Exhibit 99.1
FOR IMMEDIATE RELEASE
SANMINA-SCI ANNOUNCES FOURTH QUARTER AND YEAR-END RESULTS
SAN JOSE, CA (October 29, 2008) - - Sanmina-SCI Corporation (the “Company”/ Nasdaq GS: SANM), a leading global Electronics Manufacturing Services (EMS) company, today reported financial results(1) for the fourth quarter and fiscal year ended September 27, 2008.
Fourth Quarter Fiscal 2008 Highlights for Continuing Operations(2)
· Revenue of $1.70 Billion
· Non-GAAP Operating Margin of 3.5 Percent, Up 220 Basis Points Year-over-Year
· Non-GAAP Diluted Earnings Per Share of $0.05
· Break-even GAAP Earnings Per Share
Revenue from Continuing Operations
Revenue from continuing operations for the fourth quarter was $1.70 billion, compared to $1.75 billion in the same period a year ago. Revenue from continuing operations for the fiscal year ended September 27, 2008 was $7.20 billion, compared to $7.14 billion for the year ended September 29, 2007.
Non-GAAP Financial Results for Continuing Operations (3)
Non-GAAP gross profit in the fourth quarter was $132.8 million, or 7.8 percent of revenue, compared to gross profit of $109.9 million, or 6.3 percent of revenue, in the fourth quarter a year ago. Non-GAAP gross profit for the fiscal year 2008 was $531.2 million, or 7.4 percent of revenue, compared to gross profit of $464.0 million, or 6.5 percent for the fiscal year 2007.
Non-GAAP operating income was $59.3 million, or 3.5 percent of revenue in the quarter, compared to $22.7 million, or 1.3 percent of revenue, in the same period a year ago. Non-GAAP operating income for fiscal 2008 was $205.6 million, or 2.9 percent of revenue, compared to $101.6 million, or 1.4 percent of revenue for fiscal 2007.
Non-GAAP net income in the fourth quarter was $24.0 million, or $0.05 diluted earnings per share, compared to a net loss of ($9.9) million, or ($0.02) diluted loss per share, in the same period a year ago. Non-GAAP net income for the full year was $69.6 million, or $0.13 diluted earnings per share, compared to net loss of ($58.3) million, or ($0.11) diluted loss per share in fiscal 2007.
GAAP Financial Results for Continuing Operations (1)
GAAP net income in the fourth quarter was $22 thousand, or break-even diluted earnings per share, compared to a net loss of ($1,070.4) million, or ($2.03) per share, in the same period a year ago. GAAP net loss for the full year was ($37.4) million, or ($0.07) per share, compared to net loss of ($1,141.5) million, or ($2.17) per share in fiscal 2007. Fiscal 2007 results included a charge of $1.0 billion associated with the write-off of certain goodwill. The forgoing GAAP results are subject to change pending the completion of the Company’s review of the value of the goodwill carried on its balance sheet. (see Potential Goodwill Impairment).
