Flextronics Announces All-Time Record Quarterly Revenues

SINGAPORE, Oct. 25 /PRNewswire/ -- Flextronics (Nasdaq: FLEX - news), a global provider of operational services focused on delivering design, engineering, manufacturing and logistic solutions to branded technology companies, today announced results for its second quarter ended September 30, 2001.

  • (Photo: http://www.newscom.com/cgi-bin/prnh/20010815/FLEXLOGO )
         ($ in millions,        Second Quarter Ended      Six Months Ended
            except EPS              September 30,           September 30,
            data) (A)            2001         2000        2001        2000
         Net sales             $3,244.9    $3,079.0     $6,355.5    $5,756.0
         Cash operating
          income                 $103.3      $141.7       $226.2      $253.3
         Cash net income          $73.0      $104.8       $163.6      $184.3
         Diluted cash EPS         $0.15       $0.22        $0.32       $0.39

    Note A. The above earnings data is presented before amortization and one-time charges.

    Net sales for the quarter ended September 30, 2001, reached a record $3.24 billion, up 5% from $3.08 billion a year ago. This also represents an increase of $134 million or 4% over the prior quarter. Before amortization and one-time charges, cash operating income was $103 million, cash net income was $73 million and diluted cash earnings per share was 15 cents.

    "The Company has achieved its growth in this difficult market environment through the continuous addition of new customers as well as the addition of new programs with existing customers," stated Michael E. Marks, Chairman and Chief Executive Officer of Flextronics. "I am pleased with the positive results of our continued tight focus on operating metrics," continued Marks. Inventory has declined by $367 million since the beginning of the fiscal year while inventory turns reached 8.2 turns in the quarter ending September 30, 2001. Quarter over quarter, inventory decreased by $105 million while receivables remained flat and revenues increased. Flextronics' balance sheet also remained strong through this period with total debt to total capitalization of 26%.

    "While we believe the pipeline of new opportunities remains robust, we continue to plan our operations as though no new business will come our way," said Mr. Marks. As a result, the Company recorded a one-time charge of $399 million to complete integration activities with recent acquisitions as well as to reduce excess capacity in response to the current economic downturn. The Company is eliminating 4 million square feet of manufacturing space, or 20% of the prior quarter's total and reducing headcount by 10,000, or 15% of the global workforce at the end of the prior quarter. As before, the reductions were primarily in high cost locations that Flextronics does not expect to use again as its customers are accelerating their transition of manufacturing requirements to lower cost locations, where Flextronics continues to expand.

    Mr. Marks concluded: "We believe all these restructuring charges are behind us. The current plan will allow us to remain profitable and competitive in a very tough market while positioning us for improvement as opportunities arise. We have reached a stage in our Company where we believe we have the correct foot print and service offerings and we intend to emerge from this difficult environment in the strongest possible shape."

    A conference call hosted by Flextronics' management will be held today at 2:15 p.m. PDT to further discuss the financial results of the Company and its future outlook. This call will be broadcast via the Internet and may be accessed by logging on to the Company's Web site at www.flextronics.com. Additional information in the form of a slide presentation and Chairman's Letter that summarizes and discusses the quarterly results may also be found on the site.

    Minimum requirements to listen to the broadcast are RealPlayer software (free download at http://www.real.com/products/player/index.html) and at least a 14.4 Kbps bandwidth connection to the Internet.

    This news release, the Chairman's Letter to the Shareholders and the earnings slide presentation contain forward-looking statements within the meaning of federal securities laws and is subject to the safe harbor under those laws. These forward-looking statements include statements related to expected new business opportunities, transition of manufacturing to lower cost locations, completion of restructuring charges and the effect of our restructuring, anticipated operating results, and our profitability and competitiveness. 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 the challenges of integrating acquired companies, economic trends and fluctuations in demand for customers' products and changes in customers' product sources, competition in our industry, the difficulties of managing during uncertain economic conditions and the other risks described under "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Certain Factors Affecting Future Operating Results" in the most recent Annual Report on Form 10-K and quarterly report on Form 10-Q, filed with the SEC. The forward-looking statements in this news release and Chairman's Letter to the Shareholders are based on current expectations, and Flextronics assumes no obligation to update these forward-looking statements.

