Company Delivers Solid Quarter - Exceeds Outlook SAN JOSE, Calif.,
Jan. 26 /PRNewswire-FirstCall/ -- Sanmina-SCI Corporation (the
"Company") (NASDAQ:SANM), a leading global Electronics
Manufacturing Services (EMS) company, today reported financial
results for the first fiscal quarter ended January 2, 2010. First
Quarter Fiscal 2010 Highlights -- Revenue of $1.48 billion,
exceeded outlook of $1.35 - $1.45 billion -- GAAP gross margin of
7.4 percent, a 40 basis point sequential improvement -- GAAP
operating margin of 2.7 percent, a 210 basis point sequential
improvement -- Non-GAAP gross margin of 7.6 percent, a 50 basis
point sequential improvement -- Non-GAAP operating margin of 3.3
percent, a 70 basis point sequential improvement -- Early
redemption of $176 million of outstanding debt Revenue for the
first quarter was $1.48 billion, up 9 percent compared to $1.35
billion in the prior quarter ended October 3, 2009 and up 4 percent
compared to $1.42 billion in the same period a year ago. GAAP
Financial Results(1) GAAP net income in the first quarter was $59
million, a diluted earnings per share of $0.74, compared to a net
loss of $33 million, a diluted loss per share of $0.42 in the prior
quarter. GAAP net loss for the same period a year ago was $26
million, a diluted loss per share of $0.29. GAAP net income in the
first quarter 2010 included a one-time benefit of approximately $36
million in connection with certain legal proceedings. Non-GAAP
Financial Results(1)(2) Non-GAAP gross profit in the first quarter
was $112 million, or 7.6 percent of revenue, up 50 basis points,
compared to gross profit of $96 million, or 7.1 percent of revenue
in the prior quarter. Non-GAAP gross profit for the same period a
year ago was $96 million, or 6.7 percent of revenue. Non-GAAP
operating income was $49 million, an increase of 41 percent,
compared to $35 million in the prior quarter and up 57 percent
compared to $31 million in the same period a year ago. Operating
margin for the first quarter was 3.3 percent, up 70 basis points,
compared to 2.6 percent in the prior quarter and a 110 basis point
improvement compared to 2.2 percent in the first quarter fiscal
2009. Non-GAAP net income in the first quarter was $18 million, a
diluted earnings per share of $0.23, compared to a net income of
$94 thousand, a diluted earnings per share of $0.00 in the prior
quarter. Non-GAAP net loss for the same period a year ago was $768
thousand, a diluted loss per share of $0.01. Three Month Periods
(In millions, except per share data) Q1:2010 Q4:2009 Q1:2009
------------------------ ------- ------- ------- GAAP: Revenue
$1,478 $1,354 $1,419 Net income (loss) $59 $(33) $(26) Diluted
earnings (loss) per share(1) $0.74 $(0.42) $(0.29) Non-GAAP(2):
Revenue $1,478 $1,354 $1,424 Gross profit $112 $96 $96 Gross margin
7.6% 7.1% 6.7% Operating income $49 $35 $31 Operating margin 3.3%
2.6% 2.2% Net income (loss) $18 $0.1 $(0.8) Diluted earnings (loss)
per share(1) $0.23 $0.00 $(0.01) --------------------------- -----
----- ------ Balance Sheet Results During the quarter the Company
redeemed $176 million of debt that was scheduled to mature in June
2010. As of January 2, 2010 cash and cash equivalents amounted to
$727 million, compared to $899 million for the year ended October
3, 2009. Cash flow from operations was $13 million for the first
quarter. Working capital metrics strengthened as cash cycle days
improved to 41 days and inventory turns increased to 7.1x. "We
delivered a solid first quarter of revenue growth and margin
expansion. These results reflect our strong operational execution
and an increase in demand which we expect to continue into the
second quarter. With visibility improving, new market opportunities
and a healthy pipeline, we are optimistic that 2010 will be a year
of growth for Sanmina-SCI," stated Jure Sola, Chairman and Chief
Executive Officer. Second Quarter Fiscal 2010 Outlook The following
forecast is for the second fiscal quarter ending April 3, 2010.
