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| Solectron Reports Results in Line With Guidance, Completes Financing Plan To Strengthen Balance Sheet |
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Solectron (www.solectron.com), the world's leading supply-chain facilitator, provides a full range of manufacturing and supply-chain management services to the world's premier high-tech electronics companies. Solectron's offerings include new-product design and introduction services, materials management, high-tech product manufacturing, and product warrantyand end-of-life support. Solectron, based in Milpitas, Calif., is the first two-time winner of the Malcolm Baldrige National Quality Award for manufacturing. (PRNewsFoto)[AG JL] MILPITAS, CA USA | |||
MILPITAS, Calif., March 21 /PRNewswire-FirstCall/ -- Solectron Corporation (NYSE: SLR), a leading provider of electronics manufacturing and supply-chain management services, today reported fiscal second-quarter financial results within its previously stated range of guidance. (Photo: http://www.newscom.com/cgi-bin/prnh/20001201/SLRLOGO ) Net sales in the quarter ended March 1 were $3 billion, compared with $5.4 billion in the year-earlier period and $3.2 billion in the first quarter of fiscal 2002. The company's guidance was for second-quarter sales of $2.7 billion to $3.2 billion. Pro-forma cash earnings per share(1) were 1 cent for the quarter, consistent with the company's guidance of 1 to 4 cents. Excluding one-time charges and extraordinary gains, Solectron had a loss of $28.5 million, or 3 cents per diluted share. That is consistent with the company's guidance for diluted EPS, excluding one-time charges, of break-even to a loss of 3 cents. Solectron reported a net loss of $126 million, or 15 cents per diluted share(2), in the second quarter. That compares with net income of $121.9 million, or 18 cents per diluted share, in the same period last year. "In the quarter, we generated nearly $1 billion of cash flow from operations, and we greatly strengthened our balance sheet with a three-part financing package in which we raised $1.6 billion, completed a $500 million line of credit and paid down $2.2 billion of debt," said Koichi Nishimura, Solectron chairman, president and chief executive officer. "In the midst of a tough economy, we continued to adjust rapidly to current conditions and at the same time make progress on initiatives important to our company's sustained, long-term success. We are focused on improving our performance and on bringing the strength of our unique, full-range of services to customers as never before. We are executing on our previously announced plans to reduce headcount and capacity, and we continue to evaluate incremental actions. "We also had several significant business wins in a number of market sectors, including signing major new customers in the automotive and high-end consumer electronics industries," Nishimura said. Pace Micro Technology, Juniper Networks, Microsoft, Sony Ericsson Mobile Communications, Audiovox and Delphi Automotive all engaged Solectron for new business programs during the quarter. "We have systematically built industry-leading services and differentiated capabilities, and we are now focused on delivering a complete, integrated offering to our customers," Nishimura said. "The needs of our customers continue to expand, and many of our recent wins resulted directly from our ability to provide supply-chain services that span the product life cycle -- including pre-designed modular solutions, prototyping and test, manufacturing, packaging, systems assembly, global distribution and after-sales services." Third-Quarter Guidance The company today issued its guidance for the fiscal third quarter. Solectron expects sales to range from $2.7 billion to $3.1 billion. Excluding one-time charges, the company expects a loss ranging from 4 to 6 cents per diluted share, reflecting continued softness in sales and higher interest expense. Six-Month Summary For the first six months of fiscal 2002, Solectron reported sales of $6.1 billion, compared with $11.1 billion in the year-earlier period. The company reported a net loss of $178.5 million, or 24 cents per diluted share, compared with net income of $312.5 million, or 48 cents per diluted share, a year ago. For the first half of fiscal 2002, diluted EPS, excluding one-time charges, was a 4-cent loss, compared with income of 53 cents a year earlier. Webcast To Be Held Today At 4:30 p.m. EST today, Solectron will hold a conference call to discuss this earnings report. A live Internet broadcast of the conference call