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NEC and Celestica announce significantly expanded

Jan 08, 2002

TOKYO, Japan and TORONTO, Canada, Jan. 8 /CNW/ - NEC Corporation (NEC) (NASDAQ: NIPNY) (FTSE: 6701q.l) and Celestica Inc. (Celestica) (NYSE, TSE: CLS) today announced that they have entered into an agreement regarding a strategic outsourcing relationship under which the companies will, on closing, commence a five-year supply agreement, with total estimated revenue of approximately US$2.5 billion.

As part of the transaction, Celestica will assume supply chain management, sub-assembly, final assembly, integration and testing for a broad range of NEC's optical backbone and broadband access equipment.

Highlights of the transaction are as follows:

- Under the terms of the agreement, Celestica will expand its operations

in Japan by acquiring certain of NEC's advanced manufacturing

facilities in Miyagi and Yamanashi, Japan. NEC's Miyagi and Yamanashi

facilities are engaged in the development and manufacturing of advanced

optical transmission systems, including wavelength division

multiplexing system (WDM) and SONET/SDH, as well as access network

systems such as xDSL (DSLAM).

- Approximately 1,200 highly-skilled manufacturing specialists and

related support staff, including 800 from NEC's Miyagi operation

and 400 from NEC's Yamanashi operation, will join Celestica.

- The transaction is expected to close by March 31, 2002, subject to

normal closing conditions, including regulatory approvals. Further

details of the transaction were not disclosed.

The design and development functions currently performed by NEC Miyagi will remain with NEC and NEC Miyagi will continue as a developer of optical transmission systems. The development and manufacturing operation of NEC Yamanashi's Otsuki Plant, that is involved in manufacturing optical devices and optical submarine cable systems, will also remain with NEC.

"NEC's growing partnership with Celestica will allow us to improve our competitive positioning by further leveraging our leading-edge R&D, product development and manufacturing expertise with Celestica's global manufacturing capabilities and supply chain management expertise," said Kaoru Yano, Senior Vice President of NEC and Company Deputy President of NEC Networks. "Through the alliance with Celestica, NEC intends to improve price competitiveness, production lead-times and supply chain flexibility to optimize overall manufacturing efficiency. NEC also chose to work with Celestica based on its reputation for providing global, advanced manufacturing capabilities and cost- effective supply chain solutions for the world's best communications and information technology companies."

"Celestica is extremely pleased and honoured to enhance its operations in Japan through this expanded strategic relationship with NEC, a respected market leader," said Eugene Polistuk, Chairman and CEO, Celestica. "Celestica is an organization that prides itself on the quality of its employees and the advanced supply chain and manufacturing capabilities it offers its customers. The addition of NEC's technologically advanced operations in Miyagi and Yamanashi, and the accompanying highly-skilled human resources, complements our existing Japanese service offering and demonstrates our commitment to building a strong presence in Japan to meet the growing needs of NEC and other valued customers into the future."

NEC Corporation is being advised by Deutsche Bank in this transaction.

About NEC Corporation

NEC Corporation (NASDAQ: NIPNY) (FTSE: 6701q.l) is a leading provider of Internet solutions, dedicated to meeting the specialized needs of its customers in the key computer, network and electron device fields through its three market-focused in-house companies: NEC Solutions, NEC Networks and NEC Electron Devices. NEC Corporation, with its in-house companies, employs approximately 150,000 people worldwide and saw net sales of 5,409 billion Yen (approx. US$43 billion) in fiscal year 2000-2001. For further information, please visit the NEC home page at: http://www.nec.com

About Celestica

Celestica is a world leader in electronics manufacturing services (EMS) for industry leading original equipment manufacturers (OEMs). With facilities in North America, Europe, Asia and Latin America, Celestica provides a broad range of services including design, prototyping, assembly, testing, product assurance, supply chain management, worldwide distribution and after-sales service.

For further information on Celestica, visit its website at http://www.celestica.com

The company's security filings can also be accessed at http://www.sedar.com.

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