TDK's Consolidated Financial Results for the First Half of Fiscal Year 2004 
                           Ended September 30, 2003 
 
    TOKYO, Oct. 31 -- TDK Corporation today announced its Consolidated business 
results prepared in conformity with accounting principles generally accepted in 
the United States of America (the "U.S. GAAP") for the first half of fiscal year 
("FY") 2004 and the 2nd quarter ("Qtr.") and Non-Consolidated business results 
for the first half of FY 2004.  
 
    1) Summary  
    Consolidated results (April 1, 2003 - September 30, 2003)  
    Term     The first half of FY2004      The first half of FY2003          
                (April 1, 2003 -             (April 1, 2002 -  
                 Sep. 30, 2003)               Sep. 30, 2002)         Change 
    Item           (Yen     %     (U.S.$      (Yen        %     (Yen         % 
                  millions)      thousands)  millions)         millions) 
    Net sales    316,279  100.0  2,849,360    296,380   100.0   19,899     6.7  
    Operating  
     income       24,020    7.6    216,396     10,019     3.4   14,001   139.7    
    Income before  
     income taxes 25,014    7.9    225,351      7,636     2.6   17,378   227.6     
    Net income    19,257    6.1    173,486      4,645     1.6   14,612   314.6    
    Net income  
     per common  
     share         Yen 145.27          U.S.$1.31           Yen 34.98 
 
    (Sales breakdown)  
 
    Term     The first half of FY2004      The first half of FY2003          
                (April 1, 2003 -             (April 1, 2002 -   
                 Sep. 30, 2003)               Sep. 30, 2002)         Change 
    Product       (Yen      %      (U.S.$     (Yen        %     (Yen         % 
                millions)         thousands) millions)         millions) 
    Electronic  
     materials  
     and  
     components 254,352   80.4    2,291,459   234,272    79.0   20,080     8.6    
    Electronic  
     materials   82,302   26.0      741,459    88,918    30.0   (6,616)   -7.4  
    Electronic  
     devices     52,451   16.6      472,531    59,293    20.0   (6,842)   -1.5     
    Recording 
     devices    111,423   35.2    1,003,811    78,173    26.4   33,250    42.5    
    Semiconduc- 
     tors & 
     others       8,176    2.6       73,658     7,888     2.6      288     3.7     
    Recording  
     media &  
     systems     61,927   19.6      557,901    62,108    21.0     (181)   -0.3   
    Total sales 316,279  100.0    2,849,360   296,380   100.0   19,899     6.7   
    Overseas  
     sales      234,743   74.2    2,114,802   212,091    71.6   22,652    10.7 
 
     Notes: 
           
     1. The figures for net income per common share are calculated based upon  
        the weighted average number of shares of common stock (the total  
        outstanding number).  
           
     2. U.S.$1=Yen 111 
 
 
    Table of Contents 
                                                             Non-Consolidated  
Non-Consolidated results (April 1, 2003 - September 30, 2003)  
 
    Term     The first half of FY2004      The first half of FY2003          
                (April 1, 2003 -             (April 1, 2002 -  
                 Sep. 30, 2003)               Sep. 30, 2002)         Change 
    Item           (Yen     %     (U.S.$      (Yen        %     (Yen         % 
                  millions)      thousands)  millions)         millions) 
    Net sales   152,474  100.0    1,373,639   167,260   100.0  (14,786)   -8.8    
    Operating  
     income       1,062    0.7        9,567     3,480     2.1   (2,418)  -69.5   
    Current  
     income       4,819    3.2       43,414     6,937     4.1   (2,118)  -30.5    
    Net  
     income       1,127    0.7       10,153     1,056     0.6       71     6.7    
    Net income 
     per common  
     share         Yen   8.51          U.S.$0.07           Yen   7.96  
    Dividends  
     per share     Yen  25.00          U.S.$0.22           Yen  25.00   
 
     Notes: 
 
     1. Any portion less than Yen one million is disregarded, the same being  
        applicable hereinafter.  U.S.$1=Yen 111 (U.S. dollar translation is  
        added herein solely for convenience of readers outside Japan.) 
 
     2. The figures for net income per common share are calculated based upon  
        the weighted average number of shares of common stock (the total  
        outstanding number). 
 
    (Sales breakdown)  
 
 
    Term     The first half of FY2004      The first half of FY2003          
                (April 1, 2003 -             (April 1, 2002 -   
                 Sep. 30, 2003)               Sep. 30, 2002)         Change 
    Product       (Yen      %      (U.S.$     (Yen        %     (Yen         % 
                millions)         thousands) millions)         millions) 
    Electronic 
     materials  
     and compon- 
     ents       131,033   85.9    1,180,477   146,384    87.5  (15,351)  -10.5   
    Electronic  
     materials   64,157   42.1      577,990    70,620    42.2   (6,463)   -9.2   
    Electronic  
     devices     39,041   25.6      351,720    45,694    27.3   (6,653)  -14.6   
    Recording  
     devices     20,562   13.5      185,243    24,055    14.4   (3,493)  -14.5   
    Semiconduc- 
     tors &  
     others       7,272    4.7       65,513     6,013     3.6    1,259    20.9 
    Recording  
     media &  
     systems     21,440   14.1      193,153    20,876    12.5      564     2.7   
    Total sales 152,473  100.0    1,373,630   167,260   100.0  (14,787)   -8.8  
    Overseas  
     sales       87,909   57.7      791,972    90,622    54.2   (2,713)   -3.0
                                                                        
    Note:  U.S.$1=Yen 111  
 
 
    Table of Contents 
                                                                 Consolidated  
                        2nd Qtr. Consolidated results 
    Consolidated results (July 1, 2003 - September 30, 2003)  
                                                                   
    Term        The 2nd Qtr. of FY2004         The 2nd Qtr. of FY2003        
                   (July 1, 2003 -                (July 1, 2002 - 
                   Sep. 30, 2003)                 Sep. 30, 2002)     Change 
    Item           (Yen     %      (U.S.$         (Yen      %   (Yen         %   
                 millions)        thousands)     millions)      millions) 
                                                                       
    Net  
     sales      163,063  100.0    1,469,036     147,672   100.0  15,391   10.4   
    Operating  
     income      13,840    8.5      124,685       4,033     2.7   9,807   43.2    
    Income  
     before  
     income  
     taxes       13,850   8.5       124,775       4,333     2.9   9,517  219.6 
    Net income   11,232   6.9       101,189       2,484     1.7   8,748  352.2   
    Net income  
     per common  
     share         Yen 84.76           U.S.$0.76           Yen 18.71    
 
    (Sales breakdown)  
                                                                       
                                                                        
    Term        The 2nd Qtr. of FY2004         The 2nd Qtr. of FY2003        
                   (July 1, 2003 -                (July 1, 2002 - 
                   Sep. 30, 2003)                 Sep. 30, 2002)     Change 
    Product          (Yen     %      (U.S.$         (Yen      %   (Yen       %   
                 millions)        thousands)     millions)      millions) 
                                                                  
    Electronic  
     materials  
     and  
     components 130,563   80.1  1,176,243       116,102    78.6  14,461   12.5 
    Electronic  
     materials   41,882   25.7    377,315        43,058    29.2  (1,176)  -2.7    
    Electronic  
     devices     26,634   16.3    239,946        29,449    19.9  (2,815)  -9.6   
    Recording  
     devices     57,583   35.3    518,766        39,832    27.0  17,751   44.6   
    Semiconduc- 
    tors &  
    others        4,464    2.8     40,216         3,763     2.5     701   18.6 
    Recording  
     media &  
     systems     32,500   19.9    292,793        31,570    21.4     930    2.9 
    Total sales 163,063  100.0  1,469,036       147,672   100.0  15,391   10.4 
    Overseas  
     sales      121,960   74.8  1,098,739       105,900    71.7  16,060   15.2
                                                                        
     Notes: 
      
     1. The figures for net income per common share are calculated based upon  
        the weighted average number of shares of common stock (the total  
        outstanding number). 
 
