VTech Communications Limited is pleased to announce that we are entering the second phase of cell manufacturing. Since phase-one cell manufacturing deployment from the third quarter of 2002, we have experienced a significant productivity improvement of 20% on the pilot production. The basic concept of this production mode is to reduce unnecessary materials, sub-assembly handling, and provide a real-time production and quality feedback environment for the members in the same production cell. This production mode has proven to provide us not only higher efficiency, but also flexibility on line changeovers. In order to deploy the same manufacturing mode setup with a wider scope for various products, we have hired a renowned cell manufacturing consultant from Japan to speed up the installation.