| | Three Month Periods Ending | | Twelve Month Periods Ending | |
Continuing Operations
(In thousands, except per share data) | | September 27,
2008 | | September 29,
2007 | | September 27,
2008 | | September 29,
2007 | |
GAAP: | | | | | | | | | |
Revenue | | $ | 1,703,579 | | $ | 1,753,905 | | $ | 7,202,403 | | $ | 7,137,793 | |
Net income (loss) | | $ | 22 | | $ | (1,070,397 | ) | $ | (37,399 | ) | $ | (1,141,493 | ) |
Earnings (loss) per share | | $ | 0.00 | | $ | (2.03 | ) | $ | (0.07 | ) | $ | (2.17 | ) |
Non-GAAP: (3) | | | | | | | | | |
Gross profit | | $ | 132,828 | | $ | 109,895 | | $ | 531,224 | | $ | 464,008 | |
Gross margin | | 7.8 | % | 6.3 | % | 7.4 | % | 6.5 | % |
Operating income | | $ | 59,305 | | $ | 22,673 | | $ | 205,573 | | $ | 101,551 | |
Operating margin | | 3.5 | % | 1.3 | % | 2.9 | % | 1.4 | % |
Net income (loss) | | $ | 24,027 | | $ | (9,926 | ) | $ | 69,594 | | $ | (58,271 | ) |
Earnings (loss) per share | | $ | 0.05 | | $ | (0.02 | ) | $ | 0.13 | | $ | (0.11 | ) |
(3) | Please refer to “Non-GAAP Financial Information” below for a discussion of how the above non-GAAP financial measures are calculated and why we believe this information is useful to investors. A reconciliation from GAAP to non-GAAP results is contained in the financial statements contained in this release and is available in the Investor Relations section of our website at www.sanmina-sci.com. |
Balance Sheet Highlights for Continuing Operations
· Ending Cash and Cash Equivalents Were $869.8 Million
· Inventory Decreased $87.7 Million; Lowest Inventory Level in 12 Quarters
· Gross Cash Cycle Days Were 47.4
“I am pleased with our fourth quarter operational execution as we delivered record margins and strong asset management. This is particularly commendable despite a difficult economic environment that impacted customer demand, and our revenue, late in the quarter,” stated Jure Sola, Chairman and Chief Executive Officer.
Fiscal First Quarter 2009 Guidance
Based on limited demand visibility and a challenging global economy, the Company is cautious in its guidance and estimates first quarter fiscal 2009 revenue to be in the range of $1.425 to $1.625 billion and non-GAAP earnings per share in the range of $0.00 to $0.03.
“Sanmina-SCI is well positioned to navigate through this challenging environment, remain profitable, generate positive cash flow and improve our working capital metrics, which will help position us as a stronger company when the market turns around,” concluded Sola.
Stock Repurchase Program
The Company also announced today that its Board of Directors has approved a stock repurchase program covering up to 10% of its shares based on the closing stock price on October 29, 2008. The Company initially may purchase up to $10 million of its stock, the maximum amount currently permitted under its credit agreements. The Company may repurchase additional shares under the program as these restrictions expire or are modified. Purchases under the program shall be made at prevailing market prices or in negotiated transactions off the market. The program shall continue through December 2009, unless otherwise determined by the Board of Directors.
(1) Potential Goodwill Impairment
Given the recent significant decrease in the Company’s market capitalization, similar to that experienced by other companies in the EMS Industry, the Company has undertaken a review of the value of the goodwill carried on its balance sheet using the two step test contained in Statement of Financial Accounting Standards (SFAS) 142, Goodwill and Other Intangible Assets. The Company does not expect to complete this review until mid-November. Should the company determine that its goodwill has become impaired under SFAS 142, it will be required to record a non-cash charge which could be significant and would reduce reported GAAP net income and earnings per share for the fiscal fourth quarter and year ended September 27, 2008 and which would be included in the financial statements filed with the Company’s Annual Report on Form 10-K. The non-cash charge, if any, would not impact the non-GAAP financial information presented in this release.
(2) Basis of Presentation for Continuing Operations
The Company completed the sale of the assets of its personal computing business and associated logistics services in two transactions that closed on June 2, 2008 and July 7, 2008, respectively. The Company has reported this line of business as a discontinued operation in the financial statements that accompany this press release.
(3) 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, we believe that presenting non-GAAP financial measures enables investors to analyze the core financial and operating performance of our Company in the manner utilized by management and to facilitate period-to-period comparisons and analysis of operating trends. A reconciliation from GAAP to non-GAAP results is included in the financial statements contained in this release and is also 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.
