Business integration

RNS Number:8547N
Toshiba Corporation
23 July 2003

                                                                   July 22, 2003





                                                Tadashi Okamura, President & CEO

                                                             Toshiba Corporation

                                         Shibaura 1-1-1, Minato-ku, Tokyo, Japan

                                        Contact: Hideo Kitamura, General Manager


                                                  Corporate Communication Office


                                                             Tel: [phone]



 Notice of Integration of Industrial Electric and Automation Systems Businesses



Toshiba Corporation (President and CEO: Tadashi Okamura, hereafter 'Toshiba')
and Mitsubishi Electric Corporation (President and CEO: Tamotsu Nomakuchi,
hereafter 'Mitsubishi') today agreed to establish a new joint venture company
(hereafter "Newco"), with equal ownership. Newco will succeed to the industrial
electric and automation systems business for manufacturing plant (the "Business"
see 3.(1) for details) now conducted directly by, or through subsidiaries of,
Toshiba and Mitsubishi.



The following are the procedure to form Newco:



1.     On October 1, 2003, Toshiba and Mitsubishi will separate the Businesses
into a Toshiba and Mitsubishi joint venture company, TMA Electric Corporation
(President and CEO: Mamoru Kitamura, hereafter "TMAE"), established in October
1999, with equal ownership. This process is hereinafter referred to as 
"Corporate Separation".



2.     On the same day as and following the Corporate Separation, Toshiba and
Mitsubishi will  merge TMAE into Toshiba GE Automation Systems Corporation
(President and CEO: Takuo Funahashi, hereafter 'TGAJ'), and will also do the
same for and TGA Investment Service Yugen gaisha (President and CEO: Naoki
Kanda, a Toshiba subsidiary, hereafter 'TGAIS'). TGAJ will commence business as
Newco, equally owned by Toshiba and Mitsubishi.



3.     Newco will change its trading name to Toshiba Mitsubishi-Electric
Industrial Systems (provisional name).



Through synergies achieved by the integration, Toshiba and Mitsubishi will
strengthen operating structures in the Businesses, which will enable Newco to
position itself as a leading system integrator and assure its survival in the
global market. Enhanced promotion of overall competitiveness, global presence
and management efficiency is also anticipated.



Toshiba and Mitsubishi reached basic agreement on the merger on April 18, 2003
and have now established a definitive agreement.



1. Outline of the integration

(1)     Schedule

July 16, 2003                  Toshiba decided approved Corporate Separation

July 22, 2003                  Mitsubishi decided approved Corporate Separation

July 23, 2003                  Formal Agreement between Mitsubishi and
                               Toshiba on Corporate Separation (Plan)

October 1, 2003                Date of Corporate Separation (Plan)

October 1, 2003                Registration of Corporate Separation (Plan)



(2) Method

  -Corporate Separation

    ("Kaisha-Bunkatsu" under the terms of the Japanese Commercial Code)

Toshiba and Mitsubishi separate the Businesses, which are transferred to TMAE in
accordance with the process of Corporate Separation admitted under the Japanese
Commercial Code. Toshiba and Mitsubishi follow the "Simplified Corporate
Separation" method," which does not necessitate a resolution at the
shareholders' meeting.



  - Reason for selecting this method

      This method was chosen to transfer the Businesses efficiently compared
with other method such as transfer of business ("Eigyo-Jhoto") which is
typically employed in Japan before the introduction of Corporate Separation
procedure.



(3)  Allocation of Shares

     Toshiba will own TMAE's newly issued 5,000 common shares.

     Mitsubishi will own TMAE's newly issued 5,000 common shares.



In order to assure fairness and accountability, Toshiba asked Mizuho Securities
Co., Ltd. (hereafter Mizuho Securities) to provide an appraisal as an
independent third-party in connection with the above share allocation ration.
The allocation was determined in consideration of the advice and the agreement
of the three companies involved, including TMAE. Mizuho Securities took into
account of DCF method, Market Price method, and similar company comparison
method, in reaching the allocation ratio.