These statements are forward-looking and actual results may differ
materially. -- Revenue between $1.45 billion to $1.55 billion --
Non-GAAP diluted earnings per share between $0.22 to $0.27
(1)Earnings Per Share Calculation The Company completed a reverse
split of its common stock at a ratio of one for six, effective
August 14, 2009. Earnings per share data contained in this release
for periods prior to such date have been calculated on a post split
basis. (2)Non-GAAP Financial Information In the commentary set
forth above and/or in the financial statements included in this
earnings release, we present the following non-GAAP financial
measures: revenue, gross profit, gross margin, operating income,
operating margin, net income (loss) and earnings (loss) 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 (including charges for
customer bankruptcy reorganizations, litigation settlements and
discrete tax events), to the extent material or which we consider
to be of a non-operational nature in the applicable period. See
Schedule 1 below for more information regarding our use of non-GAAP
financial measures, including the economic substance behind each
exclusion, the manner in which management uses non-GAAP measures to
conduct and evaluate the business, the material limitations
associated with using such measures and the manner in which
management compensates for such limitations. A reconciliation from
GAAP to non-GAAP results is included in the financial statements
contained in this release and is also available on the Investor
Relations section of our website at http://www.sanmina-sci.com/.
Sanmina-SCI provides second quarter outlook information 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. Company Conference Call
Information Sanmina-SCI will hold a conference call regarding this
announcement on Tuesday, January 26, 2010 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 also be broadcast
live over the Internet. You can 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 47564654. 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 OEMs primarily in the
communications, defense and aerospace, industrial and medical
instrumentation, multimedia, enterprise computing and storage,
renewable energy and automotive technology sectors. Sanmina-SCI has
facilities strategically located in key regions throughout the
world. More information regarding the company is available at
http://www.sanmina-sci.com/. Sanmina-SCI Safe Harbor Statement
Certain statements contained in this press release, including the
Company's outlook for future revenue and earnings per share and
statements concerning future customer demand and growth constitute
forward-looking statements within the meaning of the safe harbor
provisions of Section 21E of the Securities Exchange Act of 1934.
Actual results could differ materially from those projected in
these statements as a result of a number of factors, including
continued deterioration of the market for the Company's customers'
products and the global economy as a whole, which could negatively
impact the Company's revenue and the Company's customers' ability
to pay for the Company's products; customer bankruptcy filings; the
sufficiency of the Company's cash position and other sources of
liquidity to operate and expand its business; impact of the
restrictions contained in the Company's credit agreements and
indentures upon the Company's ability to operate and expand its
business; competition negatively impacting the Company's revenues
and margins; any failure of the Company to effectively assimilate
acquired businesses and achieve the anticipated benefits of its
acquisitions; the need to adopt future restructuring plans as a
result of changes in the Company's business; and the other factors
set forth in the Company's annual report for fiscal 2009 filed with
the Securities Exchange Commission ("SEC"). The Company is under no
obligation to (and expressly disclaims any such obligation to)
update or alter any of the forward-looking statements made in this
earnings release, the conference call or the Investor Relations
section of our website whether as a result of new information,
future events or otherwise, unless otherwise required by law.
Sanmina-SCI Corporation Condensed Consolidated Balance Sheets (In
thousands) (GAAP) January 2, October 3, 2010 2009 ---- ----
(Unaudited) ASSETS ------ Current assets: Cash and cash equivalents
$727,495 $899,151 Accounts receivable, net 749,925 668,474
Inventories 778,326 761,391 Prepaid expenses and other current
assets 84,823 78,128 Assets held for sale 60,116 68,902 ------
------ Total current assets 2,400,685 2,476,046 --------- ---------
Property, plant and equipment, net 550,020 543,497 Other
non-current assets 93,977 104,354 ------ ------- Total assets
$3,044,682 $3,123,897 ========== ========== LIABILITIES AND
STOCKHOLDERS' EQUITY ----------------------------- Current
liabilities: Accounts payable $828,430 $780,876 Accrued liabilities
148,945 140,926 Accrued payroll and related benefits 103,624 98,408
Current portion of long-term debt - 175,700 --- ------- Total
