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Hitachi, Ltd., Fuji Electric Co., Ltd. and Meidensha Corporation Transfer Substation Systems Businesses to Japan AE Power Systems Corporation by the Separation of Related Units.

Tokyo, May 23, 2002, --- Hitachi, Ltd. (TSE:6501/NYSE:HIT), Fuji Electric Co., Ltd. (TSE:6504) and Meidensha Corporation (TSE:6508) announced today that they have agreed to transfer their substation businesses to Japan AE Power Systems Corporation by separating each related business units. The three companies' substation businesses comprise such operations as transformers, circuit breakers and switching devices. Japan AE Power Systems is a joint venture established by the three companies.       The substation market continues on its course of rapid change driven by liberalization and deregulation of the electric power industry in Japan. In Japanese market, the level of capital investment by the electric power companies is held low, affected by on-going electric power industry liberalization. There are new emerging market factors that Japan AE Power Systems has to face: the growth of Independent Power Provider (IPP) business, the rise of the distributed generation represented by the microturbines and fuel cells, and the rising need to replace the outmoded and inefficient business capitals installed during the Japanese high economic growth period into the energy efficient ones.       In overseas markets, although electric power demands in the Southeast Asia and China and the power retail market is growing there, the market climate with the leading overseas makers is getting very competitive.       Hitachi, Fuji Electric and Meidensha entered into a comprehensive strategic alliance covering development, manufacture and service in the transmission and distribution business in January 2001, with the goals of: (1) strengthening the competitiveness of the product offerings, (2) accelerating the new product development process through the synergy of each leading-edge technologies and (3) developing the overseas businesses. As part of the alliance, the three companies established Japan AE Power Systems in July 2001. Japan AE Power Systems reinforced its product offering by taking advantage of the excellent engineering resources of three companies and embarked on the development of overseas business operations by opening new offices in Shanghai and Singapore.       To survive in the increasingly competitive substation market, the three companies will continue to refine business operation style and financial strength of Japan AE Power Systems. Specifically, the three companies agreed to separate its related business units to the Japan AE Power Systems by applying a provision of the recently enacted more simplified separation act under the commercial laws in Japan.       Japan AE Power Systems has to realize the timely product development and timely production by effectively allocating the resources currently scattered across the three companies' related production bases. By integrating and consolidating its product offerings and production lines and by managing more efficiently, Japan AE Power Systems aims to be a leading company in the global transmission and distribution market.       By transferring operations to Japan AE Power Systems, Hitachi, Fuji Electric and Meidensha hope Japan AE Power Systems will deliver the stable profitability in the transmission and distribution sector, maintain the leading position in the market and continue its offering of the high quality and reliable products for the benefit of its customers. Reorganization Overview 1. Key points in the corporate separation move: 1. Key points in the business unit separation move: (1) Separation schedule   Contract conclusion: July 25, 2002 (tentative) Separation date: October 1, 2002 Separation registration: October 1, 2002 (2) Separation method   Simplified separation of business units from Hitachi, Fuji Electric and Meidensha into AE Power Systems (3) Stock allocation 1. Rates of Allocation   250,000 shares of Japan AE Power Systems' common stock will be issued to Hitachi. 150,000 shares of Japan AE Power Systems' common stock will be issued to Fuji Electric. 100,000 shares of Japan AE Power Systems' common stock will be issued to Meidensha. 2. Basis for calculating allocation rates   In the interest of fairness and appropriateness of stock allocation, Hitachi, Fuji Electric and Meidensha have employed the services of a third-party audit corporation to calculate the value of the businesses to be separated. 3. Results of third-party calculation and methods and basis of calculation   The auditing corporation applied the discount cash flow method, market multiple method and the net appraisal value method in its evaluations. Based on these results, stock allocation rates were determined through deliberation between Hitachi, Fuji Electric, Meidensha and Japan AE Power Systems. (4) Rights and obligations transferred to the assuming company   Hitachi, Fuji Electric and Meidensha will transfer to the assuming company all assets, liabilities and contractual status in principle contracts relating to the separated businesses. (5) Anticipated fulfillment of obligations   Hitachi, Fuji Electric and Meidensha have determined that regarding all related binding obligations of the separating business unit whose maturity dates fall on dates after the separation date, AE Power Systems can fulfill these obligations. (6) Directors newly appointed to the assuming company   None. 2. Profile of the Compiles Included in the Separation Agreement As of March 31, 2002. *The Dai-Ichi Kangyo Bank, Limited, The Fuji Bank, Limited and The Industrial Bank of Japan, Limited changed the name into "Mizuho Bank, Ltd.", "Mizuho Corporate Bank, Ltd." because of divided and merged. 3.Performance for the past three fiscal years (broken down by each company) (unit:millions of yen (except where otherwise indicated) 4.Three companies' status after the separation of its related business units (1) No changes will made to the company names, business content or head office location of Hitachi, Fuji Electric or Meidensha following separation. Paid-in capital will not be decreased due to this transfer of business. (2) Impact on the performance of Hitachi and Fuji Electric will be negligible. Forecasts for the performance of Meidensha taking into account this separation move will be announced following the finalization of contract details. 5.Profile of Japan AE Power Systems Corporation (following transfer) (1) Head office location: 2-1-1, Yaesu, Chuo-ku, Tokyo (2) Principal plants: City of Hitachi, Ibaraki-ken, City of Ichikawa, Chiba-ken, City of Numazu, Shizuoka-ken (3) Paid-in capital: ¥20 billion(stake ratio:Hitachi 50%, Fuji Denki 30%, Meidensha 20%)(tentative) (4) Establishment: July 1, 2001 (5) Business content: Research, development, design, manufacture, engineering, sales, installation, maintenance, and service of equipment and machinery for transmission, reception and transformation of electric power (6) President: Masakazu Mori, President and Representative Director (7) Employees: Approximately 1,300

WRITTEN BY Corporate Communications Division