SAN JOSE, Calif., Jan. 25 /PRNewswire-FirstCall/ -- Sanmina-SCI
Corporation (NASDAQ:SANM), a leading global electronics
manufacturing services (EMS) company, today reported financial
results for its first fiscal quarter ended December 31, 2005. First
Quarter Fiscal 2006 Highlights Include: -- REVENUE OF $2.86
BILLION, WITHIN GUIDANCE OF $2.8-$2.9 BILLION -- NON-GAAP EARNINGS
PER SHARE OF $0.08, WITHIN GUIDANCE OF $0.06-$0.08 -- GAAP EARNINGS
PER SHARE OF $0.04 -- NON-GAAP OPERATING INCOME OF $76.1 MILLION,
UP 21.9% OVER Q4'05 -- NON-GAAP GROSS MARGIN 6.0% For the first
quarter ended December 31, 2005, Sanmina-SCI reported revenue of
$2.86 billion, an increase of 3.5%, from $2.77 billion in the
fourth quarter of fiscal 2005 ended October 1, 2005. Non-GAAP
Financial Results for the Quarter (1): Net income for the first
fiscal quarter of 2006 was $39.6 million, up 26.4% over the fourth
quarter. Diluted earnings per share for the quarter was $0.08.
Operating income was $76.1 million, up 21.9% over the fourth
quarter of fiscal 2005. Operating income as a percentage of revenue
for the quarter was 2.7% versus 2.3% for the prior quarter and 2.5%
for the first quarter of fiscal 2005. Gross profit was $171.1
million, up 11.1% over the fourth quarter of fiscal 2005. Gross
margin was 6.0%, up from the prior quarter of 5.6% and up from 5.4%
in the first quarter of fiscal 2005. GAAP Financial Results for the
Quarter: For the first quarter of fiscal 2006, the company reported
net income of $21.2 million, versus $5.3 million for the fourth
quarter fiscal 2005 and $24.4 million for the same period a year
ago. Diluted earnings per share for the quarter were $0.04. The
GAAP financial statements for the first quarter 2006 included a
one-time favorable income tax adjustment of $64.0 million relating
to previously-accrued income taxes that were reversed as a result
of a settlement reached with the U.S. Internal Revenue Service. The
settlement was in relation to certain U.S. tax audits that were
concluded during the quarter. Notification of approval of the
settlement by the Congressional Joint Committee on Taxation was
received following the filing of the Company's annual report on
Form 10-K for fiscal 2005. Of the $64.0 million adjustment, $27.9
million was recorded as an income tax benefit to earnings. The
remaining $36.1 million was recorded as an adjustment to goodwill
for pre-merger tax items associated with SCI Systems. (Non-GAAP
results exclude this one-time benefit.) FINANCIAL RESULTS (In
thousands, except per share data) Q1:2006 Q4:2005 Q1:2005 GAAP:
Revenue $2,861,797 $2,765,302 $3,252,706 Net Income $21,170 $5,342
$24,366 Earnings per share $0.04 $0.01 $0.05 Non-GAAP:(1) Gross
Profit $171,073 $154,033 $176,967 Gross Margin 6.0% 5.6% 5.4%
Operating Income $76,130 $62,444 $82,168 Operating Margin 2.7% 2.3%
2.5% Net Income $39,581 $31,319 $45,692 Earnings per share $0.08
$0.06 $0.09 (1) Non-GAAP financial results exclude integration and
restructuring costs, impairment charges, other infrequent or
unusual items and non-cash interest and amortization expense. In
addition to the above items, the first quarter of 2006 Non-GAAP
results do not include stock-based compensation expenses. Please
refer to "Non-GAAP Financial Information" below for a discussion of
how the above non-GAAP financial measures are calculated and why we
believe this information is useful to investors. A reconciliation
from GAAP to non-GAAP results is contained in the attached
financial summary and is available on the Investor Relations
section of our website at http://www.sanmina-sci.com/. At December
31, 2005, the Company reported $1.04 billion in cash and cash
equivalents and short-term investments. At quarter-end, the Company
reported a current ratio of 1.8, working capital of $1.79 billion,
and stockholders' equity of $2.4 billion. "This was a good quarter
for Sanmina-SCI as we saw improvements in our business. These
improvements in our first quarter can be attributed in large part
to our continued focus on the fundamentals, improved product mix
and improved operating efficiencies. Though there is still more
work to be done, we do believe the Company is well positioned for
long-term growth," stated Jure Sola, Chairman and Chief Executive
Officer of Sanmina-SCI. Company Outlook The following statements
are based on current expectations. These statements are
forward-looking and actual results may differ materially. Please
refer to the Risk Factors reported in the Company's annual and
quarterly reports on file with the Securities and Exchange
Commission for a description of some of the factors that could
influence the Company's ability to achieve the projected results.
