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Thomson Closes Two U.S. TV Tube Plants

By Steve Smith -- TWICE, 6/16/2003

Paris - Thomson is shutting down two TV tube production lines at its Marion, Ind. plant and will not invest to renew a glass line at its Circleville, Ohio facility, but plans to expand manufacturing in China.

Calling U.S. TV tube and glass manufacturing 'unprofitable' in a statement released after a meeting of its board, Thomson said that decision to cut back on U.S. TV tube production was due to 'significant market share losses among local producers to competitive imports.' The statement also said 'demand and prices for TV tubes in the U.S. have declined sharply.' According to published reports, by the end of the year 820 workers at the Marion plant will be permanently laid off and another 400 would be laid off at its Circleville, Ohio facility.

At the same time Thomson is expanded operations in China, restating an April report that an agreement is in place to supply about 2 million tubes to the Changhong Group. A second tube line will open in Foshan during the third quarter of 2003.

The impact of expected losses in the Components Group, which operates Thomson plants worldwide, will be to reduce the Group's first half operating profit to 140 to 150 million euros, or from around $165 million to $176 million. Full year operating margin will be 6.5 percent, a point lower than the previous target for the year and about a half point lower than what was achieved in fiscal year 2002.

Thomson also confirmed that its free cash flow objective of at least 500 million euros, or about $589 million, can still be met.

In other company news, Thomson has inked a contract with DirecTV to supply software and will supply set top boxes to Sky Italia, a subsidiary of News Corp. The agreement is set to begin in early 2004.

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