     2. U.S.$1=Yen 111  
 
 
    Table of Contents 
 
    2) Management Policies  
 
    (1) Fundamental Management Policy  
    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 electronic materials, electronic devices, recording devices 
and recording media & systems.  This drive has been based on the company's 
founding spirit: "Contribute to culture and industry through creativity."  
    To preserve its identity as a dynamic company, TDK is dedicated to 
creating value for all stakeholders, including shareholders, customers, 
society and employees, by drawing on innovative thinking and a willingness to 
tackle new challenges.  TDK firmly believes that it must remain an 
organization that is a constant source of exciting ideas that are of true 
value to stakeholders.  
 
    (2) Fundamental Policy for Distribution of Earnings  
    Returning earnings to shareholders is one of TDK's highest management 
priorities.  As such, TDK's fundamental policy is to pay a stable dividend 
while taking into consideration a broad range of factors, including the return 
on equity (ROE), dividends as a percentage of equity (DOE) and the company's 
results of operation on a consolidated basis.  
    Retained earnings are used to make TDK more competitive by developing new 
products and technologies.  Funds are strategically invested in R&D to respond 
precisely to the rapid technological advances in the electronics industry.  
 
    (3) Medium- and Long-Term Management Strategy  
    In April 2000, TDK launched its Exciting 108 medium-term management plan 
with the aim of becoming an exciting company and increasing TDK's value.  The 
plan runs through to the end of March 2004.  
    TDK is prioritizing three key fields in the electronics industry: IT Home 
Electronics Appliances; High-Speed, Large-Capacity Networks; and Car 
Electronics.  By bolstering materials and process technologies, TDK fortes, 
the company hopes to deliver in a timely manner the new products that 
customers need.  In the dynamically changing electronics industry, TDK aims to 
raise its corporate value by increasing profitability without counting on  
top-line growth and sales without relying on market expansion.  
    Environmental activities are also positioned as an important management 
theme as TDK is determined to play its part in preserving the environment for 
future generations.  TDK is devoting its energies to achieve zero emission 
status at all sites in Japan and five sites overseas.  And, having formulated 
a fundamental environmental plan, "TDK Environmental Action 2010," the company 
is committed to contributing to the creation of a society oriented toward 
recycling.  
 
    (4) Corporate Ethics  
    TDK has formulated a corporate code of ethics to guide the activities of 
all members of TDK in their efforts to create an even better company.  The 
corporate code of ethics, which is based on TDK's corporate motto and 
principles, specifies the rules that the company, management and employees 
must observe in the conduct of business.  The corporate code of ethics 
demonstrates TDK's commitment to constantly upholding corporate ethical 
standards and improving risk management.  
 
    (5) Strategy to Improve Corporate Governance  
    Companies must conduct their activities and manage their operations in a 
fair, impartial and transparent manner, abiding by laws and regulations, and 
with the recognition that their existence is supported by shareholders, 
customers, society and employees.  TDK put in place internal controls with 
this fundamental recognition in mind.  It has also implemented a number of 
other measures in the same vein, such as appointing outside director and 
statutory auditors, involving people outside the company in setting directors' 
remuneration, and ensuring that corporate ethics are strictly observed.  
 
    (5-1) Management structure and other corporate governance systems 
concerning decision-making, strategy execution and supervision  
    One of TDK's 7 directors is an outside director, who also serves as the 
chairperson of the Remuneration Committee, which was set up to ensure the 
fairness of directors' remuneration.  Another committee, the Corporate Ethics 
Committee, was established to ensure that TDK upholds corporate ethical 
standards.  Independent of this committee, TDK has a "hotline" that encourages 
employees to report matters relating to corporate ethics and offer 
suggestions.  Moreover, having introduced the post of corporate officer, TDK 
has clearly demarcated responsibilities: directors are responsible for 
decision-making and oversight, while corporate officers have responsibility 
for executing day-to-day operations.  Corporate officers execute policies set 
by the Board of Directors in their respective areas of responsibility.  
    TDK applies the Corporate Auditor System in accordance with the Commercial 
Code of Japan, and 3 of its 5 corporate auditors come from outside the 
company.  The role of the corporate auditor is not restricted to the 
supervision of directors' activities. As required, they also audit business 
activities.  In addition, the Management Review & Support Department is 
primarily responsible for auditing business activities.  
    Another defining aspect of TDK's corporate governance system is that it 
receives advice and warnings from outside legal counsel and independent 
auditors regarding risks associated with TDK's corporate activities.  
     
    (5-2) Personal, financial and trading relationships between the company 
and the outside director and outside corporate auditors, and other beneficial 
relationships  
    There are no personal or financial relationships between TDK and the 
outside director or the three outside corporate auditors.  
 
    (5-3) Measures taken to enhance corporate governance over the past year  
    To ensure that corporate ethical standards are being upheld, TDK has put 
in place a global corporate ethics framework that encompasses the activities 
of overseas subsidiaries as well as domestic ones.  And, to comply with the 
U.S. Sarbanes-Oxley Act of 2002, a strict law relating to corporate governance 
that was prompted by a series of scandals involving major corporations, TDK 
formed a project team that includes outside experts to undertake a fundamental 
review and reinforcement of corporate systems.  Moreover, at the ordinary 
general meeting of shareholders held in June 2003, a resolution was approved 
that shortens the terms of directors to one year.  This change was made to 
give the company the best management structure with which to respond flexibly 
to changes in its operating environment and to build greater trust with 
shareholders.  
 
    (6) Policy Regarding Reduction of TDK's Share Trading Unit  
    On August 1, 2000, TDK reduced the trading unit of its common shares from 
1,000 to 100 shares to broaden the shareholder base and increase the liquidity 
of the company's shares.  TDK now considers that its shares have sufficient 
liquidity. TDK will consider a further reduction of the trading unit based on 
its stock price and market needs as well as on a cost-benefit analysis.  
 
    3) Business Results and Financial Position  
 
    1. Summary  
    Consolidated results for the first half of fiscal 2004, the six-month 
period from April 1, 2003 through September 30, 2003, are as follows:  

    TDK posted net sales of Yen 316,279 million (US$2,849,360 thousand), up 
6.7% from Yen 296,380 million.  Operating income rose 139.7%, from Yen 10,019 
million, to Yen 24,020 million (US$216,396 thousand).  Income before income 
taxes was Yen 25,014 million (US$225,351 thousand), up 227.6% from Yen 7,636 
million, and net income was Yen 19,257 million (US$173,486 thousand), an 
increase of 314.6% from Yen 4,645 million.  Net income per common share was 
Yen 145.27 (US$1.31), compared with Yen 34.98 in the first half of the 
previous fiscal year.  
    Average first-half yen exchange rates for the U.S. dollar and euro were 
Yen 118 (previous year Yen 123) and Yen 134 (previous year Yen 117), 
respectively, as the yen appreciated 4.1% versus the dollar and depreciated 
14.5% against the euro.  This had the effect of lowering net sales by 
approximately Yen 4.9 billion and operating income by approximately Yen 2.8 
billion.  
 
    (Sales by Segment) 
    The following is an explanation of sales by segment.  
    Electronic materials and components segment  
    In the electronic materials and components segment, net sales increased 
8.6%, from Yen 234,272 million, to Yen 254,352 million (US$2,291,459 
thousand). Sales in the electronic materials and electronic devices sectors 
fell compared with one year earlier when demand was buoyant.  Strong demand 
was seen in some areas, such as for digital audio and visual products.  The 
main factor behind the higher sales in this segment was a sharp increase in 
sales in the recording devices sector, where robust demand for HDD heads 
carried over from the previous fiscal year.  Sector results were as follows.  
 