(4) Cash Subsidy

Toshiba and Mitsubishi will not receive any cash in the process of Corporate
Separation.



(5) Legal Rights and Obligations

TMAE will succeed to the assets, liabilities, rights and obligations, including
contract status, involved in the transferred business, except those agreed by
the three parties.



(6) Forecast of Payment of Obligation

Toshiba and Mitsubishi consider that TMAE, as well as Toshiba and Mitsubishi,
will be able to fulfill all payment obligations that will become due after the
Corporate Separation date.



2. Outline of the companies

                                                            As of March 31, 2003

                             Toshiba                    Mitsubishi                      TMAE
                       Separation              Separation Company             Successor Company
                        Company                                    
Company Name       Development, manufacture,   Development, manufacture,    Development and
                   sales, and service of       sales and services of energy manufacturing of large sized
                   digital products,           and electric systems,        motors and generators
                   electronic devices and      industrial automation
                   components, social          system, Information and
                   infrastructure equipment    communication systems,
                   and systems, home           electronic device, and home
                   appliances, and other       appliances
                   products

Established        June 25, 1904               January 15, 1921             October 1, 1999

Head Office        Shibaura 1-1-1,             Marunouchi 2-2-3,            Mita 3-13-16,
Location           Minato-ku, Tokyo            Chiyoda-ku,Tokyo             Minato-ku, Tokyo                            
Represent          Tadashi Okamura,            Tamotsu Nomakuchi,           Mamoru Kitamura, President
-ative             President and CEO           President and CEO            and CEO

Capital            274,926 million yen         175,820 million yen          2,000 million yen

Outstanding        3,219,027 thousand shares   2,146,967 thousand           40,000 shares
Shares                                         shares

Total Assets       708,583million yen          465,702 million yen          4,259 million yen

Shareholders'      2,877,805 million yen       2,422,083 million yen        13,438 million yen
Equity

Financial          March 31                    March 31                     March 31
Closing Date

Number             39,875                      35,457                       685
of Employees

Major               Government                  Government                  Toshiba Corporation
Customers           Local Government            Local Government            Mitsubishi Electric
                    Corporations                Corporations                Corporation


Principal          The Master Trust Bank of    The Master Trust Bank of     Toshiba Corporation
Shareholders       Japan (trust)      5.3%     Japan (trust) 6.6%                        50%                            
                   The Dai-ichi Mutual Life                                              
and Share-         Insurance Company           Japan Trustee Service Bank,  Mitsubishi Electric
                                               Ltd   (trust)                
holdings                              3.6%                     5.3%                50%
                                                                                   
                   Japan Trustee Service Bank,       
                   Ltd(trust)   3.6%
                                               Meiji Life Insurance

                                                                4.0%

Major Banks        Sumitomo Mitsui Banking     Bank of Tokyo -Mitsubishi    Bank of Tokyo -Mitsubishi
                   Corporation,                Mizuho Corporate Bank,       Sumitomo Mitsui Banking
                   UFJ Bank                    Sumitomo Mitsui Banking      Corporation                             
                   Mizuho Corporate Bank, etc. Corporation,                 Mitsubishi Trust Bank
                                               Mitsubishi Trust Bank,       Mizuho Corporate Bank,
                                               etc.                         etc.

