SINGAPORE, Oct. 23 /PRNewswire-FirstCall/ -- Flextronics today announced results for its second quarter ended September 28, 2007 as follows:
Record Second Quarter Results
Net sales increased from the year ago quarter by $855 million, or 18%, to $5.6 billion in the second quarter ended September 28, 2007, which is at the high end of the Company's previously provided revenue guidance of $5.3-$5.6 billion. For the second quarter ended September 28, 2007, adjusted net income increased 25% over the year ago quarter to $146 million, or $0.24 per diluted share, compared to $117 million, or $0.20 per diluted share, in the year ago quarter. The Company's adjusted earnings per diluted share of $0.24 in the second quarter ended September 28, 2007 is at the high end of the Company's previously provided guidance of $0.22-$0.24.
Adjusted operating profit increased 20% from the year ago quarter to a record $172 million in the second quarter ended September 28, 2007 while adjusted operating margin increased sequentially 10 basis points to 3.1% from 3.0%. Operating cash flow was $371 million in the second quarter ended September 28, 2007 and $516 million in the six-month period ended September 28, 2007. Free cash flow (net cash flow from operating activities less net purchases of property, plant and equipment) amounted to $297 million in the second quarter ended September 28, 2007 and $370 million in the six-month period ended September 28, 2007.
Mike McNamara, chief executive officer of Flextronics, stated, "We continue to maintain a strong financial position with over $1 billion in cash, no short term debt maturities, and a record low debt to capital leverage ratio of 19%. Inventory turns improved to 8.0x while cash conversion cycle improved by two days sequentially to an industry leading 11 days. We remain intensely focused on generating a higher return on capital while growing our business, as evidenced by our return on invested capital of 11.2%, which increased 80 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 very successful quarter for Flextronics. We believe we are executing very well on the controllable aspects of the business, which should provide an excellent foundation to add the capabilities of Solectron into the Flextronics framework."
Conference Calls and Web Casts
A conference call hosted by Flextronics's management will be held today at 1:30 p.m. PDT to discuss the Company's financial results for the second quarter ended September 28, 2007. Additionally, Flextronics will host its annual analyst and investor meeting on Tuesday, November 6, 2007 in New York City to present the Company's strategy and vision as well as the Company's revised financial guidance for the remainder of fiscal 2008 to reflect the previously announced Solectron acquisition, which was completed on October 1, 2007.
Both events 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 growth and return on capital. 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 growth may not occur as expected; our dependence on industries that continually produce technologically advanced products with short life cycles; 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; the challenges of effectively managing our operations; the challenges of integrating acquired companies or assets; our reliance on strategic relationships with major customers; the impact on our margins and profitability resulting from substantial investments and start-up and integration costs in our components, design and ODM capabilities; that we may not be able to obtain 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 design and quickly introduce world-class components products that offer significant price and/or performance advantages over competitive products; production difficulties, especially with new products; 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; not realizing expected returns from our retained interests in divested businesses; changes in government regulations and tax laws; 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 effects of customer bankruptcies; and the risks to our particular electronics and technology sector of economic instability and a slowdown in consumer spending. Other risks relate to Flextronics's acquisition of Solectron, which closed on October 1, 2007, including that the revenues, cost savings, growth prospects and any other synergies expected from the acquisition may not be fully realized due to difficulties integrating the businesses, operations and product lines of Flextronics and Solectron or may take longer to realize than expected; and that Flextronics may incur significant costs associated with the acquisition, including charges to operations to reflect costs associated with integrating the businesses and operations of Flextronics and Solectron. 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 ("SEC") and under "Cautionary Statement Regarding Forward Looking Information," "Risk Factors" and "The Merger" included in the definitive joint proxy/prospectus, which forms a part of our registration statement on Form S-4/A filed by Flextronics with the SEC on August 7, 2007. 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/
