EX-99.01 2 f98445exv99w01.txt EXHIBIT 99.01 EXHIBIT 99.01 PRESS RELEASE [FLEXTRONICS LETTERHEAD] FLEXTRONICS CONTACTS: Thomas J. Smach Senior Vice President of Finance +1.408.576.7722 investor_relations@flextronics.com Renee Brotherton Senior Director of Corporate Marketing +1.408.576.7189 renee.brotherton@flextronics.com -------------------------------------------------------------------------------- FLEXTRONICS ANNOUNCES FOURTH QUARTER RESULTS - REVENUES GROW 23%; PROFORMA PROFITS GROW 187% -EXCEEDS HIGH-END OF EXPECTATIONS -FISCAL 2005 GUIDANCE INCREASED SINGAPORE, APRIL 27, 2004 - Flextronics (NASDAQ: FLEX) today announced results for its fourth quarter and fiscal year ended March 31, 2004, as follows:
(In millions, except EPS) THREE MONTHS ENDED TWELVE MONTHS ENDED -------------------------------------------------------------------------- MARCH 31, MARCH 31, MARCH 31, MARCH 31, 2004 2003 2004 2003 -------------------------------------------------------------------------- Net sales $3,768.2 $3,059.6 $14,530.4 $13,378.7 Proforma operating income (1) $ 98.6 $ 50.0 $ 338.6 $ 272.1 GAAP operating income (loss) $ 16.6 $ 50.0 $ (201.8) $ (32.3) Proforma net income (1) $ 72.8 $ 25.4 $ 234.8 $ 161.6 GAAP net income (loss) $ 16.0 $ 19.5 $ (352.4) $ (83.5) Diluted proforma EPS (1) $ 0.13 $ 0.05 $ 0.42 $ 0.31 Diluted GAAP EPS $ 0.03 $ 0.04 $ (0.67) $ (0.16)
(1) Proforma results exclude after-tax intangibles amortization and restructuring and other charges, as applicable. See Schedules 1 and 2 attached to this press release for a reconciliation of proforma results to Generally Accepted Accounting Principles ("GAAP") results. FOURTH QUARTER AND FISCAL 2004 RESULTS Net sales for the fourth quarter were a record $3.8 billion, which represents an increase of $708.6 million, or 23% over the March 2003 quarter. Net sales for the fiscal year reached a record $14.5 billion, which represents an increase of $1.2 billion, or 9% over fiscal 2003. Proforma net income was $72.8 million, or $0.13 per diluted share for the fourth quarter, which represents an increase of $47.4 million, or 187% over the March 2003 quarter. Including after-tax amortization expense of $8.8 million and previously announced restructuring costs of $48.0 million, GAAP net income in the fourth quarter was $16.0 million, or $0.03 per diluted share, as compared to GAAP net income of $19.5 million, or $0.04 per diluted share in the March 2003 quarter. PRESS RELEASE [FLEXTRONICS LETTERHEAD] The quarterly results reflect continued industry-leading working capital management, with a cash conversion cycle of 16 days and inventory turns of 12 times. "Our financial results continue to improve as we realize the earnings leverage embedded in our business. Quarterly revenues grew 23% on a year-over-year basis, while proforma profits nearly tripled. Both operating margin and revenues were stronger than expected, as the quarter ended less seasonal than expected for handsets and other consumer related products. While we executed well in the quarter, delivering improved operating performance and maintaining industry-leading working capital management, we remain focused on continually improving operating results going forward. Our pipeline is solid and we are winning business from new and existing customers across many end markets. The combination of improving demand, better pricing trends, and strength in our higher value-add supply chain services, including our ODM business, should continue to drive momentum in our operating leverage, leading to increased margins and profits," said Michael E. Marks, Chief Executive Officer of Flextronics. INCREASING OUTLOOK The Company has increased its sales expectations for the June 2004 quarter by approximately $150 million and increased it proforma EPS expectations by $0.02. In addition, the Company indicated that each of the other three remaining quarters in fiscal 2005 are also expected to exceed the existing First Call consensus by approximately $100 million in sales per quarter and $0.01 in proforma EPS per quarter. This represents an annual increase in expectations of $450 million in sales and $0.05 in proforma EPS for the Company's fiscal year ending on March 31, 2005. Quarterly GAAP earnings are expected to be lower than proforma earnings by approximately $0.02 per diluted share reflecting amortization