current liabilities 1,080,999 1,195,910 --------- ---------
Long-term liabilities: Long-term debt 1,261,677 1,262,014 Other
116,884 146,903 ------- ------- Total long-term liabilities
1,378,561 1,408,917 --------- --------- Total stockholders' equity
585,122 519,070 ------- ------- Total liabilities and stockholders'
equity $3,044,682 $3,123,897 ========== ========== Sanmina-SCI
Corporation Condensed Consolidated Statements of Operations (In
thousands, except per share amounts) (GAAP) (Unaudited) Three
Months Ended ------------------ January 2, December 27, 2010 2008
----------- ------------- Net sales $1,478,302 $1,419,264 Cost of
sales 1,368,615 1,335,466 --------- --------- Gross profit 109,687
83,798 ------- ------ Operating expenses: Selling, general and
administrative 62,415 62,987 Research and development 3,098 4,192
Amortization of intangible assets 1,178 1,650 Restructuring and
integration costs 3,338 9,235 Asset impairment - 3,798 --- -----
Total operating expenses 70,029 81,862 ------ ------ Operating
income 39,658 1,936 Interest income 381 3,450 Interest expense
(26,777) (29,183) Other income, net 39,655 553 ------ --- Interest
and other income, net 13,259 (25,180) ------ ------- Income (loss)
before income taxes 52,917 (23,244) Provision for (benefit from)
income taxes (6,465) 2,429 ------ ----- Net income (loss) $59,382
$(25,673) ======= ======== Basic income (loss) per share $0.76
$(0.29) Diluted income (loss) per share $0.74 $(0.29)
Weighted-average shares used in computing per share amounts: Basic
78,615 87,219 Diluted 80,575 87,219 Sanmina-SCI Corporation
Reconciliation of GAAP to Non-GAAP Measures (in thousands, except
per share amounts) (Unaudited) Three Months Ended
------------------ January 2, October 3, December 27, 2010 2009
2008 ----------- ----------- ------------- GAAP Revenue $1,478,302
$1,353,960 $1,419,264 Adjustments Customer bankruptcy
reorganization (1) - - 5,000 --- --- ----- Non-GAAP Revenue
$1,478,302 $1,353,960 $1,424,264 ========== ========== ==========
GAAP Gross Profit $109,687 $94,330 $83,798 GAAP gross margin 7.4%
7.0% 5.9% Adjustments Stock compensation expense (2) 2,066 2,028
1,865 Amortization of intangible assets - 24 233 Customer
bankruptcy reorganization (1) - - 10,000 --- --- ------ Non-GAAP
Gross Profit $111,753 $96,382 $95,896 ======== ======= =======
Non-GAAP gross margin 7.6% 7.1% 6.7% GAAP operating income $39,658
$7,721 $1,936 GAAP operating margin 2.7% 0.6% 0.1% Adjustments
Stock compensation expense (2) 4,652 4,470 4,162 Amortization of
intangible assets 1,178 1,096 1,883 Stock option investigation - -
150 Customer bankruptcy reorganization (1) - - 10,000 Restructuring
and integration costs 3,338 18,316 9,235 Asset impairment - 2,944
3,798 --- ----- ----- Non-GAAP operating income $48,826 $34,547
$31,164 ======= ======= ======= Non-GAAP operating margin 3.3% 2.6%
2.2% GAAP net income (loss) $59,382 $(32,685) $(25,673)
Adjustments: Operating income adjustments (see above) 9,168 26,826
29,228 Net gain on derivative financial instruments and other (3) -
- (4,993) Impairment of long-term investment - 825 - Gain on sale
of business (3,710) - - Loss on repurchase of debt (4) 828 4,945 -
Gain from litigation settlement (5) (35,556) - - Nonrecurring tax
items (11,644) 183 670 ------- --- --- Non-GAAP net income (loss)
$18,468 $94 $(768) ======= === ===== Non-GAAP Basic Income (Loss)
Per Share: $0.23 $0.00 $(0.01) Non-GAAP Diluted Income (Loss) Per
Share: $0.23 $0.00 $(0.01) Weighted-average shares used in
computing Non- GAAP per share amounts: Basic 78,615 78,604 87,219
Diluted 80,575 79,209 87,219 (1) Relates to revenue reversal and
inventory reserves associated with a customer's bankruptcy
reorganization announcement. (2) Stock compensation expense was as
follows: Three Months Ended ------------------ January 2, October
3, December 27, 2010 2009 2008 ----------- -----------
------------- Cost of sales $2,066 $2,028 $1,865 Selling, general
and administrative 2,487 2,324 2,212 Research and development 99
118 85 --- --- --- Stock compensation expense -total company $4,652
$4,470 $4,162 ====== ====== ====== (3) Relates primarily to a gain
on interest rate swaps not accounted for as hedging instruments
during a portion of Q1 FY09 due to termination of a swap. (4)
Includes write-off of unamortized debt issuance costs in both
periods and write-off of OCI on dedesignated portion of interest
rate swap for the three months ended October 3, 2009. (5)
Represents cash received in connection with a litigation
settlement. Schedule I The tables contained above include non-GAAP
measures of revenue, gross profit, gross margin, operating income,
operating margin, net income and earnings per share. Management
excludes from these measures stock-based compensation,
restructuring and integration expenses, impairment charges,
amortization charges and other infrequent items, including customer
bankruptcy impacts, to the extent material or which we consider to
be of a non-operational nature in the applicable period. Management
excludes these items principally because such charges are not
directly related to the Company's ongoing core business operations.
