Consolidated Financial Statements for the Year Ended March 31, by sqi14466

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									                                                      Member, Financial Accounting Standards Foundation


      Consolidated Financial Statements for the Year Ended March 31, 2009
                                                                                                                                  May 15, 2009
Name of Listed Company: Yokogawa Electric Corporation (the “Company” herein)
Stock Exchanges Where the Company’s Shares are Listed:             Tokyo Stock Exchange, Section 1
Stock Code: 6841                                                   (URL: http://www.yokogawa.com/)
Name and Position of the Representative: Shuzo Kaihori, President and Chief Executive Officer
Name and Position of Person in Charge:    Yuusuke Ichinose, General Manager of Public Relations & Investor Relations Dept.
                                          Telephone Number: +81-422-52-5530
Planned Date of the Regular General Meeting of Shareholders: June 29, 2009
Planned Date to Start Dividend Payment:     June 30, 2009
Planned Date to File Annual Report:         June 29, 2009

                                                                          (Any amount less than one million yen is disregarded.)
1. Consolidated business results for the year ended March 31, 2009 (April 1, 2008-March 31, 2009)
(1) Results of operations on a consolidated basis
                                                           (Percentages show the increase or decrease since the previous period.)
                                               Net Sales            Operating Income             Ordinary Income                  Net Income
                                               Million yen     %        Million yen     %            Million yen     %             Million yen    %
   For the year ended March 31, 2009           376,534     -13.9         4,707      -82.8               274      -98.3           (38,446)        --
   For the year ended March 31, 2008           437,448       0.9        27,412       -6.4            16,453      -44.4             11,667      -7.1

                                                                                       Net Income to      Ordinary Income
                                          Net Income per          Diluted Net                                                      Operating Income
                                                                                       Shareholders’       to Total Asset
                                               Share           Income per Share                                                    to Net Sales Ratio
                                                                                       Equity Ratio            Ratio
                                                       Yen                  Yen                     %                     %                       %
   For the year ended March 31, 2009               (149.26)                   --                 -19.8                  0.1                      1.3
   For the year ended March 31, 2008                  44.76                   --                   5.1                  3.7                      6.3
(Note)
Profit or loss from investments accounted for by the equity method:
    For the year ended March 31, 2009                 567 million yen
    For the year ended March 31, 2008                 869 million yen

(2) Financial conditions on a consolidated basis
                                                                                                 Shareholders’ Equity       Shareholders’ Equity per
                                               Total Assets          Shareholders’ Equity
                                                                                                        Ratio                        Share
                                                     Million yen                  Million yen                             %                     Yen
   For the year ended March 31, 2009                400,959                      171,008                      41.7                     649.20
   For the year ended March 31, 2008                444,644                      224,844                      49.6                     856.72
(Note)
Shareholders’ equity
    For the year ended March 31, 2009                167,224 million yen
    For the year ended March 31, 2008                220,674 million yen

(3) Consolidated cash flow status
                                          Net Cash Provided        Net Cash Provided by          Net Cash Provided              Cash and Cash
                                            by Operating           (used in) Investment            by Financing                Equivalents at the
                                              Activities                Activities                   Activities                End of the Period
                                                    Million yen                Million yen                 Million yen                    Million yen
   For the year ended March 31, 2009                24,461                  (24,099)                      28,449                          56,833
   For the year ended March 31, 2008                20,834                  (51,043)                      23,923                          30,209



2. Dividend status
                                                           Dividends per Share                                                             Net Asset
                                                                                                            Total             Payout
                                                                                                                                           Dividend
                                       June     September     December       End of         Annual       Dividends             Ratio
                     (Record date)                                                                                                           Rate
                                        30         30            31           Term           Total        (annual)           (consol.)
                                                                                                                                           (consol.)
                                        Yen           Yen            Yen           Yen           Yen     Million yen                %              %
 For the year ended March 31, 2008        --          8.00             --          8.00         16.00          4,163              35.7            1.8
 For the year ended March 31, 2009        --          8.00             --          8.00         16.00          4,121                --            2.1
   For the year ending March 31,
                                          --             --            --             --           --                --              --             --
           2010 (Forecast)
(Note) The plan for a yearly dividend for the year ending March 31, 2010 has not been finalized yet.




                                                                   - 1 -
3. Business forecast for the year ending March 31, 2010 (April 1, 2009-March 31, 2010)
                                          (Percentages show the increase or decrease since the previous interim term / fiscal year.)
                                                        Operating                                                  Net Income per
                                     Net Sales                           Ordinary Income        Net Income
                                                         Income                                                          Share
                                      Million yen %            Million yen %        Million yen %            Million yen %                             Yen
        Interim period                145,000     -26.3          (10,000) --            (12,000)    --          (14,000)       --                 (54.35)
            Annual                    315,000     -16.3            (9,000) --           (13,000)    --          (18,000)       --                (69.88)


4. Other
(1) Changes to important subsidiaries during the period (changes to specific subsidiaries accompanying changes to consolidated
    subsidiaries)    No

(2) Changes to the principles/procedures for accounting or the method of display, etc., related to the creation of consolidated
    financial statements
    (Items listed in changes to important items that serve as the foundation for the creation of consolidated financial statements)
    (1) Changes accompanying revision of accounting standards                   Yes
    (2) Changes other than (1)                                                   No
(Note)
For details, see “Changes to Important Items that Serve as the Foundation for the Creation of Consolidated Financial Statements”
on page 20.

(3) Number of shares issued (common stock)
    (1) Number of shares outstanding at the end of the period (including treasury stock)
          For the year ended March 31, 2009                   268,624,510 shares
          For the year ended March 31, 2008                   268,624,510 shares
    (2) Treasury stock at the end of the period
          For the year ended March 31, 2009                     11,037,684 shares
          For the year ended March 31, 2008                     11,045,061 shares
(Note)
See “Per-share Information” on page 25 for the number of shares used in the calculation of consolidated net income per share.

(Note)
Overview of non-consolidated business results

1. Non-consolidated business results for the year ended March 31, 2009 (April 1, 2008-March 31, 2009)
(1) Results of operations on a non-consolidated basis     (Percentages show the increase or decrease since the previous period.)
                                                Net Sales               Operating Income            Ordinary Income                     Net Income
                                                 Million yen %               Million yen %                Million yen    %               Million yen       %
  For the year ended March 31, 2009             184,872    -22.6           (11,577)       --             (2,151)         --            (40,043)            --
  For the year ended March 31, 2008             238,786     -0.3              3,984    -62.4             (2,424)         --             (2,132)            --



                                                 Net Income per Share                Diluted Net Income per Share

                                                                        Yen                                             Yen
  For the year ended March 31, 2009                                 (155.46)                                              --
  For the year ended March 31, 2008                                   (8.18)                                              --

(2) Financial conditions on a non-consolidated basis
                                                                                                   Shareholders’ Equity
                                                Total Assets               Net Assets                                               Net Assets per Share
                                                                                                          Ratio
                                                      Million yen                Million yen                              %                            Yen
  For the year ended March 31, 2009                  304,203                    139,474                          45.8                         541.47
  For the year ended March 31, 2008                  341,153                    186,550                          54.7                         724.23
(Note)
Shareholders’ equity
    For the year ended March 31, 2009                               139,474 million yen
    For the year ended March 31, 2008                               186,550 million yen


* Explanation on the appropriate use of business forecasts / other notes
   The above forecasts are based on the information that was available at the time this document was released and involve
   assumptions regarding uncertain factors that may have an effect on future performance. Actual performance may vary greatly
   due to a variety of factors. Please refer to page 6 for a disclaimer regarding the assumptions used in performance forecasts, as
   well as the use of such forecasts.




                                                                    - 2 -
                             Qualitative Information and Financial Statements
                                                 Contents


                                                                                                                  Page
1. Business Results                                                                   .........................     4
    (1) Analysis of Business Results                                                  .........................     4
    (2) Full Year Business Forecast                                                   .........................     5
    (3) Analysis of Financial Conditions                                              .........................     6
    (4) Policy on Appropriation of Profit and Dividends for the Period Under
                                                                                      .........................     7
         Review / Subsequent Periods
2. Status of the Yokogawa Group                                                       .........................     8
3. Management Policies                                                                .........................    10
    (1) Core Management Policies                                                      .........................    10
    (2) Target Management Indicators                                                  .........................    10
    (3) Medium- and Long-term Business Strategies                                     .........................    10
    (4) Challenges for the Company                                                    .........................    10
4. Consolidated Financial Statements                                                  .........................    12
    (1) Consolidated Balance Sheets                                                   .........................    12
    (2) Consolidated Statements of Income                                             .........................    14
    (3) Consolidated Statements of Changes in Net Assets                              .........................    15
    (4) Consolidated Cash Flow Statements                                             .........................    18
    (5) Notes for Going Concern                                                       .........................    20
    (6) Important Items Used as the Basis for Creation of Consolidated Financial
                                                                                      .........................    20
       Statements
    (7) Changes to Important Items that Serve as the Foundation for the Creation of
                                                                                      .........................    20
       Consolidated Financial Statements
    (8) Changes to the Method of Display                                              .........................    21
    (9) Additional Information                                                        .........................    21
    (10) Notes to Consolidated Financial Statements                                   .........................    22
    (Segment Information)                                                             .........................    22
      a. Segment information by business type                                         .........................    22
      b. Segment information by geographical location                                 .........................    24
      c. Non-Japan net sales                                                          .........................    25
    (Per-share Information)                                                           .........................    25
    (Important Post-balance Sheet Events)                                             .........................    25
    (Disclosure omission)                                                             .........................    25
5. Non-consolidated Financial Statements                                              .........................    26
    (1) Balance Sheets                                                                .........................    26
    (2) Statements of Income                                                          .........................    29
    (3) Statements of Changes in Net Assets                                           .........................    31
    (4) Notes for Going Concern                                                       .........................    34
    (5) Changes in Accounting Policies                                                .........................    34
    (6) Changes to the Method of Display                                              .........................    34
6. Other                                                                              .........................    35
    (1) Status of Production, Order Reception, and Sales                              .........................    35




                                                    - 3 -
1. Business Results
(1) Analysis of Business Results
This section reviews the performance of the Yokogawa Group for the consolidated accounting period
under review. The economic downturn in the second half of the year triggered by the global financial
crisis, falling investment in semiconductor manufacturing facilities as a result of a sluggish
semiconductor market, and sharp appreciation of the yen since last September caused sales to plunge
from the previous fiscal year. We responded with measures such as reducing expenses and capital
investment in order to achieve the operating income target; however, operating income fell from the
previous fiscal year because of the decrease in sales and a change in accounting policy this consolidated
accounting period that shifts the loss on disposal of inventories and the loss on write-down of inventories
from non-operating expenses to operating expenses.

Due to this change in accounting policy and smaller foreign exchange losses compared with the previous
fiscal year, ordinary income fell less than operating income.

