Jabil Announces Manufacturing Agreement With Philips

28 August 2002
St. Petersburg, Florida and Amsterdam, The Netherlands

Forward - Looking Statement

Jabil Circuit, Inc. (NYSE: JBL) and Royal Philips Electronics (AEX:PHI; NYSE: PHG) announced today an agreement for the majority of Philips Contract Manufacturing Services (PCMS) division to be sold and business transferred to Jabil. The acquisition includes nine manufacturing plants and a minimum €4 billion, four-year product supply agreement.

"We are delighted to be selected as a strategic long term supplier for Philips' consumer electronics business and welcome the PCMS people and management to Jabil. Philips is a global technology and market share leader with a strong brand identity and enviable financial condition. This is a meaningful alliance in complete alignment with Philips and Jabil's long-term business objectives," said Tim Main, President and CEO of Jabil Circuit, Inc. Main said this transaction would improve Jabil's customer, industry and operational diversification and materially extends the EMS solution into the consumer electronics industry, a $150 billion segment with a current outsourcing market penetration of just 9 percent.

"This agreement follows our earlier announcement to look for a strong partner for PCMS, in line with our strategy to focus on selected activities which fully support the long-term ambitions of our Consumer Electronics division, and the industry trend towards outsourcing," said Gottfried Dutiné, Member of Philips' Board of Management. "The acquisition of PCMS by Jabil, one of the world's leading EMS players, offers the business exciting new opportunities for growth, and we look forward to a growing supplier relationship."

PCMS has been operating as an independent division of Philips for the past three years. As a stand-alone EMS provider, the Philips sites have been operating with full EMS capabilities, including design, development and engineering to full-scale manufacturing and customized supply chain management. Philips Consumer Electronics is PCMS's largest customer. Based on 2001 revenue, PCMS was the world's 10th largest EMS company.

Per the agreement, Jabil will take over manufacturing operations on three continents, including sites in Brazil, China, Hungary, India, Poland and Singapore and three other sites in Europe. The proposed agreement contemplates Jabil employment for current Philips management from each location and for approximately 5000 manufacturing employees, including over 150 product development and design engineers.

Jabil will provide design and engineering services; new product introduction (NPI), prototype and test services; procurement, PCB assembly and final assembly and integration for a wide range of Philips consumer products, including consumer televisions and DVD's, storage and display products audio systems and set top boxes.

Completion of the transaction, which is subject to the customary consultation procedures with trade unions, workers councils and clearance by the competition authorities, is expected to take place later this year. Purchase price for the acquisition is approximately €235 million, net of assumed liabilities.

About Philips

Royal Philips Electronics of the Netherlands is one of the world's largest electronics companies and Europe's largest, with sales of €32.3 billion in 2001. Philips is a global leader in color television sets, lighting, electric shavers, medical diagnostic imaging and patient monitoring, and one-chip TV products. Philips is the world's third largest consumer electronics company and has 184,000 employees in more than 60 countries. Philips is quoted on the NYSE (symbol: PHG), London, Frankfurt, Amsterdam and other stock exchanges. News from Philips is located at www.newscenter.philips.com.

About Jabil

This news release contains various forward-looking statements, including those regarding Jabil's anticipated negotiation, documentation and consummation of the transaction described below and the potential benefits to Jabil from this transaction. These statements are based on Jabil's 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: the ability to negotiate and enter into acceptable binding, definitive documentation setting forth the specific terms of the transaction described above; the length and severity of the current economic downturn and Jabil's ability to manage customer demand through the downturn; fluctuations in operating results; changes in technology; competition; managing rapid growth; managing rapid declines in customer demand; managing the integration of businesses we acquire; risks associated with international sales and operations; retaining key personnel; our dependence on a limited number of customers; the consolidation of our customer base; business and competitive factors generally affecting the electronic manufacturing services industry, our customers and our business. There are also other risk factors that we may not have currently identified or quantified; and other risks, relevant factors and uncertainties identified in our Annual Report on Form 10-K for the fiscal year ended August 31, 2001, any subsequent Reports on Form 10-Q and Form 8-K and our other securities filings. Jabil disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.