Exhibit 99.1
FOR IMMEDIATE RELEASE
SANMINA-SCI ANNOUNCES SECOND QUARTER FISCAL 2009 RESULTS
SAN JOSE, CA (April 22, 2009) - Sanmina-SCI Corporation (the “Company”/ Nasdaq GS: SANM), a leading global Electronics Manufacturing Services (EMS) company, today reported financial results for the second fiscal quarter ended March 28, 2009.
Revenue for the second quarter was $1.2 billion, compared to $1.4 billion in the prior quarter ended December 27, 2008.
GAAP Financial Results
GAAP net loss in the second quarter was $37.5 million and diluted loss per share of 7 cents, compared to a net loss of $25.3 million and diluted loss per share of 5 cents in the prior quarter.
Non-GAAP Financial Results(2)
Non-GAAP gross profit in the second quarter was $70.6 million, or 5.9 percent of revenue, compared to gross profit of $95.9 million, or 6.7 percent of revenue in the first quarter. Non-GAAP operating income was $11.4 million, or 1 percent of revenue in the quarter compared to $31.2 million, or 2.2 percent of revenue in the prior quarter.
Non-GAAP net loss in the second quarter was $30.9 million, a diluted loss per share of 6 cents, compared to a net loss of $768 thousand and break-even diluted earnings per share in the prior quarter.
(In thousands, except per share data) | | Q2:2009 | | Q1:2009 | | Q2:2008(1) | |
GAAP: | | | | | | | |
Revenue | | $ | 1,195,107 | | $ | 1,419,264 | | $ | 1,817,431 | |
Net loss | | $ | (37,538 | ) | $ | (25,273 | ) | $ | (39,937 | ) |
Loss per share | | $ | (0.07 | ) | $ | (0.05 | ) | $ | (0.08 | ) |
Non-GAAP*: | | | | | | | |
Revenue | | $ | 1,195,107 | | $ | 1,424,264 | | $ | 1,817,431 | |
Gross profit | | $ | 70,590 | | $ | 95,896 | | $ | 126,051 | |
Gross margin | | 5.9 | % | 6.7 | % | 6.9 | % |
Operating income | | $ | 11,441 | | $ | 31,164 | | $ | 44,862 | |
Operating margin | | 1.0 | % | 2.2 | % | 2.5 | % |
Net income (loss) | | $ | (30,949 | ) | $ | (768 | ) | $ | 14,453 | |
Earnings (loss) per share | | $ | (0.06 | ) | $ | (0.00 | ) | $ | 0.03 | |
* 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 provided in this release and is available in the Investor Relations section of our website at www.sanmina-sci.com.
Second Quarter Balance Sheet Highlights
· Ending cash balance increased $55 million to $851.5 million
· Cash flow from operations was $97 million(3)
· Inventories improved $78 million
· Retired $34 million of outstanding debt and repurchased 23 million shares
“The difficult economic challenges we continued to face in the second quarter impacted all of our market segments. Demand was weak in January and February, but we did see signs of stabilization in March. As we await further economic recovery, we are cautiously optimistic that the third quarter will continue to stabilize,” stated Jure Sola, Chairman and Chief Executive Officer.
“We continue to make progress in those areas we can control and I am pleased with our ability to manage our working capital metrics and generate cash in the second quarter. Our cash position increased $55 million sequentially while we retired $34 million of debt in the quarter. We are well positioned to weather the economic uncertainties with a strong balance sheet and a healthy debt maturity profile. We remain focused on cost reduction initiatives, inventory management, positive cash flow generation, increased liquidity and providing innovative technology to our customers.”
Third Quarter Fiscal 2009 Outlook
The following internal forecast for the third fiscal quarter ending June 27, 2009 is based on current market demand. These statements are forward-looking and actual results may differ materially.
· Revenue between $1.175 billion to $1.250 billion
· Non-GAAP diluted loss per share between ($0.04) to ($0.02)
· Expect to generate positive cash flow from operations
“Short-term visibility has improved slightly as we enter the third quarter. We are taking aggressive actions to make the company more efficient at the current revenue level which will allow us to enhance our future financial performance as market demand normalizes,” concluded Sola.
(1)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. Therefore, results for the second quarter fiscal 2008 are based on continuing operations.
(2)Non-GAAP Financial Information
In the commentary set forth above, we present the following non-GAAP financial measures: revenue, 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.