    Electronic materials  
    Sales in the electronic materials sector decreased 7.4%, from Yen 88,918 
million, to Yen 82,302 million (US$741,459 thousand).  
    (Capacitors) Sales of multilayer chip capacitors, which account for the 
majority of capacitor sector sales, decreased in spite of a steady upturn in 
demand that began in the fourth quarter of fiscal 2003, particularly in 
respect of audio and visual equipment and communications products.  There were 
two main reasons for the year-on-year decrease: prices continued to fall due 
to calls for discounts from customers, and orders weakened following an 
increase during the first half of fiscal 2003 that followed a period of 
inventory reductions by customers.  
    (Ferrite cores and magnets) In ferrite cores and magnets, overall sales of 
ferrite cores declined year on year due to continuing calls for discounts on 
flyback transformers and deflection yoke cores in a soft TV and computer 
monitor market, the key applications for these products.  The decline also 
reflected stiff price-based competition in general-purpose power supply cores 
despite brisk demand.  Magnet sales also declined, despite solid growth in 
demand from the automobile industry, driven by the increasing use of 
electronics in vehicles.  Inventory reductions by customers in other 
industries and price discounting in all markets were to blame for the lower 
overall magnet sales.  As a result, sales for ferrite cores and magnets as a  
whole fell year on year.  
 
    Electronic devices  
    In the electronic devices sector, sales decreased 11.5%, from Yen 59,293 
million, to Yen 52,451 million (US$472,531 thousand).  
    (Inductive devices) Inductive devices, the largest product category in 
this sector, saw sales decline year on year due to inventory cutbacks by 
customers and price discounting pressure in the video game systems sector.  
Another factor was the strong demand in the same period of the previous fiscal 
year from TV manufacturers related to the 2002 FIFA World Cup(TM).  On the 
other hand, an expanding digital audio and visual products market, including 
products like DVD players, plasma display panels and LCDs, and the increasing 
use of electronics in vehicles resulted in higher demand in these areas.  
    (High-frequency components) Sales of high-frequency components decreased, 
despite an upswing in sales volume for use in mobile phones, the main market 
for these components.  The continuing glut in the supply of high-frequency 
components of all types prompted customers to demand price reductions that 
were greater than in other electronic components sectors.  Another reason for 
the overall drop in sales was lower demand for components in fields other than 
mobile phones.  
    (Other products) Overall, sales of other products decreased.  Solid growth 
continued to be recorded by sensors and actuators used in PCs and peripherals 
and in communications products.  However, this could not offset the negative 
effect of scaled-back production by customers, which dented demand for DC-DC 
converters for video game systems.  
 
    Recording devices  
    Recording devices sales jumped 42.5%, from Yen 78,173 million, to Yen 
111,423 million (US$1,003,811 thousand).  HDD heads, the main product in this 
sector, saw a dramatic increase in sales on the back of brisk demand in the 
HDD market, the main market for these heads.  The strong sales growth also 
reflected robust HDD sales at major TDK customers.  Sales of other heads also 
increased on buoyant demand.  
 
    Semiconductors & others  
    Sales in the semiconductors & others sector increased 3.7%, from Yen 7,888 
million, to Yen 8,176 million (US$73,658 thousand) thanks to higher sales of 
other products.  Holding back further growth was lower sales of semiconductors 
for LAN/WAN applications and set-top box modems due to sluggish levels of 
investment in communications infrastructure equipment and curbs on capital 
expenditures at customers.  Sales of anechoic chambers for noise control also 
fell.  
 
    Recording media & systems segment  
    In the recording media & systems segment, sales edged down 0.3%, from Yen 
62,108 million, to Yen 61,927 million (US$557,901 thousand).  Audiotape sales 
shrank as the long-term decline in demand continued due to the shift to 
optical media.  Videotape sales also declined, as demand shifted from VHS 
tapes to DVDs, which are rapidly gaining acceptance by consumers.  On the 
other hand, optical media products CD-Rs and DVDs both saw sales increase as 
this market continues to expand.  Growth in the DVD market is particularly 
noteworthy.  These sales increases offset falling sales of MDs resulting from 
lower demand and of CD-Rs due to declining sales prices.  While sales of  
LTO-standard* (Linear Tape-Open) tape-based data storage media for computers 
increased, the other products sector saw overall sales fall due to factors  
such as lower software sales.  
 
    * Linear Tape-Open, LTO, LTO logo, Ultrium and Ultrium logo are trademarks 
of HP, IBM and Seagate RSS in the U.S., other countries or both.  
 
    (Sales by Region)  
    By region, sales in Japan decreased 3.3%, from Yen 84,289 million, to Yen 
81,536 million (US$734,558 thousand). While sales increased in the recording 
devices sector, sales fell in the electronic materials and electronic devices 
sectors as well as the recording media & systems segment.  
    In the Americas, sales dropped 23.0%, from Yen 56,294 million, to Yen 
43,328 million (US$390,343 thousand).  Sales in all sectors, with the 
exception of semiconductors & others, fell due to a weak recovery in demand 
and the appreciation of the yen against the U.S. dollar.  
    In Europe, sales increased 7.6%, from Yen 34,368 million, to Yen 36,987 
million (US$333,216 thousand).  The main reasons were strong demand for 
optical media (CD-Rs and DVDs) and the yen's depreciation against the euro.  
    In Asia and Others, sales increased 27.2%, from Yen 121,429 million, to 
Yen 154,428 million (US$1,391,243 thousand), mainly due to higher sales of 
recording devices.  
    The overall result was a 10.7% rise in overseas sales year on year, from 
Yen 212,091 million, to Yen 234,743 million (US$2,114,802 thousand).  Overseas 
sales accounted for 74.2% of consolidated net sales, a 2.6 percentage point 
increase from 71.6%.  
    On a parent-company basis, net sales decreased 8.8%, from Yen 167,260 
million, to Yen 152,474 million (US$1,373,639 thousand) and current income 
decreased 30.5%, from Yen 6,937 million, to Yen 4,819 million (US$43,414 
thousand). Net income increased 6.7%, from Yen 1,056 million, to Yen 1,127 
million (US$10,153 thousand) and net income per common share was Yen 8.51 
(US$0.07).  
    At today's meeting of TDK's Board of Directors, an interim dividend of Yen 
25 per share of common stock was approved.  
 
 
    2. Financial Position  
 
    (2-1) The following table summarizes TDK's balance sheet at September 30, 
2003, compared with March 31, 2003.  
                      
     * Total assets                   Yen 750,715 million   0.5% increase 
     * Total stockholders' equity     Yen 561,662 million   1.4% increase 
     * Equity ratio                   74.8%                 0.7 percentage  
                                                             point increase 
 
    At the end of the interim period, cash and cash equivalents were Yen 
22,855 million higher than on March 31, 2003, but net property, plant and 
equipment and other assets decreased Yen 9,237 million and Yen 10,816 million, 
respectively.  As a result of the above items and other changes, total assets 
increased Yen 3,378 million from March 31, 2003.  
    Total liabilities decreased Yen 4,267 million. Trade payables increased 
Yen 3,494 million, but retirement and severance benefits decreased Yen 9,160 
million.  
    Total stockholders' equity increased Yen 7,777 million.  Retained earnings 
increased Yen 15,376 million and accumulated other comprehensive loss 
increased Yen 6,380 million.  
 
  
    (2-2) Cash Flows  
                                                               (Yen millions)  
                                                              
                         Fiscal 2004 Interim   Fiscal 2003 Interim   Change 
    Net cash provided  
     by operating activities   52,031                44,070           7,961     
    Net cash used in investing 
     activities               (18,535)              (13,345)         (5,190) 
    Net cash used in financing 
     activities                (5,292)               (4,340)           (952) 
    Effect of exchange rate  
     changes on cash and cash 
     equivalents               (5,349)               (4,324)         (1,025) 
    Net increase in cash and  
     cash equivalents          22,855                22,061             794  
    Cash and cash equivalents 
     at beginning of period   170,551               125,761          44,790 
    Cash and cash equivalents 
     at end of period         193,406               147,822          45,584  
 
    Operating activities provided net cash of Yen 52,031 million (US$468,748 
thousand), a year-on-year increase of Yen 7,961 million.  This mainly 
reflected an increase of Yen 14,612 million in net income to Yen 19,257 
million (US$173,486 thousand), and a decrease of Yen 4,861 million in 
depreciation and amortization to Yen 23,642 million (US$212,991 thousand).  
    Investing activities used net cash of Yen 18,535 million (US$166,982 
thousand), an increase of Yen 5,190 million.  A Yen 6,354 million increase in 
capital expenditures to Yen 20,826 million (US$187,622 thousand) was the main 
reason.  
    Financing activities used net cash of Yen 5,292 million (US$47,676 
thousand), Yen 952 million more year on year.  This primarily reflected a Yen 
565 million increase in sale (purchase) of treasury stock, net and a Yen 659 
million increase in dividends paid.  
 