can be joined by going to http://www.videonewswire.com/event.asp?id=3847 . Following the live broadcast, replays of the call will be available at http://www.solectron.com. In addition, audio replays of the call will be available through 2:30 p.m. EST, March 28. Call 800-925-5418 from within the United States or 402-530-8077 from outside the United States and specify password "Solectron IR." About Solectron Solectron (http://www.solectron.com) provides a full range of global manufacturing and supply-chain management services to the world's premier high-tech electronics companies. Solectron's offerings include new-product design and introduction services, materials management, high-tech product manufacturing, and product warranty and end-of-life support. Solectron, based in Milpitas, Calif., is the first two-time winner of the Malcolm Baldrige National Quality Award. The company had sales of $18.7 billion in fiscal 2001. Safe Harbor This news release contains forward-looking statements regarding our outlook for the future, including our financial outlook for the third quarter, and our new business wins. Our statements are based on current expectations, forecasts and assumptions involving risks and uncertainties that could cause actual outcomes and results to differ materially. These risks and uncertainties include the length and severity of the current economic downturn overall and in the electronics technology sector; our ability to manage customer demand through the downturn; the ability to effectively integrate recent acquisitions, including Iphotonics, Stream International and C-MAC Industries; the risk of price fluctuation; reliance on major customers; fluctuations in operating results; changes in technology; competition; risks associated with international sales and operations; interest rate risk; environmental regulations; market risk; segment risk; the ability to retain key personnel; and intellectual property rights enforcement. For a further list and description of risks and uncertainties, see the reports filed by Solectron with the Securities and Exchange Commission, specifically forms 8-K, 10-Q, S-3, S-4 and 10-K. Solectron disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Earnings Release Dates Solectron plans to announce fiscal 2002 third-quarter results Thursday, June 20, and fourth-quarter and fiscal year-end results Monday, Sept. 23. Supplemental information, consolidated statements of income and consolidated balance sheets follow. All monetary amounts are stated in U.S. dollars. Selected Financial Data Analytical Data (Dollars in millions) Q2 - FY02 Q1 - FY02 Q2 - FY01 Net sales $2,974.6 $3,152.2 $5,418.5 Sales by business unit Technology Solutions business unit $187.4 $154.5 $298.0 Global Operations business unit $2,462.9 $2,855.9 $5,039.2 Printed circuit board assembly 62.1% 73.8% 77.9% Systems assembly 37.9% 26.2% 22.1% Global Services business unit $223.1 $141.8 $81.3 MicroSystems business unit $101.2 -- -- Sales % by market segment Networking Equipment 26.5 26.4 31.6 Mobile Communications 9.9 11.3 13.2 Telecommunications 20.8 16.3 20.4 PCs/Notebooks 17.8 20.5 12.7 Computer Peripherals 4.8 4.5 5.7 Mainframe & Server 5.0 4.1 3.7 Workstations 4.0 5.5 5.0 High-End Consumer Products 3.0 4.0 0.5 Semiconductor & Test 1.1 1.4 3.2 Other 7.1 6.0 4.0 Asset Management Metrics (Dollars in millions) Q2 - FY02 Q1 - FY02 Cash, cash equivalents and short-term investments $3,253.2 $2,886.8 Inventories $2,339.4 $2,751.5 Inventory turns 4.4 4.0 Accounts receivable, net $2,223.4 $2,013.8 Days sales outstanding 64 64 Earnings Per Share Summary Q2 - FY02 Q1 - FY02 Q2 - FY01 Diluted EPS(2) ($0.15) ($0.08) $0.18 Diluted EPS before one-time charges and extraordinary gains ($0.03) $0.00 $0.24 Cash EPS(1) $0.01 $0.05 $0.30 Calculation of Cash EPS (In millions, except per-share data) Q2 - FY02 Q1 - FY02 Q2 - FY01 Net (loss) income ($126.0) ($52.5) $121.9 Adjustments, net of tax: Restructuring and acquisition costs $128.6 $51.7 $36.5 Extraordinary gain ($31.1) -- -- Goodwill amortization -- -- $30.8 Intangible asset amortization $14.9 $14.5 $15.1 Non-cash interest expense $21.9 $22.3 $23.7 Cash earnings $8.3 $36.0 $228.0 Shares used for cash earnings per share 885.5 753.9 772.9 Cash earnings per share $0.01 $0.05 $0.30 (1) Cash earnings per diluted share/cash EPS is presented as supplemental information for illustrative purposes only and is not prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP). It is intended to help investors understand the earnings impact of certain non-cash items, restructuring and impairment costs, extraordinary gains and other one-time