Company Conference Call Information
Sanmina-SCI will be holding a conference call regarding this announcement on Wednesday, October 29, 2008 at 5:00 p.m. ET (2:00 p.m. PT). The access numbers are: domestic 877-273-6760 and international 706-634-6605. The conference will be broadcast live over the Internet. You can log on to the live webcast at www.sanmina-sci.com. Additional information in the form of a slide presentation is available by logging onto Sanmina-SCI’s website at www.sanmina-sci.com. A replay of today’s conference call will be available for 48-hours. The access numbers are: domestic 800-642-1687 and international 706-645-9291, access code is 6875262.
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.
Sanmina-SCI Safe Harbor Statement
Certain statements contained in this press release, including the Company’s expectations for future revenue and earnings per share, and the number of shares expected to be repurchased under the Company’s stock repurchase program constitute forward-looking statements within the meaning of the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934. Actual results could differ materially from those projected in these statements as a result of a number of factors, including adverse conditions in the electronics industry, particularly in the principal industry sectors served by the Company, competition negatively impacting the Company’s pricing, changes in customer requirements and in the volume of sales to principal customers adversely affecting revenue and profitability, the ability of Sanmina-SCI to effectively assimilate acquired businesses and achieve the anticipated benefits of its acquisitions, impact of the restrictions contained in the Company’s credit agreements and indentures upon the repurchase of shares, the Company’s cash position and other liquidity needs and the factors set forth in the Company’s fiscal year 2007 Annual Report on Form 10-K and Quarterly Reports on Form 10-Q that the Company files with the Securities Exchange Commission (“SEC”). In addition, the Company’s actual earnings per share on a non-GAAP basis for the fiscal quarter ending December 27, 2008 could differ materially from the targets stated under “Company Guidance” above due to (i) integration and other acquisition-related expenses associated with future acquisitions, if any, (ii) changes in the anticipated amount of employee share-based compensation expense recognized on the Company’s financial statements and (iii) charges resulting from the impairment of any of the Company assets, including goodwill, required to be taken under SFAS 142.
The Company is under no obligation to (and expressly disclaims any such obligation to) update or alter any of the forward-looking statements made in this earnings release, the conference call or the Investor Relations section of our website whether as a result of new information, future events or otherwise, unless otherwise required by law.
Sanmina-SCI Contact
Paige Bombino
Investor Relations
408-964-3610
SANMF
Press Release Financials | | SANMINA-SCI |
| | 2700 North First Street |
| | San Jose, CA 95134 |
| | Tel: 408-964-3610 |
Sanmina - SCI Corporation
Condensed Consolidated Balance Sheets
(In thousands)
(GAAP)
| | September 27, | | September 29, | |
| | 2008 | | 2007 | |
| | (Unaudited) | | | |
ASSETS | | | | | |