    3. Fiscal 2004 Projections  
    TDK's consolidated and non-consolidated projections for fiscal 2004, as 
announced in July and May 2003, respectively, have been revised, as detailed 
below, based on the following considerations.  
 
     * TDK had assumed an average yen-U.S. dollar exchange rate for the fiscal  
       year of Yen 120.  But given that the actual average rate in the first  
       half of fiscal 2004 was Yen 118, TDK is now assuming an average rate of  
       Yen 110 for the second half of the year. 
 
     * There were signs of an upturn in some markets in the first half of the  
       year, highlighted by growth in demand for products used in digital home  
       electronic appliances and a recovery in demand for those used in  
       notebook computers and mobile phones.  On the other hand, the downside  
       of the growth in digital products is lower demand for existing  
       products, leading to disparity between sectors in the electronics  
       market. 
 
     * There was some divergence between the assumptions and premises used by  
       TDK at the start of the fiscal year and actual results for the first  
       half, prompting the need for revisions.  Both electronic materials and  
       electronic devices have seen orders pick up in respect of some products  
       while other categories continue to face stiff competition.  TDK has  
       thus revised its projected results for the second half of the year  
       based on new assumptions. 
 
     * In HDD heads, the mainstay product in the recording devices sector,  
       first-half results were strong on the back of rising demand for HDDs.     
       Given the order backlog in the third quarter, TDK believes that net  
       sales for fiscal 2004 may exceed initial estimates. 
 
     * TDK also believes that consolidated earnings may marginally exceed  
       previous projections, with the benefits of cost cutting and higher  
       production volumes outstripping the negative effects of exchange rates  
       and pressure to discount prices.  On a non-consolidated basis, TDK  
       forecasts that it will have difficulty fully absorbing the effect of  
       exchange rate fluctuations. 
 
 
    Consolidated Projections for Fiscal 2004  
                                                              
                              Revised projection % change   As of July 2003 
                                 Yen millions    from FY03   Yen millions 
 
    Net sales                   Yen 636,000          4.5     Yen 635,000  
    Operating income                 45,000        103.8          41,000  
    Income before income taxes       46,000        154.4          42,000  
    Net income                       33,500        178.7          30,000  
     
    Non-Consolidated Projections for Fiscal 2004  
                                                              
                              Revised projection  % change   As of May 2003 
                                 Yen millions     from FY03     Yen millions 
 
    Net sales                   Yen 307,800         -4.0     Yen 321,000 
    Operating income                  2,100        -34.0           8,000  
    Current income                    7,500        -17.4          13,000  
    Net income                        2,400           -            7,000  
 
 
    Cautionary Statement About Projections  
    This earnings release contains forward-looking statements, including 
projections, plans, policies, management strategies, targets, schedules, 
understandings and evaluations, about TDK and its group companies 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 earnings release.  
    In preparing forecasts and estimates, TDK and its group companies 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 earnings release are subject 
to a number of risks and uncertainties and may prove to be inaccurate.  
    The electronics markets in which TDK and its group companies operate are 
highly susceptible to rapid changes.  Furthermore, TDK and its group companies 
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.  
    The premises and assumptions used in computing the projections in this 
earnings release include, but are not limited to, those explained above.  
 
 
                                                                Consolidated  
    4) Statements of income  
                                                                                  
    Term     The first half of FY2004      The first half of FY2003          
                (April 1, 2003 -             (April 1, 2002 -  
                 Sep. 30, 2003)               Sep. 30, 2002)         Change 
    Item          (Yen      %    (U.S.$      (Yen        %     (Yen         % 
                  millions)      thousands)  millions)         millions) 
 
    Net  
    sales        316,279  100.0  2,849,360    296,380   100.0   19,899     6.7    
    Cost of  
     sales       227,919   72.1  2,053,324    223,738    75.5    4,181     1.9   
    Gross profit  88,360   27.9    796,036     72,642    24.5   15,718    21.6    
    Selling, gen- 
     eral and  
     administra- 
     tive  
     expenses     64,340   20.3    579,640     62,623    21.1    1,717     2.7 
    Operating  
     income       24,020    7.6    216,396     10,019     3.4   14,001   139.7 
    Other income 
    (deductions):                                        
    Interest and  
     dividend  
     income          655             5,901        708              (53)       
    Interest  
     expense        (212)           (1,910)      (198)             (14)        
    Foreign  
     exchange  
     gain (loss)  (2,037)          (18,351)    (1,699)            (338)         
    Other-net      2,588            23,315     (1,194)           3,782        
    Total other  
     income  
    (deductions)     994    0.3      8,955     (2,383)   -0.8    3,377      -   
    Income before  
     income taxes 25,014    7.9    225,351      7,636     2.6   17,378   227.6    
    Income taxes   5,511    1.7     49,649      2,756     1.0    2,755   100.0 
    Income before 
     minority  
     interests    19,503    6.2    175,702      4,880     1.6   14,623   299.7   
    Minority  
     interests      (246)   0.1     (2,216)      (235)   -0.0      (11)   -4.7 
    Net income    19,257    6.1    173,486      4,645     1.6   14,612   314.6 
    Net income  
     per common 
     share         Yen 145.27          U.S.$1.31           Yen 34.98  
    Average common 
     shares  
     outstanding          132,559 thousands                132,802 thousands 
 
     Notes:  
 
     1. The figures for net income per common share are calculated based upon  
        the weighted average number of shares of common stock (the total  
        outstanding number). 
 
     2. U.S.$1=Yen 111 
 
 
                                                                Consolidated  
 
    5) Balance sheets  
 
                                    ASSETS 
                      
    Term                   As of           As of        Change       As of   
                      Sep. 30, 2003    Mar. 31, 2003            Sep. 30, 2002     
    Item         (Yen     %     (U.S.$     (Yen      %    (Yen     (Yen     % 
                millions)     thousands)  millions)     millions) millions)    
    Current 
     assets      446,324  59.5  4,020,937 420,962  56.3  25,362  406,300  55.8 
    Cash and 
     cash  
     equival- 
     ents        193,406        1,742,396 170,551        22,855  147,822       
    Net trade  
     receivables 141,343        1,273,360 140,023         1,320  137,796  
    Inventories   77,663          699,667  73,917         3,746   83,714      
    Other current 
     assets       33,912          305,514  36,471        (2,559)  36,968     
    Noncurrent  
     assets      304,391  40.5  2,742,261 326,375  43.7 (21,984) 321,374  44.2    
    Investments 
     in secur- 
     ities        16,791          151,270  18,722        (1,931)  14,737      
    Net property,  
     plant and  
     equipment   216,670        1,951,982 225,907        (9,237) 244,040        
    Other assets  70,930          639,009  81,746       (10,816)  62,597        
    TOTAL        750,715 100.0  6,763,198 747,337 100.0   3,378  727,674 100.0  
                                                                       
            
                     LIABILITIES AND STOCKHOLDERS' EQUITY 
                                                                                  
    Term                   As of           As of        Change       As of   
                      Sep. 30, 2003    Mar. 31, 2003            Sep. 30, 2002     
    Item           (Yen    %     (U.S.$     (Yen      %    (Yen    (Yen     % 
                  millions)     thousands) millions)     millions) millions)
      
