiro Hagihara
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director (outside)
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">0</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">3,500</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Takehiro Kamigama
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director, Executive Vice President
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">800</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">32,000</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Seiji Enami
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director and CFO
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">1,100</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">7,100</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Kiyoshi Ito
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Corporate Officer, Executive Vice President
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">1,000</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">34,100</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Takaya Ishigaki
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Corporate Officer, Senior Vice President
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">300</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">12,200</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Minoru Takahashi
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Corporate Officer, Senior Vice President
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">200</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">12,600</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Yukio Hirokawa
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Corporate Officer
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">1,300</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">16,800</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Masatoshi Shikanai
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Corporate Officer
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">300</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">14,900</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Michinori Katayama
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Corporate Officer
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">500</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">14,300</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Kenryo Namba
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Corporate Officer
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">2,000</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">16,100</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Raymond Leung
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Corporate Officer
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">0</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">1,000</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Shunji Itakura
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Corporate Officer
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">0</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">3,700</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Shiro Nomi
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Corporate Officer
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">0</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">3,200</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Shinichi Araya
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Corporate Officer
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">0</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">3,200</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Takuma Otsuka
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Full-time Corporate Auditor
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">1,000</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="0" align="right" valign="top">&#151;
</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Masaaki Miyoshi
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Full-time Corporate Auditor
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">1,000</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">2,400</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Kazutaka Kubota
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Corporate Auditor (outside)
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">0</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="0" align="right" valign="top">&#151;
</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Kaoru Matsumoto
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Corporate Auditor (outside)
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">0</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="0" align="right" valign="top">&#151;
</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Ryoichi Ohno
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Corporate Auditor (outside)
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" style="border-bottom: 1px solid #000000">0</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="0" align="right" valign="top" style="border-bottom: 1px solid #000000">&#151;
</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">21,500</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">360,300</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">- 55 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Stock option plans</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK obtained approval of the Ordinary General Meeting of Shareholders held on June&nbsp;29, 2005
regarding the issuance of stock acquisition rights as stock options for a stock-linked compensation
plan (the Stock Acquisition Rights) to Board members and Corporate Officers, pursuant to Articles
280-20 and 280-21 of the Japanese Commercial Code. Upon approval, the Board of Directors adopted
resolutions to issue at no charge an aggregate of 246 Stock Acquisition Rights, each representing a
stock option to purchase 100 shares of common stock of TDK, to the 17 Directors and Corporate
Officers. The Stock Acquisition Rights are exercisable during the period from July&nbsp;1, 2005 to June
30, 2025. The amount to be paid by qualified persons upon the exercise of each Stock Acquisition
Rights is set at &#165;1 per share of common stock, which is subject to an adjustment in certain events,
including but not limited to a stock split, stock dividend and issue of new shares at a price less
than the current market price of the shares of TDK.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK also obtained approval of the Ordinary General Meeting of Shareholders held on June&nbsp;29,
2005 regarding the issuance of stock acquisition rights as stock options (the Stock Acquisition
Rights) to select senior executives, pursuant to Articles 280-20 and 280-21 of the Japanese
Commercial Code. Upon approval, the Board of Directors adopted resolutions to issue at no charge
an aggregate of 906 Stock Acquisition Rights, each representing a stock option to purchase 100
shares of common stock of TDK, to the 172 select senior executives of TDK, and the Directors and
select senior executives of affiliates. The Stock Acquisition Rights are exercisable during the
period from August&nbsp;1, 2007 to July&nbsp;31, 2011.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK obtained approval of the Ordinary General Meeting of Shareholders held on June&nbsp;29, 2004
regarding the issuance of stock acquisition rights as stock options (the Stock Acquisition Rights)
to Board members, Corporate Officers and select squisition Rights, each representing a stock
option to purchase 100 shares of common stock of TDK, to the 187 Directors, Corporate Officers and
select senior executives of TDK, and the Directors and select senior executives of affiliates. The
Stock Acquisition Rights are exercisable during the period from August&nbsp;1, 2006 to July&nbsp;31, 2010.
The amount to be paid by qualified persons upon the exercise of each Stock Acquisition Rights is
set at &#165;8,147 per share of common stock, which was calculated by a formula approved by shareholders
at the said annual shareholders meeting and is subject to an adjustment in certain events,
including but not limited to a stock split, stock dividend and issue of new shares at a price less
than the current market price of the shares of TDK. The exercise price of each Stock Acquisition
Rights was equal to or greater than the fair market value of TDK&#146;s common stock on the date of
grant. To cover these options TDK purchased on the Tokyo Stock Exchange a total of 234,300 common
shares with an aggregate purchase price of &#165;1,656&nbsp;million from August&nbsp;9, 2004 through August&nbsp;16,
2004.
</DIV>

<P align="center" style="font-size: 10pt">- 56 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK obtained approval of the Ordinary General Meeting of Shareholders held on June&nbsp;27, 2003
regarding the issuance of the Stock Acquisition Rights to Board members, Corporate Officers and
select senior executives, pursuant to Articles 280-20 and 280-21 of the Japanese Commercial Code.
Upon approval, the Board of Directors adopted resolutions to issue at no charge an aggregate of
2,547 Stock Acquisition Rights, each representing a stock option to purchase 100 shares of common
stock of TDK, to the then 179 Directors, Corporate Officers and select senior executives of TDK,
and the Directors and select senior executives of affiliates. The Stock Acquisition Rights issued
on August&nbsp;7, 2003 are exercisable during the period from August&nbsp;1, 2005 to July&nbsp;31, 2009. The
amount to be paid by qualified persons upon the exercise of each Stock Acquisition Rights is set at
&#165;6,954 per share of common stock, which was calculated by a formula approved by shareholders at the
said annual shareholders meeting and is subject to an adjustment in certain events, including but
not limited to a stock split, stock dividend and issue of new shares at a price less than the
current market price of the shares of TDK. The exercise price of each Stock Acquisition Rights was
equal to or greater than the fair market value of TDK&#146;s common stock on the date of grant. To
cover these options TDK purchased on the Tokyo Stock Exchange a total of 260,000 common shares with
an aggregate purchase price of &#165;1,847&nbsp;million from August&nbsp;8, 2003 through August&nbsp;18, 2003.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK obtained approval of the Ordinary General Meeting of Shareholders held on June&nbsp;27, 2002
regarding the issuance of the Stock Acquisition Rights to Board members, Corporate Officers and
select senior executives, pursuant to Articles 280-20 and 280-21 of the Japanese Commercial Code,
as amended. Upon approval, the Board of Directors adopted resolutions to issue at no charge an
aggregate of 2,236 Stock Acquisition Rights, each representing a stock option to purchase 100
shares of common stock of TDK, to the then 197 Directors, Corporate Officers and select senior
executives of TDK, and the Directors and select senior executives of affiliates. The Stock
Acquisition Rights issued on August&nbsp;9, 2002 are exercisable during the period from August&nbsp;1, 2004
to July&nbsp;31, 2008. The amount to be paid by qualified persons upon the exercise of each Stock
Acquisition Rights is set at &#165;5,909 per share of common stock, which was calculated by a formula
approved by shareholders at the said annual shareholders meeting and is subject to an adjustment in
certain events, including but not limited to a stock split, stock dividend and issue of new shares
at a price less than the current market price of the shares of TDK. The exercise price of each
Stock Acquisition Rights was equal to or greater than the fair market value of TDK&#146;s common stock
on the date of grant. To cover these options TDK purchased on the Tokyo Stock Exchange a total of
223,600 common shares with an aggregate purchase price of &#165;1,209&nbsp;million from August&nbsp;12, 2002
through August&nbsp;19, 2002.

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Ordinary General Meeting of Shareholders held on June&nbsp;28, 2001 approved to implement TDK&#146;s
stock option plan for Directors and certain employees of TDK, and to purchase TDK&#146;s own shares for
transfer to them under the plan, pursuant to Article&nbsp;210-2 of the Japanese Commercial Code. Stock
options (rights to purchase common shares) were provided to the then 12 Directors on the Board and
184 associate directors and officials in amounts ranging from 500 to 10,000 common shares each,
exercisable from August&nbsp;1, 2003 to April&nbsp;30, 2007, at an exercise price of &#165;6,114 per share, which
was calculated by a formula approved by shareholders at the said annual shareholders meeting and is
subject to an adjustment in certain events, including but not limited to a stock split, stock
dividend and issue of new shares at price less than the current market price of the shares of TDK.
The exercise price of each Stock Acquisition Right was equal to or greater than the fair market
value of TDK&#146;s common stock on the date of grant. To cover these options TDK purchased on the
Tokyo Stock Exchange a total of 158,000 common shares with an aggregate purchase price of &#165;917
million from July&nbsp;2, 2001 through July&nbsp;23, 2001.
</DIV>

<P align="center" style="font-size: 10pt">- 57 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Ordinary General Meeting of Shareholders held on June&nbsp;29, 2000 approved to implement of
TDK&#146;s stock option plan for Directors and certain employees of TDK, and the purchase of TDK&#146;s own
shares for transfer to them under the plan, pursuant to Article&nbsp;210-2 of the Japanese Commercial
Code. Stock options (rights to purchase common shares) were provided to the then 13 Directors on
the Board and 191 associate directors and officials in amounts ranging from 500 to 10,000 common
shares each, exercisable from August&nbsp;1, 2002 to April&nbsp;30, 2006, at an exercise price of &#165;15,640 per
share, which was calculated by a formula approved by shareholders at the said annual shareholders
meeting and is subject to an adjustment in certain events, including but not limited to a stock
split, stock dividend and issue of new shares at price less than the current market price of the
shares of TDK. The exercise price of each Stock Acquisition Right was equal to or greater than the
fair market value of TDK&#146;s common stock on the date of grant. To cover these options TDK purchased
on the Tokyo Stock Exchange a total of 170,400 common shares with an aggregate purchase price of
&#165;2,665&nbsp;million from July&nbsp;3, 2000 through August&nbsp;2, 2000.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Employees (excluding Directors and Corporate Officers) Shareholding Association
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of March&nbsp;31, 2005, the number of members of the TDK Employees Shareholding Association
totaled 1,623. The Employees Shareholding Association accepts new memberships in March and
September of every year. Members are entitled to purchase shares of TDK, the maximum amount being
&#165;50,000 a month. In addition, members have received a monthly subsidy equivalent to 5% of the
purchase price of shares. The subsidy amounted to &#165;19&nbsp;million ($178 thousand) for fiscal 2005.
The total amount of TDK shares having voting rights owned by the TDK Employees Shareholding
Association was as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="24%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="45%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Title of class</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Identity of person or group</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Amount owned</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Percent of class</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Common stock
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" valign="top">TDK Employees Shareholding Association
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" valign="top">501,005&nbsp;shares
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">0.38 %</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">- 58 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left">
<A name="108"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U><B>Item&nbsp;7</B></U><B>. Major Shareholders and Related Party Transaction</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">A. Major shareholders
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The table below lists the number of TDK shares held by holders of 5% or more of TDK shares and
their percentage ownership as of March&nbsp;31, 2005:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Shares owned</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 0px solid #000000">Name of major shareholder</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 0px solid #000000">(in thousands)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 0px solid #000000">Percentage</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">The Master Trust Bank of Japan, Ltd. (Trust account)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,271</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">12.96</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Japan Trustee Services Bank, Ltd. (Trust account)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,869</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">10.41</TD>
    <TD nowrap>%</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Major shareholders do not have voting rights different from other shareholders, subject to the
limitation on exercise as set forth in &#147;Item&nbsp;10. B. Memorandum and Articles of Association &#150; Common
Stock &#150; Voting rights.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At March&nbsp;31, 2005, there were 1,784,560 registered ADRs outstanding and 374 registered
holders, of which 1,784,036 ADRs were held by 224 registered U.S. holders.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Depositary of ADRs of TDK is Citibank N.A. of New York.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK is not, directly or indirectly, owned or controlled by another corporation or by any
foreign government.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">B. Related party transaction
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Since the beginning of TDK&#146;s last full fiscal year, TDK has not transacted with, nor does TDK
currently plan to transact with, a related party, except for transactions among TDK.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">C. Interests of experts and counsel
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</DIV>

<P align="center" style="font-size: 10pt">- 59 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left">
<A name="109"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U><B>Item&nbsp;8</B></U><B>. Financial Information</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">A. Consolidated statements and other financial information
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Consolidated financial statements</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK&#146;s audited financial statements are included under Item&nbsp;17 &#147;Financial Statements&#148;. Except
for TDK&#146;s financial statements included under Item&nbsp;17, no other information in this Annual Report
has been audited by TDK&#146;s independent auditors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Refer to Consolidated Financial Statements and Notes to Consolidated Financial Statements (See
Item&nbsp;17).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Export sales</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Finished goods and materials sent out of Japan are mainly bound for consolidated subsidiaries
of TDK, and are not, therefore, recorded as exports on a consolidated basis. For this reason, the
proportion of exports to total net sales is not significant.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Legal proceedings</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There are no material pending legal proceedings, other than ordinary routine litigation
incidental to the business, to which TDK or any of its subsidiaries is a party or of which any of
their property is the subject.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Dividend policy</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Returning earnings to shareholders is one of TDK&#146;s highest management priorities. Therefore,
TDK&#146;s fundamental policy is to give consideration to a consistent increase in dividends based on
factors such as the return on equity (ROE), dividends as a percentage of equity (DOE)&nbsp;and TDK&#146;s
results of operations on a consolidated basis.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">B. Significant changes
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No significant change has occurred since the date of the annual consolidated financial
statements.
</DIV>


<P align="center" style="font-size: 10pt">- 60 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left">
<A name="110"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U><B>Item&nbsp;9</B></U><B>. The Offer and Listing</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A.&nbsp;Offer and listing details
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The primary market for TDK&#146;s shares of common stock (Common Stock) is the Tokyo Stock Exchange
(the &#147;TSE&#148;). The shares are traded on the First Section of that exchange and are also listed on
the Osaka Securities Exchange in Japan. In addition, TDK&#146;s shares are listed on the New York Stock
Exchange in the form of American Depositary Receipts (&#147;ADRs&#148;), on the Euronext Brussels Stock
Exchange in the form of Bearer Depositary Receipts, and on the London Stock Exchange in the form of
shares of TDK.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth for the periods indicated the reported high and low sales
prices of TDK&#146;s shares of common stock on the TSE and the reported high and low bid prices for American Depositary Shares
of which each represents one share of common stock, as reported by the New York Stock Exchange.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><I>U.S. market</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6">Yen per share of</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><I>price per American</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">Common stock (1)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><I>Depositary Share (2)</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">High</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Low</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><I>High</I></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><I>Low</I></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Annual highs and lows</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Year ended March&nbsp;31, 2001</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,200</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,600</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>157.50</I></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>54.00</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Year ended March&nbsp;31, 2002</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,670</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,800</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>69.00</I></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>40.00</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Year ended March&nbsp;31, 2003</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,380</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,060</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>57.00</I></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>32.95</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Year ended March&nbsp;31, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,350</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,810</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>77.86</I></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>32.40</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Year ended March&nbsp;31, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,630</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,790</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>80.10</I></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>61.40</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Quarterly highs and lows</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Year ended March&nbsp;31, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">1st quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,020</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,810</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>49.80</I></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>32.40</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">2nd quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,890</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,860</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>67.75</I></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>51.29</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">3rd quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,800</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,470</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>72.20</I></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>60.40</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">4th quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,350</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,020</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>77.86</I></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>66.01</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Year ended March&nbsp;31, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">1st quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,630</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,130</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>80.10</I></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>64.50</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">2nd quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,390</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,790</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>77.05</I></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>61.40</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">3rd quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,910</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,160</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>74.85</I></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>67.80</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">4th quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,880</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,050</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>75.93</I></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>68.40</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Year ended March&nbsp;31, 2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">1st quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,020</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,250</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>74.35</I></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>68.02</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Monthly highs and lows</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">February&nbsp;2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,630</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,230</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>72.85</I></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>69.37</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">March&nbsp;2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,880</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,300</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>75.93</I></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>68.40</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">April&nbsp;2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,850</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,250</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>72.50</I></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>68.02</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">May&nbsp;2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,310</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>74.27</I></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>68.22</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">June&nbsp;2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,020</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,510</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>74.35</I></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>68.54</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">July&nbsp;2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,970</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,480</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>71.98</I></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><I>67.05</I></TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Notes:
</DIV>


<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>As reported by the Tokyo Stock Exchange.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>As reported by the New York Stock Exchange.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt">- 61 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">






<DIV align="left" style="font-size: 10pt; margin-top: 12pt">B. Plan of distribution
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">C. Markets
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;See Item&nbsp;9.A. &#147;Offer and listing details&#148;.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">D. Selling shareholders
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">E. Dilution
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">F. Expenses of the issue
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</DIV>

<P align="center" style="font-size: 10pt">- 62 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left">
<A name="111"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U><B>Item&nbsp;10</B></U><B>. Additional Information</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A.&nbsp;Share capital
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B.&nbsp;Memorandum and articles of association
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Organization</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK is a joint stock corporation <I>(kabushiki kaisha) </I>incorporated in Japan under the Commercial
Code <I>(shoho) </I>of Japan. It is registered in the Commercial Register <I>(shogyo tokibo) </I>maintained by
the Tokyo Legal Affairs Bureau (Registration Number: 0199-01-034849).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Objects and purposes</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Article&nbsp;2 of the Articles of Incorporation of TDK provides that its purpose is to engage in
the following lines of business:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 6%"><B>&#149;</B> Manufacture and sale of electric machinery and appliances;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 6%"><B>&#149;</B> Manufacture and sale of magnetic materials such as ferrite and magnet;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 6%"><B>&#149;</B> Manufacture and sale of electronic machinery and appliances such as automatic inserting
machine for electronic components, automatic mounter for electronic components, and
electronic measuring equipment and of components thereof;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 6%"><B>&#149;</B> Manufacture and sale of recording media such as magnetic tape, floppy disk and optical disk
and of data writing, reading and storage equipment therefor;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 6%"><B>&#149;</B> Manufacture and sale of ceramic materials such as electricity inductive ceramics,
piezoelectric ceramics, semiconductor ceramics and electricity insulating ceramics;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 6%"><B>&#149;</B> Manufacture and sale of circuit components such as coil and transformers;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 6%"><B>&#149;</B> Manufacture and sale of semiconductors;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 6%"><B>&#149;</B> Manufacture and sale of stabilizing power supplies (units to stabilize electric current or
voltage);
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 6%"><B>&#149;</B> Manufacture and sale of machinery and appliances for medical use and medical instruments and
of components thereof;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 6%"><B>&#149;</B> Manufacture and sale of single crystal materials and each product applying the same;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 6%"><B>&#149;</B> Manufacture and sale of precious metals, precious stones, artificial precious stones and
each product applying or utilizing the same;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 6%"><B>&#149;</B> Manufacture and sale of outer wall materials of buildings and structures;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 6%"><B>&#149;</B> Designing and contracting of construction work;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 6%"><B>&#149;</B> Development, production, sale and grant of license of software;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 6%"><B>&#149;</B> Manufacture, sale and contracting of applied product, machinery and tools and equipment of
each of the foregoing; and
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 6%"><B>&#149;</B> Any and all businesses incidental or relating to each of the foregoing.
</DIV>

<P align="center" style="font-size: 10pt">- 63 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>With respect to directors, TDK&#146;s Articles of Incorporation, bylaws and associated internal
rules issued pursuant to the Articles provide in summary as follows;</U>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a director is not entitled to vote on a proposal or arrangement or contract in
which the director is materially interested;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the remuneration and retirement allowances for directors are determined at a
general meeting of shareholders;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the Board of Directors have authority to approve long-term borrowing of &#165;10
billion or more by resolution passed at a duly convened meeting of the Board of
Directors. The Representative Director is authorized by the Board of Directors to make
final decisions with respect to long-term borrowings in an amount less than &#165;10&nbsp;billion
and short-term borrowings (including issuance of commercial paper);</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(d)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>there are no provisions requiring the mandatory retirement of directors at a
specified age;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(e)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>share ownership is not required in order to be eligible to serve as a director.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Common Stock</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>General</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Set forth below is information relating to TDK&#146;s Common Stock, including brief summaries of
the relevant provisions of TDK&#146;s Articles of Incorporation and Share Handling Regulations, as
currently in effect, and of the Commercial Code of Japan and related legislation. The discussion
of the Commercial Code below reflects certain amendments to the Commercial Code, which became
effective on April&nbsp;1, 2003 and on September&nbsp;25, 2003.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In order to assert shareholders&#146; rights against TDK, a shareholder must have its name and
address registered on TDK&#146;s register of shareholders, in accordance with TDK&#146;s Share Handling
Regulations. The registered beneficial holder of deposited shares underlying the ADSs is the
Depositary for the ADSs. Accordingly, holders of ADSs will not be able directly to assert
shareholders&#146; rights to TDK.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Authorized capital</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Article&nbsp;5 of the Articles of Incorporation of TDK provides that the total number of shares
authorized to be issued by TDK is four hundred and eighty million (480,000,000) shares.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of March&nbsp;31, 2005, 133,189,659 shares of Common Stock without having any par value were
issued, including 945,072 shares of treasury stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The concept of &#147;par value&#148; of shares of capital stock is eliminated under the Commercial Code
of Japan. Thus, all shares of capital stock of TDK have no par value.
</DIV>

<P align="center" style="font-size: 10pt">- 64 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Dividends</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Articles of Incorporation of TDK provide that the accounts shall be closed on March&nbsp;31 of
each year and that dividends, if any, shall be paid to shareholders, beneficial shareholders and
pledgees of record as of the end of such day. After the close of the fiscal period, the Board of
Directors prepares, among other things, a proposed allocation of profits for dividends and other
purposes; this proposal is submitted to the Board of Corporate Auditors of TDK and to independent
certified public accountants and then submitted for approval to the ordinary general meeting of
shareholders, which is normally held in June each year. In addition to provisions for dividends,
if any, and for the legal reserve and other reserves, the allocation of profits customarily
includes a bonus to Directors. In addition to year-end dividends, the Board of Directors may by
its resolution declare a cash distribution pursuant to Article&nbsp;293-5 of the Commercial Code (an
&#147;interim dividend&#148;) to shareholders, beneficial shareholders and pledgees of record as of the end
of each September&nbsp;30, without shareholders&#146; approval, but subject to the limitations described
below.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Commercial Code provides that a company may not make any distribution of profit by way of
dividends or interim dividends for any fiscal period unless it has set aside in its legal reserve
an amount equal to at least one-tenth of the amount paid by way of appropriation of retained
earnings for such fiscal period or of the amount of such interim dividends until the aggregate
amount of additional paid-in capital and legal reserve equals to one-quarter of its stated capital.
Under the Commercial Code, TDK is permitted to distribute profits by way of year-end dividends out
of the excess of its net assets (as appearing on its non-consolidated balance sheet at the last
fiscal year end) over the sum of the following amounts:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 6%">(i)&nbsp;stated capital;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 6%">(ii)&nbsp;capital reserve and retained earnings resrve;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 6%">(iii)&nbsp;the amount of retained earnings reserve that is required to be set aside for the fiscal
year concerned; and
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 6%">(iv)&nbsp;such other amounts as are set out in ordinances promulgated by the Ministry of Justice.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the case of interim dividends, TDK may distribute dividends out of the sum of (1)&nbsp;the
excess of its net assets (as appearing on its non-consolidated balance sheet at the last fiscal
year end) over the aggregate of the amounts stated in (a)&nbsp;through (d)&nbsp;below, and (2)&nbsp;the aggregate
of the amounts stated in (e)&nbsp;through (g)&nbsp;below:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the total amount of the stated capital and reserves as of the end of the last
fiscal year;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the total amount of the retained earnings reserve set aside at the ordinary
general shareholders&#146; meeting for the last fiscal year and the retained earnings reserve
required to be set aside at the time of the cash distribution;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the total amount determined to be distributed as dividends or paid out from the
profits or incorporated into the stated capital at the ordinary general shareholders&#146;
meeting for the last fiscal year, and the total acquisition price of TDK&#146;s own shares
determined by resolution of the ordinary general shareholders&#146; meeting for the last
fiscal year and/ or resolution of the Board of Directors after the last fiscal year (see
&#147;<I>Acquisition of TDK&#146;s Own Shares</I>&#148;);</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(d)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>such other amounts as are setout in ordinances promulgated by the Ministry of
Justice;</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">- 65 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(e)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the balance of the amounts of capital reserve and retained earnings reserve that
have been reduced after tah last fiscal year, after the subtraction of the amounts used
out of such reduced amounts for refunds to shareholders and/or replenishment of capital
deficiencies;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(f)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the balance of the amount of capital that has been reduced after the last fiscal
year, after the subtraction of the amounts used out of such reduced amount for refunds
to shareholders, cancellation of shares, and/or replenishment of capital deficiencies;
and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(g)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>such other amounts as are set out in ordinances promulgated by the Ministry of
Justice.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Furthermore, if TDK reduces the amount of its stated capital, additional paid-in capital or
legal reserve after the end of the latest fiscal year, the amount so reduced, less the amount paid
to shareholders upon such reduction and certain other amounts, as well as such other amounts as are
set out in the ordinance of the Ministry of Justice will be added to the distributable amount as
interim dividends as described above.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK may not pay any interim dividends where there is a risk that the amount of TDK&#146;s net
assets appearing on the non-consolidated balance sheet at the end of the current fiscal year does
not exceed the aggregate of the amounts referred to in (i)&nbsp;through (v)&nbsp;above.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In Japan, the ex-dividend date and record date for dividends precede the date of determination
of the amount of the dividend. The price of shares generally goes ex-dividend on the third
business day prior to the record date.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Stock splits</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the Commercial Code, the Board of Directors of TDK may at any time make stock splits by
its resolution. Generally, upon stock splits, shareholders will not be required to exchange share
certificates held by them for new share certificated. In respect of shares deposited with the
Japan Securities Depository Center, Inc. (&#147;JASDEC&#148;), new shares resulting from the stock split will
automatically be deposited with JASDEC, and shareholders who directly possess share certificates
will receive additional certificates representing the additional shares resulting from the stock
split. Before a stock split, TDK must give public notice of the stock split, specifying the record
date for the stock split, not less than two weeks prior to the record date. In addition, promptly
after the stock split takes effect, TDK must send notice to each shareholder specifying the number
of entitled shares.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the Commercial Code, the Board of Directors of TDK may increase the authorized share
capital up to the number reflecting the rate of stock splits and amend the Articles of
Incorporation of TDK without the approval of a shareholders&#146; meeting.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>General meeting of shareholders</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The ordinary general meeting of shareholders of TDK for each fiscal year is normally held in
June in each year in Chuo-ku, Tokyo, Japan (address of principal executive office) or any adjacent
place thereto or in Ichikawa-shi, Chiba, Japan. In addition, TDK may hold an extraordinary general
meeting of shareholders whenever necessary by giving notice of convocation thereof at least two
weeks prior to the date set for the meeting.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notice of convocation of a shareholders&#146; meeting setting forth the place, time and purpose
thereof, must be mailed to each shareholder having voting rights (or, in the case of a non-resident
shareholder, to his or her standing proxy or mailing address in Japan) at least two weeks prior to
the date set for the meeting. Under the Commercial Code, such notice may be given to shareholders
by electronic means, subject to the consent by the relevant shareholders. The record date for an
ordinary general meeting of shareholders is March&nbsp;31 of each year.
</DIV>

<P align="center" style="font-size: 10pt">- 66 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any shareholder or group of shareholders holding at least 3&nbsp;percent of the total number of
voting rights for a period of six months or more may require the convocation of a general meeting
of shareholders for a particular purpose. Unless such shareholders&#146; meeting is convened promptly
or a convocation notice of a meeting which is to be held not later than eight weeks from the day of
such demand is dispatched, the requiring shareholder may, upon obtaining a court approval, convene
such shareholders&#146; meeting.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any shareholder or group of shareholders holding at least 300 voting rights or 1&nbsp;percent of
the total number of voting rights for a period of six months or more may propose a matter to be
considered at a general meeting of shareholders by submitting a written request to a Representative
Director at least eight weeks prior to the date set for such meeting.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Voting rights</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;So long as TDK maintains the unit share system (see <I>New &#147;Unit&#148; share system, below</I>) a holder
of shares constituting one or more whole units is entitled to one voting right per unit of shares
subject to the limitations on voting rights set forth in the following paragraph. Except as
otherwise provided by law or by the Articles of Incorporation, a resolution can be adopted at a
general meeting of shareholders by a majority of the number of voting rights of all the
shareholders represented at the meeting. The Commercial Code and TDK&#146;s Articles of Incorporation
provide, however, that the quorum for the election of Directors and Corporate Auditors shall not be
less than one-third of the total number of voting rights of all the shareholders. TDK&#146;s
shareholders are not entitled to cumulative voting in the election of Directors and Corporate
Auditors. A stock corporation (kabushiki kaisha) or limited liability company (yugen kaisha) that
holds shares of TDK stock may not exercise its voting rights with respect to such TDK shares if TDK
and its subsidiaries, either alone or together, hold shares or membership interests representing
more than 25% of the voting power of such corporate shareholder. Shareholders may exercise their
voting rights through proxies, provided that the proxies are also shareholders holding voting
rights. TDK&#146;s shareholders also may cast their votes in writing. Shareholders may also exercise
their voting rights by electronic means when the Board of Directors decides to permit such method
of exercising voting rights.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Commercial Code provides that in order to amend the Articles of Incorporation and in
certain other instances, including a reduction of stated capital, the removal of a Director or
Corporate Auditor, dissolution, merger or consolidation with a certain exception under which
shareholders&#146; resolution is not required, the transfer of the whole or an important part of the
business, the taking over of the whole of the business of any other corporation with a certain
exception under which shareholders resolution is not required, share exchange or share transfer for
the purpose of establishing 100 % parent-subsidiary relationships with a certain exception under
which shareholders resolution is not required, splitting of the corporation into two or more
corporations with a certain exception under which shareholders resolution is not required, or any
offering of new shares at a &#147;specially favorable&#148; price (or any offering of stock acquisition
rights to subscribe for or acquire shares of capital stock (&#147;stock acquisition rights&#148;) or bonds
with stock acquisition rights at a &#147;specially favorable&#148; exercise conditions) to any persons other
than shareholders, the quorum shall be one-third of the total voting rights of all the shareholders
and the approval by at least two-thirds of the voting rights of all the shareholders represented at
the meeting is required (the &#147;special shareholders resolutions&#148;).
</DIV>

<P align="center" style="font-size: 10pt">- 67 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Issue of additional shares and pre-emptive rights</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Holders of TDK&#146;s shares of Common Stock have no pre-emptive rights under its Articles of
Incorporation. Authorized but unissued shares may be issued at such times and upon such terms as
the Board of Directors determines, subject to the limitations as to the offering of new shares at a
&#147;specially favorable&#148; price mentioned under <I>&#147;Voting rights&#148; </I>above. The Board of Directors may,
however, determine that shareholders shall be given subscription rights regarding a particular
issue of new shares, in which case such rights must be given on uniform terms to all shareholders
as at a record date of which not less than two weeks&#146; prior public notice must be given. Each of
the shareholders to whom such rights are given must also be given notice of the expiry thereof at
least two weeks prior to the date on which such rights expire.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Rights to subscribe for new shares may be made generally transferable by the Board of
Directors. Whether TDK will make subscription rights generally transferable in future rights
offerings will depend upon the circumstances at the time of such offerings. If subscription rights
are not made generally transferable, transfers by a non-resident of Japan or a corporation
organized under the laws of a foreign country or whose principal office is located in a foreign
country will be enforceable against TDK and third parties only if TDK&#146;s prior written consent to
each such transfer is obtained. When such consent is necessary in the future for the transfer of
subscription rights, TDK intends to consent, on request, to all such transfers by such a
non-resident or foreign corporation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subject to certain requirements, TDK may issue stock acquisition rights by a resolution of the
Board of Directors. Holders of stock acquisition rights may exercise their rights to acquire a
certain number of shares within the exercise period as prescribed in the terms of their stock
acquisition rights. Upon exercise of stock acquisition rights, TDK will be obliged to issue the
relevant number of new shares or alternatively to transfer the necessary number of existing shares
held by it (treasury stock).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Liquidation rights</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the event of a liquidation of TDK, the assets remaining after payment of all debts and
liquidation expenses and taxes will be distributed among shareholders in proportion to the
respective numbers of shares of common stock held.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Record date</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;March&nbsp;31 is the record date for TDK&#146;s year-end dividends. So long as TDK maintains in its
Articles of Incorporation a provision for the unit of shares, the shareholders and beneficial
shareholders who are registered as the holders of one unit of shares or more in TDK&#146;s registers of
shareholders and/or beneficial shareholders at the end of each March&nbsp;31 are also entitled to
exercise shareholders&#146; rights at the ordinary general meeting of shareholders with respect to the
fiscal year ending on such March&nbsp;31. September&nbsp;30 is the record date for interim dividends. In
addition, TDK may set a record date for determining the shareholders and/or beneficial shareholders
entitled to other rights and for other purposes by giving at least two weeks&#146; prior public notice.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The price of shares generally goes ex-dividends or ex-rights on Japanese stock exchanges on
the third business day prior to a record date (or if the record date is not a business day, the
fourth business day prior thereto), for the purpose of dividends or rights offerings.
</DIV>

<P align="center" style="font-size: 10pt">- 68 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Acquisition of TDK&#146;s Own Shares</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK may acquire its own shares (i)&nbsp;by way of purchase on any Japanese stock exchange on which
its shares are listed or by way of tender offer (pursuant to a resolution of the Board of Directors
because the Articles of Incorporation of TDK were amended so as to allow TDK to purchase its own
shares in accordance with the revised Commercial Code), (ii)&nbsp;from a specific shareholder other than
its subsidiary (pursuant to a special resolution of an ordinary general meeting of shareholders),
or (iii)&nbsp;from its subsidiary (pursuant to resolution of the Board of Directors). In the case of
(ii)&nbsp;above, any other shareholder may make a request directly to a representative director in
writing, five days prior to the relevant shareholder&#146;s meeting, to include such other shareholder
as the seller of shares in the proposed purchase.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any such acquisition of TDK&#146;s shares must satisfy certain requirements, including that the
total amount of the purchase price may not exceed the amount of the retained earnings available for
annual dividend payments after taking into account any reduction of the stated capital, additional
paid-in capital or legal reserve (if such reduction is authorized by a resolution of the relevant
general meeting of shareholders) less the sum of the amount to be paid by way of appropriation of
retained earnings and the amount of retained earnings to be transferred to the sated capital in
respect of the relevant fiscal year pursuant to a resolution of such general meeting of
shareholders. In the case of purchase of TDK&#146;s own shares by it pursuant to resolution of the
Board of Directors mentioned in (i)&nbsp;or (iii)&nbsp;above, however, the total amount of the purchase price
of such shares may not exceed the amount distributable as interim dividends, as described in
&#147;<I>Dividends</I>&#148; above, less the amount of the interim dividends actually paid. However, if it is
anticipated that the net assets, as stated on its non-consolidated balance sheet at the end of the
fiscal year, will be less than the aggregate amount of items described in (i)&nbsp;through (v)&nbsp;in
&#147;<I>Dividend</I>s&#148; above, TDK may not purchase such shares.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK may hold the shares so acquired in compliance with the provisions of the Commercial Code
of Japan, and may generally dispose of or cancel such shares by a resolution of the Board of
Directors, subject to the limitation as to the offering of treasury shares at a &#147;specially
favorable&#148; price mentioned in &#147;<I>Voting Rights</I>&#148; above.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>New &#147;Unit&#148; share system</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A new unit share system called &#147;tangen-kabushiki&#148; has been introduced.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the Articles of Incorporation of TDK, 100 shares of TDK constitute one unit.
Although the number of shares constituting a new unit is included in the Articles of Incorporation,
any amendment to the Articles of Incorporation reducing (but not increasing) the number of shares
constituting a unit or eliminating the provisions for the unit of shares may be made by the
resolution of the Board of Directors rather than by the special shareholders resolution, which is
otherwise required for amending the Articles of Incorporation. The number of shares constituting
one new unit, however, cannot exceed 1,000 or one two-hundredth (1/200) of all issued shares.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>&#151;Voting rights under the new unit share system</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the new unit share system, shareholders shall have one voting right for each unit of
shares that they hold. Any number of shares less than a full unit will carry no voting rights.
</DIV>

<P align="center" style="font-size: 10pt">- 69 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>&#151;Share certificates for less than a unit</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unless TDK&#146;s Board of Directors adopts a resolution to eliminate the provision for the unit
shares from the Articles of Incorporation or the shareholders amend the Articles of Incorporation
by a special shareholders resolution to eliminate the provision not to issue share certificates for
less than a unit of shares, a share certificate for any number of shares less than a unit will in
general not be issued. As the transfer of shares normally requires the delivery of the share
certificates therefor, any fraction of a unit for which no share certificates are issued is not
transferable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>&#151;Repurchase or saleby TDK of shares constituting less than a unit</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A holder of shares constituting less than one unit may require TDK to purchase such shares, or
sell such number of shares which, if combined with the shares already held by such holder, would
constitute one unit of shares, at their market value in accordance with the provisions of the Share
Handling Regulations of TDK.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>&#151;Effect of the unit share system on holders of ADRs</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A holder who owns ADRs evidencing less than 100 ADSs will indirectly own less than a whole
unit of shares of Common Stock. Although, as discussed above, under the unit share system holders
of less than a unit have the right to require TDK to purchase their shares, holders of ADRs
evidencing ADSs that represent other than integral multiples of whole units are unable to withdraw
the underlying shares of Common Stock representing less than a unit and, therefore, are unable, as
a practical matter, to exercise the rights to require TDK to purchase such underlying shares unless
TDK&#146;s Articles of Incorporation are amended to eliminate the provision not to issue share
certificates for the numbers of shares less than a unit. As a result, access to the Japanese
markets by holders of ADRs through the withdrawal mechanism will not be available for dispositions
of shares of Common Stock in lots less than a unit. The unit share system does not affect the
transferability of ADSs, which may be transferred in lots of any size.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Reporting of substantial shareholdings</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Securities and Exchange Law of Japan and regulations thereunder require any person who has
become, beneficially and solely or jointly, a holder of more than 5&nbsp;percent of the total issued
shares of capital stock of a company listed on any Japanese stock exchange or whose shares are
traded on the over-the-counter market in Japan to file with the Director-General of a competent
Local Finance Bureau of the Ministry of Finance within five business days a report concerning such
shareholdings.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A similar report must also be filed in respect of any subsequent change of 1&nbsp;percent or more
in any such holding or any change in material matters set out in reports previously filed, with
certain exceptions. For this purpose, shares issuable to such person upon conversion of
convertible securities or exercise of share subscription warrants or stock acquisition rights are
taken into account in determining both the number of shares held by such holder and the issuer&#146;s
total issued share capital. Copies of such report must also be furnished to the issuer of such
shares and all Japanese stock exchanges on which the shares are listed or (in the case of shares
traded over-the-counter) the Japan Securities Dealers Association.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Except for the general limitation under Japanese anti-trust and anti-monopoly regulations
against holding of shares of capital stock of a Japanese corporation which leads or may lead to a
restraint of trade or monopoly, and except for general limitations under the Commercial Code or
TDK&#146;s Articles of Incorporation on the rights of shareholders applicable regardless of residence or
nationality, there is no limitation under Japanese laws and regulations applicable to TDK or under
its Articles of Incorporation on the rights of non-resident or foreign shareholders to hold the
shares of Common Stock of TDK or exercise voting rights thereon.
</DIV>

<P align="center" style="font-size: 10pt">- 70 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There is no provision in TDK&#146;s Articles of Incorporation that would have an effect of
delaying, deferring or preventing a change in control of TDK and that would operate only with
respect to merger, consolidation, acquisition or corporate restructuring involving TDK.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C.&nbsp;Material contracts
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All contracts entered into by TDK during the two years prior to the date of this annual report
were entered into in the ordinary course of business.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;D.&nbsp;Exchange controls
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Japanese Foreign Exchange Regulations
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Foreign Exchange and Foreign Trade Law of Japan, frequently referred to as the Foreign
Exchange Law, and the cabinet orders and ministerial ordinances thereunder govern the issuance of
shares by companies and the acquisition and holding of shares by &#147;exchange non-residents&#148; and
&#147;foreign investors&#148; under the Foreign Exchange Law.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Exchange non-residents are:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>individuals who do not reside in Japan; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>corporations whose principal offices are not located in Japan.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Generally, branches and other offices located within Japan of non-resident corporations are
regarded as exchange residents of Japan and branches and other offices of Japanese corporations
located outside Japan are regarded as exchange non-residents of Japan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Foreign investors are:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>individuals who do not reside in Japan;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>corporations which are organized under the laws of foreign
countries or whose principal offices are located outside
Japan; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>corporations in which more than 50% of the shares are held by
individuals who do not reside in Japan and/or corporations
which are organized under the laws of foreign countries or
whose principal offices are located outside Japan or a
majority of the officers (or officers having the power of
representation) are persons who do not reside in Japan.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Due to the amendments to the Foreign Exchange Law effective on April&nbsp;1, 1998, all aspects of
foreign exchange and foreign trade transactions that were previously subject to licensing or other
prior notifications or approvals, with minor exceptions, were changed to require only
post-transaction reporting. However, the Minister of Finance of Japan will have the power to
impose licensing requirements for transactions in limited circumstances.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Potential Consequences Resulting from an Acquisition of Listed Shares
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the event that a foreign investor acquires shares of a Japanese company listed on a
Japanese stock exchange or traded on an over-the-counter market in Japan (&#147;listed shares&#148;) and if
the foreign investor&#146;s direct and indirect total holdings are 10% or more of the issued shares of
the company after the acquisition, the foreign investor must file a report of the acquisition with
the Minister of Finance and any other competent Minister within 15&nbsp;days from and including the date
of such acquisition. However, in certain limited circumstances (including the case where the
acquisition of the shares reaches 10%), a prior notification of such an acquisition must be filed
with the Minister of Finance and any other competent Minister, who may then modify or prohibit the
proposed acquisition. The acquisition of shares by exchange non-residents as a result of stock
splits is not subject to any of the foregoing requirements.
</DIV>

<P align="center" style="font-size: 10pt">- 71 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Potential Consequences Resulting from Dividends and Proceeds of Sales
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the current Foreign Exchange Law, dividends paid on, and the proceeds of sales in Japan
of, shares held by exchange non-residents may, in general, be converted into foreign currency and
repatriated abroad.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Potential Consequences Resulting from the Sale of Securities to Exchange Non-Resident
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A Japanese resident is required to file a report with the Minister of Finance concerning the
transfer of securities for value exceeding &#165;100&nbsp;million to an exchange non-resident within 20&nbsp;days
of the date of the transfer. If an exchange resident issues or offers its securities for value of
&#165;1&nbsp;billion or more outside Japan, the exchange resident must file a report of the issuance or
offering of securities with the Minister of Finance within 20&nbsp;days of the date of the closing.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">American Depositary Shares
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The deposit of shares of Common Stock by a non-resident of Japan, the issuance of ADRs in
exchange therefor and the withdrawal of the underlying shares of Common Stock upon surrender of
ADRs are not subject to any formalities or restrictions referred to under &#147;Potential Consequences
Resulting from an Acquisition of Listed Shares&#148; above, except where, as a result of such deposit or
withdrawal, the aggregate number of shares held by the depositary (or its nominee) or the holder
surrendering ADRs, as the case may be, would be 10% or more of the total outstanding shares of
Common Stock, in which event the reporting to the Minister of Finance of Japan may be required as
outlined in the second sentence under the same heading.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Reporting of Substantial Shareholdings
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Securities and Exchange Law of Japan, as amended, requires any person who has become a
beneficial holder (including certain sole or joint holders) of more than five percent of the total
outstanding voting shares of a company listed on any Japanese stock exchange or traded on the
over-the-counter markets in Japan, to file with the Minister of Finance of Japan, within five
business days, a report concerning such share holdings, with certain exceptions in case the issuer
thereof is a foreign company. A similar report must also be made (with certain exceptions) if the
ratio of such holding subsequently changes by one percent or more. Copies of any such report must
also be furnished to the issuer of such shares and to all Japanese stock exchanges on which the
shares are listed or the Japan Securities Dealers Association in the case of over-the-counter
shares. For this purpose, shares issuable upon conversion of convertible securities or exercise of
stock acquisition rights are taken into account in determining both the number of shares held by
such holder and the issuer&#146;s total number of outstanding shares.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;E.&nbsp;Taxation
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Dividends, Stock Splits and Repurchase
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Generally, a non-resident of Japan or a non-Japanese corporation is subject to Japanese
withholding tax on dividends paid by Japanese corporations. Stock splits are not subject to
Japanese income tax. However, a transfer of retained earnings or legal reserve (but, in general,
not additional paid-in capital) to stated capital (whether made in connection with a stock split or
otherwise) is treated as a dividend payment to shareholders for Japanese tax purposes and is, in
general, subject to Japanese income tax.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The rate of Japanese withholding tax applicable to dividends on TDK&#146;s shares paid by TDK to
non-resident shareholders is 7&nbsp;percent for dividends paid on or before March&nbsp;31, 2008 and 15
percent thereafter, except for any individual shareholder who holds 5&nbsp;percent or more of the issued
shares, for whom the applicable rate is 20&nbsp;percent.
</DIV>

<P align="center" style="font-size: 10pt">- 72 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Japan has income tax treaties, conventions or agreements which generally provide that the
withholding tax rate may not exceed 15&nbsp;percent for portfolio investors with, among others,
Australia, Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Italy, Luxembourg, The
Netherlands, New Zealand, Norway, Singapore, Spain, Sweden, Switzerland, the United Kingdom and the
United States. In case of the Japan-U.S. tax treaty, however, as a result of a recent amendment,
the maximum withholding tax rate has been reduced, generally to 10&nbsp;percent for portfolio investors
effective from July&nbsp;1, 2004. Under Japanese tax law, the maximum rate applicable under the tax
treaties, conventions or agreements shall be applicable except when such maximum rate is more than
the Japanese statutory rate.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK, as a Japanese corporation, may be obligated to withhold a certain amount from any
payments by TDK to its shareholder that is a non-resident of Japan or a non-Japanese corporation.
Specifically, according to Articles 212-1 and 212-2 of the Income Tax Law of Japan, TDK has the
obligation to withhold the amount determined by the applicable tax rate from its dividends to such
of its shareholders.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Acquisition or Disposal of Shares or ADRs
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gains derived by a non-resident of Japan or a non-Japanese corporation from the sale outside
Japan of Shares or ADRs, or from the sale of Shares or ADRs within Japan by a non-resident of Japan
or a non-Japanese corporation not having a permanent establishment in Japan are in general not
subject to Japanese income tax.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Japanese inheritance and gift taxes at progressive rates may be payable by an individual who
has acquired Shares or ADRs as a legatee, heir or donee.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;F.&nbsp;Dividends and paying agents
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;G.&nbsp;Statements by experts
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;H.&nbsp;Documents on display
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;According to the Securities Exchange Act of 1934, as amended, TDK is subject to the
requirements of informational disclosure. TDK files various reports and other information,
including Form 20-F and Annual Reports, with the Securities Exchange Commission and the New York
Stock Exchange. These reports may be inspected at the following sites.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="97%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Securities Exchange Commission:</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;450 Fifth Street, N.W., Washington D.C. 20549</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">New York Stock Exchange:</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;20 Broad Street, New York, New York 10005</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Form 20-F is also available at the Electronic Data Gathering, Analysis, Retrieval system
(EDGAR)&nbsp;website maintained by the Securities Exchange Commission.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="97%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Securities Exchange Commission Home Page:</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;http://www.sec.gov</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;I.&nbsp;Subsidiary information
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</DIV>

<P align="center" style="font-size: 10pt">- 73 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left">
<A name="112"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U><B>Item&nbsp;11</B></U><B>. Quantitative and Qualitative Disclosures about Market Risk</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Market risk exposure</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK is subject to market risk associated with changes in stock prices, interest rates and
foreign currency exchange rates. Foreign exchange risk is considered as the primary market risk
exposure. TDK has a policy for the procedures and controls to manage market risk sensitive
instruments. In order to hedge interest rate risk and foreign currency exchange rate risk, TDK
uses derivative financial instruments. TDK does not hold or issue derivative financial instruments
for trading purposes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Foreign exchange and interest rate risk</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Forward exchange contracts and currency swap contracts have been entered into to hedge adverse
effects of foreign currency exchange rate fluctuations mainly on foreign-currency-denominated trade
receivables and foreign-currency-denominated forecasted transactions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At March&nbsp;31, 2005 and 2004, TDK and certain of its subsidiaries had forward exchange contracts
to sell and buy foreign currencies (principally U.S. dollars and Japanese Yen) and currency option
contracts for a contract amount of &#165;28,990&nbsp;million ($270,935 thousand) and &#165;34,978&nbsp;million,
respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK and one of its subsidiaries have currency swaps and interest rate and currency swaps with
certain financial institutions to limit their exposure to fluctuations in foreign exchange rates
and interest rates involved mainly with loans made by TDK to its subsidiaries in a total amount of
&#165;11,067&nbsp;million ($103,430 thousand) and &#165;12,605&nbsp;million at March&nbsp;31, 2005 and 2004, respectively.
These swaps require TDK and the subsidiary to pay principally euros and U.S. dollars and to receive
Japanese yen at a specified rate on specific dates. The remaining term of these swaps is one month
as of March&nbsp;31, 2005. The following table provides information about TDK&#146;s derivative instruments
related to foreign exchange risk as of March&nbsp;31, 2005 and 2004.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000">2004</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">(millions of yen)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Average</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">(millions of yen)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Average</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Contract</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Fair</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">contractual</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Contract</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Fair</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">contractual</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><B>Forward exchange contracts</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">amounts</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">value</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">rate</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">amounts</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">value</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">rate</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="23" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">To sell Malaysian Ringgit
/ receive USD</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">859</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.86</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">To sell USD / receive Yen</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,295</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(88</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">105.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,779</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">403</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">107.75</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">To sell CHF / receive Euro</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">54</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.54</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">4,349</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(88</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">18,638</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">396</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">(millions of yen)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Average</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">(millions of yen)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Average</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Contract</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Fair</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">contractual</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Contract</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Fair</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">contractual</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><B>Currency option contracts</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">amounts</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">value</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">rate</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">amounts</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">value</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">rate</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="23" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">To sell USD / receive Yen</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">23,803</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(354</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">105.10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">16,340</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">91</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">108.00</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">To sell USD / receive THB</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">838</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(12</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">39.07</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">24,641</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(366</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">16,340</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">91</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">(millions of yen)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Average</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">(millions of yen)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Average</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Contract</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Fair</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">contractual</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Contract</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Fair</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">contractual</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><B>Currency swap contracts</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">amounts</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">value</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">rate</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">amounts</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">value</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">rate</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="23" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">To receive Euro / pay GBP</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">2,041</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(10</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.69</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">3,910</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(35</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.68</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">To receive Yen / pay Euro</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,026</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(302</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">134.75</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,695</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">287</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">133.77</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">11,067</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(312</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">12,605</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">252</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<P align="center" style="font-size: 10pt">- 74 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK&#146;s exposure to market risk related to changes in interest rates relates primarily to
its debt securities. TDK has debt securities with fixed rates. TDK, to the extent possible, plans
to limit debt securities to short-term debt securities. TDK believes that the fair values of
interest rate sensitive instruments as of March&nbsp;31, 2005 and 2004, and potential, near-term losses
affecting future earnings, fair values, and/or cash flows from reasonable near-term changes in
interest rates are immaterial.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Stock price risk</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK&#146;s exposure to market risk involving changes in stock prices relates only to its equity
securities categorized as available-for-sale securities. TDK purchases equity securities for the
purpose of acquiring technological information and as part of its sales strategy, and not as a
means of investing surplus funds. The aggregate cost and fair value of these equity securities
were &#165;6.0&nbsp;billion ($56&nbsp;million) and &#165;7.0&nbsp;billion ($65&nbsp;million) as of March&nbsp;31, 2005, and &#165;2.8
billion and &#165;3.8&nbsp;billion as of March&nbsp;31, 2004, respectively. As of March&nbsp;31, 2005, these
securities mainly represented investments in companies in the transportation, communications and
electronic equipment industries, and the cost and fair value of these equity securities were &#165;5.6
billion ($53&nbsp;million) and &#165;6.5&nbsp;billion ($61&nbsp;million), respectively. As of March&nbsp;31, 2004, these
securities mainly represented investments in companies in the communications and electronic
equipment industries, and the cost and fair value of the equity securities were &#165;2.4&nbsp;billion and
&#165;3.3&nbsp;billion, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The information of equity securities include available-for-sale securities at March&nbsp;31, 2005
and 2004, is as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>

    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>

    <TD width="2%">&nbsp;</TD>

    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>

    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
<TD style="border-bottom: 1px solid #000000" nowrap align="center" colspan="13">2005</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>

<TD style="border-bottom: 1px solid #000000" nowrap align="center" colspan="13">2004</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="13" style="border-bottom: 1px solid #000000">Yen (Millions)</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="13" style="border-bottom: 1px solid #000000">Yen (Millions)</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="2">Gross</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="2">Gross</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="2">Gross</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="2">Gross</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="2">unrealized</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="2">unrealized</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="2">unrealized</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="2">unrealized</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="2">holding</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="2">holding</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="2">holding</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="2">holding</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Cost</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="2">gains</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="2">losses</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Fair value</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Cost</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="2">gains</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="2">losses</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Fair value</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD colspan="14" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>

</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">&#165;5,951</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,054</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;2,782&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,054</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,836</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD colspan="14" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="left" style="border-top: 3px double #000000">&nbsp;</TD>

</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left">
<A name="113"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U><B>Item&nbsp;12</B></U><B>. Description of Securities Other than Equity Securities</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A.&nbsp;Debt securities
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B.&nbsp;Warrants and rights
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C.&nbsp;Other securities
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;D.&nbsp;American depositary shares
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</DIV>


<P align="center" style="font-size: 10pt">- 75 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left">
<A name="114"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PART 2</B>
</DIV>

<DIV align="left">
<A name="115"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U><B>Item&nbsp;13</B></U><B>. Defaults, Dividend Arrearages and Delinquencies</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None.
</DIV>
<DIV align="left">
<A name="116"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U><B>Item&nbsp;14</B></U><B>. Material Modifications to the Rights of Security Holders and Use of Proceeds</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None.
</DIV>
<DIV align="left">
<A name="117"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U><B>Item&nbsp;15</B></U><B>. Controls and Procedures</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;Disclosure controls and procedures
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK&#146;s Chief Executive Officer and Chief Financial Officer, after evaluating the effectiveness
of its &#147;disclosure controls and procedures&#148; (as defined in Exchange Act Rules&nbsp;13a-15(e) and
15d-15(e)) as of March&nbsp;31, 2005 (the &#147;Evaluation Date&#148;), the end of the period covered by this
Annual Report, have concluded that, as of the Evaluation Date, TDK&#146;s disclosure controls and
procedures were adequate and effective and designed to ensure that material information relating to
TDK and its consolidated subsidiaries is made known to the Chief Executive Officer and the Chief
Financial Officer by others within TDK and its consolidated subsidiaries.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;Management&#146;s annual report on internal control over financial reporting
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This requirement was &#147;intentionally omitted pursuant to SEC Release No.&nbsp;33-8345 dated March&nbsp;2,
2005&#148;.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;Attestation report of the registered public accounting firm
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This requirement was &#147;intentionally omitted pursuant to SEC Release No.&nbsp;33-8345 dated March&nbsp;2,
2005&#148;.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;Changes in internal control over financial reporting
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There were no significant changes in TDK&#146;s internal control over financial reporting that
occurred during the period covered by this Annual Report that has materially affected, or is
reasonably likely to materially affect, the issuer&#146;s internal control over financial reporting.
</DIV>

<DIV align="left">
<A name="118"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U><B>Item&nbsp;16A</B></U><B>. Audit Committee Financial Expert</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The registrant, a foreign private issuer, has at least one &#147;audit committee financial expert&#148;
serving on its audit committee. TDK&#146;s board of auditors has determined that Ryoichi Ohno qualifies
as an &#147;audit committee financial experts&#148; as defined by the rules of SEC. Mr.&nbsp;Ohno is an outside
corporate auditor within the meaning of the Special Audit Law. See <I>Significant differences in
corporate governance practices between TDK and U.S. listed companies on the New York Stock Exchange</I>
in Item&nbsp;6.C. &#147;Board practices&#148;. Mr.&nbsp;Ohno was registered as a U.S. Certified Public Accountant in
1988 and elected as one of TDK&#146;s corporate auditors at an Ordinary General Meeting of Shareholders
held in June&nbsp;2004. See Item&nbsp;6.A. for additional information regarding Mr.&nbsp;Ohno.
</DIV>


<P align="center" style="font-size: 10pt"> - 76 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left">
<A name="119"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U><B>Item&nbsp;16B.</B></U> <B>Code of Ethics</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK has established a code of business ethics (&#147;TDK Code of Ethics&#148;) that applies to TDK&#146;s
corporate officers and all TDK employees and is actively pursuing to promote ethical business
practices on a worldwide basis. TDK amended the TDK Code of Ethics as of May&nbsp;25, 2005 to revise
section pertaining to the civil rights of its employees and to add a new section regarding
employment conditions. Both sections apply to TDK&#146;s corporate officers and all TDK employees.
Please see Sections&nbsp;2.2.3 and 2.2.4 of the TDK Code of Ethics. The TDK Business Ethics &#038; CSR
Committee (formally named &#147;TDK Business Ethics Committee&#148;) has been charged with the oversight of
the ethics program at TDK. It has built a global ethics framework which encompasses domestic and
overseas consolidated subsidiaries. Built into the framework is a direct communication means
called the &#147;helpline&#148; for employees to report matters relating to business ethics issues and offer
suggestions. The TDK Code of Ethics is attached as exhibit to this annual report. TDK has not
granted a waiver or implicit waiver from any provision of the TDK Code of Ethics in the most recent
fiscal year.
</DIV>

