| *****For immediate use September 25th,
Integration of Electronic Components Business of NEC into Tokin
TOKYO, September 25th, 2001 - NEC Corporation
("NEC") (NASDAQ: NIPNY, FTSE: 6701q.l, TSE: 6701) and Tokin Corporation
("Tokin") (TSE: 6759) today announced that the two companies reached
an agreement in principle that effective as of April 1, 2002, NEC will transfer
its electronic components business to Tokin.
The electronic components business of NEC to be transferred to Tokin (the "Business")
is the business of manufacturing and sale of capacitors, batteries and relays.
In the fiscal year ended March 31, 2001, the Business has consolidated net sales
of 77.3 billion yen and approximately 5,000 employees (3,200 overseas and 1,800
in Japan). The transfer will give Tokin complete ownership of NEC Mobile Energy
Corporation, a NEC's subsidiary in charge of NEC's battery business, and NEC Technologies
(Thailand) Co., Ltd., one of NEC's capacitor manufacturing subsidiaries. The capacitor
manufacturing unit of NEC Toyama, Ltd., and the relay manufacturing unit of NEC
Tohoku Ltd. will be also transferred to Tokin.
In the fiscal year ended March 31, 2001, Tokin, with its four internal business
units: metal and magnetic based product business, EMC business, network device
business, and media recording business, has consolidated net sales of 92.6 billion
yen and approximately 9,300 employees (6,300 overseas and 3000 in Japan). With
the transfer of the Business, Tokin will have consolidated net sales of approximately
170 billion yen and employees of approximately 14,300.
The transfer of the Businesses to Tokin will be made by a scheme of the "division
and transfer of business" under the Commercial Code of Japan (Kaisha Bunkatsu).
The number of shares of Tokin common stock to be issued to NEC in exchange for
the transfer of the Business will be 49,682,386 shares, which is agreed by the
two companies based upon valuation by their financial advisors. As a result, as
of April 1, 2002, NEC will hold approximately 66.60% of outstanding shares of
Tokin common stock. (Presently NEC's holding in Tokin is approximately 40.60%,
which includes 19.90% shares transferred to a securities-based employee retirement
benefit trust created by NEC). The number of shares to be issued to NEC is subject
to change through mutual consultation between the two companies if there occurs
any material change in the conditions on which the valuation is based.
NEC is currently aiming to advance its solution business and, at the same time,
to maximize the corporate value of the entire NEC Group by reorganization of its
affiliates. In order to focus on the system LSI business, NEC Electron Devices,
one of the in-house companies of NEC, will transfer the Businesses to Tokin, and
will stimulate the growth of Tokin as the company in charge of electronic component
business in the NEC Group. Tokin, which has a wide range of products based on
materials-orientated technology, will aim to become a world leading electronic
components manufacturer by strengthening competitiveness through the integration
of NEC's electronic components business which offers high-density, strategic products
in the area of mobile terminals and broad-band infrastructure market and synergies
created thereby such as the unification of engineering resources and the acceleration
of shift to overseas production.
After the business integration, Tokin will target four markets: IT terminals,
IT infrastructure, car electronics, and new markets, by offering electronic components
of high functionality. It is expected that the business integration will bring
various effects in the areas of product development, sales and supply, procurement
or fixed cost reductions.
For product development, by integration of Tokin's abundant materials technology
(metal materials, ferrite, dielectric material, optical devices) and NEC's product
development resources, Tokin will be able to carry out its development and manufacturing
in a total process from the materials to the end products. Further, it will be
possible to proactively provide a much wider range of device solutions, including
new type of device solutions such as modularization of devices, to a customer
by offering products together, which are currently offered by NEC and Tokin separately.
On the manufacturing side, cost reductions can be achieved through integration
and streamlining of domestic production facilities, fixed cost reductions through
expansion of overseas production and a flexible shift of employee bases, as well
as, further cost curtailment through effective use of overseas production facilities.
(NEC has production facilities in Thailand and Philippines, and Tokin has production
facilities in China, Vietnam, Malaysia and Taiwan.)
Regarding sales, cost reductions are expected through the business integration
of domestic and overseas sales networks and sales channels, which currently overlap
in almost all areas or customers. The sales force will also be strengthened through
integration of marketing activities and expansion of customer coverage.
In the area of procurement, it is expected that the business integration will
bring about such effect as lower prices from the unification of procurement routes
and cost reductions contributed by the recycling of materials.
Through the above synergistic effects which are expected to result from the
integration, Tokin will aim to become a world leading electronic components manufacturer,
achieving a target of consolidated net sales of 200 billion yen and operating
margin of over 10% in the fiscal year ending March 31, 2003.
About Tokin Corporation
Taking advantage of its progressive/highly developed materials technologies, Tokin
is proud to offer a wide variety of devices and systems for use in a broad range
of products such as high-performance household appliances, office equipment, audio/visual
equipment, and car electronics. For further information, please visit the Tokin
home page at: www.tokin.co.jp
About NEC Corporation
NEC Corporation (NASDAQ: NIPNY) (FTSE: 6701q.l) is a leading provider of Internet
solutions, dedicated to meeting the specialized needs of its customers in the
key computer, network and electron device fields through its three market-focused
in-house companies: NEC Solutions, NEC Networks and NEC Electron Devices. NEC
Corporation, with its in-house companies, employs more than 150,000 people worldwide
and saw consolidated net sales of 5,409 billion Yen (approx. US$43 billion) in
the fiscal year ended March 31, 2001. For further information, please visit the
NEC home page at: http://www.nec.com
The above forecasts are forward-looking statements involving risks and uncertainties.
A number of important factors could cause our actual results to differ materially
from such statements. Among the factors that could cause actual results to differ
materially from such statements include: general economic conditions in our markets;
demand for, and competitive pricing pressure on, our products and services; our
ability to continue to win acceptance of our products and services in highly competitive
markets; and movements of currency exchange rates. Any forward looking statements
speak only as of the date on which they are made, and we do not undertake any
obligation to update or revise any of them, whether as a result of new information,
future events or otherwise.
In case where the information contained in this supplement falls within the
definition of "Material Information" under the Securities and Exchange
Law, Article 166, Paragraph 2, if you read this supplement before the time of
"Publication" (which is defined under the Securities and Exchange Law
and its Enforcement Ordinance as twelve hours after its release; i.e., approximately
2:00 am on September 26, 2001 (JST)), you and the persons listed below* may be
prohibited from purchasing, selling, or making other transactions of shares of
stock or other securities of Tokin Corporation before the time of Publication.
||Other directors or employees of your company if the content of this press
release comes to their knowledge in connection with their duty