Plexus Reports Fourth Quarter and Fiscal 2006 Revenues and Earnings


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Plexus Corp. (NASDAQ:PLXS) today announced that revenues for its fourth quarter of fiscal 2006 ended September 30, 2006 increased 23% to $396.9 million from $322.2 million in the same quarter last year. Net income in the fourth quarter was a record $42.6 million, or $0.91 per diluted share, which included $0.03 for share-based compensation expense. Net income in the comparable prior year period was $10.5 million, or $0.24 per diluted share. The most recent quarter's net income included two non-operational adjustments: a $17.7 million favorable adjustment to the tax provision for a reduction in the valuation allowance on deferred tax assets and a $0.5 million net loss on the adoption of "FIN 47" concerning conditional asset retirement obligations. On a non-GAAP basis that excludes these adjustments, the Company earned record quarterly net income of $25.5 million, or $0.54 per diluted share, in the fourth quarter.<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

Revenues for the full year were a record $1.461 billion, a 19% increase over the prior year. Net income for fiscal 2006 was a record $100.0 million, equivalent to $2.15 per diluted share, which included $0.06 for share-based compensation expense. Fiscal 2005's net loss was $(12.4) million, or $(0.29) per diluted share. On a non-GAAP basis, which excludes the adjustments noted above, the Company earned net income of $82.9 million, or $1.78 per diluted share in fiscal 2006. The non-GAAP net income for fiscal 2005, which excludes restructuring and impairment costs, was $26.7 million, or $0.61 per diluted share.

Dean Foate, President and CEO, commented, "We are pleased with the progress made this year to return the Company to solid profitability and sustainable growth. We delivered on our commitment to achieve profitable growth in 2006. Revenues increased 19%, and we expanded our operating margins to 5.5%. Our 28.8% after-tax return on capital employed for the year was among the highest in the <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />EMS industry. The turnaround, which we started four years ago, is complete, and we can now turn all of our attention on enhancing long- term value for our shareholders. Consistent with our recent experience, we are targeting annual revenue growth in the range of 15% to 18% in fiscal 2007."

Addressing the first quarter of fiscal 2007, Mr. Foate added, "We currently anticipate revenues for the first quarter to be in the range of $385 million to $395 million and expect diluted earnings per share (before any restructuring costs) in the range of $0.31 to $0.35. Earnings guidance includes approximately $0.03 per diluted share for share-based compensation. The slightly lower sequential revenues anticipated in the first quarter are attributable to lower expectations for a large defense program offset, in part, by the ramp of recent new program wins. In addition, after-tax earnings comparisons this year will be more difficult due to an increase in the expected effective tax rate to about 25% from the current rate of less than 1%."

Gordon Bitter, CFO commented, "The balance sheet was strengthened in 2006 by strong cash flows from operations. Cash and Cash Equivalents and Short Term Investments at year-end 2006 were $194.9 million, an increase of $86.2 million over the prior year-end balance. We currently expect capital expenditures to increase substantially in fiscal 2007 to approximately $70 million to support anticipated growth in Asia and reinvestment requirements in North America."

Plexus provides non-GAAP supplemental information. These non-GAAP income statements exclude transactions that are not expected to have an effect on future operations. Such transactions include restructuring and asset impairment costs, as well as the establishment or reduction of the valuation allowance for deferred tax assets. These non-GAAP financial data are provided to facilitate meaningful period-to-period comparisons of underlying operational performance by eliminating infrequent or unusual charges. Similar non-GAAP financial measures are used for internal management assessments because such measures provide additional insight into ongoing financial performance. Please refer to the attached accompanying reconciliations of the GAAP net income and EPS to the non-GAAP supplemental data.

SECTOR BREAKOUT

Plexus reports revenues based on the industry sector breakout set forth in the table below, which reflects the Company's sales and marketing focus.

           Industry                  Q4 - Fiscal 2006      Q3 - Fiscal 2006

  Wireline/Networking                      38%                   38%

  Wireless Infrastructure                   8%                    6%

  Medical                                       25%                   25%

  Industrial/Commercial                   18%                   17%

  Defense/Security/Aerospace          11%                   14%

  Fiscal Q4 Highlights

  --  Top 10 customers comprised 59% of sales during the quarter, down 4

      percentage points from the previous quarter.

  --  Juniper Networks Inc., with 17% of sales, and General Electric Corp.,

      with 12% of sales, were the only customers representing 10% or more of

      revenues for the fourth quarter.

  --  Cash flow provided by operations was approximately $33.5 million for

      the quarter.

  --  Capital expenditures for the quarter were $8.6 million.

  --  Cash Conversion Cycle:

    Cash Conversion Cycle               Q4 - Fiscal 2006    Q3 - Fiscal 2006

  Days in Accounts Receivable                48 Days             50 Days

  Days in Inventory                                 58 Days             60 Days

  Days in Accounts Payable                   (56) Days           (60) Days

  Annualized Cash Cycle                        50 Days             50 Days

  Conference Call/Webcast and Replay Information

  What:    Plexus Corp.'s Fiscal Q4 Earnings Conference Call

  When:    Thursday, November 2, 2006 at 8:30 a.m. Eastern Time

  Where:   888-823-7459 or 973-935-8751 with conference ID: 7947092

           http://www.videonewswire.com/PLXS/110206/

           (requires Windows Media Player)

  Replay:  The call will be archived until November 9, 2006 at noon Eastern

           Time

           http://www.videonewswire.com/PLXS/110206/

           Or via telephone replay at 877-519-4471 or 973-341-3080

           PIN: 7947092

About Plexus Corp. - The Product Realization Company

Plexus ( http://www.plexus.com/  ) is an award-winning participant in the Electronics Manufacturing Services (EMS) industry, providing product design, test, manufacturing and fulfillment and aftermarket solutions to branded product companies in the Wireline/Networking, Wireless Infrastructure, Medical, Industrial/Commercial and Defense/Security/Aerospace industries.

The Company's unique Focused Factory manufacturing model and global supply chain solutions are strategically enhanced by value-added product design and engineering services. Plexus specializes in customer programs that require flexibility, scalability, technology and quality.

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