|Flextronics, Nortel Complete Transfer of Calgary Manufacturing Operations and Related Assets|
Calgary Transfer Marks Final Phase of Outsourcing Deal Worth in Excess of US$2 Billion Annually
SINGAPORE, May 9 /PRNewswire-FirstCall/ -- Flextronics (Nasdaq: FLEX) and Nortel* (NYSE/TSX: NT) today announced that they have completed the transfer of the manufacturing operations and related assets including product integration, testing, repair and logistics operations of Nortel's Systems House in Calgary to Flextronics. Approximately 650 employees in Calgary will transfer to Flextronics as part of the final phase of the previously announced agreement.
"Today marks a significant event in our business relationship with Nortel, as we have now completed the transfer of Nortel's remaining major optical, wireless and enterprise manufacturing operations and related supply chain activities, which should generate in excess of US$2 billion of revenue annually for Flextronics. This deal brings long-term strategic value for Flextronics and creates the broadest capability of any EMS company in the telecom market," said Mike McNamara, Flextronics' Chief Executive Officer.
"The significant increase of complex, multi-technology network solutions including carrier-grade products that we will provide to Nortel solidifies Flextronics as the leader in the infrastructure market and significantly enhances our competitive advantage for large-scale, low-cost manufacturing of very complex products," said Michael Clarke, president of Flextronics' Infrastructure segment.
"Our goal from the beginning was to create an industry-leading supply chain," said Joel Hackney, senior vice president, Global Operations and Quality, Nortel. "Working with Flextronics, our customers can expect superior value through delivery agility, global reach, cost competitiveness, excellent quality, and skilled people."
"This initiative was unprecedented in our industry in terms of size and scope," Hackney said. "We have transferred essentially all of our remaining major manufacturing activities to a world-class electronics manufacturing services provider, leaving Nortel to focus on making business simple for its customers through development and integration of world-class communications and networking solutions."
Headquartered in Singapore (Singapore Reg. No. 199002645H), Flextronics is a leading Electronics Manufacturing Services (EMS) provider focused on delivering complete design, engineering and manufacturing services to aerospace, automotive, computing, consumer digital, industrial, infrastructure, medical and mobile OEMs. With fiscal year 2006 revenues from continuing operations of USD$15.3 billion, Flextronics helps customers design, build, ship, and service electronics products through a network of facilities in over 30 countries on five continents. This global presence provides design and engineering solutions that are combined with core electronics manufacturing and logistics services, and vertically integrated with components technologies, to optimize customer operations by lowering costs and reducing time to market. For more information, please visit http://www.flextronics.com/ .
This press release contains forward-looking statements within the meaning of federal securities laws. These forward-looking statements include statements related to Flextronics's new strategic relationship with Nortel. These forward-looking statements involve risks and uncertainties that could cause the actual results to differ materially from those anticipated by these forward-looking statements. These risks include the challenges of effectively managing Flextronics's operations; the risk that Flextronics may not obtain the benefits anticipated from the Nortel transaction; the ability of Flextronics to retain and motivate employees acquired from Nortel; the risk that Flextronics may not achieve anticipated cost reductions and efficiencies from the Nortel transaction; the possible need for future restructurings and impairments of assets; the ability of Flextronics to integrate operations and related assets pursuant to the Nortel transaction; and the other risks described under "Business-Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Flextronics's most recent Annual Report on Form 10-K and in Flextronics's quarterly reports on Form 10-Q and current reports on Form 8-K, filed with the SEC. The forward-looking statements in this press release are based on current expectations and Flextronics assumes no obligation to update these forward- looking statements.
Nortel is a recognized leader in delivering communications capabilities that enhance the human experience, ignite and power global commerce, and secure and protect the world's most critical information. Our next-generation technologies, for both service providers and enterprises, span access and core networks, support multimedia and business-critical applications, and help eliminate today's barriers to efficiency, speed and performance by simplifying networks and connecting people with information. Nortel does business in more than 150 countries. For more information, visit Nortel on the Web at www.nortel.com. For the latest Nortel news, visit www.nortel.com/news.
