Exhibit 99.1
News Release
For Media Inquiries:
Paula Horii Lydia Whitefield
908-953-6633 908-953-2728
phorii@avaya.com lwhitefield@avaya.com
For Investor Inquiries:
Derrick Vializ
908-953-7500
vializ@avaya.com
AVAYA AGREES TO OUTSOURCE MOST MANUFACTURING TO CELESTICA
AS PART OF AVAYA'S OVERALL RESTRUCTURING PLAN
FOR IMMEDIATE RELEASE: TUESDAY, FEBRUARY 20, 2001
BASKING RIDGE, N.J. - Avaya Inc. (NYSE: AV), a global leader in
business communications solutions and services, today announced an agreement to
outsource most of the manufacturing of its communications systems and software
to Toronto-based Celestica Inc. (NYSE: TSE: CLS), a global leader in the
electronics manufacturing services industry. The move will allow Avaya to reduce
inventories, fixed costs and capital expenditures while continuing to invest in
next generation enterprise solutions and services, the company said.
Avaya will receive approximately $200 million for the assets it is
transferring to Celestica. The transaction is expected to close in phases
beginning in the third fiscal quarter of 2001 and is subject to regulatory
approvals and ratification of the labor agreement between the International
Brotherhood of Electrical Workers and Celestica.
Under the strategic manufacturing agreement, which is worth
approximately $4 billion over its five-year term, Avaya will outsource to
Celestica the manufacturing of its large business systems in Westminster, Colo.,
along with the operation of its repair and distribution facilities in Little
Rock, Ark. As part of the agreement, Celestica will manufacture in its other
facilities the small business systems that Avaya currently makes in Shreveport,
Louisiana. Avaya's operations in Shreveport will be phased out by the end of the
fiscal year, the company said.
"Avaya's agreement with Celestica completes a key part of our
restructuring and begins a new chapter in our strategy for reinvestment and
growth," said Don Peterson, Avaya president and CEO. "Avaya's move to contract
manufacturing with Celestica, an industry leader in electronic manufacturing
services, ensures that our customers will continue to enjoy the quality and
reliability of our traditional flagship products. At the same time, it allows us
greater flexibility and focus on designing and developing the next generation
of enterprise solutions and services such as converged voice and data networks,
customer relationship management (CRM) and unified communications."
"Celestica is delighted to expand its communications customer base
with the addition of Avaya," said Eugene Polistuk, chairman and CEO, Celestica.
"Not only does this relationship add a new senior communications customer to
Celestica but it brings with it a highly skilled employee base, experienced in
manufacturing mission-critical communications programs. This intellectual asset
base will further leverage Celestica's plans for future growth in data and voice
communications."
Avaya said it expects to incur restructuring and related charges of
approximately $150 million pre-tax in fiscal 2001 in conjunction with this
outsourcing agreement. The company said that over the next six fiscal
quarters, it would also incur approximately $49 million pre-tax in one-time
implementation costs and approximately $59 million pre-tax in recurring
costs. Once the agreement is fully implemented at the end of fiscal 2002,
Avaya expects to realize net savings of approximately $400 million pre-tax
over the remaining term of the contract, $150 million of which will be
realized in the last year of the agreement.
About 1,400 Avaya employees are expected to join Celestica as part of
this transaction. Avaya has approximately 1,055 people in Westminster who will
become Celestica employees. The company manufactures such large business systems
as the DEFINITY(R) Enterprise Communications Server there. An additional 4,150
people work for Avaya in Colorado, in the areas of research and development and
sales and services, and they will remain with Avaya.
There are approximately 320 Avaya employees in Avaya's repair,
distribution and warehouse facilities in Little Rock, and they will become
Celestica employees.
In Shreveport, Avaya has approximately 900 employees where the
company manufactures such small business systems as Merlin MAGIX(TM)
Integrated System and the PARTNER-Registered Tradmark- Advanced
Communications System. As Avaya phases out its operations in Shreveport,
employees may apply for employment opportunities elsewhere at Avaya,
Celestica and Lucent Technologies and will be eligible for career transition
support that includes training, career counseling, outplacement support and
other benefits, the company said.
ABOUT AVAYA
Avaya, headquartered in Basking Ridge, N.J., USA, is a leading
provider of communications systems for enterprises, including businesses,
government agencies and other organizations. Avaya offers converged voice and
data, customer relationship management, messaging, voice multi-service
networking and structured cabling products and services. Avaya is a worldwide
leader in sales of messaging and structured cabling systems and a U.S. leader in
sales of enterprise voice communications and call center systems. Avaya intends
to use its leadership positions in enterprise communications systems and
software, its broad portfolio of products and services, and strategic alliances
with other technology and consulting services leaders to offer its customers
comprehensive eBusiness solutions.
ABOUT CELESTICA
With more than 29,000 employees worldwide, Celestica operates 34
manufacturing and design facilities in the United States, Canada, Mexico, the
United Kingdom, Ireland, Italy, the Czech Republic, Thailand, Hong Kong, China,
Malaysia and Brazil. Celestica provides a broad range of services including
design, prototyping, assembly, testing, product assurance, supply chain
management, worldwide distribution and after-sales service. Its customers
include industry leading original equipment manufacturers (OEMs), primarily in
the information technology and communications sectors.
This news release contains forward-looking statements based on
current expectations, forecasts and assumptions that involve risks and
uncertainties that could cause actual outcomes and results to differ
materially. These risks and uncertainties include, but are not limited to,
price and product competition, rapid technological development, dependence on
new product development, the successful introduction of new products, the mix
of our products and services, customer demand for our products and services,
economic, political and other risks associated with international sales and
operations, U.S. and foreign government regulation, general industry and
market conditions and growth rates and general domestic and international
economic conditions including interest rate and currency exchange rate
fluctuations. In addition, Avaya's ability to realize cost savings from the
contract manufacturing arrangement is dependent on a variety of factors
including, but not limited to the successful implementation of the contract
manufacturing arrangement and Celestica's ability to achieve manufacturing
efficiencies. For a further list and description of such risks and
uncertainties, see the reports filed by Avaya with the Securities and
Exchange Commission. Avaya disclaims any intention or obligation to update or
revise any forward-looking statements, whether as a result of new
information, future events or otherwise.