and non- recurring charges, and non-cash interest charges on debt. The weighted average number of shares used to calculate cash EPS is based on the weighted average number of shares used to calculate diluted net income (loss) per share adjusted for the assumed conversion of zero-coupon convertible debt. An accompanying table calculates cash EPS with diluted EPS. (2) Earnings per diluted share/diluted EPS is the per-diluted-share calculation of net income (loss) as defined under GAAP. Capital Structure Summary (Dollars in millions) Q2 - FY02 Q1 - FY02 Cash, cash equivalents and short-term investments $3,253 $2,887 Short-term debt: LYONs #1 due 2019 -- $615 Other short-term debt $220 $274 Total short-term debt $220 $889 Long-term debt: 7.375% senior notes due 2006 $150 $150 9.625% senior notes due 2009 $497 -- LYONs #2 due May 2020 $1,432 $2,432 LYONs #3 due November 2020 $1,516 $1,573 7.25% adjustable conversion-rate equity securities (ACES) due 2006 $1,054 -- Other long-term debt $42 $161 Total long-term debt $4,691 $4,316 Total debt $4,911 $5,205 Stockholders equity $7,591 $5,141 Total capitalization $12,502 $10,346 Debt to capitalization 39% 50% Selected Financial Data (Dollars in millions) Q2 - FY02 Q1 - FY02 Amortization of other intangible assets $21.3 $20.6 Capital expenditures $54.9 $62.7 Depreciation expense $85.0 $82.0 C-MAC Data (Dollars in millions) Q1 - FY02 Sales $352.6 Inventory $337.3 Accounts Receivable $212.8 Consolidated statements of income and balance sheets. Analysts Contact: Thomas Alsborg, Solectron Corporation, 408-956-6614 (U.S.), thomasalsborg@ca.slr.com Media Contact: Kevin Whalen, Solectron Corporation, 408-956-6854 (U.S.), kevinwhalen@ca.slr.com SOLECTRON CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (US$ in millions, except per-share data) Three Months Ended Six Months Ended March 1, March 2, March 1, March 2, 2002 2001 2002 2001 Net sales $2,974.6 $5,418.5 $6,126.8 $11,114.0 Cost of sales 2,773.9 4,930.3 5,725.0 10,141.1 Gross profit 200.7 488.2 401.8 972.9 Operating expenses: Selling, general and administrative 213.5 189.1 377.7 377.7 Research and development 21.2 18.3 33.7 36.3 Goodwill amortization expense -- 33.8 -- 35.5 Acquisition, restructuring and impairment costs 174.7 54.5 247.6 54.5 Operating income (loss) (208.7) 192.5 (257.2) 468.9 Interest income 21.4 36.6 41.3 73.2 Interest expense (62.5) (47.1) (105.2) (79.8) Income (loss) before income taxes & extraordinary gain (249.8) 182.0 (321.1) 462.3 Income taxes (92.7) 60.1 (113.5) 149.8 Income (loss) before extraordinary gain (157.1) 121.9 (207.6) 312.5 Extraordinary gain, net of income tax 31.1 -- 29.1 -- Net Income (loss) $(126.0) $121.9 $(178.5) $312.5 Basic net income (loss) per share: Income (loss) before extraordinary gain $(0.19) $0.19 $(0.28) $0.50 Extraordinary gain, net of income tax 0.04 -- 0.04 -- Net Income (loss) per share $(0.15) $0.19 $(0.24) $0.50 Diluted net income (loss) per share: Income (loss) before extraordinary gain $(0.19) $0.18 $(0.28) $0.48 Extraordinary gain, net of income tax 0.04 -- 0.04 -- Net income (loss) per share $(0.15) $0.18 $(0.24) $0.48 Weighted average number of shares: Basic 818.0 648.4 740.9 628.6 Diluted 818.0 664.3 740.9 722.0 SOLECTRON CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (US$ in millions) March 1, August 31, 2002 2001 ASSETS Current assets: Cash, cash equivalents and short- term investments* $3,253.2 $2,790.1 Accounts receivable, net 2,223.4 2,443.6 Inventories 2,339.4 3,209.9 Prepaid expenses and other current assets 401.8 260.5 Total current assets 8,217.8 8,704.1 Net property and equipment 1,392.8 1,304.7 Other assets 852.9 934.4 Goodwill 4,437.1 1,987.2 Total assets $14,900.6 $12,930.4 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Short-term debt $219.8 $306.2 Accounts payable 1,581.3 1,786.1 Accrued employee compensation 267.3 166.5 Accrued expenses 550.5 363.7 Other current liabilities -- 66.8 Total current liabilities 2,618.9 2,689.3 Long-term debt 4,581.4 5,027.5 Other long-term liabilities 109.6 62.9 Total liabilities 7,309.9 7,779.7 Stockholders' equity: Common stock 0.8 0.7 Additional paid-in capital 6,617.0 3,877.6 Retained earnings 1,353.1 1,531.6 Accumulated other comprehensive losses (380.2) (259.2) Total stockholders' equity 7,590.7 5,150.7 Total liabilities and stockholders' equity $14,900.6 $12,930.4 * This caption includes $638.9 million of restricted balances.SOURCE Solectron Corporation
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CONTACT:
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+1-408-956-6854, or kevinwhalen@ca.slr.com, both of Solectron
Corporation
