Good strong report from SLR. Hope this breaks the recent ECM
downtrend, especially if JBL has another good report
tomorrow.
Solectron Increases Sales 101 Percent, Net
Income 74 Percent in Fiscal First Quarter
- Diluted Cash EPS* of 31 Cents Exceeds Consensus Estimates -
MILPITAS, Calif., Dec. 18 /PRNewswire/ -- Solectron Corporation (NYSE: SLR - news), the world's leading provider
of electronics manufacturing and supply-chain management services, today reported fiscal first-quarter sales of $5.7
billion, 100.9 percent higher than the $2.8 billion reported in the year- earlier period. Diluted cash earnings per share* in
the quarter were 31 cents, up 63.2 percent from 19 cents in the same quarter last year and above analysts' consensus
estimates.
(Photo: newscom.com )
The company earned net income under U.S. Generally Accepted Accounting Principles (GAAP) of $190.6 million, up
73.6 percent from $109.8 million in the same period last year. Diluted GAAP earnings per share** increased 70.6
percent to 29 cents from 17 cents a year ago, also above analysts' consensus estimates.
The fiscal 2001 first quarter was a 14-week period, versus a 13-week period last year, because of the periodic calendar
alignment required under the company's fiscal-year schedule. On a normalized 13-week basis, first- quarter sales would
have been $5.3 billion -- exceeding the company's guidance, issued in September, of first-quarter sales in a range of $4.8 billion to $5.1 billion.
Summary of Sales and Earnings Per Share
Q1 2001 Q1 2000 % Change
Sales (in billions) $5.696 $2.835 100.9
Diluted Cash EPS* 31 cents 19 cents 63.2
(before one-time charges)
Diluted GAAP EPS 29 cents 18 cents 61.1
(before one-time charges)
Diluted GAAP EPS** 29 cents 17 cents 70.6
* Diluted Cash EPS is calculated by adjusting diluted GAAP
EPS to exclude tax-effected amortization of goodwill and
other intangible items, which amounted to approximatel $11.2 million and $3.3 million (after tax) in the first fiscal
quarters of 2001 and 2000, respectively. It is also before
one-time charges.
** Diluted GAAP EPS is the per-share calculation of net
income as defined under U.S. Generally Accepted Accounting Principles.
``We generated a strong quarter from both an operational viewpoint and a strategic perspective,'' said Koichi Nishimura,
Solectron chairman, president and chief executive officer. ``Our ongoing businesses delivered solid sales and earnings
growth, exceeding analyst estimates and reflecting a continued increase in customer demand for our services.''
Business growth in the quarter came in part from the networking and telecommunications market segments. The
company said networking customers had strong demand, and telecommunications grew partly through additional
outsourcing in that segment.
Gross margin in the quarter was 8.5 percent, compared with 8.7 percent in the fourth quarter of fiscal 2000. Margins
continued to be affected by higher- than-normal materials management costs.
Also in the quarter, Solectron announced two strategically important business developments. The company entered a
cooperative agreement with Sony Corporation that includes the purchase of two Sony manufacturing sites, a
360,000-square-foot facility in Miyagi Prefecture, Japan, and a 130,000- square-foot site in Kaohsiung, Taiwan.
Solectron also agreed to acquire Singapore-based NatSteel Electronics (NEL), the sixth-largest electronics manufacturing
services company, in a deal valued at about $2.4 billion.
``Through the Sony relationship and the NatSteel Electronics acquisition, we are significantly expanding our strategic
presence in the Asia/Pacific region,'' Nishimura said. ``Each gives us additional capacity, and each extends the skills,
capabilities and services that Solectron can offer to our customers.''
Components Situation Begins to Ease
The company also said the constricted supply of components in the electronics industry began to ease in the late stages of
the quarter. While some component categories remain constrained, overall lead times became shorter in recent weeks.
``We are taking advantage of the changing conditions, and we expect to realize the full benefits of the improving
components environment going forward,'' Nishimura said. ``We are working hard to return to our normal, just- in-time
business practices, and we are focused on actions to improve inventory metrics.''
Forward-Looking Guidance
The company expects to generate second-quarter sales of $5.4 billion to $5.7 billion and diluted cash EPS of 29 to 30
cents in the quarter ending March 2, before any one-time charges related to acquisitions. The company said it expects
diluted GAAP EPS to be 24 cents to 25 cents in the quarter, before any one-time charges.
The company's second-quarter guidance includes the effect of the acquisitions from Sony and assumes the acquisition of
100 percent of NEL by late January. In addition, Solectron said it expects the second quarter to include increased
integration and infrastructure costs associated with its new sites, partially offset by operating efficiency and productivity
improvements. Those costs are expected to affect margins in the quarter and are reflected in the earnings guidance.
The sales guidance reflects the typical seasonal pace and short-shipment days for the various holidays that occur in the
second quarter. The company said it estimates incremental sales from Sony and NEL (based on its published guidance to
investors) to range from $290 million to $340 million.