The increase in the consolidated net loss in FY2008 exceeded the decrease in ordinary income because of
higher extraordinary losses resulting from an increase in the loss on the write-down of investments in
marketable securities, restructuring loss, impairment loss for fixed assets, and higher corporate tax
adjustments that were made necessary by the difficulty of forecasting future taxable income and a
subsequent reversal of deferred tax assets.

   Consolidated                                                                        Billions of yen
                               Year ended March 31,        Year ended March 31,
                                                                                        Change
                                       2008                        2009
     Net Sales                              437.448                     376.534           down 60.913
     Operating Income                         27.412                       4.707          down 22.705
     Ordinary Income                          16.453                       0.274          down 16.178
     Net Income (or Loss)                     11.667                    (38.446)          down 50.114

Results by individual business segment are outlined below.

Industrial Automation and Control Business
                                                                                       Billions of yen
                               Year ended March 31,        Year ended March 31,
                                                                                        Change
                                       2008                        2009
     Net Sales                              322.222                     301.152            down 21.07
     Operating Income                         39.069                     29.097            down 9.972

In our core industrial automation and control market, business conditions were good in the first half of the
fiscal year as high oil prices and the increase in demand for energy and raw materials outside Japan drove
investment in petroleum, petrochemical, natural gas, and other plants. Since the second half, however, the
global financial turmoil stemming from the sub-prime loan crisis in the US, the resulting economic
slowdown, and the decline in oil prices have led to the postponement of planned projects outside Japan
and (with the exception of a few booming industries) lower levels of investment and production in a wide
variety of industries in Japan.

In such market circumstances, we have released a new production control platform and a line of highly
durable, energy-saving control/monitoring modules suitable for use under severe conditions at oil field,
natural gas field, and pipeline sites. We have also strengthened our product lineup through the acquisition
of Analytical Specialties, Inc., a company with a unique gas analyzer technology. In Japan, we have
worked to win orders for plant upgrades and have focused on fields that are less affected by the economic
downturn; these include foods, pharmaceuticals, energy saving, environmental conservation, and electric
power, gas, and water services. Outside Japan, we have fully entered the upstream market (oil and gas
exploration, development, and production) and are also focusing on the power plant market, where
demand has been increasing in recent years, especially in emerging nations. We have thus been able to
win orders for a number of huge projects around the world. Moreover, by providing VigilantPlant
Services, we are helping customers make continuous improvements throughout the lifecycle of their
facilities.
Despite these development, sales, marketing, and service initiatives, sales for the industrial automation


                                                   - 4 -
and control business declined to 301.152 billion yen, a decrease of 21.07 billion yen from the previous
year, and operating income fell to 29.097 billion yen, a decrease of 9.972 billion yen from the previous
year.

Test and Measurement Business
                                                                                       Billions of yen
                               Year ended March 31,        Year ended March 31,
                                                                                         Change
                                       2008                        2009
     Net Sales                                68.771                      34.138          down 34.633
     Operating Loss                          (1.987)                    (13.764)            up 11.777

In the semiconductor test system segment of the test and measurement market, falling demand for DRAM
and other semiconductor devices drove down prices and led to stagnant capital investment by
semiconductor manufacturers. As a result, the market was smaller than in other years. In the measuring
instrument market, the power measurement instrument segment targeting the alternative energy and
energy saving fields remained steady. On the other hand, capital investment and R&D spending were
down sharply with our major customers in the electronics and auto industries.

In such market circumstances, we sought to win orders by releasing new products such as cost-effective
power measurement instruments and wave measurement instruments; however, due to the aforementioned
sluggishness in the semiconductor market from the second half of the fiscal year, sales for the test and
measurement business fell to 34.138 billion yen, a decline of 34.633 billion yen from the previous year,
and operating loss came to 13.764 billion yen, up 11.777 billion yen from the previous year.

New and Other Businesses
                                                                               Billions of yen
                               Year ended March 31,        Year ended March 31,
                                                                                          Change
                                       2008                        2009
     Net Sales                                46.455                      41.244             down 5.211
     Operating Loss                            (9.67)                   (10.626)               up 0.956

As for our new and other businesses, the photonics business centering on 40-Gbps optical
communications has grown due to the full-scale introduction of next-generation networks. In the life
science business, the global market for confocal scanner units has been strong. The advanced stage
business, however, has been slow due to low demand from major customers who manufacture
semiconductor equipment.

In such market circumstances, we released a compact MSA-compliant 40-Gbps transponder, and started
activities to expand the photonics business worldwide. We also signed an agreement with the Carl Zeiss
Group, the world’s largest producer of high-performance microscopes, to sell Yokogawa’s confocal
scanner unit in all markets outside Japan.

At the same time, orders for semiconductor equipment decreased drastically, impacting the advanced
stage business, and business launching costs were incurred. As a result, sales for the new and other
businesses declined to 41.244 billion yen, a decrease of 5.211 billion yen from the previous year, and
operating loss totaled 10.626 billion yen, up 0.956 billion yen from the previous year.

(2) Full Year Business Forecast
In our core industrial automation and control business, constraints on capital investment in various
industries are expected to continue in Japan. Although many countries around the world have tried to
revive their economies through financial and monetary policies, the outlook for the control business
remains unclear. Yen-based orders, sales, and operating income will fall from the previous year because
of the adoption of yen exchange rates that are lower than last year’s average. The test and measurement
business will continue to face severe conditions because semiconductor equipment manufacturers are
curbing investment, merging, and reorganizing. In the measuring instrument market, although investment
in alternative energy and energy-saving fields will remain strong, conditions will be less favorable for our
major customers in the electronics and auto industries. In new and other businesses, the photonics
business will see higher orders due to the expanding introduction of 40-Gbps optical communications,
while in the life science business the confocal scanner market will remain brisk.


                                                   - 5 -
   The current consolidated business forecasts are as follows:

   Consolidated Business Performance Forecasts (Yearly)                               Billions of yen
                              Year ended March 31,        Year ending March 31,
                                                                                            Change
                                       2009                        2010
    Net Sales                                  376.534                          315          down 61.534
    Operating Income                              4.707                          (9)         down 13.707
    Ordinary Income                               0.274                        (13)          down 13.274
    Net Income (or loss)                       (38.446)                        (18)             up 20.446
    Note: The consolidated business forecast assumes an exchange rate of US$1 = 95 yen, 1 Euro = 125 yen.

       Notes regarding the use of forecasts
        The above forecasts are based on certain assumptions deemed reasonable by Yokogawa at
        the present time, and may differ from actual business results.
        Major factors that may affect business performance include the following:
        ・ Fluctuations in the US dollar, the euro, Asian currencies, Middle East currencies, etc.,
             relative to the yen
        ・ Sudden changes in economic conditions in major markets, trade regulations, or other
             aspects of the business environment in major markets
        ・ Sudden fluctuations in product supply or demand in the market
        ・ Fluctuations in Japanese share prices
        ・ Protection of Yokogawa patents and the licensing of patents held by other companies
        ・ Alliances with other companies for product development or other purposes


(3) Analysis of Financial Conditions
1) Conditions of assets, liabilities, and net assets
Total assets at the end of this consolidated accounting period were 400.959 billion yen, a decrease of
43.684 billion yen over the previous period. This is mainly attributed to a 17.935 billion yen decrease in
current assets and a 25.749 billion yen decrease in fixed assets. The main factors for the decrease in
current assets were a 25.248 billion yen increase in cash and time deposits, a 32.514 billion yen decrease
in notes and accounts receivable due to the decline in sales, and an 8.935 billion yen decrease in current
deferred tax assets due to the reversal of deferred tax assets. The main factors for the decrease in fixed
assets were a 7.676 billion yen increase in intangible fixed assets, a 9.828 billion yen decrease in tangible
fixed assets, a 9.155 billion yen decrease in investments in marketable securities, and a 13.697 billion yen
decrease in long-term deferred tax assets.

Total liabilities were 229.95 billion yen, up 10.151 billion yen from the previous period. The main factors
were an 11.148 billion yen decrease in notes and accounts payable, a 6.293 billion yen decrease in
short-term bank loans, a 5.67 billion yen decrease in bonus allowances, a 4.480 billion yen decrease in
accounts payable, a 3.939 billion yen decrease in other current liabilities due to the repayment of
commercial paper, and a 45.604 billion yen increase in long-term bank loans.

Net assets were 171.008 billion yen, down 53.836 billion yen from the previous period. The main factors
were a 42.817 billion yen decrease in retained earnings, a 2.973 billion decrease in net unrealized gains
on other securities, and a 7.275 billion yen decrease in foreign currency translation adjustments.

As a result, the shareholders’ equity ratio was 41.7%, down 7.9% from the previous year.

2) Cash flow status
The balance of cash and cash equivalents at the end of this consolidated accounting period was 56.833
billion yen, up 26.624 billion yen from the previous period. The main factors were proceeds of 24.461
billion yen from operating activities, payments of 24.099 billion yen from investment activities, and
proceeds of 28.449 billion yen from financing activities.

Cash flow from operating activities was 24.461 billion yen, an increase of 3.626 billion yen compared to
the previous period. This came from a net loss before tax and other adjustments of 9.4 billion yen, after
adjusting for items such as 21.615 billion yen in depreciation, a 28.321 billion yen decrease in trade
receivables, a 7.383 billion yen decrease in trade payables, and a 5.4 billion yen decrease in allowance for


                                                   - 6 -
bonuses.

Cash flow from investment activities saw expenditure of 24.099 billion yen, a decrease of 26.944 billion
yen over the previous period. The decrease was mainly due to outlays of 14.411 billion yen for the
acquisition of tangible fixed assets, and 13.19 billion yen for the acquisition of intangible fixed assets.

Cash flow from financing activities saw proceeds of 28.449 billion yen, which came from a 4.718 billion
yen decrease in short-term loans payable, an 8 billion yen decrease in commercial paper, and payments
for cash dividends of 4.12 billion yen, after adjusting for 46 billion yen in new long-term debt
borrowings.

(Note) Trends in cash flow indicators
                                     Year              Year            Year        Year          Year
                                    ended             ended           ended       ended         ended
                                   March 31,         March 31,       March 31,   March 31,     March 31,
                                     2005             2006            2007        2008          2009
   Shareholders’ equity ratio (%)            42.2             53.7        53.4         49.6          41.7
   Market value based
                                             88.2            131.8       108.2         57.8          25.3
   shareholders’ equity ratio (%)
   Cash flow to
                                               5.5             2.4         1.5          4.5             5.1
   interest bearing debt ratio

   Interest coverage ratio (multiple)        21.1             34.1        37.6         15.0          16.9

      Shareholders’ equity ratio: Shareholders’ equity / total assets
      Shareholders’ equity ratio on market value basis: Total market value of stock / total assets
      Cash flow to interest bearing debt ratio: Interest-bearing debt / operating cash flow
      Interest coverage ratio: Operating cash flow / interest payments

        (Note 1)    All values are calculated using consolidated financial figures.
        (Note 2)    Market value has been calculated based on the number of shares issued,
                    excluding treasury stock.
        (Note 3)    Interest bearing debt includes all debt listed on the consolidated balance sheets
                    for which interest is being paid (includes zero coupons and euro yen convertible
                    bonds).
        (Note 4)    The figures for operating cash flow and interest payments utilize the “Cash
                    flows from operating activities” and “Interest expenses paid” shown in the
                    consolidated cash flow statements.