The Company provides the following guidance with respect to its
second fiscal quarter ending April 1, 2006: -- Revenue is expected
to be seasonally down in the range of $2.6 billion to $2.7 billion;
-- Non-GAAP diluted earnings per share to be between $0.05 and
$0.07, excluding stock-based compensation expenses, integration and
restructuring costs, impairment charges, other infrequent or
unusual items and non-cash interest and amortization expense.
Non-GAAP Financial Information In the summary table set forth
above, we present the following non-GAAP financial measures: gross
profit, gross margin, operating income, operating margin, net
income and earnings per share. In computing each of these non-GAAP
financial measures, we exclude charges or gains relating to:
stock-based compensation expenses, restructuring costs (including
employee severance and benefits costs and charges related to excess
facilities and assets), integration costs (consisting of costs
associated with the integration of acquired businesses into our
operations), impairment charges for goodwill and intangible assets,
extraordinary gains or losses, non-cash interest and amortization
expense and other infrequent or unusual items, to the extent
material, which we consider to be of a non-operational nature in
the applicable period. We have furnished these non-GAAP financial
measures because we believe they provide useful supplemental
information to investors in that they eliminate certain financial
items that are of a non-recurring, unusual or infrequent nature or
are not related to the Company's regular, ongoing business.Our
management also uses this information internally for forecasting,
budgeting and other analytical purposes. Therefore, the non-GAAP
financial measures enable investors to analyze the core financial
and operating performance of our Company and to facilitate
period-to-period comparisons and analysis of operating trends. A
reconciliation from non-GAAP to GAAP results is contained in the
attached financial summary and is available on the Investor
Relations section of our website at http://www.sanmina-sci.com/.
Sanmina-SCI provides earnings guidance only on a non-GAAP basis due
to the inherent uncertainties associated with forecasting the
timing and amount of restructuring, impairment and other unusual
and infrequent items. The non-GAAP financial information presented
in this release may vary from non-GAAP financial measures used by
other companies. In addition, non-GAAP financial information should
not be viewed as a substitute for financial data prepared in
accordance with GAAP. Company Conference Call Information
Sanmina-SCI will be holding a conference call regarding this
announcement on Wednesday, January 25, 2006 at 5:00 p.m. ET (2:00
p.m. PT). The access numbers are: domestic 877-273-6760 and
international: 706-634-6605. The conference will be broadcast live
over the Internet. Log on to the live webcast at
http://www.sanmina-sci.com/. Additional information in the form of
a slide presentation is available by logging onto Sanmina-SCI's
website at http://www.sanmina-sci.com/. A replay of today's
conference call will be available for 48-hours. The access numbers
are: domestic 800-642-1687 and international: 706-645-9291, access
code: 4338491. About Sanmina-SCI Sanmina-SCI Corporation is a
leading electronics contract manufacturer serving the
fastest-growing segments of the global electronics manufacturing
services (EMS) market. Recognized as a technology leader,
Sanmina-SCI provides end-to-end manufacturing solutions, delivering
superior quality and support to large OEMs primarily in the
communications, defense and aerospace, industrial and medical
instrumentation, computer technology and multimedia sectors.
Sanmina-SCI has facilities strategically located in key regions
throughout the world. Information about Sanmina-SCI is available at
http://www.sanmina-sci.com/. Sanmina-SCI Safe Harbor Statement The
foregoing, including the discussion regarding the Company's future
prospects, contains certain forward-looking statements that involve
risks and uncertainties, including uncertainties associated with
economic conditions in the electronics industry, particularly in
the principal industry sectors served by the Company, changes in
customer requirements and in the volume of sales to principal
customers, the ability of Sanmina-SCI to effectively assimilate
acquired businesses and achieve the anticipated benefits of its
acquisitions, and competition and technological change. The
Company's actual results of operations may differ significantly
from those contemplated by such forward-looking statements as a
result of these and other factors, including factors set forth in
the Company's fiscal year 2005 Annual Report on Form 10-K filed on
December 29, 2005 and the other reports, including quarterly
reports on Form 10-Q and current reports on Form 8-K, that the
Company files with the Securities Exchange Commission. Condensed
Consolidated Statements of Operations (In thousands, except per
share data) (GAAP) (Unaudited) Three Months Ended December 31, 2005
January 1, 2005 Net sales $2,861,797 $3,252,706 Cost of sales
2,691,700 3,075,739 Gross profit 170,097 176,967 Operating
expenses: Selling, general and administrative 87,689 87,309
Research and development 8,890 7,490 Amortization of intangible
assets 2,233 2,030 Integration costs 175 114 Restructuring costs
35,628 20,425 Total operating expenses 134,615 117,368 Operating
income 35,482 59,599 Interest Income 5,925 3,507 Interest expense
(34,248) (30,056) Other expense, net 1,054 270 Interest and other
expense, net (27,269) (26,279) Income before income taxes 8,213
33,320 Provision for (benefit from) income taxes(1) (12,957) 8,954
Net income $21,170 $24,366 Earnings per share: Basic $0.04 $0.05
Diluted $0.04 $0.05 Weighted-Average Shares used in computing per
share amounts: Basic 524,311 519,205 Diluted 524,703 525,008 (1)
Included a one-time favorable income tax adjustment of $64.0
million relating to previously-accrued income taxes that were
reversed as a result of a settlement reached with the U.S. Internal
Revenue Service. The settlement was in relation to certain U.S. tax
audits that were concluded during the quarter. Notification of
approval of the settlement by the Congressional Joint Committee on
Taxation was received following the filing of the company's Annual
Report on Form 10-K for fiscal 2005. Of the $64 million adjustment,
$27.9 million was recorded as an income tax benefit to earnings.
