FOR IMMEDIATE RELEASE

Cleveland, Ohio -- January 24, 2003 -- Keithley Instruments, Inc. (NYSE:KEI), a leader in solutions for emerging measurement needs, today announced results for its fiscal 2003 first quarter that ended December 31, 2002.

First Quarter Fiscal 2003 Results

Net sales of $26.2 million for the first quarter of fiscal 2003 increased 28 percent from sales of $20.4 million in last year's first quarter. Sales were higher in all major geographies with the Pacific Basin region posting the largest gains. Sequentially, sales decreased 8 percent from the fourth quarter of fiscal 2002. The company reported a net loss for the first quarter of fiscal 2003 of $0.5 million, or $0.03 per share. The company reported a net loss of $1.6 million, or $0.10 per share, in last year's first quarter.

Orders of $23.0 million for the first quarter increased 15 percent from last year's orders of $20.1 million. Geographically, orders were up 14 percent in the United States, up 88 percent in the Pacific Basin, and down 17 percent in Europe when compared to the prior year. Compared to the prior year's first quarter, orders from semiconductor customers increased 57 percent, wireless communications customers increased 41 percent, electronic components and subassembly manufacturers increased 4 percent, and research and education increased 7 percent. For the first quarter, semiconductor orders comprised approximately 20 percent of the total, wireless communications orders were approximately 15 percent, electronic components and subassembly manufacturers orders were approximately 20 percent, research and education made up about 25 percent, while optoelectronics orders made up less than 5 percent. Sequentially, orders decreased 12 percent from the fourth quarter of fiscal 2002. Order backlog decreased $2.5 million during the quarter to $12.3 million at December 31, 2002.

"Although our first quarter results were within our guidance, orders were clearly a disappointment," stated Joseph P. Keithley, the company's Chairman, President and Chief Executive Officer. "Our orders levels were soft primarily as a result of weaker conditions in the semiconductor industry. Despite current conditions, we continue to believe in the long-term growth potential of the industries we serve. We introduced two significant new products this past quarter that strengthened our offerings to these industries. We're already beginning to see design wins for our Model 2800 RF Power Analyzer, engineered specifically for high speed production testing of wireless phones, RFIC power amplifiers, and related RF devices, and will begin shipping this product this month. Early customer evaluations for our Model 4500-MTS Modular Test System, which serves high speed, high channel count automated optoelectronics device test applications, are promising. Typical applications include testing fiberoptic telecommunication system components, such as tunable laser diodes, laser diode modules, Raman amplifier pump laser modules, and other active optoelectronic devices. Additionally, our Model 6487 Picoammeter/Voltage Source product introduced this quarter has been selected by the editors of Electronic Products magazine for one of its "Product-of-the-Year" awards. This product, along with our Model 6485 Picoammeter introduced last year, continue to be favorites among our research customers, and provide us with opportunities to serve new applications such as nanotechnology research."

"I am also pleased to announce that Keithley has been certified to the ISO 14001:1996 International Quality System Standard at our Cleveland facilities. ISO 14001 is an international system through which a company can demonstrate its commitment to sound environmental performance, pollution prevention, and continual improvement. The standard is becoming increasingly important for companies who do business in Europe," added Keithley.

The company's financial position at December 31, 2002 continued to be strong. Cash generated from operations for the quarter was $1.3 million. Cash and short-term investments totaled $47.3 million, while debt was $0.6 million at the end of the quarter. Inventory of $9.0 million decreased $1.1 million during the quarter and $5.2 million from year ago levels, with turns improving to 4.3 from 2.1 the same time last year. Days sales outstanding were 44 at December 31, 2002 compared to 42 at the end of fiscal year 2002 and 50 at this time last year. The total number of employees on December 31, 2002 was 624 compared to 612 at the end of fiscal year 2002. The increase was due to the hiring of a direct sales force in the United States.

Sales Initiatives

"We are very pleased with the performance of our Japanese operations," stated Keithley. "Orders for the first quarter increased 31 percent from the prior year's first quarter, and the operation was profitable this quarter. We are starting to see the payback for the investment we made last year."

