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| Solectron Reports Sales Stability, Continued Metrics Improvements in First 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., Dec. 19 /PRNewswire-FirstCall/ -- Solectron Corporation (NYSE: SLR), a leading provider of electronics manufacturing and supply-chain management services, today reported sales of $3.1 billion in the first quarter of fiscal 2003, at the high end of the company's previously stated guidance of $2.8 billion to $3.1 billion. That compares with sales of $3.2 billion in the year-earlier quarter and $3.1 billion in the fourth quarter of fiscal 2002. (Photo: http://www.newscom.com/cgi-bin/prnh/20001201/SLRLOGO ) In the quarter ended Nov. 29, Solectron reported a net loss of $71 million, or 9 cents per diluted share, compared with a net loss of $53 million, or 8 cents per diluted share, in the year-earlier period and a net loss of $2.6 billion, or $3.21 per diluted share, in the fourth quarter of fiscal 2002. Excluding pre-tax restructuring and impairment charges of $102 million and a $34 million pre-tax gain from the repurchase of debt, Solectron had a first-quarter loss of $7 million, or 1 cent per diluted share -- within the company's guidance ranging from a 3-cent loss to break-even EPS performance. Excluding restructuring, impairment and unusual items, Solectron had earnings of $1 million, or nil per share, in the same period last year and a loss of $33 million, or 4 cents per share, in the fourth quarter of fiscal 2002. During the quarter, Solectron's key metrics continued to improve: -- Sales reflected stability in the business. -- Gross margin improved to 7.5 percent, the highest level in six quarters. -- Operating profit was $12 million, excluding restructuring and impairment charges. -- Inventory turns increased to 6.3, the sixth straight quarter of improvement. -- Days sales outstanding improved for the third consecutive quarter, to 52 days. -- Cash-to-cash cycle decreased 6 days to 64 days. In addition, the company repurchased $219 million in debt while maintaining a cash position of nearly $2 billion. "Our progress is on track and reflects the solid execution of our plan to return the company to profitability and deliver value to our stockholders," said Koichi Nishimura, Solectron chairman, president and chief executive officer. "We are pleased that new business wins in targeted segments continued to offset ongoing weakness in certain technology end markets. For example, our business in the consumer segment reached 5.5 percent of companywide sales in the quarter, and our automotive business reached 3 percent of sales. Our team is excited about our growing success at diversifying the industries we serve. "During the quarter, we took restructuring charges to further reduce our general and administrative expenses, and we continue to evaluate the opportunity for additional steps to shift more of our activities from high-cost to lower-cost regions," Nishimura said. "With an expectation of seasonal softness in the second quarter, our guidance is for sales to range from $2.8 billion to $3 billion, and earnings per share, excluding unusual charges, to range from a 2-cent loss to break-even performance." Webcast To Be Held Today At 5 p.m. EST today, Solectron will hold a conference call to discuss this earnings report. A live Internet broadcast of the call can be joined by going to http://www.firstcallevents.com/service/ajwz370607993gf12.html . Following the live broadcast, replays of the call will be available at http://www.solectron.com. In addition, audio replays will be available immediately following the call through Jan. 2. Call 800-642-1687 from within the United States or 706-645-9291 from outside the United States and specify pass code: 6760528. Safe Harbor This release contains forward-looking statements within the meaning of Section 27A of the Securities Exchange Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that involve a number of risks and uncertainties based on current expectations, forecasts and assumptions that could cause actual outcomes and results to differ materially. Specific forward-looking statements include: our financial outlook for the second quarter of fiscal 2003; our new business wins; our planned earnings release dates for the remainder of fiscal 2003; and our ability to return to profitability. 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. 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 second-quarter results Thursday, March 20; third-quarter results Thursday, June 19; and fourth-quarter and fiscal year-end results Thursday, Sept. 25. Supplemental information, consolidated statements of operations and consolidated balance sheets follow. All monetary amounts are stated in U.S. dollars. Analytical Data (Dollars in millions) Q1 - FY03 Q4 - FY02 Q1 - FY02 Net Sales $3,136.6 $3,116.6 $3,152.2 Sales by Business Unit Technology Solutions business unit $283.6 $260.6 $154.5 Global Operations business unit $2,495.7 $2,521.1 $2,855.9 Printed circuit board assembly 61.5% 62.6% 73.8% Systems 38.5% 37.4% 26.2% Global Services business unit $251.4 $236.4 $141.8 MicroSystems business unit $105.9 $98.5 -- Sales percentage by Region North America 39.9% 42.2% 