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Sanmina-SCI Reports $1.1 Billion Fourth Quarter Loss
October 30, 2007 | PR NewswireEstimated reading time: 5 minutes
Sanmina-SCI Corporation ("the Company") (NASDAQ:SANM), a leading global electronics manufacturing services (EMS) company, today reported financial results for its fourth fiscal quarter and fiscal year ended September 29, 2007.<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />
For the fourth quarter ended September 29, 2007, Sanmina-SCI reported revenue of $2.5 billion, compared to $2.5 billion in the third quarter ended June 30, 2007 and $2.7 billion in the fourth quarter ended September 30, 2006. Revenue for the year ended September 29, 2007 was $10.4 billion, compared to $11.0 billion in the prior year.
Non-GAAP Financial Results for the Quarter and Fiscal Year
Net income for the fourth quarter 2007 was $10.2 million, $0.02 diluted earnings per share, compared to a net loss of $22.8 million, a diluted loss per share of $0.04 for the third quarter ended June 30, 2007, and net loss of $2.1 million, breakeven diluted earnings per share for the fourth quarter 2006. Net income for fiscal year 2007 was $22.8 million, $0.04 diluted earnings per share, compared to $102.4 million, $0.19 diluted earnings per share in the prior year.
Gross profit was $134.1 million or 5.4 percent of revenue, a 60 basis point improvement from the prior quarter of $120.3 million, or 4.8 percent of revenue, and up from $131.0 million, or 4.8 percent of revenue in the same period a year ago. Operating income for the quarter was $42.8 million, up from $29.1 million in the prior quarter and up from $32.1 million for the same period last year. Fiscal 2007 operating income was $182.6 million, compared to $243.7 million in fiscal 2006 (see Non-GAAP Financial Information).
GAAP Financial Results for the Quarter and Fiscal Year
Fourth quarter GAAP earnings were primarily impacted by a non-cash impairment charge for goodwill of $1.1 billion. As a result of this charge, the Company reported a net loss of $1.1 billion in the fourth quarter of fiscal 2007, compared to a net loss of $27.6 million in the prior quarter and a net loss of $28.1 million for the same period last year. Diluted loss per share for the quarter was $2.10. Net loss for fiscal year 2007 was $1.1 billion and diluted loss per share was $2.15. This charge resulted from the Company's annual goodwill impairment analysis in accordance with Statement of Financial Accounting Standards No. 142 (SFAS No. 142).
Cash Flow and Balance Sheet Metrics
The Company continued to manage its cash flow and balance sheet metrics, making improvements throughout fiscal 2007.
* Cash flow from operations was $145 million in Q4'07, and $511 million for fiscal 2007
* Cash and cash equivalents were $933.4 million, up $441.6 million from Q4'06
* Cash cycle days of 29 days represented a 7 day improvement from Q3'07
* Inventory decreased $72.7 million, inventory turns improved to 8.9x in Q4'07
"I am pleased with our gross margin improvement, cash flow generation and inventory turns during the fourth quarter. We are confident that we will continue to improve our financial metrics. We are committed to driving our ROIC above our weighted cost of capital as we exit fiscal year 2008," stated Jure Sola, Chairman and Chief Executive Officer.
"The basis for Sanmina-SCI's operational excellence strategy in 2008 and beyond is to focus on high-end markets that offer the greatest opportunity for success, invest in leading edge technology, and provide unparalleled end-to- end manufacturing solutions to our customers," concluded Sola.
Personal and Business Computing Division
Consistent with previous announcements made by the Company concerning its personal and business computing business unit, the Company reaffirmed its intentions of separating this business unit from its core operations either by means of a sale or other disposition of the business. This business unit includes the Company's personal computing and industry standard server businesses, their related BTO/CTO operations in <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />Mexico and Hungary and their associated logistics activities. The Company expects the disposition of this business to occur over the next twelve months. Accordingly, effective with the first fiscal quarter 2008, the Company expects to account for this business unit as a discontinued operation in accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets.
First Quarter Fiscal 2008 Outlook
The following statements are based on current expectations. These statements are forward-looking and actual results may differ materially. Please refer to the Risk Factors reported in the Company's annual and quarterly reports on file with the Securities and Exchange Commission for a description of some of the factors that could influence the Company's ability to achieve the projected results.
The Company provides the following guidance with respect to the first fiscal quarter ending December 29, 2007:
* Revenue is expected to be in the range of $2.5 billion to $2.65 billion
* Non-GAAP diluted earnings per share to be between $0.02 to $0.04
Non-GAAP Financial Information
In the commentary set forth above, we present the following non-GAAP financial measures: gross profit, gross margin, operating income, operating margin, net income and earnings 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, to the extent material or which we consider to be of a non-operational nature in the applicable period.
We have furnished these non-GAAP financial measures because we believe they provide useful supplemental information to investors in that they eliminate certain financial items that are of a non-recurring, unusual or infrequent nature or are not related to the Company's regular, ongoing business. Our management also uses this information internally for forecasting, budgeting and other analytical purposes. Therefore, the non-GAAP financial measures enable investors to analyze the core financial and operating performance of our Company and to facilitate period-to-period comparisons and analysis of operating trends. A reconciliation from GAAP to non-GAAP results is contained in the attached financial summary and is available on the Investor Relations section of our website at www.sanmina-sci.com. Sanmina-SCI provides earnings guidance 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.
The non-GAAP financial information presented in this release may vary from non-GAAP financial measures used by other companies. In addition, non-GAAP financial information should not be viewed as a substitute for financial data prepared in accordance with GAAP.
About Sanmina-SCI
Sanmina-SCI Corporation (NASDAQ:SANM) 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 large OEMs primarily in the communications, defense and aerospace, industrial and medical instrumentation, computer technology and multimedia sectors. Sanmina-SCI has facilities strategically located in key regions throughout the world. Information about Sanmina-SCI is available at www.sanmina-sci.com