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| Solectron Meets Fourth-Quarter Expectations, Reports 32 Percent Sales Growth In Fiscal Year |
| SOLECTRON LOGO
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., Sept. 17 /PRNewswire/ -- Solectron Corporation (NYSE: SLR), the leading global provider of electronics manufacturing and supply-chain management services, today reported fourth-quarter cash earnings per share* of 6 cents, within the range of guidance the company provided. Solectron had cash EPS of 28 cents in the year-earlier period. Sales in the quarter that ended Aug. 31 were $3.6 billion, compared with $4.7 billion in the same period last year and $4 billion in the third quarter of fiscal 2001. Solectron reported, on a GAAP basis, a fourth-quarter net loss of $250.3 million, or 38 cents per diluted share,** compared with net income of $171 million, or 27 cents per diluted share, in the year-earlier period. Excluding restructuring and other non-recurring charges, the company had a fourth-quarter loss of $67 million, or 10 cents per share. "In the quarter, we continued to adjust to short-term conditions and at the same time we accelerated strategic initiatives important to the long-term opportunities presented in the current environment," said Koichi Nishimura, chairman, president and chief executive officer of Solectron. "The rate of decline in our customers' end markets has eased, but we see little evidence of a near-term rebound. Having said that, the secular trend for OEMs to outsource their supply chain needs is strengthening. We continue to discuss a number of significant opportunities with OEMs, and we are well positioned as the partner of choice to provide total supply-chain solutions to our customers." Fourth-quarter results were affected by a charge of $207 million for restructuring activities and one-time charges of $66 million credit and other losses. Restructuring charges to consolidate facilities, relocate certain capabilities and refine the value proposition of a number of sites include costs of eliminating equipment, writing off or terminating leases on property, and reducing the company's work force. During the quarter, gross margins declined in part because of sales mix. The company experienced an increase in sales in the PC sector, which typically have lower margins, and a decline in higher-margin sectors such as telecommunications. Margins are expected to improve in the coming year as restructuring efficiencies take hold. The company's cash position in the quarter improved to $2.8 billion. Contributing to that increase was a $1 billion reduction in inventory, as OEM customers took back excess parts and materials, and the company returned to normal just-in-time inventory management practices. "In the last six months, we have made tremendous progress on inventories, which are now at their lowest levels in five quarters. We expect to make continued progress as we move into the new fiscal year," Nishimura said. Full-Year Summary In fiscal year 2001, Solectron had sales of $18.7 billion, up 32 percent from $14.1 billion in the previous year. The company reported cash EPS of 77 cents, compared with 88 cents a year earlier. On a GAAP basis, Solectron reported a net loss of $123.5 million, or 19 cents per diluted share. Excluding restructuring and other one-time charges of $410.7 million, the company earned $287.2 million, or 44 cents per share. "It was a challenging year, and in many ways a year of contrasts. In the first half, we were ramped up quickly to help our customers meet higher-than-expected demand, even in the face of widespread component shortages," Nishimura said. "The rapid economic downturn presented a far different set of challenges in the second half and, again, we responded. "Our ability to adapt quickly to these dramatic changes is a testament to our people's commitment, drive and initiative -- and to the flexibility, responsiveness and versatility that characterize Solectron as the EMS industry leader," he said. "It hasn't been easy, and I am proud of how all of our associates worldwide met the challenges of the last year." During the quarter, Solectron completed the acquisitions of Shinei International and MCC/Sequel. Shinei provides the company with enclosure and design capabilities