Solectron Announces Third Quarter Financial Results



    MILPITAS, CALIF., June 28 /CNW/ - Solectron Corporation (NYSE:  SLR), a
leading provider of integrated electronic supply chain services including
design, manufacturing and aftermarket services, today reported sales of $2.99
billion in the third quarter of fiscal 2007, an increase of 3 percent over
second quarter fiscal 2007 revenues of $2.90 billion, and an increase of 10
percent over third quarter fiscal 2006 revenues of $2.70 billion.

    The company reported GAAP profit after tax from continuing operations of
$12.2 million, or $0.01 per share, in the third quarter of fiscal 2007,
compared with a GAAP profit after tax from continuing operations of $15.6
million, or $0.02 per share, in the second quarter of fiscal 2007. In the
third quarter of fiscal 2006, Solectron reported a GAAP profit after tax from
continuing operations of $42.4 million, or $0.05 per share.

    Non-GAAP profit after tax from continuing operations was $50.2 million,
or $0.06 per share, in the third quarter of fiscal 2007, compared with
non-GAAP profit after tax from continuing operations of $41.0 million, or
$0.05 per share, for the second quarter of fiscal 2007. In the third quarter
of fiscal 2006, Solectron reported non-GAAP profit after tax from continuing
operations of $38.9 million, or $0.04 per share. Non-GAAP financial results do
not include restructuring costs, impairment charges, amortization of
intangibles, or stock-based compensation expenses. Please refer to "Non-GAAP
Information" below for further information.

    Recent Announcement of Acquisition

    On June 4, 2007 Solectron Corporation and Flextronics International Ltd.
("Flextronics") (NASDAQ:  FLEX) announced that the two companies have entered
into a definitive agreement for Flextronics to acquire Solectron. The merger
agreement has been filed with the SEC. The transaction is expected to close in
the fourth calendar quarter of 2007.

    Non-GAAP Information

    In addition to disclosing results determined in accordance with GAAP,
Solectron also discloses non-GAAP results of operations that exclude certain
items. By disclosing this non-GAAP information, management intends to provide
investors with additional information to further analyze the company's
performance, core results and underlying trends. Management utilizes a measure
of net income and earnings per share on a non-GAAP basis that excludes certain
charges to better assess operating performance.

    Consistent with industry practice, management has historically applied
these non-GAAP measures when discussing earnings or earnings guidance and
intends to continue doing so.

    Non-GAAP information is not determined using GAAP. Therefore, the
information is not necessarily comparable to other companies and should not be
used to compare the company's performance over different periods. Non-GAAP
information should not be viewed as a substitute for, or superior to, net
income or other data prepared in accordance with GAAP as measures of our
profitability or liquidity. Users of this financial information should
consider the types of events and transactions for which adjustments have been
made. In addition, Solectron's GAAP financial results often reflect one-time
events and adjustments, and therefore a comparison of GAAP results over
different periods can be difficult. See the tables at the end of this press
release for a reconciliation of non-GAAP amounts to amounts reported under
GAAP. A reconciliation from non-GAAP to GAAP results is contained in the
attached financial summary and is available in the Investor Relations section
of our website at www.solectron.com.

    Webcast To Be Held Today

    At 4:30 p.m. ET today, Solectron will hold a conference call to discuss
its third quarter financial results. A live webcast can be accessed at
www.solectron.com. Supplemental financial information related to the
conference call will also be available in the Investor Relations section of
this Web site. Following the live broadcast, the archived webcast will be
available at www.solectron.com/investor/events.htm.

    An audio replay will also be available two hours after the conclusion of
the call. To access the replay, call +1 (800) 642 1687 from within the United
States, or +1 (706) 645 9291 from outside the United States, and specify pass
code 2379358.

    Safe Harbor

    This release contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended regarding the expected closing
date of the transaction with Flextronics. This forward-looking statement
involves a number of risks and uncertainties, and are based on current
expectations, forecasts and assumptions.

    Actual outcomes and results could differ materially. These risks and
uncertainties include the possibility that the acquisition may not be
completed as planned or at all, and that the parties may experience
difficulties or delays in obtaining regulatory or shareholder approvals for
the proposed transaction.

    For a further list and description of risks and uncertainties, see the
reports filed by Solectron with the Securities and Exchange Commission.
Solectron disclaims any intention or obligation to update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise. Supplemental information, condensed consolidated balance
sheets and statements of operations follow. All monetary amounts are stated in
U.S. dollars.

