GTW Gateway

Gateway Reaches Agreement With America Online to Repurchase Gateway Stock IRVINE, Calif., Nov. 2 /PRNewswire-FirstCall/ -- Gateway, Inc. (NYSE:GTW) announced today that it has reached an agreement with America Online, Inc., a subsidiary of Time Warner Inc., to repurchase the Gateway Series A and Series C preferred stock and up to 2.7 million shares of common stock currently held by AOL for an aggregate purchase price of $315.6 million. Closing is scheduled for December 22, 2004. The securities to be retired consist of the Series A preferred stock, which otherwise would have automatically converted into approximately 22.2 million shares of Gateway common stock (based on a minimum conversion price of $8.99 per share), and the Series C preferred stock, which has a stated value of $200 million (and is redeemable at AOL's option in December 2004). (Logo: http://www.newscom.com/cgi-bin/prnh/20020930/LAM050LOGO ) Consideration to be paid by Gateway includes: * $185.6 million in cash; and, * A reduction by up to $130 million of cash payments for certain past and future revenue share payments that AOL would otherwise be required to make to Gateway under the strategic alliance agreement between the parties. AOL may initially retain up to 3.5 million shares of Gateway common stock following the closing. Gateway expects to pay any balance of $130 million deferred liability in cash on or before June 30, 2005, although final payment can be extended under certain circumstances. The per share purchase price represents a negotiated discount to Gateway's closing price of $5.54 at close of the market on October 18, 2004. Consummation of the transaction is subject to customary conditions. Gateway also announced that it had signed an agreement with a major financial institution for a $200 million five-year borrowing base revolving credit facility. Gateway also is considering other refinancing alternatives to increase its overall working capital. However, the AOL transaction is not contingent on completion of any other financing and the Company believes it will have adequate working capital to meet its financial needs upon completion of the AOL transaction. About Gateway Since its founding in 1985, Gateway (NYSE:GTW) has been a technology pioneer, offering award-winning PCs and related products to consumers, businesses, government offices and schools. With its acquisition of eMachines now complete, Gateway is the third-largest PC company in the U.S. and among the top ten worldwide. Its products under both brands received more than 150 awards and honors last year. Gateway products are offered at major retailers, over the web and phone, and through its direct and indirect sales force. eMachines products are sold by major retailers. See http://www.gateway.com/ for more information. http://www.newscom.com/cgi-bin/prnh/20020930/LAM050LOGO http://photoarchive.ap.org/ DATASOURCE: Gateway, Inc. CONTACT: Media, David Hallisey, +1-949-471-7703, , or Investors, Marlys Johnson, +1-605-232-2709, , both of Gateway, Inc. Web site: http://www.gateway.com/

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