(4) Policy on Appropriation of Profit and Dividends for the Period Under Review / Subsequent Periods
    The Company recognizes that, along with establishing a stable management foundation, the continued
    distribution of earnings to shareholders is one of its most important policies. With the objective of
    investing in new businesses and developing new products for growing markets, and taking under
    consideration the need to secure an internal reserve and strengthen our financial standing, we have set
    the consolidated dividend ratio at 30%.

    We plan to set the yearly ordinary dividend for this year at 16 yen, with the year-end dividend and
    interim dividend each at 8 yen.

    In addition, the plan for a yearly dividend next year has not been finalized yet due to uncertainty
    about the future.




                                                     - 7 -
2. Status of the Yokogawa Group
The Yokogawa Group consists of Yokogawa Electric Corporation (“the Company”), 87 subsidiaries, and
6 affiliated companies. The major businesses of the Group companies and businesses pertaining to each
company in the Group by segment are as follows below.

(1) Industrial Automation and Control Business
Major products are production control systems, flowmeters, and differential pressure and pressure
transmitters. In this business segment, products manufactured by consolidated subsidiaries such as
Yokogawa Manufacturing Corporation, Yokogawa Electric Asia Pte. Ltd., and Yokogawa Electric China
Co., Ltd. are sold, engineered, and serviced in Japan by the Company. Outside Japan, mainly Yokogawa
Engineering Asia Pte. Ltd. in Southeast Asia, Yokogawa Europe B.V. in Europe, Yokogawa Corporation
of America in the United States, Yokogawa Middle East B.S.C.(c) in the Middle East, and Yokogawa
China Co., Ltd. in China conduct sales, engineering, and after-sales service.

(2) Test and Measurement Business
Major products are semiconductor test systems, waveform measurement instruments, and optical
communication measurement instruments. In this business segment, products manufactured by Yokogawa
Manufacturing Corporation and Yokogawa Electronics Manufacturing Korea are sold and serviced in
Japan by the Company. Outside Japan, mainly Yokogawa Engineering Asia Pte. Ltd. in Southeast Asia,
Yokogawa Europe B.V. in Europe, Yokogawa Corporation of America in the United States, Yokogawa
Measuring Instruments Korea in South Korea, and Yokogawa Shanghai Trading Co., Ltd. in China
conduct sales and after-sales service.

(3) New and Other Businesses
Major products are optical communication modules and sub-systems, XY stages, confocal scanners, and
aviation equipment. Yokogawa Manufacturing Corporation is in charge of the manufacture of optical
communication modules and sub-systems, XY stages, confocal scanners, and the like, while the Company
conducts sales and after-sales service. The Company and Yokogawa Denshikiki Co., Ltd. are engaged in
the manufacture and sales of aviation equipment. Kokusai Chart Corporation is involved in
manufacturing measurement recording paper, Yokogawa Pionics Co., Ltd. handles operations relating to
real estate, and Yokogawa Human Create Corporation acts as a temporary staffing agency.




                                                - 8 -
Business Overview
The following diagram illustrates the relations of the companies in the Yokogawa Group.


                            <In Japan>                                                                                                                                               <Outside Japan>


Production                                                                                                                                                                     Production
  <IA & control, test & measurement, and new and other
  businesses>                                                                                                                                                                  < IA & control business >
                                                                  Products                                                                                  Products                Yokogawa Electric Asia Pte. Ltd.
         Yokogawa Manufacturing Corp.




                                                                                 Yokogawa Electric Corp. (manufacturing, sales, and after-sales service)
                                                                    Parts                                                                                    Parts                  Yokogawa Electric China Co., Ltd.
                                  2 other companies
                                                               Products                                                                                       Products         <IA & control and test & measurement>
                                                                 Parts                                                                                         Parts                Yokogawa Electronics Manufacturing Korea Co., Ltd.

 Sales, engineering, after-sales service, etc.
                                                                                                                                                                                                                3 other companies
  <IA & control business>
       Yokogawa Field Engineering Service Corp.                 Products                                                                                      Products
       Yokogawa Solutions Corp.
                                                                                                                                                                               Sales, engineering, after-sales service, etc.
       YDC Corp.
                                                                                                                                                                               <IA & control and test & measurement>
  <IA & control, test & measurement businesses>                                                                                                                                     Yokogawa Electric International Pte. Ltd.
                                                              Engineering,                                                                                 Engineering,
       Yokogawa & Co., Ltd.                                                                                                                                                         Yokogawa Europe B.V.
                                                               after-sales                                                                                 after-sales
                                                                service,                                                                                    service,                Yokogawa Corporation of America
                                                                   etc.                                                                                        etc.
  < New and other businesses>                                                                                                                                                       Yokogawa Engineering Asia Pte.Ltd.
       Yokogawa Denshikiki Co., Ltd.                                                                                                                                           < IA & control business>
       Kokusai Chart Corp.
                                                                                                                                                                                      Yokogawa Middle East B.S.C.(c)
                                                                                                                                                                                      Yokogawa India Ltd.
                                  8 other companies
                                                                                                                                                                                      Yokogawa China Co., Ltd.
                                                                                                                                                                                      Yokogawa Electric Korea Co., Ltd.
                                                                                                                                                                                      Yokogawa Electric CIS Ltd.
                                                                                                                                                                                      Yokogawa America do Sul Ltda.
                                                                                                                                                                                      Yokogawa Australia Pty. Ltd
                                                                                                                                                                                      Yokogawa Sichuan Instruments Co., Ltd.
                                                                                                                                                                                      Yokogawa (Thailand) Ltd.
<Others>                                                                                                                                                                       <Test & measurement business>
  < New and other businesses>                                                                                                                                                       Yokogawa Measuring Instruments Korea Corp.
      Yokogawa Pionics Co., Ltd.                                                                                                                                                    Yokogawa Shanghai Trading Co., Ltd.
      Yokogawa Human Create Corp.                                                                                                                                                                              47 other companies
                                                                                                                                                                              <Others>
                                                              Service, etc.
                                  4 other companies                                                                                                                            < New and other businesses>
                                                                                                                                                           Service     etc.
                                                                                                                                                                                     Yokogawa Reinsurance Pte. Ltd.
                                                                                                                                                                                                             1 other company




                    [Customers in Japan]                                                                                                                                                        [Customers outside Japan]




(Note) All companies whose names are mentioned in the diagram are consolidated subsidiaries.
       The following subsidiary is listed on a Japanese securities exchange:
           Kokusai Chart Corporation         Jasdaq Securities Exchange.




                                                                              - 9 -
3. Management Policies
(1) Core Management Policies
Corporate Philosophy
As a group, our goal is to contribute to society through broad-ranging activities in the areas of
measurement, control, and information. Individually, we aim to combine good citizenship with the
courage to innovate – we take this as our corporate philosophy and make every effort to realize it.

Corporate Social Responsibility (CSR)
In order to fulfill its corporate social responsibility, Yokogawa will enhance its corporate governance by
developing and operating an internal control system, and contribute to community and society through the
pursuit of high quality and customer satisfaction, the observance of business ethics, fair trade, the training
and utilization of human resources, and environmental management activities, while aiming for
continuous improvement of its corporate value. In doing so, we prioritize safety and compliance.

(2) Target Management Indicators
In this volatile economy, it is difficult to specify mid-term numerical targets. In addition, we consider
FY2009 and 2010 to be a period for structural reform, with an eye on the next growth phase. Therefore,
we will focus on achieving annual management plans and producing results.

(3) Medium- and Long-term Business Strategies
According to the Yokogawa Philosophy, we aim to achieve a healthy and profitable operation with the
VISION-21 & ACTION-21 corporate strategy, considering that it is a company’s mission to run a healthy
business and maximize corporate value based on a long-term perspective.

In FY2006, we started the second phase of VISION-21 & ACTION-21, with FY2010 as the Second
Milestone. We will achieve a healthy and profitable operation and enhance our corporate value by
dramatically enhancing the management efficiency of our activities. We will strive to be a One Global
YOKOGAWA with truly consolidated management practices and will provide Customer Centric
Solutions from the customer’s perspective using our Leading Edge Technology.

(4) Challenges for the Company
In order to overcome the current severe business conditions and achieve growth and profitability from
FY2011 onwards, we will strive to enhance our management efficiency. This will be done by reducing
fixed costs and thoroughly reviewing our business portfolio in FY2009 and 2010.

Challenges by business segment
The industrial automation and control business is expected to remain stagnant for a while due to the
sluggish global economy. In the medium term, however, stable growth in this market is expected as
demand for energy and raw materials revives, especially in emerging nations. As environmental issues are
now recognized as a common challenge, energy-saving and environmental conservation are markets with
good potential.

In response to these circumstances, we will strengthen the foundation for this business by assigning more
resources to it, achieving global cost competitiveness, and expanding the business functions outside Japan.
We will also focus on increasing market share by acquiring new customers in a wider variety of industries
outside Japan, growing in the fields of energy and environmental conservation by using Yokogawa’s
measurement, control, and information technologies, and providing solutions such as customized
maintenance services. Through these activities, we aim to become the leading global IA company.

As for measuring instruments, which are part of the test and measurement businesses, we will provide
value-added solutions in the emerging fields of alternative energy and energy-saving equipment,
environmental conservation, and optical communications. In the semiconductor tester business, we will
slash fixed costs in response to the changing market structure, and concentrate our resources in the
memory tester field.

With regard to the new businesses, we will select and concentrate on specific businesses based on an
assessment of market potential, profitability, and competitiveness. As for the photonics business, we will



                                                  - 10 -
expand our business activities outside Japan in response to the rapid global expansion in next-generation
networks, while at the same time improving our production capability and accelerating the reduction of
production costs. And in the life science business, we will focus on special fields such as cell observation.

Challenges in enhancing corporate governance
Our Group will place a priority on enhancing its corporate governance to realize healthy and sustainable
growth. It will be a basic mission of corporate management to secure healthy and profitable operation and
to earn the trust of all stakeholders, including shareholders.

At meetings of the board of directors, we will strive for quick and transparent decision-making by
directors who are familiar with Yokogawa’s business as well as external directors who are independent
from the organization. In addition, we will improve our management audit function by strictly checking
and verifying the legality and efficiency of the work carried out by directors and the validity of their
decision making processes. This will be done by a board of corporate auditors that includes external
auditors.