    About Solectron

    Solectron Corporation is one of the world's largest providers of complete
product lifecycle services. We offer collaborative design and new product
introduction, supply chain management, Lean manufacturing and aftermarket
services such as product warranty repair and end-of-life support to leading
customers worldwide. Solectron works with the world's premier providers of
networking, telecommunications, computing, storage, consumer, automotive,
industrial, medical, self-service automation and aerospace and defense
products. The company's industry-leading Lean Six Sigma methodology (Solectron
Production System(TM)) provides OEMs with quality, flexibility, innovation and
cost benefits that improve competitive advantage. Based in Milpitas, Calif.,
Solectron operates in more than 20 countries on five continents and had sales
from continuing operations of $10.6 billion in fiscal 2006. For more
information, visit us at www.solectron.com.

    Note: SOLECTRON and the Solectron logo are registered trademarks of
Solectron Corporation. The Solectron Production System, SPS, and Solectron
Supply Chain Solutions Suite are also trademarks of Solectron Corporation.
Other names mentioned are trademarks, registered trademarks or service marks
of their respective owners.

    Additional Information and Where to Find it:

    In connection with the proposed merger, Flextronics intends to file with
the Securities and Exchange Commission ("SEC") a Registration Statement on
Form S-4 that will contain a Joint Proxy Statement/Prospectus. Investors and
security holders are urged to read the Registration Statement and the Joint
Proxy Statement/Prospectus carefully when they become available because they
will contain important information about Flextronics, Solectron and the
proposed merger. The Joint Proxy Statement/Prospectus and other relevant
materials (when they become available), and any other documents filed with the
SEC, may be obtained free of charge at the SEC's web site www.sec.gov. In
addition, investors and security holders may obtain a free copy of other
documents filed by Flextronics or Solectron by directing a written request, as
appropriate, to Solectron at 847 Gibraltar Drive, Milpitas, CA 95035,
Attention: Investor Relations, or to Flextronics's U.S. offices at 2090
Fortune Drive, San Jose, CA 95131, Attention: Investor Relations. Investors
and security holders are urged to read the Joint Proxy Statement/Prospectus
and the other relevant materials when they become available before making any
voting or investment decision with respect to the proposed merger.

    This communication shall not constitute an offer to sell or the
solicitation of an offer to sell or the solicitation of an offer to buy any
securities, nor shall there be any sale of securities in any jurisdiction in
which such offer, solicitation or sale would be unlawful prior to registration
or qualification under the securities laws of such jurisdiction. No offering
of securities shall be made except by means of a prospectus meeting the
requirements of Section 10 of the Securities Act of 1933, as amended.

    Participants in the Solicitation:

    Flextronics, Solectron and their respective directors and executive
officers may be deemed to be participants in the solicitation of proxies in
connection with the proposed merger. Information regarding the interests of
these directors and executive officers in the proposed transaction will be
included in the Joint Proxy Statement/Prospectus referred to above. Additional
information regarding the directors and executive officers of Flextronics is
also included in Flextronics's proxy statement (Form DEF 14A) for the 2006
annual general meeting of Flextronics shareholders, which was filed with the
SEC on July 31, 2006. This document is available free of charge at the SEC's
website (www.sec.gov) and by contacting Flextronics Investor Relations at
Flextronicsinvestorrelations@flextronics.com. Additional information regarding
the directors and executive officers of Solectron is also included in
Solectron's proxy statement (Form DEF 14A) for the 2007 annual stockholders
meeting of Solectron, which was filed with the SEC on December 4, 2006. This
document is available free of charge at the SEC's website (www.sec.gov) and by
contacting Solectron at 847 Gibraltar Drive, Milpitas, CA 95035, Attention:
Investor Relations.

    
    Q3'07
    ----------------------------------------------------------------------
    GAAP to Non-GAAP Reconciliation                          Quarter Ended
    (in millions)                                            June 1, 2007
    -------------------------------------------------------- -------------
    Income on a GAAP Basis                                         $ 12.1
       Discontinued operations                                     $ (0.1)
                                                             -------------
    Income from continuing operations on a GAAP Basis              $ 12.2
       Restructuring and impairment charges                        $ 29.6
       Amortization of intangibles                                 $  2.1
       Stock compensation expense                                  $  6.3
                                                             -------------
    Income from continuing operations on a non-GAAP Basis          $ 50.2
                                                             -------------