expense. CONVERSION OF NOTES Flextronics also announced today that it intends to convert all of the outstanding 0% Convertible Junior Subordinated Notes issued in March 2003 into approximately 19 million shares of common stock. The Company plans to file a Registration Statement on Form S-3 tomorrow to register the shares, and the conversion will be completed after the Securities and Exchange Commission declares the Form S-3 effective. The conversion will not impact Flextronics' diluted EPS, as the stock equivalents have always been included in the diluted EPS calculation. "We have been working with the Company for the last 18 months and believe that there are numerous ways that we can continue to help the Company realize its growth and profit potential. Flextronics has performed exceptionally well since early 2003, and we fully expect that the Company will build on its industry-leading position both in the near-term and the longer-term. Although the forced conversion of our investment provides us liquid common stock, we have no current intention to sell or distribute our position at this time," said Jim Davidson, Managing Director, Silver Lake Partners. CONFERENCE CALL AND WEB CAST A conference call hosted by Flextronics' management will be held today at 1:30 p.m. PDT to discuss the Company's financial results and its 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 to Shareholders 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 2004 revenues of $14.5 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 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, changes in customer demand, future growth, increased utilization rates, improved pricing, existing and new customer activities, the effect of our conversion of our 0% Convertible Junior Subordinated Notes, improved general economic conditions, seasonality, ODM activity, industry capacity, anticipated revenues, earnings leverage, operating margins and results, cash flow, profitability, level of future restructuring activities and charges, and the expected impact of potential new programs on our anticipated revenues and earnings. 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 risk that we may not obtain anticipated new customer programs, including the program under discussion with Nortel, or that if we do, they may be delayed, and may not contribute to our revenue or profitability as expected, or at all, 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 - Risk Factors" 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 CEO'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. PRESS RELEASE [FLEXTRONICS LETTERHEAD] SCHEDULE 1 FLEXTRONICS INTERNATIONAL LTD. AND SUBSIDIAIRES CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED)
FOURTH QUARTER ENDED MARCH 31, 2004 FOURTH QUARTER ENDED MARCH 31, 2003 -------------------------------------------- ---------------------------------------- PROFORMA PROFORMA PROFORMA(1) ADJUSTMENTS GAAP PROFORMA(1) ADJUSTMENTS GAAP -------------- -------------- -------------- ------------- -------------- ----------- Net sales $ 3,768,153 $ 3,768,153 $ 3,059,565 $3,059,565 Cost of sales 3,529,256 3,529,256 2,893,527 2,893,527 Restructuring and other charges --- 75,555 75,555 --- --- --- ----------- ----------- ----------- ----------- ----------- ---------- Gross profit 238,897 (75,555) 163,342 166,038 --- 166,038 Selling, general and administrative expenses 140,335 140,335 116,087 116,087 Restructuring and other charges --- 6,414 6,414 --- --- --- ----------- ----------- ----------- ----------- ----------- ---------- Operating income 98,562 (81,969) 16,593 49,951 --- 49,951 Intangibles amortization --- 9,772 9,772 --- 6,832 6,832 Interest and other expense, net 17,633 17,633 22,024 22,024 ----------- ----------- ----------- ----------- ----------- ---------- Income (loss) before income taxes 80,929 (91,741) (10,812) 27,927 (6,832) 21,095 Provision for (benefit from) income taxes 8,093 (34,903) (26,810) 2,576 (1,007) 1,569 ----------- ----------- ----------- ----------- ----------- ---------- Net income (loss) $ 72,836 $ (56,838) $ 15,998 $ 25,351 $ (5,825) $ 19,526 =========== =========== =========== =========== =========== ========== Earnings per share: Basic $ 0.14 $ 0.03 $ 0.05 $ 0.04 =========== =========== =========== ========== Diluted $ 0.13 $ 0.03 $ 0.05 $ 0.04 =========== =========== =========== ========== Shares used in computing per share amounts: Basic 529,323 529,323 519,266 519,266 =========== =========== =========== ========== Diluted 569,572 569,572 531,118 531,118 =========== =========== =========== ==========