The Group’s compliance principles are set out in the Standards of Business Conduct for the Yokogawa
Group. The directors will take the initiative to promote the observation and awareness of business ethics
throughout the Group. We have also established an internal control system for the Yokogawa Group to
ensure the reliability of financial statements, the validity of the decision-making process, and proper and
efficient execution of operations.

Furthermore, in order to ensure compliance, the internal audit department conducts internal audits based
on an annual plan, and reports the key results to the board of directors and the corporate auditors.




                                                  - 11 -
4. Consolidated Financial Statements
(1) Consolidated Balance Sheets
                                                                                    Millions of yen
                                               Year ended                 Year ended
                                              March 31, 2008             March 31, 2009
Assets
  Current assets
     Cash and deposits                                          31,738                     56,987
     Notes and accounts receivable-trade                       142,902                    110,387
     Short-term investment securities                             301                          --
     Inventories                                                44,815                         --
     Merchandise and finished goods                                 --                     20,842
     Work in process                                                --                     11,583
     Raw materials and supplies                                     --                     12,281
     Deferred tax assets                                        12,216                      3,280
     Other                                                      13,648                     11,999
     Allowance for doubtful accounts                           (3,256)                    (2,931)
     Total current assets                                      242,366                    224,431
  Noncurrent assets
     Property, plant and equipment
        Buildings and structures, net                           51,132                     57,405
        Machinery, equipment and vehicles,
                                                                21,693                     14,925
        (net)
        Tools, furniture and fixtures, net                      10,161                      7,436
        Land                                                    18,626                     18,828
        Lease assets, net                                           --                       464
        Construction in progress                                 9,928                      2,654
        Total property, plant and equipment                    111,543                    101,715
     Intangible assets                                          22,036                     29,713
     Investments and other assets
        Investments securities                                  40,266                     31,111
        Long-term loans receivable                                105                          79
        Deferred tax assets                                     16,605                      2,908
        Other                                                   12,359                     11,581
        Allowance for doubtful accounts                          (639)                      (580)
        Total investments and other assets                      68,697                     45,099
     Total noncurrent assets                                   202,277                    176,528
  Total assets                                                 444,644                    400,959




                                              - 12 -
                                                                                       Millions of yen
                                                 Year ended                  Year ended
                                                March 31, 2008              March 31, 2009
Liabilities
   Current liabilities
      Notes and accounts payable-trade                            40,034                      28,886
      Short-term loans payable                                    18,979                      12,686
      Income taxes payable                                         2,604                       1,892
      Provision for bonuses                                       14,511                       8,841
      Accounts payable-other                                      19,137                      14,657
      Other                                                       50,103                      46,163
      Total current liabilities                                  145,370                     113,126
   Noncurrent liabilities
      Long-term loans payable                                     55,993                     101,597
      Deferred tax liabilities                                       157                       1,584
      Provision for retirement benefits                            5,221                       3,192
      Provision for directors’ retirement
                                                                     236                         188
      benefits
      Long-term accounts payable-other                            11,832                       9,427
      Other                                                          987                         833
      Total noncurrent liabilities                                74,429                     116,824
   Total liabilities                                             219,799                     229,950
Net assets
  Shareholders’ equity
      Capital stock                                               43,401                      43,401
      Capital surplus                                             50,355                      50,345
      Retained earnings                                          139,952                      97,134
      Treasury stock                                             (10,990)                    (10,978)
      Total shareholders’ equity                                 222,718                     179,902
   Valuation and translation adjustments
      Valuation difference on
                                                                   2,991                          17
      available-for-sale securities
      Deferred gains or losses on hedges                               1                           --
      Pension liability adjustment                                     --                      (384)
      Foreign currency translation adjustment                     (5,036)                    (12,311)
      Total valuation and translation
                                                                  (2,044)                    (12,678)
      adjustments
   Minority interests                                              4,170                       3,783
   Total net assets                                              224,844                     171,008
Total liabilities, net assets                                    444,644                      400,959




                                                - 13 -
(2) Consolidated Statements of Income
                                                                                                      Millions of yen
                                                                     Year ended                 Year ended
                                                                    March 31, 2008             March 31, 2009
Net sales                                                                        437,448                   376,534
Cost of sales                                                                    277,430                   253,005
Gross profit                                                                     160,018                   123,528
Selling, general and administrative expenses                                     132,605                   118,821
Operating income                                                                     27,412                     4,707
Non-operating income
   Interest income                                                                      391                      209
   Dividend income                                                                    1,612                     1,745
   Equity in earnings of affiliates                                                     869                      567
   Miscellaneous income                                                                 867                      723
   Total non-operating income                                                         3,740                     3,245
Non-operating expenses
   Interest expenses                                                                  1,308                     1,595
   Loss on disposal of inventories                                                    5,501                        --
   Loss on valuation of inventories                                                     401                        --
   Foreign exchange losses                                                            4,570                     3,452
   Miscellaneous losses                                                               2,918                     2,629
   Total non-operating expenses                                                      14,699                     7,678
Ordinary income                                                                      16,453                      274
Extraordinary income
   Gain on sale of noncurrent assets                                                    117                       54
   Gain on sale of investment securities                                                142                     1,428
   Gain on termination of retirement payment system                                       --                     646
   State subsidy                                                                      1,903                      500
   Other                                                                                478                      640
   Total extraordinary income                                                         2,642                     3,270
Extraordinary losses
   Loss on sale of noncurrent assets                                                     28                       22
   Loss on retirement of noncurrent assets                                              416                      689
   Impairment loss                                                                    1,115                     1,846
   Loss on valuation of investment securities                                           725                     4,871
   Restructuring loss                                                                     --                    2,521
   Impairment loss on software for sale                                                 499                      701
   Other                                                                              1,874                     2,292
   Total extraordinary losses                                                         4,660                 12,945
Income (loss) before income taxes and minority interests                             14,434                 (9,400)
Income taxes-current                                                                  5,230                     3,189
Refund of income taxes                                                                  (43)                     (90)
Income taxes-deferred                                                                (3,129)                25,611
Total income taxes                                                                    2,057                 28,710
Minority interests in income                                                            709                      335
Net income (loss)                                                                    11,667               (38,446)




                                                           - 14 -
(3) Consolidated Statements of Changes in Net Assets
                                                                                                       Millions of yen
                                                                     Year ended                 Year ended
                                                                    March 31, 2008             March 31, 2009
Shareholders’ equity
  Capital stock
     Balance at the end of previous period                                           43,401                     43,401
     Balance at the end of current period                                            43,401                     43,401
   Capital surplus
     Balance at the end of previous period                                           50,355                     50,355
     Changes of items during the period
        Disposal of treasury stock                                                        0                        (9)
        Total changes of items during the period                                          0                        (9)
     Balance at the end of current period                                            50,355                     50,345
   Retained earnings
     Balance at the end of previous period                                       132,603                    139,952
     Effect of changes in accounting policies applied to
                                                                                          --                      102
     foreign subsidiaries
     Changes of items during the period
        Dividends from surplus                                                       (4,074)                (4,121)
        Net income (loss)                                                            11,667                (38,446)
        Other                                                                         (243)                      (351)
        Total changes of items during the period                                      7,349                (42,919)
     Balance at the end of current period                                        139,952                        97,134
   Treasury stock
     Balance at the end of previous period                                           (4,389)               (10,990)
     Changes of items during the period
        Purchase of treasury stock                                                   (6,603)                      (10)
        Disposal of treasury stock                                                        2                        17
        Other                                                                             0                          4
        Total changes of items during the period                                     (6,601)                       11
     Balance at the end of current period                                        (10,990)                  (10,978)
   Total shareholders’ equity
     Balance at the end of previous period                                       221,970                    222,718
     Effect of changes in accounting policies applied to
                                                                                                                  102
     foreign subsidiaries
     Changes of items during the period
        Dividends from surplus                                                       (4,074)                 (4,121)
        Net income (loss)                                                            11,667                (38,446)
        Purchase of treasury stock                                                   (6,603)                      (10)
        Disposal of treasury stock                                                        2                          7
        Other                                                                         (243)                      (346)
        Total changes of items during the period                                        748                (42,917)
     Balance at the end of current period                                        222,718                    179,902




                                                           - 15 -
                                                                                                       Millions of yen
                                                                       Year ended                 Year ended
                                                                      March 31, 2008             March 31, 2009
Valuation and translation adjustments
   Valuation difference on available-for-sale securities
      Balance at the end of previous period                                            11,926                     2,991
      Changes of items during the period
         Net changes of items other than shareholders’
                                                                                       (8,935)                (2,973)
         equity
         Total changes of items during the period                                      (8,935)                (2,973)
      Balance at the end of current period                                              2,991                        17
   Deferred gains or losses on hedges
      Balance at the end of previous period                                                 6                         1
      Changes of items during the period
         Net changes of items other than shareholders’
                                                                                           (4)                      (1)
         equity
         Total changes of items during the period                                          (4)                      (1)
      Balance at the end of current period                                                  1                        --
   Pension liability adjustment
      Balance at the end of previous period                                                 --                       --
      Changes of items during the period
         Net changes of items other than shareholders’
                                                                                            --                    (384)
         equity
         Total changes of items during the period                                           --                    (384)
      Balance at the end of current period                                                  --                    (384)
   Foreign currency translation adjustment
      Balance at the end of previous period                                               348                 (5,036)
      Changes of items during the period
         Net changes of items other than shareholders’
                                                                                       (5,385)                (7,275)
         equity
         Total changes of items during the period                                      (5,385)                (7,275)
      Balance at the end of current period                                             (5,036)               (12,311)
   Total valuation translation adjustments
      Balance at the end of previous period                                            12,281                 (2,044)
      Changes of items during the period
         Net changes of items other than shareholders’
                                                                                   (14,325)                  (10,633)
         equity
         Total changes of items during the period                                  (14,325)                  (10,633)
      Balance at the end of current period                                             (2,044)               (12,678)
Minority interests
   Balance at the end of previous period                                                4,650                     4,170
   Changes of items during the period
      Net changes of items other than shareholders’ equity                              (480)                     (386)
      Total changes of items during the period                                          (480)                     (386)
   Balance at the end of current period                                                 4,170                     3,783




                                                             - 16 -
                                                                                                         Millions of yen
                                                                       Year ended                 Year ended
                                                                      March 31, 2008             March 31, 2009
Total net assets
   Balance at the end of previous period                                           238,902                    224,844
   Effect of changes in accounting policies applied to
                                                                                            --                     102
   foreign subsidiaries
   Changes of items during the period
      Dividends from surplus                                                           (4,074)                 (4,121)
      Net income (loss)                                                                11,667                (38,446)
      Purchase of treasury stock                                                       (6,603)                     (10)
      Disposal of treasury stock                                                            2                        7
      Other                                                                             (243)                     (346)
      Net changes of items other than shareholders’ equity                         (14,806)                  (11,020)
   Total changes of items during the period                                        (14,057)                  (53,938)
Balance at the end of current period                                               224,844                    171,008




