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| Solectron Reports Third-Quarter Results, Provides Guidance for Fourth Quarter |
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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., June 18 /PRNewswire/ -- Solectron Corporation (NYSE: SLR), the world's leading provider of electronics manufacturing and supply-chain management services, today reported cash earnings per share*, excluding restructuring charges, of 12 cents in its fiscal third quarter, within the range of guidance the company provided. (Photo: http://www.newscom.com/cgi-bin/prnh/20001201/SLRLOGO ) Sales in the quarter that ended June 1 were $4 billion, up 9.3 percent from $3.6 billion in the year-earlier quarter and representing a 26.5 percent decrease from $5.4 billion in the second quarter of fiscal 2001. Solectron incurred a net loss under U.S. Generally Accepted Accounting Principles of $186 million, or 28 cents per diluted share**, compared with net income of $119.7 million, or 19 cents per diluted share, in the same period of last year. Excluding restructuring charges, the company had third-quarter earnings of $5 million, or 1 cent per diluted share. In the quarter, Solectron continued to be affected by the global economic downturn and resulting declines in demand from customer end-markets. A restructuring plan initiated in the quarter led to a $285 million third-quarter pre-tax charge to accelerate long-term strategic actions to prepare the organization for a re-acceleration in business growth. "In the third quarter, demand from our OEM customers declined significantly as end-market activity slowed across all sectors. By responding rapidly to the slowdown, we were able to deliver EPS within our range of guidance," said Koichi Nishimura, Solectron chairman, president and chief executive officer. "While the short-term outlook remains uncertain, I am optimistic about the long-term prospects for our business as the OEM outsourcing trend continues." Restructuring Activities In the quarter, Solectron launched a restructuring plan to consolidate facilities, relocate certain capabilities and refine the value proposition of a number of sites. The plan currently is expected to result in charges to earnings of $335 million, with $285 million recorded in the third quarter and the balance expected to be recorded in the fourth quarter. The charges primarily cover the costs of eliminating equipment, writing off or terminating leases on property, and reducing the company's work force. Through its restructuring actions, the company said it is accelerating key initiatives of its long-range strategic plan. Fourth-Quarter Guidance Noting that its forward-looking visibility is limited, the company issued guidance for its fiscal fourth quarter, which ends Aug. 31. Sales are expected to range from $3 billion to $3.5 billion, implying full-year sales growth of 28 to 32 percent. Cash EPS, before restructuring charges, is expected to range from 5 to 9 cents. The company noted that it will continue to adjust as necessary to changing market conditions and would, if business trends warrant, consider further restructuring actions. Analytical Data (Dollars in millions) Q3 - FY01 Q2 - FY01 Q3 - FY00 Net Sales $3,983.4 $5,418.5 $3,645.0 Sales by Region Americas $2,168.4 $3,530.1 $2,429.1 Asia/Pacific $1,016.1 $905.0 $565.8 Europe $798.9 $983.4 $650.1 Sales by Business Unit Technology Solutions $227.2 $300.3 $368.2 Manufacturing & Operations $3,671.8 $5,042.8 $3,210.2 Printed Circuit Board 74.9% 78.1% 73.4% Systems 25.1% 21.9% 26.6% Global Services $84.4 $75.4 $66.6 Sales % by Market Segment Networking Equipment 20.6 31.6 28.6 Mobile Communications 12.9 13.2 16.7 Telecommunications 22.9 20.4 12.6 PCs/Notebooks 17.2 12.7 12.9 Computer Peripherals 5.3 5.7 7.2 Workstations & Servers 5.7 5.0 9.3 Other 15.4 11.4 12.7 Earnings Per Share Summary Q3 - FY01 Q2 - FY01 Q3 - FY00 Cash EPS* $0.12 $0.30 $0.21 Diluted EPS** $(0.28) $0.24 $0.19 Diluted EPS before acquisition, restructuring and impairment charges $0.01 $0.24 $0.20 Asset Management Metrics (Dollars in millions) Q3 - FY01 Q2 - FY01 Cash, cash equivalents and short-term investments $2,175.9 $1,819.1 Inventories $4,201.7 $4,882.5 Inventory turns 3.2 4.2 Accounts receivable, net $2,391.4 $3,187.8 Days sales outstanding 63.0 48.8 Nine-Month Summary For the first nine months of fiscal 2001, Solectron reported sales of $15.1 billion, up 60.6 percent from $9.4 billion in the year-earlier period. Cash EPS before restructuring and non-recurring charges was 73 cents per share, compared with 59 cents per share a year ago. Net income decreased to $126.8 million, or 19 cents per diluted share, from $326.2 million, or 52 cents per diluted share, a year ago. About Solectron Solectron (http://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 warranty and end-of-life support. Solectron, based in Milpitas, Calif., is the first two-time winner of the Malcolm Baldrige National Quality Award for manufacturing. Safe Harbor This news release contains forward-looking statements regarding the anticipated re-acceleration of business growth, our expected fourth-quarter earnings results and restructuring charges, and our long-term outlook for the company, 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 