37.3% Asia/Pacific 35.1% 33.1% 34.8% Europe 16.6% 16.1% 17.5% Latin America 8.4% 8.6% 10.4% Sales percentage by Market Segment Communications 25.9% 30.5% 27.6% Networking equipment 21.3% 24.5% 26.3% Computing 19.2% 17.7% 14.0% PCs/Notebooks 17.6% 15.9% 20.6% Consumer products 5.5% 3.8% 4.0% Semiconductor and test 2.6% 1.7% 1.4% Automotive 3.0% 1.4% -- Other 4.9% 4.5% 6.1% Earnings Per Share Summary (Dollars in millions, except per-share data) Q1 - FY03 Q4 - FY02 Q1 - FY02 Diluted loss per share ($0.09) ($3.21) ($0.08) Diluted earnings (loss) per share before restructuring, impairment and unusual items ($0.01) ($0.04) $0.00 Calculation of Diluted Earnings (Loss) Per Share Before Restructuring and Impairment Costs, Inventory Write-Offs, and Gains and Losses on Retirement of Debt Q1 - FY03 Q4 - FY02 Q1 - FY02 Net loss ($70.9) ($2,647.3) ($52.5) Restructuring and impairment costs, net of tax $85.4 $2,569.8 $51.7 Inventory write-offs, net of tax -- $60.6 -- Loss (gain) on LYONS purchases, net of tax ($21.3) ($15.7) $2.0 Net income (loss) before these charges ($6.8) ($32.6) $1.2 Pro forma weighted average number of shares 825.5 824.6 753.9 Earnings (loss) per share before these charges ($0.01) ($0.04) $0.00 Charges and Non-Cash Expenses, Net of Tax (Dollars in millions) Q1 - FY03 Q4 - FY02 Q1 - FY02 Restructuring and impairment costs $85.4 $50.8 $51.7 Goodwill and intangible impairment -- $2,519.0 -- Loss (gain) on retirement of debt ($21.3) ($15.7) $2.0 Intangible asset amortization $5.5 $7.7 $14.5 Non-cash interest expense $14.9 $19.4 $22.3 Asset Management Metrics Q1 - FY03 Q4 - FY02 Q1 - FY02 Inventory turns 6.3 6.1 4.0 Days sales outstanding 52 55 64 Cash-to-cash cycle (in days) 64 70 106 10 Percent Customers The following customers represented at least 10 percent of sales during the quarter. Q1 - FY03 Q4 - FY02 Q1 - FY02 Hewlett-Packard/Compaq 11.7% 10.4% 10.8% Nortel Networks 10.9% 11.8% 13.7% Cisco Systems * 11.0% 11.1% * Less than 10 percent of total sales during the quarter Selected Financial Data, Pre-Tax (Dollars in millions) Q1 - FY03 Q4 - FY02 Q1- FY02 Capital expenditures $41.6 $51.2 $62.7 Depreciation expense $73.7 $66.1 $82.1 Amortization expense $7.8 $11.2 $20.5 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 $12.3 billion in fiscal 2002. Analysts Contacts: Perry Hayes, Solectron Corporation, 408-956-7543 (U.S.), perryhayes@ca.slr.com Tonya Chin, Solectron Corporation, 408-956-6537 (U.S.), tonyachin@ca.slr.com Media Contact: Kevin Whalen, Solectron Corporation, 408-956-6854 (U.S.), kevinwhalen@ca.slr.com SOLECTRON CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (US$ in millions, except per-share data) Unaudited Three Months Ended Nov. 29, Nov. 30, 2002 2001 Net sales $3,136.6 $3,152.2 Cost of sales 2,900.0 2,927.1 Gross profit 236.6 225.1 Operating expenses: Selling, general and administrative 202.3 205.5 Research and development 22.1 12.5 Restructuring and impairment costs 101.8 72.9 Operating loss (89.6) (65.8) Interest income 10.2 19.9 Interest expense (56.5) (42.7) Other income - net 36.1 14.3 Loss before income tax benefit (99.8) (74.3) Income tax benefit (28.9) (21.8) Net loss $(70.9) $(52.5) Basic net loss per share $(0.09) $(0.08) Diluted net loss per share $(0.09) $(0.08) Shares used in per-share calculation: Basic 825.5 663.7 Diluted 825.5 663.7 Note: For each period presented, the company reclassified "other income - net" from "selling, general and administrative" expense to a separate line below operating loss. In addition, gains and losses from retirement of debt have been reclassified from extraordinary to "other income - net" in accordance with SFAS No. 145. SOLECTRON CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (US$ in millions) Unaudited Nov. 29, Aug. 30, 2002 2002 ASSETS Current assets: Cash, cash equivalents and short- term investments * $1,997.6 $2,249.8 Accounts receivable, net 1,858.7 1,788.2 Inventories 1,809.0 1,870.0 Prepaid expenses and other current assets 648.9 752.0 Total current assets 6,314.2 6,660.0 Net property and equipment 1,081.7 1,173.0 Goodwill 2,196.8 2,163.9 Other assets 1,015.3 1,017.1 Total assets $10,608.0 $11,014.0 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Short-term debt $548.4 $643.0 Accounts payable 1,472.1 1,509.5 Accrued employee compensation 231.1 218.5 Accrued expenses 461.2 527.3 Other current liabilities 109.2 106.9 Total current liabilities 2,822.0 3,005.2 Long-term debt 3,010.1 3,183.9 Other long-term liabilities 54.5 52.2 Total liabilities 5,886.6 6,241.3 Stockholders' equity: Common stock 0.8 0.8 Additional paid-in capital 6,640.7 6,635.9 Accumulated deficit (1,649.5) (1,578.6) Accumulated other comprehensive losses (270.6) (285.4) Total stockholders' equity 4,721.4 4,772.7 Total liabilities and stockholders' equity $10,608.0 $11,014.0 * This caption includes $148.3 million and $235.4 million of restricted balances as of Nov. 29, 2002, and Aug. 30, 2002, respectively.SOURCE Solectron Corporation
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CONTACT:
analysts, Perry Hayes, +1-408-956-7543, or
perryhayes@ca.slr.com, or Tonya Chin, +1-408-956-6537, or
tonyachin@ca.slr.com, or media, Kevin Whalen, +1-408-956-6854, or
kevinwhalen@ca.slr.com, all of Solectron Corporation