                                                             - 17 -
(4) Consolidated Cash Flow Statements
                                                                                                          Millions of yen
                                                                        Year ended                 Year ended
                                                                       March 31, 2008             March 31, 2009
Net cash provided by (used in) operating activities
  Income before income taxes and minority interests (loss)                              14,434                 (9,400)
   Depreciation and amortization                                                        23,129                  21,615
   Increase (decrease) in allowance for doubtful accounts                                1,406                       (1)
   Increase (decrease) in provision for bonuses                                            (80)                (5,400)
   Increase (decrease) in provision for retirement benefits                              (766)                 (1,715)
   Interest and dividend income                                                         (2,003)                (1,954)
   Interest expense                                                                      1,308                     1,595
   Loss (gain) on valuation of investment securities                                       725                     4,871
   Equity in (earnings) losses of affiliates                                             (869)                     (567)
   Loss (gain) on sales of investment securities                                         (142)                 (1,395)
   Loss on retirement of noncurrent assets                                                 416                      689
   Impairment loss                                                                       1,115                     1,846
   Restructuring loss                                                                        --                    2,521
   Impairment loss on software for sale                                                      --                     701
   Decrease (increase) in notes and accounts receivable-
                                                                                    (10,460)                    28,321
   trade
   Decrease (increase) in inventories                                                    3,794                 (2,485)
   Increase (decrease) in notes and accounts payable-trade                                 660                 (7,383)
   Decrease in payment liability due to change in retirement
                                                                                        (4,308)                (2,298)
   payment system
   Other, net                                                                           (2,351)                (1,972)
   Subtotal                                                                             26,010                  27,587
   Interest and dividends income received                                                2,073                     2,143
   Interest expenses paid                                                               (1,388)                (1,451)
   Income taxes (paid) refund                                                           (5,859)                (3,818)
   Net cash provided by (used in) operating activities                                  20,834                  24,461
Net cash provided by (used in) investing activities
  Payments into time deposits                                                           (4,761)                (3,218)
   Proceeds from withdrawal of time deposits                                             4,383                     4,319
   Purchase of property, plant and equipment                                        (35,588)                  (14,411)
   Proceeds from sales of property, plant and equipment                                  2,284                      138
   Purchase of intangible assets                                                    (11,191)                  (13,190)
   Purchase of investment securities                                                    (6,878)                (2,482)
   Proceeds from sales and redemption of investment
                                                                                         2,411                     3,486
   securities
   Purchase of investments in subsidiaries resulting in
                                                                                             --                    (775)
   change in scope of consolidation
   Proceeds from transfer of business                                                        --                    1,011
   Other, net                                                                           (1,703)                    1,022
   Net cash provided by (used in) investment activities                             (51,043)                  (24,099)




                                                              - 18 -
                                                                                                         Millions of yen
                                                                       Year ended                 Year ended
                                                                      March 31, 2008             March 31, 2009
Net cash provided by (used in) financing activities
  Net increase (decrease) in short-term loans payable                                  (8,715)                (4,718)
   Increase (decrease) in commercial paper                                             18,000                 (8,000)
   Proceeds from long-term loans payable                                               45,580                  46,000
   Repayment of long-term loans payable                                                   (11)                       --
   Redemption of bonds                                                             (20,000)                          --
   Purchase of treasury stock                                                          (6,603)                     (10)
   Cash dividends paid                                                                 (4,069)                (4,120)
   Cash dividends paid to minority shareholders                                         (258)                     (692)
   Other, net                                                                               2                       (8)
   Net cash provided by (used in) financing activities                                 23,923                  28,449
Effect of exchange rate change on cash and cash equivalents                            (1,823)                (2,187)
Net increase (decrease) in cash and cash equivalents                                   (8,107)                 26,624
Cash and cash equivalents at beginning of period                                       38,178                  30,209
Increase (decrease) in cash and cash equivalents resulting
                                                                                          138                        --
from change of scope of consolidation
Cash and cash equivalents at end of period                                             30,209                  56,833




                                                             - 19 -
(5) Notes for Going Concern
   Not applicable

(6) Important Items Used as the Basis for Creation of Consolidated Financial Statements
  1. Items related to the range of consolidation
     (1) Consolidated subsidiaries: 83 companies
        Increases due to acquisition of shares: 1 company
            Analytical Specialties, Inc. (U.S.A.)
        Decreases due to merger: 1 company
           Yokogawa Control Engineering Corporation
        Decreases due to liquidation of the company: 1 company
           Yokogawa Reinsurance Ltd. (Ireland)

    (2) Non-consolidated subsidiaries
      (Names of major companies)
      Morioka Tokki Corporation
        This company does not significantly influence the consolidated financial statements, and has therefore
        been excluded from the range of consolidation.

  2. Items related to application of the equity method
     (1) Non-consolidated subsidiaries: 2 companies
        (Names of major companies)
        Morioka Tokki Corporation
       Decreases due to divestment of consolidated subsidiary’s share: 1 company
       Yokogawa Denyo Corporation

    (2) Affiliated companies: 4 companies
      (Names of major companies)
      Yokogawa Rental & Lease Corporation
       Decreases due to divestment of consolidated subsidiary’s share: 1 company
       Yokogawa Toa Kogyo, Ltd.

    (3) Companies for which the equity method is not applicable
      (Names of major companies)
      Yokogawa Q&A Corporation
        This company does not significantly influence the consolidated financial statements, and has therefore
        been excluded from the range of application of the equity method.

    (4) Financial statements related to a company’s fiscal year are used if the equity method is applicable to
      the company and if the company has a closing date that differs from the consolidated closing date.

  3. Items related to the fiscal year of consolidated subsidiaries, etc.
  Starting with the consolidated accounting period under review, the closing date for Yokogawa Electric China
  Co., Ltd. and 11 other non-Japan subsidiaries is December 31. For creation of consolidated financial
  statements, financial statements based on the provisional settlement of accounts implemented on the
  consolidated closing date are used for these companies.

  4. Items related to accounting standards
  Excluding “(7) Changes to Important Items that Serve as the Foundation for the Creation of Consolidated
  Financial Statements,” no major changes have been made to the description in our latest statutory financial
  report under the Financial Instruments and Exchange Act, so we omitted the disclosure of these items.

(7) Changes to Important Items that Serve as the Foundation for the Creation of Consolidated Financial
Statements
  (Accounting Standard for Measurement of Inventories)
  As for the inventories for ordinary sales, we formerly relied on the cost method by the specific identification



                                                    - 20 -
  or average cost method. However, beginning this consolidated fiscal year, we began using ASBJ Statement
  No. 9 Accounting Standard for Measurement of Inventories (issued on July 5, 2006) and chiefly calculate the
  value of inventories with the specific identification or average cost method (as for the value on the balance
  sheet, we use an asset write-down method based on the decreased profitability). Its influence on the profit
  and loss is negligible.

  (Accounting Standard for Lease Transactions)
  As for financial lease transactions without ownership transfer, we formerly relied on an accounting
  procedure that was based on the leasing transaction method. However, beginning this consolidated fiscal
  year, we adopted the Accounting Standard for Lease Transactions (Statement No. 13 - issued by the First
  Subcommittee of the Business Accounting Council on June 17, 1993 and revised on March 30, 2007) and
  the Guidance on Accounting Standard for Lease Transactions (Guidance No. 16 - issued by the Accounting
  Practice Committee of the Japan Institute of Certified Public Accountants on January 18, 1994 and revised
  on March 30, 2007), and are using them for the accounting of ordinary sales transactions.

  For the financial lease transactions without ownership transfer which began before the applicable accounting
  period, we still use the accounting procedure based on the method related to ordinary lease transactions. Its
  influence on the profit and loss is negligible.

  (Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for Consolidated
  Financial Statements)
  Beginning this consolidated fiscal year, we use the Practical Solution on Unification of Accounting Policies
  Applied to Foreign Subsidiaries for Consolidated Financial Statements (ASBJ PITF No. 18) issued on May
  17, 2006 and adjust the consolidated results accordingly. Its influence on the profit and loss is negligible.

(8) Changes to the Method of Display
  In accordance with the method of display in our latest statutory financial report issued as stipulated by the
  Financial Instruments and Exchange Act (submitted on June 26, 2008), the accounting items in these
  consolidated financial statements have been regrouped.

  (Consolidated Balance Sheets)
  In accordance with the revised Rules of Consolidated Quarterly Financial Statements (issued by the
  Financial Service Agency of Japan on August 7, 2008), the item “Inventories” in the previous consolidated
  accounting period is included in the “Merchandise and finished goods,” “Work in process,” and “Raw
  materials and supplies” sections. “Merchandise and finished goods,” “Work in process,” and “Raw materials
  and supplies” included in the Inventories section in the previous accounting period were respectively 18.856
  billion yen, 11.794 billion yen, and 14.164 billion yen.

  (Consolidated Statements of Income)
  The “Restructuring Loss,” which was included in the “Other” line of the extraordinary losses section in the
  previous consolidated accounting period, has been added because it exceeds 10% of extraordinary losses.
  The “Restructuring Loss” in the previous consolidated accounting period under review was 103 million yen.

  (Consolidated Cash Flow Statements)
  The “Restructuring loss” and “Impairment loss on software for sale,” which were included in the “Other”
  line of the Cash Flow from Operating Activities section in the previous consolidated accounting period, have
  been added as they now account for a more significant portion of cash flow. The “Restructuring loss” and
  “Impairment loss on software for sale” in the previous consolidated accounting period under review were
  respectively 103 million yen and 499 million yen.

  The “Decrease in long-term loans payable,” that was included in the Cash Flow from Financing Activities
  section in the previous consolidated accounting period has been included in the “Other” line as the amount
  now accounts for a less significant portion of cash flow. The “Decrease in long-term loans payable” in the
  current consolidated accounting period under review was 15 million yen.

(9) Additional Information
  (Service life of Tangible Fixed Assets)
  Beginning with the current consolidated accounting period under review, the service life based on the
  amended corporation tax law was changed for consolidated subsidiaries in Japan. Its influence on the profit
  and loss is negligible.



