Toshiba Plant Kensetsu to Merge with Toshiba Engineering

Toshiba Plant Kensetsu Co., Ltd. agreed to merge with Toshiba Engineering Corp. on January 1, 2004, with the objective of utilizing resources efficiently and conducting an integrated business encompassing engineering, construction and field services (on-site adjustment and testing). We signed a memorandum of understanding on the contemplated merger.

1. Objective of the merger

The two companies are subsidiaries of Toshiba Corporation in the industrial and power systems and social infrastructure systems fields. Toshiba Plant Kensetsu has been principally involved in on-site construction work while Toshiba Engineering has concentrated on engineering and field services. As well as providing services to other members of Toshiba Group, the two companies also secure orders for public works and private-sector facilities. We have been contributing to the growth in the sales of Toshiba Group.

The two companies have for some time been operating in a tough business environment, characterized by a shrinking market and declining prices, due to the impact of sluggish capital investment by power companies and manufacturers coupled with reduced investment in public works. In these circumstances, we have concluded that the expansion of sales to customers outside Toshiba Group in Japan and overseas, combined with strengthened management, is a prerequisite for our future prosperity.

The two companies are convinced that the most effective approach for securing a prosperous future is to become a comprehensive engineering constructor capable of swiftly providing competitive, solutions encompassing engineering, procurement, construction and field services by combining Toshiba Plant Kensetsu's construction know-how and Toshiba Engineering's expertise in engineering and field services. Accordingly, we agreed to merge on January 1, 2004.

This merger is expected to enhance the cost competitiveness of Toshiba Group's field operations through efficient utilization of resources. The new company will do its utmost to win more business by capitalizing on its ability to provide comprehensive solutions covering engineering, procurement, construction and field services.

2. Overview of the new company

1. Company's name: Toshiba Plant Systems & Services Corporation
2. Address of the head office: 5-37-1 Kamata, Ota-ku, Tokyo
3. Existing company: Toshiba Plant Kensetsu
4. Merger ratio: 1.65 shares of Toshiba Plant Kensetsu for 1 share of Toshiba Engineering
5. Money to be delivered due to merger: None
6. Paid-in capital: 11,876 million yen (no increase)
7. Number of employees: Approximately 3,250 (at the time of merger: planned figure)
8. President and CEO: Tadahisa Ogita (current president and CEO of Toshiba Plant Kensetsu Co., Ltd.)
9. Business:
   1. Planning, design, project scheduling, and installation of thermal, hydroelectric and nuclear power plants, substation facilities, factories and other industrial facilities, water supply and sewage systems for buildings, environment-related systems and facilities, aeronautical safety facilities, etc., and field testing, trial operation and adjustment of the same
   2. Planning, design, project scheduling, and installation of drive control systems for industrial plants and electrical, instrumentation and control systems for water supply and sewage systems and other public facilities, and field testing, trial operation and adjustment of the same
   3. Development and sales of multimedia and information system-related products; development, design and sales of various systems utilizing IC card and IC tag technologies
   4. Planning, design, installation, field testing and trial operation of production systems
   5. Consulting, planning, development, design and procurement of power generation and thermal systems utilizing natural energy (such as hydroelectric power, wind power, biomass, and solar power)
10. Expected post-merger net sales: 102 billion yen for the fiscal year ending March 31, 2004; 135 billion yen for the fiscal year ending March 31, 2005