(1) Proforma results exclude after-tax intangibles amortization and restructuring charges, as applicable. PRESS RELEASE [FLEXTRONICS LETTERHEAD] SCHEDULE 2 FLEXTRONICS INTERNATIONAL LTD. AND SUBSIDIAIRES CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED)
FOURTH QUARTER ENDED MARCH 31, 2004 FOURTH QUARTER ENDED MARCH 31, 2003 -------------------------------------------- ---------------------------------------- PROFORMA PROFORMA PROFORMA(1) ADJUSTMENTS GAAP PROFORMA(1) ADJUSTMENTS GAAP -------------- -------------- -------------- ------------- -------------- ----------- Net sales $14,530,416 $14,530,416 $13,378,699 $13,378,699 Cost of sales 13,704,576 13,704,576 12,650,402 12,650,402 Restructuring and other charges --- 477,305 477,305 --- 266,244 266,244 ----------- ----------- ----------- ----------- ----------- ---------- Gross profit 825,840 (477,305) 348,535 728,297 (266,244) 462,053 Selling, general and administrative expenses 487,287 487,287 456,199 456,199 Restructuring and other charges --- 63,043 63,043 --- 38,167 38,167 ----------- ----------- ----------- ----------- ----------- ---------- Operating income (loss) 338,553 (540,348) (201,795) 272,098 (304,411) (32,313) Intangibles amortization --- 36,715 36,715 --- 22,146 22,146 Interest and other expense, net 77,700 77,700 92,780 92,780 Loss on early extinguishment of debt --- 103,909 103,909 --- --- ----------- ----------- ----------- ----------- ----------- ---------- Income (loss) before income taxes 260,853 (680,972) (420,119) 179,318 (326,557) (147,239) Provision for (benefit from) income taxes 26,085 (93,826) (67,741) 17,715 (81,501) (63,786) ----------- ----------- ----------- ----------- ----------- ---------- Net income (loss) $ 234,768 $ (587,146) $ (352,378) $ 161,603 $ (245,056) $ (83,453) =========== =========== ========== ========== =========== ========== Earnings (loss) per share: Basic $ 0.45 $ (0.67) $ 0.31 $ (0.16) ========== ========== ========== ========== Diluted $ 0.42 $ (0.67) $ 0.31 $ (0.16) ========== ========== ========== ========== Shares used in computing per share amounts: Basic 525,318 525,318 517,198 517,198 ========== ========== ========== ========== Diluted 559,433 525,318 526,738 517,198 ========== ========== ========== ==========
(1) Proforma results exclude after-tax intangibles amortization, costs associated with the early extinguishment of debt, restructuring charges and the Beckman Coulter legal settlement, as applicable. PRESS RELEASE [FLEXTRONICS LETTERHEAD] SCHEDULE 3 FLEXTRONICS INTERNATIONAL LTD. AND SUBSIDIAIRES CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS) (UNAUDITED)
AS OF AS OF MARCH 31, 2004 MARCH 31, 2003 -------------- -------------- ASSETS Current Assets: Cash and cash equivalents $ 615,276 424,020 Accounts receivable, net 1,871,637 1,417,086 Inventories 1,179,513 1,141,559 Deferred income taxes 33,802 29,153 Other current assets 581,063 466,942 ---------- --------- Total current assets $4,281,291 3,478,760 Property, plant and equipment, net 1,625,000 1,965,729 Deferred income taxes 588,984 415,041 Goodwill and other intangibles, net 2,721,432 2,192,910 Other assets 370,987 341,664 ---------- --------- Total assets $9,587,694 8,394,104 ========== ========= LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Bank borrowings and current portion of long-term debt $ 96,287 $ 52,484 Current portion of capital lease obligations 8,203 7,622 Accounts payable 2,145,174 1,601,923 Other current liabilities 1,131,010 918,990 ---------- ---------- Total current liabilities 3,380,674 2,581,019 Long-term debt, net of current portion: Capital lease obligations 15,084 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 7,659 497,172 9 3/4 % Euro Senior Subordinated Notes due 2010 181,422 160,192 1% Convertible Subordinated Notes due 2010 500,000 --- 6 1/2 % Senior Subordinated Notes due 2013 399,650 --- Other 320,446 34,580 Other liabilities 215,546 221,212 Total shareholders' equity 4,367,213 4,542,020 ---------- ---------- Total liabilities and shareholders' equity $9,587,694 $8,394,104 ========== ==========