<DIV align="left">
<A name="120"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U><B>Item&nbsp;16C.</B></U> <B>Principal Accountant Fees and Services</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table discloses the aggregate fees accrued or paid to KPMG AZSA &#038; Co. and KPMG
International member firms for each of the last two fiscal years and briefly describes the services
performed:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 0px solid #000000">(Yen in millions)</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000">Year ended March 31</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">2005</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">2004</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Audit fees</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">323</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">265</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Audit-related fees</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Tax fees</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">211</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">169</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">All other fees</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">575</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">447</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Audit fees consist of fees for &#147;Audit Services&#148;. &#147;Audit Services&#148; are professional services
rendered by the Principal Auditor for the audit of TDK&#146;s annual financial statements and services
that are normally provided by the Principal Auditor in connection with statutory and regulatory
filings or engagements: (i)&nbsp;Services associated with statutory audits; and (ii)&nbsp;Services associated
with U.S. SEC registration statements or other periodic filings.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Audit-related fees consist of fees for &#147;Audit-Related Services&#148;. &#147;Audit-Related Services&#148; are
professional services relating to the Audit Services: (i)&nbsp;Audits of employee benefit plans; and
(ii)&nbsp;Sarbanes-Oxley Act related assistance service.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tax fees consist of fees for &#147;Tax Services&#148;: (i)&nbsp;Federal and local tax compliance; (ii)&nbsp;Review
of federal, local and international income, franchise, and other tax returns; (iii)&nbsp;Transfer
pricing documentation; and (iv)&nbsp;Domestic and foreign indirect taxes.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Audit and Non-Audit Services Pre-Approval Policy</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subject to the confirmation as stipulated below, no pre-approval of the Board of Directors, in
the context of the United States Sarbanes-Oxley Act of 2002 (&#147;Sarbox Act&#148;) or the U.S. SEC rules,
is required for any non-audit services rendered by any Non-Outside Auditor. Any contracts
involving such services shall be processed in the usual manner in accordance with the applicable
laws, in-house rules or any other regulations.
</DIV>


<P align="center" style="font-size: 10pt"> - 77 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">





<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%">Any person who wishes to retain a Non-Outside Auditor for non-audit services
(&#147;Retainer&#148;) is not allowed to do so unless both of the following conditions are met:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(i)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Retainer has received a letter of confirmation from such a public
accounting firm that the public accounting firm is neither an Outside Auditor nor a
person associated with the Outside Auditor; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(ii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Retainer has confirmed that such public accounting firm does not appear on
the list of persons associated with the Outside Auditor, which is contained in the
database system (&#147;Pre-Approval Database&#148;) within the TDK intranet system.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The foregoing letter of confirmation shall be regularly renewed at least once every 12&nbsp;months
and the manager of the Pre-Approval Database described in that Database shall update the list of
associated persons to reflect changes or modifications as reported by the Outside Auditor.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The types of services generally described in above explanation for audit fees, audit-related
fees and tax fees shall be pre-approved by the Board of Directors. Those services described are
provided for the sake of establishing general criteria as to the types of services requiring
pre-approval. The Board of Directors shall evaluate and determine whether or not to pre-approve
each application for such services.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK is prohibited from causing the Outside Auditor to provide, and the Outside Auditor is
prohibited from rendering such services generally described as follows: (i)&nbsp;Bookkeeping or other
services related to the accounting records or financial statements of the audit client; (ii)
Financial information systems design and implementation; (iii)&nbsp;Appraisal or valuation services,
fairness opinions or contribution-in-kind reports; (iv)&nbsp;Actuarial services; (v)&nbsp;Internal audit
outsourcing services; (vi)&nbsp;Management functions or human resources; (vii)&nbsp;Broker or dealer,
investment adviser or investment banking services; (viii)&nbsp;Legal services and expert services
unrelated to the audit; and (ix)&nbsp;Any other service that the Board of Directors determines, by
regulation, is impermissible. When such an application is received, the Board of Directors must
not pre-approve the application.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In accordance with the Sarbox Act and related SEC Rules, audit or non-audit services which do
not fit in with any of the types generally described in above explanation for audit fees,
audit-related fees and tax fees may have to be pre-approved by the Board of Directors. The Board
of Directors shall evaluate and determine whether or not to pre-approve each application for such
services.
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%">TDK may engage the Outside Auditor to render an audit or non-audit service pursuant to
this policy without obtaining individual pre-approval by the Board of Directors, provided
that all of the following conditions are met:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(i)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the service to be rendered shall fall under any of the types listed in above
explanation for audit fees, audit-related fees and tax fees;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(ii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the engagement to render the service shall commence within one year from the time
when the Board of Directors adopts this Policy;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(iii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the fee for the service to be rendered shall be less than 20,000,000 yen
(&#147;Individual Fee Limit&#148;); and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(iv)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the total amount of fees payable to the Outside Auditor by TDK on account of
non-audit services with respect to any fiscal year shall not exceed the total amount of
audit fees payable to the Outside Auditor by TDK with respect to such year (&#147;Overall Fee
Limit&#148;).</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"> - 78 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Appointed Director must confirm whether an audit or non-audit service to be rendered by
the Outside Auditor meets the foregoing conditions. The Appointed Director also shall report to
the Board of Directors all audit and non-audit services in which the Outside Auditor is engaged in
accordance with this Section. The Board of Directors must appoint a director as the Appointed
Director and after the appointment the Appointed Director must be listed in the Pre-Approval
Database.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any divisions or departments of TDK, which contemplate or attempt to receive audit or
non-audit services from an Outside Auditor or Non-Outside Auditor, shall report its intention and
submit designated information, using the Pre-Approval Database.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Appointed Director must evaluate such audit or non-audit services to be rendered either by
the Outside Auditor or Non-Outside Auditor reported electronically through the Pre-Approval
Database and must confirm whether any given reported services requires pre-approval by the Board of
Directors. The Appointed Director shall request pre-approval to the Board of Directors if
pre-approval by the Board of Directors is required.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In making determination, the Board of Directors is required to consider the following:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Whether the Outside Auditor cannot function in the role of management;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Whether the Outside Auditor cannot audit its own work; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Whether the Outside Auditor cannot serve in an advocacy role for its client.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Board of Directors must not pre-approve, in the absence of strong countervailing
considerations, non-audit services proposed to be performed by the Outside Auditor if the total
amount of fees payable to the Outside Auditor by TDK on account of non-audit services with respect
to any fiscal year exceeds the total amount of audit fees payable to the Outside Auditor by TDK
with respect to such year.
</DIV>

<DIV align="left">
<A name="121"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U><B>Item&nbsp;16D.</B></U><B> Exemptions from Listing Standards for Audit Committees</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</DIV>
<DIV align="left">
<A name="122"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U><B>Item&nbsp;16E.</B></U><B> Purchases of Equity Securities by the Issuer and Affiliated Purchasers</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None.
</DIV>

<P align="center" style="font-size: 10pt"> - 79 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left">
<A name="123"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PART 3</B>
</DIV>

<DIV align="left">
<A name="124"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U><B>Item&nbsp;17.</B></U><B>
Financial Statements</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Index of Consolidated Financial Statements of TDK Corporation and subsidiaries:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Page</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px"><A href="#300">Report of Independent Registered Public
Accounting Firm</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">81</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px"><A href="#301">Consolidated Balance Sheets as of March&nbsp;31, 2005
and 2004</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">82</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px"><A href="#302">Consolidated Statements of Income
for the years ended March&nbsp;31, 2005, 2004 and 2003</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">84</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px"><A href="#303">Consolidated Statements of Stockholders&#146; Equity
for the years ended March&nbsp;31, 2005, 2004 and 2003</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">85</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px"><A href="#304">Consolidated Statements of Cash Flows
for the years ended March&nbsp;31, 2005, 2004 and 2003</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">86</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px"><A href="#305"> Notes to Consolidated Financial Statements</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">87</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Schedule for the years ended March&nbsp;31, 2005, 2004 and 2003:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">

<TD><DIV style="margin-left:60px; text-indent:-15px"><A href="#900">Schedule&nbsp;II
&#150; Valuation and Qualifying Accounts</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">119</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Schedules other than those listed above have been omitted as they are not applicable or the
information is presented in the consolidated financial statements and related notes.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Financial statements of 50&nbsp;percent or less owned persons accounted for by the equity method
have been omitted as, in the aggregate, they do not meet the tests of a significant subsidiary at a
20&nbsp;percent level as of or for the years ended March&nbsp;31, 2005, 2004 and 2003.
</DIV>


<P align="center" style="font-size: 10pt"> - 80 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left">
<A name="300"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U>Report of Independent Registered Public Accounting Firm</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">The Board of Directors and Stockholders<BR>

TDK Corporation:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have audited the consolidated financial statements of TDK Corporation and subsidiaries as
listed in the accompanying index. In connection with our audits of the consolidated financial
statements, we also have audited the financial statement schedule as listed in the accompanying
index. These consolidated financial statements and financial statement schedule are the
responsibility of the Company&#146;s management. Our responsibility is to express an opinion on these
consolidated financial statements and financial statement schedule based on our audits.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We conducted our audits in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a reasonable basis for our
opinion.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company declined to present segment information for each of the years in the three-year
period ended March&nbsp;31, 2005. In our opinion, disclosures of segment and related information about
the different types of business activities in which the company engages and the different economic
environments in which it operates is required by U.S. generally accepted accounting principles.
The omission of segment information results in an incomplete presentation of the Company&#146;s
consolidated financial statements.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In our opinion, except for the omission of the segment information as discussed in the
preceding paragraph, the consolidated financial statements referred to above present fairly, in all
material respects, the financial position of TDK Corporation and subsidiaries as of March&nbsp;31, 2005
and 2004, and the results of their operations and their cash flows for each of the years in the
three-year period ended March&nbsp;31, 2005, in conformity with U.S. generally accepted accounting
principles. Also in our opinion, the related financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as a whole, presents fairly, in all
material respects, the information set forth therein.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The accompanying consolidated financial statements as of and for the year ended March&nbsp;31,
2005, have been translated into United States dollars solely for the convenience of the reader. We
have audited the translation and, in our opinion, the consolidated financial statements expressed
in yen have been translated into United States dollars on the basis set forth in Note 2 to the
consolidated financial statements.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">/s/ KPMG AZSA &#038; Co.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Tokyo, Japan<BR>
June&nbsp;15, 2005, except for the second paragraph of Note 22 which is June&nbsp;29, 2005, and the<BR>
third paragraph of Note 22 which is as of July&nbsp;19, 2005.
</DIV>

<P align="center" style="font-size: 10pt"> - 81 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left">
<A name="301"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Consolidated balance sheets<BR></B>
As of March&nbsp;31, 2005 and 2004
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">U.S. Dollars</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7">Yen</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">(Thousands)</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000">(Millions)</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">(Note 2)</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">

 <TD nowrap align="left" colspan="0" style="border-bottom: 1px solid #000000"><B>ASSET</B></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2004</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Current assets:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash and cash equivalents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#165;</B></TD>
    <TD align="right"><B>251,508</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">227,155</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>2,350,542</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Marketable securities (Note 4)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,609</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">402</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>15,037</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Trade receivables (Note 19):</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Notes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>6,133</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,431</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>57,317</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Accounts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>144,426</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">133,900</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,349,776</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Allowance for doubtful receivables</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(2,560</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2,000</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(23,925</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" nowrap align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Net trade receivables</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>147,999</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">138,331</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,383,168</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Inventories (Note 5)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>74,924</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">77,301</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>700,224</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income tax receivables (Note 7)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>204</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">763</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,907</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Assets held for sale (Note 20)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>993</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>9,280</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Prepaid expenses and other current assets (Note 7)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>33,366</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31,821</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>311,832</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Total current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>510,603</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">475,773</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>4,771,990</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Investments in securities </B>(Note 4)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>22,698</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,381</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>212,131</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Property, plant and equipment, at cost:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Land</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>20,097</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,464</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>187,822</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Buildings</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>181,581</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">176,256</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,697,019</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Machinery and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>445,636</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">471,247</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>4,164,823</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Construction in progress</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>15,206</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,312</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>142,112</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>662,520</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">678,279</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>6,191,776</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Less accumulated depreciation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(445,551</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(469,334</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(4,164,028</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" nowrap align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Net property, plant and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>216,969</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">208,945</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>2,027,748</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Goodwill </B>(Note 17)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>9,210</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,029</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>86,075</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Intangible assets </B>(Note 17)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>13,247</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,027</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>123,804</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Deferred income taxes </B>(Note 7)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>8,633</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34,140</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>80,682</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Other assets </B>(Notes 8 and 12)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>26,641</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,024</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>248,981</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#165;</B></TD>
    <TD align="right"><B>808,001</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">770,319</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>7,551,411</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>See accompanying notes to consolidated financial statements.</I>
</DIV>


<P align="center" style="font-size: 10pt"> - 82 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">U.S. Dollars</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7">Yen</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">(Thousands)</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000">(Millions)</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">(Note 2)</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" colspan="0" style="border-bottom: 1px solid #000000"><B>LIABILITIES AND STOCKHOLDERS&#146; EQUITY</B></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2004</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Current liabilities:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Short-term debt (Note 6)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#165;</B></TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">315</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Current installments of long-term debt (Note 6)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>103</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">101</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>963</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Trade payables:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Notes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>638</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">635</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>5,963</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Accounts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>61,454</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">59,282</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>574,336</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accrued salaries and wages</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>12,915</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,085</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>120,701</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accrued expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>31,065</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33,449</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>290,327</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income taxes payables (Note 7)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>19,283</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,689</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>180,215</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Liabilities held for sale (Note 20)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>92</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>860</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other current liabilities (Note 7)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>5,307</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,662</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>49,598</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Total current liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>130,857</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">115,218</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,222,963</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Long-term debt, excluding current installments </B>(Note 6)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>81</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>757</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Retirement and severance benefits </B>(Note 8)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>28,839</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">73,521</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>269,523</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Deferred income taxes </B>(Note 7)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>751</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">215</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>7,019</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Other noncurrent liabilities</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>3,244</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,843</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>30,318</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Commitments and contingent liabilities </B>(Notes 12 and 13)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Total liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>163,772</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">190,824</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,530,580</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Minority interests</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>5,162</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,276</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>48,242</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Stockholders&#146; equity :</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Common stock :</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Authorized 480,000,000 shares;
issued 133,189,659 shares in 2005 and 2004;
outstanding 132,244,587 shares in 2005
and 132,409,452 shares in 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>32,641</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32,641</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>305,056</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Additional paid-in capital</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>63,051</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">63,051</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>589,262</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Legal reserve (Note 9)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>16,918</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,497</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>158,112</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Retained earnings (Note 9)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>585,557</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">560,756</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>5,472,495</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accumulated other comprehensive income (loss) (Notes 7, 8 and 11)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(51,657</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(90,387</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(482,776</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Treasury stock at cost; 945,072 shares in 2005
and 780,207 shares in 2004 (Note 10)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(7,443</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(6,339</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(69,560</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" nowrap align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Total stockholders&#146; equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>639,067</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">576,219</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>5,972,589</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#165;</B></TD>
    <TD align="right"><B>808,001</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">770,319</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>7,551,411</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"> - 83 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left">
<A name="302"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Consolidated statements of income</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">For the years ended March&nbsp;31, 2005, 2004 and 2003
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">U.S. Dollars</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11">Yen</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">(Thousands)</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000">(Millions)</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">(Note 2)</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2004</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2003</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Net sales (Note 19)</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#165;</B></TD>
    <TD align="right"><B>657,853</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">655,792</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">604,865</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>6,148,159</B></TD>

    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Cost of sales</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>484,323</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">476,407</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">459,552</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>4,526,383</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Gross profit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>173,530</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">179,385</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">145,313</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,621,776</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Selling, general and administrative expenses</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>119,886</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">122,875</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">115,569</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,120,430</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Transfer to the government of the substitutional
portion of Employees&#146; Pension Fund (Note 8):</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Subsidy from the government</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(33,533</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(313,392</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Loss on settlement</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>27,347</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>255,579</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Restructuring cost (Note 16)</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,197</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>



<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Operating income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>59,830</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">56,510</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,547</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>559,159</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Other income (deductions):</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Interest and dividend income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,692</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,189</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,379</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>15,813</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Interest expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(967</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(323</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(577</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(9,037</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Equity in earnings (loss)&nbsp;of affiliates</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,765</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,639</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">361</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>16,495</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Loss on
securities, net (Note 4)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(142</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,093</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(3,298</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(1,327</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Foreign exchange gain (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(856</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(3,064</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,479</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(8,000</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Other &#151; net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(594</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">989</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(381</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(5,552</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" nowrap align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>898</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(663</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(3,995</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>8,392</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Income from continuing operations
before income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>60,728</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">55,847</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,552</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>567,551</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Income taxes </B>(Note 7)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>23,284</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,133</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,193</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>217,607</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Income from continuing operations
before minority interests</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>37,444</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43,714</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,359</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>349,944</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Minority interests, net of tax</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>479</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">359</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">766</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>4,477</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Income from continuing operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>36,965</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43,355</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,593</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>345,467</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Discontinued operations (Note 20):</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Loss from operations of discontinued TSC
(including loss on disposal of &#165;454&nbsp;million in 2005)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>3,509</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">244</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,471</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>32,794</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Income tax expense (benefit)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>156</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,010</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(897</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,458</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Loss from discontinued operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>3,665</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,254</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,574</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>34,252</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#165;</B></TD>
    <TD align="right"><B>33,300</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42,101</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,019</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>311,215</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11">Yen (except number of</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">U.S. Dollars</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000">common shares outstanding)</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">(Note 2)</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Amounts per share:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Income from continuing operations per share (Note 18):</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#165;</B></TD>
    <TD align="right"><B>279.41</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">327.27</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">102.42</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>2.61</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>279.25</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">327.15</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">102.42</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>2.61</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Loss from discontinued operations per share (Note 18):</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>&#165;</B></TD>
    <TD align="right"><B>(27.70</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(9.47</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(11.86</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>$</B></TD>
    <TD align="right"><B>(0.26</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(27.69</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(9.46</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(11.86</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(0.26</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net income per share (Note 18):</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#165;</B></TD>
    <TD align="right"><B>251.71</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">317.80</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">90.56</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>2.35</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>251.56</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">317.69</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">90.56</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>2.35</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Weighted average basic common shares
outstanding (in thousands) (Note 18)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>132,293</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">132,475</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">132,716</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Weighted average diluted common shares
outstanding (in thousands) (Note 18)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>132,376</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">132,523</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">132,716</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Cash dividends paid during the year (Note 9)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#165;</B></TD>
    <TD align="right"><B>60.00</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>0.56</B></TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>See accompanying notes to consolidated financial statements.</I>
</DIV>



<P align="center" style="font-size: 10pt"> - 84 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left">
<A name="303"></A>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Consolidated statements of stockholders&#146; equity</B><BR>
For the years ended March&nbsp;31, 2005, 2004 and 2003
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">U.S. Dollars</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11">Yen</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">(Thousands)</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000">(Millions)</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">(Note 2)</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2004</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2003</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Common stock:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Balance at beginning of period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right"><B>32,641</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32,641</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32,641</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>305,056</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Balance at end of period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>32,641</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32,641</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32,641</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>305,056</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Additional paid-in capital:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Balance at beginning of period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>63,051</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">63,051</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">63,051</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>589,262</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Balance at end of period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>63,051</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">63,051</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">63,051</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>589,262</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Legal reserve </B>(Note 9)<B>:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Balance at beginning of period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>16,497</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,953</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,683</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>154,177</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Transferred from retained earnings</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>421</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">544</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">270</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>3,935</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Balance at end of period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>16,918</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,497</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,953</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>158,112</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Retained earnings </B>(Note 9)<B>:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Balance at beginning of period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>560,756</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">525,919</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">520,143</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>5,240,710</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>33,300</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42,101</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,019</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>311,215</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Cash dividends</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(7,938</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(6,625</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(5,973</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(74,187</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Losses on sales of treasury stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(140</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(95</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(1,308</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Transferred to legal reserve</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(421</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(544</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(270</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(3,935</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" nowrap align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Balance at end of period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>585,557</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">560,756</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">525,919</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>5,472,495</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Accumulated other comprehensive income (loss) </B>(Notes 7,8 and 11)<B>:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Balance at beginning of period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(90,387</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(78,824</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(43,999</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(844,738</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other comprehensive income (loss)&nbsp;for the period, net of tax</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>38,730</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(11,563</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(34,825</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>361,962</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Balance at end of period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(51,657</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(90,387</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(78,824</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(482,776</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" nowrap align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Treasury stock </B>(Note 10)<B>:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Balance at beginning of period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(6,339</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(4,855</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(3,592</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(59,243</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Acquisition of treasury stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(1,672</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,865</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,263</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(15,626</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Exercise of stock option</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>568</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">381</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>5,309</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Balance at end of period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(7,443</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(6,339</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(4,855</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(69,560</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" nowrap align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total stockholders&#146; equity</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#165;</B></TD>
    <TD align="right"><B>639,067</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">576,219</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">553,885</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>5,972,589</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Disclosure of comprehensive income (loss):</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net income for the period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#165;</B></TD>
    <TD align="right"><B>33,300</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42,101</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,019</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>311,215</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other comprehensive income (loss)&nbsp;for the period, net of tax (Note 11)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>38,730</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(11,563</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(34,825</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>361,962</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total comprehensive income (loss)&nbsp;for the period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#165;</B></TD>
    <TD align="right"><B>72,030</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30,538</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(22,806</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>673,177</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>See accompanying notes to consolidated financial statements.</I>
</DIV>




<P align="center" style="font-size: 10pt">- 85 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left">
<A name="304"></A>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Consolidated statements of cash flows</B><BR>
For the years ended March&nbsp;31, 2005, 2004 and 2003
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">U.S. Dollars</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11">Yen</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">(Thousands)</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000">(Millions)</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">(Note 2)</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2004</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2003</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Cash flows from operating activities:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#165;</B></TD>
    <TD align="right"><B>33,300</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42,101</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,019</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>311,215</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Loss from discontinued operations, net of tax</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>3,665</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,254</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,574</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>34,252</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income from continuing operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>36,965</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43,355</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,593</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>345,467</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Adjustments to reconcile net income to net cash provided
by operating activities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Depreciation and amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>52,806</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50,726</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">57,132</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>493,514</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Loss on disposal of property and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,190</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,363</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,589</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>11,121</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Deferred income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(5,532</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,858</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,913</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(51,701</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Loss (gain)&nbsp;on securities, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>142</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,093</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,298</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,327</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Gain on sale of a subsidiary</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(1,799</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(567</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(16,813</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Changes in assets and liabilities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Increase in trade receivables</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(7,343</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(7,680</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2,654</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(68,626</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Decrease (increase)&nbsp;in inventories</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>3,461</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(7,868</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,533</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>32,346</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Increase in trade payables</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>245</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,200</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,742</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>2,290</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Increase (decrease)&nbsp;in accrued expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(2,496</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,878</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(5,226</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(23,327</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Increase (decrease)&nbsp;in income taxes payables, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>14,464</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,704</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,901</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>135,178</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Increase (decrease)&nbsp;in retirement and severance benefits, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>2,519</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,285</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,639</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>23,542</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other &#151; net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(1,040</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(527</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(544</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(9,720</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" nowrap align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net cash provided by operating activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>93,582</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">113,820</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">105,916</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>874,598</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Cash flows from investing activities:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Capital expenditures</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(61,005</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(44,471</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(41,026</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(570,140</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Proceeds from sale and maturities of investments in securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,788</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,814</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,511</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>16,710</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Payment for purchase of investments in securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(2,424</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(700</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(22,654</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Payment for purchase of other investments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(221</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(442</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(6,606</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(2,065</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Proceeds from sales of property, plant and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>999</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,299</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,590</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>9,336</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Acquisition of minority interests</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(366</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(3,967</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Proceeds from sale of a subsidiary</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,523</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other &#151; net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(22</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net cash used in investing activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(60,863</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(37,647</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(46,220</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(568,813</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" nowrap align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Cash flows from financing activities:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Proceeds from long-term debt</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>218</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">69</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">211</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>2,037</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Repayment of long-term debt</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(164</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(479</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(646</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(1,533</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Increase (decrease)&nbsp;in short-term debt, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(330</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,047</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(254</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(3,084</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Sale (purchase)&nbsp;of treasury stock, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(1,244</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,579</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,263</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(11,626</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Dividends paid</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(7,938</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(6,625</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(5,973</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(74,187</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" nowrap align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net cash used in financing activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(9,458</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(9,661</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(7,925</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(88,393</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" nowrap align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net cash provided by (used in) discontinued operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(1,625</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">761</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,983</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(15,187</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" nowrap align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Effect of exchange rate changes on cash and cash equivalents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>2,717</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(10,669</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(4,998</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>25,393</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net increase in cash and cash equivalents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>24,353</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">56,604</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44,790</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>227,598</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Cash and cash equivalents at beginning of period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>227,155</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">170,551</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">125,761</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>2,122,944</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Cash and cash equivalents at end of period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#165;</B></TD>
    <TD align="right"><B>251,508</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">227,155</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">170,551</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>2,350,542</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>See accompanying notes to consolidated financial statements.</I>
</DIV>




<P align="center" style="font-size: 10pt">- 86 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">





<DIV align="left">
<A name="305"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>1. Nature of Operations and Summary of Significant Accounting Policies</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>(a)&nbsp;Nature of Operations</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK is a multinational manufacturer of ferrite products and a producer of inductor, ceramic
capacitors, magnetic head and other components and recording media and systems. TDK, a Tokyo-based
company founded in 1935 to commercialize ferrite, now manufactures and sells a broad range of
products. TDK&#146;s two business segments are electronic materials and components, and recording media
and systems, which accounted for 83% and 17% of net sales, respectively, for the year ended March
31, 2005. The main products which are manufactured and sold by the two business segments are as
follows:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>a) Electronic materials and components products:</B>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 6%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Ferrite cores, Ceramic capacitors, High-frequency components, Inductors, and GMR heads
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>b) Recording media and systems products:</B>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 6%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Audio tapes, Video tapes, CD-Rs, MDs, and DVDs
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK sells electronic materials and components products to electric and communication equipment
manufacturers and audio equipment manufacturers, mainly in Asia and Japan, and recording media and
systems products to distribution agents and audio equipment manufacturers, mainly in Japan, Europe,
and North America.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>(b)&nbsp;Basis of Presentation</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK and its domestic subsidiaries maintain their books of account in conformity with financial
accounting standards of Japan, and its foreign subsidiaries in conformity with those of the
countries of their domicile.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The consolidated financial statements presented herein reflect certain adjustments, not
recorded on the primary books of TDK and subsidiaries, to present the financial position, results
of operations, and cash flows in conformity with U.S. generally accepted accounting principles (the
&#147;U.S. GAAP&#148;). Such adjustments relate principally to accounting for retirement and severance
benefits and impairment of long-lived assets.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>(c)&nbsp;Consolidation Policy</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The consolidated financial statements include the accounts of TDK, its subsidiaries and those
variable interest entities where TDK is the primary beneficiary under
FASB Interpretation No.&nbsp;46
(revised December&nbsp;2003) (&#147;FIN 46R&#148;), &#147;Consolidation of Variable Interest Entities&#148;. All
significant intercompany accounts and transactions have been eliminated in consolidation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The investments in affiliates in which TDK&#146;s ownership is 20% to 50% and where TDK exercises
significant influence over their operating and financial policies are accounted for by the equity
method. All significant intercompany profits from these affiliates have been eliminated.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>(d)&nbsp;Cash Equivalents</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash equivalents include all highly liquid debt instruments purchased with an original
maturity of three months or less.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>(e)&nbsp;Allowance for Doubtful Receivables</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The allowance for doubtful receivables is TDK&#146;s best estimate of the amount of probable credit
losses in TDK&#146;s existing trade receivables. An additional reserve for individual receivables is
recorded when TDK becomes aware of a customer&#146;s inability to
meet its financial obligations, such as in the case of bankruptcy filings or deterioration in
a customer&#146;s operating results or financial position. If customer circumstances change, estimates
of the recoverability of receivables would be further adjusted.
</DIV>

<P align="center" style="font-size: 10pt">- 87 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>(f)&nbsp;Investments in Securities</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK classifies its debt and equity securities into one of three categories: trading,
available-for-sale, or held-to-maturity. Trading securities are bought and held principally for
the purpose of selling them in the near term. Held-to-maturity securities are those securities in
which TDK has the ability and intent to hold the security until maturity. All securities not
included in trading or held-to-maturity are classified as available-for-sale.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Trading and available-for-sale securities are recorded at fair value. Held-to-maturity
securities are recorded at amortized cost, adjusted for the amortization or accretion of premiums
or discounts. Unrealized holding gains and losses on trading securities are included in earnings.
Unrealized holding gains and losses, net of the related tax effect, on available-for-sale
securities are excluded from earnings and are reported as a separate component of accumulated other
comprehensive income (loss)&nbsp;until realized. As of March&nbsp;31, 2005 and 2004, TDK did not hold any
trading or held-to-maturity securities. Available-for sale securities, which mature or are
expected to be sold in less than one year, are classified as current assets.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A decline in the fair value of any available-for-sale security below cost that is deemed to be
other-than-temporary results in a reduction in carrying amount to fair value. The impairment is
charged to earnings and a new cost basis for the security is established. To determine whether an
impairment is other-than-temporary, TDK periodically reviews the fair value of available-for-sale
securities for possible impairment by taking into consideration the financial and operating
conditions of the issuer, the general market conditions in the issuer&#146;s industry, degree and period
of the decline in fair value and other relevant factors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Nonmarketable securities are recorded at cost, as fair value is not readily determinable. TDK
periodically evaluates whether an event or change in circumstances may have a significant adverse
effect on the fair value of the investment. Factors considered in accessing whether an indication
of impairment exists include the financial and operating conditions of the issuer, the general
market conditions in the issuer&#146;s industry and other relevant factors. If an indication of
impairment is present, TDK estimates the fair value of nonmarketable securities. If the fair value
is less than cost and the impairment is determined to be other-than-temporary, a nonmarketable
security is written down to its impaired value through a charge to earnings.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>(g)&nbsp;Inventories</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventories are stated at the lower of cost or market. Cost is determined principally by the
average cost method.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>(h)&nbsp;Property, Plant and Equipment</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 the following estimated useful lives:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="33%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="65%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:8%; text-indent:-0px">Buildings
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">3 to 60&nbsp;years</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:8%; text-indent:-0px">Machinery and equipment
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">2 to 22&nbsp;years</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>(i)&nbsp;Income Taxes</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that includes the enactment date. TDK uses a
specific identification method to release the residual tax effects associated with components of
accumulated other comprehensive income resulting from a change in tax law or rate.
</DIV>

<P align="center" style="font-size: 10pt">- 88 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>(j)&nbsp;Stock Option Plan</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In December&nbsp;2002, the FASB issued Statement of Financial Accounting Standards No.&nbsp;148 (&#147;SFAS
148&#148;), &#147;Accounting for Stock-Based Compensation &#151; Transition and Disclosure&#148;, which amends FASB
Statement No.&nbsp;123 (&#147;SFAS 123&#148;), &#147;Accounting for Stock-Based Compensation&#148;. SFAS 148 provides
alternative methods of transition for a voluntary change to the fair value based method of
accounting for stock-based employee compensation. In addition, SAFS 148 amends the disclosure
requirements of SFAS 123 to require more prominent and more frequent disclosures in financial
statements about the effects of stock-based compensation. However, it gives an entity a choice of
recognizing related compensation expense by adopting the fair value method or to continue to
measure compensation using the intrinsic value-based method prescribed under Accounting Principles
Board Opinion No.&nbsp;25 (&#147;APB 25&#148;), &#147;Accounting for Stock Issued to Employees&#148;, the former standard.
TDK has chosen to use the measurement principle prescribed by APB 25. As such, stock-based
compensation cost is recognized by TDK only if the market price of the underlying common stock
exceeds the exercise price on the date of grant. Accordingly, no stock option related compensation
cost has been recognized in fiscal 2005, fiscal 2004 and fiscal 2003 for TDK&#146;s stock based
compensation plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table illustrates the effects on both income from continuing operations and net
income if the fair-value-based method had been applied to all outstanding and unvested stock based
awards with such costs recognized ratably over the vesting period of the underlying instruments.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11">Yen</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">U.S. Dollars</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000">(Millions)</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">(Thousands)</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2004</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2003</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income from
continuing
operations, as
reported</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&nbsp;</B></TD>
    <TD align="right"><B>&#165;36,965</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43,355</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,593</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>345,467</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deduct total
stock-based
employee
compensation
expense determined
under
fair-value-based
method for all
awards, net of tax</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(438</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(330</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(239</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(4,093</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" nowrap align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Pro forma income
from continuing
operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#165;36,527</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43,025</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,354</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>341,374</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000">Yen</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Basic income from continuing
operations per share:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">As reported</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#165;</B></TD>
    <TD align="right"><B>279.41</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">327.27</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">102.42</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>2.61</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Pro forma</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>276.11</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">324.78</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">100.62</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>2.58</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Diluted income from continuing
operations per share:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">As reported</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#165;</B></TD>
    <TD align="right"><B>279.25</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">327.15</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">102.42</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>2.61</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Pro forma</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>275.98</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">324.74</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">100.62</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>2.58</B></TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">- 89 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11">Yen</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">U.S. Dollars</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000">(Millions)</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">(Thousands)</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2004</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2003</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income, as reported</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#165;</B></TD>
    <TD align="right"><B>33,300</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42,101</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,019</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>311,215</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deduct total
stock-based employee
compensation expense
determined under
fair-value-based
method for all awards,
net of tax</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(438</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(330</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(239</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(4,093</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Pro forma net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#165;</B></TD>
    <TD align="right"><B>32,862</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41,771</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,780</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>307,122</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000">Yen</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Basic net income per share:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">As reported</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#165;</B></TD>
    <TD align="right"><B>251.71</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">317.80</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">90.56</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>2.35</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Pro forma</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>248.40</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">315.31</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">88.76</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>2.32</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Diluted net income per share:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">As reported</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#165;</B></TD>
    <TD align="right"><B>251.56</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">317.69</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">90.56</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>2.35</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Pro forma</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>248.29</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">315.27</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">88.76</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>2.32</B></TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>(k)&nbsp;Research and Development Expenses</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Research and development costs are expensed as incurred.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>(l)&nbsp;Advertising Costs</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Advertising costs are expensed as incurred.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>(m)&nbsp;Shipping and Handling Fees and Costs</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shipping and handling costs amounted to &#165;13,397&nbsp;million ($125,206 thousand), &#165;12,163&nbsp;million
and &#165;11,305&nbsp;million for the years ended March&nbsp;31, 2005, 2004 and 2003, respectively, and are
included in selling, general and administrative expenses in the consolidated statements of income.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>(n)&nbsp;Foreign Currency Translation</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Foreign currency financial statements have been translated in accordance with Statement of
Financial Accounting Standards No.&nbsp;52 (&#147;SFAS 52&#148;), &#147;Foreign Currency Translation&#148;. Under SFAS 52,
the assets and liabilities of TDK&#146;s subsidiaries located outside Japan are translated into Japanese
yen at the rates of exchange in effect at the balance sheet date. Revenue and expense items are
translated at the average exchange rates prevailing during the year. Gains and losses resulting
from foreign currency transactions are included in other income (deductions), and those resulting
from translation of financial statements are excluded from the statements of income and are
accumulated in stockholders&#146; equity as a component of accumulated other comprehensive income
(loss).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>(o)&nbsp;Use of Estimates</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Management of TDK has made a number of estimates and assumptions relating to the reporting of
assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities
to prepare these consolidated financial statements in conformity with the U.S. GAAP. Significant
items subject to such estimates and assumptions include the valuation of intangible assets,
property, plant and equipment, trade receivables, inventories, and deferred income tax assets, and
assumptions related to the estimation of actuarial determined employee benefit obligations. Actual
results could differ from those estimates.
</DIV>


<P align="center" style="font-size: 10pt">- 90 -
</DIV>


<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>(p)&nbsp;Accounting for the Impairment or Disposal of Long-Lived Assets</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Property, plant and equipment and certain identifiable intangibles with finite useful lives
are reviewed for impairment whenever events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. Recoverability of assets to be held and used is
measured by a comparison of the carrying amount of an asset to future net cash flows (undiscounted
and without interest charges) expected to be generated by the asset. If such assets are considered
to be impaired, the impairment to be recognized is measured by the amount by which the carrying
amount of the assets exceed the fair value of the assets. Assets to be disposed of are reported at
the lower of the carrying amount or fair value less costs to sell.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>(q)&nbsp;Goodwill and Other Intangible Assets</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Goodwill is not amortized, but instead is tested for impairment at least annually or more
frequently if certain indicators arise. Intangible assets with finite useful lives are amortized
over their respective estimated useful lives. Intangible assets determined to have an indefinite
useful life are not amortized, but instead are tested for impairment until the life is determined
to no longer be indefinite.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK conducts its annual impairment test at the end of each fiscal year.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>(r)&nbsp;Derivative Financial Instruments</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK has elected not to apply hedge accounting. Accordingly, changes in the fair value of
derivatives are recognized in earnings in the period of the changes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>(s)&nbsp;Net Income per Share</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Basic net income per share has been computed by dividing net income available to common
stockholders by the weighted-average number of common shares outstanding during each year. Diluted
net income per share reflects the potential dilution that could occur if securities or other
contracts to issue common stock were exercised or converted into common stock or resulted in the
issuance of common stock of TDK. Stock options were not included in the calculation of diluted
earnings per share for the years ended March&nbsp;31, 2003 as their effect would be antidilutive. For
the years ended March&nbsp;31, 2005 and 2004, stock options to purchase 404,700 and 170,400 shares,
respectively, were excluded from the calculation of diluted earnings per share as the effect would
have been antidilutive.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>(t)&nbsp;Revenue Recognition</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK generates revenue principally through the sale of electronic materials &#038; components and
recording media &#038; systems under separate contractual arrangements for each. TDK recognizes revenue
when persuasive evidence of an arrangement exists, delivery has occurred and title and risk of loss
have been transferred to the customer, the sales price is fixed or determinable, and collectibility
is probable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Revenue from sales of electronic materials &#038; components including electronic materials,
electronic devices and recording devices is recognized when the products are received by customers
based on the free-on board destination sales term. With regards to sales of electronic materials &#038;
components, TDK&#146;s policy is not to accept product returns unless the products are defective. The
conditions of acceptance are governed by the terms of the contract or customer arrangement and
those not meeting the predetermined specification are not recorded as revenue.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Revenue from sales of recording media &#038; systems products such as videotape and DVDs is also
recognized when the products are received by customers based on the free-on board destination sales
term.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK offers sales incentives through various programs to certain resellers and retailers.
These sales incentives include product discounts, volume-based discounts, marketing development
funds (&#147;MDFs&#148;), rebates and coupons, and are accounted for in accordance with the Emerging Issues
Task Force issue 01-9 &#147;Accounting for Consideration Given by a Vendor to a Customer (Including a
Reseller of Vendor&#146;s Product)&#148;. These sales incentives totaled to &#165;14,292&nbsp;million, &#165;15,089&nbsp;million
and &#165;15,031&nbsp;million for the years ended March&nbsp;31, 2005,
</DIV>

<P align="center" style="font-size: 10pt">- 91 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">2004 and 2003, respectively.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A number of product discounts are based on a certain percentage off the invoice price
predetermined by spot contracts or based on contractually agreed upon amounts with resellers and
retailers. Product discounts are recognized as a reduction of revenue at the time the related
revenue is recognized and amounted to &#165;7,194&nbsp;million, &#165;5,993&nbsp;million and &#165;5,214&nbsp;million for the
years ended March&nbsp;31, 2005, 2004 and 2003, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Volume-based discounts are provided only if the resellers and retailers achieve a specified
cumulative level of revenue transactions in a year or less period. Liabilities are recognized as a
reduction of revenue for the expected sales incentive at the time the related revenue is recognized
and are initially based on the estimation of sales volume by using historical experience on an
individual customer basis. Estimates of expected sales incentives are evaluated and adjusted
periodically based on actual revenue transactions and forecasts for the balance of the year or
incentive period. Volume-based discounts recognized as a reduction of revenue amounted to &#165;3,005
million, &#165;2,982&nbsp;million and &#165;2,918&nbsp;million for the years ended March&nbsp;31, 2005, 2004 and 2003,
respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;MDFs are provided to certain resellers and retailers as a contribution to or a sponsored fund
for customers&#146; marketing programs, such as customers&#146; coupons, catalog, sales contests and
advertisements, mostly in the form of a subsidy. Under this program, we do not receive an
identifiable benefit sufficiently separable from our customers. Accordingly, MDFs are accounted
for as a reduction of revenue based on the annual contract or at the time TDK has incurred the
obligation, if earlier, and amounted to &#165;2,631&nbsp;million, &#165;2,923&nbsp;million and &#165;3,114&nbsp;million for the
years ended March&nbsp;31, 2005, 2004 and 2003, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Consumer promotions mainly consist of coupons and mail-in rebates offered to end users, who
are reimbursed by TDK to retailers or end users for the coupons or mail-in rebates redeemed.
Liabilities are recognized at the time related revenue is recognized (or at the time of the offer
if the sale to retailers occurs before the offer) for the expected number of coupons or mail-in
rebates to be redeemed. TDK uses historical rates of redemption on similar offers for similar
products to estimate redemption rates for current incentive offerings. Consumer promotions
recognized as a reduction of revenue amounted to &#165;1,061&nbsp;million, &#165;2,446&nbsp;million and &#165;2,830&nbsp;million
for the years ended March&nbsp;31, 2005, 2004 and 2003, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK also provides slotting fees paid to certain retailers for putting TDK products at
attractive areas or shelves in the store. Slotting fees are recognized as a reduction of revenue
at the time TDK has incurred the obligation. Slotting fees recognized as a reduction of revenue
amounted to &#165;205&nbsp;million, &#165;451&nbsp;million and &#165;598&nbsp;million for the years ended March&nbsp;31, 2005, 2004
and 2003, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Additionally, TDK has advertising programs with certain resellers and retailers where TDK
agrees to reimburse them for advertising cost incurred by them to put TDK products on their flyers,
catalogs and billboards. TDK receives an identifiable benefit (advertising)&nbsp;in return for the
consideration and that benefit is sufficiently separable because TDK could have purchased that
advertising from other parties. Also, TDK can reasonably estimate the fair value of the benefit
through obtaining sufficient evidence from the resellers and retailers in the form of the invoice
issued by the third party providing the service to the resellers and retailers. Therefore, such
advertising programs are expensed as selling, general and administrative expenses at the time TDK
has incurred the obligation and amounted to &#165;196&nbsp;million, &#165;293&nbsp;million and &#165;357&nbsp;million for the
years ended March&nbsp;31, 2005, 2004 and 2003, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK allows limited right of returns in certain cases and reduces revenue for estimated future
returns based upon historical experience at the time the related revenue is recorded.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No warranties are offered on TDK&#146;s products.
</DIV>

<P align="center" style="font-size: 10pt">- 92 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>(u)&nbsp;New Accounting Standards Not Yet Adopted</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In March&nbsp;2004, the Emerging Issues Task Force reached a consensus on Issue 03-1 (&#147;EITF 03-1&#148;),
&#147;The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments&#148;. EITF
03-1 provides guidance on other-than-temporary impairment models for marketable debt and equity
securities accounted for under Statement of Financial Accounting Standards No.&nbsp;115 (&#147;SFAS 115&#148;),
&#147;Accounting for Certain Investments in Debt and Equity Securities&#148;, and nonmarketable equity
securities accounted for under the cost method. The EITF developed a basic three-step model to
evaluate whether an investment is other-than-temporarily impaired. The FASB issued a FASB Staff
Position EITF 03-1-1 in September&nbsp;2004 which delayed the effective date of the recognition and
measurement provisions of EITF 03-1. The adoption of EITF 03-1 is not expected to have a material
effect on TDK&#146;s consolidated results of operations and financial position.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In December&nbsp;2004, the FASB issued Statement of Financial Accounting Standards No.&nbsp;123 (revised
2004), &#147;Share Based Payment&#148; (&#147;SFAS 123R&#148;). SFAS 123R is a revision of SFAS 123, &#147;Accounting for
Stock Based Compensation&#148;, and supersedes APB 25. SFAS 123R requires TDK to measure the cost of
employee services received in exchange for equity awards based on the grant date fair value of the
awards. The cost will be recognized as compensation expense over the vesting period of the awards.
In April&nbsp;2005, the Securities and Exchange Commission deferred the effective date of SFAS 123R to
the beginning of the first annual period after June&nbsp;15, 2005. TDK is currently evaluating the
effect that the adoption of SFAS 123R will have on TDK&#146;s consolidated financial position and
results of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In November&nbsp;2004, the FASB issued Statement of Financial Accounting Standards No.&nbsp;151 (&#147;SFAS
151&#148;), &#147;Inventory Costs &#150; an amendment of Accounting Research Bulletin No.&nbsp;43 (&#147;ARB 43&#148;), Chapter
4&#148;. SFAS 151 amends the guidance in ARB 43, Chapter&nbsp;4, &#147;Inventory Pricing&#148;, to clarify the
accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted
material (spoilage). SFAS 151 requires that items such as idle facility expense, excessive
spoilage, double freight and rehandling costs be recognized as current-period charges regardless of
whether they meet the criterion of &#147;so abnormal&#148; as stated in ARB 43. In addition, SFAS 151
requires that allocation of fixed production overheads to the costs of conversion be based on the
normal capacity of the production facilities. SFAS 151 is effective for inventory costs incurred
in fiscal periods beginning after June&nbsp;15, 2005. TDK does not expect the adoption of SFAS 151 to
have a material effect on TDK&#146;s consolidated financial position and results of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>(v)&nbsp;Reclassifications</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Certain reclassifications principally relating to discontinued operations, have been made to
the prior year&#146;s consolidated financial statements to conform to the presentation used for the year
ended March&nbsp;31, 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>2. Financial Statement Translation</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The consolidated financial statements are expressed in Japanese yen, the functional currency
of TDK. Supplementally, the Japanese yen amounts as of and for the year ended March&nbsp;31, 2005, have
also been translated into U.S. dollar amounts, solely for the convenience of the reader, at the
rate of &#165;107=U.S.$1, the approximate exchange rate on the Tokyo Foreign Exchange Market on March
31, 2005. This translation should not be construed as a representation that the amounts shown
could be converted into U.S. dollars at such rate.
</DIV>

<P align="center" style="font-size: 10pt">- 93 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>3. Foreign Operations</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amounts included in the consolidated financial statements relating to subsidiaries operating
in foreign countries are summarized as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000">Yen (Millions)</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(Thousands)</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#165;</B></TD>
    <TD align="right"><B>360,925</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">318,915</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">304,645</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>3,373,131</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net sales</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>498,366</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">494,184</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">432,048</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>4,657,626</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>17,362</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38,731</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,675</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>162,262</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>4. Marketable Securities and Investments in Securities</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Marketable securities and investments in securities at March&nbsp;31, 2005 and 2004, are as
follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>

    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>



<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000">Yen (Millions)</TD>

    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(Thousands)</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Short-term marketable securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#165;</B></TD>
    <TD align="right"><B>1,609</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">402</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>15,037</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Long-term marketable securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>7,094</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,535</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>66,299</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Nonmarketable securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,555</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">419</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>14,533</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Investments in affiliates</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>14,049</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,427</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>131,299</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#165;</B></TD>
    <TD align="right"><B>24,307</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,783</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>227,168</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Marketable securities and investments in securities include available-for-sale securities.
Information with respect to such securities at March&nbsp;31, 2005 and 2004, is as follows:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U><B>As of March&nbsp;31, 2005</B></U>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="2">Gross</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="2">Gross</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="2">Unrealized</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="2">Unrealized</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="2">Holding</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="2">Holding</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left">Yen (Millions):</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Cost</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="2">Gains</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="2">Losses</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Fair Value</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Equity securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>&#165; 5,951</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,054</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>7,005</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Debt securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,698</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,698</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#165; 7,649</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,054</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>8,703</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>As of March&nbsp;31, 2004</U>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="2">Gross</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="2">Gross</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="2">Unrealized</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="2">Unrealized</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="2">Holding</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="2">Holding</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left">Yen (Millions):</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Cost</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="2">Gains</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="2">Losses</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Fair Value</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Equity securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>&#165; 2,782</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,054</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,836</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Debt securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,101</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,101</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>&#165; 3,883</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,054</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,937</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U><B>As of March&nbsp;31, 2005</B></U>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="2">Gross</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="2">Gross</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="2">Unrealized</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="2">Unrealized</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="2">Holding</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="2">Holding</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left">U.S. Dollars (Thousands):</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Cost</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="2">Gains</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="2">Losses</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Fair Value</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Equity securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>55,617</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>9,850</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>65,467</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Debt securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>15,869</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>15,869</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>71,486</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>9,850</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>81,336</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Debt securities classified as available-for-sale at March&nbsp;31, 2005 mature in fiscal 2006
through 2008 (weighted average remaining term of 1.9&nbsp;years).
</DIV>

<P align="center" style="font-size: 10pt">- 94 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The proceeds from sale and settlement of available-for-sale securities are &#165;1,788&nbsp;million
($16,710 thousand), &#165;1,814&nbsp;million and &#165;1,511&nbsp;million for the years ended March&nbsp;31, 2005, 2004 and
2003, respectively. The gross realized gains on the sale and settlement of available-for-sale
securities are &#165;377&nbsp;million ($3,523 thousand), &#165;135&nbsp;million and &#165;4&nbsp;million for the years ended
March&nbsp;31, 2005, 2004 and 2003, respectively. TDK recorded a write-down of &#165;519&nbsp;million ($4,850
thousand), &#165;1,228&nbsp;million and &#165;3,302&nbsp;million on certain available-for-sale securities and
nonmarketable securities representing other-than-temporary declines in the fair value of the
available-for-sale securities for the years ended March&nbsp;31, 2005, 2004 and 2003, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The aggregate cost of nonmarketable securities accounted for under the cost method at March
31, 2005 and 2004 totaled &#165;1,555&nbsp;million ($14,533 thousand) and &#165;419&nbsp;million, respectively, and, as
of March&nbsp;31, 2005 and 2004, those securities were not evaluated for impairment because (a)&nbsp;TDK did
not estimate the fair value of those investments as it was not practicable to estimate the fair
value of the investment and (b)&nbsp;TDK did not identify any events or changes in circumstances that
might have had significant adverse effect on the fair value of those investments.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Investments in affiliates accounted for by the equity method consist of 26.1% of the common
stock of Semiconductor Energy Laboratory Co., Ltd., a research and development company, 50.0% of
the common stock of Tokyo Magnetic Printing Co., Ltd., a magnetic products manufacturing company,
and four other affiliated companies, collectively, which are not significant. The unamortized
amounts of goodwill related to affiliated companies were &#165;1,231&nbsp;million ($11,505 thousand) as of
both March&nbsp;31, 2005 and 2004. This equity-method goodwill is not amortized, but is analyzed for
impairment at least annually.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of March&nbsp;31, 2005 and 2004, certain debt securities in the amount of &#165;1,695&nbsp;million and
&#165;699&nbsp;million, respectively were pledged as collateral for extended custom duty payments to Tokyo
Customs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>5. Inventories</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventories at March&nbsp;31, 2005 and 2004, are summarized as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6">Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">(Millions)</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(Thousands)</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Finished goods</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>&#165; 30,819</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34,104</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>288,028</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Work in process</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>21,633</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,351</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>202,177</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Raw materials</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>22,472</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,846</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>210,019</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>&#165; 74,924</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">77,301</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>700,224</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The cost elements for finished goods and work in process include direct costs for materials
such as primary materials and purchased semi-finished products, direct labor costs such as basic
salaries, bonuses, and legal welfare expenses, direct costs such as expenses paid to
subcontractors, and indirect manufacturing costs comprising material costs, labor costs and other
overhead costs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>6. Short-Term and Long-Term Debt</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Short-term debt and weighted average interest rates at March&nbsp;31, 2005 and 2004, are as
follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6">Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6">Weighted average</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">(Millions)</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(Thousands)</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">interest rate</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">2004</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="21" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Short-term bank loans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>&#165; &#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">315</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD nowrap><B>%</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">1.36</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="21" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At March&nbsp;31, 2005, unused short-term credit facilities for issuance of commercial paper
amounted to &#165;32,485&nbsp;million ($303,598 thousand).
</DIV>

<P align="center" style="font-size: 10pt">- 95 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Long-term debt at March&nbsp;31, 2005 and 2004, is set forth below:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10">Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000">(Millions)</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(Thousands)</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">

    <TD><DIV style="margin-left:15px; text-indent:-15px">Lease obligation
(weighted average: 2005 &#151; 4.05%,
2004 &#151; 4.25%)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#165;</B></TD>
    <TD align="right"><B>184</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">128</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>1,720</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>184</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">128</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,720</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Less current installments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>103</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">101</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>963</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#165;</B></TD>
    <TD align="right"><B>81</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>757</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The aggregate annual maturities of long-term debt outstanding at March&nbsp;31, 2005, are as
follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Yen (Millions)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">(Thousands)</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Year ending March&nbsp;31,
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">
2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">103</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">963</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">53</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">495</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">196</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2009</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">56</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2010</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">184</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,720</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Short-term and long-term bank loans were made under general agreements that provide that under
certain circumstances security and guarantees for present and future indebtedness will be given
upon request of the bank, and that the bank shall have the right, as the obligations become due, or
in the event of their default, to offset cash deposits against such obligations due to the bank.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK&#146;s short-term and long-term debts placed with financial institutions were unsecured.
Further, no assets of TDK were subject to mortgage, pledge or lien pursuant to our short-term and
long-term debt agreements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There were no debt covenants, or cross-default provisions under TDK&#146;s financing arrangements.
Furthermore, there were no subsidiary level dividend restrictions under the financing arrangements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>7. Income Taxes</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK and its domestic subsidiaries are subject to a national corporate tax of 30%, an
inhabitants tax of between 5.2% and 6.2% and a deductible enterprise tax of between 7.7% and 8.0 %,
which in the aggregate resulted in a statutory rate of approximately 40% for the year ended March
31,2005. For the years ended March&nbsp;31, 2004 and 2003, the deductible enterprise tax rate was
between 9.6% and 10.1%, which in the aggregate resulted in statutory rate of approximately 41%.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amendments to Japanese tax regulations were enacted into law on March&nbsp;24, 2003. As a result
of this amendment, the statutory income tax rate was reduced from approximately 41% to 40%
effective from April&nbsp;1, 2004. Current income taxes were calculated at the rate of 40%, in effect
for the year ended March&nbsp;31, 2005, and 41% in the years 2004 and 2003, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The effects of the income tax rate reduction on deferred income tax balances as of March&nbsp;31,
2003 reduced the net deferred tax asset by approximately &#165;1,044&nbsp;million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For the year ended March&nbsp;31, 2005, residual tax effects of &#165;4,571&nbsp;million previously recorded
in accumulated other comprehensive income (minimum pension liability adjustments) were released and
recorded as a reduction to income tax expense in the consolidated statements of income as a result
of the elimination of the minimum pension liability adjustment.
</DIV>

<P align="center" style="font-size: 10pt">- 96 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The effective tax rates of TDK for the years ended March&nbsp;31, 2005, 2004 and 2003, are reconciled with the Japanese statutory tax rate in the
following table:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">2003</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Japanese statutory tax rate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>40.4</B></TD>
    <TD nowrap><B>%</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">41.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">41.0</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Expenses not deductible for tax purposes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1.1</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Non taxable income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(0.2</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2.1</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Difference in statutory tax rates of foreign subsidiaries</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(10.5</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(23.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(19.9</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Change in the valuation allowance</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>3.8</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Change in enacted tax laws and rates</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Currency translation adjustment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>0.0</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2.9</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Investment tax credit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(1.2</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4.0</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Research and development tax credit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(3.6</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Residual tax effect in minimum pension liability
adjustments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(7.5</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Additional tax related to prior years income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>17.0</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(1.0</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.6</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" nowrap align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Effective tax rate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>38.3</B></TD>
    <TD nowrap><B>%</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">21.7</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">30.1</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" nowrap align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total income taxes for the years ended March&nbsp;31, 2005, 2004 and 2003 are allocated as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="6" style="border-bottom: 1px solid #000000">(Millions)</TD>