Management excludes certain charges and expenses from the data it uses to evaluate the condition of the business because, in its view, such charges and expenses do not relate to the ongoing core operations of the business. For example, the features and costs of products and the locations of manufacture can change over time, and these changes in some instances may require reorganization or closure of certain plants and the layoffs of related employees. These actions, in turn, generate restructuring expense applicable to the particular plant reorganized or closed. Including these charges in the operating results evaluated by management would prevent the Company from discovering the underlying performance of individual plants or business units which, but for changes in customer requirements, would have continued operations. Such individual plant-level information is consolidated to present to management a view of the Company’s operations as a whole. Similarly, since not all employees hold equal numbers of stock options, inclusion of stock compensation expense in operating results would decrease the perceived performance of business units whose employees hold more stock options compared to business units whose employees hold fewer stock options. As a result, management can only discover long-term trends in the Company’s core business operations by evaluating key operational expenses such as ongoing purchases of inventory for assembly, payment of payroll obligations for continuing employees, interest expense relating to the Company’s debt obligations and lease payments for operating facilities. Moreover, we believe the exclusion of these charges provides for a more accurate comparison of our results to those of our peers due to the varying available valuation methodologies, subjective assumptions and variety of award types.
Therefore, we believe that presenting non-GAAP financial measures in addition to GAAP results 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 third quarter outlook information 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.
(3)GAAP cash flow from operations equals internal operating cash flow of $134 million, which includes $40 million from the factoring of A/R, less cash restructuring payments of $21 million and a payment related to the divesture of the PC business of $16 million.
Company Conference Call Information
Sanmina-SCI will be holding a conference call regarding this announcement on Wednesday, April 22, 2009 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 93674373.
About Sanmina-SCI
Sanmina-SCI Corporation is a leading electronics contract manufacturer serving leading 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 OEMs primarily in the communications, defense and aerospace, industrial and medical instrumentation, multimedia, enterprise computing and storage, and automotive technology sectors. Sanmina-SCI has facilities strategically located in key regions throughout the world. More information regarding the company is available at http://www.sanmina-sci.com.
Sanmina-SCI Safe Harbor Statement
Certain statements contained in this press release, including the Company’s expectations for future revenue, earnings per share and cash flow 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 continued deterioration of the market for the Company’s customers’ products and the global economy as a whole, which could negatively impact the Company’s revenue and the Company’s customers’ ability to pay for the Company’s products; customer bankruptcy filings; the sufficiency of the Company’s cash position and other sources of liquidity to operate and expand its business; impact of the restrictions contained in the Company’s credit agreements and indentures upon the Company’s ability to operate and expand its business; competition negatively impacting the Company’s revenues and margins; any failure of the Company to effectively assimilate acquired businesses and achieve the anticipated benefits of its acquisitions; the failure of the Company’s cost reduction efforts to be successful for any reason, including the need to suspend such initiatives for business reasons; and the other factors set forth in the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended December 27, 2008 filed with the Securities Exchange Commission (“SEC”).
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
Director, Investor Relations
408-964-3610
SANMF
Sanmina - SCI Corporation