    Current  
     liabilities 109,836   14.7   989,514  105,014  14.0  4,822   99,683  13.7  
    Short-term  
     debt          1,620           14,595    1,919         (299)   1,834       
    Trade  
     payables     60,454          544,631   56,960        3,494   55,896    
    Accrued 
     expenses     37,766          340,234   39,571       (1,805)  33,031     
    Income taxes  
     payables      2,163           19,486    1,057        1,106    2,484     
    Other current  
     liabilities   7,833           70,568    5,507        2,326    6,438     
    Noncurrent  
     liabilities  75,989   10.1   684,585   85,078  11.4 (9,089)  58,971   8.1   
    Long-term debt, 
     excluding  
      current  
      installments   165            1,486       94           71      255    
    Retirement and 
     severance  
     benefits     75,811          682,982   84,971       (9,160)  58,318     
    Deferred  
     income taxes     13              117       13            -      398      
    Total  
     liabilities 185,825   24.8 1,674,099  190,092  25.4 (4,267) 158,654  21.8 
    Minority  
     interests     3,228    0.4    29,081    3,360   0.5   (132)   4,425   0.6 
    Common stock  32,641          294,063   32,641            -   32,641    
       
    Additional  
     paid-in  
     capital       63,051         568,027   63,051            -   63,051     
    Legal reserve  16,494         148,595   15,953          541   15,955     
    Retained  
     earnings     541,295       4,876,532  525,919       15,376  521,859     
    Accumulated  
     other compre- 
     hensive  
     income  
     (loss)       (85,204)       (767,604) (78,824)      (6,380) (64,100)      
    Treasury  
     stock         (6,615)        (59,595)  (4,855)      (1,760)  (4,811)    
    Total stock- 
     holders'  
     equity       561,662  74.8 5,060,018  553,885  74.1  7,777  564,595  77.6   
    TOTAL         750,715 100.0 6,763,198  747,337 100.0  3,378  727,674 100.0     
    Total common  
     shares  
     outstanding   132,376 thousands   132,625 thousands   132,634 thousands 
 
     Note: U.S.$1=Yen 111  
 
 
                                                                Consolidated  
 
    6) Statements of stockholders' equity  
 
                     Term               FY2003        The first half of FY2003 
                   The first half   (April 1, 2002 -     (April 1, 2002 - 
                   of FY2004         Mar. 31, 2003)       Sep. 30, 2002) 
                 (April 1, 2003 - 
                  Sep. 30, 2003) 
 
    Item          (Yen       (U.S.$         (Yen          (Yen millions)   
                millions)  thousands)     millions)   
    Common  
     stock:           
    Balance at  
     beginning  
     of period   32,641      294,063         32,641           32,641    
    Balance at  
     end of  
     period      32,641      294,063         32,641           32,641    
    Additional  
     paid-in  
     capital:                                                 
    Balance at  
     beginning  
     of period   63,051      568,027         63,051           63,051    
    Balance at  
     end of  
     period      63,051      568,027         63,051           63,051    
    Legal  
     reserve:                                                           
    Balance at  
     beginning of  
     period      15,953      143,721         15,683           15,683    
    Transferred  
     from  
     retained  
     earnings       541        4,874            270              272    
    Balance at  
     end of  
     period      16,494      148,595         15,953           15,955    
    Retained  
     earnings:                                                                 
    Balance at  
     beginning  
     of period  525,919    4,738,009        520,143          520,143    
    Net income   19,257      173,486         12,019            4,645    
    Cash divi- 
     dends       (3,316)     (29,874)        (5,973)          (2,657) 
    Losses on  
     sales of  
     treasury  
     stock          (24)        (215)             -                -    
    Transferred  
     to legal  
     reserve       (541)      (4,874)          (270)            (272) 
    Balance at  
     end of  
     period     541,295    4,876,532        525,919          521,859    
    Accumulated 
     other  
     comprehen- 
     sive income 
    (loss):                                                                    
    Balance at 
     beginning  
     of period  (78,824)    (710,127)       (43,999)         (43,999) 
    Other com- 
     prehensive  
     income (loss) 
     for the period, 
     net of tax  (6,380)     (57,477)       (34,825)         (20,101) 
    Balance at  
     end of  
     period     (85,204)    (767,604)       (78,824)         (64,100) 
    Treasury  
     stock:                                                                  
    Balance at  
     beginning  
     of period   (4,855)     (43,739)       (3,592)           (3,592) 
    Acquisition  
     of treasury 
     stock       (1,854)     (16,703)       (1,263)           (1,219) 
    Exercise of 
     stock option    94          847             -                 -  
    Balance at  
     end of  
     period      (6,615)     (59,595)       (4,855)           (4,811) 
    Total stock- 
     holders'  
     equity     561,662    5,060,018       553,885           564,595    
    Disclosure  
     of compre- 
     hensive in- 
     come (loss): 
    Net income  
     for the  
     period      19,257      173,486        12,019             4,645  
    Other com- 
     prehensive  
     income (loss)  
     for the per- 
     iod, net of 
     tax         (6,380)     (57,477)      (34,825)          (20,101) 
    Total com- 
     prehensive  
     income (loss)  
     for the  
     period      12,877      116,009       (22,806)          (15,456) 
  
     Note: U.S.$1=Yen 111  

                                                                Consolidated  
    7) Statements of cash flows  
                                                                             
    Term                                                     The first half 
                                                                of FY2003 
                          The first half of FY2004          (April 1, 2002 - 
                     (April 1, 2003 - Sep. 30, 2003)         Sep. 30, 2002) 
 
    Item            (Yen millions)     (U.S.$ thousands)     (Yen millions) 
 
    Cash flows from  
     operating  
     activities:      
     Net income         19,257              173,486               4,645       
     Adjustments to  
      reconcile net  
      income to net cash 
      provided by opera- 
      ting activities:        
     Depreciation and  
      amortization      23,642              212,991              28,503  
     Loss on disposal  
      of property and  
      equipment          1,231               11,090               2,441  
     Deferred income  
      taxes              2,494               22,468               2,533  
     Loss on securities  1,068                9,622                 949  
     Changes in assets  
      and liabilities:                                                         
     Decrease (increase)  
      in trade  
      receivables       (6,860)             (61,802)                306      
      Decrease (increase)  
       in inventories   (6,323)             (56,964)              4,616      
      Increase in trade  
       payables          6,411               57,757               5,451      
      Increase (decrease)  
       in income taxes  
       payables, net     2,072               18,667               5,865      
     Other-net           9,039               81,433             (11,239) 
    Net cash provided  
     by operating  
     activities         52,031              468,748              44,070      
    Cash flows from  
     investing activities:                                                      
      Capital  
      expenditures     (20,826)            (187,622)            (14,472) 
      Proceeds from  
       sales and  
       maturities of  
       investments       1,830               16,487                  11      
      Payment for pur- 
       chase of invest- 
       ments               (96)                (865)                (30) 
      Other-net            557                5,018               1,146      
    Net cash used in  
     investing  
     activities        (18,535)            (166,982)            (13,345) 
    Cash flows from  
     financing  
     activities:                                                             
      Proceeds from  
       long-term debt       35                  315                  35      
      Repayment of long- 
       term debt          (212)              (1,910)               (439) 
      Increase (decrease) 
       in short-term  
       debt, net           (15)                (135)                (60) 
      Sale (purchase)  
       of treasury  
       stock, net       (1,784)             (16,072)             (1,219) 
      Dividends paid    (3,316)             (29,874)             (2,657) 
    Net cash used in  
    financing  
    activities          (5,292)             (47,676)             (4,340) 
    Effect of exchange  
     rate changes on  
     cash and cash  
     equivalents        (5,349)             (48,189)             (4,324) 
    Net increase in  
     cash and cash  
     equivalents        22,855              205,901              22,061  
    Cash and cash  
     equivalents at  
     beginning of  
     period            170,551            1,536,495             125,761  
    Cash and cash  
     equivalents at  
     end of period     193,406            1,742,396             147,822  
 
     Note: U.S.$1=Yen 111  
 
 
    8) Summary of Significant Accounting Policies  
 
    1. The consolidated financial statements are prepared in conformity with  
       U.S. GAAP. 
 
    (1) Marketable Securities 
    Statement of Financial Accounting Standards ("SFAS") No.115, "Accounting 
for Certain Investments in Debt and Equity Securities" is adopted. 
 