    <TD nowrap align="right" colspan="8" style="border-bottom: 1px solid #000000">(Thousands)</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">2005</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income from continuing operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>23,284</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,133</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,193</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">217,607</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Loss from discontinued operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>156</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,010</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(897</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,458</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Stockholders&#146; equity, accumulated other comprehensive income (loss):</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Foreign currency translation adjustments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>8</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">245</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(242</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">75</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Net unrealized gains (losses)&nbsp;on securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(148</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">348</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(166</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,383</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Minimum pension liability adjustments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>29,538</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,422</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(10,950</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">276,056</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>52,838</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,158</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6,062</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">493,813</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt">- 97 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income from continuing operations before income taxes and income taxes for the years ended
March&nbsp;31, 2005, 2004 and 2003, are summarized as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Income From</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Continuing</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Operations</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Before Income</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000">Income Taxes</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Taxes</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Current</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Deferred</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Total</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Yen (Millions):</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Japanese</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#165; 36,836</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>22,261</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(5,026</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>17,235</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Foreign</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>23,892</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>6,555</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(506</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>6,049</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#165; 60,728</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>28,816</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(5,532</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>23,284</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Japanese</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,611</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,411</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,404</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Foreign</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">47,236</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,864</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,865</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,729</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">55,847</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,275</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,858</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,133</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">2003</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Japanese</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,932</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,929</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,977</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,048</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Foreign</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,620</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,209</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,064</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,145</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,552</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,280</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,913</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,193</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">U.S. Dollars (Thousands):</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Japanese</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>344,261</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>208,047</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(46,972</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>161,075</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Foreign</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>223,290</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>61,261</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(4,729</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>56,532</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>567,551</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>269,308</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(51,701</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>217,607</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">- 98 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The tax effects of temporary differences that give rise to significant portions of the
deferred tax assets and deferred tax liabilities at March&nbsp;31, 2005 and 2004, are as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6">Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">(Millions)</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(Thousands)</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deferred tax assets:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Trade accounts receivable, principally due to
allowance for doubtful receivables</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right"><B>332</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">217</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>3,103</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Inventories</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>894</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">251</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>8,355</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Accrued business tax</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,330</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">344</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>12,430</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Accrued expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>3,863</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,605</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>36,103</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Retirement and severance benefits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>10,648</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,334</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>99,514</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Net operating loss carryforwards</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>14,631</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,427</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>136,738</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Tax credit carryforwards</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>208</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">559</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,944</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Minimum pension liability adjustments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>4,174</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29,133</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>39,009</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Property, plant and equipment, principally due
to differences in depreciation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>2,523</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,219</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>23,579</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,493</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,276</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>13,954</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:75px; text-indent:-15px">Total gross deferred tax assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>40,096</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">61,365</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>374,729</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:75px; text-indent:-15px">Less valuation allowance</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(15,409</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(11,028</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(144,009</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" nowrap align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:75px; text-indent:-15px">Net deferred tax assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right"><B>24,687</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50,337</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>230,720</B></TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deferred tax liabilities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Investments, principally due to differences
in valuation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(6,034</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7,329</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(56,393</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Undistributed earnings of foreign subsidiaries</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(2,656</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,773</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(24,822</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Net unrealized gains on securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(272</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(420</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(2,542</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(1,220</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,068</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(11,402</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" nowrap align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:75px; text-indent:-15px">Total gross deferred tax liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(10,182</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(11,590</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(95,159</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" nowrap align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:75px; text-indent:-15px">Net deferred tax assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>&#165; 14,505</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38,747</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>135,561</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The net changes in the total valuation allowance for the years ended March&nbsp;31, 2005, 2004 and
2003, are an increase of &#165;4,381&nbsp;million ($40,944 thousand), &#165;1,338&nbsp;million and &#165;2,246&nbsp;million,
respectively. The valuation allowance primarily relates to deferred tax assets associated with net
operating loss carryforwards incurred by certain foreign subsidiaries. The decrease in the
valuation allowance attributable to preacquisition tax benefits recognized during the years ended
March&nbsp;31, 2005 and 2004 amounted to &#165;119&nbsp;million and &#165;1,122&nbsp;million, respectively. The reversal of
the valuation allowance upon realization of tax benefits resulted in a reduction of goodwill. In
assessing the realizability of deferred tax assets, management considers whether it is more likely
than not that some portion or all of the deferred tax assets will not be realized. The ultimate
realization of deferred tax assets is dependent upon the generation of future taxable income during
the periods in which those temporary differences become deductible and tax carryforwards are
utilized. Management considered the scheduled reversal of deferred tax liabilities, projected
future taxable income, and tax planning strategies in making this assessment. Based upon the level
of historical taxable income and projections for future taxable income over the periods which the
deferred tax assets are deductible, management believes it is more likely than not TDK will realize
the benefits of these deductible differences and tax carryforwards, net of the existing valuation
allowance at March&nbsp;31, 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At March&nbsp;31, 2005, TDK and certain subsidiaries have net operating loss carryforwards for
income tax purposes of &#165;48,135&nbsp;million ($449,860 thousand) which are available to offset future
taxable income, if any.
</DIV>

<P align="center" style="font-size: 10pt">- 99 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Periods available to offset future taxable income vary in each tax jurisdiction and range from
one year to an indefinite period as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Yen (Millions)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">(Thousands)</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Within 1&nbsp;year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">159</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,486</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">1 to 5&nbsp;years</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,440</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">60,187</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">5 to 20&nbsp;years</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,242</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">142,449</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Indefinite periods</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,294</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">245,738</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">48,135</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">449,860</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At March&nbsp;31, 2005, certain subsidiaries have tax credit carryforwards for income tax purposes
of &#165;208&nbsp;million ($1,944 thousand) which are available to reduce future income taxes, if any.
Approximately &#165;143&nbsp;million ($1,336 thousand) of the tax credit carryforwards expire through 2019,
while the remainder have an indefinite carryforward period.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net deferred income tax assets and liabilities at March&nbsp;31, 2005 and 2004, are reflected in
the accompanying consolidated balance sheets under the following captions:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6">Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">(Millions)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(Thousands)</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Prepaid expenses and other current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right"><B>6,654</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,105</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>62,187</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deferred income taxes (noncurrent assets)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>8,633</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34,140</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>80,682</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other current liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(31</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(283</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(289</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deferred income taxes (noncurrent
liabilities)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(751</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(215</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(7,019</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" nowrap align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right"><B>14,505</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38,747</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>135,561</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of March&nbsp;31, 2005 and 2004, TDK did not recognize deferred tax liabilities of approximately
&#165;61,663&nbsp;million ($576,290 thousand) and &#165;50,714&nbsp;million, respectively, for certain portions of
undistributed earnings of foreign subsidiaries because TDK currently does not expect those
unremitted earnings to reverse and become taxable to TDK in the foreseeable future. A deferred tax
liability will be recognized when TDK expects that it will recover those undistributed earnings in
a taxable manner, such as through receipt of dividends or sale of the investments. As of March&nbsp;31,
2005 and 2004, the undistributed earnings of these subsidiaries are approximately &#165;244,341&nbsp;million
($2,283,561 thousand) and &#165;208,991&nbsp;million, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>8. Retirement and Severance Benefits</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK and certain of its subsidiaries sponsor noncontributory retirement and severance plans
that provide for pension or lump-sum benefit payments, based on length of service and certain other
factors, to employees who retire or terminate their employment for reasons other than for dismissal
for cause. Corporate statutory auditors participate in an unfunded retirement plan sponsored by
TDK.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK also sponsors a contributory defined benefit pension plan for which a majority of its
employees are covered. Pension benefits under the plan are based on length of service and certain
other factors. The contributory plan in Japan consists of the Employees&#146; Pension Fund plan
(&#147;EPF&#148;), comprised of the substitutional portion based on the pay related part of the old age
pension benefits prescribed by the Welfare Pension Insurance Law (similar to Social Security
benefits in the United States) and the corporate portion based on contributory defined pension
arrangements established at the discretion of TDK. The substitutional portions of the EPF
represent a welfare pension plan carried out on behalf of the Japanese government.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;These contributory and noncontributory plans are funded in conformity with the funding
requirements of the applicable Japanese governmental regulations.
</DIV>

<P align="center" style="font-size: 10pt">- 100 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK had been exempted from contributing to the Japanese Pension Insurance (&#147;JPI&#148;) program that
would otherwise have been required if it had not elected to fund the government substitutional
portion of the benefit through an EPF arrangement. The plan assets of the EPF were invested and
managed as a single portfolio for the entire EPF and were not separately attributed to the
substitutional and corporate portions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In June&nbsp;2001, the Contributed Benefit Pension Plan Law was newly enacted. This law permits an
employer to elect to transfer the entire substitutional portion benefit obligation from the EPF to
the government together with a specified amount of plan assets pursuant to a government formula.
After such transfer, the employer would be required to make periodic contribution to JPI, and the
Japanese government would be responsible for all benefit payments.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the new law, TDK received an approval of exemption from the Minister of Health,
Labor and Welfare, effective September&nbsp;25, 2003, from the obligation for benefits related to future
employee service with respect to the substitutional portion of its EPF. TDK received governmental
approval of exemption from the obligation for benefits related to past employee service in October
2004 with respect to the substantial portion of its domestic contributory plan. The transfer to
the government was completed on January&nbsp;31, 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK accounted for the transfer in accordance with EITF Issue No.&nbsp;03-2 &#147;Accounting for the
Transfer to the Japanese Government of the Substitutional Portion of Employee Pension Fund
Liabilities&#148; (&#147;EITF 03-2&#148;). As specified in EITF 03-2, the entire separation process is to be
accounted for at the time of completion of the transfer to the government of the substitutional
portion of the benefit obligation and related plan assets as a settlement in accordance with SFAS
No.&nbsp;88, &#147;Employers&#146; Accounting for Settlements and Curtailments of Defined Benefit Pension Plans
and for Termination Benefits&#148;. As a result of the transfer, TDK recognized as a subsidy from the
Japanese government an amount equal to the difference between the fair value of the obligation
deemed &#147;settled&#148; with the Japanese government and the assets required to be transferred to the
government. The subsidy that TDK recognized amounted to &#165;33,533&nbsp;million ($313,392 thousand). In
addition, TDK recognized a settlement loss equal to the amount calculated as the ratio of the
obligation settled to the total EPF obligation immediately prior to settlement, both of which
exclude the effect of future salary progression relating to the substitutional portion, times the
net unrecognized gain/loss immediately prior to settlement, which amounted to &#165;27,347&nbsp;million
($255,579 thousand). This gain and loss is included in operating income in the accompanying
consolidated statements of income for the year ended March&nbsp;31, 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Effective October&nbsp;1, 2004, the corporate portion of the EPF was amended by a new defined
benefit plan that provides benefits based on length of service and other factors in a manner
similar to the predecessor corporate defined benefit plan but, at a reduced rate. The reduction in
the pension benefit obligation as of the effective date in the amount of &#165;10,925&nbsp;million ($102,103
thousand) has been accounted for as a negative plan amendment and included in prior service cost
and will be amortized into net periodic benefit cost over the weighted average remaining service
period of the plan participants.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK and its subsidiaries use a January 1 measurement date for the majority of the plans.
</DIV>


<P align="center" style="font-size: 10pt">- 101 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net periodic benefit cost for TDK&#146;s employee retirement and severance defined benefit plans
for the years ended March&nbsp;31, 2005, 2004 and 2003 consisted of the following components:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11">Yen</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">U.S. Dollars</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000">(Millions)</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">(Thousands)</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">2004</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">2003</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2005</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Service cost-benefits earned
during the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#165;6,806</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,341</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,383</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>63,607</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest cost on projected
benefit obligation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>5,359</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,271</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,985</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>50,084</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Expected return on plan assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(3,180</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2,640</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(3,678</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(29,720</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Amortization of transition assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(1,331</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,331</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,331</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(12,439</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Recognized actuarial loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>5,696</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,480</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,963</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>53,234</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Amortization of unrecognized
prior service benefit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(1,522</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,353</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,342</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(14,224</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Settlement gain, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(6,186</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(57,813</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#165;5,642</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,768</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,980</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>52,729</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">- 102 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Reconciliations of beginning and ending balances of the benefit obligations and the fair value
of the plan assets are as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7">Yen</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">U.S. Dollars</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000">(Millions)</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">(Thousands)</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2004</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Change in benefit obligations:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Benefit obligations at beginning of period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#165;258,991</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">250,625</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>2,420,477</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Service cost</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>6,806</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,341</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>63,607</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Interest cost</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>5,359</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,271</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>50,084</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Plan participants&#146; contributions</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">405</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Plan amendments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(10,925</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">68</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(102,103</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Actuarial loss (gain)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(727</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,223</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(6,794</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Benefits paid</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(6,646</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(6,692</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(62,112</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Transfer of substitutional portion</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(67,862</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(634,224</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Others</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(437</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(4,084</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Translation adjustment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>438</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(804</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>4,093</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" align="left" style="border-bottom: 1px solid #000000"><B>&nbsp;</B></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Benefit obligations at end of period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>184,997</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">258,991</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,728,944</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" align="left" style="border-bottom: 1px solid #000000"><B>&nbsp;</B></TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Change in plan assets:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Fair value of plan assets at beginning of period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>168,913</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">146,573</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,578,626</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Actual return on plan assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>8,053</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,458</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>75,262</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Employer contributions</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>3,596</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,434</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>33,608</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Plan participants&#146; contributions</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">405</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Benefits paid</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(6,046</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(5,588</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(56,505</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Transfer of substitutional portion</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(31,985</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(298,925</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Translation adjustment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>117</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(369</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,093</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" align="left" style="border-bottom: 1px solid #000000"><B>&nbsp;</B></TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Fair value of plan assets at end of period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>142,648</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">168,913</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,333,159</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" align="left" style="border-bottom: 1px solid #000000"><B>&nbsp;</B></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Funded status</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(42,349</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(90,078</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(395,785</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Unrecognized net transition obligation
being recognized over 18&nbsp;years</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(2,607</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(5,046</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(24,365</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Unrecognized net actuarial loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>72,650</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">113,550</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>678,972</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Unrecognized prior service benefit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(28,295</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(18,891</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(264,439</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" align="left" style="border-bottom: 1px solid #000000"><B>&nbsp;</B></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net amount recognized</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(601</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(465</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(5,617</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" align="left" style="border-bottom: 3px double #000000"><B>&nbsp;</B></TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Amounts recognized in consolidated balance sheets consists of:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" nowrap align="center"></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Prepaid pension cost</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>17,669</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>165,131</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Retirement and severance benefits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(28,839</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(73,521</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(269,523</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Intangible assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>56</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">64</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>523</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Accumulated other comprehensive loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>10,513</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">72,992</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>98,252</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" align="left" style="border-bottom: 1px solid #000000"><B>&nbsp;</B></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net amount recognized</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(601</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(465</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(5,617</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" align="left" style="border-bottom: 1px solid #000000"><B>&nbsp;</B></TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Actuarial present value of accumulated benefit
obligations at end of period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#165;167,834</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">237,868</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>1,568,542</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" align="left" style="border-bottom: 3px double #000000"><B>&nbsp;</B></TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The projected benefit obligations and the fair value of plan assets for the pension plans with
projected benefit obligations in excess of plan assets, and the accumulated benefit obligations and
the fair value of plan assets for the pension plans with accumulated benefit obligations in excess
of plan assets are as follows.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7">Yen</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">U.S. Dollars</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000">(Millions)</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">(Thousands)</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">2004</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2005</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Plans with projected benefit
obligations in excess of plan assets:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Projected benefit obligations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#165;184,997</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">258,991</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$1,728,944</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Fair value of plan assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>142,648</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">168,913</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,333,159</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Plans with accumulated benefit
obligations in excess of plan assets:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Accumulated benefit obligations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>54,504</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">237,364</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>509,383</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Fair value of plan assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>28,531</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">168,316</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>266,645</B></TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<P align="center" style="font-size: 10pt">- 103 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Assumptions</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Weighted-average assumptions used to determine benefit obligations at March&nbsp;31:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">2004</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Discount rate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>2.2</B></TD>
    <TD nowrap><B>%</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">2.1</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Assumed rate of increase in future compensation levels</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>3.0</B></TD>
    <TD nowrap><B>%</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">3.0</TD>
    <TD nowrap>%</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Weighted-average assumptions used to determine net periodic benefit cost for the years ended March&nbsp;31:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">2004</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">2003</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Discount rate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>2.1</B></TD>
    <TD nowrap><B>%</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">2.1</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">2.6</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Assumed rate of increase in future compensation levels</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>3.0</B></TD>
    <TD nowrap><B>%</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">3.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">3.0</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Expected long-term rate of return on plan assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>2.2</B></TD>
    <TD nowrap><B>%</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">2.2</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">2.6</TD>
    <TD nowrap>%</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK determines the expected long-term rate of return based on the expected long-term return of
the various asset categories in which it invests. TDK considers the current expectations for
future returns and the actual historical returns of each plan asset category.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Plan assets</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The weighted-average asset allocations of TDK&#146;s benefit plans at March&nbsp;31, 2005 and 2004 by
asset category are as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">2004</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Equity securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>26.2</B></TD>
    <TD nowrap><B>%</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">54.4</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Debt securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>6.9</B></TD>
    <TD nowrap><B>%</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">19.9</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>62.5</B></TD>
    <TD nowrap><B>%</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">19.9</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>4.4</B></TD>
    <TD nowrap><B>%</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">5.8</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" nowrap align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>100.0</B></TD>
    <TD nowrap><B>%</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK&#146;s investment policies are designed to ensure adequate plan assets are available to provide
future payments of pension benefits to eligible participants. Taking into account the expected
long-term rate of return on plan assets, TDK formulates a &#147;model&#148; portfolio comprised of the
optimal combination of equity securities and debt securities. Plan assets are invested in
individual equity and debt securities using the guidelines of the &#147;model&#148; portfolio in order to
produce a total return that will match the expected return on a mid-term to long-term basis. TDK
evaluates the gap between expected return and actual return of invested plan assets on an annual
basis to determine if such differences necessitate a revision in the formulation of the &#147;model&#148;
portfolio. TDK revises the &#147;model&#148; portfolio when and to the extent considered necessary to
achieve the expected long-term rate of return on plan assets.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During the year ended March&nbsp;31, 2005, the EPF sold certain assets to facilitate the funding of
the payment to the Japanese government for the transfer of the substitutional portion of the plan.
In addition, the strategic mix for domestic pension plans has increased asset allocation to cash
based on the unclear outlook for the bond and equity market in Japan at the middle of 2004. As a
result, the relative portion of cash in pension assets at March&nbsp;31, 2005 increased compared to
March&nbsp;31, 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Contributions</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK expects to contribute &#165;4,882&nbsp;million ($45,626 thousand) to its defined benefit plans for
the year ending March&nbsp;31, 2006.
</DIV>

<P align="center" style="font-size: 10pt">- 104 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Estimated future benefit payments</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The benefits expected to be paid from the pension plans in each year 2006 through 2015 are as
follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Yen</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">U.S. Dollars</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">(Millions)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">(Thousands)</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Year ending March&nbsp;31,
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">
2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;6,075</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">56,776</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,828</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">54,467</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,806</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">63,607</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">2009</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,346</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">68,654</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">2010</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,227</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">76,888</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">2011 &#151; 2015</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;41,146</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">384,542</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>9. Legal Reserve and Dividends</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Japanese Commercial Code provides that an amount equal to at least 10% of cash dividends
and other distributions from retained earnings paid by TDK and its Japanese subsidiaries be
appropriated as a legal reserve. No further appropriations are required when the total amount of
the additional paid-in capital and the legal reserve equals 25% of their respective stated capital.
The Japanese Commercial Code also provides that to the extent that the sum of the additional
paid-in capital and the legal reserve exceeds 25% of the stated capital, the amount of the excess
(if any) is available for appropriations by resolution of the shareholders. Certain foreign
subsidiaries are also required to appropriate their earnings to legal reserves under the laws of
the respective countries. Cash dividends and appropriations to the legal reserve charged to
retained earnings for the years ended March&nbsp;31, 2005, 2004 and 2003 represent dividends paid out
during those years and the related appropriations to the legal reserve. The accompanying
consolidated financial statements do not include any provision for the dividend proposed by the
Board of Directors of &#165;40 ($0.37) per share aggregating &#165;5,290&nbsp;million ($49,439 thousand) in
respect of the year ended March&nbsp;31, 2005.
Cash dividends per common share are computed based on dividends paid for the year.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>10. Stock Option Plan</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK obtained approval of the Ordinary General Meeting of Shareholders held on June&nbsp;29, 2004
regarding the issuance of stock acquisition rights as stock options (the Stock Acquisition Rights)
to Board members, Corporate Officers and select senior executives, pursuant to Articles 280-20 and
280-21 of the Japanese Commercial Code. Upon approval, the Board of Directors adopted resolutions
to issue at no charge an aggregate of 2,343 Stock Acquisition Rights, each representing a stock
option to purchase 100 shares of common stock of TDK, to the then 187 Directors, Corporate Officers
and select senior executives of TDK, and the Directors and select senior executives of affiliates.
The Stock Acquisition Rights issued on August&nbsp;6, 2004 are exercisable during the period from August
1, 2006 to July&nbsp;31, 2010. The amount to be paid by qualified persons upon the exercise of each
Stock Acquisition Rights is set at &#165;8,147 ($76.14) per share of common stock, which was calculated
by a formula approved by shareholders at the said annual shareholders meeting and is subject to an
adjustment in certain events, including but not limited to a stock split, stock dividend and issue
of new shares at a price less than the current market price of the shares of TDK. The exercise
price of each Stock Acquisition Rights was equal to or greater than the fair market value of TDK&#146;s
common stock on the date of grant. To cover these options TDK purchased on the Tokyo Stock
Exchange (&#147;TSE&#148;) a total of 234,300 common shares with an aggregate purchase price of &#165;1,656
million ($15,472 thousand) from August&nbsp;9, 2004 through August&nbsp;16, 2004.
</DIV>


<P align="center" style="font-size: 10pt">- 105 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK obtained approval of the Ordinary General Meeting of Shareholders held in June&nbsp;2003
and 2002 regarding the issuance of stock acquisition rights as stock options, pursuant to Articles
280-20 and 280-21 of the Japanese Commercial Code. Upon approval, the Board of Directors adopted
resolutions to issue at no charge an aggregate of 2,547 and 2,236 Stock Acquisition Rights, each
representing a stock option to purchase 100 shares of common stock of TDK, to the then 179 and 197
Directors, Corporate Officers and selected senior executives of TDK, and the Directors and select
senior executives of its affiliates. The amount to be paid by qualified persons upon the exercise
of each Stock Acquisition Rights was set at &#165; 6,954 and &#165; 5,909 per share of common stock. The
exercise price of each Stock Acquisition Rights was equal to or greater than the fair market value
of TDK&#146;s common stock on the date of grant.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Ordinary General Meeting of Shareholders held in June&nbsp;2001 and 2000 approved to implement
TDK&#146;s stock option plan for Directors and certain employees of TDK, and the purchase of TDK&#146;s own
shares for transfer to them under the plan, pursuant to Article&nbsp;210-2 of Japanese Commercial Code.
Stock options were provided to the then 196 and 204 Directors on the Board and associate directors
and officials in amounts ranging from 500 to 10,000 common shares each, at an exercise price of
&#165; 6,114 and &#165; 15,640 per share. The exercise price of each Stock Acquisition Rights was equal to or
greater than the fair market value of TDK&#146;s common stock on the date of grant.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK currently accounts for these stock option plans as fixed plans pursuant to APB 25.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A summary of the status of TDK&#146;s stock option plans as of March&nbsp;31, 2005, 2004 and 2003, and
of the activity during the years ending on those dates, is as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="23%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000">2004</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000">2003</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Weighted</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Weighted</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Weighted</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Weighted</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Number</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">average</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Number</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">average</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Number</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">average</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">average</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">of</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">exercise</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">of</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">exercise</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">of</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">exercise</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">exercise</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 0px solid #000000">shares</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">price</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 0px solid #000000">shares</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">price</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 0px solid #000000">shares</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">price</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">price</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">U.S.</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Yen</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Dollars</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Outstanding at
beginning of year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>739,300</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right"><B>8,358</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">548,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">8,967</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">327,900</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">11,050</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>78.11</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Granted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>234,300</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>8,147</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">254,700</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,954</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">223,600</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,909</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>76.14</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Exercised</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>71,700</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>5,979</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46,900</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,114</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>55.88</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Forfeited or
Expired</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>33,300</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>13,695</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,276</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,777</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>127.99</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Outstanding at
end of year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>868,600</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>8,293</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">739,300</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,358</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">548,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,967</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>77.50</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Exercisable at
end of year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>380,600</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>9,275</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">264,300</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,755</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">168,900</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,640</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>86.68</B></TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="margin-left: 0%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">Information about stock options outstanding at March&nbsp;31, 2005 is as follows:</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="15" style="border-bottom: 1px solid #000000">Options Outstanding</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Weighted</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">average</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Number</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">remaining</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7">Weighted average</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Range of exercise prices</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">outstanding at</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">contractual life</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000">exercise price</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Yen</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">March 31, 2005</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">(years)</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Yen</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">8,147</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>234,300</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,147</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">76.14</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">6,954</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>253,700</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,954</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">64.99</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">5,909</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>171,600</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,909</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">55.22</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">6,114</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>79,000</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,114</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">57.14</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">15,640</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>130,000</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,640</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">146.17</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">5,909 to 15,640</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>868,600</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,293</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">77.50</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"> - 106 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The fair value of these stock options was estimated on the date of grant using the
Black-Scholes option pricing model with the following assumptions:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2004</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2003</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD nowrap><DIV style="margin-left:15px; text-indent:-15px">Grant-date fair value</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&#165;<B>1,910</B> </TD>
    <TD align="right"><B>($17.85</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">1,849</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">1,569</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Expected life</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="right"><B>4.0 years</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="center">4.0 years</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="center">4.0 years</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Risk-free interest rate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>0.59</B></TD>
    <TD nowrap><B>%</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0.47</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0.35</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Expected volatility</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>35.05</B></TD>
    <TD nowrap><B>%</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">39.65</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">39.96</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Expected dividend yield</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>0.77</B></TD>
    <TD nowrap><B>%</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0.75</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0.80</TD>
    <TD nowrap>%</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>11. Other Comprehensive Income (Loss)</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Change in accumulated other comprehensive income (loss)&nbsp;for the years ended March&nbsp;31, 2005,
2004 and 2003, are as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11">Yen</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">U.S. Dollars</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000">(Millions)</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">(Thousands)</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2004</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2003</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Foreign currency translation adjustments:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Balance at beginning of period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&#165;</TD>
    <TD align="right"><B>(52,807</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(26,520</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(7,773</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>$</B></TD>
    <TD align="right"><B>(493,523</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Adjustments for period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>5,636</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(26,287</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(18,747</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>52,672</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Balance at end of period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(47,171</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(52,807</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(26,520</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(440,851</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" nowrap align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net unrealized gains (losses)&nbsp;on securities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Balance at beginning of period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>648</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">110</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">379</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>6,056</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Adjustments for period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>153</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">538</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(269</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,430</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Balance at end of period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>801</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">648</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">110</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>7,486</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Minimum pension liability adjustments:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Balance at beginning of period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(38,228</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(52,414</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(36,605</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(357,271</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Adjustments for period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>32,941</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,186</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(15,809</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>307,860</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Balance at end of period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(5,287</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(38,228</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(52,414</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(49,411</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" nowrap align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total accumulated other comprehensive income (loss):</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Balance at beginning of period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(90,387</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(78,824</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(43,999</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(844,738</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Adjustments for period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>38,730</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(11,563</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(34,825</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>361,962</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Balance at end of period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&#165;</TD>
    <TD align="right"><B>(51,657</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(90,387</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(78,824</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>$</B></TD>
    <TD align="right"><B>(482,776</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" nowrap align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"> - 107 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tax effects allocated to each component of other comprehensive income (loss)&nbsp;and
reclassification adjustments for the years ended March&nbsp;31, 2005, 2004 and 2003, are as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 0px solid #000000">Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000">(Millions)</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Before</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Tax</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">tax</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">(expense)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Net-of-tax</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">amount</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">or benefit</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">amount</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>2005</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Foreign currency translation adjustments:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Amount arising during the year on investments in
foreign entities held at end of period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>&#165;</B></TD>
    <TD align="right"><B>5,203</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(8</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>5,195</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Reclassification adjustments for the portion of
gains and losses realized upon liquidation and
sale of investments in foreign entities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>441</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>441</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:75px; text-indent:-15px">Net foreign currency translation adjustments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>5,644</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(8</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>5,636</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Unrealized gains (losses)&nbsp;on securities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Unrealized holding gains arising for period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>676</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(119</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>557</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Reclassification adjustments for (gains)&nbsp;losses
realized in net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(671</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>267</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(404</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" nowrap align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:75px; text-indent:-15px">Net unrealized gains (losses)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>5</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>148</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>153</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Minimum pension liability adjustments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>62,479</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>(29,538</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>32,941</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Other comprehensive income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right"><B>68,128</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(29,398</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>38,730</B></TD>
    <TD>&nbsp;</TD>

</TR>

<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>2004</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Foreign currency translation adjustments:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Amount arising during the year on investments in
foreign entities held at end of period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(26,464</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(245</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(26,709</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Reclassification adjustments for the portion of
gains and losses realized upon liquidation and
sale of investments in foreign entities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">422</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">422</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:75px; text-indent:-15px">Net foreign currency translation adjustments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(26,042</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(245</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(26,287</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Unrealized gains (losses)&nbsp;on securities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Unrealized holding gains arising for period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">886</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(348</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">538</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Minimum pension liability adjustments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,608</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(9,422</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,186</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Other comprehensive income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(1,548</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(10,015</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(11,563</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" nowrap align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>2003</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Foreign currency translation adjustments:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Amount arising during the year on investments in
foreign entities held at end of period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(19,751</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">242</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(19,509</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Reclassification adjustments for the portion of
gains and losses realized upon liquidation of
investments in foreign entities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">762</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">762</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:75px; text-indent:-15px">Net foreign currency translation adjustments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(18,989</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">242</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(18,747</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Unrealized gains (losses)&nbsp;on securities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Unrealized holding gains arising for period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">104</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(41</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">63</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Reclassification adjustments for (gains)&nbsp;losses
realized in net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(539</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">207</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(332</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" nowrap align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:75px; text-indent:-15px">Net unrealized gains (losses)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(435</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">166</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(269</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Minimum pension liability adjustments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(26,759</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,950</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(15,809</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" nowrap align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Other comprehensive income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(46,183</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,358</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(34,825</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" nowrap align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"> - 108 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11">U.S. Dollars</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000">(Thousands)</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Tax</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Before tax</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">(expense)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Net-of-tax</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">amount</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">or benefit</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">amount</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>2005</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Foreign currency translation adjustments:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Amount arising during the year on
investments in foreign entities held at
end of period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>48,626</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(75</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>48,551</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Reclassification adjustments for the
portion of gains and losses realized upon
liquidation and sale of investments in
foreign entities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>4,121</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>4,121</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:75px; text-indent:-15px">Net foreign currency translation
adjustments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>52,747</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(75</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>52,672</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Unrealized gains (losses)&nbsp;on securities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Unrealized holding gains arising for period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>6,318</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(1,112</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>5,206</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Reclassification adjustments for (gains)
losses realized in net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(6,271</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>2,495</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(3,776</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" nowrap align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:75px; text-indent:-15px">Net unrealized gains (losses)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>47</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,383</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,430</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Minimum pension liability adjustments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>583,916</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(276,056</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>307,860</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Other comprehensive income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>636,710</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(274,748</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>361,962</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>12. Leases</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK and its subsidiaries occupy offices and other facilities under various cancellable lease
agreements expiring in fiscal 2006 through 2007. Lease deposits made under such agreements,
aggregating &#165;1,900&nbsp;million ($17,757 thousand) and &#165;2,079&nbsp;million, at March&nbsp;31, 2005 and 2004,
respectively, are included in other assets on the accompanying consolidated balance sheets.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following is a schedule by years of future minimum rental payments required under
operating leases that have initial or remaining noncancellable lease terms in excess of one year as
of March&nbsp;31, 2005:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Yen</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">U.S. Dollars</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">(Millions)</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">(Thousands)</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Year ending March&nbsp;31,
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">2,355</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">22,009</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,697</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,860</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,133</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,589</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">2009</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">595</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,561</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">2010</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">305</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,850</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Later years</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">723</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,757</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">6,808</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">63,626</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>13. Commitments and Contingent Liabilities</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At March&nbsp;31, 2005, commitments outstanding for the purchase of property, plant and equipment
approximated &#165;12,292&nbsp;million ($114,879 thousand). TDK has entered into several purchase agreements
with certain suppliers whereby TDK committed to purchase a minimum amount of raw materials to be
used in the manufacture of its products. Future minimum purchases remaining under the agreements
approximated &#165;3,841&nbsp;million ($35,897 thousand) at March&nbsp;31, 2005.
</DIV>

<P align="center" style="font-size: 10pt"> - 109 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK and certain of its subsidiaries provide guarantees to third parties on bank loans of its
employees. The guarantees on behalf of the employees are made for their housing loans. For each
guarantee issued, in the event the employee defaults on payment, TDK would be required to make
payments under its guarantee. The maximum amount of undiscounted payments TDK would have to make
in the event of default is &#165;6,296&nbsp;million ($58,841 thousand) and &#165;6,605&nbsp;million at March&nbsp;31, 2005
and 2004, respectively. As of March&nbsp;31, 2005, the liability recognized for TDK&#146;s obligation under
the guarantee arrangement is not material.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Several claims against TDK and certain subsidiaries are pending. Provision has been made for
the estimated liabilities for the items. In the opinion of management, based upon discussion with
counsel, any additional liability not currently provided for will not materially affect the
consolidated financial position and results of operations of TDK.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>14. Risk Management Activities and Derivative Financial Instruments</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK and its subsidiaries operate internationally which exposes them to the risk of changes in
foreign exchange rates and interest rates; derivative financial instruments are utilized to reduce
these risks. TDK and its subsidiaries do not hold or issue financial instruments for trading
purposes. TDK and its subsidiaries are exposed to credit related losses in the event of
nonperformance by the counterparties to those financial instruments, but does not expect any
counterparties to fail to meet their obligations given their high credit ratings. The credit
exposure of currency swaps, interest rate and currency swaps, forward foreign exchange contracts
and currency option contracts is represented by the fair values of contracts.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TDK and one of its subsidiaries have currency swaps and interest rate and currency swaps with
certain financial institutions to limit their exposure to fluctuations in foreign exchange rates
and interest rates involved mainly with loans made by TDK to its subsidiaries in a total amount of
&#165;11,067&nbsp;million ($103,430 thousand) and &#165;12,605&nbsp;million at March&nbsp;31, 2005 and 2004, respectively.
These swaps require TDK and the subsidiary to pay principally euros and U.S. dollars and to receive
Japanese yen at a specified rate on specific dates. The remaining term of these swaps is one month
as of March&nbsp;31, 2005. Gains or losses on interest and currency swaps and currency swaps are
included in interest expense and foreign exchange gain (loss)&nbsp;in the consolidated statements of
income, respectively. The swap contracts are measured at fair value and are included in prepaid
expenses and other current assets or other current liabilities, as the case may be, in the
consolidated balance sheets.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Forward exchange contracts and currency option contracts have been entered into to hedge
adverse effects of foreign currency exchange rate fluctuations mainly on
foreign-currency-denominated trade receivables and foreign-currency-denominated forecasted
transactions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At March&nbsp;31, 2005 and 2004, TDK and certain of its subsidiaries had forward exchange contracts
to sell and buy foreign currencies (principally U.S. dollars and Japanese Yen) and currency option
contracts for a contract amount of &#165;28,990&nbsp;million ($270,935 thousand) and &#165;34,978&nbsp;million,
respectively. Gains or losses on forward exchange contracts and currency option contracts are
included in foreign exchange gain (loss)&nbsp;in the consolidated statements of income. These contracts
are measured at fair value and are included in prepaid expenses and other current assets or other
current liabilities, as the case may be, in the consolidated balance sheets.
</DIV>

<P align="center" style="font-size: 10pt"> - 110 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>15. Fair Value of Financial Instruments</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following methods and assumptions were used to estimate the fair value of financial
instruments in cases for which it is practicable:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>(a)</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Cash and cash equivalents, Trade receivables, Other current assets, Short-term debt, Trade
payables, Accrued salaries and wages, Accrued expenses, Income taxes payables and Other
current liabilities.</B></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The carrying amount approximates fair value because of the short maturity of these
instruments.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>(b)&nbsp;Marketable securities and Investments in securities</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The fair values of marketable securities and investments in securities are estimated based on
quoted market prices for these instruments. For other securities for which there are no quoted
market prices, a reasonable estimate of fair values could not be made without incurring excessive
costs. Additional information pertinent to the value of unquoted investments is provided below.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>(c)&nbsp;Long-term debt</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The fair value of TDK&#146;s long-term debt is estimated based on the amount of future cash flows
associated with the instrument discounted using TDK&#146;s current borrowing rate for similar debt of
comparable maturity, or based on the quoted market prices for the same or similar issues.
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>(d)</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Currency Swaps, Currency and Interest Rate Swaps, Forward Foreign Exchange Contracts and
Foreign Currency Option Contracts</B></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The fair values of currency swaps, currency and interest rate swaps, forward foreign exchange
contracts and foreign currency option contracts are estimated by obtaining quotes from financial
institutions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The carrying amounts and estimated fair values of TDK&#146;s financial instruments at March&nbsp;31,
2005 and 2004, are summarized as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">Yen (Millions)</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>As of March 31, 2005</B></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Carrying amount</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Estimated fair value</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Nonderivatives:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Assets:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Investments in securities and other
assets for which it is:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:75px; text-indent:-15px">Practicable to estimate fair value</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right"><B>12,684</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>12,684</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:75px; text-indent:-15px">Not practicable to estimate fair value</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,741</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Liability:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Long-term debt, including current portion</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(184</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(184</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Derivatives:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Currency and interest rate swaps in a:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:75px; text-indent:-15px">Gain position</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:75px; text-indent:-15px">Loss position</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(312</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(312</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Forward foreign exchange contracts in a:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:75px; text-indent:-15px">Gain position</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:75px; text-indent:-15px">Loss position</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(88</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(88</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Currency option contracts in a:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:75px; text-indent:-15px">Gain position</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:75px; text-indent:-15px">Loss position</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(366</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(366</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"> - 111 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">Yen (Millions)</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">As of March 31, 2004</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Carrying amount</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Estimated fair value</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Nonderivatives:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Assets:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Investments in securities and other
assets for which it is:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:75px; text-indent:-15px">Practicable to estimate fair value</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">8,259</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,259</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:75px; text-indent:-15px">Not practicable to estimate fair value</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,135</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Liability:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Long-term debt, including current portion</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(128</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(128</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Derivatives:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Currency and interest rate swaps in a:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:75px; text-indent:-15px">Gain position</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">287</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">287</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:75px; text-indent:-15px">Loss position</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(35</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(35</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Forward foreign exchange contracts in a:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:75px; text-indent:-15px">Gain position</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">403</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">403</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:75px; text-indent:-15px">Loss position</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Currency option contracts in a:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:75px; text-indent:-15px">Gain positions</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">91</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">91</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">U.S. Dollars (Thousands)</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>As of March 31, 2005</B></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Carrying amount</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Estimated fair value</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Nonderivatives:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Assets:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Investments in securities and other assets
for which it is:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:75px; text-indent:-15px">Practicable to estimate fair value</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>118,542</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>118,542</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:75px; text-indent:-15px">Not practicable to estimate fair value</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>16,271</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Liability:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Long-term debt, including current portion</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(1,720</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(1,720</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Derivatives:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Currency and interest rate swaps in a:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:75px; text-indent:-15px">Gain position</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:75px; text-indent:-15px">Loss position</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(2,916</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(2,916</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Forward foreign exchange contracts in a:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:75px; text-indent:-15px">Gain position</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:75px; text-indent:-15px">Loss position</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(822</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(822</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Currency option contracts in a:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:75px; text-indent:-15px">Gain position</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:75px; text-indent:-15px">Loss position</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(3,421</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(3,421</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The carrying amounts of the nonderivative assets and liabilities are included in the
consolidated balance sheets under the indicated captions. The carrying amounts of the currency
swaps, the currency and interest rate swaps, forward foreign exchange contracts and foreign
currency option contracts in a gain position are included in prepaid expenses and other current
assets, while those in a loss position are included in other current liabilities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;It is not practicable to estimate the fair value of investments in untraded companies.
Management believes that the carrying amounts approximate fair value.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Limitations</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Fair value estimates are made at a specific point in time, based on relevant market
information and information about the financial instrument. These estimates are subjective in
nature and involve uncertainties and matters of significant judgment and therefore cannot be
determined with precision. Changes in assumptions could significantly affect the estimates.
</DIV>

<P align="center" style="font-size: 10pt"> - 112 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>16. Restructuring Charges</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The downturn in the U.S. economy from the fourth quarter ended March&nbsp;31, 2001 and the
reduction in IT investment volume on a world-wide basis had an adverse effect on TDK. Under the
circumstances, TDK believes offering competitive pricing is essential to maintaining its
advantageous position in the market of electronic components. Additionally, many of TDK&#146;s
customers who manufacture consumer products have transferred their manufacturing facilities to
Asian countries, in particular China. As a result, TDK, as a supplier of electronic components to
these customers, will be required to transfer certain of its factories to these Asian countries in
order to meet the customers&#146; logistical needs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During the year ended March&nbsp;31, 2003, TDK recorded a restructuring charge of &#165;5,345&nbsp;million.
TDK recorded a workforce reduction charge of approximately &#165;2,346&nbsp;million relating primarily to
severances. As a result of the restructuring, a total of 1,302 regular employees were terminated
through March&nbsp;31, 2003. TDK recorded a restructuring charge of &#165;2,999&nbsp;million mainly relating to
losses on the disposal of property, plant and equipment in Japan, the Americas and Europe.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Through March&nbsp;31, 2003, TDK had paid &#165;5,119&nbsp;million of the &#165;5,345&nbsp;million restructuring
charges. TDK paid all of the remaining restructuring costs by the end of first quarter of fiscal
2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>17. Goodwill and Other Intangible Assets</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The components of acquired intangible assets excluding goodwill at March&nbsp;31, 2005 and 2004,
are as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="23" style="border-bottom: 1px solid #000000">Yen (Millions)</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000">2004</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Accumu-</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Accumu-</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Gross</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">lated</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Gross</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">lated</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Carrying</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Amorti-</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Net</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Carrying</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Amorti-</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Net</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Amount</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">zation</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Amount</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Amount</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">zation</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Amount</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Amortized intangible
assets:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Patent</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right"><B>10,347</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>2,242</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>8,105</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,349</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,259</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,090</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Software</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>7,271</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>4,399</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>2,872</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,359</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,207</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,152</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>2,346</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>715</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,631</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,739</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">870</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,869</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="23" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>19,964</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>7,356</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>12,608</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,447</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,336</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,111</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="23" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Unamortized
intangible assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right"><B>639</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>639</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">916</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">916</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="23" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000">U.S. Dollars (Thousands)</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Accumu-</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Gross</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">lated</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Carrying</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Amorti-</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Net</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Amount</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">zation</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Amount</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Amortized intangible assets:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Patent</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>96,701</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>20,953</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>75,748</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Software</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>67,953</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>41,112</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>26,841</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>21,926</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>6,683</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>15,243</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>186,580</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>68,748</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>117,832</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Unamortized intangible assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>5,972</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>5,972</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"> - 113 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Intangible assets subject to amortization are amortized using the straight-line method over
their estimated useful lives to their estimated residual value of zero. The useful lives are 11
years for the Patents, 3 to 5&nbsp;years for Internal-use Software, and 10&nbsp;years for Other intangible
assets.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Aggregate amortization expense for the years ended March&nbsp;31, 2005, 2004 and 2003 was &#165;2,467
million ($23,056 thousand), &#165;2,626&nbsp;million and &#165;1,762&nbsp;million, respectively. Estimated
amortization expense for the next five years is: &#165;2,342&nbsp;million in 2006, &#165;1,869&nbsp;million in 2007,
&#165;1,521&nbsp;million in 2008, &#165;1,331&nbsp;million in 2009, and &#165;1,211&nbsp;million in 2010.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The changes in the carrying amount of goodwill by segment for the year ended March&nbsp;31, 2005 is
as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000">Yen (Millions)</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Electronic</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">materials and</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Recording media</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">components</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">and systems</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Total</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>April&nbsp;1, 2003</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">13,634</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">497</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,131</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Additions</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">76</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">76</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deductions</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,128</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(497</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,625</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Translation adjustment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,553</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,553</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>March&nbsp;31, 2004</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,029</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,029</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Additions</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">991</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">991</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deductions</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,975</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,975</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Translation adjustment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">165</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">165</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>March&nbsp;31, 2005</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">9,210</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,210</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000">U.S. Dollars (Thousands)</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Electronic</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">materials and</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Recording media</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">components</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">and systems</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Total</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>March&nbsp;31, 2004</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">93,729</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">93,729</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Additions</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,262</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,262</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deductions</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(18,458</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(18,458</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Translation adjustment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,542</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,542</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>March&nbsp;31, 2005</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">86,075</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">86,075</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Goodwill additions during the year ended March&nbsp;31, 2005 principally represent the excess of
purchase price over the fair value of assets acquired and liabilities assumed for a certain
immaterial acquisition made during the year. Goodwill deductions during the year ended March&nbsp;31,
2005 primarily consist of an impairment loss from discontinued operations in the amount of &#165;1,856
million in connection with the discontinuation of TDK&#146;s semiconductor business (note 20) and a
reclassification to deferred income taxes in the amount of &#165;119&nbsp;million related to post-acquisition
adjustment resulting from recognition of preacquisition tax benefits.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Goodwill deductions during the year ended March&nbsp;31, 2004 consist of a reclassification to
intangible assets in the amount of &#165;1,006&nbsp;million resulting from the finalization of the purchase
price allocation of a subsidiary acquired in 2003, a reclassification to deferred income taxes in
the amount of &#165;1,122&nbsp;million related to post-acquisition adjustment resulting from recognition of
preacquisition tax benefits, and the sale of a certain subsidiary in the amount of &#165;497&nbsp;million.
</DIV>

<P align="center" style="font-size: 10pt"> - 114 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>18. Net Income per Share</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A reconciliation of the numerators and denominators of the basic and diluted net income per
share computations is as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11">Yen</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">U.S. Dollars</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000">(Millions)</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">(Thousands)</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2004</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2003</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income from continuing
operations available to common
stockholders</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right"><B>36,965</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43,355</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,593</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>345,467</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Loss from discontinued
operations available to common
stockholders</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>3,665</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,254</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,574</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>34,252</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income available to common
stockholders</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right"><B>33,300</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42,101</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,019</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>311,215</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000">Number of shares (Thousands)</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2004</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2003</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Weighted average common shares
outstanding &#151; Basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>132,293</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">132,475</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">132,716</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Effect of dilutive stock options</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>83</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">48</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Weighted average common shares
outstanding &#151; Diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>132,376</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">132,523</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">132,716</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000">Yen</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2004</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2003</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income from continuing
operations per share:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right"><B>279.41</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">327.27</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">102.42</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>2.61</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>279.25</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">327.15</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">102.42</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>2.61</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Loss from discontinued
operations per share:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right"><B>(27.70</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(9.47</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(11.86</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(0.26</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(27.69</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(9.46</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(11.86</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(0.26</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income per share:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right"><B>251.71</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">317.80</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">90.56</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>2.35</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>251.56</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">317.69</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">90.56</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>2.35</B></TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>19. Business and Credit Concentrations</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;One significant customer related to electronic materials and components business accounted for
12.6%, 12.1% and 8.5% of TDK&#146;s net sales for the years ended March&nbsp;31, 2005, 2004 and 2003,
respectively, and 13.2% and 10.2% of trade receivables at March&nbsp;31, 2005 and 2004, respectively.
</DIV>

<P align="center" style="font-size: 10pt"> - 115 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>20. Discontinued Operations</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On March&nbsp;31, 2005, TDK entered into an agreement to sell all outstanding stock of its wholly
owned subsidiary, TDK Semiconductor Corporation (&#147;TSC&#148;) for &#165;1,509&nbsp;million ($14,103 thousand) to
Golden Gates Capital (&#147;Buyer&#148;). The sale of TSC is part of TDK&#146;s continuing shift away from
non-core products and technologies. The sale agreement also includes earn-out payments, to be made
by the Buyer to TDK, of up to &#165;3,478&nbsp;million ($32,505 thousand). The payments are contingent upon
certain milestones being met related to future revenue targets extending through 2007. The
transaction was completed on April&nbsp;8, 2005. TDK has accounted for the sale of TSC as a
discontinued operation pursuant to FASB Statement No.&nbsp;144, &#147;Accounting for the Impairment or
Disposal of Long-Lived Assets&#148;, as TSC meets the definition of a &#147;component of an entity&#148;. The
results of operations for this subsidiary have been reported as discontinued operations for all
periods presented. Accordingly, certain financial statement information and related footnote
disclosures related to prior periods have been reclassified.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Selected financial information for the years ended March&nbsp;31, 2005, 2004 and 2003 for the
discontinued operations, are summarized as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">U.S. Dollars</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000">Yen (Millions)</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">(Thousands)</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2004</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2003</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net sales</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right"><B>2,242</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,070</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,015</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>20,953</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Loss from operations before
income taxes (including loss on
disposal of &#165;454&nbsp;million in
2005)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>3,509</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">244</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,471</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>32,794</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income tax expense (benefit)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>156</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,010</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(897</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,458</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Loss from discontinued operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right"><B>3,665</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,254</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,574</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>34,252</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Included in loss from discontinued operations for the year ended March&nbsp;31, 2004, is patent
infringement settlement income in the amount of &#165;1,933&nbsp;million which, prior to being reclassified,
was previously included in income before income taxes for the year. This patent infringement
settlement income has been reflected as a component of loss from discontinued operations as it
directly relates to the TSC business being disposed.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On August&nbsp;6, 2001, TSC filed suit against Silicon Laboratories, Inc. (&#147;SiLabs&#148;) alleging
infringement by SiLabs of U.S. Patent No.&nbsp;5,654,984 entitled &#147;Signal Modulation Across Capacitors&#148;
(&#147;the &#146;984 patent&#148;) owned by TSC. The patent relates to novel methods and circuitry for
communicating a signal across an isolation barrier using capacitors. The patented technology is
principally useful in modem applications. TDK&#146;s lawsuit alleged that SiLabs integrated the
patented technology into its competing modem products. SiLabs counterclaimed alleging (1)&nbsp;unfair
competition and (2)&nbsp;intentional and negligent interference with economic relations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In April&nbsp;2003, the parties resolved the dispute with the execution of a Settlement Agreement
wherein both parties agreed to dismiss all litigation between them without admitting any liability.
In exchange for the payment of $17&nbsp;million to TSC, SiLabs was granted a fully paid-up, exclusive
perpetual license to use the &#146;984 patent, as well as three ancillary patents owned by TSC.
Pursuant to the Settlement Agreement, TDK has no further obligation to provide additional services,
product deliverables or enhancements to the licensed technology. TSC did reserve for itself and
other TDK companies the right to use the patents with regard to TDK-branded products. In addition,
TSC agreed that neither it or any TDK entity would pursue a claim against SiLabs for a period of 20
years for patent infringement related to any SiLabs product in existence at the time of the
settlement or any capacitive-based digital access arrangement (&#147;DAA&#148;) product subsequently
introduced by SiLabs.
</DIV>

<P align="center" style="font-size: 10pt"> - 116 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The components of the assets and liabilities held for sale as of March&nbsp;31, 2005 are as
follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">U.S. Dollars</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Yen (Millions)</TD>
    <TD style="border-bottom: 1px solid #000000" >&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">(Thousands)</TD>
</TR>

<!-- End Table Head -->

<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Assets held
for sale</DIV></TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">548</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">5,121</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Net property, plant and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">430</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,019</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Other assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">140</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">993</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,280</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Liabilities
held for sale</DIV></TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Current liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">92</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">860</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>21. Sale of a Subsidiary</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On October&nbsp;1, 2004, TDK Logistics Corporation (&#147;TDK Logistics&#148;), a wholly owned subsidiary
which provided warehousing and transportation services to only TDK, was acquired in a share for
share exchange by Alps Logistics Co., Ltd. (&#147;ALPS&#148;), a third party listed company on the Tokyo
Stock Exchange. The share exchange ratio was 0.82 of an ALPS share for one TDK Logistics share.
The fair value of shares issued to effect this transaction was determined based on the market value
of ALPS common shares at the consummation date and amounted to &#165;3,365&nbsp;million. As a result of the
acquisition, TDK owns approximately 7.9% of the outstanding common stock of ALPS. TDK continues to
use warehousing and transportation services which are now provided by ALPS. The sale of TDK
Logistics does not meet the criteria for reporting as discontinued operations as the operations and
cash flows of the former subsidiary will not be eliminated from the cash flows of TDK. TDK
recorded a gain on sale of &#165;1,799&nbsp;million ($16,813 thousand) which is included in operating income
in the consolidated statement of income for the year ended March&nbsp;31, 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>22. Subsequent Events</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On May&nbsp;17, 2005, TDK acquired 100% of the issued and outstanding shares of Amperex Technology
Limited (&#147;ATL&#148;), a Hong Kong based company engaged in the production and sale of Polymer Lithium
Batteries with about 3,000 employees, for the total purchase price of approximately $100&nbsp;million,
net of cash acquired. ATL was founded in July&nbsp;1999 and has a manufacturing plant in Dongguan,
China.
The acquisition was made for the purpose of obtaining an operating base on which to develop
TDK&#146;s materials technology in the field of energy, where growth is expected in the future. ATL
specializes in the compact and flexible polymer lithium battery business, and has established a
production system of stable quality based on its special know-how in materials technology and
production engineering technology.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On June&nbsp;29, 2005, TDK received a notification and assessment of additional tax from the Tokyo
Regional Tax Bureau (Nihonbashi Tax Office) asserting that prices charged and paid by TDK in
connection with sales and purchases of products involving its overseas subsidiaries have not been
commensurate with the prices of similar transactions involving unrelated third parties. The period
of additional assessments covers the tax years ending from March&nbsp;1999 through March&nbsp;2003.
The additional tax assessed by the Tokyo Regional Tax Bureau amounts to &#165;11,960&nbsp;million
including interest and penalty, which has been reflected as additional tax expense and other
expense, net of deferred income tax benefits in the accompanying consolidated statements of income
for the year ended March&nbsp;31, 2005.
TDK intends to appeal the assessment with the Tokyo Regional Tax Bureau. However, no assurances
can be provided as to whether TDK will be successful or the ultimate outcome of the appeal.
</DIV>

<P align="center" style="font-size: 10pt"> - 117 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>


<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On July&nbsp;19, 2005, TDK entered into an agreement with Invensys plc (&#147;Seller&#148;), a London based
manufacturer listed on the London Stock Exchange, to purchase the Lambda Power division of the
Seller for the aggregate purchase price of approximately $235&nbsp;million, net of cash acquired. The
division consists of Lambda USA, Lambda Europe, Densei-Lambda KK and other entities, and conducts
business primarily related to development, production and sales of power supplies in thirteen
countries around the world. Under the terms of the agreement, TDK will be the sole owner of Lambda
Power businesses in the U.S. and Europe and acquire approximately 58% of the shares of
Densei-Lambda KK. TDK conducts its power supply business based on expertise in electronic
materials, particularly ferrite. The acquisition is intended to establish a more resilient
operating base in the power supply field, which is expected to continue to grow in the years ahead,
by combining TDK&#146;s strengths with those of the various businesses of the Lambda Power division.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>23. Supplementary Information</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000">(Millions)</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(Thousands)</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2004</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2003</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>(a)&nbsp;Statement of Income</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Research and development</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right"><B>36,348</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32,948</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30,099</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>339,701</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Rent</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>7,349</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,037</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,194</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>68,682</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Maintenance and repairs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>11,090</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,875</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,111</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>103,645</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Advertising costs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>4,926</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,261</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,521</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>46,037</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>(b)&nbsp;Statement of Cash Flows</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash paid during year for:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right"><B>331</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">350</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">646</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>3,093</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right"><B>13,740</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,299</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,270</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>128,411</B></TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Noncash activities</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In fiscal 2005, TDK received a 7.9% ownership interest in ALPS having a fair value of &#165;3,365
million in exchange for all issued and outstanding shares of TDK Logistics in a share-to-share
exchange transaction.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In fiscal 2004 and fiscal 2003, there were no material noncash investing and financing
activities.
</DIV>

<P align="center" style="font-size: 10pt"> - 118 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left">
<A name="900"></A>
</DIV>

<DIV align="right" style="font-size: 10pt; margin-top: 12pt"><B><U>Schedule&nbsp;II</U></B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">TDK CORPORATION AND SUBSIDIARIES
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 6pt">Valuation and Qualifying Accounts<BR>
(In millions of yen)<BR>
Years ended March&nbsp;31, 2005, 2004 and 2003
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Balance at</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Balance</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">beginning</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Charged to</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Bad debts</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Translation</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">at end of</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">of period</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">earnings</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">written off</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">adjustment</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">period</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Year ended March&nbsp;31, 2005:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Allowance for doubtful receivables</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">2,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">598</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">106</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">68</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,560</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Year ended March&nbsp;31, 2004:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Allowance for doubtful receivables</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">2,850</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(227</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">373</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(250</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Year ended March&nbsp;31, 2003:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Allowance for doubtful receivables</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">3,770</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(218</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">440</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(262</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,850</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"> - 119 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left">
<A name="125"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U><B>Item&nbsp;18.</B></U> <B>Financial Statements</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</DIV>


<DIV align="left">
<A name="126"></A>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U><B>Item&nbsp;19.</B></U> <B>Exhibits</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Documents filed as exhibits to this annual report are as follows:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">1.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>ARTICLES OF INCORPORATION (English translation)</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">1.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>SHARE HANDLING REGULATIONS (English translation)</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">8.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>List of Significant Subsidiaries (See &#147;Organizational Structure&#148; in Item&nbsp;4.C. of this
Annual Report)</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">11.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>TDK CODE OF ETHICS (English translation)</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">12.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Certification pursuant to Section&nbsp;302 of the Sarbanes-Oxley Act of 2002 of CEO of the
Company</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">12.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Certification pursuant to Section&nbsp;302 of the Sarbanes-Oxley Act of 2002 of CFO of the
Company</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">13.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Certification pursuant to Section&nbsp;906 of the Sarbanes-Oxley Act of 2002 of CEO of the
Company</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">13.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Certification pursuant to Section&nbsp;906 of the Sarbanes-Oxley Act of 2002 of CFO of the
Company</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"> - 120 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>
<DIV align="left">
<A name="127"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U>SIGNATURES</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the requirements of Section&nbsp;12 of the Securities Exchange Act of 1934, the
Registrant certifies that it meets all the requirements for filing of Form 20-F and has duly caused
this annual report to be signed on its behalf by the undersigned, thereunto duly authorized.
</DIV>

<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="2" align="left"><U>TDK Corporation</U><BR>
(Registrant)<BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">Date:  August 11, 2005&nbsp;</TD>
    <TD valign="top">By:&nbsp;&nbsp;</TD>
    <TD colspan="2" style="border-bottom: 1px solid #000000" align="left">/s/Hajime Sawabe
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left">Hajime Sawabe&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left">Representative Director,
President and CEO&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
</TABLE>


