The financial forecast for the fiscal year (full year) ended March 31, 2003 announced on November 8, 2002 has been revised as follows;

Consolidated financial forecast revision
1. Financial forecast revision for fiscal year (full year) ended March 31, 2003 (April 1, 2002 - March 31, 2003)

Non-consolidated financial forecast revision
2. Financial forecast revision for fiscal year (full year) ended March 31, 2003 (April 1, 2002 - March 31, 2003)

3. Reason for revision
Recently, the outlook for the world economy has become increasingly uncertain due to the Iraqi situation, as well as the economic slowdown in Western countries and the prolonged Japanese recession.

In the electronics and semiconductor industries in which we operate, demand for PCs and other final products is sluggish, and the prices of memory chips and other semiconductor devices have been falling sharply since February. Furthermore, semiconductor manufacturers are increasingly tending to reduce or postpone investments in plants and equipment. In the medium and long term, the semiconductor industry is expected to continue growing while experiencing the ups and downs of the business cycle, but the current business environment is very harsh compared to prospects when the previous forecasts were announced. At present, we expect the market to start picking up in the second half of the year ending in March 2004, but such predictions depend on future developments in the world economy and are thus difficult to make.

In addition to strong price reduction pressure, the two year slowdown of investments in semiconductor plants and equipment has been causing sluggish orders in TEL's flagship semiconductor production equipment business, resulting in increased concern about declining inventory turnover. For this reason, an increase in devaluation loss of inventory is expected to be reported at the end of the current term.

In the past, we have made efforts to reduce costs by reforming our corporate structure and taking other measures, but in view of these recent rapid changes in the business environment that confronts us, recently we regretfully decided to revise downward the financial forecast for the year ended in March 2003.

We recognize that this stagnant business performance is not only the result of the sluggish market but also the outcome of structural problems, and in order to further increase profitability under these circumstances we consider it essential to implement drastic reforms in our business structure, including worldwide streamlining of operation bases, as well as lowering fixed costs through personnel cuts involving around 1,000 employees and other measures. For this reason, we decided to include costs required to implement these business structure reforms in the financial forecast for the year ended March 2003

At the same time, based on these conditions, we reviewed the possibility of recovering deferred tax assets.

(1) Net sales
Despite the severe business environment, we continued to concentrate our efforts on strengthening sales, and as a result, we expect that all business sectors will achieve the previously announced sales goals both on a consolidated and on a non-consolidated basis.

(2) Ordinary income
Due to efforts for increased sales and cost reductions, revenue improved as compared to the initial predictions, but devaluation loss of inventory is expected to increase by around 6.5 billion yen on a consolidated basis as compared to the previous forecast and grow by around 4 billion yen on a non-consolidated basis. As a result, we are expecting to post an ordinary loss of 3.5 billion yen, 5.5 billion yen less than previously predicted, on a consolidated basis and an ordinary loss of 12 billion yen, 2 billion yen less, on a non-consolidated basis.

(3) Net income
As part of our efforts to implement reforms in our business structure, unusual losses for the providing of a series of expenditures, amounting to roughly 22.7 billion yen on a consolidated basis and around 11 billion yen on a non-consolidated basis will be reported. Expenditures include additional costs that accompany disposal of assets following worldwide streamlining of operation bases and personnel reductions. In addition, due to losses from devaluation of securities caused by the sharp fall of stock prices at the end of the fiscal year and other factors, losses before income taxes are expected to be 27.5 billion yen on a consolidated basis and 30 billion yen on a non-consolidated basis. Furthermore, the possibility of recovering deferred tax assets was reviewed, and as a result we are expecting to post a net loss of 41 billion yen on a consolidated basis and a net loss of 43 billion yen on a non-consolidated basis as deferred tax of around 13.8 billion yen on a consolidated basis and 19.8 billion yen on a non-consolidated basis will additionally be reported due to a non-consolidated write-off of deferred tax assets and other factors.

(Note) The forecast figures described above are calculated on the basis of information currently available and may differ from actual financial results reported later.