Certain statements in this press release may contain words such as "could", "expects", "may", "anticipates", "believes", "intends", "estimates", "plans", "envisions", "seeks" and other similar language and are considered forward-looking statements or information under applicable securities legislation. These statements are based on Nortel's current expectations, estimates, forecasts and projections about the operating environment, economies and markets in which Nortel operates. These statements are subject to important assumptions, risks and uncertainties, which are difficult to predict and the actual outcome may be materially different. Although Nortel believes expectations reflected in such forward-looking statements are reasonable based upon certain assumptions, they may prove to be inaccurate and consequently Nortel's actual results or events could differ materially from its expectations set out in this press release. Further, actual results or events could differ materially from those contemplated in forward-looking statements as a result of the following (i) risks and uncertainties relating to Nortel's restatements and related matters including: Nortel's most recent restatement and two previous restatements of its financial statements and related events; the negative impact on Nortel and NNL of their most recent restatement and delay in filing their financial statements and related periodic reports (including the anticipated delay in filing the Quarterly Reports on Form 10-Q for the first quarter of 2006) causing them to breach their public debt indentures and, if the delay extends beyond June 15, 2006, their obligations under their credit facilities, with the possibility that the holders of their public debt or NNL's lenders would seek to accelerate the maturity of that debt, and causing, if the delay extends beyond June 15, 2006, a breach of NNL's support facility with EDC with the possibility that EDC would refuse to issue additional support under the facility, terminate its commitments under the facility or require NNL to cash collateralize all existing support; legal judgments, fines, penalties or settlements, or any substantial regulatory fines or other penalties or sanctions, related to the ongoing regulatory and criminal investigations of Nortel in the U.S. and Canada; any significant pending civil litigation actions not encompassed by Nortel's proposed class action settlement; any substantial cash payment and/or significant dilution of Nortel's existing equity positions resulting from the finalization and approval of its proposed class action settlement, or if such proposed class action settlement is not finalized, any larger settlements or awards of damages in respect of such class actions; any unsuccessful remediation of Nortel's material weaknesses in internal control over financial reporting resulting in an inability to report Nortel's results of operations and financial condition accurately and in a timely manner; the time required to implement Nortel's remedial measures; Nortel's inability to access, in its current form, its shelf registration filed with the United States Securities and Exchange Commission (SEC), and Nortel's below investment grade credit rating and any further adverse effect on its credit rating due to Nortel's restatement of its financial statements; any adverse affect on Nortel's business and market price of its publicly traded securities arising from continuing negative publicity related to Nortel's restatements; Nortel's potential inability to attract or retain the personnel necessary to achieve its business objectives; any breach by Nortel of the continued listing requirements of the NYSE or TSX causing the NYSE and/or the TSX to commence suspension or delisting procedures; any default in Nortel's filing obligations extending beyond July 15, 2006 for the 2006 First Quarter Form 10-Qs, causing any Canadian securities regulatory authority to impose an order to cease all trading in Nortel's securities within the applicable jurisdiction or to impose such an order sooner if Nortel fails to comply with the alternate information guidelines of such regulatory authorities; (ii) risks and uncertainties relating to Nortel's business including: yearly and quarterly fluctuations of Nortel's operating results; reduced demand and pricing pressures for its products due to global economic conditions, significant competition, competitive pricing practice, cautious capital spending by customers, increased industry consolidation, rapidly changing technologies, evolving industry standards, frequent new product introductions and short product life cycles, and other trends and industry characteristics affecting the telecommunications industry; any material and adverse affects on Nortel's performance if its expectations regarding market demand for particular products prove to be wrong or because of certain barriers in its efforts to expand internationally; any reduction in Nortel's operating results and any related volatility in the market price of its publicly traded securities arising from any decline in its gross margin, or fluctuations in foreign currency exchange rates; any negative developments associated with Nortel's supply contract and contract manufacturing agreements including as a result of using a sole supplier for key optical networking solutions components, and any defects or errors in Nortel's current or planned products; any negative impact to Nortel of its failure to achieve its business transformation objectives; additional valuation allowances for all or a portion of its deferred tax assets; Nortel's failure to protect its intellectual property rights, or any adverse judgments or settlements arising out of disputes regarding intellectual property; changes in regulation of the Internet and/or other aspects of the industry; Nortel's failure to successfully operate or integrate its strategic acquisitions, or failure to consummate or succeed with its strategic alliances; any negative effect of Nortel's failure to evolve adequately its financial and managerial control and reporting systems and processes, manage and grow its business, or create an effective risk management strategy; and (iii) risks and uncertainties relating to Nortel's liquidity, financing arrangements and capital including: the impact of Nortel's most recent restatement and two previous restatements of its financial statements; any acceleration under their public debt indentures and credit facilities, which may result in Nortel and NNL being unable to meet their respective payment obligations; any inability of Nortel to manage cash flow fluctuations to fund working capital requirements or achieve its business objectives in a timely manner or obtain additional sources of funding; high levels of debt, limitations on Nortel capitalizing on business opportunities because of credit facility covenants, or on obtaining additional secured debt pursuant to the provisions of indentures governing certain of Nortel's public debt issues and the provisions of its credit facilities; any increase of restricted cash requirements for Nortel if it is unable to secure alternative support for obligations arising from certain normal course business activities, or any inability of Nortel's subsidiaries to provide it with sufficient funding; any negative effect to Nortel of the need to make larger defined benefit plans contributions in the future or exposure to customer credit risks or inability of customers to fulfill payment obligations under customer financing arrangements; any negative impact on Nortel's ability to make future acquisitions, raise capital, issue debt and retain employees arising from stock price volatility and further declines in the market price of Nortel's publicly traded securities, or any future share consolidation resulting in a lower total market capitalization or adverse effect on the liquidity of Nortel's common shares. For additional information with respect to certain of these and other factors, see the Company's Annual Report on Form 10-K/A and NNL's Annual Report on Form 10-K and other securities filings with the SEC. Unless otherwise required by applicable securities laws, Nortel disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
NOTE: *Nortel, the Nortel logo and the Globemark are trademarks of Nortel Networks.
SOURCE Flextronics International Ltd. -0- 05/09/2006 /CONTACT: Thomas J. Smach, Chief Financial Officer, +1-408-576-7722, or firstname.lastname@example.org, Renee Brotherton, Senior Director of Corporate Marketing, +1-408-576-7189, or email@example.com, both of Flextronics; or Mark Buford, Corporate Media Relations, of Nortel, +1-972-684-8512, or firstname.lastname@example.org/ /Web site: http://www.flextronics.com/ (FLEX NT) CO: Flextronics International Ltd.; Nortel ST: Singapore IN: CPR HRD EPM ECP NET SU: TNM KG -- SFTU071 -- 2335 05/09/2006 09:17 EDT http://www.prnewswire.com