<P align="center" style="font-size: 10pt"> - 121 -
</DIV>

</BODY>
</HTML>
[{"type": "20-F", "sequence": "1", "filename": "k00986e20vf.htm", "description": "TDK CORPORATION", "secsgml_size_bytes": 1184308}]
{"company-data": {"conformed-name": "TDK CORP", "cik": "0000203383", "assigned-sic": "3695", "irs-number": "000000000", "fiscal-year-end": "0331"}, "filing-values": {"form-type": "20-F", "act": "34", "file-number": "001-08346", "film-number": "051015093"}, "business-address": {"street1": "13-1 NIHONBASHI, 1-CHOME", "city": "CHUO-KU, TOKYO 103, JAPAN", "state": "M0", "zip": "103-8272", "phone": "81-3-3278-5111"}, "former-company": {"former-conformed-name": "TDK ELECTRONICS CO LTD", "date-changed": "19831004"}}
TDK CORPORATION
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 20-F
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended
March 31, 2005
Commission file number
2-76735
TDK KABUSHIKI KAISHA
(Exact name of Registrant as specified in its charter)
TDK CORPORATION
(Translation of Registrant's name into English)
Japan
(Jurisdiction of incorporation or organization)
13-1, Nihonbashi 1-chome, Chuo-ku, Tokyo 103-8272, Japan
(Address of principal executive offices)
Securities registered pursuant to Section 12(b) of the Act.
Title of each class
Name of each exchange on which registered
American Depositary Shares
New York Stock Exchange
Common stock
New York Stock Exchange
Securities registered or to be registered pursuant to Section 12(g) of the Act.
None
(Title of Class)
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.
None
(Title of Class)
Indicate the number of outstanding shares of the issuer's classes of capital or common stock
as of the close of the period covered by the annual report.
Common stock
Outstanding as of March 31, 2005: 132,244,587 shares (excluding treasury stock)
Indicate by a check mark whether the registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes
þ
No
o
Indicate by a check mark which financial statement item the registrant has elected to follow.
Item 17
þ
Item 18
o
Table of Contents
PART 1
Item 1.
Identity of Directors, Senior Management and Advisers
Item 2.
Offer Statistics and Expected Timetable
Item 3.
Key Information
Item 4.
Information on the Company
Item 5.
Operating and Financial Review and Prospects
Item 6.
Directors, Senior Management and Employees
Item 7.
Major Shareholders and Related Party Transaction
Item 8.
Financial Information
Item 9.
The Offer and Listing
Item 10.
Additional Information
Item 11.
Quantitative and Qualitative Disclosures about Market Risk
Item 12.
Description of Securities Other than Equity Securities
PART 2
Item 13.
Defaults, Dividend Arrearages and Delinquencies
Item 14.
Material Modifications to the Rights of Security Holders and Use of Proceeds
Item 15.
Controls and Procedures
Item 16A.
Audit Committee Financial Expert
Item 16B.
Code of Ethics
Item 16C.
Principal Accountant Fees and Services
Item 16D.
Exemptions from Listing Standards for Audit Committees
Item 16E.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
PART 3
Item 17.
Financial Statements
Report of
Independent Registered Public Accounting Firm
Consolidated Financial Statements
Notes to Consolidated Financial Statements
Schedule II — Valuation and Qualifying Accounts
Item 18.
Financial Statements
Item 19.
Exhibits
EX-1.1 Articles of Incorporation (English translation)
EX-1.2 Share Handling Regulations (English translation)
EX-11.1 TDK Code of Ethics (English translation)
EX-12.1 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of CEO of the Company
EX-12.2 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of CFO of the Company
EX-13.1 Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of CEO of the Company
EX-13.2 Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of CFO of the Company
- 2 -
Table of Contents
All information contained in this Report is as of March 31, 2005 unless otherwise specified.
Fiscal 2005, fiscal 2004, fiscal 2003 and fiscal 2002 of this Report indicate TDK Corporation's
fiscal period of the fiscal years ended March 31, 2005, 2004, 2003 and 2002, respectively.
The figures in this Report are expressed in yen and, solely for the convenience of the reader,
are translated into United States dollars at the rate of ¥107 = U.S.$1, the approximate exchange
rate prevailing on the Tokyo Foreign Exchange Market as of March 31, 2005. (See Note 2 of the
Notes to Consolidated Financial Statements.) On July 29, 2005 the noon buying rate for yen cable
transfers in New York City as reported by the Federal Reserve Bank of
New York was ¥112.25 = $1.
This translation should not be construed as a representation that the amounts shown could be
converted into U.S. dollars at such rate.
Forward-Looking Statements
This report contains forward-looking statements, including projections, plans, policies,
management strategies, targets, schedules, understandings and evaluations, about TDK Corporation
("TDK") and its group companies (TDK and its group companies are referred to also as "TDK" where
the context so requires) that are not historical facts. These forward-looking statements are based
on current forecasts, estimates, assumptions, plans, beliefs and evaluations in light of
information available to management on the date of this report was prepared.
In preparing forecasts and estimates, TDK has used as their basis, certain assumptions as
necessary, in addition to confirmed historical facts. However, due to their nature, there is no
guarantee that these statements and assumptions will prove to be accurate in the future. TDK
therefore wishes to caution readers that these statements, facts and certain assumptions contained
in this report are subject to a number of risks and uncertainties and may prove to be inaccurate.
The electronics markets in which TDK operates are highly susceptible to rapid changes.
Furthermore, TDK operates not only in Japan, but in many other countries. As such, factors that
can have significant effects on its results include, but are not limited to, shifts in technology,
demand, prices, competition, economic environments and foreign exchange rates.
- 3 -
Table of Contents
PART 1
Item 1
. Identity of Directors, Senior Management and Advisers
A. Directors and senior management
Not applicable.
B. Advisers
Not applicable.
C. Auditors
Not applicable.
Item 2
. Offer Statistics and Expected Timetable
A. Offer statistics
Not applicable.
B. Method and expected timetable
Not applicable.
- 4 -
Table of Contents
Item 3
. Key Information
A. Selected financial data
Thousands of
U.S. dollars,
except per
share
Millions of yen, except per share amounts
amounts (1)
2005
2004
2003
2002
2001
2005
Net sales
¥
657,853
¥
655,792
¥
604,865
¥
564,286
¥
665,867
$
6,148,159
Cost of sales
484,323
476,407
459,552
463,331
493,068
4,526,383
Gross profit
173,530
179,385
145,313
100,955
172,799
1,621,776
Selling, general and
administrative expenses
119,886
122,875
115,569
115,696
123,965
1,120,430
Transfer to the government
of the substitutional portion
of Employees' Pension Fund:
Subsidy from the government
(33,533
)
—
—
—
—
(313,392
)
Loss on settlement
27,347
—
—
—
—
255,579
Restructuring cost
—
—
5,197
25,489
—
—
Operating income (loss)
59,830
56,510
24,547
(40,230
)
48,834
559,159
Income (loss) from continuing operations before
income taxes
60,728
55,847
20,552
(40,230
)
61,223
567,551
Income (loss) from continuing
operations
36,965
43,355
13,593
(23,619
)
42,214
345,467
Loss (income) from discontinued
operations
3,665
1,254
1,574
2,152
(1,769
)
34,252
Net income (loss)
33,300
42,101
12,019
(25,771
)
43,983
311,215
Per Common Share:
Income
(loss) from continuing
operations per share:
Basic
¥
279.41
¥
327.27
¥
102.42
¥
(177.72
)
¥
317.25
$
2.61
Diluted
279.25
327.15
102.42
(177.72
)
317.25
2.61
Loss
(income) from discontinued
operations per share:
Basic
¥
(27.70
)
¥
(9.47
)
¥
(11.86
)
¥
(16.19
)
¥
13.29
$
(0.26
)
Diluted
(27.69
)
(9.46
)
(11.86
)
(16.19
)
13.29
(0.26
)
Net income
(loss) per share:
Basic
¥
251.71
¥
317.80
¥
90.56
¥
(193.91
)
¥
330.54
$
2.35
Diluted
251.56
317.69
90.56
(193.91
)
330.54
2.35
Cash dividends
60.00
50.00
45.00
60.00
60.00
U.S. Dollar equivalents (2)
$
0.56
$
0.47
$
0.38
$
0.45
$
0.55
- 5 -
Table of Contents
Millions of yen, except per share amounts
Thousands of
U.S. dollars (1)
and exchange rate for yen
2005
2004
2003
2002
2001
2005
Net working capital (3)
¥
379,746
¥
360,555
¥
315,948
¥
288,865
¥
306,771
$
3,549,027
Total assets
808,001
770,319
747,337
749,910
820,177
7,551,411
Short-term indebtedness
103
416
1,919
2,312
5,879
963
Long-term indebtedness
81
27
94
459
1,004
757
Retirement and severance
benefits
28,839
73,521
84,971
49,992
31,755
269,523
Stockholders' equity
639,067
576,219
553,885
583,927
637,749
5,972,589
Number of shares outstanding
(in thousands)
132,245
132,409
132,625
132,860
133,019
Yen exchange rates per U.S. dollar (4)
Average
Term end
High
Low
Year ended March 31:
2001
111.64
125.54
125.54
104.19
2002
125.64
132.70
134.77
115.89
2003
121.10
118.07
133.40
115.71
2004
112.75
104.18
120.55
104.18
2005
107.28
107.22
114.30
102.26
2006 (through July 31, 2005)
108.94
112.25
113.42
104.41
February, 2005
105.84
103.70
March, 2005
107.49
103.87
April, 2005
108.67
104.64
May, 2005
108.17
104.41
June, 2005
110.91
106.64
July, 2005
113.42
110.47
Notes:
(1)
Translated, except for cash dividend amounts, for convenience of the reader
into U.S. dollars at the rate of ¥107 = $1, the approximate rate on the
Tokyo Foreign Exchange Market on March 31, 2005.
(2)
Translated based on the rates specified in Note (4) below on the respective
dates of semi-annual payments for each year.
(3)
Net working capital is defined as current assets less current liabilities.
(4)
Based on the noon buying rate in New York City for cable transfers in
foreign currencies as certified for customs purposes by the Federal Reserve
Bank of New York. The average rates are computed based on the exchange
rates on the last day of each month during the year.
(5)
In accordance with SFAS No. 144, "Accounting for the Impairment or Disposal
of Long-Lived Assets", certain amounts in the segment information do not
reflect discontinued operations, previous fiscal year's segment information
has been reclassified to conform to the fiscal 2005 presentation.
B. Capitalization and indebtedness
Not applicable.
C. Reasons for the offer and use of proceeds
Not applicable.
- 6 -
Table of Contents
D. Risk factors
Our business is exposed to fluctuations in economic conditions that may adversely affect our
business results.
The world and Japanese economies are grappling with various risk factors. Among these factors
are the status of the recovery of capital expenditures and improvement of employment conditions and
income in the U.S.; a slowing economy due to the stronger euro in Europe; the outlook for the high
economic growth rate in China; and the outlook for improving corporate earnings as well as capital
expenditure and inventory reductions in Japan. Furthermore, the digital consumer products field, a
core business for TDK, is significantly affected by the extremely fast pace of technological
innovation and competition in the development of new products as well as fluctuations in economic
conditions. Changes in the economic environments from TDK's expectations could significantly affect TDK's
business results and financial condition.
Fluctuations in currency exchange rates could adversely affect our business results and
financial condition.
TDK imports and exports products between different regions of the world as it conducts its
business activities in countries around the globe. Business results at overseas bases, including
sales, expenditures, assets and other accounts, are converted into Japanese yen for the purpose of
preparing consolidated financial statements. Because of this, sudden changes in foreign currency
exchange rates affect company transactions between regions and costs and prices of TDK's products
and services at overseas bases in relation to the yen. Such fluctuations also give rise to
conversion differences with respect to TDK's investments in overseas assets and liabilities.
Therefore, sudden fluctuations in foreign currency exchange rates could have a significant
adverse effect on TDK's business results and financial condition.
We are susceptible to risks involved with selling our products in markets outside of
Japan.
One of TDK's corporate strategies is to expand in markets outside Japan as it conducts
business in countries around the world. Overseas sales account for more than 70% of total sales on
a consolidated basis.
However, in many of these markets, TDK may be exposed to international political risks, such
as war, terrorism and other events; economic risks, such as fluctuations in foreign currency
exchange rates and trade friction; and social risks, including labor problems stemming from
differences in cultures and customs, and disease. Such risks may give rise to changes of a far
greater magnitude than TDK anticipates. TDK may also face unexpected barriers in building
relationships with trading partners due to differences in commercial and business customs.
Manifestation of these risks could lower productivity in manufacturing processes, undermining the
competitiveness of products and also hinder sales activities and results in other negative
consequences. These outcomes could in turn have a significant adverse effect on TDK's business
results and financial condition.
- 7 -
Table of Contents
A slow-down of the Chinese economy, adverse changes in political and economic policies
of the Chinese government, or other factors in China may reduce our growth and profitability.
TDK has many production bases for mainstay products such as HDD heads in China, a country in
the midst of strong economic growth. TDK has also established a system for supplying both local
companies and customers that have been setting up operations in China. Furthermore, TDK plans to
expand business further in this country.
However, in the event that political factors (such as changes in laws and regulations),
economic factors (such as the continuity of high growth, Renminbi (RMB) application against U.S.
dollars and problems with electric power supply and other infrastructure) and social factors cause
unexpected events in China, there could be a material adverse effect on TDK's business results and
financial condition.
We may not be able to compete effectively with respect to prices, which would have a material
adverse effect on our profitability.
TDK supplies products in a broad range of fields in an electronics industry defined by intense
competition. These fields include IT and communications devices such as digital home appliances,
PCs and mobiles phones. In all fields, price is a main competitive factor differentiating TDK from
other companies. Furthermore, in the electronic components industry, in addition to leading
Japanese companies, the rapid emergence of Asian companies, particularly those in South Korea and
Taiwan, has fueled intense price-based competition.
However, pressure continues to mount from customers for price discounts. In the event that
the fall in prices far exceeds TDK expectations or becomes protracted, there could be a material
adverse effect on TDK's business results and financial condition.
Rapid changes in technology could adversely affect our business and hurt our competitive
position.
TDK believes that its ability to increase sales by developing appealing, innovative products
has an important role to play in its growth. However, it is extremely difficult to predict future
demand in the rapidly changing electronics industry and develop new technologies to meet that
demand. TDK may fail to develop and supply in a timely manner attractive, new products with
innovative technologies for this industry and its markets. In the event that TDK misreads the
industry and market and/or is slow in developing innovative technologies on a cost competitive
basis, actual earnings could differ significantly from its forecasts. At the same time, TDK may
cease to be able to compete in markets, resulting in a significant adverse effect on TDK's business
results and growth prospects.
Claims of product liability and other issues associated with the quality of our products
could adversely affect our business results and brand name.
TDK manufactures various products at overseas manufacturing bases that it is developing
globally in accordance with ISO (International Organization for Standardization) quality management
standards (ISO 9001) and the strict standards required by customers in the electronics industry,
where technological innovation is remarkable.
TDK cannot be fully certain, however, that all of its products are defect-free and immune from
recalls at some later date. A product recall or a product liability claim against TDK caused by
product defects could result in recall costs or damage claims, lower sales and have a negative
impact on TDK's reputation and brand, endangering its continued existence. A situation resulting
from poor product quality due to a major product defect could have a materially adverse effect
TDK's business results and brand name.
Our proprietary technology is difficult to protect and unauthorized use of our proprietary
technology by third parties may reduce the value of our products and brand and impair our ability
to compete effectively.
TDK growth depends to a great extent on its ability to obtain patents, licenses and other
intellectual property rights covering its products, product designs and manufacturing processes.
However, there are cases where TDK intellectual property rights cannot be fully protected in a
particular region for reasons unique to that region. Furthermore, TDK may suffer damages resulting
from the manufacture by a third party of similar products to its own with the unauthorized use of
TDK intellectual property rights. The failure to protect intellectual property rights of others
could have a materially adverse effect on TDK's business development and business results and
financial condition.
- 8 -
Table of Contents
Our business may suffer if we are sued for infringing upon the intellectual property rights
of third parties.
There may be cases where it is alleged that TDK products infringe on the intellectual property
rights of third parties. Regarding problems relating to the infringement of such intellectual
property rights, TDK may suffer damages or may be sued for damages. In either case, settlement
negotiations and legal procedures would be inevitable and could be expected to be lengthy and
expensive. If TDK assertions are not accepted in such disputes, it may have to pay damages and
royalties and suffer losses such as the loss of markets.
The failure to prevent infringement on the rights of others could have a materially adverse
effect on TDK's business development and business results and financial condition.
Our success depends on attracting and retaining highly-skilled employees, and we would
suffer material adverse effects if we are unable to do so.
To prevail against fierce competition in the electronics industry, TDK believes that it is
necessary to recruit and retain staff possessing advanced technical skills. Regarding personnel
with superior management ability, such as with respect to the ability to formulate strategy and
organizational management, TDK believes that it is necessary to upgrade skills at an advanced
level.
However, intense competition to recruit such skilled employees is not limited to the
industries where TDK is active. Moreover, in Japan, there is increasing fluidity in the labor
market caused by revisions to the life-time employment system and other developments. These and
other factors mean there is no guarantee that TDK will continue to be able to recruit and retain
skilled employees. The inability to recruit and train personnel as planned could have a materially
adverse effect on the TDK's operations, business results and growth prospects.
We are dependent on certain raw materials and other products, and our business will
suffer if we are unable to procure such materials.
TDK's manufacturing system is premised on deliveries of raw materials, components, equipment
and other supplies in adequate quality and quantity in a timely manner from many external
suppliers. In new product development, TDK may rely on certain irreplaceable suppliers for
materials.
Because of this, there may be cases where supplies of raw materials and other products to TDK
are interrupted by an accident or some other event at a supplier, supply is suspended due to
quality or other issues, or there is a shortage of or instability in supply due to a rapid increase
in demand for finished products that use certain materials and products. If any of these
situations becomes protracted, TDK may have difficulty finding substitutes in a timely manner from
other suppliers, which could have a significant, adverse effect on TDK production and prevent it
fulfilling its responsibilities to supply products to its customers. Furthermore, if an imbalance
arises in the supply-demand equation, there could be a spike in the price of raw materials. In the
event of these or other similar occurrences, there could be a material adverse effect on TDK's
business results and financial condition.
Increased government regulation of our industry or changes in those regulations, whether in
Japan or overseas, may limit our ability to compete effectively.
TDK is subject to various regulations in Japan and other countries where it conducts business.
These include approval for conducting business and making investments, laws and regulations
governing the safety of electric and electronic products, laws and regulations relating to national
security between nations, and export/import laws and regulations. TDK is also subject to
commercial, antitrust, patent, product liability, environmental, consumer and business taxation
laws and regulations.
In the event that these laws and regulations become more stringent in the future, TDK business
development could be affected in no small way and it may incur various additional operating costs.
Furthermore, in the event that TDK is unable to respond appropriately to these laws and
regulations, it may be forced to partially withdraw from certain businesses or take other actions.
Government laws and regulations in their various forms may thus have a material adverse effect
on TDK's business results and financial condition.
- 9 -
Table of Contents
Fluctuations in interest rates may have an adverse effect on our profitability.
Although TDK attempts to limit its borrowings from third parties, from time to time, TDK or
its subsidiaries may need to borrow funds from such third parties. To the extent that interest
rates increase, TDK or its subsidiaries may be subject to higher interest expenses. In contrast, a
protracted period of low interest rates also may have an adverse effect on TDK by limiting TDK's
interest income from investments. Low interest rates also may require TDK to make additional
contributions to pension benefit funds since the assets of those funds may become under funded.
Either of these changes could have a material adverse effect on TDK's business results and
financial condition.
We are developing a business strategy whereby we sell to a concentrated number of Original
Equipment Manufacturers (OEMs), and are thus susceptible to adverse changes with respect to the
business of such OEMs.
TDK is developing on a global scale an OEM business, whereby it supplies mainly electronic
components to electronics manufacturers, personal computer (PC) makers and other customers.
However, supplies to these customers are significantly affected by various factors that are
beyond TDK's control such as changes in each customer's business results and management strategies.
A drop-off in purchasing demand due to poor business results at major customers, changes in
customers' purchasing plans and policies, the unexpected termination of contracts and other
occurrences could result in TDK's profit margins being reduced due to discounting pressure from
customers or TDK being left holding large amounts of inventory.
Customers' business results, changes in management strategy or other factors could thus have a
material adverse effect on TDK's business results and financial condition.
Our operations depend on facilities throughout the world and are subject to forces of nature
that could disrupt our ability to serve our customers.
TDK has many production sites and R&D facilities in Japan and overseas. These facilities and
plants have taken measures to prevent damage caused by natural disasters. However, these
facilities and plants could still suffer significant damage due to a force majeure event such as a
large earthquake, typhoon or flood that far exceeds any level expected. In the event of
interruption to manufacturing, disruption of transportation routes, damage to or disconnection of
information and communications infrastructure, TDK's ability to supply its customers could be
affected for a long period of time. This situation could have a material adverse affect on TDK's
business results and financial condition.
If we are unable to comply with the various environmental laws and regulations to which we
are subject, we may have to withdraw from certain business activities, which would have an
adverse effect on our brand and business operations.
TDK is subject to various environmental laws and regulations with respect to industrial waste
and emissions into the atmosphere and water from its production processes in Japan and overseas.
Furthermore, TDK is required to lower the use in its products of specified hazardous chemical
substances that could harm humans and the natural environment. From the perspective of
environmental protection, environmental regulations are expected to become increasingly stringent
in the future.
TDK is engaged in various activities to help protect the environment, including complying with
environmental regulations. However, expenses are expected to increase for responding to customer
demands and environmental laws and regulations relating to the non-use of hazardous chemical
substances in products. If TDK has difficulty responding appropriately to these demands and laws
and regulations, it may be forced to withdraw from certain business activities impacting the brand
name of TDK.
Future developments involving environmental regulations could thus have a material adverse
effect on TDK's business results and financial condition.
- 10 -
Table of Contents
Japan's Unit Share System could affect access to Japanese markets by holders of American
Depositary Shares ("ADSs"), which could adversely affect the price of our shares.
Pursuant to the Articles of Incorporation of TDK, 100 shares of TDK constitute one unit. A
holder who owns ADRs evidencing less than 100 ADSs will indirectly own less than a whole unit of
shares of Common Stock. Although, under the unit share system holders of less than a unit have the
right to require TDK to purchase their shares, holders of ADRs evidencing ADSs that represent other
than integral multiples of whole units are unable to withdraw the underlying shares of Common Stock
representing less than a unit and, therefore, are unable to exercise the rights to require TDK to
purchase such underlying shares at this time. As a result, access to the Japanese markets by
holders of ADRs through the withdrawal mechanism will not be available for dispositions of shares
of Common Stock in lots less than a unit. The unit share system does not affect the
transferability of ADSs, which may be transferred in lots of any size.
Holders of American Depositary Shares have limited rights, which could adversely affect the
price of our shares.
The rights of shareholders under Japanese law to take actions, including voting their shares,
receiving dividends and distributions, bringing derivative actions, examining TDK's accounting
books and records and exercising appraisal rights are available only to shareholders of record.
Citibank, N.A., through its custodian agent, is the record holder of the shares underlying the
ADSs, and therefore only it can exercise the rights of shareholders in connection with the
deposited shares. The depositary has agreed to endeavor to vote the shares underlying ADSs in
accordance with the instructions of ADS holders and to pay the dividends and distributions
collected from TDK. However, ADS holders will not be able to bring a derivative action, examine
TDK's accounting books and records or exercise appraisal rights through the depositary.
TDK is incorporated in Japan and a substantial portion of its assets are located outside of
the United States (U.S.). As a result, it may be more difficult for investors to enforce against
TDK judgments obtained in U.S. courts predicated upon the civil liability provisions of the Federal
securities laws of the United States, including the Securities Act of 1933, as amended, and the
Securities Exchange Act of 1934, as amended, or judgments obtained in other courts outside of
Japan. In addition, there is doubt as to the enforceability in Japanese courts, in original
actions or in actions for enforcements of judgments of U.S. courts, of civil liabilities based
solely upon violation of these Federal securities laws of the United States.
Item 4
. Information on the Company
A. History and development of the Company
History
TDK Corporation (TDK Kabushiki Kaisha) is a corporation formed under the Commercial Code of
Japan. TDK's principal place of business is at 13-1, Nihonbashi 1-chome, Chuo-ku, Tokyo 103-8272,
Japan and the telephone number is +81-3-5201-7102. The agent in the U.S. for purposes of this Item
4 is TDK U.S.A. Corporation, 901 Franklin Avenue, P.O. Box 9302, Garden City, New York, NY 11530.
TDK is the world's leading manufacturer of recording media, ferrite products and recording
device products, and a major producer of inductor, ceramic capacitor, magnet and other components.
TDK is a Tokyo-based company founded on December 7, 1935 to commercialize ferrite.
- 11 -
Table of Contents
Historically, TDK's growth has been centered on ferrite, a material invented in 1933 by Doctor
Yogoro Kato and Doctor Takeshi Takei. Ferrite is indispensable as a magnetic substance in the
manufacture of electronic equipment. It is a magnetic material with a ceramic structure composed
of iron oxide and other metallic oxides. Its advantages over other magnetic materials include
higher resistivity and thus lower eddy current loss while maintaining superior permeability and
flux density. Based on its strong materials knowledge and production technology, TDK expanded into
ceramic capacitors and magnetic recording tapes in the early 1950s, and ferrite magnets and coil
components in the early 1960s. In the early 1980s, TDK began production of a magnetic head,
continuing development to its modern day product the "HDD head". Since the 1990s, TDK has promoted
the establishment of world-wide research and development organizations and environmental management
efforts. TDK has continued to broaden its product development programs by building up expertise in
materials technology and new recording-related products.
In the years ended March 31, 2005, 2004 and 2003, TDK's capital expenditures were ¥61.0
billion, ¥44.5 billion and ¥41.0 billion, respectively. For further information of TDK's capital
expenditures, see "Capital Expenditures" included Item 5.B. "Liquidity and capital resources".
TDK is planning capital expenditures of ¥65.0 billion in fiscal 2006, primarily for the
expansion of production facilities and upgrading of facilities. Regarding TDK's capital
expenditure plans, TDK's policy is to invest actively in targeted strategic fields to drive growth.
B. Business overview
Sales by product category
TDK's sales are generated by two business segments: electronic materials and components, and
recording media and systems. The following is a breakdown of consolidated net sales of TDK and its
consolidated subsidiaries by business segment for fiscal 2005, 2004 and 2003:
2005
2004
2003
2005
(millions
(millions
of yen)
(%)
of U.S.
dollars)
Electronic Materials and
Components:
Electronic materials
¥
174,800
¥
166,818
¥
168,949
$
1,633.7
(26.6
)
(25.4
)
(27.9
)
Electronic devices
116,387
107,999
112,729
1,087.7
(17.7
)
(16.5
)
(18.7
)
Recording devices
234,578
230,105
175,986
2,192.3
(35.7
)
(35.1
)
(29.1
)
Semiconductors
and others
19,449
14,870
10,850
181.8
(2.9
)
(2.3
)
(1.8
)
Sub total
545,214
519,792
468,514
5,095.5
(82.9
)
(79.3
)
(77.5
)
Recording Media and Systems
112,639
136,000
136,351
1,052.7
(17.1
)
(20.7
)
(22.5
)
Total
¥
657,853
¥
655,792
¥
604,865
$
6,148.2
(100.0
)
(100.0
)
(100.0
)
Notes:
(1)
In accordance with SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets", certain amounts in the segment
information do not reflect discontinued operations, previous fiscal
year's segment information has been reclassified to conform to the
fiscal 2005 presentation.
(2)
The business segment information is required by the Japanese
Securities Exchange Law. Segment information is unaudited.
- 12 -
Table of Contents
Electronic Materials and Components
TDK's electronic materials and components are divided
into four principal categories: (i) electronic materials; (ii) electronic devices; (iii) recording
devices; and (iv) semiconductors and others. Overall business results of each category in fiscal
2005 compared to fiscal 2004 are as follows.
(i) Electronic materials
The electronics materials sector is broadly divided into two product
sectors: capacitors, and ferrite cores and magnets.
Sales of multilayer chip capacitors, a mainstay of capacitor products, increased year over
year. In the first half of fiscal 2005, the Athens Olympics propelled demand for digital home
appliances higher, which had an add-on effect for components used in them. In the second half,
however, demand for components cooled, this time the result of cutbacks in the production of
digital home appliances, and prices also dropped. But, against this market backdrop, TDK absorbed
the sales price declines and the effect of unfavorable foreign exchange movements through
improvements to its product mix.
In ferrite cores, sales declined from the previous fiscal year, despite higher demand for
general-purpose power supply cores for digital home appliances and cores for communications
equipment. This decrease was due to a reduction in output of deflection yoke cores and flyback
transformer cores used in CRT TVs. Magnet sales increased year over year, the result of steadily
rising demand for use in automotive and HDD applications.
(ii) Electronic devices
The electronic devices sector is broken down into three categories:
inductive devices, high-frequency components, and other products.
Inductive devices, the largest product category in this sector, posted higher sales, despite
lower sales prices and the negative effect of foreign exchange movements. This increase was
attributed to higher demand spurred by acceleration in the pace at which automobiles are
incorporating electronics and the increasing sophistication of mobile phones, as well as by new
product launches.
Sales of high-frequency components declined marginally year over year because higher sales
volume and an improved product mix failed to completely offset persistently strong discounting
pressure from mobile phone handset manufacturers, the main customer for these components. Other
products include power systems and sensors and actuators. In power systems, sales of DC-DC
converters and DC-AC inverters were healthy. Sensors and actuators recorded higher sales due to
growth in demand for use in PCs and peripherals and communications equipment.
(iii) Recording devices
The recording devices sector is divided into two categories: heads for
HDDs, the mainstay of the sector, and other types of heads.
Sales of HDD heads rose year over year. However, TDK had to overcome the loss of business
from a major customer that started producing heads in house in 2004, as well as the impact of
falling sales prices and unfavorable foreign exchange movements.
Cutbacks in HDD inventories at customers in the first half of fiscal 2005 also affected the
sector's performance. However, demand for HDD heads rose in the second half of the fiscal year
following the end of these cutbacks. Sales of other heads declined year over year due to sluggish
sales of optical pickups.
(iv) Semiconductors and others
In the semiconductors and others sector, the main product is
anechoic chambers.
TDK recorded slightly higher sales of anechoic chambers for electromagnetic noise control and
equipment used in these chambers. There was also growth in external sales of manufacturing
equipment due to higher investments in semiconductor facilities and equipment by customers.
- 13 -
Table of Contents
Recording Media and Systems
In the recording media & systems segment, the main products are
audiotapes, videotapes, optical media and tape-based data storage media for computers.
Sales of audiotape and videotapes declined year over year. While TDK maintained a high market
share, demand is declining for these products as a whole. Sales of optical media increased, with
higher DVD sales and lower CD-R sales. Sales of other products decreased year over year. There
was an increase in sales of LTO-standard* (Linear Tape-Open) tape-based data storage media for
computers. However, a decline in sales caused by the sale in the previous fiscal year of a U.S.
software development subsidiary and lower sales of recording equipment brought overall sales of
other products down year over year.
* Linear Tape-Open, LTO, LTO logo, Ultrium and Ultrium logo are trademarks of HP, IBM and Certance
LLC in the U.S., other countries or both.
Marketing and Distribution
Marketing channels in Japan
TDK markets electronic materials and components in Japan through its sales division, which had
approximately 244 sales representatives at March 31, 2005.
In Japan, TDK markets magnetic recording tapes and optical disks through 6 district sales
offices with a staff of 93. Approximately 52 percent of domestic sales of TDK brand products are
made to approximately 124 distribution agents. These agents in turn sell TDK brand products to
over 45,000 retailers in Japan. Remaining TDK brand products are sold directly to approximately
5,000 retail stores in Japan. OEM sales are made to certain manufacturers as well.
Operations outside Japan
TDK has 53 direct and indirect foreign subsidiaries as follows: 26 manufacture various product
lines and distribute their products in their country of operation and other countries; 17 are sales
subsidiaries which exclusively handle products manufactured by TDK; 1 is a holding company for the
administration of TDK's U.S. operations; 1 is a holding company for the administration of TDK's
European operations; 1 is a company for research and development in Ireland; 1 is a company for
research and development in the U.S.; 1 is a company for design and development for semiconductors
in the U.S.; 1 is a company for engineering service for magnetic heads in Singapore; 2 are local
management company for the administration of TDK's Chinese operations; 1 is a company for
engineering service for magnetic heads in China, and 1 is a company for engineering service for
magnetic heads in Korea. Principal manufacturing or assembly operations are conducted by
subsidiaries in the following countries:
China
-
GMR heads, inductors, ferrite cores, capacitors,
transformer, power supplies and ferrite magnets
United States
-
GMR heads, capacitors and ferrite magnets
Luxembourg
-
Videotapes, CD-Rs and DVDs
Taiwan
-
Capacitors, ferrite cores and power supplies
Philippines
-
GMR heads
Thailand
-
Audiotapes and rare-earth metal magnets
Malaysia
-
Capacitors and high-frequency components
Korea
-
Capacitors and inductors
Hungary
-
Capacitors and ferrite cores
Hong Kong
-
Ferrite cores
In addition, TDK has sales subsidiaries in Germany, the United Kingdom, the United States,
Hong Kong, Singapore, Australia, Brazil, Poland, China and Philippines.
- 14 -
Table of Contents
TDK is pursuing a policy of expanding overseas production, which enables TDK to more easily
adapt to fluctuating exchange rates and potential trade barriers. Production
outside Japan as a percentage of sales outside Japan was 81.9 percent in fiscal 2005, 78.9
percent in fiscal 2004 and 76.8 percent in fiscal 2003.
Outside of Japan, TDK relies on a combination of its sales force, distribution agents,
retailers and directed sales efforts to market its products.
Consolidated net sales of TDK and consolidated subsidiaries by geographical area for fiscal
2005, 2004 and 2003 were as follows:
2005
2004
2003
2005
(millions of yen)(%)
(millions of U.S.
dollars)
Japan
¥
159,487
(24.2
)
¥
161,607
(24.6
)
¥
172,818
(28.6
)
$1,490.5
North America
58,850
(9.0
)
71,224
(10.9
)
78,777
(13.0
)
550.0
Europe
71,085
(10.8
)
80,233
(12.2
)
77,191
(12.8
)
664.4
Asia and others
368,431
(56.0
)
342,728
(52.3
)
276,079
(45.6
)
3,443.3
Total
¥
657,853
(100.0
)
¥
655,792
(100.0
)
¥
604,865
(100.0
)
$6,148.2
Notes:
(1)
In accordance with SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets", certain amounts in the segment
information do not reflect discontinued operations, previous fiscal
year's segment information has been reclassified to conform to the
fiscal 2005 presentation.
(2)
Net sales in each geographic area are based on the location of TDK
entities where the external sales are generated.
Patents and Licenses
TDK has a variety of patents in Japan and other countries, and licenses from other companies,
it believes that expiration of any one of its patents or licenses or related group of patents or
licenses would not materially adversely affect its business activities. TDK does not believe that
acquisition of new proprietary patents or other companies' patents would have a material effect on
operating results in the future.
Competition
In electronic materials and components, rapid technological innovation makes technological
improvement a particularly significant competitive factor in the industry. Product performance
characteristics, reliability, price, and the diversity of product line-ups are also significant
competitive factors. In general, TDK's ferrite and other products compete with similar products
made of other materials. For many applications in which specific performance characteristics are
required, however, competition with other materials is not significant.
- 15 -
Table of Contents
In Japan and elsewhere, the markets in which TDK sells its products are highly competitive.
TDK believes that the principal elements of competition in recording media and systems are brand
recognition, product quality, and marketing strategy. While the Japanese, American and European
optical disks markets have grown in terms of volume, they have continued to be plagued by severe
price competition. However, TDK has consistently promoted internationalization in manufacturing
and marketing and has maintained strategic sales in regions where high profitability is expected.
Meanwhile, TDK has implemented further cost-reduction programs and is increasing its competitive
strength in other ways, notably through the expansion of overseas production.
Raw Materials and Sources of Supply
TDK purchases a wide variety of raw materials, machines, tools and parts for use in the
manufacture of its products. The principal raw materials purchased include plastic resin, used to
mould tape cassette shell and in packaging, magnetic powder of iron oxide, base film for magnetic
tape and various electronic and mechanical parts. For products manufactured in Japan, TDK
purchases such raw materials from approximately 1,900 different sources, primarily in Japan.
However, TDK purchases base tape from mainly three suppliers in Japan, although alternative sources
of supply exist. Recently TDK increased its purchases from overseas and also increased local
procurement of raw materials. No single source accounted for more than 10 percent of total
purchases for fiscal 2005.
TDK monitors the availability of raw materials on a regular basis to ensure that it will not
encounter any shortages. TDK has not experienced any significant difficulty in obtaining raw
materials and believes that it will be able to continue to obtain comparable raw materials in
sufficient quantities to meet its manufacturing needs in the future. TDK also believes that the
effect of price volatility with respect to raw materials that it uses in manufacturing its products
can be managed.
- 16 -
Table of Contents
C. Organizational structure
As of March 31, 2005, TDK had 53 overseas subsidiaries and 18 Japanese subsidiaries. The
following table lists the significant subsidiaries owned by TDK.
Name of company
Head office location
Function
Percentage owned
SAE Magnetics (H.K.)
Ltd.
Hong Kong
Production of electronic
materials and components
100.0
%
TDK Taiwan Corporation
Taipei, Taiwan
Production of electronic
materials and components
83.8
%
TDK Hong Kong Co., Ltd.
Hong Kong
Production of electronic
materials and components
100.0
%
TDK Xiamen Co., Ltd.
Xiamen, China
Production of electronic
materials and components
100.0
%
Headway Technologies, Inc.
California, U.S.A.
Production of electronic
materials and components
100.0
%
TDK Fujitsu Philippines
Corporation
Laguna, Philippines
Production of electronic
materials and components
65.8
%
Allied Focus Industry Ltd.
Hong Kong
Production of electronic
materials and components
100.0
%
TDK (Malaysia) Sdn. Bhd.
Negeri Sambian, Malaysia
Production of electronic
materials and components
100.0
%
TDK Components U.S.A., Inc.
Georgia, U.S.A.
Production of electronic
materials and components
100.0
%
TDK Dalian Corporation
Dalian, China
Production of electronic
materials and components
100.0
%
TDK Corporation of America
Illinois, U.S.A.
Sale of electronic
materials and components
100.0
%
TDK Electronics Europe GmbH
Düsseldorf, Germany
Sale of electronic
materials and components
100.0
%
TDK Singapore (Pte) Ltd.
Singapore
Sale of electronic materials and
components and recording media &
systems
100.0
%
TDK Marketing Europe GmbH
Ratingen, Germany
Sale of recording media & systems
100.0
%
TDK Electronics Corporation
New York, U.S.A.
Sale of recording media & systems
100.0
%
TDK Recording Media Europe
S.A.
Luxembourg
Production of recording
media & systems
100.0
%
TDK U.S.A. Corporation
New York, U.S.A.
Others
100.0
%
TDK Europe S.A.
Luxembourg
Others
100.0
%
TDK-MCC Corporation
Akita, Japan
Production of electronic
materials and components
100.0
%
TDK Shonai Manufacturing
Corporation
Yamagata, Japan
Production of electronic
materials and components
100.0
%
TDK Akita Manufacturing
Corporation
Akita, Japan
Production of electronic
materials and components
100.0
%
Media Technology Corporation
Yamanashi, Japan
Production of recording
media & systems
70.0
%
TDK Marketing Corporation
Tokyo, Japan
Sale of recording media &
systems
100.0
%
TDK Core Co., Ltd.
Tokyo, Japan
Others
100.0
%
TDK Service Corporation
Tokyo, Japan
Others
100.0
%
- 17 -
Table of Contents
D. Property, plants and equipment
TDK's manufacturing operations are conducted primarily at 33 plants in Japan and 21 plants
overseas.
The following table sets forth information, as of March 31, 2005, with respect to TDK's
manufacturing facilities, approximately 79 percent (in terms of floor space) of which are owned by
TDK.
Number of
Floor space
principal
(thousands of
Location
factories
square feet)
Principal products manufactured
Japan
Akita
16
2,110
Capacitors, ferrite cores,
inductors and high-frequency
components
Nagano
4
1,146
GMR heads and optical disks
Chiba
1
663
Rare-earth metal magnets,
ferrite cores and power
supplies
Yamanashi
3
603
GMR heads and data storage tapes
Oita
1
471
Videotapes
Shizuoka
2
427
Ferrite magnets
Yamagata
3
311
Inductors
Iwate
1
298
Capacitors
Ibaraki
2
112
Display
Overseas
China
7
2,669
GMR heads, inductors, ferrite cores,
capacitors, transformer, power
supplies and ferrite magnets
United States of
America
6
901
GMR heads, capacitors and ferrite
magnets
Luxembourg
1
494
Videotapes, CD-Rs and DVDs
Taiwan
1
345
Capacitors, ferrite cores and power
supplies
Philippines
1
344
GMR heads
Thailand
1
285
Audiotapes and rare-earth metal magnets
Malaysia
1
211
Capacitors and high-frequency
components
Korea
1
164
Capacitors and inductors
Hungary
1
160
Capacitors and ferrite cores
Hong Kong
1
41
Ferrite cores
Total
54
11,755
TDK considers all of its principal manufacturing facilities and other significant properties
to be in good condition and adequate to meet the needs of its operations. TDK owns each of its
significant properties.
As of March 31, 2005, TDK excluded 1 plant (135 thousand square feet) in the Americas, 1 plant
in Europe (2 thousand square feet) and 1 plant (59 thousand square feet) in Asia from the above
table because these plants have ceased operating and are in the process of being sold or otherwise
liquidated, in order to improve TDK's profitability.
In addition, TDK utilizes additional floor space at the above plants and elsewhere for
laboratories, office buildings, and employee housing and welfare facilities, with an aggregate
floor space of 5,560 thousand square feet, of which approximately 54 percent is owned by TDK and
the balance is leased to TDK.
- 18 -
Table of Contents
Item 5
. Operating and Financial Review and Prospects
Overview
TDK was established in 1935 as the world's first company to commercialize a magnetic material
called ferrite. In the ensuing years, TDK has developed and commercialized a host of other
materials and products. This drive is based on TDK's founding spirit of "Contribute to culture and
industry through creativity".
Looking ahead, TDK is determined to further refine its materials, process, and evaluation &
simulation technologies-its core technologies-aiming to be an Exciting Company, a consummate
e-material solution provider that delivers with perfect timing products imbuing value that
customers want.
TDK's operations are affected by the economies of various regions of the world, including
Japan, the United States, Europe and China. Despite rising crude oil prices and other factors that
restricted growth, the U.S. economy generally expanded steadily due in part to an upturn in capital
expenditures and improvements in employment statistics and household incomes. European economies,
while resilient in the first half of fiscal 2005, suffered a slowdown in the second half due to the
effects of a strengthening euro, rising crude oil prices and other negative factors. China,
meanwhile, maintained a high economic growth rate. In comparison, the Japanese economy slowed due
to a drop-off in exports, the result of second-half production cutbacks by manufacturers of IT and
digital products, despite strength in capital expenditures that was supported by strong corporate
earnings.
In the electronics industry in the first half of fiscal 2005, demand for digital home
appliances, such as LCD and plasma TVs and DVD recorders, was boosted by the Summer Olympic Games
in Athens and other factors. This resulted in strong demand for the TDK's electronic components in
the first half. However, demand for these components began to cool in the second half in line with
production cutbacks of finished products that use them.
In this business environment, TDK continued to implement cost structure reforms, for example,
the improvement of variable expenses by reviewing terms of supply and requesting discounts from
purchased materials vendors. TDK also actively made investments to drive growth, such as by
ramping up production capacity of capacitors and forging a strategic alliance in HDD heads.
TDK posted consolidated net sales of ¥657,853 million in fiscal 2005, up 0.3 percent from
¥655,792 million in fiscal 2004. Operating income rose 5.9 percent, from ¥56,510 million in fiscal
2004 to ¥59,830 million in fiscal 2005. Income from continuing operations before income taxes
increased 8.7 percent, from ¥55,847 million in fiscal 2004 to ¥60,728 million in fiscal 2005. Net
income downed 20.9 percent, from ¥42,101 million in fiscal 2004 to ¥33,300 million in fiscal 2005.
Basic net income per common share was ¥251.71 in fiscal 2005, down from ¥317.80 in fiscal 2004.
TDK's businesses are broadly classified into two business segments: the electronic materials
and components segment and the recording media & systems segment.
Electronic Materials and Components Segment is made up of four product sectors: (1)electronic
materials, (2)electronic devices, (3)recording devices, and (4)semiconductors & others. Segment
net sales increased 4.9 percent, from ¥519,792 million in fiscal 2004 to ¥545,214 million in fiscal
2005.
Recording Media & Systems Segment is made up of four product categories: audiotapes,
videotapes, optical media and other products. Segment sales declined 17.2 percent, from ¥136,000
million in fiscal 2004 to ¥112,639 million in fiscal 2005.
- 19 -
Table of Contents
A. Operating Results
Results of Operations
Years ended March 31
2005
2004
2003
2005
(millions of yen)
(millions
(%)
of dollars)
Net sales
¥
657,853
¥
655,792
¥
604,865
$
6,148.2
(100.0
)
(100.0
)
(100.0
)
Cost of sales
484,323
476,407
459,552
4,526.4
(73.6
)
(72.6
)
(76.0
)
Gross profit
173,530
179,385
145,313
1,621.8
(26.4
)
(27.4
)
(24.0
)
Selling, general
119,886
122,875
115,569
1,120.4
and administrative expenses
(18.2
)
(18.8
)
(19.1
)
Transfer to the government of the
substitutional portion of
Employees' Pension Fund:
Subsidy from the government
(33,533
)
—
—
(313.4
)
(-5.1
)
—
—
Loss on settlement
27,347
—
—
255.6
(4.2
)
—
—
Restructuring costs
—
—
5,197
—
—
—
(0.9
)
Operating income
59,830
56,510
24,547
559.2
(9.1
)
(8.6
)
(4.0
)
Other income (other deductions)
898
(663
)
(3,995
)
8.4
(0.1
)
(-0.1
)
(-0.7
)
Income taxes and minority interests
23,763
12,492
6,959
222.1
(3.6
)
(1.9
)
(1.1
)
Loss from discontinued operations
3,665
1,254
1,574
34.3
(0.5
)
(0.2
)
(0.2
)
Net income
¥
33,300
¥
42,101
¥
12,019
$
311.2
(5.1
)
(6.4
)
(2.0
)
Sales by Region
Years ended March 31
2005
2004
2003
2005
(millions of yen)
(millions
(%)
of dollars)
Japan
¥
184,025
¥
168,623
¥
165,484
$
1,719.9
(28.0
)
(25.7
)
(27.4
)
Americas
77,813
88,734
104,134
727.2
(11.8
)
(13.5
)
(17.2
)
Europe
71,702
80,710
77,713
670.1
(10.9
)
(12.3
)
(12.9
)
Asia (excluding Japan) and Oceania
321,612
314,875
254,925
3,005.7
(48.9
)
(48.0
)
(42.1
)
Middle East and Africa
2,701
2,850
2,609
25.3
(0.4
)
(0.5
)
(0.4
)
Net sales
¥
657,853
¥
655,792
¥
604,865
$
6,148.2
(100.0
)
(100.0
)
(100.0
)
This summary of sales by region is based on the location of the customer.
- 20 -
Table of Contents
Segment Information
The following industry and geographic segment information is required by the Japanese
Securities Exchange Law. Segment information is unaudited.
Industry Segment Information
Years ended March 31
2005
2004
2003
2005
(millions of yen)
(thousands
of dollars)
ELECTRONIC MATERIALS AND COMPONENTS
Net sales
Unaffiliated customers
¥
545,214
¥
519,792
¥
468,514
$
5,095,458
Intersegment
—
—
—
—
Total revenue
545,214
519,792
468,514
5,095,458
(100.0
%)
(100.0
%)
(100.0
%)
(100.0
%)
Operating expenses
477,694
461,077
445,511
4,464,430
(87.6
%)
(88.7
%)
(95.1
%)
(87.6
%)
Operating income
¥
67,520
¥
58,715
¥
23,003
$
631,028
(12.4
%)
(11.3
%)
(4.9
%)
(12.4
%)
Identifiable assets
537,593
505,178
495,144
5,024,233
Depreciation and amortization
47,409
46,293
52,358
443,075
Capital expenditures
57,192
40,084
38,457
534,505
RECORDING MEDIA AND SYSTEMS
Net sales
Unaffiliated customers
¥
112,639
¥
136,000
¥
136,351
$
1,052,701
Intersegment
—
—
—
—
Total revenue
112,639
136,000
136,351
1,052,701
(100.0
%)
(100.0
%)
(100.0
%)
(100.0
%)
Operating expenses
120,329
138,205
134,807
1,124,570
(106.8
%)
(101.6
%)
(98.9
%)
(106.8
%)
Operating income (loss)
¥
(7,690
)
¥
(2,205
)
¥
1,544
$
(71,869
)
(-6.8
%)
(-1.6
%)
(1.1
%)
(-6.8
%)
Identifiable assets
84,160
97,186
96,761
786,542
Depreciation and amortization
5,397
4,433
4,774
50,439
Capital expenditures
3,813
4,387
2,569
35,635
ELIMINATIONS AND CORPORATE
Corporate assets
¥
186,248
¥
167,955
¥
155,432
$
1,740,636
TOTAL
Net sales
Unaffiliated customers
¥
657,853
¥
655,792
¥
604,865
$
6,148,159
Intersegment
—
—
—
—
Total revenue
657,853
655,792
604,865
6,148,159
(100.0
%)
(100.0
%)
(100.0
%)
(100.0
%)
Operating expenses
598,023
599,282
580,318
5,589,000
(90.9
%)
(91.4
%)
(95.9
%)
(90.9
%)
Operating income
¥
59,830
¥
56,510
¥
24,547
$
559,159
(9.1
%)
(8.6
%)
(4.1
%)
(9.1
%)
Identifiable and corporate assets
808,001
770,319
747,337
7,551,411
Depreciation and amortization
52,806
50,726
57,132
493,514
Capital expenditures
61,005
44,471
41,026
570,140
Note:
In accordance with SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets", certain amounts in the segment
information do not reflect discontinued operations, previous fiscal
year's segment information has been reclassified to conform to the fiscal
2005 presentation.
- 21 -
Table of Contents
Geographic Segment Information
Years ended March 31
2005
2004
2003
2005
(millions of yen)
(thousands
of dollars)
JAPAN
Net sales
¥
339,493
¥
329,782
¥
334,882
$
3,172,832
Operating income
26,382
8,538
5,193
246,561
Identifiable assets
305,717
316,695
326,128
2,857,168
AMERICAS
Net sales
87,594
100,971
97,424
818,636
Operating income
5,496
4,985
1,439
51,364
Identifiable assets
70,844
65,584
73,845
662,093
EUROPE
Net sales
71,682
80,641
78,462
669,925
Operating income (loss)
(5,125
)
(115
)
(3,547
)
(47,897
)
Identifiable assets
44,961
51,797
48,108
420,196
ASIA AND OTHERS
Net sales
400,866
380,781
314,918
3,746,411
Operating income
33,551
42,912
20,640
313,561
Identifiable assets
263,621
228,058
193,637
2,463,748
ELIMINATIONS AND CORPORATE
Net sales
241,782
236,383
220,821
2,259,645
Operating income (loss)
474
(190
)
(822
)
4,430
Identifiable assets
122,858
108,185
105,619
1,148,206
TOTAL
Net sales
¥
657,853
¥
655,792
¥
604,865
$
6,148,159
Operating income
59,830
56,510
24,547
559,159
Identifiable and corporate assets
808,001
770,319
747,337
7,551,411
OVERSEAS SALES
Americas
¥
77,813
¥
88,734
¥
104,134
$
727,224
Europe
71,702
80,710
77,713
670,112
Asia and others
324,313
317,725
257,534
3,030,963
Overseas sales total
¥
473,828
¥
487,169
¥
439,381
$
4,428,299
Percentage of consolidated sales
72.0
%
74.3
%
72.6
%
72.0
%
Notes:
(1)
Net sales in each geographic area are based on the location of TDK
entities where the sales are generated.
(2)
Overseas sales are based on the location of the customers.
(3)
In accordance with SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets", certain amounts in the segment
information do not reflect discontinued operations, previous year's
segment information has been reclassified to conform to the fiscal
2005 presentation.
- 22 -
Table of Contents
Fiscal 2005 Compared to Fiscal 2004
Sales
Consolidated net sales rose 0.3 percent from ¥655.8 billion to ¥657.9 billion ($6,148 million)
in fiscal 2005, the year ended March 31, 2005.
TDK's operations are affected by the economies of various regions of the world, including
Japan, the United States, Europe and China. Despite rising crude oil prices and other factors that
restricted growth, the U.S. economy generally expanded steadily due in part to an upturn in capital
expenditures and improvements in employment statistics and household incomes. European economies,
while resilient in the first half of fiscal 2005, suffered a slowdown in the second half due to the
effects of a strengthening euro, rising crude oil prices and other negative factors. China,
meanwhile, maintained a high economic growth rate. In comparison, the Japanese economy slowed due
to a drop-off in exports, the result of second-half production cutbacks by manufacturers of IT and
digital products, despite strength in capital expenditures that was supported by strong corporate
earnings.
In the electronics industry in the first half of fiscal 2005, demand for digital home
appliances, such as LCD and plasma TVs and DVD recorders, was boosted by the Summer Olympic Games
in Athens and other factors. This resulted in strong demand for the TDK's electronic components in
the first half. However, demand for these components began to cool in the second half in line with
production cutbacks of finished products that use them.
In this business environment, TDK continued to implement cost structure reforms, for example,
the improvement of variable expenses by reviewing terms of supply and requesting discounts from
purchased materials vendors. TDK also actively made investments to drive growth, such as by
ramping up production capacity of capacitors and forging a strategic alliance in HDD heads.
As a result, the electronic materials and components segment posted net sales of ¥545.2
billion ($5,095 million), up 4.9 percent from ¥519.8 billion in the previous fiscal year.
Sales in the electronic materials sector rose 4.8 percent from ¥166.8 billion to ¥174.8
billion ($1,634 million). Sales of multilayer chip capacitors, a mainstay of capacitor products,
increased year over year. In the first half of fiscal 2005, the Athens Olympics propelled demand
for digital home appliances higher, which had an add-on effect for components used in them. In the
second half, however, demand for components cooled, this time the result of cutbacks in the
production of digital home appliances, and prices also dropped. But, against this market backdrop,
TDK absorbed the sales price declines and the effect of unfavorable foreign exchange movements
through improvements to its product mix. In ferrite cores, sales declined from the previous fiscal
year, despite higher demand for general-purpose power supply cores for digital home appliances and
cores for communications equipment. This decrease was due to a reduction in output of deflection
yoke cores and flyback transformer cores used in CRT TVs. Magnet sales increased year over year,
the result of steadily rising demand for use in automotive and HDD applications.
Sales in the electronic devices sector increased 7.8 percent from ¥108.0 billion to ¥116.4
billion ($1,088 million). Inductive devices, the largest product category in this sector, posted
higher sales, despite lower sales prices and the negative effect of foreign exchange movements.
This increase was attributable to higher demand spurred by acceleration in the pace at which
automobiles are incorporating electronics and the increasing sophistication of mobile phones, as
well as by new product launches. Sales of high-frequency components declined marginally year over
year because higher sales volume and an improved product mix failed to completely offset
persistently strong discounting pressure from mobile phone handset manufacturers, the main customer
for these components. In power systems, sales of DC-DC converters and
DC-AC inverters were
healthy. Sensors and actuators recorded higher sales due to growth in demand for use in PCs and
peripherals and communications equipment.
- 23 -
Table of Contents
In the recording devices sector, sales rose 1.9 percent from ¥230.1 billion to ¥234.6 billion
($2,192 million). Sales of HDD heads, the main product in this sector, rose year over year.
However, TDK had to overcome the loss of business from a major customer that started producing
heads in house in 2004, as well as the impact of falling sales prices and unfavorable foreign
exchange movements. Cutbacks in HDD inventories at customers in the first half of fiscal 2005 also
affected the sector's performance. However, demand for HDD heads rose in the second half of the
fiscal year following the end of these cutbacks. Sales of other heads declined year over year due
to sluggish sales of optical pickups.
Sales in the semiconductors & others sector climbed 30.8 percent from ¥14.9 billion to ¥19.4
billion ($182 million). TDK recorded slightly higher sales of anechoic chambers for
electromagnetic noise control and equipment used in these chambers. There was also growth in
external sales of manufacturing equipment due to higher investments in semiconductor facilities and
equipment by customers.
Operating income of the electronic materials and components segment in fiscal 2005 was ¥67.5
billion, up ¥8.8 billion from fiscal 2004. In spite of the deep-rooted pressure for sales price
discounts, operating income increased due to higher sales of capacitors and inductive devices,
discounts in raw materials and cost improvements by rationalization.
In the recording media & systems segment, sales declined 17.2 percent from ¥136.0 billion to
¥112.6 billion ($1,053 million). Sales of audiotapes and videotapes declined year over year.
While TDK maintained a high market share, demand is declining for these products as a whole. Sales
of optical media increased, with higher DVD sales volume offsetting a sharp fall in DVD prices and
lower CD-R sales. Sales of other products decreased year over year. There was an increase in
sales of LTO-standard* (Linear Tape-Open) tape-based data storage media for computers. However, a
decline in sales caused by the sale in the previous fiscal year of a U.S. software development
subsidiary and lower sales of recording equipment brought overall sales of other products down year
over year.
Operating loss of the recording media & systems segment in fiscal 2005 was ¥7.7 billion, up
¥5.5 billion from fiscal 2004. Operating loss increased due to a decline in demand of audiotapes
and videotapes as a whole, decrease in sales as a result of sale of a subsidiary in the United
States of America in fiscal 2004, and continuous drop in sales prices mainly in optical media.
*Linear Tape-Open, LTO, LTO logo, Ultrium and Ultrium logo are trademarks of HP, IBM and
Certance LLC in the U.S., other countries or both.
By region, sales in Japan rose 9.1 percent from ¥168.6 billion to ¥184.0 billion ($1,720
million). Overseas sales declined 2.7 percent from ¥487.2 billion to ¥473.8 billion ($4,428
million). Overseas sales accounted for 72.0% of consolidated net sales.
In Japan, sales in the electronic devices sector and recording media & systems segment
declined, while higher sales were recorded in the electronic materials, recording devices and
