SAN JOSE, Calif., Nov. 1, 2010 /PRNewswire-FirstCall/ --
Sanmina-SCI Corporation ("Sanmina-SCI" or the "Company") (Nasdaq:
SANM), a leading global Electronics Manufacturing Services (EMS)
company, today reported financial results for the fourth quarter
and fiscal year ended October 2,
2010.
Fourth Quarter Fiscal 2010 Highlights
- Revenue of $1.69 billion
- Non-GAAP operating margin of 4.1 percent
- Non-GAAP diluted earnings per share of $0.46
- GAAP operating margin of 3.4 percent
- GAAP diluted earnings per share of $0.38
Fiscal Year 2010 Highlights
- Revenue of $6.3 billion, up 22
percent Y/Y
- GAAP diluted earnings per share of $1.48
- Non-GAAP diluted earnings per share of $1.30
Y/Y – compared to the same period a year ago.
Revenue for the fourth quarter was $1.69
billion, up 4 percent, compared to $1.63 billion in the prior quarter ended
July 3, 2010 and up 25 percent,
compared to $1.35 billion for the
same period a year ago. Revenue for the fiscal year ended
October 2, 2010 was $6.3 billion, up 22 percent compared to
$5.2 billion for the year ended
October 3, 2009.
GAAP Financial Results
GAAP net income in the fourth quarter was $31.4 million, a diluted earnings per share of
$0.38, compared to a net income of
$21.6 million, a diluted earnings per
share of $0.26 in the prior quarter.
GAAP net loss for the same period a year ago was $32.7 million, a diluted loss per share of
$0.42. GAAP net income for the
full year was $122.4 million, a
diluted earnings per share of $1.48,
compared to net loss of $137.8
million, a diluted loss per share of $1.67 in fiscal 2009.
Non-GAAP Financial Results(1)
Non-GAAP gross profit in the fourth quarter was $132.2 million, or 7.8 percent of revenue, down
10 basis points, compared to gross profit of $129 million, or 7.9 percent of revenue in the
third quarter and up 70 basis points compared to $96.4 million, or 7.1 percent in the same period
a year ago. Non-GAAP gross profit for the fiscal year 2010
was $492.4 million, or 7.8 percent of
revenue, up 120 basis points, compared to gross profit of
$339.9 million, or 6.6 percent for
the fiscal year 2009.
Non-GAAP operating income in the fourth quarter was $68.9 million, or 4.1 percent of revenue, up 20
basis points, compared to $64.2
million, or 3.9 percent of revenue in the prior quarter and
a 150 basis point improvement compared to $34.5 million, or 2.6 percent in the fourth
quarter fiscal 2009. Non-GAAP operating income for fiscal
2010 was $237.9 million, or 3.8
percent of revenue, up 200 basis points, compared to $94.3 million, or 1.8 percent of revenue for
fiscal 2009.
Non-GAAP net income in the fourth quarter was $37.8 million, a diluted earnings per share of
$0.46, compared to a net income of
$26.6 million and $0.32 diluted earnings per share in the prior
quarter. Non-GAAP net income for the same period a year ago
was $94 thousand, a diluted earnings
per share of $0.00. Non-GAAP
net income for the full year was $106.9
million, or $1.30 diluted
earnings per share, compared to net loss of $42.5 million, a diluted loss per share of
$0.52 in fiscal 2009.