                                                   - 21 -
(10) Notes to Consolidated Financial Statements
  (Segment information)
  a. Segment information by business type                                                            Millions of yen
                                         Term Year ended March 31, 2008              Year ended March 31,
                                                                                                                   Change
                                                                                             2009

                                                                      Composition                    Composition
                                                       Amount          Ratio (%)
                                                                                     Amount           Ratio (%)
                                                                                                                   Amount
Business
                  Net sales                             322,343                          301,169                    (21,174)
                  Net sales to unaffiliated customers   322,222              73.7        301,152           80.0     (21,070)
                  Net intersegment sales                     121                               17                      (104)
Industrial
                  Operating expenses                    283,274                          272,072                    (11,202)
Automation
                  Operating income                       39,069             142.5          29,097         618.1      (9,972)
and Control
                  Assets                                258,036              58.0         234,776          58.6     (23,260)
Business
                  Depreciation                           12,101              52.3          11,250          52.1        (851)
                  Loss on impaired assets                      --                             263                        263
                  Capital expenditure                     23,528             61.9          19,261          71.8      (4,267)
                  Net sales                              68,771                            34,138                   (34,633)
                  Net sales to unaffiliated customers    68,771              15.7          34,138           9.0     (34,633)
                  Net intersegment sales                       --                               --                         --
Test and          Operating expenses                     70,758                            47,902                   (22,856)
Measurement       Operating income (loss)                (1,987)             -7.2        (13,764)        -292.4     (11,777)
Business          Assets                                  50,406             11.3          35,172           8.8     (15,234)
                  Depreciation                             4,443             19.2           3,655          16.9        (788)
                  Loss on impaired assets                      --                           1,534                      1,534
                  Capital expenditure                      5,661             14.9           4,468          16.7      (1,193)
                  Net sales                              46,455                            41,244                    (5,211)
                  Net sales to unaffiliated customers    46,455              10.6          41,244          11.0      (5,211)
                  Net intersegment sales                       --                               --                         --
                  Operating expenses                     56,124                            51,870                    (4,254)
New and Other
                  Operating income (loss)                (9,670)            -35.3        (10,626)        -225.7        (956)
Businesses
                  Assets                                  66,997             15.1          65,495          16.3      (1,502)
                  Depreciation                             6,585             28.5           6,709          31.0          124
                  Loss on impaired assets                      --                           1,627                      1,627
                  Capital expenditure                      8,800             23.2           3,084          11.5      (5,716)
                  Net sales                                (121)                             (17)
                  Net sales to unaffiliated customers          --                               --
                  Net intersegment sales                   (121)                             (17)
Inter-segment     Operating expenses                       (121)                             (17)
Elimination       Operating income                             --                               --
                  Assets                                  69,203             15.6          65,514          16.3      (3,689)
                  Depreciation                                 --               --              --                         --
                  Loss on impaired assets                      --                               --                         --
                  Capital expenditure                          --               --              --                         --
                  Net sales                             437,448                          376,534                    (60,913)
                  Net sales to unaffiliated customers   437,448             100.0        376,534          100.0     (60,913)
                  Net intersegment sales                       --                               --                         --
                  Operating expenses                    410,035                          371,827                    (38,208)
Consolidated      Operating income                       27,412             100.0           4,707         100.0     (22,705)
                  Assets                                444,644             100.0        400,959          100.0     (43,684)
                  Depreciation                           23,129             100.0          21,615         100.0      (1,514)
                  Loss on impaired assets                      --                           3,425                      3,425
                  Capital expenditure                     37,990            100.0          26,813         100.0     (11,176)
(Note) 1. Method of categorizing business
            Businesses have been grouped according to similarities in product line and   market, as well as the profit and loss
            summary of the Yokogawa Group.




                                                         - 22 -
2. The major products belonging to these business categories are as follows:
        Business Category                                            Major Products
    Industrial Automation and  Production control systems, flowmeters, differential pressure/pressure transmitters,
        Control Business       process analyzers, programmable controllers
                               Semiconductor test systems, waveform measuring instruments, optical
 Test and Measurement Business communication devices, waveform generators, power/temperature/pressure
                               measurement devices
                               Optical communication modules and sub-systems, XY stages, confocal scanners,
   New and Other Businesses aircraft navigation-related devices, marine equipment, meteorological/hydrological
                               measurement devices

3. Of the assets for the previous consolidated accounting period, the amount of total company assets included in
  Inter-segment Elimination came to 69,203 million yen. This chiefly consists of the Company’s cash, deposits, and
  investments in marketable securities.

4. Of the assets for the consolidated accounting period under review, the amount of total company assets included in
  Inter-segment Elimination came to 65,514 million yen. This chiefly consists of the Company’s cash, deposits, and
  investments in marketable securities.

5. Loss on impaired assets of 1,579 million yen in New and Other Businesses is counted as restructuring loss in the
  Consolidated Statements of Income.




                                                 - 23 -
b. Segment information by geographical location                                            Millions of yen
                                        Term    Year ended March 31,                  Year ended March 31,
                                                                                                                    Change
                                                                  2008                        2009

                                                                      Composition                  Composition
                                                         Amount                       Amount                        Amount
                                                                       Ratio (%)                    Ratio (%)
Region
                  Net sales                                297,454                        239,843                    (57,610)
                  Net sales to unaffiliated customers      237,417             54.3       187,075           49.7     (50,342)
Japan             Net intersegment sales                    60,036                          52,767                    (7,268)
                  Operating expenses                       288,564                        247,701                    (40,862)
                  Operating income (loss)                     8,890            32.4        (7,858)         -166.9    (16,748)
                  Assets                                   297,160             66.8       260,116            64.9    (37,044)
                  Net sales                                113,329                          98,277                   (15,052)
                  Net sales to unaffiliated customers       86,043             19.7         74,518          19.8     (11,525)
                  Net intersegment sales                    27,286                          23,759                    (3,527)
Asia
                  Operating expenses                       103,601                          92,036                   (11,565)
                  Operating income                            9,727            35.5          6,240         132.6      (3,487)
                  Assets                                    70,298             15.8         63,629          15.9      (6,668)
                  Net sales                                 52,564                          50,465                    (2,099)
                  Net sales to unaffiliated customers       47,489             10.8         45,472          12.1      (2,016)
                  Net intersegment sales                      5,075                          4,992                       (82)
Europe
                  Operating expenses                        48,009                          49,059                      1,049
                  Operating income                            4,555            16.6          1,406          29.9      (3,148)
                  Assets                                    31,715              7.1         31,093           7.7        (622)
                  Net sales                                 31,822                          30,239                    (1,582)
                  Net sales to unaffiliated customers       30,803              7.0         29,335            7.8     (1,467)
                  Net intersegment sales                      1,018                             903                     (114)
North America
                  Operating expenses                        30,811                          29,811                      (999)
                  Operating income                            1,010             3.7             427           9.1       (582)
                  Assets                                    15,410              3.5         15,958            4.0         548
                  Net sales                                 36,983                          41,127                      4,144
                  Net sales to unaffiliated customers       35,693              8.2         40,132          10.6        4,438
                  Net intersegment sales                      1,289                             995                     (294)
Other
                  Operating expenses                        33,623                          37,500                      3,876
                  Operating income                            3,359            12.3          3,627          77.0          268
                  Assets                                    18,999              4.3         23,153           5.8        4,154
                  Net sales                               (94,705)                       (83,419)
                  Net sales to unaffiliated customers             --                              --
Inter-segment
                  Net intersegment sales                  (94,705)                       (83,419)
Elimination
                  Operating expenses                      (94,575)                       (84,282)
                  Operating income                            (129)            -0.5             863         18.3
                  Assets                                    11,058              2.5          7,007           1.7      (4,051)
                  Net sales                                437,448                        376,534                    (60,913)
                  Net sales to unaffiliated customers      437,448            100.0       376,534          100.0     (60,913)
                  Net intersegment sales                          --                              --                       --
Consolidated
                  Operating expenses                       410,035                        371,827                    (38,208)
                  Operating income                          27,412            100.0          4,707         100.0     (22,705)
                  Assets                                   444,644            100.0       400,959          100.0     (43,684)
    (Note) 1. Countries and regions are grouped according to geographical proximity.
           2. The breakdown of countries and regions belonging to groups other than Japan is as follows.
            (1) Asia              China, Singapore, South Korea, India, etc.
            (2) Europe            The Netherlands, France, the United Kingdom, Germany, etc.
            (3) North America     The United States, Canada
            (4) Other             Middle East, Russia, Brazil, Australia, the Middle East, etc.

           3. Of the assets for the previous consolidated accounting period, the amount of total company assets included in
              Inter-segment Elimination came to 69,203 million yen. This chiefly consists of the Company’s cash, deposits, and
              investments in marketable securities.

           4. Of the assets for the consolidated accounting period under review, the amount of total company assets included in
              Inter-segment Elimination came to 65,514 million yen. This chiefly consists of the Company’s cash, deposits, and
              investments in marketable securities.




                                                          - 24 -
  c. Non-Japan net sales                                                                           Millions of yen
                                         Year ended March 31,                    Year ended March 31,
                         Term                                                                                      Change
                                                 2008                                    2009
                                                       Composition                            Composition
Region                                  Amount                                   Amount                           Amount
                                                        Ratio (%)                               Ratio (%)
Asia                                        109,651            25.1                   79,372           21.1           (30,279)
Europe                                         51,968              11.9                36,004            9.6          (15,964)

North America                                  35,147               8.0                29,087            7.7           (6,059)
Middle East                                    19,355               4.4                32,096            8.5           12,740

Other                                          27,130               6.2                29,820            7.9            2,689

Non-Japan net sales                           243,253              55.6               206,380           54.8          (36,873)
Consolidated net sales                        437,448                 --              376,534             --          (60,913)
  (Note) 1. Countries and regions are grouped according to geographical proximity.
         2. The breakdown of countries and regions belonging to groups is as follows.
          (1) Asia               China, Singapore, South Korea, India, etc.
          (2) Europe             The Netherlands, France, the United Kingdom, Germany, etc.
          (3) North America      The United States, Canada
          (4) Middle East        Bahrain, Saudi Arabia, etc.
          (5) Other              Russia, Brazil, Australia, etc.
         3. Non-Japan net sales are net sales of the Company and consolidated subsidiaries in countries or regions outside
            Japan.
         4. We have created a separate category in this table for the Middle East figures as this region accounted for a
            significant portion of consolidated sales this fiscal year.



(Per-share Information)
                                                                               Year ended March 31,       Year ended March 31,
                                                                                       2008                       2009
              1. Net assets per share (yen)                                                  856.72                     649.20

              2. Net income or loss per share (yen)                                             44.76                  (149.26)

  (Note) 1. The basis for calculation of net income per share is as follows.
                                                                               Year ended March 31,       Year ended March 31,
                                                                                       2008                       2009
                Net income per share
                     Net income or loss (millions of yen)                                    11,667                    (38,446)
                     Net income or loss related to common stock                              11,667                    (38,446)
                     (millions of yen)
                     Average number of shares during the period                         260,673,826                257,585,242

(Important Post-balance Sheet Events)
           No applicable items

(Disclosure Omission)
  Explanatory notes related to lease transactions, marketable securities, derivative transactions, retirement
  benefits, tax effect accounting, and transactions with affiliated organizations are deemed to be of minor
  significance and have not been disclosed in the financial statements.