| | | | | |
Current assets: | | | | | |
Cash and cash equivalents | | $ | 869,801 | | $ | 933,424 | |
Accounts receivable, net | | 969,558 | | 1,218,375 | |
Inventories | | 813,359 | | 1,059,856 | |
Prepaid expenses and other current assets | | 101,396 | | 167,038 | |
Assets held for sale | | 43,163 | | 36,764 | |
Total current assets | | 2,797,277 | | 3,415,457 | |
Property, plant and equipment, net | | 599,908 | | 609,394 | |
Goodwill | | 478,686 | | 510,669 | |
Other non-current assets | | 115,488 | | 134,435 | |
Total assets | | $ | 3,991,359 | | $ | 4,669,955 | |
| | | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | |
| | | | | |
Current liabilities: | | | | | |
Accounts payable | | $ | 891,397 | | $ | 1,450,705 | |
Accrued liabilities | | 191,022 | | 203,941 | |
Accrued payroll and related benefits | | 139,522 | | 142,436 | |
Total current liabilities | | 1,221,941 | | 1,797,082 | |
Long-term liabilities: | | | | | |
Long-term debt | | 1,481,985 | | 1,588,072 | |
Other | | 117,538 | | 111,654 | |
Total long-term liabilities | | 1,599,523 | | 1,699,726 | |
Total stockholders’ equity | | 1,169,895 | | 1,173,147 | |
Total liabilities and stockholders’ equity | | $ | 3,991,359 | | $ | 4,669,955 | |
Press Release Financials | | SANMINA-SCI |
| | 2700 North First Street |
| | San Jose, CA 95134 |
| | Tel: 408-964-3610 |
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(GAAP)
(Unaudited)
| | Three Months Ended | | Twelve Months Ended | |
| | September 27,
2008 | | September 29,
2007 | | September 27,
2008 | | September 29,
2007 | |
Net sales | | $ | 1,703,579 | | $ | 1,753,905 | | $ | 7,202,403 | | $ | 7,137,793 | |
Cost of sales | | 1,572,688 | | 1,649,526 | | 6,678,297 | | 6,683,277 | |
Gross profit | | 130,891 | | 104,379 | | 524,106 | | 454,516 | |
Operating expenses: | | | | | | | | | |
Selling, general and administrative | | 71,206 | | 88,011 | | 317,045 | | 355,768 | |
Research and development | | 4,815 | | 6,016 | | 19,546 | | 30,080 | |
Amortization of intangible assets | | 1,650 | | 1,650 | | 6,600 | | 6,601 | |
Restructuring costs | | 13,322 | | 15,008 | | 81,376 | | 42,587 | |
Impairment of goodwill and other assets | | 3,313 | | 1,042,541 | | 5,013 | | 1,042,541 | |
Total operating expenses | | 94,306 | | 1,153,226 | | 429,580 | | 1,477,577 | |
Operating income / (loss) | | 36,585 | | (1,048,847 | ) | 94,526 | | (1,023,061 | ) |
Interest income | | 4,726 | | 5,409 | | 19,744 | | 28,766 | |
Interest expense | | (30,296 | ) | (38,136 | ) | (127,231 | ) | (168,291 | ) |
Other income, net | | (4,211 | ) | 7,524 | | 1,316 | | 20,559 | |
Interest and other expense, net | | (29,781 | ) | (25,203 | ) | (106,171 | ) | (118,966 | ) |
Income (loss) from continuing operations before income taxes | | 6,804 | | (1,074,050 | ) | (11,645 | ) | (1,142,027 | ) |
Provision for (benefit from) income taxes | | 6,782 | | (3,653 | ) | 25,754 | | (534 | ) |
Net income (loss) from continuing operations | | 22 | | (1,070,397 | ) | (37,399 | ) | (1,141,493 | ) |
Net income (loss) from discontinued operations, net of tax | | (11,264 | ) | (38,737 | ) | 24,987 | | 6,836 | |
Net income (loss) | | $ | (11,242 | ) | $ | (1,109,134 | ) | $ | (12,412 | ) | $ | (1,134,657 | ) |
Basic income (loss) per share from: | | | | | | | | | |
Continuing operations | | $ | 0.00 | | $ | (2.03 | ) | $ | (0.07 | ) | $ | (2.17 | ) |