    (2) Inventories 
    Inventories are stated at the lower of cost or market. Cost is determined 
principally by the average method. 
 
    (3) Depreciation 
    Depreciation of property, plant and equipment is principally computed by 
the declining-balance method for assets located in Japan and of certain 
foreign subsidiaries, and by the straight-line method for assets of other 
foreign subsidiaries based on estimated useful lives. 
 
    (4) 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 
base and operating loss and tax credit carry forwards. 
 
    (5) Derivatives Financial Instruments 
    SFAS No.133, "Accounting for Derivative Instruments and Hedging 
Activities" and SFAS No.138, "Accounting for Certain Derivative Instruments 
and Certain Hedging Activities, an amendment of FASB Statement No.133" are 
adopted. 
 
    (6) Goodwill and Other Intangible Assets 
    SFAS No.141, "Business Combinations" and SFAS No.142, "Goodwill and Other 
Intangible Assets" are adopted. 
 
    2. During this consolidated accounting period, TDK had 72 subsidiaries (20  
       in Japan and 52 overseas). TDK also had 8 affiliates (5 in Japan and 3  
       overseas) whose financial statements are accounted for by the equity  
       method. 
 
    3. Comprehensive income comprises net income and other comprehensive  
       income.  Other comprehensive income includes changes in foreign  
       currency translation adjustments, minimum pension liability adjustments  
       and net unrealized gains (losses) on securities.  The net income, other  
       comprehensive income (loss) and total comprehensive income (loss) for  
       the six months ended September 30, 2003 and 2002 were as follows; 
 
 
    Term             The first half of FY2004      The first half of FY2003 
                 (April 1, 2003 - Sep. 30, 2003) (April 1,2002 - Sep. 30,2002) 
    Item        (Yen millions)      (U.S.$ thousands)      (Yen millions) 
 
    Net income      19,257               173,486                4,645   
    Other compre- 
     hensive income 
     (loss), net  
     of tax:   
    Foreign currency 
     translation  
     adjustments   (14,709)             (132,513)             (15,542) 
    Minimum pension 
     liability  
     adjustments     8,296                74,739               (2,600) 
    Net unrealized  
     gains (losses)  
     on securities      33                   297               (1,959) 
    Total comprehen- 
     sive income  
     (loss)         12,877               116,009              (15,456) 
 
     Note: U.S.$1=Yen 111 
 
     4. Adoption of new accounting standards 
 
    (1) Accounting for Revenue Arrangements with Multiple Deliverables 
    In November 2002, the Emerging Issues Task Force reached a consensus on 
Issue 00-21 ("EITF 00-21"), "Accounting for Revenue Arrangements with Multiple 
Deliverables."  EITF 00-21 provides guidance on when and how to account for 
arrangements that involve the delivery or performance of multiple products, 
services and/or rights to use assets. TDK adopted EITF 00-21 on July 1, 2003.  
The adoption of EITF 00-21 did not have a material effect on TDK's 
consolidated financial position and results of operations. 
 
    (2) Consolidation of Variable Interest Entities 
    In January 2003, the Financial Accounting Standards Board issued FASB 
Interpretation No. 46 ("FIN 46"), "Consolidation of Variable Interest 
Entities, an interpretation of ARB No. 51". FIN 46 addresses consolidation by 
a primary beneficiary of a variable interest entity ("VIE"). FIN 46 applies 
immediately to all new VIEs created or acquired after January 31, 2003, TDK 
has not entered into any new arrangements with VIEs after January 31, 2003.  
For VIEs created or acquired before February 1, 2003, the provisions of FIN 46 
must be adopted by December 31, 2003.  The effect on TDK's consolidated 
financial statements of adopting the provisions of FIN 46 has not been 
determined. 
 
 
                                                                Consolidated  
    9) Segment Information  
    The following industry and geographic segment information are required by 
the Japanese Securities Exchange Law.  
 
     1. Industry segment information  
 
    Term     The first half of FY2004      The first half of FY2003          
                (April 1, 2003 -             (April 1, 2002 -   
                 Sep. 30, 2003)               Sep. 30, 2002)         Change 
    Product       (Yen      %      (U.S.$     (Yen        %     (Yen         % 
                millions)         thousands) millions)         millions)   
 
    Electronic  
    materials  
    and components                                                                 
     Net sales  254,352   100.0   2,291,459  234,272   100.0    20,080     8.6   
      Unaffilia- 
      ted custo- 
      mers      254,352           2,291,459  234,272            20,080     8.6    
      Interseg- 
       ment           -                   -        -                 -       -   
    Operating  
     expenses   228,520    89.8   2,058,739  223,557    95.4     4,963     2.2   
    Operating  
     income      25,832    10.2     232,720   10,715     4.6    15,117   141.1    
    Recording  
     media &  
     systems                                                                   
     Net sales   61,927   100.0     557,901   62,108   100.0      (181)   -0.3   
      Unaffilia- 
       ted cust- 
       omers     61,927             557,901   62,108              (181)   -0.3   
      Interseg- 
       ment           -                   -        -                 -       -   
     Operating  
      expenses   63,739   102.9     574,225   62,804   101.1       935     1.5 
     Operating  
      income  
      (loss)     (1,812)   -2.9     (16,324)    (696)   -1.1    (1,116) -160.3   
    TOTAL                                                                      
     Net sales  316,279   100.0   2,849,360  296,380   100.0    19,899     6.7 
      Unaffilia- 
       ted cust- 
       omers    316,279           2,849,360  296,380            19,899     6.7    
      Interseg- 
       ment           -                   -        -                 -       -  
     Operating  
      expenses  292,259    92.4   2,632,964  286,361    96.6     5,898     2.1 
     Operating  
      income     24,020     7.6     216,396   10,019     3.4    14,001   139.7 
                                                                        
     Note: U.S.$1=Yen 111  
 
 
     2. Geographic segment information  
 
                                 Term          The first half of FY2004               
                                           (April 1, 2003 -Sep. 30, 2003)             
    Region                              (Yen millions)   %   (U.S.$ thousands)  
    Japan         Net sales                158,716    100.0      1,429,874   
                  Operating income           3,508      2.2         31,604    
    Americas      Net sales                 49,713    100.0        447,865   
                  Operating income (loss)     (605)    -1.2         (5,450)    
    Europe        Net sales                 36,568    100.0        329,441   
                  Operating income (loss)      (59)    -0.2           (532)     
    Asia and  
     others       Net sales                185,691    100.0      1,672,892 
                  Operating income          21,560     11.6        194,234    
    Intersegment 
     elimina- 
      tions       Net sales                114,409               1,030,712            
                  Operating income (loss)      384                   3,460  
    Total         Net sales                316,279    100.0      2,849,360 
                  Operating income          24,020      7.6        216,396 
 
 
                           Term   The first half of FY2003  
                                (April 1, 2002 - Sep. 30, 2002)   Change 
    Region                      (Yen millions)      %      (Yen millions)    %      
  
    Japan       Net sales      173,895         100.0      (15,179)      -8.7 
                Operating  
                 income          2,664           1.5          844       31.7 
    Americas    Net sales       50,938         100.0       (1,225)      -2.4 
                Operating  
                 income (loss)    (309)         -0.6         (296)     -95.8 
    Europe      Net sales       34,162         100.0        2,406        7.0 
                Operating  
                 income (loss)  (2,295)         -6.7        2,236       97.4 
    Asia and 
     others     Net sales      148,987         100.0       36,704       24.6 
                Operating  
                 income          9,870           6.6       11,690      118.4 
    Interseg- 
     ment  
     elimina- 
     tions      Net sales      111,602                      2,807        
                Operating  
                 income (loss)     (89)                       473 
    Total       Net sales      296,380         100.0       19,899        6.7 
                Operating  
                 income         10,019           3.4       14,001      139.7 
 
