SAN JOSE, Calif., Oct. 30 /PRNewswire-FirstCall/ -- Sanmina-SCI
Corporation ("the Company") (NASDAQ:SANM), a leading global
electronics manufacturing services (EMS) company, today reported
financial results for its fourth fiscal quarter and fiscal year
ended September 29, 2007. For the fourth quarter ended September
29, 2007, Sanmina-SCI reported revenue of $2.5 billion, compared to
$2.5 billion in the third quarter ended June 30, 2007 and $2.7
billion in the fourth quarter ended September 30, 2006. Revenue for
the year ended September 29, 2007 was $10.4 billion, compared to
$11.0 billion in the prior year. Non-GAAP Financial Results for the
Quarter and Fiscal Year Net income for the fourth quarter 2007 was
$10.2 million, $0.02 diluted earnings per share, compared to a net
loss of $22.8 million, a diluted loss per share of $0.04 for the
third quarter ended June 30, 2007, and net loss of $2.1 million,
breakeven diluted earnings per share for the fourth quarter 2006.
Net income for fiscal year 2007 was $22.8 million, $0.04 diluted
earnings per share, compared to $102.4 million, $0.19 diluted
earnings per share in the prior year. Gross profit was $134.1
million or 5.4 percent of revenue, a 60 basis point improvement
from the prior quarter of $120.3 million, or 4.8 percent of
revenue, and up from $131.0 million, or 4.8 percent of revenue in
the same period a year ago. Operating income for the quarter was
$42.8 million, up from $29.1 million in the prior quarter and up
from $32.1 million for the same period last year. Fiscal 2007
operating income was $182.6 million, compared to $243.7 million in
fiscal 2006 (see Non-GAAP Financial Information). GAAP Financial
Results for the Quarter and Fiscal Year Fourth quarter GAAP
earnings were primarily impacted by a non-cash impairment charge
for goodwill of $1.1 billion. As a result of this charge, the
Company reported a net loss of $1.1 billion in the fourth quarter
of fiscal 2007, compared to a net loss of $27.6 million in the
prior quarter and a net loss of $28.1 million for the same period
last year. Diluted loss per share for the quarter was $2.10. Net
loss for fiscal year 2007 was $1.1 billion and diluted loss per
share was $2.15. This charge resulted from the Company's annual
goodwill impairment analysis in accordance with Statement of
Financial Accounting Standards No. 142 (SFAS No. 142). Cash Flow
and Balance Sheet Metrics The Company continued to manage its cash
flow and balance sheet metrics, making improvements throughout
fiscal 2007. * Cash flow from operations was $145 million in Q4'07,
and $511 million for fiscal 2007 * Cash and cash equivalents were
$933.4 million, up $441.6 million from Q4'06 * Cash cycle days of
29 days represented a 7 day improvement from Q3'07 * Inventory
decreased $72.7 million, inventory turns improved to 8.9x in Q4'07
"I am pleased with our gross margin improvement, cash flow
generation and inventory turns during the fourth quarter. We are
confident that we will continue to improve our financial metrics.
We are committed to driving our ROIC above our weighted cost of
capital as we exit fiscal year 2008," stated Jure Sola, Chairman
and Chief Executive Officer. "The basis for Sanmina-SCI's
operational excellence strategy in 2008 and beyond is to focus on
high-end markets that offer the greatest opportunity for success,
invest in leading edge technology, and provide unparalleled end-to-
end manufacturing solutions to our customers," concluded Sola.
