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Tempe, Ariz. and Bothell, Wash. — Three-Five Systems Inc. (TFS) has hired key employees and acquired the customer base of Integrex Inc.
TFS will immediately begin working with customers to transfer existing programs from Integrex's Bothell location to TFS' Redmond facility. This process is expected to take approximately six weeks. The agreement is the second EMS transaction by TFS in the Northwest in the past 15 months. TFS acquired ETMA, a Redmond, Wash.-based EMS company in December 2002 and maintains operations in that Redmond location.Integrex was founded in 1999 as a full-service EMS company providing turnkey manufacturing services, including design, new product introduction (NPI), printed circuit board (PCBA) assembly, system integration, test and after-market support. Primary investors included Benaroya Capital, Fluke Venture Partners and Sunrise Capital.
Representatives for the investor group indicated that several companies competed to obtain the Integrex business and TFS was selected because of its existing presence within the Northwest regional customer community, combined with strong offshore manufacturing capability and a solid balance sheet. TFS's strong presence in the region was a driving factor in selecting a company that would continue to provide local support for Integrex's customers and employees.
TFS is buying the raw material inventory of Integrex as needed to begin manufacturing products for its new customers and is providing Integrex with an upfront, one-time payment to offset customer transfer costs. TFS also is providing an advance to Integrex against contingent payments due upon the receipt of sales revenue. TFS is not acquiring Integrex's manufacturing facility in Bothell, and it is not expected that the transaction will generate a goodwill asset for TFS.
As a result of the transaction, TFS is increasing its second half forecast of revenue and is raising its 2004 revenue expectations to between $185 and $195 million. The company continues to expect profitability in the fourth quarter of 2004.
Three-Five Systems Inc. is a recognized leader in providing electronics manufacturing services (EMS) to original equipment manufacturers (OEMs). For more information, visit www.tfsc.com.