semiconductors & others sectors. The electronics materials and components segment saw its
operating income increase by ¥17.6 billion due to increase in operating ratio, discount in raw
materials and decrease in cost by rationalization. Although operating loss of the recording media
& systems segment increased slightly, operating income in fiscal 2005 was ¥25.8 billion, up ¥16.9
billion from fiscal 2004.
In Asia (excluding Japan) and Oceania, sales declined in the recording devices sector and
recording media & systems segment, but sales increased in the electronic materials and electronic
devices sectors. The operating income of the electronic materials and components segment decreased
by ¥8.8 billion. This decrease is due to a significant decline in sales prices mainly in recording
devices and capacitors. Operating income of the recording media & systems segment also decreased
slightly, resulting in operating income for fiscal 2005 of ¥33.6 billion, ¥9.5 billion less than
fiscal 2004.
- 24 -
Table of Contents
In the Americas, sales decreased in the electronic materials and recording devices sectors as
well as the recording media & systems segment. The higher yen versus the U.S. dollar also impacted
sales in the Americas. The operating income of the electronic materials and components segment
decreased ¥0.9 billion from fiscal 2004. However, operating income in fiscal 2005 was ¥5.5
billion, up ¥0.9 billion from fiscal 2004, due to decrease in operating loss of the recording media
& systems segment as a result of sale of a subsidiary engaged in software development.
In Europe, lower sales were recorded in the electronic materials and semiconductors & others
sectors as well as the recording media & systems segment. While operating loss of the electronic
materials and components decreased, operating loss of the recording media & systems segment in
fiscal 2005 reversed from operating income in fiscal 2004 to operating
loss of ¥4.7 billion by decrease of ¥5.8 billion, due to a significant decline in sales prices
mainly in optical media. As a result, operating loss in fiscal 2005 was ¥5.1 billion, ¥5.0 billion
less than fiscal 2004.
Effect of foreign exchange movements
In fiscal 2005, overseas sales accounted for 72.0 percent of consolidated net sales, down 2.3
percentage points. As a result, fluctuations in foreign exchange rates have a significant effect
on TDK's consolidated sales and income. During fiscal 2005, the yen appreciated 5.0 percent in
relation to the U.S. dollar and depreciated 1.9 percent in relation to the euro, based on TDK's
average internal exchange rates. Overall, TDK estimates that each ¥1 movement in the exchange
rates during fiscal 2005 had the effect of reducing net sales by about ¥4.0 billion and operating
income by about ¥1.0 billion, in relation to the prior fiscal year.
By region, foreign exchange fluctuations reduced sales in Japan by about ¥3.8 billion, in Asia
(excluding Japan) and Oceania by about ¥23.6 billion and in the Americas by about ¥5.5 billion, but
increased sales in Europe by about ¥1.4 billion. The effect of foreign exchange fluctuations on
consolidated net sales after the elimination of intersegment transactions was about ¥20.6 billion.
TDK conducts a large share of business activities outside Japan as one way to offset the
impact of exchange-rate fluctuations. Such activities include manufacturing and sales, as well as
research, design and procurement. In-region production in fiscal 2005 represented 112.1 percent of
sales in Asia (excluding Japan) and Oceania, 20.9 percent in the Americas, and 23.9 percent in
Europe. Overseas production accounted for 59.0 percent of total sales in fiscal 2005, compared
with 58.6 percent one year earlier, and for 81.9 percent of overseas sales, compared with 78.9
percent one year earlier. The rise in the percentage of overseas production in fiscal 2005 is
mainly due to higher production in Asia in the electronic materials and components segment.
TDK and certain overseas consolidated subsidiaries hedge exposure to foreign exchange
movements by entering into forward foreign exchange contracts and swaps for some foreign
currency-denominated obligations. Foreign exchange risk arising in operating activities is hedged
by using forward foreign exchange contracts. In principle, TDK's policy is to hedge up to 50
percent of expected foreign currency-denominated accounts receivable for each month for the next
six months. Due to the global nature of operations, management realizes that currency movements
continue to have the potential to exert a material influence on consolidated performance.
Cost and expenses
The cost of sales increased 1.7 percent from ¥476.4 billion in fiscal 2004 to ¥484.3 billion
($4,526 million) in fiscal 2005 due to higher sales. Cost of sales increased from 72.6 percent to
73.6 percent of net sales, respectively. This reflected the negative effects on earnings of strong
discounting pressure in all segments and foreign exchange movements, mainly the appreciation of the
yen relative to the U.S. dollar. These factors outweighed positive influences such as cost
reductions from structural reforms and numerous other actions to cut costs, including the receipt
of discounts on purchased materials. As a result, gross profit decreased 3.3 percent year over
year.
- 25 -
Table of Contents
Selling, general and administrative expenses decreased ¥3.0 billion from ¥122.9 billion in
fiscal 2004 to ¥119.9 billion ($1,120 million) in fiscal 2005, and decreased from 18.8 percent to
18.2 percent of net sales, respectively. Selling, general and administrative expenses decreased
despite a 0.3 percent rise in net sales due to efforts to strictly manage fixed expenses, such as
by lowering personnel expenses through greater operational efficiency. The main components of this
decrease were reductions in personnel expenses of ¥3.1 billion and marketing expenses of ¥1.3
billion. Research and development expenses included in selling, general and administrative
expenses increased ¥3.4 billion from ¥32.9 billion in fiscal 2004 to ¥36.3 billion ($340 million)
in fiscal 2005, and increased from 5.0 percent to 5.5 percent of net sales, respectively.
In addition, pursuant to the newly enacted Contributed Benefit Pension Plan Law, TDK received
an exemption from the Minister of Health, Labor and Welfare, effective September
25, 2003, from the obligation to pay benefits related to future employee services with respect
to the substitutional portion of its Employees' Pension Fund (EPF). TDK was also granted an
exemption from the obligation to pay benefits in relation to past employee services in October 2004
with respect to the substitutional portion of its domestic contributory plan. The transfer of the
substitutional portion of TDK's EPF liabilities to the government was completed on January 31,
2005. As a result of the transfer, TDK recognized as a subsidy from the Japanese government an
amount equal to the difference between the fair value of the obligation deemed "settled" with the
Japanese government and the assets required to be transferred to the government. The subsidy that
TDK recognized amounted to ¥33.5 billion ($313 million). In addition, TDK recognized a settlement
loss in an amount equal to the product of (i) the ratio of the obligation settled to the total EPF
obligation outstanding immediately prior to settlement, both of which exclude the effect of future
salary progression relating to the substitutional portion of the EPF obligation, and (ii) the net
unrecognized gain/loss immediately prior to settlement, which amounted to ¥27.3 billion ($256
million). This gain and loss is included in operating income in the accompanying consolidated
statements of income for the year ended March 31, 2005.
Other income and deductions
Other income (deductions) improved ¥1.6 billion from the previous fiscal year, reflecting a
¥2.2 billion decline in foreign exchange losses and a ¥1.0 billion decrease in loss on securities,
net, as well as other factors.
Income taxes and minority interests
The ratio of income taxes to income from continuing operations before income taxes (the
effective tax rate) increased from 21.7 percent in fiscal 2004 to 38.3 percent in fiscal 2005. The
increase reflects mainly the fact that TDK received a notification and assessment of additional tax
from the Tokyo Regional Tax Bureau (Nihonbashi Tax Office) asserting that prices charged and paid
by TDK in connection with sales and purchases of products involving its overseas subsidiaries have
not been commensurate with the prices of similar transactions involving unrelated third parties.
The period of additional assessments covers tax years ending March 1999 through March 2003. The
additional tax assessed by the Tokyo Regional Tax Bureau amounted to
¥12.0 billion including
interest and penalty, which has been reflected as additional tax expense and other expense, net of
deferred income tax benefits, in the accompanying consolidated statements of income for the year
ended March 31, 2005.
Net income
TDK posted net income of ¥33.3 billion ($311 million), resulting in net income per diluted
share of ¥251.56 ($2.35), compared with ¥317.69 in the previous fiscal year. Return on equity
(ROE) decreased from 7.5 percent to 5.5 percent. This was due to an approximate ¥62.8 billion
increase in stockholders' equity, which reflected a decrease of about ¥38.7 billion in accumulated
other comprehensive loss due to such factors as a decrease of about ¥32.9 billion in minimum
pension liability adjustments following the transfer of the substitutional portion of EPF
liabilities, as well as an increase in retained earnings.
- 26 -
Table of Contents
Cash dividends per share paid during the fiscal year totaled ¥60 ($0.56). This dividend is
the sum of the June 2004 year-end dividend of ¥30 and the December 2004 interim dividend of ¥30.
Shareholders of record on March 31, 2005 received a cash dividend of ¥40 per share at the end of
June 2005.
In fiscal 2005, consolidated net income included loss from discontinued operations of ¥3,665
million related to TDK Semiconductor Corporation. See discussion at Discontinued
Operations.
Fiscal 2004 Compared to Fiscal 2003
Sales
Consolidated net sales increased 8.4 percent to ¥655.8 billion in fiscal 2004, the year ended
March 31, 2004, from ¥604.9 billion one year earlier.
The Japanese economy in fiscal 2004 tended toward recovery, led by IT-related production and
exports. However, with no upturn evident in household incomes, consumer spending failed to
rebound. Meanwhile, the U.S. economy, the driving force for the world economy, expanded compared
with the previous year, with consumer spending, housing investment and capital expenditures all
rising, as the government eased fiscal and monetary policy.
In the electronics industry, the year was characterized by the rising popularity of LCD and
plasma flat-screen TVs, digital cameras and DVD recorders, as well as by the increasing
sophistication of mobile phones, replacement demand for PCs, and the growing use of electronics in
automobiles. However, deflationary trends in world markets affected these finished products,
placing unrelenting pricing pressure on electronic materials and components and recording media &
systems, TDK's main products.
TDK saw orders drop in the first quarter (April-June 2003) of fiscal 2004 due to factors such
as the Severe Acute Respiratory Syndrome (SARS) outbreak and fallout from the Iraq war.
Nevertheless, TDK remained focused on implementing cost structure reforms, carrying on initiatives
from fiscal 2003 to improve asset productivity and concentrate resources on strategic businesses.
In the electronic materials and components segment, net sales increased 10.9 percent from
¥468.5 billion to ¥519.8 billion.
Sales in the electronic materials sector decreased 1.3 percent from ¥168.9 billion to ¥166.8
billion. Sales of multilayer chip capacitors, a mainstay of capacitor products, increased. Higher
orders for capacitors, which reflected growing demand for communications products, offset falling
sales prices and the negative effect of exchange rate movements. In ferrite cores, deflection yoke
cores and flyback transformer cores saw sales drop due to falling demand and sales prices. The
drop in orders for these cores was a reflection of a rapid shift in consumer demand from CRT TVs to
LCD, plasma and other flat-panel models. Higher sales of small coils and transformer cores, a
category where demand increased, failed to offset this decrease, resulting in a decline in overall
sales of ferrite cores. Magnet sales declined as the effect of falling sales prices outweighed
higher sales volumes.
In the electronic devices sector, sales decreased 4.2 percent from ¥112.7 billion to ¥108.0
billion. Inductive devices, the largest product category in this sector, posted higher sales as
demand for communications applications increased in line with advances in the performance of mobile
phones. However, sales growth was held back by lower sales prices and foreign currency movements.
Sales of high-frequency components decreased despite an upswing in shipment volumes that resulted
from strong demand for components used in mobile phones, the main market for these components, and
successful activities to win new orders. The decrease reflected the continuing glut in the supply
of high-frequency components in the market as a whole, which prompted customers to demand price
reductions that were greater than in other electronic component categories. Sensors and actuators
recorded higher sales due to growth in demand for communications applications and PCs and
peripherals. However, sales of power systems declined due to lackluster demand associated with the
amusement field, a sector where demand was strong in the previous fiscal year.
- 27 -
Table of Contents
Recording devices sales climbed 30.8 percent from ¥176.0 billion to ¥230.1 billion. Sales of
HDD heads, the main product in this sector, were up sharply. This was primarily because of
continuing expansion in the HDD market and the resulting robust HDD sales by major TDK customers.
Sales of other heads also increased.
Sales in the semiconductors & others sector climbed 37.1 percent from ¥10.9 billion to ¥14.9
billion. Growth reflected higher sales of anechoic chambers for noise control and equipment used
in these chambers.
Operating income of the electronic materials and components segment in fiscal 2004 was ¥58.7
billion, up ¥35.7 billion from fiscal 2003. This increase was due to significantly higher sales of
recording devices and cost reductions such as reduced depreciation from reforms to the profit
structure. This increase offset declines in profit due to lower sales of other products and the
negative effect of the appreciation of the yen.
In the recording media & systems segment, sales edged down 0.3 percent from ¥136.4 billion to
¥136.0 billion. While TDK continued to command a high share of the audiotape and videotape
markets, sales in these two categories decreased as demand continued to shrink due to structural
changes. Optical media products posted increased sales, with higher sales volumes of CD-Rs and
DVDs in an expanding market offsetting lower sales prices. Sales of other products decreased.
Higher sales of LTO-standard* (Linear Tape-Open) tape-based data storage media for computers failed
to offset lower sales of PC software, recording equipment and other products.
The recording media & systems segment saw some increased profits due to higher sales of
optical media products. However, the segment experienced losses of ¥2.2 billion in fiscal 2004,
down ¥3.7 billion from fiscal 2003, due to falling sales prices of other products and significantly
reduced profits from the negative effect of the appreciation of the yen.
*
Linear Tape-Open, LTO, LTO logo, Ultrium and Ultrium logo are trademarks of HP, IBM and
Certance LLC in the U.S., other countries or both.
By region, sales in Japan increased 1.9 percent to ¥168.6 billion in fiscal 2004 from ¥165.5
billion in fiscal 2003. There was a 10.9 percent rise in overseas sales year over year to ¥487.1
billion from ¥439.4 billion in fiscal 2003. Overseas sales accounted for 74.3 percent of
consolidated net sales.
In Japan, sales edged up from the previous fiscal year as higher sales in the recording
devices sector offset sales decreases caused by lower orders for DC-DC converters for the amusement
field and falling demand for audiotapes. The electronic materials and components segment saw its
operating income increase by ¥7.2 billion due to ongoing cutbacks in expenses and improvements in
cost categories mainly in raw materials price reductions resulting from structural reforms. This
increase offset losses in the recording media & systems segment. Accordingly, operating income for
fiscal 2004 increased to ¥8.5 billion, up ¥3.3 billion from fiscal 2003.
In Asia (excluding Japan) and Oceania, sales increased due to higher sales of recording
devices, as TDK regained market share, and strong sales of electronic materials and electronic
devices. The operating income of the electronic materials and components segment significantly
increased by ¥22.2 billion. This increase accounted for almost the entire increase in operating
income across the region, which was due mainly to increased sales of recording devices. The
profits of the recording media & systems segment remained practically unchanged, resulting in
operating income for fiscal 2004 of ¥42.9 billion, ¥22.3 billion more than fiscal 2003.
In the Americas, sales decreased due to the effect of foreign exchange translation resulting
from the appreciation of the yen. Other factors were lower sales in the recording media & systems
segment despite higher sales of optical media products, including DVDs, due to lower sales of other
products; and lower sales in the electronic materials and components segment. The operating income
of the electronic materials and components segment increased by ¥5.7 billion. This increase
resulted mainly from an increase in sales of recording devices. This increase offset losses in the
recording media & systems segment, which resulted from reduced sales of PC software and recording
equipment. Accordingly, operating income for fiscal 2004 was ¥5.0 billion, up ¥3.6 billion from
fiscal 2003.
- 28 -
Table of Contents
In Europe, sales increased. Sales were sluggish in the electronic materials and components
segment, but rose in the recording media & systems segment as sharply higher sales of DVDs and
other optical media products countered falling demand for audiotapes. The operating income of the
recording media & systems segment increased by ¥2.3 billion, due mainly to increased sales of
optical media, which, when combined with increased profits in the electronic materials and
components segment, resulted in operating losses for fiscal 2004 of ¥0.1 billion, an improvement of
¥3.4 billion on fiscal 2003.
Effect of foreign exchange movements
In fiscal 2004, overseas sales accounted for 74.3 percent of consolidated net sales, up 1.7
percentage points. As a result, fluctuations in foreign exchange rates have a significant effect
on TDK's consolidated sales and income. During fiscal 2004, the yen appreciated 7.2 percent in
relation to the U.S. dollar and depreciated 9.7 percent in relation to the euro, based on TDK's
average internal exchange rates. Overall, TDK estimates that each ¥1 movement in exchange rates
during fiscal 2004 had the net effect of reducing net sales by about ¥4.0 billion and operating
income by about ¥1.5 billion, in relation to the prior fiscal year.
By region, foreign exchange fluctuations reduced sales in Japan by about ¥11.0 billion, sales
in Asia (excluding Japan) and Oceania by about ¥31.0 billion and sales in the Americas by about
¥9.3 billion, but increased sales in Europe by about ¥4.5 billion. The negative effect of foreign
exchange fluctuations on consolidated net sales after the elimination of intersegment transactions
was about ¥25.8 billion.
TDK conducts a large share of business activities outside Japan as one way to offset the
impact of exchange-rate fluctuations. Such activities include manufacturing and sales, as well as
research, design and procurement. In-region production in fiscal 2004 represented 111.6 percent of
sales in Asia (excluding Japan) and Oceania, 22.5 percent in the Americas, and 23.8 percent in
Europe. Overseas production accounted for 58.6 percent of total sales in fiscal 2004, compared
with 55.8 percent one year earlier, and for 78.9 percent of overseas sales, compared with 76.8
percent one year earlier. The rise in the percentage of overseas production in fiscal 2004 is
mainly due to higher production in Asia in the electronic materials and components segment
primarily as a result of an increase in overseas production, which rose in line with sales growth
resulting from a recovery in market share in recording devices.
TDK and certain overseas subsidiaries hedge exposure to foreign exchange movements by entering
into forward foreign exchange contracts and swaps for some foreign currency-denominated
obligations. Foreign exchange risk arising in operating activities is hedged by using forward
foreign exchange contracts. In principle, TDK's policy is to hedge up to 50 percent of expected
foreign currency-denominated accounts receivable for each month for the next six months. Due to
the global nature of operations, management realizes that currency movements continue to have the
potential to exert a material influence on consolidated performance.
Cost and expenses
The cost of sales increased 3.7 percent from ¥459.6 billion in fiscal 2003 to ¥476.4 billion
in fiscal 2004 due to higher sales. Cost of sales decreased from 76.0 percent to 72.6 percent of
net sales, respectively. This reflected both an improvement in the capacity utilization rate
accompanying higher sales, and cutbacks in expenses and improvements in various cost categories
resulting from structural reforms. These benefits outweighed strong downward pressure on prices
and the adverse effects of foreign exchange movements. As a result, gross profit increased 23.4
percent.
- 29 -
Table of Contents
Selling, general and administrative expenses increased ¥7.3 billion from ¥115.6 billion in
fiscal 2003 to ¥122.9 billion in fiscal 2004, and decreased from 19.1 percent to 18.7 percent of
net sales, respectively. Selling, general and administrative expenses rose in line with the 8.4
percent rise in net sales as TDK prevented further growth in these
expenses by strictly managing fixed expenses. Personnel, which is the payment of salaries, bonuses and retirement payments,
freight charges, marketing expenses and outsourcing expenses increased ¥2.6 billion, ¥0.9 billion,
¥0.7 billion, and ¥0.4 billion, respectively. Research and development expenses represented 5.0
percent of net sales, the same as in the previous fiscal year.
Other income and deductions
Other income (deductions) improved ¥3.3 billion from the previous fiscal year. While there
was a ¥1.6 billion increase in foreign exchange losses, there was a ¥2.2 billion decrease in loss
on securities, net and increase of ¥1.3 billion in equity in earnings of affiliates.
Income taxes and minority interests
The ratio of income taxes to income from continuing operations before income taxes (the
effective tax rate) decreased from 30.1 percent in fiscal 2003 to 21.7 percent in fiscal 2004. The
decrease reflects decrease in additional valuation allowance provided during the year and the
higher amounts of income earned in China, etc. during fiscal 2004, which were taxed at rates lower
than TDK's effective rate for all other jurisdictions in which it pays income taxes.
Net income
TDK posted a net income of ¥42.1 billion, resulting in net income per diluted share of
¥317.69, compared with ¥90.56 in the previous fiscal year. The return on equity increased from 2.1
percent to 7.5 percent. Cash dividends per share paid during the fiscal year totaled ¥50. This
dividend is the sum of the June 2003 year-end dividend of ¥25 and the December 2003 interim
dividend of ¥25. Shareholders of record on March 31, 2004 received a cash dividend of ¥30 per
share at the end of June 2004.
In fiscal 2004, consolidated net income included loss from discontinued operations of ¥1,254
million related to TDK Semiconductor Corporation. See discussion at Discontinued
Operations.
- 30 -
Table of Contents
Discontinued Operations
On March 31, 2005, TDK entered into an agreement to sell all outstanding stock of its wholly
owned subsidiary, TDK Semiconductor Corporation ("TSC") for ¥1,509 million ($14,103 thousand) to
Golden Gates Capital ("Buyer"). The sale of TSC is part of TDK's continuing shift away from
non-core products and technologies. The sale agreement also includes earn-out payments, to be made
by the Buyer to TDK, of up to ¥3,478 million ($32,505 thousand). The payments are contingent upon
certain milestones being met related to future revenue targets extending through 2007. The
transaction was completed on April 8, 2005. TDK has accounted for the sale of TSC as a
discontinued operation. The results of operations for this subsidiary have been reported as
discontinued operations for all periods presented and selected financial information for the years
ended March 31, 2005, 2004 and 2003 for the discontinued operations, are summarized as follows:
U.S. Dollars
Yen (Millions)
(Thousands)
2005
2004
2003
2005
Net sales
¥
2,242
3,070
4,015
$
20,953
Loss from operations before
income taxes (including loss on
disposal of ¥454 million in
2005)
3,509
244
2,471
32,794
Income tax expense (benefit)
156
1,010
(897
)
1,458
Loss from discontinued operations
¥
3,665
1,254
1,574
$
34,252
Loss from discontinued operations
per share:
Basic
¥
(27.70
)
(9.47
)
(11.86
)
$
(0.26
)
Diluted
(27.69
)
(9.46
)
(11.86
)
(0.26
)
See Note 20 to the Consolidated Financial Statements for further discussion.
- 31 -
Table of Contents
B. Liquidity and capital resources
Operating capital requirements
TDK's requirements for operating capital primarily are for the purchase of raw materials and
parts for use in the manufacture of its products. These expenses are booked as manufacturing
expenses and selling, general and administrative expenses. The payment of payroll expenses,
marketing expenses accompanying sales activities, and distribution-related expenses account for a
significant portion of operating expenses. Personnel expenses account for a significant portion of
R&D expenses. The necessary funds for these expenses are provided from cash generated by
operations.
Capital Expenditures
In fiscal 2005, capital expenditures on a cash basis rose ¥16.5 billion from ¥44.5 billion to
¥61.0 billion ($570 million). This was the result of aggressive investment in IT home electronics
appliances; high-speed, large-capacity networks; and car electronics, which are fields TDK regards
as strategically important for growth.
In the electronic materials and components segment, capital expenditures totaled ¥57.2
billion. TDK invested in the expansion of production capacity of HDD heads, facilities for
rationalizing these activities and the development of technology for coping with increasing areal
density. These investments centered mainly on China, the U.S. and the Philippines. Furthermore,
investments were made to increase production and rationalize operations in multilayer chip
capacitors and inductors, where growth in sales is expected due to acceleration in the pace at
which electronics are being incorporated in automobiles, the increasingly sophisticated nature of
mobile phones and other factors. These investments were made mainly in Japan and China.
In the recording media & systems segment, capital expenditures totaled ¥3.8 billion, mainly
for facilities to increase DVD production.
The funds for these capital expenditures are provided by internal sources generated from
depreciation and amortization and profits.
Capital expenditures for fiscal 2004, which are described in detail below, increased by ¥3.5
billion, from ¥41.0 billion for fiscal 2003 to ¥44.5 billion.
In the electronic materials and components segment, due to the expansion of the market for
recording devices, TDK has made investments principally in Asia, but also in the Americas and
Japan, to increase production and rationalization for its recording devices. Other major
expenditures include investments to increase production and rationalization for electronic
materials and electronic devices (principally capacitors), and investments into the development of
new products. Capital expenditures of this segment increased by ¥1.7 billion from ¥38.4 billion to
¥40.1 billion.
In the recording media and systems segment, investments have been made in Europe and Japan to
increase production and develop optical media products, whose market is expanding. Capital
expenditures of this segment increased by ¥1.8 billion from ¥2.6 billion to ¥4.4 billion.
In principle, the funds for these capital expenditures are provided from cash generated by
operations.
Capital expenditures for fiscal 2003, which are described in detail below, decreased by ¥17.3
billion, from ¥58.3 billion for fiscal 2002 to ¥41.0 billion.
In the electronic materials and components segment, investments have been made in the
Americas, Asia and Japan, for increased production and rationalization mainly of its recording
devices, whose market is expanding. Other major investments have been investments into increased
production and rationalization of electronic materials and electronic devices, such as capacitors
and magnets, and investments into the development of new products. Capital expenditures of this
segment decreased by ¥16.2 billion from ¥54.6 billion to ¥38.4 billion by concentrating on key
sectors.
- 32 -
Table of Contents
In the recording media and systems segment, investments have been made mainly in Japan to
increase production and develop optical media products, whose market is expanding. Capital
expenditures of this segment decreased by ¥1.1 billion from ¥3.7 billion to ¥2.6 billion.
In principle, the funds for these capital expenditures are provided from cash generated by
operations.
Financial Management
Operating capital and capital expenditures are, in principle, funded by cash generated through
operating activities. To improve capital efficiency, to the extent possible, TDK centralizes
financial management in the Head Office, having introduced a cash management system (CMS) in Japan,
the U.S. and Europe. Surplus funds are invested with an emphasis on low risk and liquidity. Funds
from within the group will be utilized, to the extent possible, to extend financing to subsidiaries
that cannot procure operating capital or funds for capital expenditures themselves.
Cash flows for fiscal 2005, 2004 and 2003 are summarized as follows:
Years ended March 31
2005
2004
2003
2005
(millions of yen)
(millions
of dollars)
Income from continuing operations
¥
36,965
¥
43,355
¥
13,593
$
345.5
Adjustments to reconcile net income to
net cash provided by operating
activities
56,617
70,465
92,323
529.1
Net cash provided by operating activities
93,582
113,820
105,916
874.6
Net cash used in investing activities
(60,863
)
(37,647
)
(46,220
)
(568.8
)
Net cash used in financing activities
(9,458
)
(9,661
)
(7,925
)
(88.4
)
Net cash provided by (used in)
discontinued operations
(1,625
)
761
(1,983
)
(15.2
)
Effect of exchange rate changes on cash
and cash equivalents
2,717
(10,669
)
(4,998
)
25.4
Net change in cash and cash equivalents
¥
24,353
¥
56,604
¥
44,790
$
227.6
Fiscal 2005 cash and cash equivalents increased ¥24.3 billion from ¥227.2 billion to
¥251.5 billion ($2,351 million). Operating activities provided net cash of ¥93.6 billion ($875
million), ¥20.2 billion less than in fiscal 2004. The major component of cash provided by
operating activities was depreciation and amortization of ¥52.8 billion, up ¥2.1 billion. In terms
of changes in assets and liabilities, inventories decreased ¥11.3 billion, the result of efforts to
reduce inventories, while retirement and severance benefits declined ¥6.8 billion due to the
transfer of the substitutional portion of EPF liabilities and changes to the pension system. In
addition, trade payables and accrued expenses decreased ¥8.0 billion and ¥11.4 billion,
respectively, and income taxes payables, net increased ¥8.8 billion.
Investing activities used net cash of ¥60.9 billion ($569 million), ¥23.3 billion more than
the ¥37.6 billion used in the previous fiscal year. TDK used ¥61.0 billion for capital
expenditures, ¥16.5 billion more than in fiscal 2004, as a result of making aggressive investments
to drive growth. Furthermore, payment for purchase of investments in securities increased ¥2.4
billion year over year. Regarding research and development expenses, TDK's policy is to focus
investments in the strategic fields of IT home electronic appliances, high-speed and large-capacity
networks and car electronics. Funds for research and development will be appropriated from
internal funds.
Financing activities used net cash of ¥9.5 billion ($88 million), a decrease of ¥0.2 billion
from the ¥9.7 billion used in fiscal 2004. There was an increase of ¥1.3 billion in dividends paid
due to the increase in the dividend. On the other hand, there was a decline in the repayment of
debt because debt has been virtually eliminated.
- 33 -
Table of Contents
Regarding procurement costs, TDK has long-term corporate credit ratings of AA- and A1 from
Standard & Poor's and Moody's, respectively. Furthermore, Standard & Poor's gives TDK their
highest short-term credit rating, A-1+, and TDK's U.S. subsidiaries have been given the highest
short-term rating of P-1 by Moody's. These ratings allow TDK to procure funds if needed at low
interest rates.
TDK's fundamental policy is to give consideration to a consistent increase in dividends based
on factors such as the return on equity (ROE), dividends as a percentage of equity (DOE) and TDK's
results of operations on a consolidated basis. Funds for paying dividends are allocated from
internal funds.
In the dynamically changing electronics industry, it is necessary to make well-timed
investments. Given this need, and the possibility that unstable financial conditions will continue
in Japan, TDK's policy is to maintain a high level of liquidity. TDK thus has no immediate plans
to repurchase its stock.
TDK estimates that operating cash flows and other internal resources will provide adequate
liquidity in fiscal 2006. Regarding cash flows for the fiscal years ending March 31, 2006 and
onward, TDK expects to provide the necessary funds from operating cash flows by increasing
profitability and improving the return on assets.
Fiscal 2004 cash and cash equivalents increased ¥56.6 billion to ¥227.2 billion from ¥170.6
billion in the previous fiscal year. Operating activities provided net cash of ¥113.8 billion, a
year-on-year increase of ¥7.9 billion. This reflected mainly a ¥30.1 billion increase in net
income to ¥42.1 billion and a ¥6.4 billion decrease in depreciation and amortization to ¥50.7
billion, as well as decreases in trade receivables and inventories of ¥5.0 billion and ¥21.4
billion, respectively. Regarding the shortfall in pension assets, TDK plans to take action in
response to certain recent reforms to the pension system, including transferring the substitutional
portion of Employees' Pension Fund ("EPF") liabilities.
Investing activities used net cash of ¥37.6 billion, a decrease of ¥8.6 billion from ¥46.2
billion in the previous fiscal year. The main factor was a ¥6.2 billion decrease in payment for
purchase of other investments to ¥0.4 billion. Regarding research and development expenses, TDK's
policy is to focus investments in the strategic fields of IT home electronic appliances, high-speed
and large-capacity networks and car electronics. Funds for research and development will be
appropriated from internal funds.
Financing activities used net cash of ¥9.7 billion, ¥1.8 billion more than the ¥7.9 billion in
cash used in the previous fiscal year. This mainly represented an increase of ¥0.8 billion in
repayments of short-term debt and a ¥0.7 billion increase in dividends paid.
Fiscal 2003 cash and cash equivalents increased ¥44.8 billion to ¥170.6 billion, from ¥125.8
billion in the previous fiscal year. Operating activities provided net cash of ¥105.9 billion, a
year over year increase of ¥61.7 billion. This reflected mainly a ¥37.8 billion increase in net
income to ¥12.0 billion; a decrease of ¥3.8 billion in depreciation and amortization to ¥57.1
billion; a decrease in inventories of ¥14.9 billion; and an increase of ¥20.9 billion in trade
payables. Regarding the shortfall in pension assets, TDK is currently considering reforms to the
pension system, including transferring the substitutional portion of employee pension fund
liabilities.
Investing activities used net cash of ¥46.2 billion, a decrease of ¥11.3 billion, from ¥57.5
billion in the previous fiscal year. The main factor was a ¥17.3 billion decrease in capital
expenditures to ¥41.0 billion. Regarding research and development expenses, TDK's policy is to
focus investments in the strategic fields of IT home electronic appliances, high-speed and
large-capacity networks and car electronics. Funds for research and development will be
appropriated from internal funds.
Financing activities used net cash of ¥7.9 billion, ¥5.3 billion less than the ¥13.2 billion
in cash used in the previous fiscal year. This mainly represented a ¥3.3 billion decrease in
repayments of short-term debt and a ¥2.0 billion decrease in dividends paid.
- 34 -
Table of Contents
Capital resources as of March 31, 2005, 2004 and 2003 are summarized as follows:
Years ended March 31
2005
2004
2003
2005
(millions of yen)
(millions
(%)
of dollars)
Short-term debt
¥
—
¥
315
¥
1,431
$
—
(—
)
(0.1
)
(0.3
)
Current installments of long term debt
103
101
488
1.0
(0.0
)
(0.0
)
(0.1
)
Long-term
debt, excluding current installments
81
27
94
0.7
(0.0
)
(0.0
)
(0.0
)
Stockholders' equity
639,067
576,219
553,885
5,972.6
(100.0
)
(99.9
)
(99.6
)
Total capital
¥
639,251
¥
576,662
¥
555,898
$
5,974.3
(100.0
)
(100.0
)
(100.0
)
TDK currently has no capital market debt outstanding. However, TDK maintains long-term
corporate credit ratings of AA- and A1 from Standard & Poor's and Moody's, respectively.
Furthermore, Standard & Poor's gives TDK their highest short-term credit rating, A-1+ and TDK's
U.S. subsidiaries have been given the highest rating of P-1 by Moody's.
Total assets amounted to ¥808.0 billion ($7,551 million) as of March 31, 2005, up ¥37.7
billion from ¥770.3 billion at the previous fiscal year-end. As of March 31, 2005, cash and cash
equivalents were ¥251.5 billion ($2,351 million), ¥24.3 billion higher than ¥227.2 billion a year
ago. Trade receivables were ¥148.0 billion ($1,383 million), ¥9.7 billion higher than ¥138.3
billion a year ago. Property, plant and equipment increased ¥8.1 billion from ¥208.9 billion to
¥217.0 billion ($2,028 million) and noncurrent deferred income taxes decreased ¥25.5 billion from
¥34.1 billion to ¥8.6 billion ($81 million).
Total liabilities decreased ¥27.0 billion from ¥190.8 billion to ¥163.8 billion ($1,531
million). Trade payables rose ¥2.2 billion from ¥59.9 billion to ¥62.1 billion ($580 million), and
income taxes payables increased ¥14.6 billion from ¥4.7 billion to ¥19.3 billion ($180 million).
However, retirement and severance benefits declined ¥44.7 billion from ¥73.5 billion to ¥28.8
billion ($270 million) due to the transfer of the substitutional portion of EPF liabilities and
changes to the pension system. Accrued expenses decreased ¥2.4 billion from ¥33.4 billion to ¥31.0
billion ($290 million).
Total stockholders' equity increased ¥62.9 billion from ¥576.2 billion to ¥639.1 billion
($5,973 million). Retained earnings increased ¥24.8 billion from ¥560.8 billion to ¥585.6 billion
($5,472 million) and accumulated other comprehensive loss decreased ¥38.7 billion from ¥90.4
billion to ¥51.7 billion ($483 million).
Total assets amounted to ¥770.3 billion as of March 31, 2004, up ¥23.0 billion from ¥747.3
billion at the previous fiscal year-end. As of March 31, 2004, cash and cash equivalents were
¥227.2 billion, ¥56.6 billion higher than ¥170.6 billion a year ago. However, property, plant and
equipment decreased ¥17.0 billion to ¥208.9 billion from ¥225.9 billion, and noncurrent deferred
income taxes decreased ¥9.8 billion to ¥34.1 billion from ¥43.9 billion.
Total liabilities increased ¥0.7 billion, from ¥190.1 billion to ¥190.8 billion. Trade
payables increased ¥2.9 billion, from ¥57.0 billion to ¥59.9 billion, accrued expenses increased
¥5.3 billion from ¥28.1 billion to ¥33.4 billion, and income taxes payables increased ¥3.6 billion,
from ¥1.1 billion to ¥4.7 billion. Retirement and severance benefits decreased ¥11.5 billion, from
¥85.0 billion to ¥73.5 billion.
Total stockholders' equity increased ¥22.3 billion, from ¥553.9 billion to ¥576.2 billion.
Retained earnings rose ¥34.9 billion, from ¥525.9 billion to ¥560.8 billion, while accumulated
other comprehensive loss rose ¥11.6 billion, from ¥78.8 billion to ¥90.4 billion.
- 35 -
Table of Contents
Total assets amounted to ¥747.3 billion as of March 31, 2003, down ¥2.6 billion from ¥749.9
billion at the previous fiscal year-end. Among current assets, cash and cash equivalents increased
¥44.8 billion, from ¥125.8 billion to ¥170.6 billion, while net trade receivables decreased ¥2.8
billion, from ¥142.8 billion to ¥140.0 billion, and inventories were down ¥17.2 billion, from ¥91.1
billion to ¥73.9 billion. And property, plant and equipment decreased ¥39.7 billion, from ¥265.6
billion to ¥225.9 billion, as TDK reviewed capital expenditures.
Total liabilities, meanwhile, increased ¥28.7 billion, from ¥161.4 billion to ¥190.1 billion.
Accrued expenses decreased ¥7.6 billion, from ¥35.7 billion to ¥28.1 billion due to the payment
during the year of retirement allowances to employees who applied for a special voluntary
retirement package offered as part of structural reforms implemented in fiscal 2002. Trade
payables increased ¥4.4 billion, from ¥52.6 billion to ¥57.0 billion, and retirement and severance
benefits increased ¥35.0 billion, from ¥50.0 billion to ¥85.0 billion.
Total stockholders' equity declined by a total of ¥30.0 billion, from ¥583.9 billion to ¥553.9
billion. Accumulated other comprehensive loss rose ¥34.8 billion, from ¥44.0 billion to ¥78.8
billion, due to a ¥18.7 billion rise in foreign currency translation adjustments and ¥15.8 billion
increase in minimum pension liability adjustments. Offsetting these increases to some extent was a
¥5.8 billion rise in retained earnings, from ¥520.1 billion to ¥525.9 billion.
For a discussion of financial instruments, see Note 14 "Risk Management Activities and
Derivative Financial Instruments", Note 15 "Fair Value of Financial Instruments" and Note 6
"Short-Term and Long-Term Debt" in Item 17 "Financial Statements".
C. Research and development, patents and licenses, etc.
R&D expenditures amounted to ¥36.3 billion ($340 million), 5.5 percent of net sales in fiscal
2005; ¥32.9 billion, 5.0 percent of net sales in fiscal 2004; and ¥30.1 billion, 5.0 percent of net
sales in fiscal 2003.
In its R&D activities, the group continues to work on strengthening and expanding development
of new products that respond to diversification in the electronics market. In particular, the
group is concentrating on next-generation recording-related products, micro electronics modules for
mobile communications-related applications, and energy-efficient, environmentally friendly devices
based on materials and design technologies. Furthermore, the group is using its reservoir of
technologies to conduct efficient R&D activities concentrating in three strategic areas: IT home
electronic appliances; high-speed and large-capacity networks and car electronics.
In the electronic materials and components field, development themes include commercialization
of optimum ferrite materials for transformers and choke coils that possess both a high saturation
magnetic flux density and a low core loss, commercialization of 100Gbpsi GMR heads for HDDs,
development of next-generation magnetic recording technology and development of
high-frequency-related components for mobile communications applications. In the recording media &
systems field, the group has made progress with research on next-generation DVD-related products,
including commercialization of Blu-ray discs. Furthermore, in EMC-related areas, which draw on
TDK's materials technologies, TDK is working toward the commercialization of products designed for
the increasingly higher frequencies used in electronic devices.
- 36 -
Table of Contents
R&D at TDK is conducted by the Materials R&D Center, Advanced Process Technology Center,
Devices Development Center, Production Engineering Development Center, Materials Analysis Center,
Application Center, Silicon System Development Dept., New Business Development Dept. and the R&D
functions of each operating group. Each facility is developing new products and technologies in
its respective area of responsibility. The Application Center devises the necessary application
technologies with the aim of keeping TDK in step with market trends and customer needs. The
Materials R&D Center is responsible for research in magnetic and dielectric materials that use
powder metallurgy. The Advanced Process Technology Center facilitates the use of cutting-edge
process technologies. The Devices Development Center conducts research in next-generation
recording and communications technologies as well as new devices.
In terms of overseas R&D activities, TDK is conducting R&D in collaboration with leading
universities in the U.S. and U.K., and overseas R&D subsidiaries are making use of local
technological resources. In China, where TDK is aiming to establish and develop an operating base
capable of supporting growth, R&D activities are being carried out in the area of electronic
components and materials. In addition, consolidated subsidiary Headway Technologies, Inc. is
developing next-generation HDD heads.
Although TDK has a variety of patents in Japan and other countries, and licenses from other
companies, it believes that expiration of any one of its patents or licenses or related group of
patents or licenses would not materially adversely affect its business activities. Total income
from patents and licenses was ¥0.5 billion ($5 million) in fiscal 2005, ¥0.1 billion in fiscal 2004
and ¥0.2 billion in fiscal 2003. TDK paid ¥9.3 billion ($87 million) in fiscal 2005, ¥8.1 billion
in fiscal 2004 and ¥7.9 billion in fiscal 2003 for patents and licenses, mainly royalties for
licenses related to the recording devices business. TDK does not believe that acquisition of new
proprietary patents or other companies' patents would have a material effect on operating results
in the future.
D. Trend information
Economic environment
The world economy is grappling with a host of risk factors such as surging crude oil prices
and raw materials costs, and fluctuations in the foreign exchange rates of major currencies. It is
also being influenced by the effects of developments in the U.S., which is burdened with
current-account and budget deficits, and in China, which continues to achieve a high rate of
growth. With 2005 also the trough of the current semiconductor cycle, there is a persistent sense
of uncertainty about the economic outlook.
Against this economic backdrop, from a medium-term perspective, the electronics industry is
expected to see the growth of digital home appliances, the convergence of information and
communications, as typified by the increasingly diverse functions offered by mobile phones, and the
greater use of electronics in motor vehicles. These trends are expected to result in continued
expansion in demand for the electronic components that the TDK develops, manufactures and sells.
Critical accounting policies
Critical accounting policies are those that require application of management's most
difficult, subjective or complex judgments, often as a result of the need to make estimates about
the effect of matters that are inherently uncertain and may change in subsequent periods.
The following is not intended to be a comprehensive list of all of TDK's accounting policies.
TDK's significant accounting policies are more fully described in Note 1 to the Consolidated
Financial Statements. In many cases, the accounting treatment of a particular transaction is
specifically dictated by U.S. generally accepted accounting principles, with no need for
management's judgment in their application. There are also areas in which management's judgment in
selecting an available alternative would not produce a materially different result.
- 37 -
Table of Contents
TDK has identified the following as critical accounting policies: impairment of long-lived
assets, valuation of inventories, goodwill and other intangible assets, pension benefit costs, and
deferred tax assets.
Impairment of long-lived assets
As of March 31, 2005 and 2004, the aggregate of TDK's property, plant and equipment and
amortized intangible assets was ¥229.6 billion and ¥223.1 billion, which accounted for 28.4 percent
and 29.0 percent of the total assets, respectively. TDK believes that impairment of long-lived
assets are critical to TDK's financial statements because the recoverability of the amounts or lack
thereof, could significantly affect its results of operations.
TDK's long-lived assets and certain identifiable intangibles are reviewed for impairment when
events or changes in circumstances indicate that the carrying amount of an asset may not be
recoverable. This review is performed using estimates of future cash flows. If the carrying
amount of the asset is considered to be impaired, an impairment charge is recorded for the amount
by which the carrying value of an asset exceeds its fair value. Management believes that the
estimates of future cash flows and fair values are reasonable; however, changes in estimates
resulting in lower future cash flows and fair value due to unforeseen changes in business
assumptions could negatively affect the valuation of those long-lived assets and significantly
affect TDK's financial position and results of operations. These unforeseen changes include a
possible further decline in demand and price for optical media products due to a shift in demand
from CD-Rs to DVD related products including Blu-ray discs. TDK makes investments with due
prudence, taking sufficiently into consideration the future profitability of products and the
recoverability of investments.
Valuation of inventories
Inventories are stated at the lower of cost or market, with cost determined on the average
cost method. The carrying value of inventory is reduced for estimated obsolescence by the
difference between its cost and the estimated market value based upon assumptions about future
demand. TDK evaluates the inventory carrying value for potential excess and obsolete inventory
exposures by analyzing historical and anticipated demand. In addition, known and anticipated
engineering change orders are evaluated against on-hand quantities for their potential obsolescence
affects. As fluctuations in estimates, which become a standard in recognizing adjustments in the
carrying values of inventory for expected obsolescence, are influential to business results of TDK,
we conclude it as a critical accounting policy. If actual demand were to be substantially lower
than estimated, additional inventory adjustments for excess or obsolete inventory may be required,
which could have a material adverse effect on TDK's business, financial condition and results of
operations.
Regarding the appropriateness of estimates in the past, TDK does not take a method to assume
various scenarios, but a method to reconsider every quarter by comparing estimate and actual
results. For example, in the operation management of product sector with rapid development in
technological innovation such as the recording devices sector, TDK revises the estimates of
valuation of obsolete inventories arising from the timely response to customers' demands for
high-efficiency products on a quarterly basis.
Goodwill and other intangible assets
Goodwill and other intangible assets that are determined to have an indefinite life are not
amortized and are tested for impairment on an annual basis and between annual tests if an event
occurs or circumstances change that would more likely than not reduce the fair value of these
assets below their carrying amount. Fair value for these assets is determined using a discounted
cash flow analysis, which is based on an authorized business plan. Management believes that the
estimates of future cash flows and fair value are reasonable; however, changes in estimates
resulting in lower future cash flows and fair value due to unforeseen changes in business
assumptions could negatively affect the valuations.
- 38 -
Table of Contents
Pension benefit costs
Employee pension benefit costs and obligations are dependent on assumptions used by actuaries
in calculating such amounts. These assumptions include discount rates, retirement rates and
mortality rates which are based upon current statistical data, as well as salary growth, long-term
return on plan assets and other factors. Actual results that differ from the assumptions are
accumulated and amortized over future periods and, therefore, generally affect TDK's recognized
expense and recorded obligation in future periods. While TDK believes that its assumptions used
are appropriate, differences in actual experience or changes in assumptions may affect TDK's
benefit obligations and future expense.
In preparing its financial statements for fiscal 2005, TDK established a discount rate of 2.1
percent and an expected long-term rate of return of 2.2 percent on plan assets. In estimating the
discount rate, TDK uses available information about rates of return on long-term risk free
governmental and corporate bonds currently available and expected to be available during the period
to the maturity of the pension benefits. TDK established the expected long-term rate of return on
plan assets based on management's expectations in respect of the long-term returns of the various
plan asset categories in which it invests. Management developed expectations with respect to each
plan asset category based on actual historical returns and its current expectations for future
returns.
A decrease in the discount rate leads to an increase in actuarial pension benefit obligations
that could lead to an increase in net periodic pension cost through amortization of unrecognized
actuarial gain or losses. A 50 basis point decrease in the discount rate would increase the
projected benefit obligation by approximately 10 percent.
An increase in the expected return on plan assets may decrease net periodic pension cost in
the current year. For fiscal 2005, a 50 basis point decrease in the long-term rate of return would
increase net benefit cost by approximately ¥0.7 billion. However, the difference between the
expected return and the actual return on those assets could negatively affect net income in future
years.
Deferred tax assets
TDK has significant deferred tax assets, which are subject to realizability assessment. In
assessing the realizability of deferred tax assets, management considers whether it is more likely
than not that some portion or all of the deferred tax assets will not be realized. The ultimate
realization of deferred tax assets is dependent upon the generation of future taxable income during
the periods in which those temporary differences become deductible. Management considers the
planned reversal of deferred tax liabilities, projected future taxable income, and tax planning
strategies in making this assessment. Based upon the level of historical taxable income and
projections for future taxable income over the periods in which the deferred tax assets are
deductible, management believes that it is more likely than not that all of the deferred tax assets
less valuation allowance, will be realized. However, in the event future projections for income
are not realized or are realized in lesser amounts, or in cases where management revises the
assessment of the potential for realization of deferred tax assets based on other factors, deferred
tax assets may be determined not to be realizable, which then would require TDK to increase a
valuation allowance against the deferred tax assets resulting in additional income tax expenses.
- 39 -
Table of Contents
New accounting pronouncements
New
Accounting Standards
In March 2004, the Emerging Issues Task Force reached a consensus on Issue 03-1 ("EITF 03-1"),
"The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments". EITF
03-1 provides guidance on other-than-temporary impairment models for marketable debt and equity
securities accounted for under Statement of Financial Accounting Standards No. 115 ("SFAS 115"),
"Accounting for Certain Investments in Debt and Equity Securities", and nonmarketable equity
securities accounted for under the cost method. The EITF developed a basic three-step model to
evaluate whether an investment is other-than-temporarily impaired. The FASB issued a FASB Staff
Position EITF 03-1-1 in September 2004 which delayed the effective date of the recognition and
measurement provisions of EITF 03-1. The adoption of EITF 03-1 is not expected to have a material
effect on TDK's consolidated results of operations and financial position.
In December 2004, the FASB issued Statement of Financial Accounting Standards No. 123 (revised
2004), "Share Based Payment" ("SFAS 123R"). SFAS 123R is a revision of SFAS 123, "Accounting for
Stock Based Compensation", and supersedes APB 25. SFAS 123R requires TDK to measure the cost of
employee services received in exchange for equity awards based on the grant date fair value of the
awards. The cost will be recognized as compensation expense over the vesting period of the awards.
In April 2005, the Securities and Exchange Commission deferred the effective date of SFAS 123R to
the beginning of the first annual period after June 15, 2005. TDK is currently evaluating the
effect that the adoption of SFAS 123R will have on TDK's consolidated financial position and
results of operations.
In November 2004, the FASB issued Statement of Financial Accounting Standards No. 151 ("SFAS
151"), "Inventory Costs – an amendment of Accounting Research Bulletin No. 43 ("ARB 43"), Chapter
4". SFAS 151 amends the guidance in ARB 43, Chapter 4, "Inventory Pricing", to clarify the
accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted
material (spoilage). SFAS 151 requires that items such as idle facility expense, excessive
spoilage, double freight and rehandling costs be recognized as current-period charges regardless of
whether they meet the criterion of "so abnormal" as stated in ARB 43. In addition, SFAS 151
requires that allocation of fixed production overheads to the costs of conversion be based on the
normal capacity of the production facilities. SFAS 151 is effective for inventory costs incurred
in fiscal periods beginning after June 15, 2005. TDK does not expect the adoption of SFAS 151 to
have a material effect on TDK's consolidated financial position and results of operations.
E. Off-Balance Sheet Arrangements
As part of its ongoing business, TDK does not conduct transactions with unconsolidated
entities or financial partnerships, such as entities often referred to as structured finance or
special purpose entities, which have been established for the purpose of facilitating off-balance
sheet arrangements or other limited purposes.
TDK has various pension plans covering its employees. The unfunded amount as of March 31,
2005 was ¥42.3 billion ($396 million). The unfunded amount decreased by ¥47.7 billion as compared
with last year mainly due to the transfer of the substitutional portion of EPF liabilities. As of
March 31, 2005, ¥28.8 billion was accrued on the balance sheet as retirement and severance
benefits, ¥44.7 billion less than a year ago.
Regarding loans, TDK essentially uses group funds, based on a policy of, in principle, not
borrowing from banks or other outside sources. However, certain of TDK's overseas subsidiaries
have their own credit facilities based on commercial paper issuing programs, allowing them to raise
short-term funds should they be required.
Regarding TDK's capital expenditure plans, TDK's policy is to invest actively in targeted
strategic fields to drive growth. Capital expenditures will be funded using internally generated
funds.
- 40 -
Table of Contents
TDK is planning capital expenditures of ¥65.0 billion in fiscal 2006, primarily for the
expansion of production facilities and upgrading of facilities. Actual capital expenditures could
differ from this forecast as a result of factors such as shifts in technology, demand, prices,
competition, economic environments and foreign exchange rates.
F. Tabular Disclosure of Contractual Obligations
On March 31, 2005, commitments outstanding for the purchase of property, plant and equipment
approximated ¥12.3 billion ($115 million). TDK has entered into several purchase agreements with
certain suppliers whereby TDK is committed to purchase a minimum amount of raw materials to be used
in the manufacture of its products. Future minimum purchases remaining under the agreements
approximated ¥3.8 billion ($36 million) at March 31, 2005. Contingent liabilities for guarantees
of loans of TDK's employees and affiliates amounted to approximately ¥6.3 billion ($59 million).
Contractual obligations on March 31, 2005 are summarized as follows:
Payments Due by Period (Yen in millions)
Less than
1 to 3
3 to 5
After 5
Total
1 year
years
years
years
Contractual obligations:
Long-term debt
¥
184
103
74
7
—
Operating leases
6,808
2,355
2,830
900
723
Purchase commitment
of raw materials
3,841
3,247
291
177
126
Purchase commitment
of property, plant and
equipment
12,292
12,292
—
—
—
Total
23,125
17,997
3,195
1,084
849
G. Safe Harbor
This report contains forward-looking statements, including projections, plans, policies,
management strategies, targets, schedules, understandings and evaluations, about TDK and its
subsidiaries that are not historical facts. These forward-looking statements are based on current
forecasts, estimates, assumptions, plans, beliefs and evaluations in light of information available
to management on the date of this report.
In preparing forecasts and estimates, TDK and its subsidiaries have used as their basis,
certain assumptions as necessary, in addition to confirmed historical facts. However, due to their
nature, there is no guarantee that these statements and assumptions will prove to be accurate in
the future. TDK therefore wishes to caution readers that these statements, facts and certain
assumptions contained in this report are subject to a number of risks and uncertainties and may
prove to be inaccurate.
The electronics markets in which TDK and its subsidiaries operate are highly susceptible to
rapid changes. Furthermore, TDK and its subsidiaries operate not only in Japan, but in many other
countries. As such, factors that can have significant effects on its results include, but are not
limited to, shifts in technology, demand, prices, competition, economic environments and foreign
exchange rates.
- 41 -
Table of Contents
Item 6
. Directors, Senior Management and Employees
A. Directors and senior management
Directors, corporate officers and corporate auditors of TDK as of June 29, 2005 and their
respective business experience are listed below.
Directors
Name (Date of birth)
Position, responsibility and brief personal record
Hajime Sawabe
Representative Director, President and CEO – since June 1998
(Jan. 9, 1942)
- Director of TDK since June 1996
Jiro Iwasaki
Director, Senior Vice President – since June 2002
(Dec. 6, 1945)
In charge of General Manager of Administration Group and Environment
- Director of TDK since June 1996
- General Manager of Administration Group and Environment since June 2002
Shinji Yoko
Director, Senior Vice President – since June 2002
(Jan. 2, 1948)
In charge of General Manager of Electronic Components Sales
and Marketing Group
- Director of TDK since June 1998
- Appointed Deputy General Manager of Electronic Components
Business Group, General Manager of High Frequency Devices
Division in April 2000
- General Manager of Electronic Components Sales and Marketing Group since June 2002
Takeshi Nomura
Director, Senior Vice President – since June 2002
(Mar. 8, 1952)
In charge of General Manager of Ferrite and Magnet Products
Business Group
- Director of TDK since 1998
- Appointed General Manager of Materials Research Center,
General Manager of Intellectual Properties Center in July 2002
- Appointed General Manager of Materials Research Center,
General Manager of Intellectual Properties Center, General
Manager of Information Technology Research Center and
Technology in July 2003
- Appointed General Manager of Technology Group, General
Manager of Intellectual Properties Center and Technology in
January 2004
- Appointed General Manager of Technology Group, General
Manager of Intellectual Properties Center, General Manager of
Devices Development Center and Technology in July 2004
- General Manager of Ferrite and Magnet Products Business Group since April 2005
Yasuhiro Hagihara
Director* – since June 2002
(Oct. 19, 1937)
- Admitted to the bar in Washington D.C., U.S.A. in April 1971
- Elected Partner of Graham & James L.L.P. in January 1979
- Partner of Squire, Sanders & Dempsey L.L.P. since July 2000
- 42 -
Table of Contents
Name (Date of birth)
Position, responsibility and brief personal record
Takehiro Kamigama
Director, Executive Vice President – since June 2004
(Jan. 12, 1958)
In charge of General Manager of Data Storage and Thin
Film Technology Components Business Group
- Appointed General Manager of Data Storage Components
Business Group in October 2001
- Corporate Officer of TDK since June 2002