    GAAP to Non-GAAP Reconciliation: Earnings Per Share      Quarter Ended
                                                             June 1, 2007
    -------------------------------------------------------- -------------
    Income on a GAAP Basis                                         $ 0.01
       Discontinued Operations                                     $(0.00)
                                                             -------------
    Diluted net income per share from continuing operations
     on a GAAP basis                                               $ 0.01
       Restructuring and impairment charges, amortization of
        intangibles and stock compensation expense                 $ 0.05
                                                             -------------
    Diluted net income per share from continuing operations
     on a non-GAAP basis                                           $ 0.06
                                                             -------------
    Number of shares (millions) used to compute diluted net
     income per share - GAAP and non-GAAP                           904.7
    ----------------------------------------------------------------------
    

    
    Q2'07
    ----------------------------------------------------------------------
    GAAP to Non-GAAP Reconciliation                          Quarter Ended
    (in millions)                                            March 2, 2007
    -------------------------------------------------------- -------------
    Income on a GAAP Basis                                         $ 15.3
       Discontinued operations                                     $ (0.3)
                                                             -------------
    Income from continuing operations on a GAAP Basis              $ 15.6
       Restructuring and impairment charges                        $ 16.5
       Amortization of intangibles                                 $  1.2
       Stock compensation expense                                  $  7.7
                                                             -------------
    Income from continuing operations on a non-GAAP Basis          $ 41.0
                                                             -------------


    GAAP to Non-GAAP Reconciliation: Earnings Per Share      Quarter Ended
                                                             March 2, 2007
    -------------------------------------------------------- -------------
    Income on a GAAP Basis                                         $ 0.02
       Discontinued operations                                     $(0.00)
                                                             -------------
    Diluted net income per share from continuing operations
     on a GAAP basis                                               $ 0.02
       Restructuring and impairment charges, amortization of
        intangibles and stock compensation expense                 $ 0.03
                                                             -------------
    Diluted net income per share from continuing operations
     on a non-GAAP basis                                           $ 0.05
                                                             -------------
    Number of shares (millions) used to compute diluted net
     income per share - GAAP and non-GAAP                           899.4
    ----------------------------------------------------------------------
    

    
    Q3'06
    ----------------------------------------------------------------------
    GAAP to Non-GAAP Reconciliation                          Quarter Ended
    (in millions)                                            May 26, 2006
    -------------------------------------------------------- -------------
    Income on a GAAP Basis                                         $ 42.0
       Discontinued operations                                     $ (0.4)
                                                             -------------
    Income from continuing operations on a GAAP Basis              $ 42.4
       Restructuring and impairment charges                        $  2.6
       Amortization of intangibles                                 $  1.1
       Stock compensation expense                                  $  6.7
       Taxes                                                       $(13.9)
                                                             -------------
    Income from continuing operations on a non-GAAP Basis          $ 38.9
                                                             -------------


    GAAP to Non-GAAP Reconciliation: Earnings Per Share      Quarter Ended
                                                             May 26, 2006
    -------------------------------------------------------- -------------
    Income on a GAAP Basis                                         $ 0.05
       Discontinued operations                                     $(0.00)
                                                             -------------
    Diluted net income per share from continuing operations
     on a GAAP basis                                               $ 0.05
       Restructuring and impairment charges, amortization of
        intangibles and stock compensation expense                 $ 0.01
       Taxes                                                       $(0.02)
                                                             -------------
    Diluted net income per share from continuing operations
     on a non-GAAP basis                                           $ 0.04
                                                             -------------
    Number of shares (millions) used to compute diluted net
     income per share - GAAP and non-GAAP                           909.6
    ----------------------------------------------------------------------
    

    
    Supplemental Data
    ----------------------------------------------------------------------
    Sales Percentage by Market Segment
    Computing and Storage                                              33%
    Networking Equipment                                               26%
    Communications                                                     19%
    Consumer                                                           10%
    Industrial                                                          8%
    Automotive                                                          2%
    Other                                                               2%
    ----------------------------------------------------------------------
    

    
                    SOLECTRON CORPORATION AND SUBSIDIARIES
                CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
                     (in millions, except per-share data)
                                 (unaudited)

                                   Three Months Ended   Nine Months Ended
                                   ------------------- -------------------

                                   June 1,   May 26,   June 1,   May 26,
                                      2007      2006      2007      2006
                                   --------- --------- --------- ---------

    Net sales                      $2,985.3  $2,702.6  $8,886.3  $7,658.6
    Cost of sales                   2,833.9   2,560.4   8,432.7   7,261.8
                                   --------- --------- --------- ---------

    Gross profit                      151.4     142.2     453.6     396.8

    Operating expenses:
      Selling, general and
       administrative                 112.1     112.2     338.6     323.9
      Restructuring and impairment
       costs                           29.6       2.6      80.7       9.1
                                   --------- --------- --------- ---------

