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Solectron Announces Second Quarter Financial Results
March 29, 2007 | Business WireEstimated reading time: 3 minutes
Solectron Corporation (NYSE:SLR) today reported sales of $2.90 billion in the second quarter of fiscal 2007, a decrease of 3 percent over first quarter fiscal 2007 revenues of $3.00 billion, and an increase of 16 percent over second quarter fiscal 2006 revenues of $2.50 billion.
As previously announced in an 8-K filed on March 15, 2007, Solectron has entered into a new Manufacturing and Product Purchase Agreement with one of our largest customers. As a result of this Agreement, second quarter revenue was negatively impacted.
The company reported GAAP profit after tax from continuing operations of $15.6 million, or $0.02 per share, in the second quarter of fiscal 2007, compared with a GAAP profit after tax from continuing operations of $6.6 million, or $0.01 per share, in the first quarter of fiscal 2007. In the second quarter of fiscal 2006, Solectron reported a GAAP profit after tax from continuing operations of $17.1 million, or $0.02 per share.
Non-GAAP profit after tax was $41.0 million, or $0.05 per share, in the second quarter of fiscal 2007, compared with non-GAAP profit after tax of $47.6 million, or $0.05 per share, for the first quarter of fiscal 2007. In the second quarter of fiscal 2006, Solectron reported non-GAAP profit after tax of $29.7 million, or $0.03 per share. Non-GAAP financial results do not include restructuring costs, impairment charges, amortization of intangibles, stock-based compensation expenses, or other infrequent or unusual items. Please refer to "Non-GAAP Information" below for further information.
"During the second quarter we made progress in our efforts to drive growth, expand gross margins, and deliver positive free cash flow," said Paul Tufano, interim chief executive officer of Solectron. "As we begin the second half of fiscal 2007, I believe we are well positioned to deliver continued improvement in profitability, working capital management, and cash generation."
Restructuring Plan
Solectron today announced that it is commencing the next phase of its contemplated restructuring pursuant to its phased approach announced in the first quarter of fiscal 2007. Restructuring and impairment charges related to today's announcement are estimated to be in a range of $35 million to $45 million, of which approximately 90 percent will be cash expenditures.
The company estimates this restructuring will be completed within the next 12 months. These actions will reduce the workforce by approximately 1,300 to 1,500 employees and will close or consolidate approximately 400,000 square feet of facilities, primarily in North America, as well as Western Europe.
Third Quarter 2007 Guidance
Fiscal third quarter guidance is for sales of $2.90 billion to $3.10 billion, and for non-GAAP EPS from continuing operations in a range of 4 cents to 6 cents, on a fully diluted basis.
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. Earnings guidance is provided only on a non-GAAP basis due to the inherent difficulty in forecasting such charges.
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 http://www.solectron.com/.
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, 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 http://www.solectron.com/.