EX-99.01 3 f93816exv99w01.txt EXHIBIT 99.01 Exhibit 99.01 (FLEXTRONICS LOGO) PRESS RELEASE 2 CHANGI SOUTH LANE TEL: +65.6299.8888 SINGAPORE 486123 FLEXTRONICS CONTACTS: Thomas J. Smach Senior Vice President of Finance +1.408.576.7722 investor_relations@flextronics.com Renee Brotherton Director of Corporate Marketing +1.408.576.7189 renee.brotherton@flextronics.com FLEXTRONICS ANNOUNCES SECOND QUARTER RESULTS SINGAPORE, OCTOBER 22, 2003 - Flextronics (NASDAQ: FLEX) today announced results for the quarter ended September 30, 2003, as follows:
(In millions, except EPS) (1) QUARTER ENDED SIX MONTHS ENDED -------------------------------------------------------- --------------------------------- SEPTEMBER 30, JUNE 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, 2003 2003 2002 2003 2002 ------------- -------- ------------- ------------- ------------- Net sales $ 3,503.2 $ 3,106.7 $ 3,340.6 $ 6,609.9 $ 6,467.6 Proforma operating income $ 73.5 $ 48.6 $ 72.3 $ 122.2 $ 124.7 GAAP operating income (loss) $ 13.3 $ (278.5) $ 72.3 $ (265.2) $ (83.1) Proforma net income $ 47.5 $ 20.4 $ 40.0 $ 68.0 $ 70.1 GAAP net income (loss) $ (100.1) $ (289.7) $ 34.7 $ (389.8) $ (96.5) Diluted proforma EPS $ 0.09 $ 0.04 $ 0.08 $ 0.12 $ 0.13 Diluted GAAP EPS $ (0.19) $ (0.56) $ 0.07 $ (0.75) $ (0.19)
(1) Proforma results exclude intangibles amortization, costs associated with the early extinguishment of debt and restructuring charges, as applicable. See Schedules for a reconciliation of proforma results to generally accepted accounting principles ("GAAP") results. Net sales totaled $3.5 billion for the second quarter ended September 30, 2003, reflecting a 13% sequential increase. Proforma net income was $47.5 million or 9 cents per diluted share for the quarter, which represents a sequential increase of 133% in proforma net income. Including after-tax amortization expense of $7.7 million and unusual charges of $139.9 million, we incurred a net loss of $100.1 million on a GAAP basis, which is a 19-cent loss on a diluted per share basis. The unusual charges recorded in the second quarter ended September 30, 2003 include a $95.2 million loss on the early retirement of debt, relating to a refinancing that should reduce annual interest expense by more than $43 million, which increases earnings per share by 7 cents. Unusual charges also include after-tax charges of $44.7 million, relating to our previously announced restructuring plan, which we expect to complete by the end of our fiscal year. (FLEXTRONICS LOGO) PRESS RELEASE 2 CHANGI SOUTH LANE TEL: +65.6299.8888 SINGAPORE 486123 "The September quarter revenues and earnings were significantly better on a sequential basis, which supports our belief that end markets have improved," said Michael E. Marks, Chief Executive Officer of Flextronics. "We have improved our capital structure, lowered our interest expense and improved annual cash flow by reducing high coupon interest payments. Cash flow is good and spending is under control, as evidenced by the sequential reduction of more than 6% in SG&A expenses." Addressing the business outlook, Marks added, "We believe that next year should show improvement in several areas. The industry will be nearly finished with major restructurings, excess equipment capacity should be substantially reduced, and demand should be better. With the expected increase in profits from our ODM, logistics, design and network services, we believe that Flextronics is well positioned for growth in revenue and profits. We are increasingly confident that our business is improving." In terms of guidance, the Company indicated that the December quarter should generate sales in the range of $3.6 - $3.9 billion and proforma earnings of $0.13 - $0.15 per diluted share. This represents an increase in the bottom end of our previous guidance of two cents per share. Expectations for the March quarter reflect a typical sequential decline in sales to a range of $3.0 - $3.3 billion, and a related typical decline in proforma earnings to a range of $0.07 to $0.09 per diluted share. GAAP earnings are expected to be lower than proforma earnings reflecting approximately two cents per diluted share of quarterly amortization expenses as well as further restructuring charges, which we expect will range in the aggregate from $50 - $60 million, or a total of eight to ten cents per diluted share, spread over the next few quarters. The actual timing of such charges, and accordingly the actual difference between quarterly proforma and GAAP earnings, has yet to be determined. A conference call hosted by Flextronics' management will be held today at 1:30 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 website at www.flextronics.com. Additional information in the form of a slide presentation and CEO's Letter that summarizes and discusses the quarterly results may also be found on the site. A replay of the broadcast will remain available on the Company's website after the call. 