        Operating income                9.7      27.4      34.3      63.8
    Interest income                     7.5      12.3      25.1      36.7
    Interest expense                   (5.5)     (7.2)    (17.9)    (20.8)
    Other Income (expense), net         8.7      (0.8)      5.9      (0.8)
                                   --------- --------- --------- ---------

    Operating income from
     continuing operations before
     income taxes                      20.4      31.7      47.4      78.9
    Income tax expense (benefit)        8.2     (10.7)     13.0      (0.8)
                                   --------- --------- --------- ---------

        Income from continuing
         operations                $   12.2  $   42.4  $   34.4  $   79.7

    Discontinued operations:
    (Loss) income from
     discontinued operations
     before income taxes, income
     taxes of $0                   $   (0.1) $   (0.4) $   (1.0) $   16.7
                                   --------- --------- --------- ---------
    (Loss) income from
     discontinued operations           (0.1)     (0.4)     (1.0)     16.7
                                   --------- --------- --------- ---------


      Net income                   $   12.1  $   42.0  $   33.4  $   96.4
                                   --------- --------- --------- ---------

    Basic net income per share:
      Continuing operations        $   0.01  $   0.05  $   0.04  $   0.09
      Discontinued operations         (0.00)    (0.00)    (0.00)     0.02
                                   --------- --------- --------- ---------
      Basic net income per share   $   0.01  $   0.05  $   0.04  $   0.11
                                   --------- --------- --------- ---------

    Diluted net income per share:
      Continuing operations        $   0.01  $   0.05  $   0.04  $   0.09
      Discontinued operations         (0.00)    (0.00)    (0.00)     0.02
                                   --------- --------- --------- ---------
      Diluted net income per share $   0.01  $   0.05  $   0.04  $   0.11
                                   --------- --------- --------- ---------

    Shares used to compute basic
     net income per share             898.6     908.1     895.6     916.2
    Shares used to compute diluted
     net income per share             904.7     909.6     899.4     917.2
    

    
                    SOLECTRON CORPORATION AND SUBSIDIARIES
                    CONDENSED CONSOLIDATED BALANCE SHEETS
                              (US$ in millions)
                                 (unaudited)


                                             June 1, 2007  August 25, 2006
                                             ------------- ---------------

    ASSETS
    Current assets:
      Cash, cash equivalents and short-term
       investments(a)                           $ 1,195.1       $ 1,180.5
      Accounts receivable, net                    1,493.6         1,429.3
      Inventories                                 1,830.8         1,516.1
      Prepaid expenses and other current
       assets                                       366.3           225.8
                                             ------------- ---------------

        Total current assets                      4,885.8         4,351.7
    Property and equipment, net                     737.4           673.4
    Goodwill                                        159.1           155.2
    Other assets                                    120.8           193.3
                                             ------------- ---------------

    Total assets                                $ 5,903.1       $ 5,373.6
                                             ------------- ---------------

    LIABILITIES AND STOCKHOLDERS' EQUITY
    Current liabilities:
      Short-term debt                           $    64.0       $    89.5
      Accounts payable                            2,070.2         1,616.7
      Accrued employee compensation                 156.8           170.4
      Accrued expenses and other current
       liabilities                                  483.0           427.6

                                             ------------- ---------------

       Total current liabilities                  2,774.0         2,304.2
    Long-term debt                                  609.8           619.4
    Other long-term liabilities                      36.2            36.3

                                             ------------- ---------------

       Total liabilities                        $ 3,420.0       $ 2,959.9
                                             ------------- ---------------

    Commitments and contingencies

    Stockholders' equity:
      Common stock                                    0.9             1.0
      Additional paid-in capital                  7,599.7         7,585.2
      Accumulated deficit                        (5,039.9)       (5,073.3)
      Accumulated other comprehensive loss          (77.6)          (99.2)
                                             ------------- ---------------

        Total stockholders' equity                2,483.1         2,413.7
                                             ------------- ---------------

    Total liabilities and stockholders'
     equity                                     $ 5,903.1       $ 5,373.6
                                             ------------- ---------------


    (a) Includes $16.8 million and $31.6 million of restricted cash
     balances as of June 1, 2007 and August 25, 2006, respectively, and $0
     and $22.9 million of short-term investments as of June 1, 2007 and
     August 25, 2006, respectively.
    




For further information:

For further information: Solectron Corporation Perry G. Hayes, +1
408-956-7543 (U.S. Analyst Contact) perryhayes@solectron.com Corey Olfert, +1
408-956-7552 (U.S. Media Contact) coreyolfert@solectron.com

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