|
|
|
|
Three Month
Periods
|
Twelve Month
Periods
|
|
(In millions, except per share
data)
|
|
Q4:2010
|
Q3:2010
|
Q4:2009
|
|
FY:2010
|
|
FY:2009
|
|
|
|
|
|
|
|
|
|
|
|
GAAP:
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$1,688
|
$1,625
|
$1,354
|
|
$6,319
|
|
$5,177
|
|
Net income
(loss)
|
|
$31
|
$22
|
$(33)
|
|
$122
|
|
$(138)
|
|
Earnings (loss) per
share
|
|
$0.38
|
$0.26
|
$(0.42)
|
|
$1.48
|
|
$(1.67)
|
|
Non-GAAP(1):
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$1,687
|
$1,626
|
$1,354
|
|
$6,319
|
|
$5,182
|
|
Gross profit
|
|
$132
|
$129
|
$96
|
|
$492
|
|
$340
|
|
Gross margin
|
|
7.8%
|
7.9%
|
7.1%
|
|
7.8%
|
|
6.6%
|
|
Operating
income
|
|
$69
|
$64
|
$35
|
|
$238
|
|
$94
|
|
Operating
margin
|
|
4.1%
|
3.9%
|
2.6%
|
|
3.8%
|
|
1.8%
|
|
Net income
(loss)
|
|
$38
|
$27
|
$0.1
|
|
$107
|
|
$(43)
|
|
Earnings (loss) per
share
|
|
$0.46
|
$0.32
|
$0.00
|
|
$1.30
|
|
$(0.52)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet Results
As of October 2, 2010, cash and
cash equivalents amounted to $593
million. Cash cycle days were 47 days and inventory
turns were 7.3x for the quarter.
"Fiscal 2010 was a great year for Sanmina-SCI with healthy
revenue growth and margin expansion driven by solid execution of
our strategy. We remain focused on market diversification,
operational excellence and leading edge technology, which offer a
distinct advantage to our customers. Our differentiated
strategy has positioned us for profitable growth in fiscal 2011,"
stated Jure Sola, Chairman and Chief
Executive Officer.
First Quarter Fiscal 2011 Outlook
The following forecast is for the first fiscal quarter ending
January 1, 2011. These
statements are forward-looking and actual results may differ
materially.
- Revenue between $1.625 billion to $1.675
billion
- Non-GAAP diluted earnings per share between $0.40 to $0.44
(1)Non-GAAP Financial Information
In the commentary set forth above and/or in the financial
statements included in this earnings release, we present the
following non-GAAP financial measures: revenue, gross profit,
gross margin, operating income, operating margin, net income (loss)
and earnings (loss) 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), acquisition and
integration costs (consisting of costs associated with the
acquisition and integration of acquired businesses into our
operations), impairment charges for goodwill and intangible assets,
amortization expense and other infrequent or unusual items
(including charges for customer bankruptcy reorganizations,
litigation settlements and discrete tax events), to the extent
material or which we consider to be of a non-operational nature in
the applicable period. See Schedule 1 below for more
information regarding our use of non-GAAP financial measures,
including the economic substance behind each exclusion, the manner
in which management uses non-GAAP measures to conduct and evaluate
the business, the material limitations associated with using such
measures and the manner in which management compensates for such
limitations. 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 first 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.
Company Conference Call Information
Sanmina-SCI will hold a conference call regarding this
announcement on Monday, November 1,
2010 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 also 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
20295558.
About Sanmina-SCI
Sanmina-SCI Corporation 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 OEMs
primarily in the communications, defense and aerospace, industrial
and medical instrumentation, multimedia, enterprise computing and
storage, renewable energy 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 outlook for future revenue and earnings per share,
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 the return of worldwide recessionary conditions adversely
impacting the markets for the Company's customers' products and the
Company's customers' ability to pay for the Company's products and
which therefore could reduce the Company's revenue; customer
bankruptcy filings, which could cause the Company to record charges
to its earnings; 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 need to adopt future restructuring plans
as a result of changes in the Company's business, which would
increase the Company's costs and decrease its net income; and the
other factors set forth in the Company's annual and quarterly
reports 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.