Personal and Business Computing Division Consistent with previous
announcements made by the Company concerning its personal and
business computing business unit, the Company reaffirmed its
intentions of separating this business unit from its core
operations either by means of a sale or other disposition of the
business. This business unit includes the Company's personal
computing and industry standard server businesses, their related
BTO/CTO operations in Mexico and Hungary and their associated
logistics activities. The Company expects the disposition of this
business to occur over the next twelve months. Accordingly,
effective with the first fiscal quarter 2008, the Company expects
to account for this business unit as a discontinued operation in
accordance with SFAS No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets. First Quarter Fiscal 2008 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 the first fiscal quarter ending December 29, 2007: * Revenue is
expected to be in the range of $2.5 billion to $2.65 billion *
Non-GAAP diluted earnings per share to be between $0.02 to $0.04
Non-GAAP Financial Information In the commentary 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,
amortization expense and other infrequent or unusual items, to the
extent material or 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 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/. 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 Tuesday, October 30,
2007 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 is 20185342. About Sanmina-SCI Sanmina-SCI Corporation
(NASDAQ:SANM) 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 2006 Annual Report on Form 10-K filed on
January 3, 2007 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. Sanmina - SCI
Corporation Condensed Consolidated Balance Sheets (In thousands)
(GAAP) September 29, September 30, 2007 2006 (Unaudited) ASSETS
Current assets: Cash and cash equivalents $933,424 $491,829
Accounts receivable, net 1,218,375 1,526,373 Inventories 1,059,856
1,318,400 Prepaid expenses and other current assets 178,213 131,144
Deferred income taxes 17,464 23,257 Restricted cash 8,125 -- Total
current assets 3,415,457 3,491,003 Property, plant and equipment,
net 609,394 620,132 Goodwill 510,669 1,613,230 Other intangible
assets, net 22,218 29,802 Other non-current assets 85,750 94,512
Restricted cash 26,467 13,751 Total assets $4,669,955 $5,862,430
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts
payable $1,450,705 $1,494,603 Accrued liabilities 203,870 223,263
Accrued payroll and related benefits 142,436 156,248 Current
portion of long-term debt 71 100,135 Total current liabilities
1,797,082 1,974,249 Long-term liabilities: Long-term debt, net of
current portion 1,588,072 1,507,218 Other 111,654 110,400 Total
long-term liabilities 1,699,726 1,617,618 Total stockholders'
equity: 1,173,147 2,270,563 Total liabilities and stockholders'
equity $4,669,955 $5,862,430 Condensed Consolidated Statements of
Operations (In thousands, except per share amounts) (GAAP)
(Unaudited) Three Months Ended Fiscal Year Ended September 29,
September 30, September 29, September 30, 2007 2006 2007 2006 Net
sales $2,505,416 $2,717,306 $10,384,254 $10,955,421 Cost of sales
2,377,376 2,590,754 9,831,041 10,333,685 Gross profit 128,040
126,552 553,213 621,736 Operating expenses: Selling, general and
administrative 92,086 101,766 374,181 364,854 Research and
development 6,016 9,896 30,085 40,181 Amortization of intangible
assets 1,650 3,069 6,632 9,554 Restructuring costs 15,701 3,216
44,602 132,230 Impairment of assets -- 9,643 -- 15,213 Goodwill
impairment 1,099,650 3,787 1,099,650 3,787 In-process research and
development -- 2,600 -- 2,600 Total operating expenses 1,215,103
133,977 1,555,150 568,419 Operating income (loss) (1,087,063)
(7,425) (1,001,937) 53,317 Interest Income 5,409 4,892 28,766
19,434 Interest expense (38,136) (30,461) (168,291) (121,813) Loss
on extinguishment of debt -- -- (3,175) (84,600) Other income
(expense), net 7,524 (1,754) 23,734 (16,491) Interest and other
expense, net (25,203) (27,323) (118,966) (203,470) Loss before
income taxes and cumulative effect of accounting change (1,112,266)
(34,748) (1,120,903) (150,153) Provision (benefit) for income taxes
(3,132) (9,526) 13,754 (5,766) Loss before cumulative effect of
accounting change (1,109,134) (25,222) (1,134,657) (144,387)
Cumulative effect of accounting change, net of tax -- (2,865) --