                                                            - 25 -
5. Non-consolidated Financial Statements
   (1) Balance Sheets
                                                                                    Millions of yen
                                               Year ended                 Year ended
                                              March 31, 2008             March 31, 2009
Assets
  Current assets
     Cash and time deposits                                     11,058                     35,547
     Notes receivable-trade                                      2,787                       515
     Accounts receivable-trade                                  77,607                     50,752
     Short-term investment securities                             250                          --
     Finished goods                                              5,241                         --
     Semi-finished goods                                         1,094                         --
     Merchandise and finished goods                                 --                      7,101
     Work in process                                             3,787                      2,899
     Raw materials                                               2,835                         --
     Supplies                                                     219                          --
     Raw materials and supplies                                     --                      2,608
     Advanced payments-trade                                      723                        475
     Prepaid expenses                                             904                       1,080
     Deferred tax assets                                         9,017                         --
     Short-term loans receivable                                30,848                     30,647
     Accounts receivable-other                                   5,906                      5,217
     Other                                                        441                        412
     Allowance for doubtful accounts                           (2,287)                       (22)
     Total current assets                                      150,435                    137,236
  Noncurrent assets
     Property, plant and equipment
        Buildings, net                                          32,069                     35,026
        Structures, net                                          1,519                      1,398
        Machinery and equipment, net                             9,798                      6,246
        Vehicles, net                                               6                          2
        Tools, furniture and fixtures, net                       5,968                      3,791
        Land                                                    11,280                     11,531
        Lease assets, net                                           --                        62
        Construction in progress                                 4,323                      1,874
        Total property, plant and equipment                     64,966                     59,933
     Intangible assets
        Goodwill                                                  406                        504
        Patent right                                               75                         60
        Leasehold right                                           652                        652
        Software                                                 8,066                      8,227
        Software in progress                                    10,256                     16,332
        Other                                                      68                         62
        Total intangible assets                                 19,526                     25,839




                                              - 26 -
                                                                                          Millions of yen
                                                       Year ended                 Year ended
                                                     March 31, 2008             March 31, 2009
      Investments and other assets
         Investments in securities                                     34,462                     25,723
         Securities of subsidiaries and affiliates                     31,694                     31,562
         Investments in capital                                          494                           5
         Investments in capital of subsidiaries
                                                                       13,131                     13,003
         and affiliates
         Long-term loans receivable from
                                                                          12                          10
         employees
         Long-term loans receivable from
                                                                        5,801                      7,117
         subsidiaries and affiliates
         Long-term prepaid expenses                                      419                         442
         Deferred tax assets                                           16,531                          --
         Lease and guarantee deposits                                   1,155                      1,260
         Long-term financial assets                                     7,036                      6,718
         Other                                                           737                         702
         Allowance for doubtful accounts                              (3,743)                    (5,352)
         Allowance for investment loss                                (1,509)                          --
         Total investments and other assets                           106,225                     81,193
      Total noncurrent assets                                         190,718                    166,966
   Total assets                                                       341,153                    304,203
Liabilities
   Current liabilities
      Notes payable-trade                                                295                         221
      Accounts payable-trade                                           26,761                     17,805
      Short-term loans payable                                          3,012                      2,913
      Current portion of long-term loans
                                                                       10,241                        176
      payable
      Commercial paper                                                 18,000                     10,000
      Accounts payable-other                                           15,493                     11,452
      Accrued expenses                                                  4,555                      3,617
      Income taxes payable                                               143                         215
      Advances received                                                 1,009                        834
      Deposit received                                                   483                         447
      Provision for bonuses                                             8,749                      3,422
      Other                                                                0                       2,220
      Total current liabilities                                        88,745                     53,326
   Noncurrent liabilities
      Long-term loans payable                                          55,704                    101,526
      Long-term accounts payable-other                                  8,993                      5,952
      Other                                                             1,159                      3,923
      Total noncurrent liabilities                                     65,857                    111,402
   Total liabilities                                                  154,603                    164,728




                                                     - 27 -
                                                                                          Millions of yen
                                                    Year ended                  Year ended
                                                   March 31, 2008              March 31, 2009
Net assets
   Shareholders’ equity
      Capital stock                                                  43,401                      43,401
      Capital surplus
         Legal capital surplus                                       46,350                      46,350
         Other capital surplus                                        3,812                       3,802
         Total capital surpluses                                     50,162                      50,152
      Retained earnings
         Legal retained earnings                                      5,372                       5,372
         Other retained earnings
             Reserve for retirement allowance                         1,255                       1,255
             Reserve for dividends                                    1,235                       1,235
             Reserve for special depreciation                             0                           --
             Reserve for advanced depreciation
                                                                      1,556                       1,485
             of noncurrent assets
             General reserve                                         11,783                      11,783
             Retained earnings brought forward                       79,858                      35,765
         Total earned surpluses                                     101,061                      56,897
      Treasury stock                                                (10,985)                    (10,978)
      Total shareholders’ equity                                    183,639                     139,472
   Valuation and translation adjustments
      Valuation difference on available-for-sale
                                                                      2,908                           2
      securities
      Deferred gains or losses on hedges                                  2                           --
      Total valuation and translation
                                                                      2,910                           2
      adjustments
   Total net assets                                                 186,550                     139,474
Total liabilities and net assets                                    341,153                     304,203




                                                   - 28 -
(2) Statements of Income
                                                                                          Millions of yen
                                                         Year ended                Year ended
                                                        March 31, 2008            March 31, 2009
Net sales
  Net sales of finished goods                                        238,786                   184,872
   Total net sales                                                   238,786                   184,872
Cost of sales
   Beginning finished goods                                               4,268                     5,241
   Cost of products manufactured                                     170,439                   138,099
   Transfers from other accounts                                           553                      1,043
   Total                                                             175,261                   144,384
   Transfers to other accounts                                            1,977                       486
   Ending finished goods                                                  5,241                     5,934
  Cost of finished goods sold                                        168,042                   137,962
Gross profit                                                             70,743                    46,910
Selling, general and administrative expenses                             66,758                    58,487
Operating income (loss)                                                   3,984               (11,577)
Non-operating income
   Interest income                                                         392                        231
   Interest on securities                                                    7                          8
   Dividend income                                                        3,193                    13,039
  Rent receivable                                                         1,772                     1,604
   Miscellaneous income                                                    345                        390
   Total non-operating income                                             5,711                    15,273
Non-operating expenses
   Interest expenses                                                       772                      1,148
   Interest on bonds                                                        79                          --
   Contribution                                                            232                        105
   Loss on disposal of inventories                                        5,356                         --
   Rent payable                                                           1,481                     1,448
   Damages                                                                 453                        159
   Foreign exchange losses                                                2,233                     1,238
   Foreign withholding taxes                                               343                        529
   Miscellaneous losses                                                   1,167                     1,217
   Total non-operating expenses                                          12,120                     5,847
Ordinary loss                                                        (2,424)                       (2,151)




                                               - 29 -
                                                                                               Millions of yen
                                                               Year ended               Year ended
                                                              March 31, 2008           March 31, 2009
Extraordinary income
  Gain on sale of noncurrent assets                                              80                         7
  Gain on sale of investment securities                                         115                      1,570
  State subsidy                                                                1,903                      500
  Reversal of allowance for doubtful accounts for
                                                                                  --                      415
  subsidiaries and affiliates
  Other                                                                           --                      225
  Total extraordinary income                                                   2,100                     2,718
Extraordinary losses
  Loss on sale of noncurrent assets                                              20                        --
  Loss on retirement of noncurrent assets                                       236                       419
  Impairment loss                                                               848                      1,025
  Compensation for impairment loss on affiliated
                                                                                  --                      626
  companies’ production facilities
  Loss on valuation of investment securities                                    674                      4,809
  Valuation loss on affiliate companies’ stock                                    --                     1,463
  Restructuring loss                                                              --                     2,329
  Loss on restructuring of affiliate companies                                   57                         --
  Impairment loss on software for sale                                          499                       701
  Provision of allowance for doubtful accounts for
                                                                                792                         --
  subsidiaries and affiliates
  Other                                                                         580                       747
  Total extraordinary losses                                                   3,710                    12,123
Loss before income taxes                                                   (4,035)                 (11,555)
Income taxes-current                                                             53                        46
Income taxes-deferred                                                      (1,956)                      28,441
Total income taxes                                                         (1,902)                      28,487
Net loss                                                                   (2,132)                 (40,043)




                                                     - 30 -
(3) Statements of Changes in Net Assets
                                                                                                        Millions of yen
                                                                       Year ended                Year ended
                                                                      March 31, 2008            March 31, 2009
Shareholders’ equity
  Capital stock
     Balance at the end of previous period                                             43,401                    43,401
     Balance at the end of current period                                              43,401                    43,401
   Capital surplus
     Legal capital surplus
        Balance at the end of previous period                                          46,350                    46,350
        Balance at the end of current period                                           46,350                    46,350
     Other capital surplus
        Balance at the end of previous period                                           3,811                     3,812
        Changes of items during the period
           Disposal of treasury stock                                                      0                        (9)
           Total changes of items during the period                                        0                        (9)
        Balance at the end of current period                                            3,812                     3,802
     Total capital surplus
        Balance at the end of previous period                                          50,162                    50,162
        Changes of items during the period
           Disposal of treasury stock                                                      0                        (9)
           Total changes of items during the period                                        0                        (9)
        Balance at the end of current period                                           50,162                    50,152
   Retained Earnings
     Legal retained earnings
        Balance at the end of previous period                                           5,372                     5,372
        Balance at the end of current period                                            5,372                     5,372
     Other retained earnings reserve
        Reserve for retirement allowance
           Balance at the end of previous period                                        1,255                     1,255
           Balance at the end of current period                                         1,255                     1,255
        Reserve for dividends
           Balance at the end of previous period                                        1,235                     1,235
           Balance at the end of current period                                         1,235                     1,235
        Reserve for special depreciation
          Balance at the end of previous period                                            6                         0
           Changes of items during the period
              Reversal of reserve for special depreciation                                (5)                       (0)
              Total changes of items during the period                                    (5)                       (0)
           Balance at the end of current period                                            0                         --
        Reserve for advanced depreciation of noncurrent
        assets
           Balance at the end of previous period                                        1,631                     1,556
           Changes of items during the period
              Reversal of reserve for advanced depreciation
                                                                                         (74)                      (70)
              of noncurrent assets
              Total changes of items during the period                                   (74)                      (70)
           Balance at the end of current period                                         1,556                     1,485