Discontinued operations | | $ | (0.02 | ) | $ | (0.07 | ) | $ | 0.05 | | $ | 0.01 | |
Net income | | $ | (0.02 | ) | $ | (2.10 | ) | $ | (0.02 | ) | $ | (2.15 | ) |
| | | | | | | | | |
Diluted income (loss) per share from: | | | | | | | | | |
Continuing operations | | $ | 0.00 | | $ | (2.03 | ) | $ | (0.07 | ) | $ | (2.17 | ) |
Discontinued operations | | $ | (0.02 | ) | $ | (0.07 | ) | $ | 0.05 | | $ | 0.01 | |
Net income | | $ | (0.02 | ) | $ | (2.10 | ) | $ | (0.02 | ) | $ | (2.15 | ) |
| | | | | | | | | |
Weighted-average shares used in computing per share amounts: | | | | | | | | | |
Basic | | 531,222 | | 527,140 | | 530,721 | | 527,117 | |
Diluted | | 531,222 | | 527,140 | | 530,721 | | 527,117 | |
Press Release Financials | | SANMINA-SCI |
| | 2700 North First Street |
| | San Jose, CA 95134 |
| | Tel: 408-964-3610 |
Sanmina - - SCI Corporation
Reconciliation of GAAP to Non-GAAP Measures
(in thousands, except per share amounts)
(Unaudited)
| | Three Months Ended | | Twelve Months Ended | |
| | September 27,
2008 | | September 29,
2007 | | September 27,
2008 | | September 29,
2007 | |
GAAP Revenue - continuing operations | | $ | 1,703,579 | | $ | 1,753,905 | | $ | 7,202,403 | | $ | 7,137,793 | |
GAAP Revenue - discontinued operations | | 17,624 | | 751,511 | | 1,802,452 | | 3,246,461 | |
GAAP Revenue - total company | | $ | 1,721,203 | | $ | 2,505,416 | | $ | 9,004,855 | | $ | 10,384,254 | |
| | | | | | | | | |
GAAP Gross Profit - continuing operations | | $ | 130,891 | | $ | 104,379 | | $ | 524,106 | | $ | 454,516 | |
GAAP gross margin | | 7.7 | % | 6.0 | % | 7.3 | % | 6.4 | % |
Adjustments - continuing operations: | | | | | | | | | |
Stock compensation expense (1) | | 1,704 | | 4,146 | | 6,556 | | 7,459 | |
Amortization of intangible assets | | 233 | | 220 | | 970 | | 883 | |
Stock option investigation and integration | | — | | 1,150 | | (408 | ) | 1,150 | |
Non-GAAP Gross Profit - continuing operations | | 132,828 | | 109,895 | | 531,224 | | 464,008 | |
Non-GAAP gross margin - continuing operations | | 7.8 | % | 6.3 | % | 7.4 | % | 6.5 | % |
| | | | | | | | | |
GAAP Gross Profit - discontinued operations | | 3,772 | | 23,661 | | 60,784 | | 98,697 | |
Adjustments - discontinued operations: | | | | | | | | | |
Stock compensation expense (1) | | 44 | | 506 | | 361 | | 776 | |
Non-GAAP Gross Profit - total company | | $ | 136,644 | | $ | 134,062 | | $ | 592,369 | | $ | 563,481 | |
Non-GAAP gross margin - total company | | 7.9 | % | 5.4 | % | 6.6 | % | 5.4 | % |
| | | | | | | | | |
GAAP operating income (loss) - continuing operations | | $ | 36,585 | | $ | (1,048,847 | ) | $ | 94,526 | | $ | (1,023,061 | ) |
GAAP operating margin - continuing operations | | 2.1 | % | -59.8 | % | 1.3 | % | -14.3 | % |
Adjustments - continuing operations: | | | | | | | | | |
Stock compensation expense (1) | | 3,735 | | 7,362 | | 13,936 | | 20,592 | |
Amortization of intangible assets | | 1,883 | | 1,870 | | 7,570 | | 7,484 | |
Stock option investigation and integration | | 467 | | 4,739 | | 3,152 | | 11,408 | |
Restructuring costs | | 13,322 | | 15,008 | | 81,376 | | 42,587 | |
Impairment of goodwill and other assets | | 3,313 | | 1,042,541 | | 5,013 | | 1,042,541 | |
Non-GAAP operating income - continuing operations | | 59,305 | | 22,673 | | 205,573 | | 101,551 | |