Relations          Capital           Toshiba and Mitsubishi hold TMAE's shares
                   HR                Toshiba and Mitsubishi dispatch directors to TMAE
                   Business          Toshiba and Mitsubishi purchase products from TMAE and sell them



Recent Three-Year Business Results                                    Unit Million yen

                                           Toshiba                                 Mitsubishi
Financial Closing Date       March 2001  March 2002  March 2003    March     March                   March 2003
                                                                   2001      2002
Sales                          3,678,977   3,196,896   3,408,251 2,932,682 2,409,362                  2,319,210
Operating Income (loss)          125,880    -196,752      35,188   188,195   -62,592                        608
Recurring Income (loss)           95,327    -231,816      43,378   137,154  -109,501                     26,494
Net Income (loss)                 26,411    -260,332      83,364    32,483  -143,694                    -12,167
Net Income (loss) per Share         8.20      -80.87       25.90     15.13    -66.92                      -5.67
(yen)
Annual Dividend per Share          10.00        0.00        3.00     10.00      0.00                       3.00
(yen)
Shareholders Equity (yen)         286.42      198.58      220.14    307.01    229.02                     216.91



3. Business to be separated

(1) Business to be separated

a.  Sales, engineering, installation and servicing of industrial electric and
automation systems, except common-use and mass-produced products to be
distributed to customers in general.

b.  Development and manufacturing industrial supervisory control systems, and
power electronics products.



(2) Business Results for the Year ending March 31, 2004

 Revenue of Toshiba's Business amounted to nearly 50 billion yen, about 2% of
Toshiba's total sales.



(3) Assets and Liabilities of Business to be separated

-Forecast to September 30, 2003

a.           Toshiba's Business has assets of nearly 29.1 billion yen and debt
of nearly 13.1 billion yen.

b.           Mitsubishi's Business has assets of nearly 31.4 billion yen and
debt of nearly 14.4 billion yen.

c.           The above forecast is based on the balance sheets of both companies
as of March 2003. The figures will be finalized in October, in consideration of
increases and decreases in the balance sheets of both companies.



4.  Effects of Corporate Separation on Toshiba's Financial Results

There will be no change in the trade name, principal lines of business,
principal office, representative, capital stock, total assets, or financial
closing date.

Corporate Separation will not reduce the paid-in capital. No significant effect
on Toshiba's consolidated operating results is forecast.



5. Outline of the Newco

   (1) Outline of the Newco after changing its name
                                        Toshiba Mitsubishi-Electric Industrial Systems
Company Name           a.   Sales, engineering, installation and servicing of industrial electric and
                       automation systems except common-use and mass-produced products to be distributed
                       to customers in general

                       b. Development and manufacture of industrial supervisory control     systems, and
                       power electronics products.

Start of Business      October 1, 2003

Head Office Location   Mita 3-13-16, Mita, Minato-ku, Tokyo

Representative         Isamu Matsuyama, President and CEO

Capital                15 billion Japanese yen (plus approximately 20 billion
                       Japanese yen in capital reserves)


Outstanding Share      10, 000 shares

Shareholders Equity    Nearly 35 billion yen

Total Assets           Nearly 79 billion yen

Financial Closing      March 31
Date

Number of Employees    Nearly 2,200

Major Customers        Nippon Steel Corporation, JFE Steel Corporation, 
                       Mitsubishi Heavy Industries, Ltd., Asahi Breweries, Ltd., 
                       etc


Principal              Toshiba 50% Mitsubishi 50%
Shareholders
and Shareholdings

Major Banks            Sumitomo Mitsui Banking Corporation,
                       Bank of Tokyo-Mitsubishi, etc



(2)Representative of the separation company (scheduled for October 1, 2003)
Mr. Isamu Matsuyama, President and CEO (former Mitsubishi)



Forward Looking Statement:

This contains forward-looking statements concerning Toshiba's future plans,
strategies and performance. These forward-looking statements are not historical
facts, rather they represent assumptions and beliefs based on economic,
financial and competitive data currently available.  Furthermore, they are
subject to a number of risks and uncertainties that, without limitation, relate
to economic conditions, worldwide mega-competition in the electronics business,
customer demand, foreign currency exchange rates, tax rules, regulations and
other factors.  Toshiba therefore wishes to caution that actual results may
differ materially from our expectations.



                                      ####


                      This information is provided by RNS
            The company news service from the London Stock Exchange
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