and our ability to manage customer demand through the downturn, the ability to effectively integrate the NatSteel Electronics and Centennial Technologies businesses, the ability to integrate the assets acquired from Sony Corporation, IBM and Cisco Systems, risk of price fluctuation, reliance on major customers, then length and severity of the current economic slowdown in the electronics technology sector, fluctuations in operating results, changes in technology, competition, the ability to manage rapid growth, the ability to manage rapid declines in customer demand, the ability to manage business integration, 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. All monetary amounts are stated in U.S. dollars. * Cash earnings per share (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 and other one-time and non-recurring charges, and zero-coupon convertible 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 all convertible debt into common stock, when not already presumed. The following table reconciles cash EPS with diluted EPS. Calculation of Cash EPS (Dollars in millions, except per-share amounts) Year To Date Q3 - FY01 Q3 - FY00 Q3 - FY01 Q3 - FY00 Net (loss) income $(185.7) $119.7 $126.9 $326.2 Restructuring, impairment and acquisition costs, net of tax 190.5 4.7 236.2 22.5 Goodwill and intangible asset amortization costs net of tax 62.4 3.9 119.6 12.1 Non cash interest expense net of tax 23.6 64.3 Cumulative effect of change in accounting principle net of tax -- -- -- 3.5 Cash Earnings $90.8 $128.3 $547.0 $364.3 Shares used for cash earnings per share 773,802 623,756 751,095 622,700 Cash earnings per share $0.12 $0.21 $0.73 $0.59 ** Diluted EPS is the per-diluted-share calculation of net income (loss) as defined under U.S. Generally Accepted Accounting Principles (GAAP). Consolidated statements of income and balance sheets follow. SOLECTRON CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF OPERATIONS (US$ in millions, except per share data) Three Months Ended Nine Months Ended June 1, May 26, June 1, May 26, 2001 2000 2001 2000 Net sales $3,983.4 $3,645.0 $15,097.4 $9,401.3 Cost of sales 3,677.7 3,339.5 13,818.8 8,538.9 Gross profit 305.7 305.5 1,278.6 862.4 Operating expenses: Selling, general and administrative 203.1 111.3 580.8 319.4 Research and development 19.5 15.7 55.8 44.7 Goodwill amortization expense 52.3 1.3 87.8 3.9 Acquisition costs 0.3 5.2 29.5 25.5 Restructuring and impairment costs 285.0 1.8 310.3 7.7 Operating (loss) income (254.5)* 170.2 214.4 461.2 Interest income 22.7 24.0 95.9 67.4 Interest expense (48.2) (16.7) (128.0) (40.6) (Loss) income before income taxes and cumulative effect of change in accounting principle (280.0) 177.5 182.3 488.0 Income taxes (94.3) 57.8 55.5 158.3 (Loss) income before cumulative effect of change in accounting principle (185.7) 119.7 126.8 329.7 Cumulative effect of change in accounting principle for start-up costs, net of income tax benefit -- -- -- (3.5) Net (loss) income $(185.7) $119.7 $126.8 $326.2 Basic net (loss) income per share: (Loss) income before cumulative effect of change in accounting principle $(0.28) $0.20 $0.20 $0.55 Cumulative effect of change in accounting principle -- -- -- (0.01) Net (loss) income per share $(0.28) $0.20 $0.20 $0.54 Diluted net (loss) income per share: (Loss) income before cumulative effect of change in accounting principle $(0.28) $0.19 $0.19 $0.53 Cumulative effect of change in accounting principle -- -- -- (0.01) Net (loss) income per share $(0.28) $0.19 $0.19 $0.52 Weighted average number of shares: Basic 654.1 601.4 636.9 597.8 Diluted 654.1 623.8 653.1 622.7 * Includes the effect of changing certain depreciation lives from four to five years beginning March 2, 2001. Consequently, the depreciation charge on these assets was $11.8 million lower than it would have been using a four year life. SOLECTRON CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (US$ in millions) June 1, August 25, 2001 2000 ASSETS Current assets: Cash, cash equivalents and short- term investments $2,175.9 $2,434.1 Accounts receivable, net 2,391.4 2,146.3 Inventories 4,201.7 3,787.3 Prepaid expenses and other current assets 312.7 260.5 Total current assets 9,081.7 8,628.2 Net property and equipment 1,381.1 1,080.4 Other assets 844.5 627.4 Goodwill 1,985.2 39.6 Total assets $13,292.5 $10,375.6 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Short-term debt $337.6 $69.2 Accounts payable 2,040.5 2,694.1 Accrued employee compensation 203.0 179.8 Accrued expenses 120.7 262.5 Other current liabilities 146.3 11.2 Total current liabilities 2,848.1 3,216.8 Long-term debt 4,977.2 3,319.5 Other long-term liabilities 57.2 37.2 Total liabilities 7,882.5 6,573.5 Stockholders' equity: Common stock 0.7 0.6 Additional paid-in capital 3,847.9 2,259.1 Retained earnings 1,781.9 1,656.8 Accumulated other comprehensive losses (220.5) (114.4) Total stockholders' equity 5,410.0 3,802.1 Total liabilities and stockholders' equity $13,292.5 $10,375.6 Media Contact: Analysts Contact: Kevin Whalen Thomas Alsborg Solectron Corporation Solectron Corporation 408-956-6854 (U.S.) 408-956-6614 (U.S.) kevinwhalen@ca.slr.com thomasalsborg@ca.slr.comSOURCE Solectron Corporation
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