SANMF
Sanmina-SCI
Corporation
|
|
Condensed
Consolidated Balance Sheets
|
|
(In
thousands)
|
|
(GAAP)
|
|
|
|
|
October
2,
|
|
October
3,
|
|
|
|
|
2010
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
592,812
|
|
$
899,151
|
|
|
Accounts receivable,
net
|
1,018,612
|
|
668,474
|
|
|
Inventories
|
|
844,347
|
|
761,391
|
|
|
Prepaid expenses and other
current assets
|
81,191
|
|
78,128
|
|
|
Assets held for sale
|
53,047
|
|
68,902
|
|
|
|
Total current assets
|
2,590,009
|
|
2,476,046
|
|
|
|
|
|
|
|
|
Property, plant and equipment,
net
|
570,258
|
|
543,497
|
|
Other non-current
assets
|
|
141,529
|
|
104,354
|
|
|
|
Total assets
|
$ 3,301,796
|
|
$ 3,123,897
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
Accounts payable
|
$
923,038
|
|
$
780,876
|
|
|
Accrued liabilities
|
140,371
|
|
140,926
|
|
|
Accrued payroll and related
benefits
|
122,934
|
|
98,408
|
|
|
Short-term debt
|
65,000
|
|
-
|
|
|
Current portion of long-term
debt
|
-
|
|
175,700
|
|
|
|
Total current
liabilities
|
1,251,343
|
|
1,195,910
|
|
|
|
|
|
|
|
|
Long-term
liabilities:
|
|
|
|
|
|
|
Long-term debt
|
1,240,666
|
|
1,262,014
|
|
|
Other
|
|
148,186
|
|
146,903
|
|
|
|
Total long-term
liabilities
|
1,388,852
|
|
1,408,917
|
|
|
|
|
|
|
|
|
Total stockholders'
equity
|
|
661,601
|
|
519,070
|
|
|
|
Total liabilities and
stockholders' equity
|
$ 3,301,796
|
|
$ 3,123,897
|
|
|
|
|
|
|
|
Sanmina-SCI
Corporation
|
|
Condensed
Consolidated Statements of Operations
|
|
(In
thousands, except per share amounts)
|
|
(GAAP)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Twelve
Months Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
October
2,
|
|
October
3,
|
|
October
2,
|
|
October
3,
|
|
|
|
2010
|
|
2009
|
|
2010
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$ 1,687,768
|
|
$ 1,353,960
|
|
$ 6,318,691
|
|
$ 5,177,481
|
|
Cost of sales
|
1,556,057
|
|
1,259,630
|
|
5,835,701
|
|
4,855,003
|
|
|
Gross profit
|
131,711
|
|
94,330
|
|
482,990
|
|
322,478
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative
|
61,170
|
|
60,315
|
|
252,534
|
|
238,194
|
|
|
Research and
development
|
3,597
|
|
3,962
|
|
13,004
|
|
16,685
|
|
|
Amortization of intangible
assets
|
392
|
|
1,072
|
|
3,555
|
|
4,817
|
|
|
Restructuring and integration
costs
|
8,417
|
|
18,316
|
|
21,822
|
|
57,260
|
|
|
Asset impairment
|
-
|
|
2,944
|
|
1,100
|
|
10,178
|
|
|
Gain on sales of long-lived
assets
|
(28)
|
|
-
|
|
(13,824)
|
|
-
|
|
|
Total operating
expenses
|
73,548
|
|
86,609
|
|
278,191
|
|
327,134
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss)
|
58,163
|
|
7,721
|
|
204,799
|
|
(4,656)
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
710
|
|
459
|
|
2,246
|
|
6,499
|
|
|
Interest expense
|
(27,668)
|
|
(30,302)
|
|
(108,144)
|
|
(116,988)
|
|
|
Other income (expense),
net
|
2,612
|
|
(5,609)
|
|
40,341
|
|
2,575
|
|
Interest and other,
net
|
(24,346)
|
|
(35,452)
|
|
(65,557)
|
|
(107,914)
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income
taxes
|
33,817
|
|
(27,731)
|
|
139,242
|
|
(112,570)
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
2,418
|
|
4,954
|
|
16,807
|
|
25,252
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
$
31,399
|
|
