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Flextronics (FLEX) Announces Third Quarter Results


1/30/2008 8:07:35 AM

SINGAPORE, Jan. 29 /PRNewswire-FirstCall/ -- Flextronics today announced results for its third quarter ended December 31, 2007 as follows:

Third Quarter Results

Revenue increased $3.7 billion, or 67%, from the year ago quarter to a record high $9.1 billion in the December 2007 quarter. Adjusted operating profit increased $139 million, or 86%, from the year ago quarter to $300 million in the December 2007 quarter while adjusted operating margin improved 30 basis points from 3.0% to 3.3% over the same time period. Adjusted net income increased $114 million, or 84%, from the year ago quarter to $250 million in the December 2007 quarter while adjusted EPS increased 30% from $0.23 to $0.30 over the same time period.

Cash amounted to $1.8 billion at December 31, 2007. Operating cash flow generated $534 million and $1.05 billion in the three and nine month periods ended December 31, 2007, respectively. Free cash flow (operating cash flow less net capital expenditures) amounted to $470 million and $840 million in the three and nine month periods ended December 31, 2007, respectively.

"Overall demand in the December quarter was exceptionally strong as revenues and earnings exceeded the high end of our guidance," said Thomas Smach, chief financial officer of Flextronics. "Actual revenue in the quarter was $9.1 billion versus our guidance of $8.5 billion and adjusted EPS was $0.30 versus our guidance of $0.26."

"Our strong financial position provides us with substantial flexibility to make synergistic investments to enhance our competitiveness, expand our capabilities, drive revenue growth and enhance profitability," said Mike McNamara, chief executive officer of Flextronics. "We remain intensely focused on generating a higher return on capital while growing our business, as evidenced by the return on invested capital of 11.9%, which increased 70 basis points from the previous quarter."

McNamara concluded by stating, "I am very proud of the dedication and hard work of our employees and management across the globe in making this a record quarter for Flextronics while successfully integrating Solectron, the largest acquisition in our company's history."

Guidance

The Company reiterated its previously provided March 2008 quarter guidance of revenue in the range of $7.5 - $7.9 billion and adjusted EPS in the range of $0.22 - $0.24.

GAAP earnings per share are expected to be lower than the guidance provided herein by approximately $0.05 for quarterly intangible amortization and stock-based compensation expense and by approximately $0.19 - $0.27 per share for the previously announced remaining restructuring and other charges relating to the Solectron acquisition.

Conference Calls and Web Casts

A conference call hosted by Flextronics's management will be held today at 1:30 p.m. PST to discuss the Company's financial results for the third quarter ended December 31, 2007. This call will be broadcast via the Internet and may be accessed by logging on to the Company's website at http://www.flextronics.com. Additional information in the form of slide presentations may also be found on the Company's site. Replays of the broadcasts will remain available on the Company's website afterwards.

Minimum requirements to listen to the broadcast are Microsoft Windows Media Player software (free download at http://www.microsoft.com/windows/windowsmedia/download/default.asp) and at least a 28.8 Kbps bandwidth connection to the Internet.

About Flextronics

Headquartered in Singapore (Singapore Reg. No. 199002645H), Flextronics is a leading Electronics Manufacturing Services (EMS) provider focused on delivering complete design, engineering and manufacturing services to automotive, computing, consumer digital, industrial, infrastructure, medical and mobile OEMs. With the acquisition of Solectron, pro forma fiscal year 2007 revenues from continuing operations are more than US$30.0 billion. Flextronics helps customers design, build, ship, and service electronics products through a network of facilities in 35 countries on four continents. This global presence provides design and engineering solutions that are combined with core electronics manufacturing and logistics services, and vertically integrated with components technologies, to optimize customer operations by lowering costs and reducing time to market. For more information, please visit http://www.flextronics.com.

This press release contains forward-looking statements within the meaning of U.S. securities laws, including statements related to future revenue and earnings growth. These forward-looking statements involve risks and uncertainties that could cause the actual results to differ materially from those anticipated by these forward-looking statements. These risks include that revenue and earnings growth may not occur as expected; our dependence on industries that continually produce technologically advanced products with short life cycles; that we may not fully realize the expected synergies, revenues and earnings growth and cost savings from the Solectron acquisition, and that we may incur significant costs and charges associated with the acquisition; our ability to respond to changes in economic trends, to fluctuations in demand for customers' products and to the short-term nature of customers' commitments; competition in our industry, particularly from ODM suppliers in Asia; our dependence on a small number of customers for the majority of our sales and our reliance on strategic relationships with major customers; the challenges of effectively managing our operations, including our ability to manage manufacturing processes, control costs and manage changes in our operations; the challenges of integrating acquired companies and assets; not obtaining anticipated new customer programs, or that if we do obtain them, that they may not contribute to our revenue or profitability as expected or at all; our ability to utilize available and recently expanded manufacturing capacity; the risk of future restructuring charges that could be material to our financial condition and results of operations; our ability to design and quickly introduce world-class components products that offer significant price and/or performance advantages over competitive products; the impact on our margins and profitability resulting from substantial investments and start-up and integration costs in our components, design and ODM businesses; production difficulties, especially with new products; changes in government regulations and tax laws; not realizing expected returns from our retained interests in divested businesses; our exposure to potential litigation relating to intellectual property rights, product warranty and product liability; potential impairment of our intangible assets; our dependence on the continued trend of outsourcing by OEMs; the risks to our particular electronics and technology sector of economic instability and a slowdown in consumer spending; the effects of customer bankruptcies; supply shortages of required electronic components; the challenges of international operations, including fluctuations in exchange rates beyond hedged boundaries leading to unexpected charges; our dependence on our key personnel; and our ability to comply with environmental laws. Additional information concerning these and other risks is described under "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our reports on Form 10-K, 10-Q and 8-K that we file with the U.S. Securities and Exchange Commission. The forward-looking statements in this press release are based on current expectations and Flextronics assumes no obligation to update these forward-looking statements.

CONTACT: Thomas J. Smach, Chief Financial Officer, +1-408-576-7722,
investor_relations@flextronics.com, or Renee Brotherton, Vice President,
Corporate Communications, +1-408-576-7189,
renee.brotherton@flextronics.com, both of Flextronics

Web site: http://www.flextronics.com/


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