Condensed Consolidated Balance Sheets
(In thousands)
(GAAP)
| | March 28, | | September 27, | |
| | 2009 | | 2008 | |
| | (Unaudited) | | | |
ASSETS | | | | | |
| | | | | |
Current assets: | | | | | |
Cash and cash equivalents | | $ | 851,497 | | $ | 869,801 | |
Accounts receivable, net | | 710,087 | | 986,312 | |
Inventories | | 706,024 | | 813,359 | |
Prepaid expenses and other current assets | | 69,743 | | 100,399 | |
Assets held for sale | | 46,121 | | 43,163 | |
Total current assets | | 2,383,472 | | 2,813,034 | |
| | | | | |
Property, plant and equipment, net | | 574,692 | | 599,908 | |
Other non-current assets | | 132,321 | | 117,785 | |
Total assets | | $ | 3,090,485 | | $ | 3,530,727 | |
| | | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | |
| | | | | |
Current liabilities: | | | | | |
Accounts payable | | $ | 679,484 | | $ | 908,151 | |
Accrued liabilities | | 149,611 | | 191,022 | |
Accrued payroll and related benefits | | 98,389 | | 139,522 | |
Total current liabilities | | 927,484 | | 1,238,695 | |
| | | | | |
Long-term liabilities: | | | | | |
Long-term debt | | 1,451,623 | | 1,481,985 | |
Other | | 99,339 | | 114,089 | |
Total long-term liabilities | | 1,550,962 | | 1,596,074 | |
| | | | | |
Total stockholders’ equity | | 612,039 | | 695,958 | |
Total liabilities and stockholders’ equity | | $ | 3,090,485 | | $ | 3,530,727 | |
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(GAAP)
(Unaudited)
| | Three Months Ended | | Six Months Ended | |
| | March 28, 2009 | | March 29,
2008 | | March 28,
2009 | | March 29, 2008 | |
| | | | | | | | | |
Net sales | | $ | 1,195,107 | | $ | 1,817,431 | | $ | 2,614,371 | | $ | 3,595,571 | |
Cost of sales | | 1,126,517 | | 1,692,786 | | 2,461,983 | | 3,341,997 | |
Gross profit | | 68,590 | | 124,645 | | 152,388 | | 253,574 | |
| | | | | | | | | |
Operating expenses: | | | | | | | | | |
Selling, general and administrative | | 57,055 | | 79,336 | | 120,042 | | 168,414 | |
Research and development | | 4,720 | | 4,253 | | 8,912 | | 8,859 | |
Amortization of intangible assets | | 1,023 | | 1,650 | | 2,673 | | 3,300 | |
Restructuring costs | | 15,574 | | 48,019 | | 24,809 | | 54,798 | |
Asset impairment | | 3,384 | | — | | 7,182 | | — | |
Total operating expenses | | 81,756 | | 133,258 | | 163,618 | | 235,371 | |
| | | | | | | | | |
Operating income | | (13,166 | ) | (8,613 | ) | (11,230 | ) | 18,203 | |
| | | | | | | | | |
Interest income | | 1,829 | | 5,229 | | 5,279 | | 11,446 | |
Interest expense | | (28,112 | ) | (31,611 | ) | (57,295 | ) | (66,974 | ) |
Other income (expense), net | | 4,923 | | 4,272 | | 5,476 | | (368 | ) |
Interest and other expense, net | | (21,360 | ) | (22,110 | ) | (46,540 | ) | (55,896 | ) |
| | | | | | | | | |
Loss from continuing operations before income taxes | | (34,526 | ) | (30,723 | ) | (57,770 | ) | (37,693 | ) |
| | | | | | | | | |
Provision for income taxes | | 3,012 | | 9,214 | | 5,041 | | 11,697 | |
| | | | | | | | | |
Net loss from continuing operations | | (37,538 | ) | (39,937 | ) | (62,811 | ) | (49,390 | ) |
| | | | | | | | | |
Net income from discontinued operations, net of tax | | — | | 15,523 | | — | | 32,892 | |
| | | | | | | | | |
Net loss | | $ | (37,538 | ) | $ | (24,414 | ) | $ | (62,811 | ) | $ | (16,498 | ) |
| | | | | | | | | |
Basic and diluted income (loss) per share from: | | | | | | | | | |
Continuing operations | | $ | (0.07 | ) | $ | (0.08 | ) | $ | (0.12 | ) | $ | (0.09 | ) |
Discontinued operations | | $ | — | | $ | 0.03 | | $ | — | | $ | 0.06 | |
Net income | | $ | (0.07 | ) | $ | (0.05 | ) | $ | (0.12 | ) | $ | (0.03 | ) |
| | | | | | | | | |
Weighted-average shares used in computing per share amounts: | | | | | | | | | |
Basic and diluted | | 500,718 | | 530,747 | | 512,459 | | 530,200 | |
Sanmina - - SCI Corporation
Reconciliation of GAAP to Non-GAAP Measures
(in thousands, except per share amounts)
(Unaudited)
| | Three Months Ended | | Six Months Ended | |
| | March 28, 2009 | | December 27,
2008 | | March 29, 2008 | | March 28, 2009 | | March 29, 2008 | |
| | | | | | | | | | | |
GAAP Revenue | | $ | 1,195,107 | | $ | 1,419,264 | | $ | 1,817,431 | | $ | 2,614,371 | | $ | 3,595,571 | |
Adjustments | | | | | | | | | | | |
Customer bankruptcy reorganization (1) | | — | | 5,000 | | — | | 5,000 | | — | |
Non-GAAP Revenue | | $ | 1,195,107 | | $ | 1,424,264 | | $ | 1,817,431 | | $ | 2,619,371 | | $ | 3,595,571 | |
| | | | | | | | | | | |