Non-GAAP operating margin - continuing operations | | 3.5 | % | 1.3 | % | 2.9 | % | 1.4 | % |
| | | | | | | | | |
GAAP operating income (loss) - discontinued operations | | (1,273 | ) | (38,216 | ) | 39,463 | | 21,124 | |
Adjustments - discontinued operations: | | | | | | | | | |
Stock compensation expense (1) | | 51 | | 514 | | 401 | | 800 | |
Amortization of intangible assets | | — | | — | | — | | 31 | |
Restructuring costs | | 1,033 | | 693 | | 3,851 | | 2,015 | |
Impairment of assets | | 2,259 | | 57,109 | | 4,028 | | 57,109 | |
Non-GAAP operating income - total company | | $ | 61,375 | | $ | 42,773 | | $ | 253,316 | | $ | 182,630 | |
Non-GAAP operating margin - total company | | 3.6 | % | 1.7 | % | 2.8 | % | 1.8 | % |
| | | | | | | | | |
GAAP net income (loss) - continuing operations | | $ | 22 | | $ | (1,070,397 | ) | $ | (37,399 | ) | $ | (1,141,493 | ) |
Adjustments - continuing operations: | | | | | | | | | |
Operating income adjustments (see above) | | 22,720 | | 1,071,520 | | 111,047 | | 1,124,612 | |
Gain on sale of assets | | — | | (10,591 | ) | (2,622 | ) | (17,431 | ) |
Loss on redemption of debt (2) | | — | | — | | 2,237 | | 3,175 | |
Tax effect of above items | | 1,285 | | (458 | ) | (3,669 | ) | (27,134 | ) |
Non-GAAP net income (loss) - continuing operations | | 24,027 | | (9,926 | ) | 69,594 | | (58,271 | ) |
| | | | | | | | | |
GAAP net income - discontinued operations | | (11,264 | ) | (38,737 | ) | 24,987 | | 6,836 | |
Adjustments - discontinued operations: | | | | | | | | | |
Operating income adjustments (see above) | | 3,343 | | 58,316 | | 8,280 | | 59,955 | |
Loss on sale of discontinued operation | | 7,045 | | — | | 7,045 | | — | |
Tax effect of above items | | 2,956 | | 521 | | 3,595 | | 14,288 | |
Non-GAAP net income (loss) - total company | | $ | 26,107 | | $ | 10,174 | | $ | 113,501 | | $ | 22,808 | |
| | | | | | | | | |
Non-GAAP Earnings (loss) Per Share - continuing operations: | | | | | | | | | |
Basic | | $ | 0.05 | | $ | (0.02 | ) | $ | 0.13 | | $ | (0.11 | ) |
Diluted | | $ | 0.05 | | $ | (0.02 | ) | $ | 0.13 | | $ | (0.11 | ) |
| | | | | | | | | |
Non-GAAP Earnings (loss) Per Share - total company: | | | | | | | | | |
Basic | | $ | 0.05 | | $ | 0.02 | | $ | 0.21 | | $ | 0.04 | |
Diluted | | $ | 0.05 | | $ | 0.02 | | $ | 0.21 | | $ | 0.04 | |
| | | | | | | | | |
Weighted-average shares used in computing Non-GAAP earnings per share amounts: | | | | | | | | | |
Basic | | 531,222 | | 527,140 | | 530,721 | | 527,117 | |
Diluted | | 531,652 | | 529,309 | | 531,023 | | 528,965 | |
(1) Stock compensation expense was as follows: | | | | | | | | | |
| | Three Months Ended | | Twelve Months Ended | |
| | September 27,
2008 | | September 29,
2007 | | September 27,
2008 | | September 29,
2007 | |
| | | | | | | | | |
Cost of sales | | $ | 1,704 | | $ | 4,146 | | $ | 6,556 | | $ | 7,459 | |
Selling, general and administrative | | 1,951 | | 2,947 | | 7,073 | | 12,568 | |
Research and development | | 80 | | 269 | | 307 | | 565 | |
Stock compensation expense - continuing operations | | 3,735 | | 7,362 | | 13,936 | | 20,592 | |
Discontinued operations | | 51 | | 514 | | 401 | | 800 | |
Stock compensation expense - total company | | $ | 3,786 | | $ | 7,876 | | $ | 14,337 | | $ | 21,392 | |
(2) Write-off of prepaid financing fees related to debt that was repaid prior to maturity. |
