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To: Ron Bower who wrote (1346)	2/13/2000 7:18:00 AM
From: Ron Bower	Read Replies (1) \| Respond to of 1418

Because VTech had earlier announced intentions to buy Lucent's cell phone division, I misunderstood VTech/Lucent/At&T deal (it's for wireline, not cell phones). I am now unsure about it being beneficial to Jetcrown as the deal includes manufacturing facilities in Mexico. ---------------------- VTECH TO PURCHASE ASSETS RELATED TO LUCENT TECHNOLOGIES' CONSUMER PHONE MANUFACTURING OPERATIONS Obtains exclusive right to use the AT&T brand name on wireline telephone products HONG KONG, January 19, 2000 -- VTech Holdings Limited (SEHK:303; London SE:VTH; ADR: VTKHY), one of the world's leading consumer electronics corporations, today announced the signing of agreements with Lucent Technologies (NYSE: LU) for the acquisition of certain assets related to Lucent's consumer telephone manufacturing business and with AT&T (NYSE: T US) relating to certain rights to use the AT&T brand name. VTech will pay Lucent US$113.3 million to purchase assets which include consumer research and development operations, associated intellectual property and manufacturing and repair facilities. Under the trademark agreement with AT&T, VTech will receive the exclusive right for 10 years to use the AT&T brand in connection with its manufacture and sale of wireline telephones and accessories in the United States and Canada. Previously, Lucent was the license holder. Under the agreement, VTech will pay AT&T royalties based on net sales. The purchase of Lucent's assets is subject to VTech shareholder approvals and other routine regulatory approvals, as well as to VTech's securing the necessary financing. The transaction is expected to be completed by the end of the first calendar quarter of 2000. It will be financed through internal cash resources and bank loans. VTech's agreement with Lucent includes the addition of approximately 4,800 employees located primarily at research and business facilities in Eatontown, Parsippany and Murray Hill, New Jersey, and manufacturing and repair locations in Guadalajara and Reynosa, Mexico. In the last two years, Lucent's portfolio of corded and cordless phones and answering systems has maintained its market position in the U.S., and Lucent has added 40 new products. "This acquisition substantially strengthens our position as a global leader in consumer communications by increasing our presence in the United States, where we sold about eight million 900MHz cordless phones in our 1998/1999 fiscal year," said VTech chairman Allan Wong. "The transaction immediately doubles the size of our telecommunication products business, which generated US$555.3 million in sales in the fiscal year 1998/99. Lucent's manufacturing facility in Mexico will become our first factory outside China and provide quicker response and delivery times to our customers in North America. We are also gaining use of the well-respected AT&T brand which should help us tap into the growth opportunity for consumer telephony technology. These agreements will give us increased economies of scale in sourcing, manufacturing and distribution while allowing us to market separately the VTech and AT&T brands through distinct sales and service operations, so greatly improving our ability to cater to different markets." "Lucent has for many years been one of our most important customers and we already enjoy a close working relationship with Lucent people. They come from a culture that like our own is deeply rooted in technology and innovation," Wong continued. "We look forward to adding such superb talent to VTech and leading the next wave of consumer electronics development. The expertise should allow us to bring to market faster and more cost-effectively the new generation of products we are now developing, particularly certain Internet devices and cordless phones that interface with computers and Internet products. This will also increase the synergies that exist with our other consumer electronics products, notably electronic toys and educational products." Jack Gumersell, current president of Lucent's consumer products business said: "Lucent's employees have done a remarkable job of focusing on this business and maintaining its market position over the last few years. We are pleased to have placed these people and portfolio with such a highly respected technology company as VTech and are confident that they will continue to thrive under VTech's direction." Paul Murphy, VTech's managing director, will head the operation going forward. Murphy has been responsible for the development of VTech's cordless phone business worldwide since 1996 including VTech's business with Lucent. VTech is one of the world's leading consumer electronics corporations that designs, manufactures, markets and sells electronic learning and telecommunications products through its extensive international distribution network. It is known worldwide for its VTech-branded electronic learning products for children. Founded in Hong Kong in 1976, VTech had annual sales in the 1998/1999 fiscal year of approximately US$1 billion. It has subsidiaries and offices in 13 countries with more than 20,000 employees, including 1,000 professionals in research and development. The group invested over US$48 million in R&D during the last financial year and launches an average of between 80 and 100 new products each year. In the United States, VTech operates five companies at offices in three cities. VTech Communications, Inc, responsible for telecommunication products, is headquartered in Beaverton, Oregon. Prior to the acquisition, fiscal year 1998/1999 sales of the VTech group to the United States amounted to US$660 million. The United States represented 69 percent of group turnover and together with Canada and Latin America is VTech's fastest-growing market. VTech also operates a cordless phone maintenance facility in Guadalajara, Mexico. For more information, visit the VTech website at vtech.com.