Press Release 2002

Yokogawa Electric Corporation (Yokogawa) and Ando Electric Co., Ltd. (Ando) have agreed that, for the purpose of enhancing and expanding business in device testers, including device handlers and communication test, they will unify their businesses and reorganize. The companies also announced that Yokogawa will acquire 100 percent of Ando shares through a stock swap effective October 1, 2002.

In the new corporate strategy announced on January 14, 2000, Yokogawa expressed its plan to actively participate in the test and measurement fields of device testers and handlers as well as communication test used primarily in communications networks and multimedia. Ando had been contemplating an alliance with a leading company to strengthen its business structure. Under these circumstances, Yokogawa and Ando found it mutually beneficial to share business strategies and resources to enhance their respective businesses and concluded an alliance agreement on January 31, 2001. At the same time, Yokogawa acquired 33 percent of Ando's shares.

Since then, the two companies have jointly been developing products that integrate Yokogawa's device technology with Ando's communication testing technology. As early as September 2001, the companies together introduced to the market optical communication test equipment that uses 40-Gbit/s module developed by Yokogawa. Other joint efforts in semiconductor related business are also bearing fruit. Yokogawa and Ando clearly demonstrated their alliance when they exhibited their products together in the same booth at the specialized semiconductor tradeshow SEMICON JAPAN 2001 at Makuhari Messe (near Tokyo) for three days in December 2001. The alliance has also had the favorable effect of reducing manufacturing costs. Yokogawa's just-in-time production method and one-by-one electronic parts procurement system were integrated into Ando's manufacturing lines and resulted in a drastic reduction in costs.

Through such co-operation, the companies have acknowledged the need to deepen the alliance further to significantly expand their business volume and scope in the test and measurement field that is changing rapidly and dynamically. Recognition of this need led Yokogawa and Ando to conclude that Yokogawa and Ando should join forces energetically and completely to become a world leading company in this field.

Business Integration and Reorganization
Following the unification and reorganization of the two businesses, Yokogawa will acquire all Ando shares effective October 1, 2002 through a stock swap: Ando's shareholders will receive 0.53 Yokogawa share determined based on an appraisal by a third party for every one Ando share they exchange. With this transaction, effective September 25, 2002 Ando stock will no longer be listed on the Tokyo Stock Exchange. Prior to the actual transaction, Ando will enhance its financial structure by raising capital through the sale of new shares on May 30, 2002. Yokogawa will fully acquire these new shares (expected to be 8 million shares) worth 4.56 billion yen.

The aim of this business unification and reorganization is to create new test solutions that will add value for customers through technology integration. For this reason, after the exchange of shares on October 1, the two businesses will be managed in the following manner:

1. Ando's device testers business, including device handlers, will be consolidated with Yokogawa.
2. Yokogawa's business of communication test will be consolidated with Ando.

After reorganization, current president Masao Motohashi will manage communication test business and Ando will continue to grow and expand its business. Yokogawa and Ando employees assigned to the respective businesses will remain under their original employ, but they will continue to work for their respective business under the new management structure. Business conducted under an agreement with LTX will continue to be handled by Ando.

Under this structure, Yokogawa and Ando as a group can extend a wide range of products and solutions to customers in the field of device test to communication test and grow as one of the top three test and measurement suppliers in the global market.

The Yokogawa Group is targeting consolidated sales of 500 billion yen and a consolidated operating profit of 50 billion yen in fiscal year 2005 under the corporate strategy entitled VISION-21 and ACTION-21 announced in January 2000. Under this strategy, consolidated sales for the test and measurement business for fiscal year 2005 had been designed to be 150 billion yen. Reflecting the new business unification and reorganization announced today, the target has been revised to 200 billion yen.