$
(32,685)
|
|
$
122,435
|
|
$ (137,822)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic income (loss) per
share
|
$
0.39
|
|
$
(0.42)
|
|
$
1.55
|
|
$
(1.67)
|
|
|
Diluted income (loss) per
share
|
$
0.38
|
|
$
(0.42)
|
|
$
1.48
|
|
$
(1.67)
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares used in
computing
|
|
|
|
|
|
|
|
|
|
per share amounts:
|
|
|
|
|
|
|
|
|
|
Basic
|
79,683
|
|
78,604
|
|
79,195
|
|
82,528
|
|
|
Diluted
|
82,734
|
|
78,604
|
|
82,477
|
|
82,528
|
|
|
|
|
|
|
|
|
|
|
Sanmina-SCI
Corporation
|
|
Reconciliation of GAAP to
Non-GAAP Measures
|
|
(in
thousands, except per share amounts)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Twelve
Months Ended
|
|
|
|
October
2,
|
|
July
3,
|
|
October
3,
|
|
October
2,
|
|
October
3,
|
|
|
|
2010
|
|
2010
|
|
2009
|
|
2010
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Revenue
|
$ 1,687,768
|
|
$ 1,625,170
|
|
$ 1,353,960
|
|
$ 6,318,691
|
|
$ 5,177,481
|
|
Adjustments
|
|
|
|
|
|
|
|
|
|
|
|
Customer bankruptcy
reorganization (1)
|
(570)
|
|
570
|
|
-
|
|
-
|
|
5,000
|
|
Non-GAAP Revenue
|
$ 1,687,198
|
|
$ 1,625,740
|
|
$ 1,353,960
|
|
$ 6,318,691
|
|
$ 5,182,481
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Gross Profit
|
$
131,711
|
|
$
124,115
|
|
$
94,330
|
|
$
482,990
|
|
$
322,478
|
|
|
GAAP gross margin
|
7.8%
|
|
7.6%
|
|
7.0%
|
|
7.6%
|
|
6.2%
|
|
Adjustments
|
|
|
|
|
|
|
|
|
|
|
|
Stock compensation expense
(2)
|
859
|
|
487
|
|
2,028
|
|
5,452
|
|
7,209
|
|
|
Amortization of intangible
assets
|
209
|
|
-
|
|
24
|
|
209
|
|
257
|
|
|
Contingency item expected to
reverse in a future period (6)
|
-
|
|
3,039
|
|
-
|
|
3,039
|
|
-
|
|
|
Customer bankruptcy
reorganization (1)
|
(570)
|
|
1,329
|
|
-
|
|
759
|
|
10,000
|
|
Non-GAAP Gross
Profit
|
$
132,209
|
|
$
128,970
|
|
$
96,382
|
|
$
492,449
|
|
$
339,944
|
|
|
Non-GAAP gross
margin
|
7.8%
|
|
7.9%
|
|
7.1%
|
|
7.8%
|
|
6.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP operating income
(loss)
|
$
58,163
|
|
$
61,740
|
|
$
7,721
|
|
$
204,799
|
|
$
(4,656)
|
|
|
GAAP operating
margin
|
3.4%
|
|
3.8%
|
|
0.6%
|
|
3.2%
|
|
-0.1%
|
|
Adjustments
|
|
|
|
|
|
|
|
|
|
|
|
Stock compensation expense
(2)
|
2,796
|
|
2,367
|
|
4,470
|
|
15,167
|
|
15,994
|
|
|
Contingency item expected to
reverse in a future period (6)
|
-
|
|
3,039
|
|
-
|
|
3,039
|
|
-
|
|
|
Amortization of intangible
assets
|
601
|
|
926
|
|
1,096
|
|
3,764
|
|
5,074
|
|
|
Stock option
investigation
|
-
|
|
-
|
|
-
|
|
-
|
|
450
|
|
|
Customer bankruptcy
reorganization (1)
|
(1,178)
|
|
1,937
|
|
-
|
|
759
|
|
10,000
|
|
|
Restructuring, acquisition and
integration costs
|
8,516
|
|
7,390
|
|
18,316
|
|
23,115
|
|
57,260
|
|
|
Gain on sales of long-lived
assets
|
(28)
|
|
(13,796)
|
|
-
|
|
(13,824)
|
|
-
|
|
|
Asset impairment
|
-
|
|
600
|
|
2,944
|
|
1,100
|
|
10,178
|
|
Non-GAAP operating
income
|
$
68,870
|
|
$
64,203
|
|
$
34,547
|
|
$
237,919
|
|
$
94,300
|
|
|
Non-GAAP operating
margin
|
4.1%
|
|
3.9%
|
|
2.6%
|
|
3.8%
|
|
1.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net income
(loss)
|
$
31,399
|
|
$
21,563
|
|
$
(32,685)
|
|
$
122,435
|
|
$ (137,822)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
