EXHIBIT 99.01
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FLEXTRONICS
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2 CHANGI SOUTH LANE TEL: +65.6299.8888
PRESS RELEASE
SINGAPORE 486123
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FLEXTRONICS CONTACTS:
Laurette Slawson Hartigan
Vice President Treasurer &
Investor Relations
+1.408.576.7722
investor_relations@flextronics.com
Renee Brotherton
Director of Corporate Marketing
+1.408.576.7189
renee.brotherton@flextronics.com
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FLEXTRONICS ANNOUNCES FIRST QUARTER RESULTS
SINGAPORE, JULY 24, 2003 - Flextronics International Ltd. (NASDAQ: FLEX) today
announced results for the quarter ended June 30, 2003, as follows:
($ in millions, except EPS) (1) QUARTER ENDED
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JUNE 30, JUNE 30,
2003 2002
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Net sales $ 3,106.7 $ 3,127.0
Proforma operating income $ 48.6 $ 52.4
GAAP operating loss $ (278.5) $ (155.4)
Proforma net income $ 20.4 $ 30.1
GAAP net loss $ (289.7) $ (131.2)
Diluted proforma EPS $ 0.04 $ 0.06
Diluted GAAP EPS $ (0.56) $ (0.25)
(1) Proforma results exclude intangibles amortization, costs associated
with the early extinguishment of debt and restructuring charges, as
applicable. See Schedule 1 for a reconciliation of proforma results
to generally accepted accounting principles ("GAAP") results.
Net sales totaled $3.1 billion for the quarter ended June 30, 2003, reflecting a
1.5% sequential increase over the prior quarter sales. Proforma net income was
$20.4 million or $0.04 per diluted share, which is down moderately from $25.4
million or $0.05 per diluted share, respectively, in the prior sequential
quarter. After including after-tax amortization expense of $7.9 million and
unusual charges of $302.2 million, Flextronics incurred a GAAP loss of $289.7
million, which amounts to a $0.56 loss per diluted share.
The unusual charges recorded in the June quarter of 2003 includes a $8.7 million
after-tax loss on the early retirement of debt and an after-tax restructuring
charge of $293.5 million, the cash portion of which is $21.2 million. The
restructuring charges include $230.0 million for the closure of two facilities
and an asset impairment charge relating to our Multek PCB business. The
remaining restructuring charge relates to the closure and consolidation of
facilities in our
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FLEXTRONICS
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2 CHANGI SOUTH LANE TEL: +65.6299.8888
PRESS RELEASE
SINGAPORE 486123
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other business units. In order to optimize the operating efficiencies provided
by our global footprint, to reduce the overall risk profile of the Company, and
to provide for additional margin upsides in the future, we expect to complete
some final optimization of facilities during the remainder of our fiscal year.
This strategic decision, combined with additional charges relating to the June
quarter restructuring that could not be accrued for in that quarter pursuant to
GAAP, will result in recognizing additional restructuring charges over the next
few quarters that should total approximately $85 million.
The Company strengthened its liquidity again in the June quarter with cash
increasing to $860 million and total liquidity reaching $1.7 billion. Cash flow
from operations contributed $246 million while the Company continued to lead the
industry in working capital management with a cash conversion cycle of 25 days,
a one-day improvement over the prior quarter.
"The June quarter was very similar to the March quarter with the exception of
net interest expense, and to us that demonstrates stability in our business and
is in line with our belief that end markets have stabilized as well." said
Michael E. Marks, Chief Executive Officer of Flextronics. "Whether an upturn is
underway is difficult to know, but in our view demand is slightly improving.
Restructuring activities and cost reductions are continuing across the industry,
and this should work to improve margins." With regard to the business outlook,
Mr. Marks continued to say: "Our business is stable and we continue to generate
cash. We have aggressively invested over the last several years to expand our
portfolio of value-added services. We are making excellent progress in a number
of very important design related initiatives, and we expect to see results from
these efforts this fiscal year. Our company is in fine financial shape, and is
well respected in the industry and by our customer base."
In terms of guidance, the Company indicated that the September quarter should
generate sales in the range of $3.3 - $3.5 billion and proforma earnings of
$0.06 - $0.08 per share and its expectations for the December quarter are for
sales of $3.5 - $3.9 billion, and earnings of $0.11 - $0.15 per share. GAAP
earnings are expected to be lower than proforma earnings reflecting
approximately 2 cents per diluted share of quarterly amortization expenses as
well as the further restructuring charges, which we expect will total
approximately $85 million, or 15 cents in total per diluted share, spread over
the next few quarters. The actual timing of such charges, and accordingly the
actual difference between quarterly proforma and GAAP earnings, has yet to be
determined.
Mr. Marks concluded by saying, "We are committed to getting back to 20% or more
of year over year proforma earnings improvement. We believe that we will achieve
those kinds of numbers beginning in the March quarter, and as we move into next
fiscal year. If our ODM activities develop as we hope, or if there is a more
generalized recovery in the end markets, we should do even better."
A conference call hosted by Flextronics' management will be held today at 1:30
p.m. PST to further discuss the financial results of the Company and its future
outlook. This call will be broadcast via the Internet and may be accessed by
logging on to the Company's website at www.flextronics.com. Additional
information in the form of a slide presentation and CEO's Letter that summarizes
and discusses the quarterly results may also be found on the site. A replay of
the broadcast will remain available on the Company's website after the call.
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FLEXTRONICS
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2 CHANGI SOUTH LANE TEL: +65.6299.8888
PRESS RELEASE
SINGAPORE 486123
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Minimum requirements to listen to the broadcast are Microsoft Windows Media
Player software (free download at
http://www.microsoft.com/windows/windowsmedia/download/default.asp) and at least
a 28.8 Kbps bandwidth connection to the Internet.
