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| Solectron Reports Third-Quarter Sales, Earnings in Line With Guidance |
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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 20 /PRNewswire-FirstCall/ -- Solectron Corporation (NYSE: SLR), a leading provider of electronics manufacturing and supply-chain management services, today reported third-quarter sales of $3 billion and a loss of 4 cents per diluted share, excluding a loss of 31 cents per share from restructuring and impairment charges and extraordinary gains. Results were within the range of the company's guidance of $2.7 billion to $3.1 billion in sales and a 6- to 4-cent loss per diluted share, excluding restructuring and impairment charges and extraordinary gains. (Photo: http://www.newscom.com/cgi-bin/prnh/20001201/SLRLOGO ) In the quarter ended May 31, Solectron reported a net loss of $284 million, or 35 cents per diluted share. In the same period last year, Solectron had sales of $4 billion and a net loss of $186 million, or 28 cents per diluted share. Third-quarter results included pre-tax restructuring and impairment charges of $313 million in fiscal 2002 and $285 million in fiscal 2001, and after-tax extraordinary gains of $2.6 million in fiscal 2002. "In the face of weak end-market conditions, we are taking the right actions for our business," said Koichi Nishimura, Solectron chairman, president and chief executive officer. "We continued to improve key performance metrics, including working capital and gross margins, and to strengthen our balance sheet. Once again, we ended the quarter with a strong cash position, and we continue to win business from current and new customers. "We are also making significant progress executing our long-term strategy. We are steadily implementing our restructuring program, which will help us meet short- and long-term needs. We have the model for success, and we are confident in our future to provide tailored, complete supply-chain solutions that make our customers more competitive." In the quarter, Solectron gained new business from several companies, including Alcatel, Apple, Handspring, IBM and Maytag. The company also began producing optical networking equipment under a primary supplier agreement with Lucent Technologies, and providing manufacturing services for NEC Corporation's server, workstation and storage products in Japan. Separately today, Solectron said it plans to reduce its debt in the fourth quarter through a tender offer to purchase approximately $1.5 billion principal amount at maturity of its 2.75 percent Liquid Yield Option(TM) Notes with approximately $900 million of cash on hand. Fourth-Quarter Guidance The company today established its guidance for the fiscal fourth quarter, which ends Aug. 31. Solectron expects sales to range from $2.8 billion to $3.1 billion. Excluding restructuring and impairment charges and extraordinary items, the company expects a loss ranging from 5 to 3 cents per diluted share. Nine-Month Summary For the first nine months of fiscal 2002, Solectron reported sales of $9 billion, compared with $15 billion in the year-earlier period. The company reported a net loss of $463 million, or 60 cents per diluted share, compared with net income of $127 million, or 19 cents per diluted share, in the same period last year. Excluding pre-tax restructuring and impairment charges of $561 million, and after-tax extraordinary gains of $31.7 million, Solectron had a loss of $60 million, or 8 cents per diluted share, in the first nine months of fiscal 2002. Webcast To Be Held Today At 4:30 p.m. EDT 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=5765 . 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 immediately following the call through June 27. Call 800-871-1329 from within the United States or (402) 280-9913 from outside the United States and specify password "Solectron IR." Safe Harbor This news release contains forward-looking statements regarding our outlook for the future, including our financial outlook for the fourth 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 telecommunications and other electronics technology sectors; our ability to manage customer demand through the downturn; the ability to effectively integrate recent acquisitions; the ability to effectively implement restructuring plans; 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. There can be no assurance that the tender offer will be completed, and completion of the tender offer is subject to risks, including prevailing conditions in the public capital markets. 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 fourth-quarter and year-end results Monday, Sept. 23; fiscal 2003 first-quarter results Thursday, Dec. 19; second-quarter results Thursday, March, 20; third-quarter results Thursday, June, 19; and fourth-quarter and fiscal year-end results Monday, Sept. 22. Supplemental information, consolidated statements of income and consolidated balance sheets follow. All monetary amounts are stated in U.S. dollars. 