2,830 Net loss $(1,109,134) $(28,087) $(1,134,657) $(141,557) Net
loss per share before cumulative effect of accounting change: Basic
$(2.10) $(0.05) $(2.15) $(0.27) Diluted $(2.10) $(0.05) $(2.15)
$(0.27) Net loss per share: Basic $(2.10) $(0.05) $(2.15) $(0.27)
Diluted $(2.10) $(0.05) $(2.15) $(0.27) Weighted-Average Shares
used in computing per share amounts: Basic 527,140 527,191 527,117
525,967 Diluted 527,140 527,191 527,117 525,967 Sanmina - SCI
Corporation Reconciliation of GAAP to Non-GAAP Measures (in
thousands, except per share amounts) (Unaudited) Three Months Ended
Fiscal Year Ended September 29, September 30, September 29,
September 30, 2007 2006 2007 2006 GAAP Gross Profit $128,040
$126,552 $553,213 $621,736 GAAP gross margin 5.1% 4.7% 5.3% 5.7%
Adjustments: Stock compensation expense (1) 4,652 1,810 8,235 6,473
Stock option investigation 1,150 -- 1,150 -- Amortization of
intangible asset 220 2,606 883 2,606 Non-GAAP Gross Profit 134,062
130,968 563,481 630,815 Non-GAAP gross margin 5.4% 4.8% 5.4% 5.8%
GAAP operating income (loss) $(1,087,063) $(7,425) $(1,001,937)
$53,317 GAAP operating margin -43.4% -0.3% -9.6% 0.5% Adjustments:
Stock compensation expense (1) 7,876 3,868 21,392 13,276
Amortization of intangible assets 1,870 3,732 7,515 10,217
In-process research and development -- 2,600 -- 2,600 Stock option
investigation and integration 4,739 12,714 11,408 13,051
Restructuring costs 15,701 3,216 44,602 132,230 Impairment of
assets (2) -- 9,643 -- 15,213 Goodwill impairment (3) 1,099,650
3,787 1,099,650 3,787 Non-GAAP operating income $42,773 $32,135
$182,630 $243,691 Non-GAAP operating margin 1.7% 1.2% 1.8% 2.2%
GAAP net loss $(1,109,134) $(28,087) $(1,134,657) $(141,557)
Adjustments: Operating income adjustments (see above) 1,129,836
39,560 1,184,567 190,374 Gain on sale of surplus real estate and
business (10,591) -- (17,431) -- Loss on redemption of debt and
other (4), (5), (6) -- 136 3,175 93,028 Cumulative effect of
accounting change (7) -- 2,865 -- (2,830) Tax effect of above items
63 (16,562) (12,846) (36,641) Non-GAAP net income (loss) $10,174
$(2,088) $22,808 $102,374 Non-GAAP Earnings Per Share: Basic $0.02
$(0.00) $0.04 $0.19 Diluted $0.02 $(0.00) $0.04 $0.19
Weighted-Average Shares used in computing Non-GAAP earnings per
share amounts: Basic 527,140 527,191 527,117 525,967 Diluted
529,309 527,191 528,965 526,434 (1) Total stock compensation
expense for the three and twelve month periods ended September 29,
2007 and September 30, 2006 are presented as follows: Three Months
Ended Fiscal Year Ended September 29, September 30, September 29,
September 30, 2007 2006 2007 2006 (In millions) Cost of sales $4.7
$1.8 $8.2 $6.5 Selling, general and administrative 2.9 1.9 12.6 6.1
Research and development 0.3 0.2 0.6 0.7 $7.9 $3.9 $21.4 $13.3 (2)
The impact of the application of SFAS No. 144 "Accounting for the
Impairment or Disposal of Long-Lived Assets" recorded in the third
quarter of fiscal 2006 and fourth quarter of fiscal 2006 was
approximately $5.6 million and $9.6 million, respectively. (3) The
impact of the application of SFAS No. 142 "Goodwill and Other
Intangible Assets" was approximately $1.1 billion and $3.8 million
impairment recorded in the fourth quarter of fiscal 2007 and fiscal
2006, respectively. (4) The Company recorded a net loss of
approximately $84.6 million from the early extinguishment of its
$750 million 10.375% Notes due 2010 in the second quarter of fiscal
2006 (restated). The amount included a $112.2 million loss on early
extinguishment and a net benefit of $22.1 million from adjustment
of the related interest rate swap. (5) The Company recorded a net
loss of approximately $3.2 million from early extinguishment of its
$600 million Senior Unsecured Term Loan due 2008 in the third
quarter of fiscal 2007. (6) The Company wrote off a long-term
investment of $2.8 million in the third quarter of fiscal 2006. (7)
The impact of adoption of SFAS No. 123R "Share-Based Payments,"
recorded in the first quarter of fiscal 2006 (restated) was a
benefit of approximately $5.7 million. The impact of adoption of
FIN No. 47 "Conditional Asset Retirement Obligation" recorded in
the fourth quarter of fiscal 2006 was approximately $2.9 million.
DATASOURCE: Sanmina-SCI Corporation CONTACT: Sanmina-SCI
Corporation, +1-408-964-3610 Web site: http://www.sanmina-sci.com/
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