important to its full systems solutions offering. MCC/Sequel expands Solectron's after-sales service capabilities to Japan, where Solectron is leading the introduction of the outsourcing model. In addition, during the quarter the company announced definitive agreements to acquire C-MAC Industries and iPhotonics, a leading provider of core optical manufacturing services. Both transactions are expected to be completed by the end of December. On Aug. 9, the company communicated its fiscal year 2002 base plan, which anticipates sales of $16 billion to $18.5 billion and cash EPS of 62 to 66 cents. Today, Solectron said it expects continued softness in the first half of the fiscal year, since there is little evidence of near-term improvement in end markets. The base plan anticipates business to improve in the second half of the year. However, base plan assumptions may be adversely affected by continued uncertainties further exacerbated by recent national events. Webcast Scheduled This Afternoon At 4:30 p.m. EDT today, Solectron will hold its regular 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=1096. Following the live broadcast, replays of the conference call will be available at http://www.solectron.com. In addition, audio replays of the call will be available from 7:30 p.m. EDT today through Sept. 28. To access the audio replay, call 800-633-8284 in the United States or 858-812-6440 from outside the United States. In both cases specify reservation number 19665548. Earnings Release Dates In the coming year, the company will announce earnings on the following dates: First-quarter results will be issued Thursday, Dec. 20; second-quarter results will be issued Thursday, March 21; third-quarter results will be issued Thursday, June 20; and fourth-quarter results will be issued Monday, Sep. 23, 2002. Stock Repurchase Program Separately today, Solectron said its board of directors authorized a stock repurchase program of up to $200 million. The program is effective immediately. At the end of the fourth quarter, Solectron had 658.3 million shares outstanding. 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. ** Diluted EPS is the per-diluted-share calculation of net income (loss) as defined under U.S. Generally Accepted Accounting Principles (GAAP). Selected Financial Data Analytical Data (Dollars in millions) Q4 - FY01 Q3 - FY01 Q4 - FY00 Net Sales $3,594.9 $3,983.4 $4,736.2 Sales by Region Americas $1,993.0 $2,168.4 $3,099.6 Asia/Pacific $1,015.8 $1,016.1 $854.3 Europe $586.1 $798.9 $782.3 Sales by Business Unit Technology Solutions $186.4 $227.2 $457.0 Manufacturing & Operations $3,320.7 $3,671.8 $4,203.2 Printed Circuit Board 70.8% 74.9% 77.6% Systems 29.2% 25.1% 22.4% Global Services $87.8 $84.4 $76.0 Sales % by Market Segment Networking Equipment 20.4 20.6 28.0 Mobile Communications 13.2 12.9 15.0 Telecommunications 18.3 22.9 19.5 PCs/Notebooks 22.8 17.2 13.4 Computer Peripherals 4.5 5.3 6.0 Workstations & Servers 5.7 5.7 7.1 Other 15.1 15.4 11.0 Earnings Per Share Summary Q4 - FY01 Q3 - FY01 Q4 - FY00 Cash EPS* $0.06 $0.12 $0.28 Diluted EPS** $(0.38) $(0.28) $0.27 Diluted EPS before acquisition, restructuring and impairment charges $(0.10) $0.01 $0.27 Asset Management Metrics (Dollars in millions) Q4 - FY01 Q3 - FY01 Cash, cash equivalents and short-term investments $2,790.0 $2,175.9 Inventories $3,209.9 $4,201.7 Inventory turns 3.7 3.2 Accounts receivable, net $2,443.5 $2,391.4 Days sales outstanding 61 63 Calculation of Cash EPS (Dollars in millions, except per-share amounts) Q4 Fiscal Year FY 01 FY 00 FY 01 FY 00 Net (loss) income (225,766)* 171,007 (98,939)* 497,248 Restructuring and acquisition costs net of tax 138,688 3,202 366,490 25,692 Credit reserve and other one time cost net of tax 44,220 -- 44,220 -- Goodwill and intangible asset amortization costs net of tax 62,301 9,073 181,851 21,154 Non cash interest expense net of tax 23,679 15,851 88,095 Cumulative effect of change in accounting principle net of tax -- -- -- 3,480 Cash Earnings $43,122 $199,133 $581,717 $547,574 Shares used for cash earnings per share 773,379 700,279 757,140 623,543 Cash earnings per share $ 0.06 $ 0.28 $ 0.77 $ 0.88 * Net income at 33% tax rate. 