Operating income adjustments
(see above)
|
10,707
|
|
2,463
|
|
26,826
|
|
33,120
|
|
98,956
|
|
|
Net gain on derivative financial
instruments and other (3)
|
-
|
|
-
|
|
-
|
|
-
|
|
(4,993)
|
|
|
Impairment of long-term
investments
|
-
|
|
-
|
|
825
|
|
-
|
|
4,531
|
|
|
Acquisition and integration
costs
|
(541)
|
|
-
|
|
-
|
|
(541)
|
|
-
|
|
|
Gain on sale of
business
|
-
|
|
-
|
|
-
|
|
(3,710)
|
|
-
|
|
|
(Gain) / loss on repurchase of
debt (4)
|
-
|
|
369
|
|
4,945
|
|
1,197
|
|
(8,545)
|
|
|
Gain from litigation settlement
(5)
|
-
|
|
-
|
|
-
|
|
(35,556)
|
|
-
|
|
|
Nonrecurring tax
items
|
(3,760)
|
|
2,222
|
|
183
|
|
(10,018)
|
|
5,352
|
|
Non-GAAP net income
(loss)
|
$
37,805
|
|
$
26,617
|
|
$
94
|
|
$
106,927
|
|
$
(42,521)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Basic Income (Loss) Per
Share:
|
$
0.47
|
|
$
0.33
|
|
$
0.00
|
|
$
1.35
|
|
$
(0.52)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Diluted Income (Loss)
Per Share:
|
$
0.46
|
|
$
0.32
|
|
$
0.00
|
|
$
1.30
|
|
$
(0.52)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares used in
computing Non-GAAP per share amounts:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
79,683
|
|
79,544
|
|
78,604
|
|
79,195
|
|
82,528
|
|
|
Diluted
|
82,734
|
|
83,693
|
|
79,209
|
|
82,477
|
|
82,528
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Relates to revenue
reversal and inventory and bad debt reserves associated with
customer bankruptcy reorganization announcements.
|
|
|
|
(2) Stock compensation
expense was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Twelve
Months Ended
|
|
|
|
October
2,
|
|
July
3,
|
|
October
3,
|
|
October
2,
|
|
October
3,
|
|
|
|
2010
|
|
2010
|
|
2009
|
|
2010
|
|
2009
|
|
|
|
|
|
|
|
|
Cost of sales
|
$
859
|
|
$
487
|
|
$
2,028
|
|
$
5,452
|
|
$
7,209
|
|
|
Selling, general and
administrative
|
1,899
|
|
2,215
|
|
2,324
|
|
9,809
|
|
8,446
|
|
|
Research and
development
|
38
|
|
(335)
|
|
118
|
|
(94)
|
|
339
|
|
|
Stock compensation expense -
total company
|
$
2,796
|
|
$
2,367
|
|
$
4,470
|
|
$
15,167
|
|
$
15,994
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3) Relates primarily to a
gain on interest rate swaps not accounted for as hedging
instruments during a portion of Q1 FY09 due to termination of a
swap.
|
|
|
|
(4) Represents gain or
loss, including write-off of unamortized debt issuance costs, on
debt redeemed or repurchased prior to maturity.
|
|
|
|
(5) Represents cash
received in connection with a litigation settlement.
|
|
|
|
(6) Represents a
non-recurring contingency that the Company expects to resolve
favorably in future periods. However, there can be no
assurance of the exact amount or timing of this recovery.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Schedule I
The tables contained above include non-GAAP measures of revenue,
gross profit, gross margin, operating income, operating margin, net
income and earnings per share. Management excludes from these
measures stock-based compensation, restructuring and integration
expenses, impairment charges, amortization charges and other
infrequent items, to the extent material or which we consider to be
of a non-operational nature in the applicable period.