We use such non-GAAP measures in order to (1) make more meaningful
period-to-period comparisons of Company's operations, both
internally and externally, (2) guide management in assessing
performance of the business, internally allocating resources and
making decisions in furtherance of Company's strategic plan, (3)
provide investors with a better understanding of how management
plans and measures the business and (4) provide investors with a
better understanding of the ongoing, core business. The material
limitations to management's approach include the fact that the
charges and expenses excluded are nonetheless charges required to
be recognized under GAAP. Management compensates for these
limitations primarily by using GAAP results to obtain a complete
picture of the Company's performance and by including a
reconciliation of non-GAAP results back to GAAP in its earnings
releases. Additional information regarding the economic substance
of each exclusion, management's use of the resultant non-GAAP
measures, the material limitations of management's approach and
management's methods for compensating for such limitations is
provided below. Stock-based Compensation Expense, which consists of
non-cash charges for the estimated fair value of stock options and
unvested restricted stock units granted to employees, is excluded
in order to permit more meaningful period-to-period comparisons of
the Company's results since the Company grants different amounts
and value of stock options in each quarter. In addition, given the
fact that competitors grant different amounts and types of equity
award and may use different option valuation assumptions, excluding
stock-based compensation permits more accurate comparisons of the
Company's core results with those of its competitors. Restructuring
and Integration Costs, which consist of severance, lease
termination, exit costs and other charges primarily related to
closing and consolidating manufacturing facilities and those
associated with the integration of acquired businesses into our
operations, are excluded because such charges (1) can be driven by
the timing of acquisitions which are difficult to predict, (2) are
not directly related to ongoing business results and (3) do not
reflect expected future operating expenses. In addition, given the
fact that the Company's competitors complete acquisitions and adopt
restructuring plans at different times and in different amounts
than the Company, excluding these charges permits more accurate
comparisons of the Company's core results with those of its
competitors. Items excluded by the Company may be different from
those excluded by the Company's competitors and restructuring and
integration expenses include both cash and non-cash expenses. Cash
expenses reduce the Company's liquidity. Therefore, management also
reviews GAAP results including these amounts. Impairment Charges,
which consist of non-cash charges resulting primarily from the
Company's net book value exceeding its market capitalization due to
weak macroeconomic conditions, are excluded because such charges
are non-recurring and do not reduce the Company's liquidity. In
addition, given the fact that the Company's competitors may record
impairment charges at different times, excluding these charges
permits more accurate comparisons of the Company's core results
with those of its competitors. Amortization Charges, which consist
of non-cash charges impacted by the timing and magnitude of
acquisitions of businesses or assets, are also excluded because
such charges do not reduce the Company's liquidity or availability
under its credit facilities. In addition, such charges can be
driven by the timing of acquisitions, which is difficult to
predict. Excluding these charges permits more accurate comparisons
of the Company's core results with those of its competitors because
the Company's competitors complete acquisitions at different times
and for different amounts than the Company. Other Items, which
consist of other infrequent or unusual items (including charges for
customer bankruptcy reorganizations, litigation settlements and
discrete tax events), to the extent material or non-operational in
nature, are excluded because such items are typically
non-recurring, difficult to predict and generally not directly
related to the Company's ongoing core operations. However, items
excluded by the Company may be different from those excluded by the
Company's competitors. In addition, these expenses include both
cash and non-cash expenses. Cash expenses reduce the Company's
liquidity. Management compensates for these limitations by
reviewing GAAP results including these amounts. SANMF DATASOURCE:
Sanmina-SCI Corporation CONTACT: Paige Bombino, Director, Investor
Relations of Sanmina-SCI, +1-408-964-3610 Web Site:
http://www.sanmina-sci.com/
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