- General Manager of Data Storage and Thin Film
Technology Components Business Group since April 2003
- Appointed Senior Vice President of TDK in June 2003
Seiji Enami
Director and CFO– since June 2005
(Sep. 14, 1947)
In charge of General Manager of Finance and Accounting
Department
- Appointed General Manager of Recording Media and
Systems Business Group Industrial Sales Department in
April 2000
- General Manager of Finance and Accounting Department
since April 2001
- CFO of TDK since June 2004
Corporate Officers
Name (Date of birth)
Position, responsibility and brief personal record
Kiyoshi Ito
Corporate Officer, Executive Vice President – since June 2004
(May 28, 1944)
In charge of General Manager of SCM Group and Production
- Appointed General Manager of Electronic Components
Business Group Capacitors Division in March 1999
- Appointed Director of TDK in June 2000
- Appointed General Manager of Circuit Devices Business
Group in October 2001
- Appointed Corporate Officer, Senior Vice President of TDK
in June 2002
- Appointed General Manager of Circuit Devices Business
Group, General Manager of Ceramic Material Products Division
in June 2002
- General Manager of SCM Group and Production since April
2005
Takaya Ishigaki
Corporate Officer, Senior Vice President – since June 2005
(Apr. 10, 1953)
In charge of General Manager of Circuit Devices Business
Group, Capacitor Group Senior Manager
- Appointed Deputy General Manager of Circuit Devices
Business Group, Capacitor Group Senior Manager, General
Manager of Multilayer Ceramics Manufacturing Department in
October 2001
- Appointed Corporate Officer of TDK in June 2003
- General Manager of Circuit Devices Business Group,
Capacitor Group Senior Manager since April 2005
- 43 -
Table of Contents
Name (Date of birth)
Position, responsibility and brief personal record
Minoru Takahashi
Corporate Officer, Senior Vice President – since June 2005
(Feb. 12, 1948)
In charge of General Manager of Technology Group, General
Manager of Devices Development Center and Technology,
Intellectual Properties
- Appointed General Manager of Sensors and Actuators
Business Division, General Manager of Business Promotions
Department in April 2002
- Corporate Officer of TDK since June 2003
- Appointed General Manager of Sensors and Actuators
Business Group in November 2004
- General Manager of Technology Group, General Manager of
Devices Development Center and Technology, Intellectual
Properties since April 2005
Yukio Hirokawa
Corporate Officer – since June 2002
(Feb. 19, 1947)
In charge of General Manager of Network Devices Business
Group
- Appointed Associate Director, Electronic Components
Sales and Marketing Group East Japan Sales Department
Senior Manager in June 2000
- Appointed Associate Director, CRM Group Strategic Sales
Department Senior Manager in April 2001
- Appointed Associate Director, Deputy General Manager of
Network Devices Business Group in October 2001
- General Manager of Network Devices Business Group since
January 2002
Masatoshi Shikanai
Corporate Officer – since June 2002
(Oct. 3, 1949)
In charge of General Manager of Recording Media and
Solutions Business Group
- Appointed General Manager of Recording Media and
Systems Business Group Europe Division in April 2000
- Appointed Deputy General Manager of Recording Media and
Systems Business Group in February 2001
- General Manager of Recording Media and Solutions
Business Group since October 2001
Michinori Katayama
Corporate Officer – since June 2002
(Dec. 9, 1946)
In charge of General Manager of Corporate Communications
Department
- General Manager of Corporate Communications Department
since January 1999
Kenryo Namba
Corporate Officer – since June 2002
(Jan. 6, 1947)
In charge of Deputy General Manager of Technology Group,
General Manager of Material Analysis Center and Organic
Materials
- Appointed General Manager of Corporate Research and
Development Center in April 2001
- Appointed Deputy General Manager of Technology Group,
General Manager of Devices Development Center, General
Manager of Material Analysis Center in January 2004
- Deputy General Manager of Technology Group, General
Manager of Material Analysis Center and Organic Materials
since July 2004
- 44 -
Table of Contents
Name (Date of birth)
Position, responsibility and brief personal record
Raymond Leung
Corporate Officer – since June 2004
(Apr. 18, 1956)
In charge of General Manager of China Operation Group, Vice
Chairman of SAE Magnetics (H.K.) Ltd.
- Appointed President of SAE Magnetics (H.K.) Ltd. in
October 2000
- Appointed Deputy General Manager of Data Storage and Thin
Film Technology Components Business Group in June 2004
- General Manager of China Operation Group, Vice Chairman of
SAE Magnetics (H.K.) Ltd. since April 2005
Shunji Itakura
Corporate Officer – since June 2005
(Nov. 15, 1947)
In charge of General Manager of Display Business Department
- Appointed President of TDK (Malaysia) Sdn. Bhd. in January
1999
- General Manager of Display Business Department since April
2001
Shiro Nomi
Corporate Officer – since June 2005
(May 8, 1949)
In charge of General Manager of Corporate Strategy Corporate
Planning Department
- Appointed General Manager of Corporate Planning Department
in October 2000
- General Manager of Corporate Strategy Corporate Planning
Department since October 2001
Shinichi Araya
Corporate Officer – since June 2005
(Mar. 7, 1952)
In charge of Deputy General Manager of Circuit Devices
Business Group, Inductor Group Senior Manager
- Appointed General Manager of Mechatronics Division in
January 1999
- Appointed General Manager of Mechatronics Division,
General Manager of Production Engineering Development
Department in April 2000
- Appointed Deputy General Manager of Production Engineering
Development Center in April 2001
- Appointed General Manager of Production Engineering
Development Department in October 2001
- Deputy General Manager of Circuit Devices Business Group,
Inductor Group Senior Manager since April 2002
- 45 -
Table of Contents
Corporate
Auditors
Name (Date of birth)
Position, responsibility and brief personal record
Takuma Otsuka
(Feb. 23, 1944)
Corporate Auditor – since June 2000
- Appointed Director of TDK in June 1998
Masaaki Miyoshi
(Sep. 3, 1947)
Corporate Auditor – since June 2003
- Appointed President of Korea TDK Co., Ltd. in July 2000
Kazutaka Kubota
(Oct. 11, 1942)
Corporate Auditor* – since June 2003
- Appointed Vice President of Asahi Bank, Ltd. in June 2000
- Appointed President of Asahigin Research Institute, Ltd.
and Corporate Auditor of Saitama Railway Corporation in June
2002
Kaoru Matsumoto
(Dec. 8, 1947)
Corporate Auditor* – since June 2003
- Registration as a Certified Public Accountant in March 1976
- Establishment of Kaoru Matsumoto & Co. since November 1977
Ryoichi Ohno
(Nov. 3, 1958)
Corporate Auditor* – since June 2004
- Registration as a U.S. Certified Public Accountant in
November 1988
- Senior Vice President and Chief Financial Officer of The
Gibraltar Life Insurance Co., Ltd. and Finance Vice President
of Prudential Financial Inc. since September 2001
Notes(*)
All of TDK's Directors (except Yasuhiro Hagihara), Corporate Officers and Corporate
Auditors (except Kazutaka Kubota, Kaoru Matsumoto and Ryoichi Ohno) have been engaged on a
full-time basis.
All Directors and Corporate Auditors are elected by the general meeting of shareholders. The
term of office of Directors is one year. The current term of all Directors expires in June 2006.
The term of office of Corporate Auditors is four years. The current
terms for Mr. Otsuka, Mr.
Miyoshi, Mr. Kubota, Mr. Matsumoto and Mr. Ohno expire in June 2007.
There are no family relationships between any Director or Corporate Officer or Corporate
Auditor and any other Director or Corporate Officer or Corporate Auditor of TDK.
- 46 -
Table of Contents
B. Compensation
(1)
The aggregate direct remuneration, including bonuses but excluding retirement allowances,
paid by TDK during the years ended March 31, 2005 and 2004 to all Directors and Corporate
Auditors of TDK who served during each of those years was approximately ¥254 million ($2,374
thousand) and ¥326 million, respectively. During fiscal 2005, TDK's Directors and Corporate
Officers as of June 29, 2005 received 662 and 461 stock acquisition rights as stock options,
respectively. Each right represents an option to purchase 100 shares of common stock of TDK.
Further details regarding the grants are listed below. For a discussion of other material
terms of the issuance of these stock acquisitions rights, please see Item 6.E. "Share
ownership". TDK does not disclose individual remuneration for each Director and Corporate
Auditor and aggregate direct remuneration for Corporate Officers except for compensation in
the form of stock acquisition rights, because such disclosure is not required under Japanese
regulations.
Number of stock acquisition rights were
Name
Position
granted individually during fiscal 2005
Directors
Hajime Sawabe
Representative Director, President
and CEO
187
Jiro Iwasaki
Director, Senior Vice President
99
Shinji Yoko
Director, Senior Vice President
92
Takeshi Nomura
Director, Senior Vice President
92
Yasuhiro Hagihara
Director (outside)
10
Takehiro Kamigama
Director, Executive Vice President
137
Seiji Enami
Director and CFO
45
662
Corporate Officers
Kiyoshi Ito
Corporate Officer, Executive
Vice President
129
Takaya Ishigaki
Corporate Officer, Senior
Vice President
59
Minoru Takahashi
Corporate Officer, Senior
Vice President
52
Yukio Hirokawa
Corporate Officer
45
Masatoshi Shikanai
Corporate Officer
45
Michinori Katayama
Corporate Officer
52
Kenryo Namba
Corporate Officer
45
Raymond Leung
Corporate Officer
10
Shunji Itakura
Corporate Officer
8
Shiro Nomi
Corporate Officer
8
Shinichi Araya
Corporate Officer
8
461
- 47 -
Table of Contents
(2)
When a Director or Corporate Auditor retires, a proposal to pay a lump sum retirement allowance
is submitted to the general meeting of shareholders for approval. After shareholder approval is
obtained, the amount of the retirement allowance for a Director or Corporate Auditor is
determined in the case of the Director by the Board of Directors, and in the case of the
Corporate Auditor by the Corporate Auditors, and generally reflects his/her prior positions, the
length of his/her service as a Director or Corporate Auditor and his/her contribution to TDK's
performance. The aggregate amount set aside as lump sum retirement allowance by TDK during
fiscal 2005 and fiscal 2004 for Directors and Corporate Auditors of
TDK totaled approximately ¥14
million ($131 thousand) and ¥13 million, respectively. In addition, TDK introduced a Corporate
Officer system in June 2002 to improve management efficiency and expedite decision-making. With
introduction of a Corporate Officer system (See Item 6.C. "Board practices"), the remuneration
system at large was reviewed and a lump sum retirement allowance for Directors was abolished. As
decided by the Directors in office at the meeting of shareholders held on June 27, 2002, the
conventional retirement reserve fund has been frozen, and all payments from the fund will require
the consent of a general meeting of shareholders, which vote shall take place at the time of the
Director's retirement.
TDK has a stock option plan for Directors, Corporate Officers and all other employees. See
Item 6.E. "Share ownership".
C. Board practices
TDK's Articles of Incorporation provide for a Board of Directors of not more than ten members.
Directors are elected at the general meeting of shareholders for a term of office of one year and
may serve any number of consecutive terms. The Board of Directors has the ultimate responsibility
for the administration of the affairs of TDK.
The Board of Directors may appoint from among the Directors referred to above one or more
Representative Directors. Each of the Representative Directors has the authority to represent TDK
generally in the conduct of its affairs.
TDK introduced a Corporate Officer system in June 2002 to improve management efficiency and
expedite decision-making. Corporate Officers are elected at the meeting of the Board of Directors
held immediately after the ordinary general meeting of shareholders, for a term of one year, but
may serve any number of terms upon appointment of the Board of Directors each time following the
expiration of the term. With respect to the expiration of the term of office of the respective
Corporate Officers, see Item 6.B. "Compensation". The Board of Directors may elect from among
Corporate Officers one or more Executive Vice Presidents, Senior Vice Presidents and Corporate
Senior Officers. Each of the Corporate Officers has the authority individually to operate
businesses of which he/she is in charge, under the control of the Board of Directors.
The Corporate Auditors of TDK, who are elected at the general meeting of shareholders and
whose number must not exceed five, are not required to be certified public accountants. One or
more Standing Corporate Auditors is required to be elected from among the Corporate Auditors. Each
Corporate Auditor has the statutory duty to examine the financial statements and business reports
to be submitted by the Board of Directors to the general meeting of shareholders and also to
supervise the administration by the Directors but is not entitled to vote. TDK established a Board
of Corporate Auditors (at least one of which must be from outside TDK) and the term of the
Corporate Auditors is four years.
In addition to the Corporate Auditors, TDK is required to appoint independent certified public
accountants. The primary duty of certified public accountants is to examine the financial
statements proposed to be submitted by the Board of Directors to the general meetings of
shareholders, and to report their opinion thereon to the Board of Corporate Auditors as well as to
the Board of Directors.
There are no family relationships between any Director or Corporate Officer or Corporate
Auditor and any other Director or Corporate Officer or Corporate Auditor of TDK.
- 48 -
Table of Contents
Significant differences in corporate governance practices between TDK and U.S. listed
companies on the New York Stock Exchange
1. Directors' Independence
Under the Commercial Code of Japan (the "Code"), TDK is a "Company with Corporate Auditors,"
meaning a company which has corporate auditors (
kansayaku
). The Law for Special Provisions for the
Commercial Code Concerning Audits, etc., of
Kabushiki-Kaisha
(stock corporation) (the "Special
Audit Law") allows a "Large Company" (a company with stated capital of 500,000,000 yen or more or
with a total amount of 20,000,000,000 yen or more stated in the liability section of its latest
balance sheet) and a "Deemed Large Company" (a company with stated capital exceeding 100,000,000
yen with provision in its Article of Incorporation that it is subject to the special provisions
provided in Section 2 of the Special Audit Law) to choose to be a "Company with Committees,"
meaning a company which has a nominating committee, audit committee, compensation committee and one
or more executive officers, without having corporate auditors. Although TDK is a Large Company,
TDK has not chosen to be a Company with Committees.
While the Code requires companies to have a minimum of three directors, the Code does not
demand that companies have outside
director(s)
if a company is a Company with Corporate Auditors
within the meaning of the Code. The Code defines "outside director" as "a non-managing director
who was not a director, executive officer or any other employee who managed the corporate affairs
of the company or any of its subsidiaries at any time in the past and who is not currently a
director or executive officer who manages the corporate affairs of any subsidiary, nor a manager or
any other type of employee of the company or any of its subsidiaries."
The Special Audit Law requires Large Companies to have three or more corporate auditors and
provides that at least half or more of such corporate auditors must be outside corporate auditors.
The Special Audit Law defines "outside corporate auditor" as "a corporate auditor who has not been
a director, executive officer, manager or other employee of such Large Company or any of its
subsidiaries at any time before his/her assumption of office as corporate auditor".
TDK is fully in compliance with the Code and Special Audit Law. TDK has seven directors and
one of them (Yasuhiro Hagihara) is an outside director. TDK also has five corporate auditors and
three of them (Kazutaka Kubota, Kaoru Matsumoto, and Ryoichi Ohno) are outside corporate auditors.
2. Definition of "Independent Director"
As mentioned above, TDK is not required to have outside directors by law, however, TDK
voluntarily elected one outside director (Yasuhiro Hagihara).
The meaning of "outside director" under the Code is not exactly the same as the meaning of
"independent director" provided in the New York Stock Exchange Corporate Governance Rules (the
"Rules"). The Code provides that an "outside director" is "a non-managing director who was not a
director, executive officer or any other employee who managed the corporate affairs of the company
or any of its subsidiaries at any time in the past and who is not currently a director or executive
officer who manages the corporate affairs of any subsidiary, nor a manager or any other type of
employee of the company or any of its subsidiaries." Mr. Yasuhiro Hagihara is an outside director
within the meaning of the Code.
TDK, a Large Company within the meaning of the Special Audit Law, is required to have at least
three corporate auditors and at least a half or more of such corporate auditors must be outside
auditors.
- 49 -
Table of Contents
The meaning of "outside" corporate auditors under the Special Audit Law is not exactly the
same as the meaning of "independence" provided in the Rules with respect to directors. The Special
Audit Law provides that an "outside corporate auditor" is "a corporate auditor who has not been a
director, executive officer, manager or other employee of such Large Company or any of its
subsidiaries at any time before their assumption of office as corporate auditor".
Of the five TDK corporate auditors, three of them—Mr. Kazutaka Kubota, Mr. Kaoru Matsumoto and
Mr. Ryoichi Ohno—are outside corporate auditors within the meaning of the Special Audit Law.
3. Regularly Scheduled Sessions without Management
Japanese law does not require TDK to hold regular meetings without management as mentioned in
the Rules. As TDK is a Company with Corporate Auditors, each of its corporate auditors and the
board of directors monitor the management, and such monitoring by the corporate auditors and the
board of directors functions as TDK's management-check system.
4. Nominating / Corporate Governance Committee
Under Japanese law, TDK, as a Company with Corporate Auditors, is not required to establish a
nominating committee. Thus, TDK currently does not have a nominating committee.
The directors and corporate auditors of TDK must be appointed at a shareholders' meeting in
accordance with the Code. The Special Audit Law requires directors of a Large Company to obtain
the consent of the board of corporate auditors if the directors desire to submit to a shareholders'
meeting a proposal concerning the appointment of a corporate auditor. Also, the board of corporate
auditors may, by resolution, demand that the directors include the appointment of a corporate
auditor in the agenda of a shareholders' meeting or that the directors submit a proposal concerning
the appointment of a corporate auditor who is recommended by the board of corporate auditors.
5. Compensation Committee
Japanese law does not require TDK, a Company with Corporate Auditors, to set up a compensation
committee. TDK has, however, voluntarily established a compensation advisory committee (the
"CAC"). The CAC is responsible for (i) investigating compensation levels for directors and
executive officers, (ii) reviewing compensation systems, performance evaluation standards and the
method of calculating compensation, and (iii) making proposals for compensation level for certain
individuals. The CAC is authorized to make and submit proposals to the board of directors.
The CAC has three members: one outside director (Yasuhiro Hagihara), one non-outside director
(Jiro Iwasaki) and an outside expert on compensation.
In the case of TDK, a Company with Corporate Auditors, the Code requires the following matters
with respect to the amount of compensation for the directors to be determined by the resolution of
a shareholders' meeting unless specifically provided in the Articles of Incorporation:
(1) With respect to any item of compensation in a definitive amount, such amount;
(2) With respect to any item of compensation not in a definitive amount, a concrete
method for the calculation thereof;
(3) With respect to non-monetary items as compensation, the specific contents
thereof.
- 50 -
Table of Contents
6. Audit Committee
Japanese law does not require TDK, a Company with Corporate Auditors, to set up an audit
committee, and TDK therefore has not established an audit committee. TDK, however, has established
the board of corporate auditors pursuant to the Code and Special Audit Law (consisting of five
corporate auditors including three outside corporate auditors), which exempts TDK from Rule 10A-3
of the Exchange Act requiring companies to have an audit committee. This exemption is specifically
provided by Rule 10A-3(c)(3) of the Exchange Act and this rule applies to TDK because TDK meets all
the elements enumerated in the Rule:
(i)
TDK has a board of corporate auditors (
kansayaku-kai
) established and selected
pursuant to the Code and the Special Audit Law expressly permitting such a board;
(ii)
The Code prohibits a corporate auditor from concurrently serving as a director
of the company and thus the Code requires the board of corporate auditors to be
separate from the board of directors;
(iii)
The corporate auditors are elected by the shareholders at a shareholders'
meeting under the Code and not by the management of TDK. The Code prohibits a
corporate auditor from concurrently serving as a manager or other employee of the
company, and therefore no executive officer of TDK is a member of the board of
corporate auditors;
(iv)
The Code prohibits a corporate auditor from serving as a director, manager or
other employee of the company or any of its subsidiaries, or as an executive officer of
any subsidiary of the company. The Special Audit Law prohibits a corporate auditor of
a Large Company from concurrently serving as a director, executive officer, manager or
other employee of any of its consolidated subsidiaries. The Special Audit Law requires
a Large Company to have three or more corporate auditors, at least half or more of whom
must be a person who has not been a director, executive officer, manager or other
employee of such Large Company or any of its subsidiaries at any time before their
assumption of office as corporate auditor. As such, the Code and the Special Audit Law
provide for the standards for independence of the board of corporate auditors from the
management of TDK;
- 51 -
Table of Contents
(v)
The Special Audit Law provides that an accounting auditor (
kaikei kansanin
) must be
appointed at a shareholders' meeting; however, it also provides that, in order to submit
a proposal concerning an appointment of an accounting auditor to a shareholders' meeting,
the directors must obtain the consent of the board of corporate auditors and that the
board of corporate auditors may, by resolution, demand that the directors include the
appointment of an accounting auditor in the agenda of a shareholders' meeting or demand
that the directors submit a proposal concerning the appointment of a certain accounting
auditor who is recommended by the board of corporate auditors. The Special Audit Law
provides that the board of corporate auditors may, by resolution, dismiss an accounting
auditor for causes enumerated in the Special Audit Law such as breach of his or her
duties. The Special Audit Law also provides that in order to submit a proposal
concerning a dismissal of an accounting auditor to a shareholders' meeting, the directors
must obtain the consent of the board of corporate auditors and that the board of
corporate auditors may, by resolution, demand that the directors include the dismissal of
a certain accounting auditor in the agenda of a shareholders' meeting. The board of
corporate auditors may audit in their own right if it believes that the manner or result
of an audit by the accounting auditors is not reasonable. To this end, a corporate
auditor may, if necessary for the performance of his/her duties, request the accounting
auditors to provide a report on their duties. Further, it is also provided that the
accounting auditors must submit an audit report directly to the board of corporate
auditors and the corporate auditors may demand the accounting auditors to provide an
explanation with respect to their audit report. As such, in accordance with the Special
Audit Law, the board of corporate auditors of TDK is responsible, to the extent permitted
by law, for the appointment, retention and supervision of the work of a registered public
accounting firm engaged for the purpose of preparing or issuing an audit report or
performing other audit, review or attest services for TDK; and
(vi)
Under Japanese law, the establishment of the procedures for the receipt,
retention, and treatment of complaints and the confidential, anonymous submission by
employees is a responsibility of the board of directors, not the corporate auditors or
the board of corporate auditors, and thus, the board of directors of TDK has
established such procedures. Each corporate auditor of TDK may, however, investigate
the status of such procedures at any time and state his/her opinion at a meeting of the
board of directors if he/she considers it necessary. Each corporate auditor of TDK has
the authority to engage independent counsel and other advisers if such engagement is
necessary to carry out his/her duties. Each corporate auditor may require TDK to pay
any and all expenses necessary for carrying out of his/her duties, including
compensation of any advisers employed by him/her and ordinary administrative expenses.
As discussed above, TDK has established a board of corporate auditors pursuant to the Code and
Special Audit Law (consisting of five corporate auditors including three outside corporate
auditors), and therefore does not have an audit committee.
7. Corporate Governance Guidelines
Japanese law does not require TDK to either adopt or disclose corporate governance guidelines,
and thus TDK has not established such guidelines.
8. Code of Business Conduct and Ethics
Although Japanese law does not require TDK to adopt or disclose a code of business conduct and
ethics, TDK has voluntarily adopted and disclosed one. See Item 16B. "Code of Ethics".
9. Significant Differences in Corporate Governance Practices between TDK and U.S. Companies under
NYSE Listing Standards
This "TDK corporate governance practice" satisfies the disclosure requirement.
- 52 -
Table of Contents
New Corporation Code
The Corporation Code (
Kaisha-ho
) was passed by the Japanese Diet in June 2005. The
Corporation Code will integrate into a single code currently effective legislation regarding
companies, including Chapters 2, 3 and 4 of the Commercial Code, the Limited Liability Company
(
Yugen-Kaisha
) Law and the Law for Special Provisions for the Commercial Code concerning Audits,
etc. of Joint Stock Corporations (
Kabushiki-Kaisha
). In addition, the Corporation Code will
significantly change traditional concepts and systems under the currently effective Commercial Code
and other laws in many respects. Accordingly, the statements contained in this Report, including,
but not limited to, the statements in Item 10 as well as in
Significant differences in corporate
governance practices between TDK and U.S. listed companies on the New York Stock Exchange
of Item
6.C. may be subject to change once the Corporation Code becomes effective. Before the Corporation
Code can become effective, it must first be officially promulgated. Following promulgation, the
effective date will be determined by cabinet order, which in any event must be within eighteen
months after the date of promulgation. Although the Corporation Code was promulgated on July 26,
2005, the cabinet order has not been issued yet. It is generally anticipated, however, that the
effective date of the Corporation Code will be on or after April 1, 2006. Among many other
changes, one of the changes which may adversely affect shareholders' rights is that under the
Corporation Code, the strict liability standard currently imposed on directors in many instances
(e.g., conflict of interest transactions) will be changed to a negligence standard.
- 53 -
Table of Contents
D. Employees
The following table lists the number of TDK full-time employees as of March 31, 2005, 2004 and
2003.
As of March 31, 2005
Japan
Overseas
Total
Electronic materials and components
6,938
26,112
33,050
Recording media and systems
1,128
1,465
2,593
Corporate
1,436
36
1,472
Total
9,502
27,613
37,115
As of March 31, 2004
Japan
Overseas
Total
Electronic materials and components
7,147
25,204
32,351
Recording media and systems
1,173
1,734
2,907
Corporate
1,524
22
1,546
Total
9,844
26,960
36,804
As of March 31, 2003
Japan
Overseas
Total
Electronic materials and components
7,341
19,781
27,122
Recording media and systems
1,212
1,867
3,079
Corporate
1,477
27
1,504
Total
10,030
21,675
31,705
TDK considers its employee relations to be excellent; there have been no significant strikes
or labor disputes.
All full-time employees in Japan, except management and certain other personnel, must become
union members. Approximately 80 percent of full-time employees of TDK are members of the TDK Labor
Union, which is affiliated with
ZENKIN RENGO
. About 51 percent of the full-time employees
of TDK and its domestic subsidiaries are members of unions affiliated with
ZENKIN RENGO
.
As is customary in Japan, TDK negotiates with the TDK Labor Union for annual wage increases,
and twice a year for bonuses. TDK also renews the terms and conditions of labor contracts, other
than those relating to wage and bonuses, every year.
- 54 -
Table of Contents
E. Share ownership
The following table lists the number of shares (which exclude shares underlying stock
acquisition rights) and shares underlying stock acquisition rights owned by the Directors,
Corporate Officers and Corporate Auditors of TDK as of June 29, 2005. The total number of shares
held is 21,500, and the total number of share underlying acquisition rights held is 360,300, as
shown below, and these numbers constituted 0.3% of all outstanding shares.
Number of
Number of shares underlying
Name
Position
shares
stock acquisition rights
Hajime Sawabe
Representative Director,
President and CEO
8,000
71,900
Jiro Iwasaki
Director, Senior Vice President
2,000
35,700
Shinji Yoko
Director, Senior Vice President
1,000
37,800
Takeshi Nomura
Director, Senior Vice President
1,000
37,800
Yasuhiro Hagihara
Director (outside)
0
3,500
Takehiro Kamigama
Director, Executive Vice President
800
32,000
Seiji Enami
Director and CFO
1,100
7,100
Kiyoshi Ito
Corporate Officer, Executive Vice President
1,000
34,100
Takaya Ishigaki
Corporate Officer, Senior Vice President
300
12,200
Minoru Takahashi
Corporate Officer, Senior Vice President
200
12,600
Yukio Hirokawa
Corporate Officer
1,300
16,800
Masatoshi Shikanai
Corporate Officer
300
14,900
Michinori Katayama
Corporate Officer
500
14,300
Kenryo Namba
Corporate Officer
2,000
16,100
Raymond Leung
Corporate Officer
0
1,000
Shunji Itakura
Corporate Officer
0
3,700
Shiro Nomi
Corporate Officer
0
3,200
Shinichi Araya
Corporate Officer
0
3,200
Takuma Otsuka
Full-time Corporate Auditor
1,000
—
Masaaki Miyoshi
Full-time Corporate Auditor
1,000
2,400
Kazutaka Kubota
Corporate Auditor (outside)
0
—
Kaoru Matsumoto
Corporate Auditor (outside)
0
—
Ryoichi Ohno
Corporate Auditor (outside)
0
—
Total
21,500
360,300
- 55 -
Table of Contents
Stock option plans
TDK obtained approval of the Ordinary General Meeting of Shareholders held on June 29, 2005
regarding the issuance of stock acquisition rights as stock options for a stock-linked compensation
plan (the Stock Acquisition Rights) to Board members and Corporate Officers, pursuant to Articles
280-20 and 280-21 of the Japanese Commercial Code. Upon approval, the Board of Directors adopted
resolutions to issue at no charge an aggregate of 246 Stock Acquisition Rights, each representing a
stock option to purchase 100 shares of common stock of TDK, to the 17 Directors and Corporate
Officers. The Stock Acquisition Rights are exercisable during the period from July 1, 2005 to June
30, 2025. The amount to be paid by qualified persons upon the exercise of each Stock Acquisition
Rights is set at ¥1 per share of common stock, which is subject to an adjustment in certain events,
including but not limited to a stock split, stock dividend and issue of new shares at a price less
than the current market price of the shares of TDK.
TDK also obtained approval of the Ordinary General Meeting of Shareholders held on June 29,
2005 regarding the issuance of stock acquisition rights as stock options (the Stock Acquisition
Rights) to select senior executives, pursuant to Articles 280-20 and 280-21 of the Japanese
Commercial Code. Upon approval, the Board of Directors adopted resolutions to issue at no charge
an aggregate of 906 Stock Acquisition Rights, each representing a stock option to purchase 100
shares of common stock of TDK, to the 172 select senior executives of TDK, and the Directors and
select senior executives of affiliates. The Stock Acquisition Rights are exercisable during the
period from August 1, 2007 to July 31, 2011.
TDK obtained approval of the Ordinary General Meeting of Shareholders held on June 29, 2004
regarding the issuance of stock acquisition rights as stock options (the Stock Acquisition Rights)
to Board members, Corporate Officers and select squisition Rights, each representing a stock
option to purchase 100 shares of common stock of TDK, to the 187 Directors, Corporate Officers and
select senior executives of TDK, and the Directors and select senior executives of affiliates. The
Stock Acquisition Rights are exercisable during the period from August 1, 2006 to July 31, 2010.
The amount to be paid by qualified persons upon the exercise of each Stock Acquisition Rights is
set at ¥8,147 per share of common stock, which was calculated by a formula approved by shareholders
at the said annual shareholders meeting and is subject to an adjustment in certain events,
including but not limited to a stock split, stock dividend and issue of new shares at a price less
than the current market price of the shares of TDK. The exercise price of each Stock Acquisition
Rights was equal to or greater than the fair market value of TDK's common stock on the date of
grant. To cover these options TDK purchased on the Tokyo Stock Exchange a total of 234,300 common
shares with an aggregate purchase price of ¥1,656 million from August 9, 2004 through August 16,
2004.
- 56 -
Table of Contents
TDK obtained approval of the Ordinary General Meeting of Shareholders held on June 27, 2003
regarding the issuance of the Stock Acquisition Rights to Board members, Corporate Officers and
select senior executives, pursuant to Articles 280-20 and 280-21 of the Japanese Commercial Code.
Upon approval, the Board of Directors adopted resolutions to issue at no charge an aggregate of
2,547 Stock Acquisition Rights, each representing a stock option to purchase 100 shares of common
stock of TDK, to the then 179 Directors, Corporate Officers and select senior executives of TDK,
and the Directors and select senior executives of affiliates. The Stock Acquisition Rights issued
on August 7, 2003 are exercisable during the period from August 1, 2005 to July 31, 2009. The
amount to be paid by qualified persons upon the exercise of each Stock Acquisition Rights is set at
¥6,954 per share of common stock, which was calculated by a formula approved by shareholders at the
said annual shareholders meeting and is subject to an adjustment in certain events, including but
not limited to a stock split, stock dividend and issue of new shares at a price less than the
current market price of the shares of TDK. The exercise price of each Stock Acquisition Rights was
equal to or greater than the fair market value of TDK's common stock on the date of grant. To
cover these options TDK purchased on the Tokyo Stock Exchange a total of 260,000 common shares with
an aggregate purchase price of ¥1,847 million from August 8, 2003 through August 18, 2003.
TDK obtained approval of the Ordinary General Meeting of Shareholders held on June 27, 2002
regarding the issuance of the Stock Acquisition Rights to Board members, Corporate Officers and
select senior executives, pursuant to Articles 280-20 and 280-21 of the Japanese Commercial Code,
as amended. Upon approval, the Board of Directors adopted resolutions to issue at no charge an
aggregate of 2,236 Stock Acquisition Rights, each representing a stock option to purchase 100
shares of common stock of TDK, to the then 197 Directors, Corporate Officers and select senior
executives of TDK, and the Directors and select senior executives of affiliates. The Stock
Acquisition Rights issued on August 9, 2002 are exercisable during the period from August 1, 2004
to July 31, 2008. The amount to be paid by qualified persons upon the exercise of each Stock
Acquisition Rights is set at ¥5,909 per share of common stock, which was calculated by a formula
approved by shareholders at the said annual shareholders meeting and is subject to an adjustment in
certain events, including but not limited to a stock split, stock dividend and issue of new shares
at a price less than the current market price of the shares of TDK. The exercise price of each
Stock Acquisition Rights was equal to or greater than the fair market value of TDK's common stock
on the date of grant. To cover these options TDK purchased on the Tokyo Stock Exchange a total of
223,600 common shares with an aggregate purchase price of ¥1,209 million from August 12, 2002
through August 19, 2002.
The Ordinary General Meeting of Shareholders held on June 28, 2001 approved to implement TDK's
stock option plan for Directors and certain employees of TDK, and to purchase TDK's own shares for
transfer to them under the plan, pursuant to Article 210-2 of the Japanese Commercial Code. Stock
options (rights to purchase common shares) were provided to the then 12 Directors on the Board and
184 associate directors and officials in amounts ranging from 500 to 10,000 common shares each,
exercisable from August 1, 2003 to April 30, 2007, at an exercise price of ¥6,114 per share, which
was calculated by a formula approved by shareholders at the said annual shareholders meeting and is
subject to an adjustment in certain events, including but not limited to a stock split, stock
dividend and issue of new shares at price less than the current market price of the shares of TDK.
The exercise price of each Stock Acquisition Right was equal to or greater than the fair market
value of TDK's common stock on the date of grant. To cover these options TDK purchased on the
Tokyo Stock Exchange a total of 158,000 common shares with an aggregate purchase price of ¥917
million from July 2, 2001 through July 23, 2001.
- 57 -
Table of Contents
The Ordinary General Meeting of Shareholders held on June 29, 2000 approved to implement of
TDK's stock option plan for Directors and certain employees of TDK, and the purchase of TDK's own
shares for transfer to them under the plan, pursuant to Article 210-2 of the Japanese Commercial
Code. Stock options (rights to purchase common shares) were provided to the then 13 Directors on
the Board and 191 associate directors and officials in amounts ranging from 500 to 10,000 common
shares each, exercisable from August 1, 2002 to April 30, 2006, at an exercise price of ¥15,640 per
share, which was calculated by a formula approved by shareholders at the said annual shareholders
meeting and is subject to an adjustment in certain events, including but not limited to a stock
split, stock dividend and issue of new shares at price less than the current market price of the
shares of TDK. The exercise price of each Stock Acquisition Right was equal to or greater than the
fair market value of TDK's common stock on the date of grant. To cover these options TDK purchased
on the Tokyo Stock Exchange a total of 170,400 common shares with an aggregate purchase price of
¥2,665 million from July 3, 2000 through August 2, 2000.
Employees (excluding Directors and Corporate Officers) Shareholding Association
As of March 31, 2005, the number of members of the TDK Employees Shareholding Association
totaled 1,623. The Employees Shareholding Association accepts new memberships in March and
September of every year. Members are entitled to purchase shares of TDK, the maximum amount being
¥50,000 a month. In addition, members have received a monthly subsidy equivalent to 5% of the
purchase price of shares. The subsidy amounted to ¥19 million ($178 thousand) for fiscal 2005.
The total amount of TDK shares having voting rights owned by the TDK Employees Shareholding
Association was as follows:
Title of class
Identity of person or group
Amount owned
Percent of class
Common stock
TDK Employees Shareholding Association
501,005 shares
0.38 %
- 58 -
Table of Contents
Item 7
. Major Shareholders and Related Party Transaction
A. Major shareholders
The table below lists the number of TDK shares held by holders of 5% or more of TDK shares and
their percentage ownership as of March 31, 2005:
Shares owned
Name of major shareholder
(in thousands)
Percentage
The Master Trust Bank of Japan, Ltd. (Trust account)
17,271
12.96
%
Japan Trustee Services Bank, Ltd. (Trust account)
13,869
10.41
%
Major shareholders do not have voting rights different from other shareholders, subject to the
limitation on exercise as set forth in "Item 10. B. Memorandum and Articles of Association – Common
Stock – Voting rights."
At March 31, 2005, there were 1,784,560 registered ADRs outstanding and 374 registered
holders, of which 1,784,036 ADRs were held by 224 registered U.S. holders.
The Depositary of ADRs of TDK is Citibank N.A. of New York.
TDK is not, directly or indirectly, owned or controlled by another corporation or by any
foreign government.
B. Related party transaction
Since the beginning of TDK's last full fiscal year, TDK has not transacted with, nor does TDK
currently plan to transact with, a related party, except for transactions among TDK.
C. Interests of experts and counsel
Not applicable.
- 59 -
Table of Contents
Item 8
. Financial Information
A. Consolidated statements and other financial information
Consolidated financial statements
TDK's audited financial statements are included under Item 17 "Financial Statements". Except
for TDK's financial statements included under Item 17, no other information in this Annual Report
has been audited by TDK's independent auditors.
Refer to Consolidated Financial Statements and Notes to Consolidated Financial Statements (See
Item 17).
Export sales
Finished goods and materials sent out of Japan are mainly bound for consolidated subsidiaries
of TDK, and are not, therefore, recorded as exports on a consolidated basis. For this reason, the
proportion of exports to total net sales is not significant.
Legal proceedings
There are no material pending legal proceedings, other than ordinary routine litigation
incidental to the business, to which TDK or any of its subsidiaries is a party or of which any of
their property is the subject.
Dividend policy
Returning earnings to shareholders is one of TDK's highest management priorities. Therefore,
TDK's fundamental policy is to give consideration to a consistent increase in dividends based on
factors such as the return on equity (ROE), dividends as a percentage of equity (DOE) and TDK's
results of operations on a consolidated basis.
B. Significant changes
No significant change has occurred since the date of the annual consolidated financial
statements.
- 60 -
Table of Contents
Item 9
. The Offer and Listing
A. Offer and listing details
The primary market for TDK's shares of common stock (Common Stock) is the Tokyo Stock Exchange
(the "TSE"). The shares are traded on the First Section of that exchange and are also listed on
the Osaka Securities Exchange in Japan. In addition, TDK's shares are listed on the New York Stock
Exchange in the form of American Depositary Receipts ("ADRs"), on the Euronext Brussels Stock
Exchange in the form of Bearer Depositary Receipts, and on the London Stock Exchange in the form of
shares of TDK.
The following table sets forth for the periods indicated the reported high and low sales
prices of TDK's shares of common stock on the TSE and the reported high and low bid prices for American Depositary Shares
of which each represents one share of common stock, as reported by the New York Stock Exchange.
U.S. market
Yen per share of
price per American
Common stock (1)
Depositary Share (2)
High
Low
High
Low
Annual highs and lows
Year ended March 31, 2001
17,200
6,600
157.50
54.00
Year ended March 31, 2002
8,670
4,800
69.00
40.00
Year ended March 31, 2003
7,380
4,060
57.00
32.95
Year ended March 31, 2004
8,350
3,810
77.86
32.40
Year ended March 31, 2005
8,630
6,790
80.10
61.40
Quarterly highs and lows
Year ended March 31, 2004
1st quarter
6,020
3,810
49.80
32.40
2nd quarter
7,890
5,860
67.75
51.29
3rd quarter
7,800
6,470
72.20
60.40
4th quarter
8,350
7,020
77.86
66.01
Year ended March 31, 2005
1st quarter
8,630
7,130
80.10
64.50
2nd quarter
8,390
6,790
77.05
61.40
3rd quarter
7,910
7,160
74.85
67.80
4th quarter
7,880
7,050
75.93
68.40
Year ended March 31, 2006
1st quarter
8,020
7,250
74.35
68.02
Monthly highs and lows
February 2005
7,630
7,230
72.85
69.37
March 2005
7,880
7,300
75.93
68.40
April 2005
7,850
7,250
72.50
68.02
May 2005
8,000
7,310
74.27
68.22
June 2005
8,020
7,510
74.35
68.54
July 2005
7,970
7,480
71.98
67.05
Notes:
(1)
As reported by the Tokyo Stock Exchange.
(2)
As reported by the New York Stock Exchange.
- 61 -
Table of Contents
B. Plan of distribution
Not applicable.
C. Markets
See Item 9.A. "Offer and listing details".
D. Selling shareholders
Not applicable.
E. Dilution
Not applicable.
F. Expenses of the issue
Not applicable.
- 62 -
Table of Contents
Item 10
. Additional Information
A. Share capital
Not applicable.
B. Memorandum and articles of association
Organization
TDK is a joint stock corporation
(kabushiki kaisha)
incorporated in Japan under the Commercial
Code
(shoho)
of Japan. It is registered in the Commercial Register
(shogyo tokibo)
maintained by
the Tokyo Legal Affairs Bureau (Registration Number: 0199-01-034849).
Objects and purposes
Article 2 of the Articles of Incorporation of TDK provides that its purpose is to engage in
the following lines of business:
•
Manufacture and sale of electric machinery and appliances;
•
Manufacture and sale of magnetic materials such as ferrite and magnet;
•
Manufacture and sale of electronic machinery and appliances such as automatic inserting
machine for electronic components, automatic mounter for electronic components, and
electronic measuring equipment and of components thereof;
•
Manufacture and sale of recording media such as magnetic tape, floppy disk and optical disk
and of data writing, reading and storage equipment therefor;
•
Manufacture and sale of ceramic materials such as electricity inductive ceramics,
piezoelectric ceramics, semiconductor ceramics and electricity insulating ceramics;
•
Manufacture and sale of circuit components such as coil and transformers;
•
Manufacture and sale of semiconductors;
•
Manufacture and sale of stabilizing power supplies (units to stabilize electric current or
voltage);
•
Manufacture and sale of machinery and appliances for medical use and medical instruments and
of components thereof;
•
Manufacture and sale of single crystal materials and each product applying the same;
•
Manufacture and sale of precious metals, precious stones, artificial precious stones and
each product applying or utilizing the same;
•
Manufacture and sale of outer wall materials of buildings and structures;
•
Designing and contracting of construction work;
•
Development, production, sale and grant of license of software;
•
Manufacture, sale and contracting of applied product, machinery and tools and equipment of
each of the foregoing; and
•
Any and all businesses incidental or relating to each of the foregoing.
- 63 -
Table of Contents
With respect to directors, TDK's Articles of Incorporation, bylaws and associated internal
rules issued pursuant to the Articles provide in summary as follows;
(a)
a director is not entitled to vote on a proposal or arrangement or contract in
which the director is materially interested;
(b)
the remuneration and retirement allowances for directors are determined at a
general meeting of shareholders;
(c)
the Board of Directors have authority to approve long-term borrowing of ¥10
billion or more by resolution passed at a duly convened meeting of the Board of
Directors. The Representative Director is authorized by the Board of Directors to make
final decisions with respect to long-term borrowings in an amount less than ¥10 billion
and short-term borrowings (including issuance of commercial paper);
(d)
there are no provisions requiring the mandatory retirement of directors at a
specified age;
(e)
share ownership is not required in order to be eligible to serve as a director.
Common Stock
General
Set forth below is information relating to TDK's Common Stock, including brief summaries of
the relevant provisions of TDK's Articles of Incorporation and Share Handling Regulations, as
currently in effect, and of the Commercial Code of Japan and related legislation. The discussion
of the Commercial Code below reflects certain amendments to the Commercial Code, which became
effective on April 1, 2003 and on September 25, 2003.
In order to assert shareholders' rights against TDK, a shareholder must have its name and
address registered on TDK's register of shareholders, in accordance with TDK's Share Handling
Regulations. The registered beneficial holder of deposited shares underlying the ADSs is the
Depositary for the ADSs. Accordingly, holders of ADSs will not be able directly to assert
shareholders' rights to TDK.
Authorized capital
Article 5 of the Articles of Incorporation of TDK provides that the total number of shares
authorized to be issued by TDK is four hundred and eighty million (480,000,000) shares.
As of March 31, 2005, 133,189,659 shares of Common Stock without having any par value were
issued, including 945,072 shares of treasury stock.
The concept of "par value" of shares of capital stock is eliminated under the Commercial Code
of Japan. Thus, all shares of capital stock of TDK have no par value.
- 64 -
Table of Contents
Dividends
The Articles of Incorporation of TDK provide that the accounts shall be closed on March 31 of
each year and that dividends, if any, shall be paid to shareholders, beneficial shareholders and
pledgees of record as of the end of such day. After the close of the fiscal period, the Board of
Directors prepares, among other things, a proposed allocation of profits for dividends and other
purposes; this proposal is submitted to the Board of Corporate Auditors of TDK and to independent
certified public accountants and then submitted for approval to the ordinary general meeting of
shareholders, which is normally held in June each year. In addition to provisions for dividends,
if any, and for the legal reserve and other reserves, the allocation of profits customarily
includes a bonus to Directors. In addition to year-end dividends, the Board of Directors may by
its resolution declare a cash distribution pursuant to Article 293-5 of the Commercial Code (an
"interim dividend") to shareholders, beneficial shareholders and pledgees of record as of the end
of each September 30, without shareholders' approval, but subject to the limitations described
below.
The Commercial Code provides that a company may not make any distribution of profit by way of
dividends or interim dividends for any fiscal period unless it has set aside in its legal reserve
an amount equal to at least one-tenth of the amount paid by way of appropriation of retained
earnings for such fiscal period or of the amount of such interim dividends until the aggregate
amount of additional paid-in capital and legal reserve equals to one-quarter of its stated capital.
Under the Commercial Code, TDK is permitted to distribute profits by way of year-end dividends out
of the excess of its net assets (as appearing on its non-consolidated balance sheet at the last
fiscal year end) over the sum of the following amounts:
(i) stated capital;
(ii) capital reserve and retained earnings resrve;
(iii) the amount of retained earnings reserve that is required to be set aside for the fiscal
year concerned; and
(iv) such other amounts as are set out in ordinances promulgated by the Ministry of Justice.
In the case of interim dividends, TDK may distribute dividends out of the sum of (1) the
excess of its net assets (as appearing on its non-consolidated balance sheet at the last fiscal
year end) over the aggregate of the amounts stated in (a) through (d) below, and (2) the aggregate
of the amounts stated in (e) through (g) below:
(a)
the total amount of the stated capital and reserves as of the end of the last
fiscal year;
(b)
the total amount of the retained earnings reserve set aside at the ordinary
general shareholders' meeting for the last fiscal year and the retained earnings reserve
required to be set aside at the time of the cash distribution;
(c)
the total amount determined to be distributed as dividends or paid out from the
profits or incorporated into the stated capital at the ordinary general shareholders'
meeting for the last fiscal year, and the total acquisition price of TDK's own shares
determined by resolution of the ordinary general shareholders' meeting for the last
fiscal year and/ or resolution of the Board of Directors after the last fiscal year (see
"
Acquisition of TDK's Own Shares
");
(d)
such other amounts as are setout in ordinances promulgated by the Ministry of
Justice;
- 65 -
Table of Contents
(e)
the balance of the amounts of capital reserve and retained earnings reserve that
have been reduced after tah last fiscal year, after the subtraction of the amounts used
out of such reduced amounts for refunds to shareholders and/or replenishment of capital
deficiencies;
(f)
the balance of the amount of capital that has been reduced after the last fiscal
year, after the subtraction of the amounts used out of such reduced amount for refunds
to shareholders, cancellation of shares, and/or replenishment of capital deficiencies;
and
(g)
such other amounts as are set out in ordinances promulgated by the Ministry of
Justice.
Furthermore, if TDK reduces the amount of its stated capital, additional paid-in capital or
legal reserve after the end of the latest fiscal year, the amount so reduced, less the amount paid
to shareholders upon such reduction and certain other amounts, as well as such other amounts as are
set out in the ordinance of the Ministry of Justice will be added to the distributable amount as
interim dividends as described above.
TDK may not pay any interim dividends where there is a risk that the amount of TDK's net
assets appearing on the non-consolidated balance sheet at the end of the current fiscal year does
not exceed the aggregate of the amounts referred to in (i) through (v) above.
In Japan, the ex-dividend date and record date for dividends precede the date of determination
of the amount of the dividend. The price of shares generally goes ex-dividend on the third
business day prior to the record date.
Stock splits
Under the Commercial Code, the Board of Directors of TDK may at any time make stock splits by
its resolution. Generally, upon stock splits, shareholders will not be required to exchange share
certificates held by them for new share certificated. In respect of shares deposited with the
Japan Securities Depository Center, Inc. ("JASDEC"), new shares resulting from the stock split will
automatically be deposited with JASDEC, and shareholders who directly possess share certificates
will receive additional certificates representing the additional shares resulting from the stock
split. Before a stock split, TDK must give public notice of the stock split, specifying the record
date for the stock split, not less than two weeks prior to the record date. In addition, promptly
after the stock split takes effect, TDK must send notice to each shareholder specifying the number
of entitled shares.
Under the Commercial Code, the Board of Directors of TDK may increase the authorized share
capital up to the number reflecting the rate of stock splits and amend the Articles of
Incorporation of TDK without the approval of a shareholders' meeting.
General meeting of shareholders
The ordinary general meeting of shareholders of TDK for each fiscal year is normally held in
June in each year in Chuo-ku, Tokyo, Japan (address of principal executive office) or any adjacent
place thereto or in Ichikawa-shi, Chiba, Japan. In addition, TDK may hold an extraordinary general
meeting of shareholders whenever necessary by giving notice of convocation thereof at least two
weeks prior to the date set for the meeting.
Notice of convocation of a shareholders' meeting setting forth the place, time and purpose
thereof, must be mailed to each shareholder having voting rights (or, in the case of a non-resident
shareholder, to his or her standing proxy or mailing address in Japan) at least two weeks prior to
the date set for the meeting. Under the Commercial Code, such notice may be given to shareholders
by electronic means, subject to the consent by the relevant shareholders. The record date for an
ordinary general meeting of shareholders is March 31 of each year.
- 66 -
Table of Contents
Any shareholder or group of shareholders holding at least 3 percent of the total number of
voting rights for a period of six months or more may require the convocation of a general meeting
of shareholders for a particular purpose. Unless such shareholders' meeting is convened promptly
or a convocation notice of a meeting which is to be held not later than eight weeks from the day of
such demand is dispatched, the requiring shareholder may, upon obtaining a court approval, convene
such shareholders' meeting.
Any shareholder or group of shareholders holding at least 300 voting rights or 1 percent of
the total number of voting rights for a period of six months or more may propose a matter to be
considered at a general meeting of shareholders by submitting a written request to a Representative
Director at least eight weeks prior to the date set for such meeting.
Voting rights
So long as TDK maintains the unit share system (see
New "Unit" share system, below
) a holder
of shares constituting one or more whole units is entitled to one voting right per unit of shares
subject to the limitations on voting rights set forth in the following paragraph. Except as
otherwise provided by law or by the Articles of Incorporation, a resolution can be adopted at a
general meeting of shareholders by a majority of the number of voting rights of all the
shareholders represented at the meeting. The Commercial Code and TDK's Articles of Incorporation
provide, however, that the quorum for the election of Directors and Corporate Auditors shall not be
less than one-third of the total number of voting rights of all the shareholders. TDK's
shareholders are not entitled to cumulative voting in the election of Directors and Corporate
Auditors. A stock corporation (kabushiki kaisha) or limited liability company (yugen kaisha) that
holds shares of TDK stock may not exercise its voting rights with respect to such TDK shares if TDK
and its subsidiaries, either alone or together, hold shares or membership interests representing
more than 25% of the voting power of such corporate shareholder. Shareholders may exercise their
voting rights through proxies, provided that the proxies are also shareholders holding voting
rights. TDK's shareholders also may cast their votes in writing. Shareholders may also exercise
their voting rights by electronic means when the Board of Directors decides to permit such method
of exercising voting rights.
The Commercial Code provides that in order to amend the Articles of Incorporation and in
certain other instances, including a reduction of stated capital, the removal of a Director or
Corporate Auditor, dissolution, merger or consolidation with a certain exception under which
shareholders' resolution is not required, the transfer of the whole or an important part of the
business, the taking over of the whole of the business of any other corporation with a certain
exception under which shareholders resolution is not required, share exchange or share transfer for
the purpose of establishing 100 % parent-subsidiary relationships with a certain exception under
which shareholders resolution is not required, splitting of the corporation into two or more
corporations with a certain exception under which shareholders resolution is not required, or any
offering of new shares at a "specially favorable" price (or any offering of stock acquisition
rights to subscribe for or acquire shares of capital stock ("stock acquisition rights") or bonds
with stock acquisition rights at a "specially favorable" exercise conditions) to any persons other
than shareholders, the quorum shall be one-third of the total voting rights of all the shareholders
and the approval by at least two-thirds of the voting rights of all the shareholders represented at
the meeting is required (the "special shareholders resolutions").
- 67 -
Table of Contents
Issue of additional shares and pre-emptive rights
Holders of TDK's shares of Common Stock have no pre-emptive rights under its Articles of
Incorporation. Authorized but unissued shares may be issued at such times and upon such terms as
the Board of Directors determines, subject to the limitations as to the offering of new shares at a
"specially favorable" price mentioned under
"Voting rights"
above. The Board of Directors may,
however, determine that shareholders shall be given subscription rights regarding a particular
issue of new shares, in which case such rights must be given on uniform terms to all shareholders
as at a record date of which not less than two weeks' prior public notice must be given. Each of
the shareholders to whom such rights are given must also be given notice of the expiry thereof at
least two weeks prior to the date on which such rights expire.
Rights to subscribe for new shares may be made generally transferable by the Board of
Directors. Whether TDK will make subscription rights generally transferable in future rights
offerings will depend upon the circumstances at the time of such offerings. If subscription rights
are not made generally transferable, transfers by a non-resident of Japan or a corporation
organized under the laws of a foreign country or whose principal office is located in a foreign
country will be enforceable against TDK and third parties only if TDK's prior written consent to
each such transfer is obtained. When such consent is necessary in the future for the transfer of
subscription rights, TDK intends to consent, on request, to all such transfers by such a
non-resident or foreign corporation.
Subject to certain requirements, TDK may issue stock acquisition rights by a resolution of the
Board of Directors. Holders of stock acquisition rights may exercise their rights to acquire a
certain number of shares within the exercise period as prescribed in the terms of their stock
acquisition rights. Upon exercise of stock acquisition rights, TDK will be obliged to issue the
relevant number of new shares or alternatively to transfer the necessary number of existing shares
held by it (treasury stock).
Liquidation rights
In the event of a liquidation of TDK, the assets remaining after payment of all debts and
liquidation expenses and taxes will be distributed among shareholders in proportion to the
respective numbers of shares of common stock held.
Record date
March 31 is the record date for TDK's year-end dividends. So long as TDK maintains in its
Articles of Incorporation a provision for the unit of shares, the shareholders and beneficial
shareholders who are registered as the holders of one unit of shares or more in TDK's registers of
shareholders and/or beneficial shareholders at the end of each March 31 are also entitled to
exercise shareholders' rights at the ordinary general meeting of shareholders with respect to the
fiscal year ending on such March 31. September 30 is the record date for interim dividends. In
addition, TDK may set a record date for determining the shareholders and/or beneficial shareholders
entitled to other rights and for other purposes by giving at least two weeks' prior public notice.
The price of shares generally goes ex-dividends or ex-rights on Japanese stock exchanges on
the third business day prior to a record date (or if the record date is not a business day, the
fourth business day prior thereto), for the purpose of dividends or rights offerings.
- 68 -
Table of Contents
Acquisition of TDK's Own Shares
TDK may acquire its own shares (i) by way of purchase on any Japanese stock exchange on which
its shares are listed or by way of tender offer (pursuant to a resolution of the Board of Directors
because the Articles of Incorporation of TDK were amended so as to allow TDK to purchase its own
shares in accordance with the revised Commercial Code), (ii) from a specific shareholder other than
its subsidiary (pursuant to a special resolution of an ordinary general meeting of shareholders),
