Flextronics Completes Xerox Asset Purchase

Flextronics (Singapore) has completed the first in a series of asset purchases from Xerox Corp. (Stamford, CT) that transfer Xerox's office product manufacturing operations to Flextronics. Xerox sold its plants in Toronto, Canada; Aguascalientes, Mexico; and Penang, Malaysia to Flextronics for $118 million plus the assumption of certain liabilities. The approximately 2,545 current Xerox employees in these operations will also transfer to Flextronics.

In September, the two companies announced a manufacturing agreement that includes payment to Xerox of about $220 million for the sale of inventory, property and equipment as well as a five-year contract for Flextronics to manufacture certain Xerox office equipment and components. In addition to the sale of Xerox's operations in Toronto, Aguascalientes and Penang, the company is selling to Flextronics its office manufacturing operations in Resende, Brazil and Venray, The Netherlands.

The asset sale just announced marks the beginning of a one-year transition period for Flextronics to assume manufacturing of Xerox-designed office products and related components. Flextronics will also begin the manufacturing of some Xerox electronic parts and subsystems during the first half of 2002. Xerox will continue manufacturing its high-end production printing and publishing equipment, toner and imaging supplies in its remaining global manufacturing plants.

Xerox had previously received portions of the $118 million from this first asset sale and expects to receive the remaining payment. Additional cash proceeds from the agreement will be received in phases as the companies finalize the other sales, subject to the completion of certain regulatory and other requirements.