For all of fiscal 2001, Solectron said it expects to generate sales of more than $23 billion, diluted cash EPS of $1.22 to
$1.25 and diluted GAAP EPS of 99 cents to $1.02, both before any one-time charges.
Safe Harbor
This news release contains forward-looking statements based on current expectations, forecasts and assumptions that
involve risks and uncertainties that could cause actual outcomes and results to differ materially. These risks and
uncertainties include component availability, the ability to acquire and effectively integrate the NatSteel Electronics
business, the ability to complete the asset transfer involving Sony Corporation, risk of price fluctuation, reliance on major
customers, fluctuations in operating results, changes in technology, competition, the ability to manage rapid growth, the
ability to manage business integration, risks associated with international sales and operations, interest rate risk,
environmental regulations, market risk, segment risk, the ability to retain key personnel and intellectual property rights
enforcement. For a further list and description of risks and uncertainties, see the reports filed by Solectron with the
Securities and Exchange Commission, specifically forms 8-K, 10-Q, S-3 and 10-K. Solectron disclaims any intention or
obligation to update or revise any forward-looking statements, whether as a result of new information, future events or
otherwise.
All monetary amounts are stated in U.S. dollars.
About Solectron
Solectron (www.solectron.com), the world's leading supply-chain facilitator, provides a full range of manufacturing and
supply-chain management services to the world's premier high-tech electronics companies. Solectron's offerings include
new product design and introduction services, materials management, high-tech product manufacturing, and product
warranty and end-of-life support. The company, based in Milpitas, Calif., employs more than 71,000 people in 60
locations worldwide. In the fiscal year ended Aug. 31, 2000, the company generated sales of $14.1 billion. Solectron was
the first two-time winner of the Malcolm Baldrige National Quality Award for manufacturing.
Consolidated statements of income and balance sheets follow.
SOLECTRON CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(US$ in millions)
December 1, August 25,
2000 2000
ASSETS
Current assets:
Cash, cash equivalents and short-term
investments $4,518.7 $2,434.1
Accounts receivable, net 2,687.8 2,146.3
Inventories 4,584.0 3,787.3
Prepaid expenses and other current assets 275.3 260.5
Total current assets 12,065.8 8,628.2
Net property and equipment 1,240.3 1,080.4
Other assets 720.4 667.0
Total assets $14,026.5 $10,375.6
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt $118.5 $69.2
Accounts payable 2,961.1 2,694.1
Accrued employee compensation 187.9 179.8
Accrued expenses 197.6 262.5
Other current liabilities 475.1 11.2
Total current liabilities 3,940.2 3,216.8
Long-term debt 4,893.9 3,319.5
Other long-term liabilities 41.1 37.2
Total liabilities 8,875.2 6,573.5
Stockholders' equity:
Common stock 0.6 0.6
Additional paid-in capital 3,469.2 2,259.1
Retained earnings 1,845.7 1,656.8
Accumulated other comprehensive losses (164.2) (114.4)
Total stockholders' equity 5,151.3 3,802.1
Total liabilities and stockholders'
equity $14,026.5 $10,375.6
SOLECTRON CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(US$ in millions, except per share data)
Three Months Ended
December 1, November 26,
2000 1999
Net sales $5,695.5 $2,834.6
Cost of sales 5,210.8 2,557.6
Gross profit 484.7 277.0
Operating expenses:
Selling, general and administrative 190.3 107.0
Research and development 18.0 14.7
Operating income 276.4 155.3
Interest income 36.6 23.0
Interest expense (32.7) (11.6)
Income before income taxes and cumulative
effect of change in accounting principle 280.3 166.7
Income taxes 89.7 53.4
Income before cumulative effect of change in
accounting principle 190.6 113.3
Cumulative effect of change in accounting
principle for start-up costs, net of income
tax benefit -- (3.5)
Net income $190.6 $109.8
Basic net income per share:
Income before cumulative effect of change
in accounting principle $0.31 $0.19
Cumulative effect of change in accounting
principle -- (0.01)
Net income per share $0.31 $0.18
Diluted net income per share:
Income before cumulative effect of change
in accounting principle $0.29 $0.18
Cumulative effect of change in accounting
principle -- (0.01)
Net income per share $0.29 $0.17
Weighted average number of shares:
Basic 610.3 594.5
Diluted 709.1 621.0
Memo:
Diluted cash net income per share*:
Income before cumulative effect of change
in accounting principle $0.31 $0.20
Cumulative effect of change in accounting
principle -- (0.01)
Net income per share $0.31 $0.19
Diluted cash net income per share is calculated by adjusting diluted net income per share, or GAAP EPS, to exclude
tax-effected amortization of goodwill and other intangible items. Those excluded expenses amounted to approximately
$11.2 million and $3.3 million (after tax) in the first fiscal quarters of 2001 and 2000, respectively.
CONTACT: media, Kevin Whalen, 408-956-6854 or kevinwhalen@ca.slr.com, or analysts, Thomas Alsborg, 408-956
6614 or thomasalsborg@ca.slr.com, both of Solectron Corporation.
SOURCE: Solectron Corp. |