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. Selected Financial Data Analytical Data (Dollars in millions) Q3 - FY02 Q2 - FY02 Q3 - FY01 Net Sales $3,032.8 $2,974.6 $3,983.4 Sales by business unit Technology Solutions business unit $257.8 $187.4 $227.2 Global Operations business unit $2,447.5 $2,462.9 $3,671.8 Printed circuit board assembly 60.9% 62.1% 74.9% Systems 39.1% 37.9% 25.1% Global Services business unit $221.4 $223.1 $84.4 MicroSystems business unit $106.1 $101.2 -- Sales % by market segment Networking Equipment 27.3 26.5 20.6 Mobile Communications 9.5 9.9 12.9 Telecommunications 18.7 20.8 22.9 PCs/Notebooks 16.4 17.8 17.2 Computer Peripherals 5.8 4.8 5.3 Mainframe & Servers 5.6 5.0 4.2 Workstations 4.8 4.0 5.7 High-End Consumer Products 3.0 3.0 1.4 Semiconductor & Test 1.6 1.1 2.2 Other 7.3 7.1 7.6 Asset Management Metrics Q3 - FY02 Q2 - FY02 Inventory turns 5.1 4.4 Days sales outstanding 63 64 Earnings Per Share Summary Q3 - FY02 Q2 - FY02 Q3 - FY01 Diluted EPS(A) $(0.35) $(0.15) $(0.28) Diluted EPS before acquisition, restructuring and impairment charges & extraordinary gains $(0.04) $(0.03) $ 0.01 (A) Earnings per diluted share/diluted EPS is the per-diluted-share calculation of net income(loss) as defined under GAAP. Selected Non-Cash Expenses (Dollars in millions) Net of Tax Q3 - FY02 Q2 - FY02 Q3 - FY01 Acquisition, restructuring and Impairment costs $ 254.5 $ 128.6 $ 190.5 Extraordinary gains $ (2.6) $ (31.1) -- Goodwill amortization -- -- $ 47.2 Other intangible asset amortization $ 8.4 $ 14.9 $ 15.2 Non-cash interest expense $ 22.2 $ 21.9 $ 23.6 Total $ 282.5 $ 134.3 $ 276.5 Selected Financial Data (Dollars in millions) Pre-Tax Q3 - FY02 Q2 - FY02 Capital spending $ 71.4 $ 54.9 Depreciation expense $ 78.8 $ 85.0 Other intangible asset amortization $ 11.8 $ 21.3 Non-cash interest expense $ 35.2 $ 34.8 10 Percent Customers The following customers represented at least 10 percent of sales during the quarter. Q3 - FY02 Q2 - FY02 Nortel Networks 13.3% 15.9% Cisco Systems 10.8% 10.9% Consolidated statements of income and balance sheets. SOLECTRON CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (US$ in millions, except per share data) Three Months Ended Nine Months Ended May 31, June 1, May 31, June 1, 2002 2001 2002 2001 Net sales $3,032.8 $3,983.4 $9,159.6 $15,097.4 Cost of sales 2,821.6 3,677.7 8,546.6 13,818.8 Gross profit 211.2 305.7 613.0 1,278.6 Operating expenses: Selling, general and administrative 225.1 203.1 602.8 580.8 Research and development 20.4 19.5 54.1 55.8 Goodwill amortization expense -- 52.3 -- 87.8 Acquisition, restructuring and impairment costs 313.4 285.3 561.0 339.8 Operating income (loss) (347.7) (254.5) (604.9) 214.4 Interest income 14.0 22.7 55.3 95.9 Interest expense (72.2) (48.2) (177.4) (128.0) Income (loss) before income taxes & extraordinary gain (405.9) (280.0) (727.0) 182.3 Income taxes (118.9) (94.3) (232.4) 55.5 Income (loss) before extraordinary gain (287.0) (185.7) (494.6) 126.8 Extraordinary gain, net of income tax 2.6 -- 31.7 -- Net Income (loss) $(284.4) $(185.7) $(462.9) $126.8 Basic net income (loss) per share: Income (loss) before extraordinary gain $(0.35) $(0.28) $(0.64) $0.20 Extraordinary gain, net of income tax -- -- 0.04 -- Net Income (loss) per share $(0.35) $(0.28) $(0.60) $0.20 Diluted net income (loss) per share: Income (loss) before extraordinary gain $(0.35) $(0.28) $(0.64) $0.19 Extraordinary gain, net of income tax -- -- 0.04 -- Net income (loss) per share $(0.35) $(0.28) $(0.60) $0.19 Weighted average number of shares: Basic 823.2 654.1 768.4 636.9 Diluted 823.2 654.1 768.4 653.1 SOLECTRON CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (US$ in millions) May 31, August 31, 2002 2001 ASSETS Current assets: Cash, cash equivalents and short-term investments * $3,232.3 $2,790.1 Accounts receivable, net 2,016.7 2,443.6 Inventories 2,098.7 3,209.9 Prepaid expenses and other current assets 706.4 260.5 Total current assets 8,054.1 8,704.1 Net property and equipment 1,439.6 1,304.7 Goodwill 4,506.1 1,987.2 Other assets 878.6 934.4 Total assets $14,878.4 $12,930.4 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Short-term debt $1,650.2 $306.2 Accounts payable 1,552.5 1,786.1 Accrued employee compensation 213.2 166.5 Accrued expenses 593.8 363.7 Other current liabilities 119.3 66.8 Total current liabilities 4,129.0 2,689.3 Long-term debt 3,250.8 5,027.5 Other long-term liabilities 95.8 62.9 Total liabilities 7,475.6 7,779.7 Stockholders' equity: Common stock 0.8 0.7 Additional paid-in capital 6,625.4 3,877.6 Retained earnings 1,068.7 1,531.6 Accumulated other comprehensive losses (292.1) (259.2) Total stockholders' equity 7,402.8 5,150.7 Total liabilities and stockholders' equity $14,878.4 $12,930.4 *This caption includes $425.7 million of restricted balances for May 31, 2002. CONTACT: investors, Thomas Alsborg, +1-408-956-6614, or thomasalsborg@ca.slr.com, or media, Kevin Whalen, +1-408-956-6854, or kevinwhalen@ca.slr.com, both of Solectron Corporation.SOURCE Solectron Corporation
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