     Notes:  
     1. The sales are classified by geographic areas of the seller and include  
        transfers between geographic areas. 
     2. U.S.$1=Yen 111 
     3. Sales by region  
 
 
    Term     The first half of FY2004      The first half of FY2003  
                (April 1, 2003 -             (April 1, 2002 -   
                 Sep. 30, 2003)               Sep. 30, 2002)         Change 
    Region       (Yen      %      (U.S.$     (Yen        %     (Yen         % 
                millions)         thousands) millions)         millions)    
 
    Americas     43,328   13.7     390,343    56,294    19.0  (12,966)  -23.0   
    Europe       36,987   11.7     333,216    34,368    11.6    2,619     7.6   
    Asia and  
     others     154,428   48.8   1,391,243   121,429    41.0   32,999    27.2   
    Overseas  
     sales  
     total      234,743   74.2   2,114,802   212,091    71.6   22,652    10.7   
    Japan        81,536   25.8     734,558    84,289    28.4   (2,753)   -3.3   
    Net sales   316,279  100.0   2,849,360   296,380   100.0   19,899     6.7 
 
     Notes:  
     1. Sales by region are classified by geographic areas of the buyer. 
     2. U.S.$1=Yen 111 
 
     Table of Contents 
     Consolidated  
 
     10) Fair Value of Securities  
                                           Gross           Gross   
                                        Unrealized       Unrealized     Fair 
    (Yen millions)              Cost   Holding Gains   Holding Losses   Value 
 
    As of Sep. 30, 2003  
            Equity securities  1,262         180              13        1,429  
            Debt securities    1,099          --               2        1,097  
       
            Total              2,361         180              15        2,526  
  
    As of March 31, 2003  
            Equity securities  3,455         122              11        3,566  
            Debt securities    2,495           3              --        2,498  
   
            Total              5,950         125              11        6,064  
  
    As of Sep. 30, 2002                 
            Equity securities  5,766         150           2,622        3,294  
            Debt securities    3,287          12              --        3,299  
   
            Total              9,053         162           2,622        6,593  
  
  
                                           Gross           Gross   
      U.S.$1=Yen 111                    Unrealized       Unrealized     Fair 
      (U.S.$ thousands)         Cost   Holding Gains   Holding Losses   Value 
 
    As of Sep. 30, 2003  
            Equity securities 11,369       1,622             117       12,874  
            Debt securities    9,901          --              18        9,883  
            Total             21,270       1,622             135       22,757  
 
 
    11) Fair Value of Derivatives  
   
                                        Contract    Carrying    Estimated Fair 
    (Yen millions)                       Amount      Amount          Value 
 
    As of Sep. 30, 2003  
            Forward foreign exchange 
             contracts                    3,124        (21)           (21) 
            Currency swap agreements 
             for loans to its 
             subsidiaries                10,418         (9)            (9) 
    As of March 31, 2003             
            Forward foreign exchange 
             contracts                   19,016         39             39  
            Currency swap agreements 
             for loans to its 
             subsidiaries                13,794       (287)          (287) 
    As of Sep. 30, 2002             
            Forward foreign exchange 
             contracts                   17,549        (84)           (84) 
            Currency swap agreements 
             for loans to its 
             subsidiaries                13,613        (48)           (48) 
  
                                        Contract    Carrying    Estimated Fair 
    (U.S.$ thousands) U.S.$1=Yen 111     Amount      Amount          Value 
    
    As of Sep. 30, 2003             
            Forward foreign exchange 
             contracts                   28,144       (189)          (189) 
            Currency swap agreements 
             for loans to its 
             subsidiaries                93,856        (81)           (81) 
 
 
    Table of Contents 
    Non-Consolidated  
 
    12)  Statements of income (Non-Consolidated)  
                               
        Term          The first half             The first half 
                        of FY2004                  of FY2003   
                      (April 1, 2003             (April 1, 2002 
                      - Sep. 30, 2003)           - Sep. 30, 2002)      
    Item            (Yen          (U.S.$         (Yen       (Yen        Change 
                  millions)   %   thousands)   millions)   %   millions)   % 
    Income                             
      Sales        152,474  100.0  1,373,639   167,260   100.0  (14,786)  -8.8  
      Other 
       income        7,411            66,765     5,815  
                         
                   159,885         1,440,405   173,075      
    Costs and 
     expenses  
      Cost of 
       sales       123,309         1,110,891   136,194  
      S.G.A. 
       expenses     28,103           253,180    27,585  
      Interest 
       expenses         12               108         8     
    Other expenses   3,641            32,801     2,350  
 
                   155,066         1,396,990   166,138  
    Current income   4,819    3.2     43,414     6,937     4.1   (2,118) -30.5  
  
    Extraordinary 
     profit            446             4,018       253              
    Extraordinary 
     loss            4,724            42,558     5,102              
         
    Income before 
     income taxes      541    0.4      4,873     2,088     1.2   (1,547) -74.1  
                      
    Income taxes                             
      Current         (100)             (900)   (1,077)   
      Deferred        (486)           (4,378)    2,109         
 
    Net income       1,127    0.7     10,153     1,056     0.6       71    6.7  
 
    Note: U.S.$1=Yen 111  
 
                                                              Non-Consolidated  
    13) Balance sheets (Non-Consolidated)  
                                     
 
                                   ASSETS 
 
    Term                                                         
                           As of Sep. 30, 2003             As of Mar. 31, 2003 
     Item          (Yen millions)   %   (U.S.$ thousands)  (Yen millions)   % 
     Current assets        
      Cash              57,015               513,648            55,240  
     Marketable 
      securities        12,999               117,108            11,399  
     Trade receivables  
     Notes               3,778                34,036             4,429  
     Accounts           74,120               667,747            70,136  
     Allowance for 
      doubtful 
      receivables         (131)               (1,180)             (112)  
  
     Net trade 
      receivables       77,767               700,603            74,454  
 
     Inventories        23,962               215,873            26,136  
     Prepaid expenses 
      and other 
      current assets    68,875               620,495            57,686  
 
     Total current 
      assets           240,620    47.0     2,167,747           224,917    44.1 
 
     Investments and 
      advances  
     Investments in 
      securities         7,543                67,954             8,885  
     Share of 
      subsidiaries     103,353               931,108           103,085  
     Other              30,726               276,810            37,469  
     Allowance for 
      doubtful 
      receivables         (714)               (6,432)             (632)  
 
     Total investments 
      and advances     140,908    27.6     1,269,441           148,807  
 
     Property, plant 
      and equipment  
       Land             13,784               124,180            14,929  
       Buildings        42,500               382,882            43,811  
       Machinery and 
        equipment       56,778               511,513            57,451  
       Construction in 
        progress         5,834                52,558             7,545  
 
     Total property, 
      plant and 
      equipment        118,897    23.2     1,071,144           123,737    24.3  
 
     Other assets       11,223     2.2       101,108            12,097     2.4  
     TOTAL             511,650   100.0     4,609,459           509,561   100.0  
 
    Term                          Change               As of Sep. 30, 2002 
     Item                     (Yen millions)      (Yen millions)           % 
     Current assets         
     Cash                         1,775              51,904      
     Marketable securities      117,108              11,399          
     Trade receivables  
      Notes                        (651)              5,230    
      Accounts                    3,984              79,395  
      Allowance for 
       doubtful receivables         (19)               (116)  
  
     Net trade receivables        3,313              84,510 
 
     Inventories                 (2,174)             25,755  
     Prepaid expenses and other 
      current assets             11,189              50,083  
  
     Total current assets        15,703             220,153              43.1  
  
     Investments and advances               
     Investments in securities   (1,342)              4,200      
     Share of subsidiaries          268             105,807      
     Other                       (6,743)             46,727      
     Allowance for doubtful 
      receivables                   (82)             (1,052)     
  
     Total investments and 
      advances                   (7,899)            155,682              30.5  
  