GAAP Gross Profit | | $ | 68,590 | | $ | 83,798 | | $ | 124,645 | | $ | 152,388 | | $ | 253,574 | |
GAAP gross margin | | 5.7 | % | 5.9 | % | 6.9 | % | 5.8 | % | 7.1 | % |
Adjustments | | | | | | | | | | | |
Stock compensation expense (2) | | 2,000 | | 1,865 | | 1,581 | | 3,865 | | 3,281 | |
Amortization of intangible assets | | — | | 233 | | 233 | | 233 | | 504 | |
Stock option investigation costs | | — | | — | | (408 | ) | — | | (408 | ) |
Customer bankruptcy reorganization (1) | | — | | 10,000 | | — | | 10,000 | | — | |
Non-GAAP Gross Profit | | $ | 70,590 | | $ | 95,896 | | $ | 126,051 | | $ | 166,486 | | $ | 256,951 | |
Non-GAAP gross margin | | 5.9 | % | 6.7 | % | 6.9 | % | 6.4 | % | 7.1 | % |
| | | | | | | | | | | |
GAAP operating income (loss) | | $ | (13,166 | ) | $ | 1,936 | | $ | (8,613 | ) | $ | (11,230 | ) | $ | 18,203 | |
GAAP operating margin | | -1.1 | % | 0.1 | % | -0.5 | % | -0.4 | % | 0.5 | % |
Adjustments | | | | | | | | | | | |
Stock compensation expense (2) | | 4,326 | | 4,162 | | 3,738 | | 8,488 | | 7,015 | |
Amortization of intangible assets | | 1,023 | | 1,883 | | 1,883 | | 2,906 | | 3,804 | |
Stock option investigation and integration | | 300 | | 150 | | (165 | ) | 450 | | 2,098 | |
Customer bankruptcy reorganization (1) | | — | | 10,000 | | — | | 10,000 | | — | |
Restructuring costs | | 15,574 | | 9,235 | | 48,019 | | 24,809 | | 54,798 | |
Impairment of goodwill and other assets | | 3,384 | | 3,798 | | — | | 7,182 | | — | |
Non-GAAP operating income | | $ | 11,441 | | $ | 31,164 | | $ | 44,862 | | $ | 42,605 | | $ | 85,918 | |
Non-GAAP operating margin | | 1.0 | % | 2.2 | % | 2.5 | % | 1.6 | % | 2.4 | % |
| | | | | | | | | | | |
GAAP net loss | | $ | (37,538 | ) | $ | (25,273 | ) | $ | (24,414 | ) | $ | (62,811 | ) | $ | (16,498 | ) |
Adjustments | | | | | | | | | | | |
Net income from discontinued operations, net of tax | | — | | — | | (15,523 | ) | — | | (32,892 | ) |
| | | | | | | | | | | |
GAAP net loss - continuing operations | | (37,538 | ) | (25,273 | ) | (39,937 | ) | (62,811 | ) | (49,390 | ) |
Adjustments - continuing operations: | | | | | | | | | | | |
Operating income adjustments (see above) | | 24,607 | | 29,228 | | 53,475 | | 53,835 | | 67,715 | |
Net gain on derivative financial instruments and other (3) | | — | | (4,993 | ) | — | | (4,993 | ) | — | |
Impairment of long-term investment | | 1,000 | | — | | — | | 1,000 | | — | |
(Gain) / loss on redemption of debt (4) | | (13,490 | ) | — | | — | | (13,490 | ) | 2,237 | |
Tax effect of above items | | (5,528 | ) | 270 | | 915 | | (5,258 | ) | (1,004 | ) |
Non-GAAP net income (loss) - continuing operations | | $ | (30,949 | ) | $ | (768 | ) | $ | 14,453 | | $ | (31,717 | ) | $ | 19,558 | |
| | | | | | | | | | | |
Non-GAAP Basic Earnings (Loss) Per Share: | | | | | | | | | | | |
Continuing operations | | $ | (0.06 | ) | $ | (0.00 | ) | $ | 0.03 | | $ | (0.06 | ) | $ | 0.04 | |
| | | | | | | | | | | |
Non-GAAP Diluted Earnings (loss) Per Share: | | | | | | | | | | | |
Continuing operations | | $ | (0.06 | ) | $ | (0.00 | ) | $ | 0.03 | | $ | (0.06 | ) | $ | 0.04 | |
| | | | | | | | | | | |
Weighted-average shares used in computing Non-GAAP earnings per share amounts: | | | | | | | | | | | |
Basic | | 500,718 | | 523,316 | | 530,747 | | 512,459 | | 530,200 | |
Diluted | | 500,718 | | 523,316 | | 530,895 | | 512,459 | | 530,428 | |
(1) Relates to revenue reversal and inventory reserves associated with a customer’s bankruptcy reorganization announcement.
(2) Stock compensation expense was as follows:
| | Three Months Ended | | Six Months Ended | |
| | March 28, 2009 | | December 27,
2008 | | March 29, 2008 | | March 28, 2009 | | March 29, 2008 | |
| | | | | | | | | | | |
Cost of sales | | $ | 2,000 | | $ | 1,865 | | $ | 1,581 | | $ | 3,865 | | $ | 3,281 | |
Selling, general and administrative | | 2,237 | | 2,212 | | 2,077 | | 4,449 | | 3,557 | |
Research and development | | 89 | | 85 | | 80 | | 174 | | 177 | |
Stock compensation expense - continuing operations | | 4,326 | | 4,162 | | 3,738 | | 8,488 | | 7,015 | |
Discontinued operations | | — | | — | | 140 | | — | | 270 | |
Stock compensation expense - total company | | $ | 4,326 | | $ | 4,162 | | $ | 3,878 | | $ | 8,488 | | $ | 7,285 | |
(3) Relates primarily to a gain on interest rate swaps not accounted for as hedging instruments during a portion of the quarter due to termination of a swap
(4) Represents gain or loss, including write-off of unamortized issuance costs, on debt redeemed prior to maturity.