or (iii) from its subsidiary (pursuant to resolution of the Board of Directors). In the case of
(ii) above, any other shareholder may make a request directly to a representative director in
writing, five days prior to the relevant shareholder's meeting, to include such other shareholder
as the seller of shares in the proposed purchase.
Any such acquisition of TDK's shares must satisfy certain requirements, including that the
total amount of the purchase price may not exceed the amount of the retained earnings available for
annual dividend payments after taking into account any reduction of the stated capital, additional
paid-in capital or legal reserve (if such reduction is authorized by a resolution of the relevant
general meeting of shareholders) less the sum of the amount to be paid by way of appropriation of
retained earnings and the amount of retained earnings to be transferred to the sated capital in
respect of the relevant fiscal year pursuant to a resolution of such general meeting of
shareholders. In the case of purchase of TDK's own shares by it pursuant to resolution of the
Board of Directors mentioned in (i) or (iii) above, however, the total amount of the purchase price
of such shares may not exceed the amount distributable as interim dividends, as described in
"
Dividends
" above, less the amount of the interim dividends actually paid. However, if it is
anticipated that the net assets, as stated on its non-consolidated balance sheet at the end of the
fiscal year, will be less than the aggregate amount of items described in (i) through (v) in
"
Dividend
s" above, TDK may not purchase such shares.
TDK may hold the shares so acquired in compliance with the provisions of the Commercial Code
of Japan, and may generally dispose of or cancel such shares by a resolution of the Board of
Directors, subject to the limitation as to the offering of treasury shares at a "specially
favorable" price mentioned in "
Voting Rights
" above.
New "Unit" share system
A new unit share system called "tangen-kabushiki" has been introduced.
Pursuant to the Articles of Incorporation of TDK, 100 shares of TDK constitute one unit.
Although the number of shares constituting a new unit is included in the Articles of Incorporation,
any amendment to the Articles of Incorporation reducing (but not increasing) the number of shares
constituting a unit or eliminating the provisions for the unit of shares may be made by the
resolution of the Board of Directors rather than by the special shareholders resolution, which is
otherwise required for amending the Articles of Incorporation. The number of shares constituting
one new unit, however, cannot exceed 1,000 or one two-hundredth (1/200) of all issued shares.
—Voting rights under the new unit share system
Under the new unit share system, shareholders shall have one voting right for each unit of
shares that they hold. Any number of shares less than a full unit will carry no voting rights.
- 69 -
Table of Contents
—Share certificates for less than a unit
Unless TDK's Board of Directors adopts a resolution to eliminate the provision for the unit
shares from the Articles of Incorporation or the shareholders amend the Articles of Incorporation
by a special shareholders resolution to eliminate the provision not to issue share certificates for
less than a unit of shares, a share certificate for any number of shares less than a unit will in
general not be issued. As the transfer of shares normally requires the delivery of the share
certificates therefor, any fraction of a unit for which no share certificates are issued is not
transferable.
—Repurchase or saleby TDK of shares constituting less than a unit
A holder of shares constituting less than one unit may require TDK to purchase such shares, or
sell such number of shares which, if combined with the shares already held by such holder, would
constitute one unit of shares, at their market value in accordance with the provisions of the Share
Handling Regulations of TDK.
—Effect of the unit share system on holders of ADRs
A holder who owns ADRs evidencing less than 100 ADSs will indirectly own less than a whole
unit of shares of Common Stock. Although, as discussed above, under the unit share system holders
of less than a unit have the right to require TDK to purchase their shares, holders of ADRs
evidencing ADSs that represent other than integral multiples of whole units are unable to withdraw
the underlying shares of Common Stock representing less than a unit and, therefore, are unable, as
a practical matter, to exercise the rights to require TDK to purchase such underlying shares unless
TDK's Articles of Incorporation are amended to eliminate the provision not to issue share
certificates for the numbers of shares less than a unit. As a result, access to the Japanese
markets by holders of ADRs through the withdrawal mechanism will not be available for dispositions
of shares of Common Stock in lots less than a unit. The unit share system does not affect the
transferability of ADSs, which may be transferred in lots of any size.
Reporting of substantial shareholdings
The Securities and Exchange Law of Japan and regulations thereunder require any person who has
become, beneficially and solely or jointly, a holder of more than 5 percent of the total issued
shares of capital stock of a company listed on any Japanese stock exchange or whose shares are
traded on the over-the-counter market in Japan to file with the Director-General of a competent
Local Finance Bureau of the Ministry of Finance within five business days a report concerning such
shareholdings.
A similar report must also be filed in respect of any subsequent change of 1 percent or more
in any such holding or any change in material matters set out in reports previously filed, with
certain exceptions. For this purpose, shares issuable to such person upon conversion of
convertible securities or exercise of share subscription warrants or stock acquisition rights are
taken into account in determining both the number of shares held by such holder and the issuer's
total issued share capital. Copies of such report must also be furnished to the issuer of such
shares and all Japanese stock exchanges on which the shares are listed or (in the case of shares
traded over-the-counter) the Japan Securities Dealers Association.
Except for the general limitation under Japanese anti-trust and anti-monopoly regulations
against holding of shares of capital stock of a Japanese corporation which leads or may lead to a
restraint of trade or monopoly, and except for general limitations under the Commercial Code or
TDK's Articles of Incorporation on the rights of shareholders applicable regardless of residence or
nationality, there is no limitation under Japanese laws and regulations applicable to TDK or under
its Articles of Incorporation on the rights of non-resident or foreign shareholders to hold the
shares of Common Stock of TDK or exercise voting rights thereon.
- 70 -
Table of Contents
There is no provision in TDK's Articles of Incorporation that would have an effect of
delaying, deferring or preventing a change in control of TDK and that would operate only with
respect to merger, consolidation, acquisition or corporate restructuring involving TDK.
C. Material contracts
All contracts entered into by TDK during the two years prior to the date of this annual report
were entered into in the ordinary course of business.
D. Exchange controls
Japanese Foreign Exchange Regulations
The Foreign Exchange and Foreign Trade Law of Japan, frequently referred to as the Foreign
Exchange Law, and the cabinet orders and ministerial ordinances thereunder govern the issuance of
shares by companies and the acquisition and holding of shares by "exchange non-residents" and
"foreign investors" under the Foreign Exchange Law.
Exchange non-residents are:
•
individuals who do not reside in Japan; and
•
corporations whose principal offices are not located in Japan.
Generally, branches and other offices located within Japan of non-resident corporations are
regarded as exchange residents of Japan and branches and other offices of Japanese corporations
located outside Japan are regarded as exchange non-residents of Japan.
Foreign investors are:
•
individuals who do not reside in Japan;
•
corporations which are organized under the laws of foreign
countries or whose principal offices are located outside
Japan; and
•
corporations in which more than 50% of the shares are held by
individuals who do not reside in Japan and/or corporations
which are organized under the laws of foreign countries or
whose principal offices are located outside Japan or a
majority of the officers (or officers having the power of
representation) are persons who do not reside in Japan.
Due to the amendments to the Foreign Exchange Law effective on April 1, 1998, all aspects of
foreign exchange and foreign trade transactions that were previously subject to licensing or other
prior notifications or approvals, with minor exceptions, were changed to require only
post-transaction reporting. However, the Minister of Finance of Japan will have the power to
impose licensing requirements for transactions in limited circumstances.
Potential Consequences Resulting from an Acquisition of Listed Shares
In the event that a foreign investor acquires shares of a Japanese company listed on a
Japanese stock exchange or traded on an over-the-counter market in Japan ("listed shares") and if
the foreign investor's direct and indirect total holdings are 10% or more of the issued shares of
the company after the acquisition, the foreign investor must file a report of the acquisition with
the Minister of Finance and any other competent Minister within 15 days from and including the date
of such acquisition. However, in certain limited circumstances (including the case where the
acquisition of the shares reaches 10%), a prior notification of such an acquisition must be filed
with the Minister of Finance and any other competent Minister, who may then modify or prohibit the
proposed acquisition. The acquisition of shares by exchange non-residents as a result of stock
splits is not subject to any of the foregoing requirements.
- 71 -
Table of Contents
Potential Consequences Resulting from Dividends and Proceeds of Sales
Under the current Foreign Exchange Law, dividends paid on, and the proceeds of sales in Japan
of, shares held by exchange non-residents may, in general, be converted into foreign currency and
repatriated abroad.
Potential Consequences Resulting from the Sale of Securities to Exchange Non-Resident
A Japanese resident is required to file a report with the Minister of Finance concerning the
transfer of securities for value exceeding ¥100 million to an exchange non-resident within 20 days
of the date of the transfer. If an exchange resident issues or offers its securities for value of
¥1 billion or more outside Japan, the exchange resident must file a report of the issuance or
offering of securities with the Minister of Finance within 20 days of the date of the closing.
American Depositary Shares
The deposit of shares of Common Stock by a non-resident of Japan, the issuance of ADRs in
exchange therefor and the withdrawal of the underlying shares of Common Stock upon surrender of
ADRs are not subject to any formalities or restrictions referred to under "Potential Consequences
Resulting from an Acquisition of Listed Shares" above, except where, as a result of such deposit or
withdrawal, the aggregate number of shares held by the depositary (or its nominee) or the holder
surrendering ADRs, as the case may be, would be 10% or more of the total outstanding shares of
Common Stock, in which event the reporting to the Minister of Finance of Japan may be required as
outlined in the second sentence under the same heading.
Reporting of Substantial Shareholdings
The Securities and Exchange Law of Japan, as amended, requires any person who has become a
beneficial holder (including certain sole or joint holders) of more than five percent of the total
outstanding voting shares of a company listed on any Japanese stock exchange or traded on the
over-the-counter markets in Japan, to file with the Minister of Finance of Japan, within five
business days, a report concerning such share holdings, with certain exceptions in case the issuer
thereof is a foreign company. A similar report must also be made (with certain exceptions) if the
ratio of such holding subsequently changes by one percent or more. Copies of any such report must
also be furnished to the issuer of such shares and to all Japanese stock exchanges on which the
shares are listed or the Japan Securities Dealers Association in the case of over-the-counter
shares. For this purpose, shares issuable upon conversion of convertible securities or exercise of
stock acquisition rights are taken into account in determining both the number of shares held by
such holder and the issuer's total number of outstanding shares.
E. Taxation
Dividends, Stock Splits and Repurchase
Generally, a non-resident of Japan or a non-Japanese corporation is subject to Japanese
withholding tax on dividends paid by Japanese corporations. Stock splits are not subject to
Japanese income tax. However, a transfer of retained earnings or legal reserve (but, in general,
not additional paid-in capital) to stated capital (whether made in connection with a stock split or
otherwise) is treated as a dividend payment to shareholders for Japanese tax purposes and is, in
general, subject to Japanese income tax.
The rate of Japanese withholding tax applicable to dividends on TDK's shares paid by TDK to
non-resident shareholders is 7 percent for dividends paid on or before March 31, 2008 and 15
percent thereafter, except for any individual shareholder who holds 5 percent or more of the issued
shares, for whom the applicable rate is 20 percent.
- 72 -
Table of Contents
Japan has income tax treaties, conventions or agreements which generally provide that the
withholding tax rate may not exceed 15 percent for portfolio investors with, among others,
Australia, Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Italy, Luxembourg, The
Netherlands, New Zealand, Norway, Singapore, Spain, Sweden, Switzerland, the United Kingdom and the
United States. In case of the Japan-U.S. tax treaty, however, as a result of a recent amendment,
the maximum withholding tax rate has been reduced, generally to 10 percent for portfolio investors
effective from July 1, 2004. Under Japanese tax law, the maximum rate applicable under the tax
treaties, conventions or agreements shall be applicable except when such maximum rate is more than
the Japanese statutory rate.
TDK, as a Japanese corporation, may be obligated to withhold a certain amount from any
payments by TDK to its shareholder that is a non-resident of Japan or a non-Japanese corporation.
Specifically, according to Articles 212-1 and 212-2 of the Income Tax Law of Japan, TDK has the
obligation to withhold the amount determined by the applicable tax rate from its dividends to such
of its shareholders.
Acquisition or Disposal of Shares or ADRs
Gains derived by a non-resident of Japan or a non-Japanese corporation from the sale outside
Japan of Shares or ADRs, or from the sale of Shares or ADRs within Japan by a non-resident of Japan
or a non-Japanese corporation not having a permanent establishment in Japan are in general not
subject to Japanese income tax.
Japanese inheritance and gift taxes at progressive rates may be payable by an individual who
has acquired Shares or ADRs as a legatee, heir or donee.
F. Dividends and paying agents
Not applicable.
G. Statements by experts
Not applicable.
H. Documents on display
According to the Securities Exchange Act of 1934, as amended, TDK is subject to the
requirements of informational disclosure. TDK files various reports and other information,
including Form 20-F and Annual Reports, with the Securities Exchange Commission and the New York
Stock Exchange. These reports may be inspected at the following sites.
Securities Exchange Commission:
450 Fifth Street, N.W., Washington D.C. 20549
New York Stock Exchange:
20 Broad Street, New York, New York 10005
Form 20-F is also available at the Electronic Data Gathering, Analysis, Retrieval system
(EDGAR) website maintained by the Securities Exchange Commission.
Securities Exchange Commission Home Page:
http://www.sec.gov
I. Subsidiary information
Not applicable.
- 73 -
Table of Contents
Item 11
. Quantitative and Qualitative Disclosures about Market Risk
Market risk exposure
TDK is subject to market risk associated with changes in stock prices, interest rates and
foreign currency exchange rates. Foreign exchange risk is considered as the primary market risk
exposure. TDK has a policy for the procedures and controls to manage market risk sensitive
instruments. In order to hedge interest rate risk and foreign currency exchange rate risk, TDK
uses derivative financial instruments. TDK does not hold or issue derivative financial instruments
for trading purposes.
Foreign exchange and interest rate risk
Forward exchange contracts and currency swap contracts have been entered into to hedge adverse
effects of foreign currency exchange rate fluctuations mainly on foreign-currency-denominated trade
receivables and foreign-currency-denominated forecasted transactions.
At March 31, 2005 and 2004, TDK and certain of its subsidiaries had forward exchange contracts
to sell and buy foreign currencies (principally U.S. dollars and Japanese Yen) and currency option
contracts for a contract amount of ¥28,990 million ($270,935 thousand) and ¥34,978 million,
respectively.
TDK and one of its subsidiaries have currency swaps and interest rate and currency swaps with
certain financial institutions to limit their exposure to fluctuations in foreign exchange rates
and interest rates involved mainly with loans made by TDK to its subsidiaries in a total amount of
¥11,067 million ($103,430 thousand) and ¥12,605 million at March 31, 2005 and 2004, respectively.
These swaps require TDK and the subsidiary to pay principally euros and U.S. dollars and to receive
Japanese yen at a specified rate on specific dates. The remaining term of these swaps is one month
as of March 31, 2005. The following table provides information about TDK's derivative instruments
related to foreign exchange risk as of March 31, 2005 and 2004.
2005
2004
(millions of yen)
Average
(millions of yen)
Average
Contract
Fair
contractual
Contract
Fair
contractual
Forward exchange contracts
amounts
value
rate
amounts
value
rate
To sell Malaysian Ringgit
/ receive USD
¥
—
¥
—
—
¥
859
¥
(7
)
3.86
To sell USD / receive Yen
4,295
(88
)
105.00
17,779
403
107.75
To sell CHF / receive Euro
54
—
1.54
—
—
—
Total
¥
4,349
¥
(88
)
¥
18,638
¥
396
(millions of yen)
Average
(millions of yen)
Average
Contract
Fair
contractual
Contract
Fair
contractual
Currency option contracts
amounts
value
rate
amounts
value
rate
To sell USD / receive Yen
¥
23,803
¥
(354
)
105.10
¥
16,340
¥
91
108.00
To sell USD / receive THB
838
(12
)
39.07
—
—
—
Total
¥
24,641
¥
(366
)
¥
16,340
¥
91
(millions of yen)
Average
(millions of yen)
Average
Contract
Fair
contractual
Contract
Fair
contractual
Currency swap contracts
amounts
value
rate
amounts
value
rate
To receive Euro / pay GBP
¥
2,041
¥
(10
)
0.69
¥
3,910
¥
(35
)
0.68
To receive Yen / pay Euro
9,026
(302
)
134.75
8,695
287
133.77
Total
¥
11,067
¥
(312
)
¥
12,605
¥
252
- 74 -
Table of Contents
TDK's exposure to market risk related to changes in interest rates relates primarily to
its debt securities. TDK has debt securities with fixed rates. TDK, to the extent possible, plans
to limit debt securities to short-term debt securities. TDK believes that the fair values of
interest rate sensitive instruments as of March 31, 2005 and 2004, and potential, near-term losses
affecting future earnings, fair values, and/or cash flows from reasonable near-term changes in
interest rates are immaterial.
Stock price risk
TDK's exposure to market risk involving changes in stock prices relates only to its equity
securities categorized as available-for-sale securities. TDK purchases equity securities for the
purpose of acquiring technological information and as part of its sales strategy, and not as a
means of investing surplus funds. The aggregate cost and fair value of these equity securities
were ¥6.0 billion ($56 million) and ¥7.0 billion ($65 million) as of March 31, 2005, and ¥2.8
billion and ¥3.8 billion as of March 31, 2004, respectively. As of March 31, 2005, these
securities mainly represented investments in companies in the transportation, communications and
electronic equipment industries, and the cost and fair value of these equity securities were ¥5.6
billion ($53 million) and ¥6.5 billion ($61 million), respectively. As of March 31, 2004, these
securities mainly represented investments in companies in the communications and electronic
equipment industries, and the cost and fair value of the equity securities were ¥2.4 billion and
¥3.3 billion, respectively.
The information of equity securities include available-for-sale securities at March 31, 2005
and 2004, is as follows:
2005
2004
Yen (Millions)
Yen (Millions)
Gross
Gross
Gross
Gross
unrealized
unrealized
unrealized
unrealized
holding
holding
holding
holding
Cost
gains
losses
Fair value
Cost
gains
losses
Fair value
¥5,951
1,054
—
7,005
2,782
1,054
—
3,836
Item 12
. Description of Securities Other than Equity Securities
A. Debt securities
Not applicable.
B. Warrants and rights
Not applicable.
C. Other securities
Not applicable.
D. American depositary shares
Not applicable.
- 75 -
Table of Contents
PART 2
Item 13
. Defaults, Dividend Arrearages and Delinquencies
None.
Item 14
. Material Modifications to the Rights of Security Holders and Use of Proceeds
None.
Item 15
. Controls and Procedures
(a) Disclosure controls and procedures
TDK's Chief Executive Officer and Chief Financial Officer, after evaluating the effectiveness
of its "disclosure controls and procedures" (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) as of March 31, 2005 (the "Evaluation Date"), the end of the period covered by this
Annual Report, have concluded that, as of the Evaluation Date, TDK's disclosure controls and
procedures were adequate and effective and designed to ensure that material information relating to
TDK and its consolidated subsidiaries is made known to the Chief Executive Officer and the Chief
Financial Officer by others within TDK and its consolidated subsidiaries.
(b) Management's annual report on internal control over financial reporting
This requirement was "intentionally omitted pursuant to SEC Release No. 33-8345 dated March 2,
2005".
(c) Attestation report of the registered public accounting firm
This requirement was "intentionally omitted pursuant to SEC Release No. 33-8345 dated March 2,
2005".
(d) Changes in internal control over financial reporting
There were no significant changes in TDK's internal control over financial reporting that
occurred during the period covered by this Annual Report that has materially affected, or is
reasonably likely to materially affect, the issuer's internal control over financial reporting.
Item 16A
. Audit Committee Financial Expert
The registrant, a foreign private issuer, has at least one "audit committee financial expert"
serving on its audit committee. TDK's board of auditors has determined that Ryoichi Ohno qualifies
as an "audit committee financial experts" as defined by the rules of SEC. Mr. Ohno is an outside
corporate auditor within the meaning of the Special Audit Law. See
Significant differences in
corporate governance practices between TDK and U.S. listed companies on the New York Stock Exchange
in Item 6.C. "Board practices". Mr. Ohno was registered as a U.S. Certified Public Accountant in
1988 and elected as one of TDK's corporate auditors at an Ordinary General Meeting of Shareholders
held in June 2004. See Item 6.A. for additional information regarding Mr. Ohno.
- 76 -
Table of Contents
Item 16B.
Code of Ethics
TDK has established a code of business ethics ("TDK Code of Ethics") that applies to TDK's
corporate officers and all TDK employees and is actively pursuing to promote ethical business
practices on a worldwide basis. TDK amended the TDK Code of Ethics as of May 25, 2005 to revise
section pertaining to the civil rights of its employees and to add a new section regarding
employment conditions. Both sections apply to TDK's corporate officers and all TDK employees.
Please see Sections 2.2.3 and 2.2.4 of the TDK Code of Ethics. The TDK Business Ethics & CSR
Committee (formally named "TDK Business Ethics Committee") has been charged with the oversight of
the ethics program at TDK. It has built a global ethics framework which encompasses domestic and
overseas consolidated subsidiaries. Built into the framework is a direct communication means
called the "helpline" for employees to report matters relating to business ethics issues and offer
suggestions. The TDK Code of Ethics is attached as exhibit to this annual report. TDK has not
granted a waiver or implicit waiver from any provision of the TDK Code of Ethics in the most recent
fiscal year.
Item 16C.
Principal Accountant Fees and Services
The following table discloses the aggregate fees accrued or paid to KPMG AZSA & Co. and KPMG
International member firms for each of the last two fiscal years and briefly describes the services
performed:
(Yen in millions)
Year ended March 31
2005
2004
Audit fees
323
265
Audit-related fees
36
8
Tax fees
211
169
All other fees
5
5
Total
575
447
Audit fees consist of fees for "Audit Services". "Audit Services" are professional services
rendered by the Principal Auditor for the audit of TDK's annual financial statements and services
that are normally provided by the Principal Auditor in connection with statutory and regulatory
filings or engagements: (i) Services associated with statutory audits; and (ii) Services associated
with U.S. SEC registration statements or other periodic filings.
Audit-related fees consist of fees for "Audit-Related Services". "Audit-Related Services" are
professional services relating to the Audit Services: (i) Audits of employee benefit plans; and
(ii) Sarbanes-Oxley Act related assistance service.
Tax fees consist of fees for "Tax Services": (i) Federal and local tax compliance; (ii) Review
of federal, local and international income, franchise, and other tax returns; (iii) Transfer
pricing documentation; and (iv) Domestic and foreign indirect taxes.
Audit and Non-Audit Services Pre-Approval Policy
Subject to the confirmation as stipulated below, no pre-approval of the Board of Directors, in
the context of the United States Sarbanes-Oxley Act of 2002 ("Sarbox Act") or the U.S. SEC rules,
is required for any non-audit services rendered by any Non-Outside Auditor. Any contracts
involving such services shall be processed in the usual manner in accordance with the applicable
laws, in-house rules or any other regulations.
- 77 -
Table of Contents
Any person who wishes to retain a Non-Outside Auditor for non-audit services
("Retainer") is not allowed to do so unless both of the following conditions are met:
(i)
The Retainer has received a letter of confirmation from such a public
accounting firm that the public accounting firm is neither an Outside Auditor nor a
person associated with the Outside Auditor; and
(ii)
The Retainer has confirmed that such public accounting firm does not appear on
the list of persons associated with the Outside Auditor, which is contained in the
database system ("Pre-Approval Database") within the TDK intranet system.
The foregoing letter of confirmation shall be regularly renewed at least once every 12 months
and the manager of the Pre-Approval Database described in that Database shall update the list of
associated persons to reflect changes or modifications as reported by the Outside Auditor.
The types of services generally described in above explanation for audit fees, audit-related
fees and tax fees shall be pre-approved by the Board of Directors. Those services described are
provided for the sake of establishing general criteria as to the types of services requiring
pre-approval. The Board of Directors shall evaluate and determine whether or not to pre-approve
each application for such services.
TDK is prohibited from causing the Outside Auditor to provide, and the Outside Auditor is
prohibited from rendering such services generally described as follows: (i) Bookkeeping or other
services related to the accounting records or financial statements of the audit client; (ii)
Financial information systems design and implementation; (iii) Appraisal or valuation services,
fairness opinions or contribution-in-kind reports; (iv) Actuarial services; (v) Internal audit
outsourcing services; (vi) Management functions or human resources; (vii) Broker or dealer,
investment adviser or investment banking services; (viii) Legal services and expert services
unrelated to the audit; and (ix) Any other service that the Board of Directors determines, by
regulation, is impermissible. When such an application is received, the Board of Directors must
not pre-approve the application.
In accordance with the Sarbox Act and related SEC Rules, audit or non-audit services which do
not fit in with any of the types generally described in above explanation for audit fees,
audit-related fees and tax fees may have to be pre-approved by the Board of Directors. The Board
of Directors shall evaluate and determine whether or not to pre-approve each application for such
services.
TDK may engage the Outside Auditor to render an audit or non-audit service pursuant to
this policy without obtaining individual pre-approval by the Board of Directors, provided
that all of the following conditions are met:
(i)
the service to be rendered shall fall under any of the types listed in above
explanation for audit fees, audit-related fees and tax fees;
(ii)
the engagement to render the service shall commence within one year from the time
when the Board of Directors adopts this Policy;
(iii)
the fee for the service to be rendered shall be less than 20,000,000 yen
("Individual Fee Limit"); and
(iv)
the total amount of fees payable to the Outside Auditor by TDK on account of
non-audit services with respect to any fiscal year shall not exceed the total amount of
audit fees payable to the Outside Auditor by TDK with respect to such year ("Overall Fee
Limit").
- 78 -
Table of Contents
The Appointed Director must confirm whether an audit or non-audit service to be rendered by
the Outside Auditor meets the foregoing conditions. The Appointed Director also shall report to
the Board of Directors all audit and non-audit services in which the Outside Auditor is engaged in
accordance with this Section. The Board of Directors must appoint a director as the Appointed
Director and after the appointment the Appointed Director must be listed in the Pre-Approval
Database.
Any divisions or departments of TDK, which contemplate or attempt to receive audit or
non-audit services from an Outside Auditor or Non-Outside Auditor, shall report its intention and
submit designated information, using the Pre-Approval Database.
The Appointed Director must evaluate such audit or non-audit services to be rendered either by
the Outside Auditor or Non-Outside Auditor reported electronically through the Pre-Approval
Database and must confirm whether any given reported services requires pre-approval by the Board of
Directors. The Appointed Director shall request pre-approval to the Board of Directors if
pre-approval by the Board of Directors is required.
In making determination, the Board of Directors is required to consider the following:
(i)
Whether the Outside Auditor cannot function in the role of management;
(ii)
Whether the Outside Auditor cannot audit its own work; and
(iii)
Whether the Outside Auditor cannot serve in an advocacy role for its client.
The Board of Directors must not pre-approve, in the absence of strong countervailing
considerations, non-audit services proposed to be performed by the Outside Auditor if the total
amount of fees payable to the Outside Auditor by TDK on account of non-audit services with respect
to any fiscal year exceeds the total amount of audit fees payable to the Outside Auditor by TDK
with respect to such year.
Item 16D.
Exemptions from Listing Standards for Audit Committees
Not applicable.
Item 16E.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
None.
- 79 -
Table of Contents
PART 3
Item 17.
Financial Statements
Index of Consolidated Financial Statements of TDK Corporation and subsidiaries:
Page
Report of Independent Registered Public
Accounting Firm
81
Consolidated Balance Sheets as of March 31, 2005
and 2004
82
Consolidated Statements of Income
for the years ended March 31, 2005, 2004 and 2003
84
Consolidated Statements of Stockholders' Equity
for the years ended March 31, 2005, 2004 and 2003
85
Consolidated Statements of Cash Flows
for the years ended March 31, 2005, 2004 and 2003
86
Notes to Consolidated Financial Statements
87
Schedule for the years ended March 31, 2005, 2004 and 2003:
Schedule II
– Valuation and Qualifying Accounts
119
Schedules other than those listed above have been omitted as they are not applicable or the
information is presented in the consolidated financial statements and related notes.
Financial statements of 50 percent or less owned persons accounted for by the equity method
have been omitted as, in the aggregate, they do not meet the tests of a significant subsidiary at a
20 percent level as of or for the years ended March 31, 2005, 2004 and 2003.
- 80 -
Table of Contents
Report of Independent Registered Public Accounting Firm
The Board of Directors and Stockholders
TDK Corporation:
We have audited the consolidated financial statements of TDK Corporation and subsidiaries as
listed in the accompanying index. In connection with our audits of the consolidated financial
statements, we also have audited the financial statement schedule as listed in the accompanying
index. These consolidated financial statements and financial statement schedule are the
responsibility of the Company's management. Our responsibility is to express an opinion on these
consolidated financial statements and financial statement schedule based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a reasonable basis for our
opinion.
The Company declined to present segment information for each of the years in the three-year
period ended March 31, 2005. In our opinion, disclosures of segment and related information about
the different types of business activities in which the company engages and the different economic
environments in which it operates is required by U.S. generally accepted accounting principles.
The omission of segment information results in an incomplete presentation of the Company's
consolidated financial statements.
In our opinion, except for the omission of the segment information as discussed in the
preceding paragraph, the consolidated financial statements referred to above present fairly, in all
material respects, the financial position of TDK Corporation and subsidiaries as of March 31, 2005
and 2004, and the results of their operations and their cash flows for each of the years in the
three-year period ended March 31, 2005, in conformity with U.S. generally accepted accounting
principles. Also in our opinion, the related financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as a whole, presents fairly, in all
material respects, the information set forth therein.
The accompanying consolidated financial statements as of and for the year ended March 31,
2005, have been translated into United States dollars solely for the convenience of the reader. We
have audited the translation and, in our opinion, the consolidated financial statements expressed
in yen have been translated into United States dollars on the basis set forth in Note 2 to the
consolidated financial statements.
/s/ KPMG AZSA & Co.
Tokyo, Japan
June 15, 2005, except for the second paragraph of Note 22 which is June 29, 2005, and the
third paragraph of Note 22 which is as of July 19, 2005.
- 81 -
Table of Contents
Consolidated balance sheets
As of March 31, 2005 and 2004
U.S. Dollars
Yen
(Thousands)
(Millions)
(Note 2)
ASSET
2005
2004
2005
Current assets:
Cash and cash equivalents
¥
251,508
227,155
$
2,350,542
Marketable securities (Note 4)
1,609
402
15,037
Trade receivables (Note 19):
Notes
6,133
6,431
57,317
Accounts
144,426
133,900
1,349,776
Allowance for doubtful receivables
(2,560
)
(2,000
)
(23,925
)
Net trade receivables
147,999
138,331
1,383,168
Inventories (Note 5)
74,924
77,301
700,224
Income tax receivables (Note 7)
204
763
1,907
Assets held for sale (Note 20)
993
—
9,280
Prepaid expenses and other current assets (Note 7)
33,366
31,821
311,832
Total current assets
510,603
475,773
4,771,990
Investments in securities
(Note 4)
22,698
18,381
212,131
Property, plant and equipment, at cost:
Land
20,097
20,464
187,822
Buildings
181,581
176,256
1,697,019
Machinery and equipment
445,636
471,247
4,164,823
Construction in progress
15,206
10,312
142,112
662,520
678,279
6,191,776
Less accumulated depreciation
(445,551
)
(469,334
)
(4,164,028
)
Net property, plant and equipment
216,969
208,945
2,027,748
Goodwill
(Note 17)
9,210
10,029
86,075
Intangible assets
(Note 17)
13,247
15,027
123,804
Deferred income taxes
(Note 7)
8,633
34,140
80,682
Other assets
(Notes 8 and 12)
26,641
8,024
248,981
¥
808,001
770,319
$
7,551,411
See accompanying notes to consolidated financial statements.
- 82 -
Table of Contents
U.S. Dollars
Yen
(Thousands)
(Millions)
(Note 2)
LIABILITIES AND STOCKHOLDERS' EQUITY
2005
2004
2005
Current liabilities:
Short-term debt (Note 6)
¥
—
315
$
—
Current installments of long-term debt (Note 6)
103
101
963
Trade payables:
Notes
638
635
5,963
Accounts
61,454
59,282
574,336
Accrued salaries and wages
12,915
12,085
120,701
Accrued expenses
31,065
33,449
290,327
Income taxes payables (Note 7)
19,283
4,689
180,215
Liabilities held for sale (Note 20)
92
—
860
Other current liabilities (Note 7)
5,307
4,662
49,598
Total current liabilities
130,857
115,218
1,222,963
Long-term debt, excluding current installments
(Note 6)
81
27
757
Retirement and severance benefits
(Note 8)
28,839
73,521
269,523
Deferred income taxes
(Note 7)
751
215
7,019
Other noncurrent liabilities
3,244
1,843
30,318
Commitments and contingent liabilities
(Notes 12 and 13)
—
—
—
Total liabilities
163,772
190,824
1,530,580
Minority interests
5,162
3,276
48,242
Stockholders' equity :
Common stock :
Authorized 480,000,000 shares;
issued 133,189,659 shares in 2005 and 2004;
outstanding 132,244,587 shares in 2005
and 132,409,452 shares in 2004
32,641
32,641
305,056
Additional paid-in capital
63,051
63,051
589,262
Legal reserve (Note 9)
16,918
16,497
158,112
Retained earnings (Note 9)
585,557
560,756
5,472,495
Accumulated other comprehensive income (loss) (Notes 7, 8 and 11)
(51,657
)
(90,387
)
(482,776
)
Treasury stock at cost; 945,072 shares in 2005
and 780,207 shares in 2004 (Note 10)
(7,443
)
(6,339
)
(69,560
)
Total stockholders' equity
639,067
576,219
5,972,589
¥
808,001
770,319
$
7,551,411
- 83 -
Table of Contents
Consolidated statements of income
For the years ended March 31, 2005, 2004 and 2003
U.S. Dollars
Yen
(Thousands)
(Millions)
(Note 2)
2005
2004
2003
2005
Net sales (Note 19)
¥
657,853
655,792
604,865
$
6,148,159
Cost of sales
484,323
476,407
459,552
4,526,383
Gross profit
173,530
179,385
145,313
1,621,776
Selling, general and administrative expenses
119,886
122,875
115,569
1,120,430
Transfer to the government of the substitutional
portion of Employees' Pension Fund (Note 8):
Subsidy from the government
(33,533
)
—
—
(313,392
)
Loss on settlement
27,347
—
—
255,579
Restructuring cost (Note 16)
—
—
5,197
—
Operating income
59,830
56,510
24,547
559,159
Other income (deductions):
Interest and dividend income
1,692
1,189
1,379
15,813
Interest expense
(967
)
(323
)
(577
)
(9,037
)
Equity in earnings (loss) of affiliates
1,765
1,639
361
16,495
Loss on
securities, net (Note 4)
(142
)
(1,093
)
(3,298
)
(1,327
)
Foreign exchange gain (loss)
(856
)
(3,064
)
(1,479
)
(8,000
)
Other — net
(594
)
989
(381
)
(5,552
)
898
(663
)
(3,995
)
8,392
Income from continuing operations
before income taxes
60,728
55,847
20,552
567,551
Income taxes
(Note 7)
23,284
12,133
6,193
217,607
Income from continuing operations
before minority interests
37,444
43,714
14,359
349,944
Minority interests, net of tax
479
359
766
4,477
Income from continuing operations
36,965
43,355
13,593
345,467
Discontinued operations (Note 20):
Loss from operations of discontinued TSC
(including loss on disposal of ¥454 million in 2005)
3,509
244
2,471
32,794
Income tax expense (benefit)
156
1,010
(897
)
1,458
Loss from discontinued operations
3,665
1,254
1,574
34,252
Net income
¥
33,300
42,101
12,019
$
311,215
Yen (except number of
U.S. Dollars
common shares outstanding)
(Note 2)
Amounts per share:
Income from continuing operations per share (Note 18):
Basic
¥
279.41
327.27
102.42
$
2.61
Diluted
279.25
327.15
102.42
2.61
Loss from discontinued operations per share (Note 18):
Basic
¥
(27.70
)
(9.47
)
(11.86
)
$
(0.26
)
Diluted
(27.69
)
(9.46
)
(11.86
)
(0.26
)
Net income per share (Note 18):
Basic
¥
251.71
317.80
90.56
$
2.35
Diluted
251.56
317.69
90.56
2.35
Weighted average basic common shares
outstanding (in thousands) (Note 18)
132,293
132,475
132,716
Weighted average diluted common shares
outstanding (in thousands) (Note 18)
132,376
132,523
132,716
Cash dividends paid during the year (Note 9)
¥
60.00
50.00
45.00
$
0.56
See accompanying notes to consolidated financial statements.
- 84 -
Table of Contents
Consolidated statements of stockholders' equity
For the years ended March 31, 2005, 2004 and 2003
U.S. Dollars
Yen
(Thousands)
(Millions)
(Note 2)
2005
2004
2003
2005
Common stock:
Balance at beginning of period
¥
32,641
32,641
32,641
$
305,056
Balance at end of period
32,641
32,641
32,641
305,056
Additional paid-in capital:
Balance at beginning of period
63,051
63,051
63,051
589,262
Balance at end of period
63,051
63,051
63,051
589,262
Legal reserve
(Note 9)
:
Balance at beginning of period
16,497
15,953
15,683
154,177
Transferred from retained earnings
421
544
270
3,935
Balance at end of period
16,918
16,497
15,953
158,112
Retained earnings
(Note 9)
:
Balance at beginning of period
560,756
525,919
520,143
5,240,710
Net income
33,300
42,101
12,019
311,215
Cash dividends
(7,938
)
(6,625
)
(5,973
)
(74,187
)
Losses on sales of treasury stock
(140
)
(95
)
—
(1,308
)
Transferred to legal reserve
(421
)
(544
)
(270
)
(3,935
)
Balance at end of period
585,557
560,756
525,919
5,472,495
Accumulated other comprehensive income (loss)
(Notes 7,8 and 11)
:
Balance at beginning of period
(90,387
)
(78,824
)
(43,999
)
(844,738
)
Other comprehensive income (loss) for the period, net of tax
38,730
(11,563
)
(34,825
)
361,962
Balance at end of period
(51,657
)
(90,387
)
(78,824
)
(482,776
)
Treasury stock
(Note 10)
:
Balance at beginning of period
(6,339
)
(4,855
)
(3,592
)
(59,243
)
Acquisition of treasury stock
(1,672
)
(1,865
)
(1,263
)
(15,626
)
Exercise of stock option
568
381
—
5,309
Balance at end of period
(7,443
)
(6,339
)
(4,855
)
(69,560
)
Total stockholders' equity
¥
639,067
576,219
553,885
$
5,972,589
Disclosure of comprehensive income (loss):
Net income for the period
¥
33,300
42,101
12,019
$
311,215
Other comprehensive income (loss) for the period, net of tax (Note 11)
38,730
(11,563
)
(34,825
)
361,962
Total comprehensive income (loss) for the period
¥
72,030
30,538
(22,806
)
$
673,177
See accompanying notes to consolidated financial statements.
- 85 -
Table of Contents
Consolidated statements of cash flows
For the years ended March 31, 2005, 2004 and 2003
U.S. Dollars
Yen
(Thousands)
(Millions)
(Note 2)
2005
2004
2003
2005
Cash flows from operating activities:
Net income
¥
33,300
42,101
12,019
$
311,215
Loss from discontinued operations, net of tax
3,665
1,254
1,574
34,252
Income from continuing operations
36,965
43,355
13,593
345,467
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization
52,806
50,726
57,132
493,514
Loss on disposal of property and equipment
1,190
1,363
4,589
11,121
Deferred income taxes
(5,532
)
1,858
4,913
(51,701
)
Loss (gain) on securities, net
142
1,093
3,298
1,327
Gain on sale of a subsidiary
(1,799
)
(567
)
—
(16,813
)
Changes in assets and liabilities:
Increase in trade receivables
(7,343
)
(7,680
)
(2,654
)
(68,626
)
Decrease (increase) in inventories
3,461
(7,868
)
13,533
32,346
Increase in trade payables
245
8,200
6,742
2,290
Increase (decrease) in accrued expenses
(2,496
)
8,878
(5,226
)
(23,327
)
Increase (decrease) in income taxes payables, net
14,464
5,704
2,901
135,178
Increase (decrease) in retirement and severance benefits, net
2,519
9,285
7,639
23,542
Other — net
(1,040
)
(527
)
(544
)
(9,720
)
Net cash provided by operating activities
93,582
113,820
105,916
874,598
Cash flows from investing activities:
Capital expenditures
(61,005
)
(44,471
)
(41,026
)
(570,140
)
Proceeds from sale and maturities of investments in securities
1,788
1,814
1,511
16,710
Payment for purchase of investments in securities
(2,424
)
(1
)
(700
)
(22,654
)
Payment for purchase of other investments
(221
)
(442
)
(6,606
)
(2,065
)
Proceeds from sales of property, plant and equipment
999
4,299
4,590
9,336
Acquisition of minority interests
—
(366
)
(3,967
)
—
Proceeds from sale of a subsidiary
—
1,523
—
—
Other — net
—
(3
)
(22
)
—
Net cash used in investing activities
(60,863
)
(37,647
)
(46,220
)
(568,813
)
Cash flows from financing activities:
Proceeds from long-term debt
218
69
211
2,037
Repayment of long-term debt
(164
)
(479
)
(646
)
(1,533
)
Increase (decrease) in short-term debt, net
(330
)
(1,047
)
(254
)
(3,084
)
Sale (purchase) of treasury stock, net
(1,244
)
(1,579
)
(1,263
)
(11,626
)
Dividends paid
(7,938
)
(6,625
)
(5,973
)
(74,187
)
Net cash used in financing activities
(9,458
)
(9,661
)
(7,925
)
(88,393
)
Net cash provided by (used in) discontinued operations
(1,625
)
761
(1,983
)
(15,187
)
Effect of exchange rate changes on cash and cash equivalents
2,717
(10,669
)
(4,998
)
25,393
Net increase in cash and cash equivalents
24,353
56,604
44,790
227,598
Cash and cash equivalents at beginning of period
227,155
170,551
125,761
2,122,944
Cash and cash equivalents at end of period
¥
251,508
227,155
170,551
$
2,350,542
See accompanying notes to consolidated financial statements.
- 86 -
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Nature of Operations and Summary of Significant Accounting Policies
(a) Nature of Operations
TDK is a multinational manufacturer of ferrite products and a producer of inductor, ceramic
capacitors, magnetic head and other components and recording media and systems. TDK, a Tokyo-based
company founded in 1935 to commercialize ferrite, now manufactures and sells a broad range of
products. TDK's two business segments are electronic materials and components, and recording media
and systems, which accounted for 83% and 17% of net sales, respectively, for the year ended March
31, 2005. The main products which are manufactured and sold by the two business segments are as
follows:
a) Electronic materials and components products:
Ferrite cores, Ceramic capacitors, High-frequency components, Inductors, and GMR heads
b) Recording media and systems products:
Audio tapes, Video tapes, CD-Rs, MDs, and DVDs
TDK sells electronic materials and components products to electric and communication equipment
manufacturers and audio equipment manufacturers, mainly in Asia and Japan, and recording media and
systems products to distribution agents and audio equipment manufacturers, mainly in Japan, Europe,
and North America.
(b) Basis of Presentation
TDK and its domestic subsidiaries maintain their books of account in conformity with financial
accounting standards of Japan, and its foreign subsidiaries in conformity with those of the
countries of their domicile.
The consolidated financial statements presented herein reflect certain adjustments, not
recorded on the primary books of TDK and subsidiaries, to present the financial position, results
of operations, and cash flows in conformity with U.S. generally accepted accounting principles (the
"U.S. GAAP"). Such adjustments relate principally to accounting for retirement and severance
benefits and impairment of long-lived assets.
(c) Consolidation Policy
The consolidated financial statements include the accounts of TDK, its subsidiaries and those
variable interest entities where TDK is the primary beneficiary under
FASB Interpretation No. 46
(revised December 2003) ("FIN 46R"), "Consolidation of Variable Interest Entities". All
significant intercompany accounts and transactions have been eliminated in consolidation.
The investments in affiliates in which TDK's ownership is 20% to 50% and where TDK exercises
significant influence over their operating and financial policies are accounted for by the equity
method. All significant intercompany profits from these affiliates have been eliminated.
(d) Cash Equivalents
Cash equivalents include all highly liquid debt instruments purchased with an original
maturity of three months or less.
(e) Allowance for Doubtful Receivables
The allowance for doubtful receivables is TDK's best estimate of the amount of probable credit
losses in TDK's existing trade receivables. An additional reserve for individual receivables is
recorded when TDK becomes aware of a customer's inability to
meet its financial obligations, such as in the case of bankruptcy filings or deterioration in
a customer's operating results or financial position. If customer circumstances change, estimates
of the recoverability of receivables would be further adjusted.
- 87 -
Table of Contents
(f) Investments in Securities
TDK classifies its debt and equity securities into one of three categories: trading,
available-for-sale, or held-to-maturity. Trading securities are bought and held principally for
the purpose of selling them in the near term. Held-to-maturity securities are those securities in
which TDK has the ability and intent to hold the security until maturity. All securities not
included in trading or held-to-maturity are classified as available-for-sale.
Trading and available-for-sale securities are recorded at fair value. Held-to-maturity
securities are recorded at amortized cost, adjusted for the amortization or accretion of premiums
or discounts. Unrealized holding gains and losses on trading securities are included in earnings.
Unrealized holding gains and losses, net of the related tax effect, on available-for-sale
securities are excluded from earnings and are reported as a separate component of accumulated other
comprehensive income (loss) until realized. As of March 31, 2005 and 2004, TDK did not hold any
trading or held-to-maturity securities. Available-for sale securities, which mature or are
expected to be sold in less than one year, are classified as current assets.
A decline in the fair value of any available-for-sale security below cost that is deemed to be
other-than-temporary results in a reduction in carrying amount to fair value. The impairment is
charged to earnings and a new cost basis for the security is established. To determine whether an
impairment is other-than-temporary, TDK periodically reviews the fair value of available-for-sale
securities for possible impairment by taking into consideration the financial and operating
conditions of the issuer, the general market conditions in the issuer's industry, degree and period
of the decline in fair value and other relevant factors.
Nonmarketable securities are recorded at cost, as fair value is not readily determinable. TDK
periodically evaluates whether an event or change in circumstances may have a significant adverse
effect on the fair value of the investment. Factors considered in accessing whether an indication
of impairment exists include the financial and operating conditions of the issuer, the general
market conditions in the issuer's industry and other relevant factors. If an indication of
impairment is present, TDK estimates the fair value of nonmarketable securities. If the fair value
is less than cost and the impairment is determined to be other-than-temporary, a nonmarketable
security is written down to its impaired value through a charge to earnings.
(g) Inventories
Inventories are stated at the lower of cost or market. Cost is determined principally by the
average cost method.
(h) Property, Plant and Equipment
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 the following estimated useful lives:
Buildings
3 to 60 years
Machinery and equipment
2 to 22 years
(i) 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.
Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that includes the enactment date. TDK uses a
specific identification method to release the residual tax effects associated with components of
accumulated other comprehensive income resulting from a change in tax law or rate.
- 88 -
Table of Contents
(j) Stock Option Plan
In December 2002, the FASB issued Statement of Financial Accounting Standards No. 148 ("SFAS
148"), "Accounting for Stock-Based Compensation — Transition and Disclosure", which amends FASB
Statement No. 123 ("SFAS 123"), "Accounting for Stock-Based Compensation". SFAS 148 provides
alternative methods of transition for a voluntary change to the fair value based method of
accounting for stock-based employee compensation. In addition, SAFS 148 amends the disclosure
requirements of SFAS 123 to require more prominent and more frequent disclosures in financial
statements about the effects of stock-based compensation. However, it gives an entity a choice of
recognizing related compensation expense by adopting the fair value method or to continue to
measure compensation using the intrinsic value-based method prescribed under Accounting Principles
Board Opinion No. 25 ("APB 25"), "Accounting for Stock Issued to Employees", the former standard.
TDK has chosen to use the measurement principle prescribed by APB 25. As such, stock-based
compensation cost is recognized by TDK only if the market price of the underlying common stock
exceeds the exercise price on the date of grant. Accordingly, no stock option related compensation
cost has been recognized in fiscal 2005, fiscal 2004 and fiscal 2003 for TDK's stock based
compensation plan.
The following table illustrates the effects on both income from continuing operations and net
income if the fair-value-based method had been applied to all outstanding and unvested stock based
awards with such costs recognized ratably over the vesting period of the underlying instruments.
Yen
U.S. Dollars
(Millions)
(Thousands)
2005
2004
2003
2005
Income from
continuing
operations, as
reported
¥36,965
43,355
13,593
$
345,467
Deduct total
stock-based
employee
compensation
expense determined
under
fair-value-based
method for all
awards, net of tax
(438
)
(330
)
(239
)
(4,093
)
Pro forma income
from continuing
operations
¥36,527
43,025
13,354
$
341,374
Yen
U.S. Dollars
Basic income from continuing
operations per share:
As reported
¥
279.41
327.27
102.42
$
2.61
Pro forma
276.11
324.78
100.62
2.58
Diluted income from continuing
operations per share:
As reported
¥
279.25
327.15
102.42
$
2.61
Pro forma
275.98
324.74
100.62
2.58
- 89 -
Table of Contents
Yen
U.S. Dollars
(Millions)
(Thousands)
2005
2004
2003
2005
Net income, as reported
¥
33,300
42,101
12,019
$
311,215
Deduct total
stock-based employee
compensation expense
determined under
fair-value-based
method for all awards,
net of tax
(438
)
(330
)
(239
)
(4,093
)
Pro forma net income
¥
32,862
41,771
11,780
$
307,122
Yen
U.S. Dollars
Basic net income per share:
As reported
¥
251.71
317.80
90.56
$
2.35
Pro forma
248.40
315.31
88.76
2.32
Diluted net income per share:
As reported
¥
251.56
317.69
90.56
$
2.35
Pro forma
248.29
315.27
88.76
2.32
(k) Research and Development Expenses
Research and development costs are expensed as incurred.
(l) Advertising Costs
Advertising costs are expensed as incurred.
(m) Shipping and Handling Fees and Costs
Shipping and handling costs amounted to ¥13,397 million ($125,206 thousand), ¥12,163 million
and ¥11,305 million for the years ended March 31, 2005, 2004 and 2003, respectively, and are
included in selling, general and administrative expenses in the consolidated statements of income.
(n) Foreign Currency Translation
Foreign currency financial statements have been translated in accordance with Statement of
Financial Accounting Standards No. 52 ("SFAS 52"), "Foreign Currency Translation". Under SFAS 52,
the assets and liabilities of TDK's subsidiaries located outside Japan are translated into Japanese
yen at the rates of exchange in effect at the balance sheet date. Revenue and expense items are
translated at the average exchange rates prevailing during the year. Gains and losses resulting
from foreign currency transactions are included in other income (deductions), and those resulting
from translation of financial statements are excluded from the statements of income and are
accumulated in stockholders' equity as a component of accumulated other comprehensive income
(loss).
(o) Use of Estimates
Management of TDK has made a number of estimates and assumptions relating to the reporting of
assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities
to prepare these consolidated financial statements in conformity with the U.S. GAAP. Significant
items subject to such estimates and assumptions include the valuation of intangible assets,
property, plant and equipment, trade receivables, inventories, and deferred income tax assets, and
assumptions related to the estimation of actuarial determined employee benefit obligations. Actual
results could differ from those estimates.
- 90 -
Table of Contents
(p) Accounting for the Impairment or Disposal of Long-Lived Assets
Property, plant and equipment and certain identifiable intangibles with finite useful lives
are reviewed for impairment whenever events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. Recoverability of assets to be held and used is
measured by a comparison of the carrying amount of an asset to future net cash flows (undiscounted
and without interest charges) expected to be generated by the asset. If such assets are considered
to be impaired, the impairment to be recognized is measured by the amount by which the carrying
amount of the assets exceed the fair value of the assets. Assets to be disposed of are reported at
the lower of the carrying amount or fair value less costs to sell.
(q) Goodwill and Other Intangible Assets
Goodwill is not amortized, but instead is tested for impairment at least annually or more
frequently if certain indicators arise. Intangible assets with finite useful lives are amortized
over their respective estimated useful lives. Intangible assets determined to have an indefinite
useful life are not amortized, but instead are tested for impairment until the life is determined
to no longer be indefinite.
TDK conducts its annual impairment test at the end of each fiscal year.
(r) Derivative Financial Instruments
TDK has elected not to apply hedge accounting. Accordingly, changes in the fair value of
derivatives are recognized in earnings in the period of the changes.
(s) Net Income per Share
Basic net income per share has been computed by dividing net income available to common
stockholders by the weighted-average number of common shares outstanding during each year. Diluted
net income per share reflects the potential dilution that could occur if securities or other
contracts to issue common stock were exercised or converted into common stock or resulted in the
issuance of common stock of TDK. Stock options were not included in the calculation of diluted
earnings per share for the years ended March 31, 2003 as their effect would be antidilutive. For
the years ended March 31, 2005 and 2004, stock options to purchase 404,700 and 170,400 shares,
respectively, were excluded from the calculation of diluted earnings per share as the effect would
have been antidilutive.
(t) Revenue Recognition
TDK generates revenue principally through the sale of electronic materials & components and
recording media & systems under separate contractual arrangements for each. TDK recognizes revenue
when persuasive evidence of an arrangement exists, delivery has occurred and title and risk of loss
have been transferred to the customer, the sales price is fixed or determinable, and collectibility
is probable.
Revenue from sales of electronic materials & components including electronic materials,
electronic devices and recording devices is recognized when the products are received by customers
based on the free-on board destination sales term. With regards to sales of electronic materials &
components, TDK's policy is not to accept product returns unless the products are defective. The
conditions of acceptance are governed by the terms of the contract or customer arrangement and
those not meeting the predetermined specification are not recorded as revenue.
Revenue from sales of recording media & systems products such as videotape and DVDs is also
recognized when the products are received by customers based on the free-on board destination sales
term.
TDK offers sales incentives through various programs to certain resellers and retailers.
These sales incentives include product discounts, volume-based discounts, marketing development
funds ("MDFs"), rebates and coupons, and are accounted for in accordance with the Emerging Issues
Task Force issue 01-9 "Accounting for Consideration Given by a Vendor to a Customer (Including a
Reseller of Vendor's Product)". These sales incentives totaled to ¥14,292 million, ¥15,089 million
and ¥15,031 million for the years ended March 31, 2005,
- 91 -
Table of Contents
2004 and 2003, respectively.
A number of product discounts are based on a certain percentage off the invoice price
predetermined by spot contracts or based on contractually agreed upon amounts with resellers and
retailers. Product discounts are recognized as a reduction of revenue at the time the related
revenue is recognized and amounted to ¥7,194 million, ¥5,993 million and ¥5,214 million for the
years ended March 31, 2005, 2004 and 2003, respectively.
Volume-based discounts are provided only if the resellers and retailers achieve a specified
cumulative level of revenue transactions in a year or less period. Liabilities are recognized as a
reduction of revenue for the expected sales incentive at the time the related revenue is recognized
and are initially based on the estimation of sales volume by using historical experience on an
individual customer basis. Estimates of expected sales incentives are evaluated and adjusted
periodically based on actual revenue transactions and forecasts for the balance of the year or
incentive period. Volume-based discounts recognized as a reduction of revenue amounted to ¥3,005
million, ¥2,982 million and ¥2,918 million for the years ended March 31, 2005, 2004 and 2003,
respectively.
MDFs are provided to certain resellers and retailers as a contribution to or a sponsored fund
for customers' marketing programs, such as customers' coupons, catalog, sales contests and
advertisements, mostly in the form of a subsidy. Under this program, we do not receive an
identifiable benefit sufficiently separable from our customers. Accordingly, MDFs are accounted
for as a reduction of revenue based on the annual contract or at the time TDK has incurred the
obligation, if earlier, and amounted to ¥2,631 million, ¥2,923 million and ¥3,114 million for the
years ended March 31, 2005, 2004 and 2003, respectively.
Consumer promotions mainly consist of coupons and mail-in rebates offered to end users, who
are reimbursed by TDK to retailers or end users for the coupons or mail-in rebates redeemed.
Liabilities are recognized at the time related revenue is recognized (or at the time of the offer
if the sale to retailers occurs before the offer) for the expected number of coupons or mail-in
rebates to be redeemed. TDK uses historical rates of redemption on similar offers for similar
products to estimate redemption rates for current incentive offerings. Consumer promotions
recognized as a reduction of revenue amounted to ¥1,061 million, ¥2,446 million and ¥2,830 million
for the years ended March 31, 2005, 2004 and 2003, respectively.
TDK also provides slotting fees paid to certain retailers for putting TDK products at
attractive areas or shelves in the store. Slotting fees are recognized as a reduction of revenue
at the time TDK has incurred the obligation. Slotting fees recognized as a reduction of revenue
amounted to ¥205 million, ¥451 million and ¥598 million for the years ended March 31, 2005, 2004
and 2003, respectively.
Additionally, TDK has advertising programs with certain resellers and retailers where TDK
agrees to reimburse them for advertising cost incurred by them to put TDK products on their flyers,
catalogs and billboards. TDK receives an identifiable benefit (advertising) in return for the
consideration and that benefit is sufficiently separable because TDK could have purchased that
advertising from other parties. Also, TDK can reasonably estimate the fair value of the benefit
through obtaining sufficient evidence from the resellers and retailers in the form of the invoice
issued by the third party providing the service to the resellers and retailers. Therefore, such
advertising programs are expensed as selling, general and administrative expenses at the time TDK
has incurred the obligation and amounted to ¥196 million, ¥293 million and ¥357 million for the
years ended March 31, 2005, 2004 and 2003, respectively.
TDK allows limited right of returns in certain cases and reduces revenue for estimated future
returns based upon historical experience at the time the related revenue is recorded.
No warranties are offered on TDK's products.
- 92 -
Table of Contents
(u) New Accounting Standards Not Yet Adopted
In March 2004, the Emerging Issues Task Force reached a consensus on Issue 03-1 ("EITF 03-1"),