ABOUT FLEXTRONICS
Headquartered in Singapore, Flextronics is the leading Electronics Manufacturing
Services (EMS) provider focused on delivering operational services to technology
companies. With fiscal year 2003 revenues of $13.4 billion, Flextronics is a
major global operating company with design, engineering, manufacturing and
logistics operations in 29 countries and five continents. This global presence
allows for manufacturing, excellence through a network of facilities situated in
key markets and geographies that provide its customers with the
resources, technology, and capacity to optimize their operations. Flextronics'
ability to provide end-to-end operational services that include innovative
product design, test solutions, manufacturing, IT expertise, network services
and logistics has established the Company as the leading EMS provider. For more
information, please visit www.flextronics.com.
# # #
This news release, the CEO's Letter to the Shareholders and the earnings
slide presentation contain forward-looking statements within the meaning of
federal securities laws and are subject to the safe harbor under those laws.
These forward-looking statements include statements related to our future
growth, trends in our industry, expected charges and the level of future
restructuring requirements, end market demand, expansion of and changes in our
client base, our ODM initiative, our anticipated operating results, financial
position and profitability. These forward-looking statements involve risks and
uncertainties that could cause the actual results to differ materially from
those anticipated by these forward-looking statements. These risks include the
challenges of effectively managing our operations, particularly during uncertain
economic conditions, the need for future restructurings, integrating acquired
companies, responding to changes in economic trends and to fluctuations in
demand for customers' products and changes in customers' orders, our dependence
on a small number of large customers, our dependence on industries affected by
rapid technological change, competition in our industry and the other risks
described under "Management's Discussion and Analysis of Financial Condition and
Results of Operations - Certain Factors Affecting Future Operating Results" in
our most recent Annual Report on Form 10-K and quarterly reports on Form 10-Q
and current reports on Form 8-K, filed with the SEC. The forward-looking
statements in this news release, the Chairman's Letter to the Shareholders and
the earnings slide presentation, are based on current expectations, and
Flextronics assumes no obligation to update these forward-looking statements.
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FLEXTRONICS
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2 CHANGI SOUTH LANE TEL: +65.6299.8888
PRESS RELEASE
SINGAPORE 486123
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SCHEDULE 1
FLEXTRONICS INTERNATIONAL LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
FIRST QUARTER ENDED JUNE 30, 2003 FIRST QUARTER ENDED JUNE 30, 2002
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PROFORMA PROFORMA
PROFORMA(1) ADJUSTMENTS GAAP PROFORMA(1) ADJUSTMENTS GAAP
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Net sales $ 3,106,677 $ 3,106,677 $ 3,127,027 $ 3,127,027
Cost of sales 2,941,636 2,941,636 2,959,930 2,959,930
Unusual charges -- 308,835 308,835 -- 179,352 179,352
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Gross profit (loss) 165,041 (308,835) (143,794) 167,097 (179,352) (12,255)
Selling, general and administrative 116,415 116,415 114,699 114,699
Unusual charges -- 18,273 18,273 -- 28,471 28,471
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Operating income (loss) 48,626 (327,108) (278,482) 52,398 (207,823) (155,425)
Intangibles amortization -- 8,817 8,817 -- 3,234 3,234
Interest and other expense, net 25,911 25,911 18,999 18,999
Loss on early extinguishment of debt -- 8,695 8,695 -- --
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Income (loss) before income taxes 22,715 (344,620) (321,905) 33,399 (211,057) (177,658)
Provision for (benefit from) income taxes 2,272 (34,462) (32,190) 3,340 (49,826) (46,486)
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Net income (loss) $ 20,443 $ (310,158) $ (289,715) $ 30,059 $ (161,231) $ (131,172)
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Earnings (loss) per share:
Basic $ 0.04 $ (0.56) $ 0.06 $ (0.25)
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Diluted $ 0.04 $ (0.56) $ 0.06 $ (0.25)
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Shares used in computing per share amounts:
Basic 521,100 521,100 515,016 515,016
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Diluted 549,995 521,100 524,942 515,016
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(1) Proforma results exclude intangibles amortization, costs associated
with the early extinguishment of debt and restructuring charges, as
applicable.
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FLEXTRONICS
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2 CHANGI SOUTH LANE TEL: +65.6299.8888
PRESS RELEASE
SINGAPORE 486123
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SCHEDULE 2
FLEXTRONICS INTERNATIONAL LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
(UNAUDITED)
JUNE 30, MARCH 31,
2003 2003
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ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 859,751 $ 424,020
Accounts receivable, net 1,496,208 1,417,086
Inventories, net 1,150,573 1,141,559
Deferred income taxes 31,528 29,153
Other current assets 487,560 466,942
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Total current assets 4,025,620 3,478,760
Property, plant and equipment, net 1,695,647 1,965,729
Deferred income taxes 453,862 415,041
Goodwill and other intangibles, net 2,269,448 2,192,910
Other assets 422,357 341,664
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Total assets $8,866,934 $8,394,104
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LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Bank borrowings and current portion of long-term debt $ 53,348 $ 52,484
Current portion of capital lease obligations 5,566 7,622
Accounts payable 1,863,149 1,601,923
Other current liabilities 964,913 918,990
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Total current liabilities 2,886,976 2,581,019
Long-term debt and capital lease obligations, net of current
portion 1,400,087 1,049,853
Other liabilities 233,550 221,212
Shareholders' equity 4,346,321 4,542,020
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Total liabilities and shareholders' equity $8,866,934 $8,394,104
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