                                                             - 31 -
                                                                                                        Millions of yen
                                                                       Year ended                Year ended
                                                                      March 31, 2008            March 31, 2009
        General reserve
           Balance at the end of previous period                                       11,783                    11,783
           Balance at the end of current period                                        11,783                    11,783
        Retained earnings brought forward
           Balance at the end of previous period                                       85,985                    79,858
           Changes of items during the period
              Reversal of reserve for special depreciation                                 5                          0
              Reversal of reserve for advanced depreciation
                                                                                          74                        70
              of noncurrent assets
              Dividends from surplus                                               (4,074)                   (4,121)
              Net loss                                                             (2,132)                  (40,043)
              Total changes of items during the period                             (6,126)                  (44,093)
           Balance at the end of current period                                        79,858                    35,765
     Total retained earnings
        Balance at the end of previous period                                      107,268                   101,061
        Changes of items during the period
           Dividends from surplus                                                  (4,074)                   (4,121)
           Net loss                                                                (2,132)                  (40,043)
           Total changes of items during the period                                (6,207)                  (44,164)
        Balance at the end of current period                                       101,061                       56,897
   Treasury stock
     Balance at the end of previous period                                         (4,384)                   (10,985)
     Changes of items during the period
        Purchase of treasury stock                                                 (6,603)                         (10)
        Disposal of treasury stock                                                         2                        17
        Total changes of items during the period                                   (6,601)                            6
     Balance at the end of current period                                         (10,985)                   (10,978)
   Total shareholders’ equity
     Balance at the end of previous period                                         196,447                   183,639
     Changes of items during the period
        Dividends from surplus                                                     (4,074)                   (4,121)
        Net loss                                                                   (2,132)                  (40,043)
        Purchase of treasury stock                                                 (6,603)                         (10)
        Disposal of treasury stock                                                         2                          7
        Total changes of items during the period                                  (12,808)                   (44,167)
     Balance at the end of current period                                          183,639                   139,472
Valuation and translation adjustments
   Valuation difference on available-for-sale securities
     Balance at the end of previous period                                             11,712                     2,908
     Changes of items during the period
        Net changes of items other than shareholders’
                                                                                   (8,803)                   (2,905)
        equity
        Total changes of items during the period                                   (8,803)                   (2,905)
     Balance at the end of current period                                               2,908                         2




                                                             - 32 -
                                                                                                       Millions of yen
                                                                      Year ended                Year ended
                                                                     March 31, 2008            March 31, 2009
   Deferred gains or losses on hedge
     Balance at the end of previous period                                                9                          2
     Changes of items during the period
        Net changes of items other than shareholders’
                                                                                         (7)                        (2)
        equity
        Total changes of items during the period                                         (7)                        (2)
     Balance at the end of current period                                                 2                          --
   Total valuation and translation adjustments
     Balance at the end of previous period                                            11,721                     2,910
     Changes of items during the period
        Net changes of items other than shareholders’
                                                                                  (8,810)                       (2,908)
        equity
        Total changes of items during the period                                  (8,810)                       (2,908)
     Balance at the end of current period                                              2,910                         2
Total net assets
   Balance at the end of previous period                                          208,169                   186,550
   Changes of items during the period
     Dividends from surplus                                                       (4,074)                       (4,121)
     Net loss                                                                     (2,132)                   (40,043)
     Purchase of treasury stock                                                   (6,603)                          (10)
     Disposal of treasury stock                                                           2                          7
     Net changes of items other than shareholders’ equity                         (8,810)                   (2,908)
     Total changes of items during the period                                    (21,618)                  (47,075)
   Balance at the end of current period                                           186,550                   139,474




                                                            - 33 -
(4) Notes for Going Concern
   Not applicable

(5) Changes in Accounting Policies
  (Accounting Standard for Measurement of Inventories)
  As for the inventories for ordinary sales, we formerly relied on the cost method by the specific identification
  or average cost method. However, beginning this consolidated fiscal year, we began using ASBJ Statement
  No. 9 Accounting Standard for Measurement of Inventories (issued on July 5, 2006) and chiefly calculate the
  value of inventories with the specific identification or average cost method (as for the value on the balance
  sheet, we use an asset write-down method based on the decreased profitability). Its influence on the profit
  and loss is negligible.

  (Accounting Standard for Lease Transactions)
  As for financial lease transactions without ownership transfer, we formerly relied on an accounting
  procedure that was based on the leasing transaction method. However, beginning this consolidated fiscal
  year, we adopted the Accounting Standard for Lease Transactions (Statement No. 13 - issued by the First
  Subcommittee of the Business Accounting Council on June 17, 1993 and revised on March 30, 2007) and
  the Guidance on Accounting Standard for Lease Transactions (Guidance No. 16 - issued by the Accounting
  Practice Committee of the Japan Institute of Certified Public Accountants on January 18, 1994 and revised
  on March 30, 2007), and are using them for the accounting of ordinary sales transactions.

  For the financial lease transactions without ownership transfer which began before the applicable accounting
  period, we still use the accounting procedure based on the method related to ordinary lease transactions. Its
  influence on the profit and loss is negligible.

(6) Change to the Method of Display
  In accordance with the method of display in our latest statutory financial report issued as stipulated by the
  Financial Instruments and Exchange Act (submitted on June 26, 2008), the accounting items in these
  consolidated financial statements have been regrouped.

  (Balance Sheets)
  In accordance with the revised Rules of Consolidated Quarterly Financial Statements (issued by the
  Financial Service Agency of Japan on August 7, 2008), the items “Finished goods” and “Semi-finished
  goods” in the previous consolidated accounting period have been included in the “Merchandise and finished
  goods” section, and the items “Raw materials” and “Supplies” in the previous consolidated accounting
  period have been included in the “Raw materials and supplies” section. “Finished goods,” “Semi-finished
  goods,” “Raw materials,” and “Supplies” included in the current accounting period under review are
  respectively 5,934 million yen, 1,166 million yen, 2,334 million yen, and 274 million yen.

  (Statements of Income)
  The “Valuation loss on affiliate companies’ stock,” which was included in the “Other” line of the
  extraordinary losses section in the previous consolidated accounting period, has been added because it
  exceeds 10% of extraordinary losses. The “Valuation loss on affiliate companies’ stock” in the previous
  consolidated accounting period under review was 31 million yen.




                                                    - 34 -
6. Other
 (1) Status of Production, Order Reception, and Sales
   (1) Production results                                                                            Millions of yen
                                     Year ended March 31, 2008      Year ended March 31, 2009              Change
Name of segment by business type
                                                   Composition                      Composition
                                      Amount                          Amount                        Amount      Change rate
                                                     Ratio                            Ratio
                                                                                                                   (%)
                                                      (%)                              (%)
  Industrial Automation and             322,215            74.1        301,152             80.5     (21,063)           -6.5
  Control Business
  Test and Measurement Business          68,717            15.8            34,103           9.1     (34,614)         -50.4

  New and Other Businesses               44,032            10.1            38,901          10.4       (5,131)        -11.7

              Total                     434,964           100.0        374,156            100.0     (60,808)         -14.0
  (Note) 1. Amounts are based on sales price.
         2. Consumption tax is not included in the above amounts.

  (2) Order intake status                                                                            Millions of yen
                                     Year ended March 31, 2008      Year ended March 31, 2009              Change
Name of segment by business type
                                    Order intake   Order backlog    Order intake    Order backlog Order intake Order backlog

  Industrial Automation and             343,152        145,551         302,036          131,456     (41,116)      (14,095)
  Control Business
  Test and Measurement Business          67,647           6,837            32,557         5,060     (35,090)        (1,777)

  New and Other Businesses               44,273         24,853             39,692        22,691      (4,581)        (2,162)

              Total                     455,072        177,241         374,285          159,207     (80,787)      (18,034)
  (Note)   Consumption tax is not included in the above amounts.


  (3) Sales results                                                                                  Millions of yen
                                     Year ended March 31, 2008      Year ended March 31, 2009              Change
Name of segment by business type
                                                   Composition                      Composition
                                                                                                                Change rate
                                      Amount         Ratio            Amount          Ratio         Amount
                                                                                                                   (%)
                                                      (%)                              (%)
  Industrial Automation and             322,222            73.7        301,152             80.0     (21,070)           -6.5
  Control Business
  Test and Measurement Business          68,771            15.7            34,138           9.1     (34,633)          -50.4

  New and Other Businesses               46,455            10.6            41,244          11.0      (5,211)          -11.2

              Total                     437,448           100.0        376,534            100.0     (60,913)         -13.9
  (Note) 1. Consumption tax is not included in the above amounts.
         2. No customers account for 10% or more of total sales results.
         3. Transactions between segments offset each other.




                                                         - 35 -
[Reference]
                                                                                                         May 15, 2009
                                                                                         Yokogawa Electric Corporation

       Consolidated Financial Statements for the Year Ended March 31, 2009
                                                                                                           Millions of yen
                                               Year ended March 31,       Year ended March 31,
                                                                                                            Change
                                                       2008                       2009
                                                            Ratio to                   Ratio to                   Ratio to
                                               Amount                     Amount                     Amount
                                                            Net Sales                  Net Sales                  Net Sales
Net Sales                                       437,448              --     376,534             --    (60,913)            --
Operating Income                                 27,412          6.3%         4,707         1.3%      (22,705)       -5.0%
Ordinary Income                                  16,453          3.8%           274         0.1%      (16,178)       -3.7%
Net Income                                       11,667          2.7%      (38,446)       -10.2%      (50,114)      -12.9%
Total Assets                                                  444,644                    400,959                   (43,684)
Shareholders’ Equity                                          224,844                    171,008                   (53,836)
Net Income to Shareholders’ Equity Ratio                         5.1%                     -19.8%                    -24.9%
Net Income per Share                                        44.76 yen               (149.26) yen               (194.02) yen
Shareholders’ Equity per Share                             856.72 yen                 649.20 yen               (207.52) yen
Capital Investment                                             37,990                      26,813                  (11,176)
Depreciation                                                   23,129                     21,615                    (1,514)
Research and Development Expenses                              40,875                      37,229                   (3,646)
Average Exchange Rate during the Term
                   USD                                      113.80 yen                 100.66 yen               (13.14) yen
                   EUR                                      162.26 yen                 143.28 yen               (18.98) yen

Orders of segment by business type                                                                         Millions of yen
                                               Year ended March 31,       Year ended March 31,       Year ending March 31,
                                                       2008                       2009                  2010 (Forecast)
Industrial Automation and Control Business                   343,152                    302,036                     258,000
      Test and Measurement Business                           67,647                     32,557                      27,000
         New and Other Businesses                             44,273                     39,692                      40,000
                   Total                                     455,072                    374,285                     325,000

Sales of segment by business type                                                                          Millions of yen
                                               Year ended March 31,       Year ended March 31,       Year ending March 31,
                                                       2008                       2009                  2010 (Forecast)
Industrial Automation and Control Business                   322,222                    301,152                     248,000
      Test and Measurement Business                           68,771                     34,138                      27,000
         New and Other Businesses                             46,455                     41,244                      40,000
                   Total                                     437,448                    376,534                     315,000

Operating income of segment by business type                                                               Millions of yen
                                               Year ended March 31,       Year ended March 31,       Year ending March 31,
                                                       2008                       2009                  2010 (Forecast)
Industrial Automation and Control Business                    39,069                      29,097                       8,000
      Test and Measurement Business                           (1,987)                   (13,764)                    (10,500)
         New and Other Businesses                             (9,670)                   (10,626)                     (6,500)
                   Total                                      27,412                       4,707                     (9,000)




                                                          - 36 -

								
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