Management excludes these items principally because such charges
are not directly related to the Company's ongoing core business
operations. We use such non-GAAP measures in order to (1) make more
meaningful period-to-period comparisons of Company's operations,
both internally and externally, (2) guide management in assessing
performance of the business, internally allocating resources and
making decisions in furtherance of Company's strategic plan, (3)
provide investors with a better understanding of how management
plans and measures the business and (4) provide investors with a
better understanding of the ongoing, core business. The material
limitations to management's approach include the fact that the
charges and expenses excluded are nonetheless charges required to
be recognized under GAAP. Management compensates for these
limitations primarily by using GAAP results to obtain a complete
picture of the Company's performance and by including a
reconciliation of non-GAAP results back to GAAP in its earnings
releases.
Additional information regarding the economic substance of each
exclusion, management's use of the resultant non-GAAP measures, the
material limitations of management's approach and management's
methods for compensating for such limitations is provided
below.
Stock-based Compensation Expense, which consists of
non-cash charges for the estimated fair value of stock options and
unvested restricted stock units granted to employees, is excluded
in order to permit more meaningful period-to-period comparisons of
the Company's results since the Company grants different amounts
and value of stock options in each quarter. In addition, given the
fact that competitors grant different amounts and types of equity
award and may use different option valuation assumptions, excluding
stock-based compensation permits more accurate comparisons of the
Company's core results with those of its competitors.
Restructuring and Integration Costs, which consist of
severance, lease termination, exit costs and other charges
primarily related to closing and consolidating manufacturing
facilities and those associated with the integration of acquired
businesses into our operations, are excluded because such charges
(1) can be driven by the timing of acquisitions which are difficult
to predict, (2) are not directly related to ongoing business
results and (3) do not reflect expected future operating expenses.
In addition, given the fact that the Company's competitors complete
acquisitions and adopt restructuring plans at different times and
in different amounts than the Company, excluding these charges
permits more accurate comparisons of the Company's core results
with those of its competitors. Items excluded by the Company may be
different from those excluded by the Company's competitors and
restructuring and integration expenses include both cash and
non-cash expenses. Cash expenses reduce the Company's liquidity.
Therefore, management also reviews GAAP results including these
amounts.
Impairment Charges, which consist of non-cash charges
resulting primarily from the Company's net book value exceeding its
market capitalization due to weak macroeconomic conditions, are
excluded because such charges are non-recurring and do not reduce
the Company's liquidity. In addition, given the fact that the
Company's competitors may record impairment charges at different
times, excluding these charges permits more accurate comparisons of
the Company's core results with those of its competitors.
Amortization Charges, which consist of non-cash charges
impacted by the timing and magnitude of acquisitions of businesses
or assets, are also excluded because such charges do not reduce the
Company's liquidity or availability under its credit facilities. In
addition, such charges can be driven by the timing of acquisitions,
which is difficult to predict. Excluding these charges permits more
accurate comparisons of the Company's core results with those of
its competitors because the Company's competitors complete
acquisitions at different times and for different amounts than the
Company.
Other Items, which consist of other infrequent or unusual
items (including charges for customer bankruptcy reorganizations
and discrete tax events), to the extent material or non-operational
in nature, are excluded because such items are typically
non-recurring, difficult to predict and generally not directly
related to the Company's ongoing core operations. However, items
excluded by the Company may be different from those excluded by the
Company's competitors. In addition, these expenses include both
cash and non-cash expenses. Cash expenses reduce the Company's
liquidity. Management compensates for these limitations by
reviewing GAAP results including these amounts.
SOURCE Sanmina-SCI Corporation