The remaining $36.1 million was recorded as an adjustment to
goodwill for pre- merger tax items with SCI Systems. Forward
Looking Guidance Three Months Ended April 1, 2006 Net sales $2.6 -
$2.7 billion Non-GAAP earnings per share (1) $.05 - $.07 (1)
Forward looking guidance for the quarter ended April 1, 2006 is
provided only on a non-GAAP basis. The comparable GAAP earnings or
loss per share amount is not accessible due to inherent
difficulties in predicting certain expenses and gains affecting
GAAP earnings or loss, such as the amount and timing of
Sanmina-SCI's restructuring costs, as well as debt security
repurchases, if any, that could result in gains or losses reported
in GAAP earnings. Sanmina - SCI Corporation Condensed Consolidated
Balance Sheets (In thousands) (GAAP) December 31, October 1 2005
2005 (Unaudited) (Derived from audited ASSETS financials) Current
assets: Cash and cash equivalents $1,011,098 $1,068,053 Short-term
investments 28,178 57,281 Accounts receivable, net 1,612,325
1,477,401 Inventories 1,122,773 1,015,035 Deferred income taxes
39,107 42,767 Prepaid expenses and other current assets 104,142
86,620 Total current assets 3,917,623 3,747,157 Property, plant and
equipment, net 606,895 662,101 Goodwill 1,654,126 1,689,198 Other
intangible assets, net 33,658 35,907 Other non-current assets
80,363 81,874 Restricted cash 25,538 25,538 Total assets $6,318,203
$6,241,775 LIABILITIES AND STOCKHOLDERS' EQUITY Current
liabilities: Current portion of long-term debt $1,259 $1,439
Accounts payable 1,636,397 1,559,172 Accrued liabilities 353,322
366,920 Accrued payroll and related benefits 141,141 146,687 Total
current liabilities 2,132,119 2,074,218 Long-term liabilities:
Long-term debt, net of current portion 1,635,847 1,644,666 Other
152,774 143,873 Total long-term liabilities 1,788,621 1,788,539
Stockholders' equity: Preferred stock - - Common stock 5,475 5,457
Treasury stock (188,200) (188,519) Additional paid-in capital
5,753,326 5,745,125 Accumulated other comprehensive income 25,623
36,886 Accumulated deficit (3,198,761) (3,219,931) Total
stockholders' equity 2,397,463 2,379,018 Total liabilities and
stockholders' equity $6,318,203 $6,241,775 Sanmina - SCI
Corporation Reconciliation of GAAP to Non-GAAP Measures (in
thousands, except per share data) (Unaudited) Three months ended
December 31, 2005 January 1, 2005 GAAP Gross Profit $170,097
$176,967 GAAP Gross Margin 5.9% 5.4% Adjustments: Stock
compensation expense 976 - Non-GAAP Gross Profit $171,073 $176,967
Non-GAAP Gross Margin 6.0% 5.4% GAAP operating income $35,482
$59,599 GAAP operating margin 1.2% 1.8% Adjustments: Stock
compensation expense 2,612 - Amortization of intangible assets
2,233 2,030 Restructuring and integration costs 35,803 20,539
Non-GAAP operating income $76,130 $82,168 Non-GAAP operating margin
2.7% 2.5% GAAP net income $21,170 $24,366 Adjustments: Stock
compensation expense(1) 2,612 - Amortization of intangible assets
2,233 2,030 Restructuring and integration costs 35,803 20,539
Non-cash interest expense 5 6,645 Tax effect - reversal of
previously accrued income taxes (27,864) - Tax effect of above
items 5,622 (7,888) Non-GAAP net income $39,581 $45,692 GAAP
Earnings Per Share: Basic $0.04 $0.05 Diluted $0.04 $0.05 Non-GAAP
Earnings Per Share: Basic $0.08 $0.09 Diluted $0.08 $0.09
Weighted-Average Shares used in computing GAAP and Non-GAAP
earnings per share amounts: Basic 524,311 519,205 Diluted 524,703
525,008 (1) Total stock compensation expense for the first quarter
of fiscal 2006 was approximately $1.0 million of cost of sales,
$1.5 million of selling and general administrative expense and $0.1
million of research and development expense. First Call Analyst:
FCMN Contact: geri.cookson@sanmina-sci.com DATASOURCE: Sanmina-SCI
Corporation CONTACT: Paige Bombino, Investor Relations of
Sanmina-SCI, +1-408-964-3610 Web site: http://www.sanmina-sci.com/
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