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, the first two-time winner of the Malcolm Baldrige National Quality Award, has a full range of industry-leading capabilities on five continents. Its headquarters are in Milpitas, Calif. Safe Harbor This news release contains forward-looking statements regarding our outlook for the future, including expected margin improvement in the coming year, our position in the industry, and the expected timing of completion and impact of the acquisitions noted below. 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 and our ability to manage customer demand through the downturn, the ability to effectively integrate recently completed and currently pending acquisitions including Shinei International, MCC/Sequel and the recently announced pending acquisition of C-MAC Industries, the impact of events occurring on September 11, 2001, risk of price fluctuation, reliance on major customers, the 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. 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 Twelve Months Ended August 31, August 25, August 31, August 25, 2001 2000 2001 2000 Net sales $3,594.9 $4,736.2 $18,692.3 $14,137.5 Cost of sales 3,387.4 4,323.3 17,206.2 12,862.2 Gross profit 207.5 412.9 1,486.1 1,275.3 Operating expenses: Selling, general and administrative 245.4 147.7 827.9 467.1 Research and development 14.1 16.1 69.9 60.8 Goodwill amortization expense 53.8 1.4 139.9 5.3 Acquisition costs 0.2 1.3 55.0 26.8 Restructuring and impairment costs 207.0 3.4 492.0 11.1 Operating (loss) income (313.0) 243.0 (98.6) 704.2 Interest income 21.0 39.5 116.9 106.9 Interest expense (48.0) (31.0) (176.0) (71.6) (Loss) income before income taxes and cumulative effect of change in accounting principle (340.0) 251.5 (157.7) 739.5 Income taxes (89.7) 80.5 (34.2) 238.8 (Loss) income before cumulative effect of change in accounting principle (250.3) 171.0 (123.5) 500.7 Cumulative effect of change in accounting principle for start-up costs, net of income tax benefit -- -- -- (3.5) Net (loss) income $ (250.3) $171.0 $(123.5) $497.2 Basic net (loss) income per share: (Loss) income before cumulative effect of change in accounting $(0.38) $0.28 $(0.19) $0.84 Cumulative effect of change in accounting principle -- -- -- (0.01) Net (loss) income per share $(0.38) $0.28 $(0.19) $0.83 Diluted net (loss) income per share: (Loss) income before cumulative effect of change in accounting principle $(0.38) $0.27 $(0.19) $0.80 Cumulative effect of change in accounting principle -- -- -- -- Net (loss) income per share $(0.38) $0.27 $(0.19) $0.80 Weighted average number of shares: Basic 657.3 604.2 641.8 599.4 Diluted 657.3 625.9 641.8 623.5 * Includes the effect of changing certain depreciation lives from four to five years beginning March 2, 2001. Consequently, the depreciation charge on these assets were $8.0 million and $19.8 million, respectively, for the fourth quarter and fiscal year 2001 lower than it would have been using a four year life. SOLECTRON CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (US$ in millions) August 31, August 25, 2001 2000 ASSETS Current assets: Cash, cash equivalents and short-term investments $2,790.1 $2,434.1 Accounts receivable, net 2,443.6 2,146.3 Inventories 3,209.9 3,787.3 Prepaid expenses and other current assets 260.5 260.5 Total current assets 8,704.1 8,628.2 Net property and equipment 1,304.7 1,080.4 Other assets 934.4 627.4 Goodwill 1,987.2 39.6 Total assets $12,930.4 $10,375.6 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Short-term debt $306.2 $69.2 Accounts payable 1,786.1 2,694.1 Accrued employee compensation 166.5 179.8 Accrued expenses 363.7 262.5 Other current liabilities 66.8 11.2 Total current liabilities 2,689.3 3,216.8 Long-term debt 5,027.5 3,319.5 Other long-term liabilities 62.9 37.2 Total liabilities 7,779.7 6,573.5 Stockholders' equity: Common stock 0.7 0.6 Additional paid-in capital 3,877.6 2,259.1 Retained earnings 1,531.6 1,656.8 Accumulated other comprehensive losses (259.2) (114.4) Total stockholders' equity 5,150.7 3,802.1 Total liabilities and stockholders' equity $12,930.4 $10,375.6 CONTACT: press, Kevin Whalen, +1-408-956-6854, or kevinwhalen@ca.slr.com, or analysts, Thomas Alsborg, +1-408-956-6614, or thomasalsborg@ca.slr.com, both of Solectron CorporationSOURCE Solectron Corporation
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