Flextronics, Nortel<br>delay plant transfer

Flextronics today provided an update regarding the previously announced agreement with Nortel Networks whereby Nortel Networks will divest certain optical, wireless, and enterprise manufacturing operations and optical design operations to Flextronics in a transaction that is expected, upon completion, to generate approximately $2.5 billion of revenues for Flextronics from Nortel Networks. While the completion of the transaction is still expected to occur in May 2005, it was originally anticipated that two Canadian manufacturing facilities would be transferred from Nortel Networks to Flextronics in November 2004 and February 2005. It is now expected that the transfer of these facilities will occur in February 2005 and May 2005. There has been no significant change to the expected timing of any other operations to be transferred. The initial transfer of operations is still expected to occur in November 2004 and will comprise the optical design groups in Canada and Northern Ireland. Michael Marks, Chief Executive Officer of Flextronics stated, “The delay in the transfer of these two manufacturing operations is due to Nortel Networks continuing focus on the completion of the Company’s restatement of its financial statements and the required regulatory filings. We are still on track for the targeted completion date of May 2005, so these changes to the schedule are a timing issue not a deal or relationship issue.” Marks added, “Of course this will reduce revenue expectations in the December and March quarters, and it may reduce our EPS by $0.01-$0.02 in each of those quarters as a result of the costs we have invested that won’t be offset by the expected volume. On the other hand, this will also delay some of the cash payments to Nortel Networks, which should allow us more time to accumulate cash from operations to fund such payments.”