Adaptec Announces Intent to Sign Contract Manufacturing Agreement and Intent to Sell its Singapore Manufacturing Assets to Sanmina-SCI22 December 2005
Adaptec, Inc. (NASDAQ: ADPT), a global leader in storage solutions, today announced its intention to sign a multi-year contract manufacturing agreement with Sanmina-SCI, a leading electronics manufacturing services (EMS) provider, for the manufacturing of Adaptec data protection, connectivity and storage products. In connection with this agreement, Adaptec plans to sell certain Singapore manufacturing assets and inventory with respect to printed circuit board assemblies (PCBAs) and storage system manufacturing operations to Sanmina-SCI.
"As we continue our analysis of Adaptec businesses and operations, we are identifying areas where associating with strategic partners will allow Adaptec to focus on our core value of delivering advanced RAID data protection technology to our OEM and channel customers worldwide," said S. "Sundi" Sundaresh, president and CEO of Adaptec. "Manufacturing is one of those areas where a partner like Sanmina-SCI can bring additional expertise and efficiencies to the table. As one of the world's top EMS providers, we view Sanmina-SCI as an ideal partner to whom we can entrust our manufacturing needs moving forward."
Under the terms of the anticipated contract manufacturing agreement, Sanmina-SCI will assume manufacturing operations of Adaptec products upon closing of the contemplated asset sale between the two companies, estimated to be in early January 2006. As a result of the asset sale transaction, Adaptec expects that it will incur approximately $5 to 6 million in severance costs associated with its work force in its Singapore operations.
Additional disclosure regarding the agreements will be provided in a Form 8-K which will be filed with the Securities and Exchange Commission shortly after the agreements are finalized.
Safe Harbor Statement
This news release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended. Forward-looking statements include statements regarding future events or the future performance of Adaptec and in particular the expectation that the transactions with Sanmina-SCI will be consummated and the anticipated benefits to Adaptec from entering into these transactions. These forward-looking statements are based on current expectations, forecasts and assumptions and involve a number of risks and uncertainties that could cause actual results to differ materially from those anticipated by these forward-looking statements. These risks include: identifying potential buyers for the Systems business; market demand for RAID products; difficulty in forecasting the volume and timing of customer orders; reduced demand in the server, network storage and desktop computer markets; potential difficulties incurred in transitioning from an internal to external manufacturing solution; our target markets' failure to accept, or delay in accepting, network storage and other advanced storage solutions, including our SAS, SATA and iSCSI lines of products; decline in consumer acceptance of our current products; the timing and volume of orders by OEM customers for storage products; our ability to control and manage costs associated with the delivery of new products; and the adverse effects of the intense competition we face in our business. For a more complete discussion of risks related to our business, reference is made to the section titled "Risk Factors" included in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2005, on file with the Securities and Exchange Commission. Adaptec assumes no obligation to update any forward looking information that is included in this release.
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Adaptec Inc. (NASDAQ:ADPT) provides end-to-end storage solutions that reliably move, manage and protect critical data and digital content. Adaptec provides software and hardware solutions for storage connectivity and data protection, storage networking and networked storage subsystems to leading OEM and distribution channel partners. Adaptec solutions are in use by enterprises, ISPs, medium and small businesses and consumers worldwide. Adaptec is an S&P Small Cap 600 Index member.
Source: Adaptec.com
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