"The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments". EITF
03-1 provides guidance on other-than-temporary impairment models for marketable debt and equity
securities accounted for under Statement of Financial Accounting Standards No. 115 ("SFAS 115"),
"Accounting for Certain Investments in Debt and Equity Securities", and nonmarketable equity
securities accounted for under the cost method. The EITF developed a basic three-step model to
evaluate whether an investment is other-than-temporarily impaired. The FASB issued a FASB Staff
Position EITF 03-1-1 in September 2004 which delayed the effective date of the recognition and
measurement provisions of EITF 03-1. The adoption of EITF 03-1 is not expected to have a material
effect on TDK's consolidated results of operations and financial position.
In December 2004, the FASB issued Statement of Financial Accounting Standards No. 123 (revised
2004), "Share Based Payment" ("SFAS 123R"). SFAS 123R is a revision of SFAS 123, "Accounting for
Stock Based Compensation", and supersedes APB 25. SFAS 123R requires TDK to measure the cost of
employee services received in exchange for equity awards based on the grant date fair value of the
awards. The cost will be recognized as compensation expense over the vesting period of the awards.
In April 2005, the Securities and Exchange Commission deferred the effective date of SFAS 123R to
the beginning of the first annual period after June 15, 2005. TDK is currently evaluating the
effect that the adoption of SFAS 123R will have on TDK's consolidated financial position and
results of operations.
In November 2004, the FASB issued Statement of Financial Accounting Standards No. 151 ("SFAS
151"), "Inventory Costs – an amendment of Accounting Research Bulletin No. 43 ("ARB 43"), Chapter
4". SFAS 151 amends the guidance in ARB 43, Chapter 4, "Inventory Pricing", to clarify the
accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted
material (spoilage). SFAS 151 requires that items such as idle facility expense, excessive
spoilage, double freight and rehandling costs be recognized as current-period charges regardless of
whether they meet the criterion of "so abnormal" as stated in ARB 43. In addition, SFAS 151
requires that allocation of fixed production overheads to the costs of conversion be based on the
normal capacity of the production facilities. SFAS 151 is effective for inventory costs incurred
in fiscal periods beginning after June 15, 2005. TDK does not expect the adoption of SFAS 151 to
have a material effect on TDK's consolidated financial position and results of operations.
(v) Reclassifications
Certain reclassifications principally relating to discontinued operations, have been made to
the prior year's consolidated financial statements to conform to the presentation used for the year
ended March 31, 2005.
2. Financial Statement Translation
The consolidated financial statements are expressed in Japanese yen, the functional currency
of TDK. Supplementally, the Japanese yen amounts as of and for the year ended March 31, 2005, have
also been translated into U.S. dollar amounts, solely for the convenience of the reader, at the
rate of ¥107=U.S.$1, the approximate exchange rate on the Tokyo Foreign Exchange Market on March
31, 2005. This translation should not be construed as a representation that the amounts shown
could be converted into U.S. dollars at such rate.
- 93 -
Table of Contents
3. Foreign Operations
Amounts included in the consolidated financial statements relating to subsidiaries operating
in foreign countries are summarized as follows:
U.S. Dollars
Yen (Millions)
(Thousands)
2005
2004
2003
2005
Net assets
¥
360,925
318,915
304,645
$
3,373,131
Net sales
498,366
494,184
432,048
4,657,626
Net income
17,362
38,731
10,675
162,262
4. Marketable Securities and Investments in Securities
Marketable securities and investments in securities at March 31, 2005 and 2004, are as
follows:
U.S. Dollars
Yen (Millions)
(Thousands)
2005
2004
2005
Short-term marketable securities
¥
1,609
402
$
15,037
Long-term marketable securities
7,094
4,535
66,299
Nonmarketable securities
1,555
419
14,533
Investments in affiliates
14,049
13,427
131,299
¥
24,307
18,783
$
227,168
Marketable securities and investments in securities include available-for-sale securities.
Information with respect to such securities at March 31, 2005 and 2004, is as follows:
As of March 31, 2005
Gross
Gross
Unrealized
Unrealized
Holding
Holding
Yen (Millions):
Cost
Gains
Losses
Fair Value
Equity securities
¥ 5,951
1,054
—
7,005
Debt securities
1,698
—
—
1,698
¥ 7,649
1,054
—
8,703
As of March 31, 2004
Gross
Gross
Unrealized
Unrealized
Holding
Holding
Yen (Millions):
Cost
Gains
Losses
Fair Value
Equity securities
¥ 2,782
1,054
—
3,836
Debt securities
1,101
—
—
1,101
¥ 3,883
1,054
—
4,937
As of March 31, 2005
Gross
Gross
Unrealized
Unrealized
Holding
Holding
U.S. Dollars (Thousands):
Cost
Gains
Losses
Fair Value
Equity securities
$
55,617
9,850
—
65,467
Debt securities
15,869
—
—
15,869
$
71,486
9,850
—
81,336
Debt securities classified as available-for-sale at March 31, 2005 mature in fiscal 2006
through 2008 (weighted average remaining term of 1.9 years).
- 94 -
Table of Contents
The proceeds from sale and settlement of available-for-sale securities are ¥1,788 million
($16,710 thousand), ¥1,814 million and ¥1,511 million for the years ended March 31, 2005, 2004 and
2003, respectively. The gross realized gains on the sale and settlement of available-for-sale
securities are ¥377 million ($3,523 thousand), ¥135 million and ¥4 million for the years ended
March 31, 2005, 2004 and 2003, respectively. TDK recorded a write-down of ¥519 million ($4,850
thousand), ¥1,228 million and ¥3,302 million on certain available-for-sale securities and
nonmarketable securities representing other-than-temporary declines in the fair value of the
available-for-sale securities for the years ended March 31, 2005, 2004 and 2003, respectively.
The aggregate cost of nonmarketable securities accounted for under the cost method at March
31, 2005 and 2004 totaled ¥1,555 million ($14,533 thousand) and ¥419 million, respectively, and, as
of March 31, 2005 and 2004, those securities were not evaluated for impairment because (a) TDK did
not estimate the fair value of those investments as it was not practicable to estimate the fair
value of the investment and (b) TDK did not identify any events or changes in circumstances that
might have had significant adverse effect on the fair value of those investments.
Investments in affiliates accounted for by the equity method consist of 26.1% of the common
stock of Semiconductor Energy Laboratory Co., Ltd., a research and development company, 50.0% of
the common stock of Tokyo Magnetic Printing Co., Ltd., a magnetic products manufacturing company,
and four other affiliated companies, collectively, which are not significant. The unamortized
amounts of goodwill related to affiliated companies were ¥1,231 million ($11,505 thousand) as of
both March 31, 2005 and 2004. This equity-method goodwill is not amortized, but is analyzed for
impairment at least annually.
As of March 31, 2005 and 2004, certain debt securities in the amount of ¥1,695 million and
¥699 million, respectively were pledged as collateral for extended custom duty payments to Tokyo
Customs.
5. Inventories
Inventories at March 31, 2005 and 2004, are summarized as follows:
Yen
U.S. Dollars
(Millions)
(Thousands)
2005
2004
2005
Finished goods
¥ 30,819
34,104
$
288,028
Work in process
21,633
21,351
202,177
Raw materials
22,472
21,846
210,019
¥ 74,924
77,301
$
700,224
The cost elements for finished goods and work in process include direct costs for materials
such as primary materials and purchased semi-finished products, direct labor costs such as basic
salaries, bonuses, and legal welfare expenses, direct costs such as expenses paid to
subcontractors, and indirect manufacturing costs comprising material costs, labor costs and other
overhead costs.
6. Short-Term and Long-Term Debt
Short-term debt and weighted average interest rates at March 31, 2005 and 2004, are as
follows:
Yen
U.S. Dollars
Weighted average
(Millions)
(Thousands)
interest rate
2005
2004
2005
2005
2004
Short-term bank loans
¥ —
315
$
—
—
%
1.36
%
At March 31, 2005, unused short-term credit facilities for issuance of commercial paper
amounted to ¥32,485 million ($303,598 thousand).
- 95 -
Table of Contents
Long-term debt at March 31, 2005 and 2004, is set forth below:
Yen
U.S. Dollars
(Millions)
(Thousands)
2005
2004
2005
Lease obligation
(weighted average: 2005 — 4.05%,
2004 — 4.25%)
¥
184
128
$
1,720
184
128
1,720
Less current installments
103
101
963
¥
81
27
$
757
The aggregate annual maturities of long-term debt outstanding at March 31, 2005, are as
follows:
U.S. Dollars
Yen (Millions)
(Thousands)
Year ending March 31,
2006
¥
103
$
963
2007
53
495
2008
21
196
2009
6
56
2010
1
10
¥
184
$
1,720
Short-term and long-term bank loans were made under general agreements that provide that under
certain circumstances security and guarantees for present and future indebtedness will be given
upon request of the bank, and that the bank shall have the right, as the obligations become due, or
in the event of their default, to offset cash deposits against such obligations due to the bank.
TDK's short-term and long-term debts placed with financial institutions were unsecured.
Further, no assets of TDK were subject to mortgage, pledge or lien pursuant to our short-term and
long-term debt agreements.
There were no debt covenants, or cross-default provisions under TDK's financing arrangements.
Furthermore, there were no subsidiary level dividend restrictions under the financing arrangements.
7. Income Taxes
TDK and its domestic subsidiaries are subject to a national corporate tax of 30%, an
inhabitants tax of between 5.2% and 6.2% and a deductible enterprise tax of between 7.7% and 8.0 %,
which in the aggregate resulted in a statutory rate of approximately 40% for the year ended March
31,2005. For the years ended March 31, 2004 and 2003, the deductible enterprise tax rate was
between 9.6% and 10.1%, which in the aggregate resulted in statutory rate of approximately 41%.
Amendments to Japanese tax regulations were enacted into law on March 24, 2003. As a result
of this amendment, the statutory income tax rate was reduced from approximately 41% to 40%
effective from April 1, 2004. Current income taxes were calculated at the rate of 40%, in effect
for the year ended March 31, 2005, and 41% in the years 2004 and 2003, respectively.
The effects of the income tax rate reduction on deferred income tax balances as of March 31,
2003 reduced the net deferred tax asset by approximately ¥1,044 million.
For the year ended March 31, 2005, residual tax effects of ¥4,571 million previously recorded
in accumulated other comprehensive income (minimum pension liability adjustments) were released and
recorded as a reduction to income tax expense in the consolidated statements of income as a result
of the elimination of the minimum pension liability adjustment.
- 96 -
Table of Contents
The effective tax rates of TDK for the years ended March 31, 2005, 2004 and 2003, are reconciled with the Japanese statutory tax rate in the
following table:
2005
2004
2003
Japanese statutory tax rate
40.4
%
41.0
%
41.0
%
Expenses not deductible for tax purposes
1.1
1.2
0.4
Non taxable income
(0.2
)
0.0
(2.1
)
Difference in statutory tax rates of foreign subsidiaries
(10.5
)
(23.0
)
(19.9
)
Change in the valuation allowance
3.8
4.5
13.1
Change in enacted tax laws and rates
—
0.3
5.1
Currency translation adjustment
0.0
0.0
(2.9
)
Investment tax credit
(1.2
)
(1.6
)
(4.0
)
Research and development tax credit
(3.6
)
(1.3
)
—
Residual tax effect in minimum pension liability
adjustments
(7.5
)
—
—
Additional tax related to prior years income
17.0
—
—
Other
(1.0
)
0.6
(0.6
)
Effective tax rate
38.3
%
21.7
%
30.1
%
Total income taxes for the years ended March 31, 2005, 2004 and 2003 are allocated as follows:
Yen
U.S. Dollars
(Millions)
(Thousands)
2005
2004
2003
2005
Income from continuing operations
¥
23,284
12,133
6,193
$
217,607
Loss from discontinued operations
156
1,010
(897
)
1,458
Stockholders' equity, accumulated other comprehensive income (loss):
Foreign currency translation adjustments
8
245
(242
)
75
Net unrealized gains (losses) on securities
(148
)
348
(166
)
(1,383
)
Minimum pension liability adjustments
29,538
9,422
(10,950
)
276,056
Total income taxes
¥
52,838
23,158
(6,062
)
$
493,813
- 97 -
Table of Contents
Income from continuing operations before income taxes and income taxes for the years ended
March 31, 2005, 2004 and 2003, are summarized as follows:
Income From
Continuing
Operations
Before Income
Income Taxes
Taxes
Current
Deferred
Total
Yen (Millions):
2005
Japanese
¥ 36,836
22,261
(5,026
)
17,235
Foreign
23,892
6,555
(506
)
6,049
¥ 60,728
28,816
(5,532
)
23,284
2004
Japanese
8,611
4,411
(7
)
4,404
Foreign
47,236
5,864
1,865
7,729
55,847
10,275
1,858
12,133
2003
Japanese
6,932
(1,929
)
5,977
4,048
Foreign
13,620
3,209
(1,064
)
2,145
20,552
1,280
4,913
6,193
U.S. Dollars (Thousands):
2005
Japanese
$
344,261
208,047
(46,972
)
161,075
Foreign
223,290
61,261
(4,729
)
56,532
$
567,551
269,308
(51,701
)
217,607
- 98 -
Table of Contents
The tax effects of temporary differences that give rise to significant portions of the
deferred tax assets and deferred tax liabilities at March 31, 2005 and 2004, are as follows:
Yen
U.S. Dollars
(Millions)
(Thousands)
2005
2004
2005
Deferred tax assets:
Trade accounts receivable, principally due to
allowance for doubtful receivables
¥
332
217
$
3,103
Inventories
894
251
8,355
Accrued business tax
1,330
344
12,430
Accrued expenses
3,863
3,605
36,103
Retirement and severance benefits
10,648
12,334
99,514
Net operating loss carryforwards
14,631
12,427
136,738
Tax credit carryforwards
208
559
1,944
Minimum pension liability adjustments
4,174
29,133
39,009
Property, plant and equipment, principally due
to differences in depreciation
2,523
1,219
23,579
Other
1,493
1,276
13,954
Total gross deferred tax assets
40,096
61,365
374,729
Less valuation allowance
(15,409
)
(11,028
)
(144,009
)
Net deferred tax assets
¥
24,687
50,337
$
230,720
Deferred tax liabilities:
Investments, principally due to differences
in valuation
(6,034
)
(7,329
)
(56,393
)
Undistributed earnings of foreign subsidiaries
(2,656
)
(2,773
)
(24,822
)
Net unrealized gains on securities
(272
)
(420
)
(2,542
)
Other
(1,220
)
(1,068
)
(11,402
)
Total gross deferred tax liabilities
(10,182
)
(11,590
)
(95,159
)
Net deferred tax assets
¥ 14,505
38,747
$
135,561
The net changes in the total valuation allowance for the years ended March 31, 2005, 2004 and
2003, are an increase of ¥4,381 million ($40,944 thousand), ¥1,338 million and ¥2,246 million,
respectively. The valuation allowance primarily relates to deferred tax assets associated with net
operating loss carryforwards incurred by certain foreign subsidiaries. The decrease in the
valuation allowance attributable to preacquisition tax benefits recognized during the years ended
March 31, 2005 and 2004 amounted to ¥119 million and ¥1,122 million, respectively. The reversal of
the valuation allowance upon realization of tax benefits resulted in a reduction of goodwill. In
assessing the realizability of deferred tax assets, management considers whether it is more likely
than not that some portion or all of the deferred tax assets will not be realized. The ultimate
realization of deferred tax assets is dependent upon the generation of future taxable income during
the periods in which those temporary differences become deductible and tax carryforwards are
utilized. Management considered the scheduled reversal of deferred tax liabilities, projected
future taxable income, and tax planning strategies in making this assessment. Based upon the level
of historical taxable income and projections for future taxable income over the periods which the
deferred tax assets are deductible, management believes it is more likely than not TDK will realize
the benefits of these deductible differences and tax carryforwards, net of the existing valuation
allowance at March 31, 2005.
At March 31, 2005, TDK and certain subsidiaries have net operating loss carryforwards for
income tax purposes of ¥48,135 million ($449,860 thousand) which are available to offset future
taxable income, if any.
- 99 -
Table of Contents
Periods available to offset future taxable income vary in each tax jurisdiction and range from
one year to an indefinite period as follows:
U.S. Dollars
Yen (Millions)
(Thousands)
Within 1 year
¥
159
$
1,486
1 to 5 years
6,440
60,187
5 to 20 years
15,242
142,449
Indefinite periods
26,294
245,738
¥
48,135
$
449,860
At March 31, 2005, certain subsidiaries have tax credit carryforwards for income tax purposes
of ¥208 million ($1,944 thousand) which are available to reduce future income taxes, if any.
Approximately ¥143 million ($1,336 thousand) of the tax credit carryforwards expire through 2019,
while the remainder have an indefinite carryforward period.
Net deferred income tax assets and liabilities at March 31, 2005 and 2004, are reflected in
the accompanying consolidated balance sheets under the following captions:
Yen
U.S. Dollars
(Millions)
(Thousands)
2005
2004
2005
Prepaid expenses and other current assets
¥
6,654
5,105
$
62,187
Deferred income taxes (noncurrent assets)
8,633
34,140
80,682
Other current liabilities
(31
)
(283
)
(289
)
Deferred income taxes (noncurrent
liabilities)
(751
)
(215
)
(7,019
)
¥
14,505
38,747
$
135,561
As of March 31, 2005 and 2004, TDK did not recognize deferred tax liabilities of approximately
¥61,663 million ($576,290 thousand) and ¥50,714 million, respectively, for certain portions of
undistributed earnings of foreign subsidiaries because TDK currently does not expect those
unremitted earnings to reverse and become taxable to TDK in the foreseeable future. A deferred tax
liability will be recognized when TDK expects that it will recover those undistributed earnings in
a taxable manner, such as through receipt of dividends or sale of the investments. As of March 31,
2005 and 2004, the undistributed earnings of these subsidiaries are approximately ¥244,341 million
($2,283,561 thousand) and ¥208,991 million, respectively.
8. Retirement and Severance Benefits
TDK and certain of its subsidiaries sponsor noncontributory retirement and severance plans
that provide for pension or lump-sum benefit payments, based on length of service and certain other
factors, to employees who retire or terminate their employment for reasons other than for dismissal
for cause. Corporate statutory auditors participate in an unfunded retirement plan sponsored by
TDK.
TDK also sponsors a contributory defined benefit pension plan for which a majority of its
employees are covered. Pension benefits under the plan are based on length of service and certain
other factors. The contributory plan in Japan consists of the Employees' Pension Fund plan
("EPF"), comprised of the substitutional portion based on the pay related part of the old age
pension benefits prescribed by the Welfare Pension Insurance Law (similar to Social Security
benefits in the United States) and the corporate portion based on contributory defined pension
arrangements established at the discretion of TDK. The substitutional portions of the EPF
represent a welfare pension plan carried out on behalf of the Japanese government.
These contributory and noncontributory plans are funded in conformity with the funding
requirements of the applicable Japanese governmental regulations.
- 100 -
Table of Contents
TDK had been exempted from contributing to the Japanese Pension Insurance ("JPI") program that
would otherwise have been required if it had not elected to fund the government substitutional
portion of the benefit through an EPF arrangement. The plan assets of the EPF were invested and
managed as a single portfolio for the entire EPF and were not separately attributed to the
substitutional and corporate portions.
In June 2001, the Contributed Benefit Pension Plan Law was newly enacted. This law permits an
employer to elect to transfer the entire substitutional portion benefit obligation from the EPF to
the government together with a specified amount of plan assets pursuant to a government formula.
After such transfer, the employer would be required to make periodic contribution to JPI, and the
Japanese government would be responsible for all benefit payments.
Pursuant to the new law, TDK received an approval of exemption from the Minister of Health,
Labor and Welfare, effective September 25, 2003, from the obligation for benefits related to future
employee service with respect to the substitutional portion of its EPF. TDK received governmental
approval of exemption from the obligation for benefits related to past employee service in October
2004 with respect to the substantial portion of its domestic contributory plan. The transfer to
the government was completed on January 31, 2005.
TDK accounted for the transfer in accordance with EITF Issue No. 03-2 "Accounting for the
Transfer to the Japanese Government of the Substitutional Portion of Employee Pension Fund
Liabilities" ("EITF 03-2"). As specified in EITF 03-2, the entire separation process is to be
accounted for at the time of completion of the transfer to the government of the substitutional
portion of the benefit obligation and related plan assets as a settlement in accordance with SFAS
No. 88, "Employers' Accounting for Settlements and Curtailments of Defined Benefit Pension Plans
and for Termination Benefits". As a result of the transfer, TDK recognized as a subsidy from the
Japanese government an amount equal to the difference between the fair value of the obligation
deemed "settled" with the Japanese government and the assets required to be transferred to the
government. The subsidy that TDK recognized amounted to ¥33,533 million ($313,392 thousand). In
addition, TDK recognized a settlement loss equal to the amount calculated as the ratio of the
obligation settled to the total EPF obligation immediately prior to settlement, both of which
exclude the effect of future salary progression relating to the substitutional portion, times the
net unrecognized gain/loss immediately prior to settlement, which amounted to ¥27,347 million
($255,579 thousand). This gain and loss is included in operating income in the accompanying
consolidated statements of income for the year ended March 31, 2005.
Effective October 1, 2004, the corporate portion of the EPF was amended by a new defined
benefit plan that provides benefits based on length of service and other factors in a manner
similar to the predecessor corporate defined benefit plan but, at a reduced rate. The reduction in
the pension benefit obligation as of the effective date in the amount of ¥10,925 million ($102,103
thousand) has been accounted for as a negative plan amendment and included in prior service cost
and will be amortized into net periodic benefit cost over the weighted average remaining service
period of the plan participants.
TDK and its subsidiaries use a January 1 measurement date for the majority of the plans.
- 101 -
Table of Contents
Net periodic benefit cost for TDK's employee retirement and severance defined benefit plans
for the years ended March 31, 2005, 2004 and 2003 consisted of the following components:
Yen
U.S. Dollars
(Millions)
(Thousands)
2005
2004
2003
2005
Service cost-benefits earned
during the year
¥6,806
10,341
9,383
$
63,607
Interest cost on projected
benefit obligation
5,359
6,271
5,985
50,084
Expected return on plan assets
(3,180
)
(2,640
)
(3,678
)
(29,720
)
Amortization of transition assets
(1,331
)
(1,331
)
(1,331
)
(12,439
)
Recognized actuarial loss
5,696
7,480
5,963
53,234
Amortization of unrecognized
prior service benefit
(1,522
)
(1,353
)
(1,342
)
(14,224
)
Settlement gain, net
(6,186
)
—
—
(57,813
)
¥5,642
18,768
14,980
$
52,729
- 102 -
Table of Contents
Reconciliations of beginning and ending balances of the benefit obligations and the fair value
of the plan assets are as follows:
Yen
U.S. Dollars
(Millions)
(Thousands)
2005
2004
2005
Change in benefit obligations:
Benefit obligations at beginning of period
¥258,991
250,625
$
2,420,477
Service cost
6,806
10,341
63,607
Interest cost
5,359
6,271
50,084
Plan participants' contributions
—
405
—
Plan amendments
(10,925
)
68
(102,103
)
Actuarial loss (gain)
(727
)
(1,223
)
(6,794
)
Benefits paid
(6,646
)
(6,692
)
(62,112
)
Transfer of substitutional portion
(67,862
)
—
(634,224
)
Others
(437
)
—
(4,084
)
Translation adjustment
438
(804
)
4,093
Benefit obligations at end of period
184,997
258,991
1,728,944
Change in plan assets:
Fair value of plan assets at beginning of period
168,913
146,573
1,578,626
Actual return on plan assets
8,053
21,458
75,262
Employer contributions
3,596
6,434
33,608
Plan participants' contributions
—
405
—
Benefits paid
(6,046
)
(5,588
)
(56,505
)
Transfer of substitutional portion
(31,985
)
—
(298,925
)
Translation adjustment
117
(369
)
1,093
Fair value of plan assets at end of period
142,648
168,913
1,333,159
Funded status
(42,349
)
(90,078
)
(395,785
)
Unrecognized net transition obligation
being recognized over 18 years
(2,607
)
(5,046
)
(24,365
)
Unrecognized net actuarial loss
72,650
113,550
678,972
Unrecognized prior service benefit
(28,295
)
(18,891
)
(264,439
)
Net amount recognized
(601
)
(465
)
(5,617
)
Amounts recognized in consolidated balance sheets consists of:
Prepaid pension cost
17,669
—
165,131
Retirement and severance benefits
(28,839
)
(73,521
)
(269,523
)
Intangible assets
56
64
523
Accumulated other comprehensive loss
10,513
72,992
98,252
Net amount recognized
(601
)
(465
)
(5,617
)
Actuarial present value of accumulated benefit
obligations at end of period
¥167,834
237,868
$
1,568,542
The projected benefit obligations and the fair value of plan assets for the pension plans with
projected benefit obligations in excess of plan assets, and the accumulated benefit obligations and
the fair value of plan assets for the pension plans with accumulated benefit obligations in excess
of plan assets are as follows.
Yen
U.S. Dollars
(Millions)
(Thousands)
2005
2004
2005
Plans with projected benefit
obligations in excess of plan assets:
Projected benefit obligations
¥184,997
258,991
$1,728,944
Fair value of plan assets
142,648
168,913
1,333,159
Plans with accumulated benefit
obligations in excess of plan assets:
Accumulated benefit obligations
54,504
237,364
509,383
Fair value of plan assets
28,531
168,316
266,645
- 103 -
Table of Contents
Assumptions
Weighted-average assumptions used to determine benefit obligations at March 31:
2005
2004
Discount rate
2.2
%
2.1
%
Assumed rate of increase in future compensation levels
3.0
%
3.0
%
Weighted-average assumptions used to determine net periodic benefit cost for the years ended March 31:
2005
2004
2003
Discount rate
2.1
%
2.1
%
2.6
%
Assumed rate of increase in future compensation levels
3.0
%
3.0
%
3.0
%
Expected long-term rate of return on plan assets
2.2
%
2.2
%
2.6
%
TDK determines the expected long-term rate of return based on the expected long-term return of
the various asset categories in which it invests. TDK considers the current expectations for
future returns and the actual historical returns of each plan asset category.
Plan assets
The weighted-average asset allocations of TDK's benefit plans at March 31, 2005 and 2004 by
asset category are as follows:
2005
2004
Equity securities
26.2
%
54.4
%
Debt securities
6.9
%
19.9
%
Cash
62.5
%
19.9
%
Other
4.4
%
5.8
%
100.0
%
100.0
%
TDK's investment policies are designed to ensure adequate plan assets are available to provide
future payments of pension benefits to eligible participants. Taking into account the expected
long-term rate of return on plan assets, TDK formulates a "model" portfolio comprised of the
optimal combination of equity securities and debt securities. Plan assets are invested in
individual equity and debt securities using the guidelines of the "model" portfolio in order to
produce a total return that will match the expected return on a mid-term to long-term basis. TDK
evaluates the gap between expected return and actual return of invested plan assets on an annual
basis to determine if such differences necessitate a revision in the formulation of the "model"
portfolio. TDK revises the "model" portfolio when and to the extent considered necessary to
achieve the expected long-term rate of return on plan assets.
During the year ended March 31, 2005, the EPF sold certain assets to facilitate the funding of
the payment to the Japanese government for the transfer of the substitutional portion of the plan.
In addition, the strategic mix for domestic pension plans has increased asset allocation to cash
based on the unclear outlook for the bond and equity market in Japan at the middle of 2004. As a
result, the relative portion of cash in pension assets at March 31, 2005 increased compared to
March 31, 2004.
Contributions
TDK expects to contribute ¥4,882 million ($45,626 thousand) to its defined benefit plans for
the year ending March 31, 2006.
- 104 -
Table of Contents
Estimated future benefit payments
The benefits expected to be paid from the pension plans in each year 2006 through 2015 are as
follows:
Yen
U.S. Dollars
(Millions)
(Thousands)
Year ending March 31,
2006
¥6,075
$
56,776
2007
5,828
54,467
2008
6,806
63,607
2009
7,346
68,654
2010
8,227
76,888
2011 — 2015
¥41,146
$
384,542
9. Legal Reserve and Dividends
The Japanese Commercial Code provides that an amount equal to at least 10% of cash dividends
and other distributions from retained earnings paid by TDK and its Japanese subsidiaries be
appropriated as a legal reserve. No further appropriations are required when the total amount of
the additional paid-in capital and the legal reserve equals 25% of their respective stated capital.
The Japanese Commercial Code also provides that to the extent that the sum of the additional
paid-in capital and the legal reserve exceeds 25% of the stated capital, the amount of the excess
(if any) is available for appropriations by resolution of the shareholders. Certain foreign
subsidiaries are also required to appropriate their earnings to legal reserves under the laws of
the respective countries. Cash dividends and appropriations to the legal reserve charged to
retained earnings for the years ended March 31, 2005, 2004 and 2003 represent dividends paid out
during those years and the related appropriations to the legal reserve. The accompanying
consolidated financial statements do not include any provision for the dividend proposed by the
Board of Directors of ¥40 ($0.37) per share aggregating ¥5,290 million ($49,439 thousand) in
respect of the year ended March 31, 2005.
Cash dividends per common share are computed based on dividends paid for the year.
10. Stock Option Plan
TDK obtained approval of the Ordinary General Meeting of Shareholders held on June 29, 2004
regarding the issuance of stock acquisition rights as stock options (the Stock Acquisition Rights)
to Board members, Corporate Officers and select senior executives, pursuant to Articles 280-20 and
280-21 of the Japanese Commercial Code. Upon approval, the Board of Directors adopted resolutions
to issue at no charge an aggregate of 2,343 Stock Acquisition Rights, each representing a stock
option to purchase 100 shares of common stock of TDK, to the then 187 Directors, Corporate Officers
and select senior executives of TDK, and the Directors and select senior executives of affiliates.
The Stock Acquisition Rights issued on August 6, 2004 are exercisable during the period from August
1, 2006 to July 31, 2010. The amount to be paid by qualified persons upon the exercise of each
Stock Acquisition Rights is set at ¥8,147 ($76.14) per share of common stock, which was calculated
by a formula approved by shareholders at the said annual shareholders meeting and is subject to an
adjustment in certain events, including but not limited to a stock split, stock dividend and issue
of new shares at a price less than the current market price of the shares of TDK. The exercise
price of each Stock Acquisition Rights was equal to or greater than the fair market value of TDK's
common stock on the date of grant. To cover these options TDK purchased on the Tokyo Stock
Exchange ("TSE") a total of 234,300 common shares with an aggregate purchase price of ¥1,656
million ($15,472 thousand) from August 9, 2004 through August 16, 2004.
- 105 -
Table of Contents
TDK obtained approval of the Ordinary General Meeting of Shareholders held in June 2003
and 2002 regarding the issuance of stock acquisition rights as stock options, pursuant to Articles
280-20 and 280-21 of the Japanese Commercial Code. Upon approval, the Board of Directors adopted
resolutions to issue at no charge an aggregate of 2,547 and 2,236 Stock Acquisition Rights, each
representing a stock option to purchase 100 shares of common stock of TDK, to the then 179 and 197
Directors, Corporate Officers and selected senior executives of TDK, and the Directors and select
senior executives of its affiliates. The amount to be paid by qualified persons upon the exercise
of each Stock Acquisition Rights was set at ¥ 6,954 and ¥ 5,909 per share of common stock. The
exercise price of each Stock Acquisition Rights was equal to or greater than the fair market value
of TDK's common stock on the date of grant.
The Ordinary General Meeting of Shareholders held in June 2001 and 2000 approved to implement
TDK's stock option plan for Directors and certain employees of TDK, and the purchase of TDK's own
shares for transfer to them under the plan, pursuant to Article 210-2 of Japanese Commercial Code.
Stock options were provided to the then 196 and 204 Directors on the Board and associate directors
and officials in amounts ranging from 500 to 10,000 common shares each, at an exercise price of
¥ 6,114 and ¥ 15,640 per share. The exercise price of each Stock Acquisition Rights was equal to or
greater than the fair market value of TDK's common stock on the date of grant.
TDK currently accounts for these stock option plans as fixed plans pursuant to APB 25.
A summary of the status of TDK's stock option plans as of March 31, 2005, 2004 and 2003, and
of the activity during the years ending on those dates, is as follows:
2005
2004
2003
2005
Weighted
Weighted
Weighted
Weighted
Number
average
Number
average
Number
average
average
of
exercise
of
exercise
of
exercise
exercise
shares
price
shares
price
shares
price
price
U.S.
Yen
Yen
Yen
Dollars
Outstanding at
beginning of year
739,300
¥
8,358
548,000
¥
8,967
327,900
¥
11,050
$
78.11
Granted
234,300
8,147
254,700
6,954
223,600
5,909
76.14
Exercised
71,700
5,979
46,900
6,114
—
—
55.88
Forfeited or
Expired
33,300
13,695
16,500
13,276
3,500
8,777
127.99
Outstanding at
end of year
868,600
8,293
739,300
8,358
548,000
8,967
77.50
Exercisable at
end of year
380,600
9,275
264,300
11,755
168,900
15,640
86.68
Information about stock options outstanding at March 31, 2005 is as follows:
Options Outstanding
Weighted
average
Number
remaining
Weighted average
Range of exercise prices
outstanding at
contractual life
exercise price
Yen
March 31, 2005
(years)
Yen
U.S. Dollars
8,147
234,300
5.3
8,147
76.14
6,954
253,700
4.3
6,954
64.99
5,909
171,600
3.3
5,909
55.22
6,114
79,000
2.1
6,114
57.14
15,640
130,000
1.1
15,640
146.17
5,909 to 15,640
868,600
3.2
8,293
77.50
- 106 -
Table of Contents
The fair value of these stock options was estimated on the date of grant using the
Black-Scholes option pricing model with the following assumptions:
2005
2004
2003
Grant-date fair value
¥
1,910
($17.85
)
¥
1,849
¥
1,569
Expected life
4.0 years
4.0 years
4.0 years
Risk-free interest rate
0.59
%
0.47
%
0.35
%
Expected volatility
35.05
%
39.65
%
39.96
%
Expected dividend yield
0.77
%
0.75
%
0.80
%
11. Other Comprehensive Income (Loss)
Change in accumulated other comprehensive income (loss) for the years ended March 31, 2005,
2004 and 2003, are as follows:
Yen
U.S. Dollars
(Millions)
(Thousands)
2005
2004
2003
2005
Foreign currency translation adjustments:
Balance at beginning of period
¥
(52,807
)
(26,520
)
(7,773
)
$
(493,523
)
Adjustments for period
5,636
(26,287
)
(18,747
)
52,672
Balance at end of period
(47,171
)
(52,807
)
(26,520
)
(440,851
)
Net unrealized gains (losses) on securities:
Balance at beginning of period
648
110
379
6,056
Adjustments for period
153
538
(269
)
1,430
Balance at end of period
801
648
110
7,486
Minimum pension liability adjustments:
Balance at beginning of period
(38,228
)
(52,414
)
(36,605
)
(357,271
)
Adjustments for period
32,941
14,186
(15,809
)
307,860
Balance at end of period
(5,287
)
(38,228
)
(52,414
)
(49,411
)
Total accumulated other comprehensive income (loss):
Balance at beginning of period
(90,387
)
(78,824
)
(43,999
)
(844,738
)
Adjustments for period
38,730
(11,563
)
(34,825
)
361,962
Balance at end of period
¥
(51,657
)
(90,387
)
(78,824
)
$
(482,776
)
- 107 -
Table of Contents
Tax effects allocated to each component of other comprehensive income (loss) and
reclassification adjustments for the years ended March 31, 2005, 2004 and 2003, are as follows:
Yen
(Millions)
Before
Tax
tax
(expense)
Net-of-tax
amount
or benefit
amount
2005
Foreign currency translation adjustments:
Amount arising during the year on investments in
foreign entities held at end of period
¥
5,203
(8
)
5,195
Reclassification adjustments for the portion of
gains and losses realized upon liquidation and
sale of investments in foreign entities
441
—
441
Net foreign currency translation adjustments
5,644
(8
)
5,636
Unrealized gains (losses) on securities:
Unrealized holding gains arising for period
676
(119
)
557
Reclassification adjustments for (gains) losses
realized in net income
(671
)
267
(404
)
Net unrealized gains (losses)
5
148
153
Minimum pension liability adjustments
62,479
(29,538
)
32,941
Other comprehensive income (loss)
¥
68,128
(29,398
)
38,730
2004
Foreign currency translation adjustments:
Amount arising during the year on investments in
foreign entities held at end of period
¥
(26,464
)
(245
)
(26,709
)
Reclassification adjustments for the portion of
gains and losses realized upon liquidation and
sale of investments in foreign entities
422
—
422
Net foreign currency translation adjustments
(26,042
)
(245
)
(26,287
)
Unrealized gains (losses) on securities:
Unrealized holding gains arising for period
886
(348
)
538
Minimum pension liability adjustments
23,608
(9,422
)
14,186
Other comprehensive income (loss)
¥
(1,548
)
(10,015
)
(11,563
)
2003
Foreign currency translation adjustments:
Amount arising during the year on investments in
foreign entities held at end of period
¥
(19,751
)
242
(19,509
)
Reclassification adjustments for the portion of
gains and losses realized upon liquidation of
investments in foreign entities
762
—
762
Net foreign currency translation adjustments
(18,989
)
242
(18,747
)
Unrealized gains (losses) on securities:
Unrealized holding gains arising for period
104
(41
)
63
Reclassification adjustments for (gains) losses
realized in net income
(539
)
207
(332
)
Net unrealized gains (losses)
(435
)
166
(269
)
Minimum pension liability adjustments
(26,759
)
10,950
(15,809
)
Other comprehensive income (loss)
¥
(46,183
)
11,358
(34,825
)
- 108 -
Table of Contents
U.S. Dollars
(Thousands)
Tax
Before tax
(expense)
Net-of-tax
amount
or benefit
amount
2005
Foreign currency translation adjustments:
Amount arising during the year on
investments in foreign entities held at
end of period
$
48,626
(75
)
48,551
Reclassification adjustments for the
portion of gains and losses realized upon
liquidation and sale of investments in
foreign entities
4,121
—
4,121
Net foreign currency translation
adjustments
52,747
(75
)
52,672
Unrealized gains (losses) on securities:
Unrealized holding gains arising for period
6,318
(1,112
)
5,206
Reclassification adjustments for (gains)
losses realized in net income
(6,271
)
2,495
(3,776
)
Net unrealized gains (losses)
47
1,383
1,430
Minimum pension liability adjustments
583,916
(276,056
)
307,860
Other comprehensive income (loss)
$
636,710
(274,748
)
361,962
12. Leases
TDK and its subsidiaries occupy offices and other facilities under various cancellable lease
agreements expiring in fiscal 2006 through 2007. Lease deposits made under such agreements,
aggregating ¥1,900 million ($17,757 thousand) and ¥2,079 million, at March 31, 2005 and 2004,
respectively, are included in other assets on the accompanying consolidated balance sheets.
The following is a schedule by years of future minimum rental payments required under
operating leases that have initial or remaining noncancellable lease terms in excess of one year as
of March 31, 2005:
Yen
U.S. Dollars
(Millions)
(Thousands)
Year ending March 31,
2006
¥
2,355
$
22,009
2007
1,697
15,860
2008
1,133
10,589
2009
595
5,561
2010
305
2,850
Later years
723
6,757
¥
6,808
$
63,626
13. Commitments and Contingent Liabilities
At March 31, 2005, commitments outstanding for the purchase of property, plant and equipment
approximated ¥12,292 million ($114,879 thousand). TDK has entered into several purchase agreements
with certain suppliers whereby TDK committed to purchase a minimum amount of raw materials to be
used in the manufacture of its products. Future minimum purchases remaining under the agreements
approximated ¥3,841 million ($35,897 thousand) at March 31, 2005.
- 109 -
Table of Contents
TDK and certain of its subsidiaries provide guarantees to third parties on bank loans of its
employees. The guarantees on behalf of the employees are made for their housing loans. For each
guarantee issued, in the event the employee defaults on payment, TDK would be required to make
payments under its guarantee. The maximum amount of undiscounted payments TDK would have to make
in the event of default is ¥6,296 million ($58,841 thousand) and ¥6,605 million at March 31, 2005
and 2004, respectively. As of March 31, 2005, the liability recognized for TDK's obligation under
the guarantee arrangement is not material.
Several claims against TDK and certain subsidiaries are pending. Provision has been made for
the estimated liabilities for the items. In the opinion of management, based upon discussion with
counsel, any additional liability not currently provided for will not materially affect the
consolidated financial position and results of operations of TDK.
14. Risk Management Activities and Derivative Financial Instruments
TDK and its subsidiaries operate internationally which exposes them to the risk of changes in
foreign exchange rates and interest rates; derivative financial instruments are utilized to reduce
these risks. TDK and its subsidiaries do not hold or issue financial instruments for trading
purposes. TDK and its subsidiaries are exposed to credit related losses in the event of
nonperformance by the counterparties to those financial instruments, but does not expect any
counterparties to fail to meet their obligations given their high credit ratings. The credit
exposure of currency swaps, interest rate and currency swaps, forward foreign exchange contracts
and currency option contracts is represented by the fair values of contracts.
TDK and one of its subsidiaries have currency swaps and interest rate and currency swaps with
certain financial institutions to limit their exposure to fluctuations in foreign exchange rates
and interest rates involved mainly with loans made by TDK to its subsidiaries in a total amount of
¥11,067 million ($103,430 thousand) and ¥12,605 million at March 31, 2005 and 2004, respectively.
These swaps require TDK and the subsidiary to pay principally euros and U.S. dollars and to receive
Japanese yen at a specified rate on specific dates. The remaining term of these swaps is one month
as of March 31, 2005. Gains or losses on interest and currency swaps and currency swaps are
included in interest expense and foreign exchange gain (loss) in the consolidated statements of
income, respectively. The swap contracts are measured at fair value and are included in prepaid
expenses and other current assets or other current liabilities, as the case may be, in the
consolidated balance sheets.
Forward exchange contracts and currency option contracts have been entered into to hedge
adverse effects of foreign currency exchange rate fluctuations mainly on
foreign-currency-denominated trade receivables and foreign-currency-denominated forecasted
transactions.
At March 31, 2005 and 2004, TDK and certain of its subsidiaries had forward exchange contracts
to sell and buy foreign currencies (principally U.S. dollars and Japanese Yen) and currency option
contracts for a contract amount of ¥28,990 million ($270,935 thousand) and ¥34,978 million,
respectively. Gains or losses on forward exchange contracts and currency option contracts are
included in foreign exchange gain (loss) in the consolidated statements of income. These contracts
are measured at fair value and are included in prepaid expenses and other current assets or other
current liabilities, as the case may be, in the consolidated balance sheets.
- 110 -
Table of Contents
15. Fair Value of Financial Instruments
The following methods and assumptions were used to estimate the fair value of financial
instruments in cases for which it is practicable:
(a)
Cash and cash equivalents, Trade receivables, Other current assets, Short-term debt, Trade
payables, Accrued salaries and wages, Accrued expenses, Income taxes payables and Other
current liabilities.
The carrying amount approximates fair value because of the short maturity of these
instruments.
(b) Marketable securities and Investments in securities
The fair values of marketable securities and investments in securities are estimated based on
quoted market prices for these instruments. For other securities for which there are no quoted
market prices, a reasonable estimate of fair values could not be made without incurring excessive
costs. Additional information pertinent to the value of unquoted investments is provided below.
(c) Long-term debt
The fair value of TDK's long-term debt is estimated based on the amount of future cash flows
associated with the instrument discounted using TDK's current borrowing rate for similar debt of
comparable maturity, or based on the quoted market prices for the same or similar issues.
(d)
Currency Swaps, Currency and Interest Rate Swaps, Forward Foreign Exchange Contracts and
Foreign Currency Option Contracts
The fair values of currency swaps, currency and interest rate swaps, forward foreign exchange
contracts and foreign currency option contracts are estimated by obtaining quotes from financial
institutions.
The carrying amounts and estimated fair values of TDK's financial instruments at March 31,
2005 and 2004, are summarized as follows:
Yen (Millions)
As of March 31, 2005
Carrying amount
Estimated fair value
Nonderivatives:
Assets:
Investments in securities and other
assets for which it is:
Practicable to estimate fair value
¥
12,684
12,684
Not practicable to estimate fair value
1,741
—
Liability:
Long-term debt, including current portion
(184
)
(184
)
Derivatives:
Currency and interest rate swaps in a:
Gain position
—
—
Loss position
(312
)
(312
)
Forward foreign exchange contracts in a:
Gain position
—
—
Loss position
(88
)
(88
)
Currency option contracts in a:
Gain position
—
—
Loss position
(366
)
(366
)
- 111 -
Table of Contents
Yen (Millions)
As of March 31, 2004
Carrying amount
Estimated fair value
Nonderivatives:
Assets:
Investments in securities and other
assets for which it is:
Practicable to estimate fair value
¥
8,259
8,259
Not practicable to estimate fair value
1,135
—
Liability:
Long-term debt, including current portion
(128
)
(128
)
Derivatives:
Currency and interest rate swaps in a:
Gain position
287
287
Loss position
(35
)
(35
)
Forward foreign exchange contracts in a:
Gain position
403
403
Loss position
(7
)
(7
)
Currency option contracts in a:
Gain positions
91
91
U.S. Dollars (Thousands)
As of March 31, 2005
Carrying amount
Estimated fair value
Nonderivatives:
Assets:
Investments in securities and other assets
for which it is:
Practicable to estimate fair value
$
118,542
118,542
Not practicable to estimate fair value
16,271
—
Liability:
Long-term debt, including current portion
(1,720
)
(1,720
)
Derivatives:
Currency and interest rate swaps in a:
Gain position
—
—
Loss position
(2,916
)
(2,916
)
Forward foreign exchange contracts in a:
Gain position
—
—
Loss position
(822
)
(822
)
Currency option contracts in a:
Gain position
—
—
Loss position
(3,421
)
(3,421
)
The carrying amounts of the nonderivative assets and liabilities are included in the
consolidated balance sheets under the indicated captions. The carrying amounts of the currency
swaps, the currency and interest rate swaps, forward foreign exchange contracts and foreign
currency option contracts in a gain position are included in prepaid expenses and other current
assets, while those in a loss position are included in other current liabilities.
It is not practicable to estimate the fair value of investments in untraded companies.
Management believes that the carrying amounts approximate fair value.
Limitations
Fair value estimates are made at a specific point in time, based on relevant market
information and information about the financial instrument. These estimates are subjective in
nature and involve uncertainties and matters of significant judgment and therefore cannot be
determined with precision. Changes in assumptions could significantly affect the estimates.
- 112 -
Table of Contents
16. Restructuring Charges
The downturn in the U.S. economy from the fourth quarter ended March 31, 2001 and the
reduction in IT investment volume on a world-wide basis had an adverse effect on TDK. Under the
circumstances, TDK believes offering competitive pricing is essential to maintaining its
advantageous position in the market of electronic components. Additionally, many of TDK's
customers who manufacture consumer products have transferred their manufacturing facilities to
Asian countries, in particular China. As a result, TDK, as a supplier of electronic components to
these customers, will be required to transfer certain of its factories to these Asian countries in
order to meet the customers' logistical needs.
During the year ended March 31, 2003, TDK recorded a restructuring charge of ¥5,345 million.
TDK recorded a workforce reduction charge of approximately ¥2,346 million relating primarily to
severances. As a result of the restructuring, a total of 1,302 regular employees were terminated
through March 31, 2003. TDK recorded a restructuring charge of ¥2,999 million mainly relating to
losses on the disposal of property, plant and equipment in Japan, the Americas and Europe.
Through March 31, 2003, TDK had paid ¥5,119 million of the ¥5,345 million restructuring
charges. TDK paid all of the remaining restructuring costs by the end of first quarter of fiscal
2004.
17. Goodwill and Other Intangible Assets
The components of acquired intangible assets excluding goodwill at March 31, 2005 and 2004,
are as follows:
Yen (Millions)
2005
2004
Accumu-
Accumu-
Gross
lated
Gross
lated
Carrying
Amorti-
Net
Carrying
Amorti-
Net
Amount
zation
Amount
Amount
zation
Amount
Amortized intangible
assets:
Patent
¥
10,347
2,242
8,105
10,349
1,259
9,090
Software
7,271
4,399
2,872
7,359
4,207
3,152
Other
2,346
715
1,631
2,739
870
1,869
Total
19,964
7,356
12,608
20,447
6,336
14,111
Unamortized
intangible assets
¥
639
639
916
916
U.S. Dollars (Thousands)
Accumu-
Gross
lated
Carrying
Amorti-
Net
Amount
zation
Amount
Amortized intangible assets:
Patent
$
96,701
20,953
75,748
Software
67,953
41,112
26,841
Other
21,926
6,683
15,243
Total
186,580
68,748
117,832
Unamortized intangible assets
$
5,972
5,972
- 113 -
Table of Contents
Intangible assets subject to amortization are amortized using the straight-line method over
their estimated useful lives to their estimated residual value of zero. The useful lives are 11
years for the Patents, 3 to 5 years for Internal-use Software, and 10 years for Other intangible
assets.
Aggregate amortization expense for the years ended March 31, 2005, 2004 and 2003 was ¥2,467
million ($23,056 thousand), ¥2,626 million and ¥1,762 million, respectively. Estimated
amortization expense for the next five years is: ¥2,342 million in 2006, ¥1,869 million in 2007,
¥1,521 million in 2008, ¥1,331 million in 2009, and ¥1,211 million in 2010.
The changes in the carrying amount of goodwill by segment for the year ended March 31, 2005 is
as follows:
Yen (Millions)
Electronic
materials and
Recording media
components
and systems
Total
April 1, 2003
¥
13,634
497
14,131
Additions
76
—
76
Deductions
(2,128
)
(497
)
(2,625
)
Translation adjustment
(1,553
)
—
(1,553
)
March 31, 2004
10,029
—
10,029
Additions
991
—
991
Deductions
(1,975
)
—
(1,975
)
Translation adjustment
165
—
165
March 31, 2005
¥
9,210
—
9,210
U.S. Dollars (Thousands)
Electronic
materials and
Recording media
components
and systems
Total
March 31, 2004
$
93,729
—
93,729
Additions
9,262
—
9,262
Deductions
(18,458
)
—
(18,458
)
Translation adjustment
1,542
—
1,542
March 31, 2005
$
86,075
—
86,075
Goodwill additions during the year ended March 31, 2005 principally represent the excess of
purchase price over the fair value of assets acquired and liabilities assumed for a certain
immaterial acquisition made during the year. Goodwill deductions during the year ended March 31,
2005 primarily consist of an impairment loss from discontinued operations in the amount of ¥1,856
million in connection with the discontinuation of TDK's semiconductor business (note 20) and a
reclassification to deferred income taxes in the amount of ¥119 million related to post-acquisition
adjustment resulting from recognition of preacquisition tax benefits.
Goodwill deductions during the year ended March 31, 2004 consist of a reclassification to
intangible assets in the amount of ¥1,006 million resulting from the finalization of the purchase
price allocation of a subsidiary acquired in 2003, a reclassification to deferred income taxes in
the amount of ¥1,122 million related to post-acquisition adjustment resulting from recognition of
preacquisition tax benefits, and the sale of a certain subsidiary in the amount of ¥497 million.
- 114 -
Table of Contents
18. Net Income per Share
A reconciliation of the numerators and denominators of the basic and diluted net income per
share computations is as follows:
Yen
U.S. Dollars
(Millions)
(Thousands)
2005
2004
2003
2005
Income from continuing
operations available to common
stockholders
¥
36,965
43,355
13,593
$
345,467
Loss from discontinued
operations available to common
stockholders
3,665
1,254
1,574
34,252
Net income available to common
stockholders
¥
33,300
42,101
12,019
$
311,215
Number of shares (Thousands)
2005
2004
2003
Weighted average common shares
outstanding — Basic
132,293
132,475
132,716
Effect of dilutive stock options
83
48
—
Weighted average common shares
outstanding — Diluted
132,376
132,523
132,716
Yen
U.S. Dollars
2005
2004
2003
2005
Income from continuing
operations per share:
Basic
¥
279.41
327.27
102.42
$
2.61
Diluted
279.25
327.15
102.42
2.61
Loss from discontinued
operations per share:
Basic
¥
(27.70
)
(9.47
)
(11.86
)
$
(0.26
)
Diluted
(27.69
)
(9.46
)
(11.86
)
(0.26
)
Net income per share:
Basic
¥
251.71
317.80
90.56
$
2.35
Diluted
251.56
317.69
90.56
2.35
19. Business and Credit Concentrations
One significant customer related to electronic materials and components business accounted for
12.6%, 12.1% and 8.5% of TDK's net sales for the years ended March 31, 2005, 2004 and 2003,
respectively, and 13.2% and 10.2% of trade receivables at March 31, 2005 and 2004, respectively.
- 115 -
Table of Contents
20. Discontinued Operations
On March 31, 2005, TDK entered into an agreement to sell all outstanding stock of its wholly
owned subsidiary, TDK Semiconductor Corporation ("TSC") for ¥1,509 million ($14,103 thousand) to
Golden Gates Capital ("Buyer"). The sale of TSC is part of TDK's continuing shift away from
non-core products and technologies. The sale agreement also includes earn-out payments, to be made
by the Buyer to TDK, of up to ¥3,478 million ($32,505 thousand). The payments are contingent upon
certain milestones being met related to future revenue targets extending through 2007. The
transaction was completed on April 8, 2005. TDK has accounted for the sale of TSC as a
discontinued operation pursuant to FASB Statement No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets", as TSC meets the definition of a "component of an entity". The
results of operations for this subsidiary have been reported as discontinued operations for all
periods presented. Accordingly, certain financial statement information and related footnote
disclosures related to prior periods have been reclassified.
Selected financial information for the years ended March 31, 2005, 2004 and 2003 for the
discontinued operations, are summarized as follows:
U.S. Dollars
Yen (Millions)
(Thousands)
2005
2004
2003
2005
Net sales
¥
2,242
3,070
4,015
$
20,953
Loss from operations before
income taxes (including loss on
disposal of ¥454 million in
2005)
3,509
244
2,471
32,794
Income tax expense (benefit)
156
1,010
(897
)
1,458
Loss from discontinued operations
¥
3,665
1,254
1,574
$
34,252
Included in loss from discontinued operations for the year ended March 31, 2004, is patent
infringement settlement income in the amount of ¥1,933 million which, prior to being reclassified,
was previously included in income before income taxes for the year. This patent infringement
settlement income has been reflected as a component of loss from discontinued operations as it
directly relates to the TSC business being disposed.
On August 6, 2001, TSC filed suit against Silicon Laboratories, Inc. ("SiLabs") alleging
infringement by SiLabs of U.S. Patent No. 5,654,984 entitled "Signal Modulation Across Capacitors"
("the '984 patent") owned by TSC. The patent relates to novel methods and circuitry for
communicating a signal across an isolation barrier using capacitors. The patented technology is
principally useful in modem applications. TDK's lawsuit alleged that SiLabs integrated the
patented technology into its competing modem products. SiLabs counterclaimed alleging (1) unfair
competition and (2) intentional and negligent interference with economic relations.
In April 2003, the parties resolved the dispute with the execution of a Settlement Agreement
wherein both parties agreed to dismiss all litigation between them without admitting any liability.
In exchange for the payment of $17 million to TSC, SiLabs was granted a fully paid-up, exclusive
perpetual license to use the '984 patent, as well as three ancillary patents owned by TSC.
Pursuant to the Settlement Agreement, TDK has no further obligation to provide additional services,
product deliverables or enhancements to the licensed technology. TSC did reserve for itself and
other TDK companies the right to use the patents with regard to TDK-branded products. In addition,
TSC agreed that neither it or any TDK entity would pursue a claim against SiLabs for a period of 20
years for patent infringement related to any SiLabs product in existence at the time of the
settlement or any capacitive-based digital access arrangement ("DAA") product subsequently
introduced by SiLabs.
- 116 -
Table of Contents
The components of the assets and liabilities held for sale as of March 31, 2005 are as
follows:
U.S. Dollars
Yen (Millions)
(Thousands)
Assets held
for sale
Current assets
¥
548
$
5,121
Net property, plant and equipment
430
4,019
Other assets
15
140
993
9,280
Liabilities
held for sale
Current liabilities
¥
92
$
860
21. Sale of a Subsidiary
On October 1, 2004, TDK Logistics Corporation ("TDK Logistics"), a wholly owned subsidiary
which provided warehousing and transportation services to only TDK, was acquired in a share for
share exchange by Alps Logistics Co., Ltd. ("ALPS"), a third party listed company on the Tokyo
Stock Exchange. The share exchange ratio was 0.82 of an ALPS share for one TDK Logistics share.
The fair value of shares issued to effect this transaction was determined based on the market value
of ALPS common shares at the consummation date and amounted to ¥3,365 million. As a result of the
acquisition, TDK owns approximately 7.9% of the outstanding common stock of ALPS. TDK continues to
use warehousing and transportation services which are now provided by ALPS. The sale of TDK
Logistics does not meet the criteria for reporting as discontinued operations as the operations and
cash flows of the former subsidiary will not be eliminated from the cash flows of TDK. TDK
recorded a gain on sale of ¥1,799 million ($16,813 thousand) which is included in operating income
in the consolidated statement of income for the year ended March 31, 2005.
22. Subsequent Events
On May 17, 2005, TDK acquired 100% of the issued and outstanding shares of Amperex Technology
Limited ("ATL"), a Hong Kong based company engaged in the production and sale of Polymer Lithium
Batteries with about 3,000 employees, for the total purchase price of approximately $100 million,
net of cash acquired. ATL was founded in July 1999 and has a manufacturing plant in Dongguan,
China.
The acquisition was made for the purpose of obtaining an operating base on which to develop
TDK's materials technology in the field of energy, where growth is expected in the future. ATL
specializes in the compact and flexible polymer lithium battery business, and has established a
production system of stable quality based on its special know-how in materials technology and
production engineering technology.
On June 29, 2005, TDK received a notification and assessment of additional tax from the Tokyo
Regional Tax Bureau (Nihonbashi Tax Office) asserting that prices charged and paid by TDK in
connection with sales and purchases of products involving its overseas subsidiaries have not been
commensurate with the prices of similar transactions involving unrelated third parties. The period
of additional assessments covers the tax years ending from March 1999 through March 2003.
The additional tax assessed by the Tokyo Regional Tax Bureau amounts to ¥11,960 million
including interest and penalty, which has been reflected as additional tax expense and other
expense, net of deferred income tax benefits in the accompanying consolidated statements of income
for the year ended March 31, 2005.
TDK intends to appeal the assessment with the Tokyo Regional Tax Bureau. However, no assurances
can be provided as to whether TDK will be successful or the ultimate outcome of the appeal.
- 117 -
Table of Contents
On July 19, 2005, TDK entered into an agreement with Invensys plc ("Seller"), a London based
manufacturer listed on the London Stock Exchange, to purchase the Lambda Power division of the
Seller for the aggregate purchase price of approximately $235 million, net of cash acquired. The
division consists of Lambda USA, Lambda Europe, Densei-Lambda KK and other entities, and conducts
business primarily related to development, production and sales of power supplies in thirteen
countries around the world. Under the terms of the agreement, TDK will be the sole owner of Lambda
Power businesses in the U.S. and Europe and acquire approximately 58% of the shares of
Densei-Lambda KK. TDK conducts its power supply business based on expertise in electronic
materials, particularly ferrite. The acquisition is intended to establish a more resilient
operating base in the power supply field, which is expected to continue to grow in the years ahead,
by combining TDK's strengths with those of the various businesses of the Lambda Power division.
23. Supplementary Information
Yen
U.S. Dollars
(Millions)
(Thousands)
2005
2004
2003
2005
(a) Statement of Income
Research and development
¥
36,348
32,948
30,099
$
339,701
Rent
7,349
8,037
9,194
68,682
Maintenance and repairs
11,090
11,875
11,111
103,645
Advertising costs
4,926
6,261
5,521
46,037
(b) Statement of Cash Flows
Cash paid during year for:
Interest
¥
331
350
646
$
3,093
Income taxes
¥
13,740
4,299
(1,270
)
$
128,411
Noncash activities
In fiscal 2005, TDK received a 7.9% ownership interest in ALPS having a fair value of ¥3,365
million in exchange for all issued and outstanding shares of TDK Logistics in a share-to-share
exchange transaction.
In fiscal 2004 and fiscal 2003, there were no material noncash investing and financing
activities.
- 118 -
Table of Contents
Schedule II
TDK CORPORATION AND SUBSIDIARIES
Valuation and Qualifying Accounts
(In millions of yen)
Years ended March 31, 2005, 2004 and 2003
Balance at
Balance
beginning
Charged to
Bad debts
Translation
at end of
of period
earnings
written off
adjustment
period
Year ended March 31, 2005:
Allowance for doubtful receivables
¥
2,000
598
106
68
2,560
Year ended March 31, 2004:
Allowance for doubtful receivables
¥
2,850
(227
)
373
(250
)
2,000
Year ended March 31, 2003:
Allowance for doubtful receivables
¥
3,770
(218
)
440
(262
)
2,850
- 119 -
Table of Contents
Item 18.
Financial Statements
Not applicable.
Item 19.
Exhibits
Documents filed as exhibits to this annual report are as follows:
1.1
ARTICLES OF INCORPORATION (English translation)
1.2
SHARE HANDLING REGULATIONS (English translation)
8.1
List of Significant Subsidiaries (See "Organizational Structure" in Item 4.C. of this
Annual Report)
11.1
TDK CODE OF ETHICS (English translation)
12.1
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of CEO of the
Company
12.2
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of CFO of the
Company
13.1
Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of CEO of the
Company
13.2
Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of CFO of the
Company
- 120 -
Table of Contents
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the
Registrant certifies that it meets all the requirements for filing of Form 20-F and has duly caused
this annual report to be signed on its behalf by the undersigned, thereunto duly authorized.
TDK Corporation
(Registrant)
Date:  August 11, 2005
By:
/s/Hajime Sawabe
Hajime Sawabe
Representative Director,
President and CEO
- 121 -