     Property, plant and 
      equipment  
       Land                      (1,145)             16,515      
       Buildings                 (1,311)             44,925  
     Machinery and equipment       (673)             63,295  
     Construction in progress    (1,711)              6,796  
 
     Total property, plant and 
      equipment                  (4,840)            131,533              25.7  
  
     Other assets                  (874)              3,556               0.7  
     TOTAL                        2,089             510,925             100.0  
 
     Note: U.S.$1=Yen 111  
 
 
    Non-Consolidated  
 
LIABILITIES AND STOCKHOLDERS' EQUITY 
 
     Term              As of Sep. 30, 2003             As of Mar. 31, 2003   
     Item        (Yen millions)   %   (U.S.$ thousands)    (Yen millions)   %  
 
     Current 
      liabilities  
       Trade 
        payables 
        accounts      36,655               330,225             32,843  
       Accrued 
        expenses      10,003                90,117              8,387  
       Accrued income 
        taxes             65                   585                 52  
       Other current 
        liabilities   15,758               141,963             19,389  
  
     Total current 
      liabilities     62,483    12.2       562,909             60,672     11.9  
 
     Retirement and 
      severance 
       benefits       33,746               304,018             29,337  
     Directors' 
      retirement 
      allowance          296                 2,666                309  
 
     Total noncurrent 
      liabilities     34,043     6.7       306,693             29,646      5.8  
  
     Total 
      liabilities     96,526    18.9       869,603             90,319     17.7  
 
     Stockholders' 
      equity  
       Common stock   32,641               294,063             32,641  
       Additional 
        paid-in 
        capital       59,256               533,837             59,256   
       Legal reserve   8,160                73,513              8,160  
       Retained 
        earnings     321,723             2,898,405            323,999  
       Unrealized 
        holding gain 
        (loss) on 
         other 
         securities      (44)                 (396)                37  
       Treasury 
        stock         (6,615)              (59,594)            (4,854)  
 
     Total stockholders' 
      equity         415,123    81.1     3,739,846            419,241     82.3  
 
     TOTAL           511,650   100.0     4,609,459            509,561    100.0  
 
 
    Term      Change                                As of Sep. 30, 2002 
    Item                    (Yen millions)       (Yen millions)        % 
 
    Current liabilities  
     Trade payables accounts     3,812                38,055  
     Accrued expenses            1,616                 9,589  
     Accrued income taxes           13                    27  
     Other current liabilities  (3,631)               14,060  
 
    Total current liabilities    1,811                61,733          12.1  
 
    Retirement and severance 
     benefits                    4,409                25,417  
    Directors' retirement 
     allowance                     (13)                  302  
 
    Total noncurrent 
     liabilities                 4,397                25,720           5.0  
 
    Total liabilities            6,207                87,453          17.1  
 
    Stockholders' equity  
     Common stock                   --                32,641  
     Additional paid-in capital     --                59,256  
     Legal reserve                  --                 8,160  
     Retained earnings          (2,276)              328,238  
     Unrealized holding gain 
      (loss) on other securities   (81)                  (15)  
     Treasury stock             (1,761)               (4,810)  
 
     Total stockholders' 
      equity                    (4,118)              423,471          82.9  
  
    TOTAL                        2,089               510,925         100.0  
 
    Note: U.S.$1=Yen 111  
 
 
     Supplementary Information  
     Ratio of results on a Consolidated basis to results on a  
     Non-Consolidated basis  
 
                                 Ratio of the           Ratio of the 
                                  first half            corresponding 
                                   of FY2004       period of the previous year 
 
     Net sales                         2.1                    1.8  
     Operating income                 22.6                    2.9  
     Income before income taxes       46.2                    3.7  
     Net income                       17.1                    4.4  
 
     Exchange rates used for conversion  
  
                      Term      April 1, 2003 -      April 1, 2002 - 
                                 Sep. 30, 2003        Sep. 30, 2002 
     Item                   US$=Yen    Euro=Yen     US$=Yen    Euro=Yen 
 
     Sales                   118.08      133.51      123.07      116.92  
 
     The end of the period   111.25      129.19      122.60      120.37  
 
    Non-Consolidated  
  
    Term        April 1, 2003 -     April 1, 2002 -          April 1, 2002 - 
                Sep. 30, 2003       Sep. 30, 2002            March 31, 2003 
  
            Amount    Ratio to    Amount   Ratio to  Change  Amount  Ratio to 
    Item    (Yen     sales (%)    (Yen     sales (%)   (%)    (Yen   sales (%) 
           millions)             millions)                  millions)  
 
    Invest- 
     ment in 
     facil- 
     ities   8,993       --        6,999      --      28.5    24,959      --  
  
    Depreci- 
     ation 
     expens- 
     es     11,127      7.3       12,518      7.5    -11.1    26,529     8.3  
 
     Research 
      and 
      develop- 
      ment 
      expens- 
      es    11,568      7.6       10,967      6.6      5.5    22,530     7.0  
 
    Result of 
     financial 
     opera- 
     tion          3,262                 2,678        21.8          2,829 
 
    Number of 
     employees 
     (as at the 
      end of the 
      period)      6,176                 6,304                      6,212  
 
 
    Consolidated  
 
    Term        April 1, 2003 -     April 1, 2002 -          April 1, 2002 - 
                Sep. 30, 2003       Sep. 30, 2002            March 31, 2003 
  
            Amount    Ratio to    Amount   Ratio to  Change  Amount  Ratio to 
    Item    (Yen     sales (%)    (Yen     sales (%)   (%)    (Yen   sales (%) 
           millions)             millions)                  millions)  
 
    Invest- 
     ment 
     in 
     facil- 
     ities   20,826      --        14,472     --      43.9    41,451     --  
 
    Deprecia- 
     tion 
     expens- 
     es      23,642     7.5        28,503    9.6     -17.1    57,789    9.5  
 
    Research 
     and 
     develop- 
     ment 
     expens- 
     es      17,179     5.4        15,649    5.3       9.8    31,862    5.2  
  
    Result of 
     financial 
     operation      443                   510        -13.1           802 
 
    Number of 
     employees 
     (as at the 
      end of the 
      period)    34,535                31,728                     31,705  
 
    Ratio of 
     overseas 
     production   60.4%                 55.6%                      56.0% 
 
 
    OVERSEAS SALES BY DIVISION  
  
    Term        April 1, 2003 -     April 1, 2002 -          April 1, 2002 - 
                Sep. 30, 2003       Sep. 30, 2002            March 31, 2003 
  
            Amount    Ratio to    Amount   Ratio to  Change  Amount  Ratio to 
    Item    (Yen     sales (%)    (Yen     sales (%)   (%)    (Yen   sales (%) 
           millions)             millions)                  millions)  
 
    Elec- 
     tronic 
     materials 
     and 
     compon- 
     ents   188,074     59.5       167,212    56.4    12.5   341,615    56.1  
    Elec- 
     tronic 
     mater- 
     ials    60,211     19.0        64,577    21.8    -6.8   122,761    20.2  
    Elec- 
     tronic 
     devices 29,583      9.4        29,360     9.9     0.8    58,671     9.6  
    Recording 
     devices 94,222     29.8        69,154    23.3    36.2   152,476    25.0  
    Semi- 
     conduc- 
     tors & 
     others   4,058      1.3         4,121     1.4    -1.5     7,707     1.3  
    Recording 
     media & 
     systems 46,669     14.7        44,879    15.2     4.0   101,762    16.7  
  
    Overseas 
     sales  234,743     74.2       212,091    71.6    10.7   443,377    72.8  
 
SOURCE  TDK Corporation  
    -0-                             10/31/2003 
    /CONTACT:  Michinori Katayama, Corporate Communications Department of TDK 
Corporation(Tokyo), +81-3-5201-7102; or Francis J. Sweeney of TDK U.S.A. 
Corporation, +1-516-535-2600; or Ron Matier of TDK UK Limited,  
+44-1737-773773/ 
    (TDK) 

 





END