NEWS *** new 3-yr mfg contract - $600 million
Kent Electronics Awarded Three Year Manufacturing Contract
Agreement Expected to Add Approximately $600 Million in Revenues Over Three Year Period
HOUSTON--(BUSINESS WIRE)--Feb. 2, 2000--Kent Electronics Corporation (NYSE:KNT - news) announced that
K*TEC Electronics, its contract manufacturing division, has been awarded a significant contract to manufacture large-scale box
builds for one of its customers.
The new three-year agreement will utilize the full range of K*TEC's vertical integration services including: design for
manufacture consultation, prototyping and systems assembly. The transition of the manufacturing into K*TEC's 472,000 square
foot facility in Sugar Land, Texas will take place in phases over the next six months. The Company is not at liberty to name the
customer involved, but stated that the project is expected to add approximately $600 million to K*TEC revenues over the life
of the agreement. Kent Electronics further stated that the gross margin on this business will be lower than traditional margins
given the high percentage of material content of the products.
Larry Olson, President and Chief Operating Officer of Kent Electronics, stated, ``We are pleased to have been awarded this
contract following a very competitive bidding process. This agreement demonstrates the competitive advantages of our vertical
integration strategy, which is designed to reduce costs and decrease time to market. Additionally, we believe this contract is
emblematic of the opportunities that our strategic investments in people, facilities and technology have enabled us to pursue.'
Under the terms of the agreement, the Company will issue to its customer five-year warrants for 300,000 shares of Kent
common stock at the current market price. The warrants will vest over the three-year period of the contract based upon the
attainment of certain revenue targets. |