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, Flextronics is the leading Electronics Manufacturing Services (EMS) provider focused on delivering operational services to technology companies. With fiscal year 2003 revenues of $13.4 billion, Flextronics is a major global operating company with design, engineering, manufacturing and logistics operations in 29 countries and five continents. This global presence allows for manufacturing excellence through a network of facilities situated in key markets and geographies that provide its customers with the resources, technology and capacity to optimize their operations. Flextronics' ability to provide end-to-end operational services that include innovative product design, test solutions, manufacturing, IT (FLEXTRONICS LOGO) PRESS RELEASE 2 CHANGI SOUTH LANE TEL: +65.6299.8888 SINGAPORE 486123 expertise, network services, and logistics has established the Company as the leading EMS provider. For more information, please visit www.flextronics.com. # # # This news release, the CEO's Letter to the Shareholders and the earnings slide presentation contain forward-looking statements within the meaning of federal securities laws and are subject to the safe harbor under those laws. These forward-looking statements include statements related to trends in our industry and end markets, future growth and new customer activities, seasonality, anticipated ODM activity, industry capacity, anticipated revenues, earnings leverage, operating margins and results, cash flow, profitability, risks and uncertainties regarding our litigation with Beckman Coulter, and restructuring activities, including resulting benefits and level of future restructuring charges. 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 effectively managing our operations, particularly during uncertain economic conditions, the need for future restructurings, integrating acquired companies, responding to changes in economic trends and to fluctuations in demand for customers' products and changes in customers' orders, our dependence on a small number of large customers, our dependence on industries affected by rapid technological change, competition in our industry 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 our most recent Annual Report on Form 10-K and quarterly reports on Form 10-Q and current reports on Form 8-K, filed with the SEC. The forward-looking statements in this news release, the Chairman's Letter to the Shareholders and the earnings slide presentation, are based on current expectations, and Flextronics assumes no obligation to update these forward-looking statements. (FLEXTRONICS LOGO) PRESS RELEASE 2 CHANGI SOUTH LANE TEL: +65.6299.8888 SINGAPORE 486123 SCHEDULE 1 FLEXTRONICS INTERNATIONAL LTD. AND SUBSIDIAIRES CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED)
SECOND QUARTER ENDED SEPTEMBER 30, 2003 SECOND QUARTER ENDED SEPTEMBER 30, 2002 --------------------------------------- --------------------------------------- PROFORMA PROFORMA PROFORMA(1) ADJUSTMENTS GAAP PROFORMA(1) ADJUSTMENTS GAAP ----------- ----------- ---- ----------- ----------- ---- Net sales $3,503,242 $ 3,503,242 $3,340,613 $3,340,613 Cost of sales 3,320,772 3,320,772 3,158,386 3,158,386 Unusual charges -- 42,362 42,362 -- -- ---------- --------- ----------- ---------- --------- ---------- Gross profit 182,470 (42,362) 140,108 182,227 182,227 Selling, general and administrative expenses 108,940 108,940 109,911 109,911 Unusual charges -- 17,890 17,890 -- -- ---------- --------- ----------- ---------- --------- ---------- Operating income 73,530 (60,252) 13,278 72,316 72,316 Intangibles amortization -- 8,573 8,573 -- 5,933 5,933 Interest and other expense, net 20,703 20,703 27,856 27,856 Loss on early extinguishment of debt -- 95,214 95,214 -- -- ---------- --------- ----------- ---------- --------- ---------- Income (loss) before income taxes 52,827 (164,039) (111,212) 44,460 (5,933) 38,527 Provision for (benefit from) income taxes 5,282 (16,404) (11,122) 4,450 (593) 3,857 ---------- --------- ----------- ---------- --------- ---------- Net income (loss) $ 47,545 $(147,635) $ (100,090) $ 40,010 $ (5,340) $ 34,670 ========== ========= =========== ========== ========= ========== Earnings (loss) per share: Basic $ 0.09 $ (0.19) $ 0.08 $ 0.07 ========== =========== ========== ========== Diluted $ 0.09 $ (0.19) $ 0.08 $ 0.07 ========== =========== ========== ========== Shares used in computing per share amounts: Basic 523,529 523,529 516,698 516,698 ========== =========== ========== ========== Diluted 556,728 523,529 524,452 524,452 ========== =========== ========== ==========