                                                                Schedule 1
                         (In thousands, except per share amounts)
                               Three months ended        Six months ended
                                  September 30,            September 30,
                                2001         2000        2001        2000
        Net sales            $3,244,918  $3,078,998   $6,355,516  $5,755,972
        Cost of sales         3,036,169   2,829,406    5,914,972   5,299,814
          Gross profit
           charges              208,749     249,592      440,544     456,158
         general and
         expenses               105,488     107,931      214,304     202,849
          Cash operating
           income before
           and one-time
           charges                         103,261          141,661            226,240          253,309
            Interest  expense
              and  other,  net                    22,184            22,359              44,550            40,591
                Cash  income
                  before  income
                  and  one-time
                  charges                              81,077          119,302            181,690          212,718
            Provision  for
              income  taxes                          8,100            14,475              18,129            28,410
                Cash  net
                  income  before
                  and  one-time
                  charges                            $72,977        $104,827          $163,561        $184,308
            Diluted  cash
              per  share                                $0.15              $0.22                $0.32              $0.39
            Weighted  average
              shares  and
              equivalents                        501,296          480,801            503,798          468,526
                                                                                                                            Schedule  1a
                                      FLEXTRONICS  INTERNATIONAL  LTD.  AND  SUBSIDIARIES
                                                                    SUPPLEMENTAL  DATA
                                              (In  thousands,  except  per  share  amounts)
                                                              Three  months  ended                Six  months  ended
                                                                    September  30,                      September  30,
                                                                2001                2000                2001                2000
            Cash  net
              income  before
              and  one-time
              charges                                $72,977        $104,827          $163,561        $184,308
            Goodwill  and
              net  of  tax                              3,802            12,505                6,058            21,875
            Merger  related
              costs  and
              other  one-time
              charges,  net  of
              tax  (A)                                398,980            42,395            398,980          483,068
            Net  income
              (loss)  after
              and  one-time
              charges                          $(329,805)          $49,927      $(241,477)    $(320,635)
              per  share:
                Basic                                  $(0.69)              $0.11            $(0.50)          $(0.75)
                Diluted                              $(0.69)              $0.10            $(0.50)          $(0.75)
            Shares  used  in
              per  share
                Basic                                  481,381          436,376            480,208          429,476
                Diluted                              481,381          480,801            480,208          429,476
              (A)  The  Company  recorded  one-time  after-tax  charges  of  $399.0  million
                      during  the  quarter  ended  September  30,  2001,  which  were  primarily
                      related  to  facility  closures  and  integration  costs  of  several  of  its
                      facilities.    Approximately  15%  of  the  Company's  headcount  and  20%  of
                      its  square  footage  were  eliminated  by  these  actions.    Additionally,
                      the  Company  recorded  one-time  after-tax  charges  of  $483.1  million  in
                      the  six  month  period  ended  September  30,  2000.    Of  this  amount,
                      $440.7  million  was  recorded  in  the  first  quarter  and  was  comprised  of
                      (i)  $286.5  million  related  to  the  issuance  of  an  equity  instrument  to
                      Motorola  (which  was  repurchased  in  the  quarter  ended  June  30,  2001)
                      and  (ii)  $176.6  million  related  to  the  Dii  Group  and  Palo  Alto
                      Products  International  mergers  which  were  completed  in  April  2000,
                      offset  by  (iii)  a  gain  of  $22.4  million  on  the  sale  of  marketable
                      equity  securities.    One-time  after-tax  charges  of  $42.4  million  were
                      recorded  in  the  second  quarter  for  the  Chatham  Technologies  and
                      Lightning  Metal  Specialties  mergers,  which  were  completed  in
                      August  2000.
                                                                                                                            Schedule  2
                                      FLEXTRONICS  INTERNATIONAL  LTD.  AND  SUBSIDIARIES
                                                CONDENSED  CONSOLIDATED  BALANCE  SHEETS
                                                                        (In  thousands)
                                                                                              (Unaudited)            (Audited)
                                                                                              September  30,        March  31,
                                                                                                      2001                      2001
            CURRENT  ASSETS:
                Cash  and  cash  equivalents                                $400,286              $631,588
                Accounts  receivable,  net                                1,706,196            1,651,252
                Inventories,  net                                                1,420,254            1,787,055
                Other  current  assets                                            765,951                386,152
                    Total  current  assets                                    4,292,687            4,456,047
                Property,  plant  and  equipment,  net            2,035,303            1,828,441
                Other  non-current  assets                                1,550,727            1,287,167
                    Total  assets                                                  $7,878,717          $7,571,655
                Bank  borrowings  &  current
                  portion  of  long-term  debt                              $421,134              $298,052
                Current  portion  of  capital
                  lease  obligations                                                  20,123                  27,602
                Accounts  payable                                                1,727,871            1,480,468
                Other  current  liabilities                                  933,034                735,184
                    Total  current  liabilities                          3,102,162            2,541,306
                Long-term  debt  and  capital
                  lease  obligations,  net
                  of  current  portion                                              903,612                917,313
                Other  liabilities                                                    83,673                  82,675
                Shareholders'  equity                                        3,789,270            4,030,361
                    Total  liabilities  and
                      shareholders'  equity                                $7,878,717          $7,571,655

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