Microsoft to outsource software production,awards Kao Infosystems industry’s largest turnkey contract

As part of the agreement, Kao will purchase and operate Microsoft’s Canyon Park production facility in Bothell, WA, and offer employment to all of the facility’s 400plus manufacturing employees. —

REDMOND, WA, July 15, 1996 –Microsoft Corporation and Kao Infosystems Company, Plymouth, MA, today announced that they had reached an agreement in which Microsoft will award Kao a three-year contract to produce the majority of it’s packaged products for the North American market.

As part of the agreement, Kao will purchase and operate Microsoft’s Canyon Park production facility in Bothell, WA, and offer employment to all of the facility’s 400-plus manufacturing employees.

Both companies believe the contract represents the software manufacturing industry’s single largest turnkey services contract.

According to Rick Devenuti, Microsoft’s vice president of operations,
“Our agreement with Kao will have many benefits: It allows us to join with a quality manufacturer to offer the lowest product cost to our customers. It reduces our fixed production costs, thus providing flexibility to respond to the changing software market. It offers continued employment to our Canyon Park employees, and it allows Microsoft to focus on our core competency–developing great software.”

“Our expanding relationship with Microsoft has been one of mutual trust and confidence since we began doing business together in 1990. The Canyon Park purchase and long-term outsourcing arrangement is a natural and exciting progression of the relationship.”
said John Depuy, Kao vice president,
“In addition, we are happy to welcome the skilled workers at Canyon Park to the Kao family as we produce quality products for Microsoft and other software companies.”

The Canyon Park production facility, which opened in 1988, manufactures and assembles a wide range of Microsoft software packaged products, including diskettes and other components. The proposed purchase will establish Kao’s third West Coast software production facility and extend its leadership position in the global software manufacturing industry.

Devenuti said that employee considerations ranked high in the decision to work with Kao.
“Microsoft’s manufacturing employees are among the most highly-skilled and productive in the software industry. We looked for an outsource partner that could utilize our people fully, offer similar wages and benefits, and had a reputation as a great employer.”

The transaction, which is subject to government and other approvals, is expected to close in early August.

Founded in 1975, Microsoft is the worldwide leader in software for personal computers. The company offers a wide range of products and services for business and personal use, each designed with the mission of making it easier and more enjoyable for people to take advantage of the full power of personal computing every day.

Kao Infosystems Company is one the world’s largest diskette manufacturers, CD-ROM replicators, North America’s leading software duplicator and a global fulfillment and distribution services provider. It is a wholly-owned subsidiary of Kao Corporation of America, a wholly-owned subsidiary of Kao Corporation, Japan a global conglomerate, established in 1887, that develops, manufactures and markets personal care, chemical, and information products.

Microsoft and Kao are registered trademarks of their respective companies.

For further information contact:

Dean Katz John Depuy

Public Relations Manager Vice President

Microsoft Corporation Kao Infosystems Company

(206) 936-4436 (206) 828-2749

Note to Editor: Photo of John Depuy to accompany this story is available immediately via Wieck Photo Database to any media with a telephoto receiver, PC or Macintosh, that can receive overhead transmissions. For retrieval CALL (214) 392-0888. Thank You.

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