(1) Proforma results exclude intangibles amortization, costs associated with the early extinguishment of debt and restructuring charges, as applicable. (FLEXTRONICS LOGO) PRESS RELEASE 2 CHANGI SOUTH LANE TEL: +65.6299.8888 SINGAPORE 486123 SCHEDULE 2 FLEXTRONICS INTERNATIONAL LTD. AND SUBSIDIAIRES CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED)
SIX MONTHS ENDED SEPTEMBER 30, 2003 SIX MONTHS ENDED SEPTEMBER 30, 2002 ----------------------------------- ----------------------------------- PROFORMA PROFORMA PROFORMA(1) ADJUSTMENTS GAAP PROFORMA(1) ADJUSTMENTS GAAP ----------- ----------- ---- ----------- ----------- ---- Net sales $6,609,919 $ 6,609,919 $6,467,640 $ 6,467,640 Cost of sales 6,262,408 6,262,408 6,118,316 6,118,316 Unusual charges -- 351,197 351,197 -- 179,352 179,352 ---------- --------- ----------- ---------- --------- ----------- Gross profit (loss) 347,511 (351,197) (3,686) 349,324 (179,352) 169,972 Selling, general and administrative expenses 225,355 -- 225,355 224,610 224,610 Unusual charges -- 36,163 36,163 -- 28,471 28,471 ---------- --------- ----------- ---------- --------- ----------- Operating income (loss) 122,156 (387,360) (265,204) 124,714 (207,823) (83,109) Intangibles amortization -- 17,390 17,390 -- 9,167 9,167 Interest and other expense, net 46,614 46,614 46,855 46,855 Loss on early extinguishment of debt -- 103,909 103,909 -- -- ---------- --------- ----------- ---------- --------- ----------- Income (loss) before income taxes 75,542 (508,659) (433,117) 77,859 (216,990) (139,131) Provision for (benefit from) income taxes 7,554 (50,866) (43,312) 7,790 (50,419) (42,629) ---------- --------- ----------- ---------- --------- ----------- Net income (loss) $ 67,988 $(457,793) $ (389,805) $ 70,069 $(166,571) $ (96,502) ========== ========= =========== ========== ========= =========== Earnings (loss) per share: Basic $ 0.13 $ (0.75) $ 0.14 $ (0.19) ========== =========== ========== =========== Diluted $ 0.12 $ (0.75) $ 0.13 $ (0.19) ========== =========== ========== =========== Shares used in computing per share amounts: Basic 522,315 522,315 515,929 515,929 ========== =========== ========== =========== Diluted 553,362 522,315 526,533 515,929 ========== =========== ========== ===========
(1) Proforma results exclude intangibles amortization, costs associated with the early extinguishment of debt and restructuring charges, as applicable. (FLEXTRONICS LOGO) PRESS RELEASE 2 CHANGI SOUTH LANE TEL: +65.6299.8888 SINGAPORE 486123 SCHEDULE 3 FLEXTRONICS INTERNATIONAL LTD. AND SUBSIDIAIRES CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS) (UNAUDITED)
AS OF AS OF SEPTEMBER 30, 2003 MARCH 31, 2003 ------------------ -------------- ASSETS CURRENT ASSETS: Cash and cash equivalents $ 699,505 $ 424,020 Accounts receivable, net 1,747,449 1,417,086 Inventories, net 1,196,224 1,141,559 Deferred income taxes 33,223 29,153 Other current assets 545,148 466,942 ---------- ---------- Total current assets 4,221,549 3,478,760 Property, plant and equipment, net 1,652,884 1,965,729 Deferred income taxes 469,522 415,041 Goodwill and other intangibles, net 2,297,870 2,192,910 Other assets 436,945 341,664 ---------- ---------- Total assets $9,078,770 $8,394,104 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Bank borrowings and current portion of long-term debt $ 61,132 $ 52,484 Current portion of capital lease obligations 3,545 7,622 Accounts payable 2,155,854 1,601,923 Other current liabilities 969,751 918,990 ---------- ---------- Total current liabilities 3,190,282 2,581,019 Long-term debt, net of current portion: Capital lease obligations 5,336 7,909 8 3/4 % Senior Subordinated Notes due 2007 -- 150,000 Zero Coupon Convertible Junior Subordinated Notes due 2008 200,000 200,000 9 7/8 % Senior Subordinated Notes due 2010, net of discount 7,687 497,172 9 3/4 % Senior Subordinated Notes due 2010 172,315 160,192 1 % Convertible Senior Subordinated Notes due 2010 500,000 -- 6 1/2 % Senior Subordinated Notes due 2013 400,000 -- Other 109,620 34,580 Other liabilities 218,441 221,212 Total shareholders' equity 4,275,089 4,542,020 ---------- ---------- Total liabilities and shareholders' equity $9,078,770 $8,394,104 ========== ==========