SII Announces Optical Fiber Business Transfer Agreement

Seiko Instruments (SII) announced today that it has signed a basic agreement with SEIKOH GIKEN Co. Ltd. (SG) covering the transfer of SII’s optical fiber components related business to SG. Subject to approval by the appropriate regulatory agencies in the affected countries, the basic business transfer is expected to be completed by September 1, 2005. The transfer of SII’s optical production affiliate in China to SG is scheduled to take place in January, 2006. SII has no capital relationship and is not affiliated with SG.

SII first entered the optical fiber components business in 1980, and has been continuously engaged in the development, fabrication, and marketing of connectors, ferrules, and polishing equipment. SII’s optical business has been actively promoted in Japan, the United States, Europe, and China.

After the IT bubble popped, the optoelectronics industry drifted into a prolonged slump. However, recently, driven by growing communications traffic, Japan, North America, and other regions have started to boost investment in optical communications infrastructure on a global basis.

The future competitive environment will require not only an ability to increase sales, but also significant investment in facilities while growing the business to an appropriate scale.

After careful analysis and study, SII and SG jointly decided to combine SII’s optical fiber components business with SG’s optical products business rather than continuing to operate independent of each other. We strongly believe that the new business structure will provide the most effective use of SII’s extensive proprietary optical business assets, including technological development competence, reliability, quality, and broad product range.

[Business Transfer Overview]
Under the terms of the agreement, SII will transfer the following operations to SG:
• All optical fiber business related operations throughout Japan
• Fabrication and marketing of ferrules and other optical products in China
• Sales and marketing of ferrules, connectors, polishing machines, consumables, attenuators, jumpers, and other optical products in Germany, the U.S., and Singapore.

• May 18, 2005: Basic agreement was approved by a board of directors meeting of both companies.
• July-end, 2005: Business transfer agreement to be finalized.
• September 1, 2005: Transfer of optical products marketing businesses in Japan, Germany, the U.S., and Singapore.
• Mid-January, 2006: Transfer of optical products fabrication and marketing in China.

Note: The timeline is subject to change based on negotiation and agreement between SG and SII.

[About SEIKOH GIKEN Co., Ltd.]
• Head office: 296-1 Matsuhidai, Matsudo-shi, Chiba
• Representative: Mr. Masatoshi Ueno (President and CEO)
• Establishment: June 1972
• Business category: Development, fabrication and marketing of optical disk metal molds and optical communication devices
• Paid-in capital: 6,791,682,700 yen
• Payroll: 290 (consolidated)
• Total sales: 6.9 billion yen (consolidated)(FY2003)

Contact Information
Seiko Instruments Inc.
Corporate Communications Group

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