"Effective January 1 we began selling exclusively through our own sales force in the United States," added Keithley. "We are pleased with the quality of the individuals we were able to attract. We were fully staffed with approximately 30 salesmen by the end of November. They completed their training by the end of December, and now are in the field selling product. We did record approximately $0.6 million in one-time expenses during the quarter as we paid both salaries to our new sales employees as well as commissions to the sales rep firms. Orders for the December quarter may have been slightly impacted as the rep force lost momentum; however, the transition has gone smoothly. We expect better growth over the long term in the U.S. and worldwide because of our ability to work more closely with U.S. customers."

Stock Buyback Program

During the first quarter, the company spent $2.4 million repurchasing 210,700 shares of its common stock at an average cost per share of $11.18 including commissions. Under the current repurchase program, the company may buy back an additional 1,256,300 shares through December 2003.

Business Outlook

"Conditions throughout the electronics industry remain depressed, especially in the optoelectronic and wireline telecommunications and semiconductor segments," added Keithley. "However, we continue to see a high level of spending by our customers on their next-generation product offerings. This traditionally creates new applications, price performance enhancements and increased demand, which translates into opportunities for Keithley. We expect this same cycle to occur again in the next six to twelve months. Nonetheless, prospects for short-term improvement are problematic."

Based on current expectations, the company expects sales for the second quarter to range between $23 and $26 million. At the low end of the sales range, the company would expect a pretax loss in the teens as a percentage of sales. At the high end of the sales range, the company would expect a loss in the single digits as a percentage of sales.

"We continue to operate in a very difficult environment; however, we remain committed to our strategy and continuing investments, and believe the initiatives we have been undertaking throughout this downturn better position us to generate sales and earnings growth," stated Keithley.

Forward Looking Statements

Statements in the "Sale Initiatives" and "Business Outlook" sections of this release are forward-looking statements that involve a number of risks and uncertainties. Actual results may differ materially from the expected results stated or implied in the forward-looking statements as a result of a number of factors that include but are not limited to: worldwide economic conditions and business conditions in the semiconductor, wireless, optoelectronics and other industries which the company serves and the severity and duration of the current downturn of these as well as the overall electronics industry, the company's ability to develop an effective direct sales force in the United States, the company's ability to continue to develop an effective sales and support organization in Japan, the company's ability to develop new products in a timely fashion and gain market acceptance of those products to remain competitive and gain market share, the company's ability to implement an effective lean manufacturing system without incurring significant disruption in production during the implementation, the company's ability to implement CRM and ERP systems without interruptions in its accounting, order entry, billing, manufacturing and other customer support functions, the company's ability to control costs, changes in effective tax rates, foreign currency fluctuations which could affect worldwide operations, and the effects of terrorist activities and armed conflicts that could cause disruptions in general economic activity. Further information on factors that could cause actual results to differ from those anticipated is included in the company's annual report on Form 10-K and quarterly reports on Form 10-Q which are filed with the Securities and Exchange Commission. In light of these uncertainties, the inclusion of forward-looking information should not be regarded as a representation by the company that its plans or objectives will be achieved. Further, the company is not obligating itself to revise forward-looking statements contained herein to reflect events or circumstances after the date of this release or to reflect the occurrence of unanticipated events.

Conference Call on the Web

On Friday, January 24, 2003 at 10:00 a.m. Eastern Time, interested parties may listen to the Keithley Instruments quarterly conference call live on the Web by registering at the investor relations portion of the company's web site at www.keithley.com. Interested parties may also listen to a replay of the quarterly conference call by visiting the web site. The replay will be available for approximately 30 days.

KEITHLEY INSTRUMENTS, INC.
CONSOLIDATED STATEMENT OF INCOME
(In Thousands of Dollars Except for Per Share Data)
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Keithley Instruments, Inc. provides optical and electrical measurement solutions from DC to RF (radio frequency) to the wireless, semiconductor, optoelectronics, and other electronics manufacturing industries. Engineers and scientists around the world use Keithley's advanced hardware and software for process monitoring, production test, and basic research.

Products and company names listed are trademarks or trade names of their respective companies.

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