Oct. 26, 2009 (PR Newswire) -- SINGAPORE, Oct. 26 /PRNewswire-FirstCall/ -- Flextronics (Nasdaq: FLEX) today announced results for its second quarter ended October 2, 2009 as follows:

(US$ in millions, except EPS)
Three Month Periods Ended
-------------------------
October 2,          July 3,
2009              2009
----              ----
Net sales                                       $5,832             $5,783
GAAP operating income                             $123                $10
Adjusted operating income (1)                     $149                $90
GAAP net income (loss)                             $20              $(154)
Adjusted net income (1)                           $104                $63
GAAP EPS                                         $0.02             $(0.19)
Adjusted EPS (1)                                 $0.13              $0.08

(1) A reconciliation of non-GAAP financial measures to GAAP financial
measures is presented in Schedule II attached to this press
release.

Second Quarter Results

Net sales for the second quarter ended October 2, 2009 were $5.8 billion, an increase of 1%, compared to net sales for the first quarter ended July 3, 2009. Adjusted operating income for the second quarter was $149 million, an increase of 66%, compared to the first quarter adjusted operating income of $90 million. Adjusted operating margin for the second quarter was 2.6% compared to 1.6% for the first quarter. Adjusted net income for the second quarter was $104 million and adjusted EPS was $0.13 compared to $63 million and $0.08, respectively, for the prior quarter.

Cash and cash equivalents totaled $2.0 billion at October 2, 2009, an increase of $289 million from the prior quarter end. During the second quarter, Flextronics generated $312 million of operating cash flow and $270 million of free cash flow (defined as net cash provided by operating activities, less purchases of property & equipment, net of dispositions). Net debt, which is total debt less total cash, was further reduced in the current quarter by $483 million to $587 million. Net debt has decreased by approximately $1.1 billion from one year ago. Adjusted ROIC improved to 22.2% for the quarter.

"During the second quarter, Flextronics posted solid financial progress across all aspects of our business, reflecting our efforts to re-size our business to adapt to current market conditions. We are very pleased with the healthy expansion of our adjusted gross margin, which rose by 90 basis points sequentially," said Paul Read, chief financial officer of Flextronics. "In addition, we achieved a cash conversion cycle of 15 days, generated free cash flow of $270 million and our significantly reduced net debt position of $587 million is comparable with the period prior to our Solectron acquisition."

In connection with its previously announced restructuring plans, during the second quarter, Flextronics recognized $13 million of pretax restructuring charges comprised of $9 million of cash charges primarily related to employee severance costs and $4 million of non-cash asset impairment charges. The Company remains confident that it is on track to realize the expected annualized savings between $230 million and $260 million upon the completion of its restructuring activities, which will be completed by the end of Fiscal 2010.

During the second quarter the Company received proceeds of $255 million from the sale of a non-core investment and note receivable and recorded non-cash charges to impair certain other non-core investments and notes receivable amounting to $92 million. Also during the quarter, the Company recognized approximately $60 million of non-cash tax benefits as a result of settlements in various tax jurisdictions.

"The improvement of our financial performance this quarter was a real positive and we are seeing signs of strengthening in the economy and a general improvement in business conditions," said Mike McNamara, chief executive officer, Flextronics.

Guidance

For the third quarter ending December 31, 2009, revenue is expected to be in the range of $6.0 billion to $6.4 billion and adjusted EPS is expected to be in the range of $0.14 to $0.16 per share.

GAAP earnings per share are expected to be lower than the guidance provided herein by approximately $0.07 per diluted share for estimated restructuring activities, quarterly intangible amortization, stock-based compensation expense and non-cash interest expense.

2004 Award Plan for New Employees

Flextronics granted restricted stock units representing 20,000 shares on August 31, 2009 from the 2004 Award Plan for New Employees. The restricted stock units will generally vest over a three to five year period.

Conference Calls and Web Casts

A conference call hosted by Flextronics's management will be held today at 5:00 p.m. EST / 2:00 p.m. PST to discuss the Company's financial results for the second quarter ended October 2, 2009.

The conference 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 may also be found on the Company's site. A replay of the broadcast will remain available on the Company's website afterwards.

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 (Singapore Reg. No. 199002645H), Flextronics is a leading Electronics Manufacturing Services (EMS) provider focused on delivering complete design, engineering and manufacturing services to automotive, computing, consumer, industrial, infrastructure, medical and mobile OEMs. Flextronics helps customers design, build, ship, and service electronics products through a network of facilities in 30 countries on four continents. This global presence provides design and engineering solutions that are combined with core electronics manufacturing and logistics services, and vertically integrated with components technologies, to optimize customer operations by lowering costs and reducing time to market. For more information, please visit www.flextronics.com.

This press release contains forward-looking statements within the meaning of U.S. securities laws, including statements related to future expected revenues and earnings per share. 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 that future revenues and earnings may not be achieved as expected; the risks to our particular electronics and technology sector of economic instability and a slowdown in consumer spending, particularly given the current economic conditions; the effects of customer or supplier bankruptcies or insolvency; the effects that current credit and market conditions could have on the liquidity and financial condition of customers or suppliers, including any impact on their ability to meet contractual obligations to us on terms and conditions previously negotiated; the effects that the current macroeconomic environment could have on our liquidity and ability to access credit markets; our dependence on industries that continually produce technologically advanced products with short life cycles; our ability to respond to changes in economic trends, to fluctuations in demand for customers' products and to the short-term nature of customers' commitments; competition in our industry, particularly from ODM suppliers in Asia; our dependence on a small number of customers for the majority of our sales and our reliance on strategic relationships with major customers; the challenges of effectively managing our operations, including our ability to manage manufacturing processes, control costs and manage changes in our operations; the challenges of integrating acquired companies and assets; not obtaining anticipated new customer programs, or that if we do obtain them, that they may not contribute to our revenue or profitability as expected or at all; our ability to utilize available manufacturing capacity; the risk of future restructuring charges that could be material to our financial condition and results of operations; our ability to design and quickly introduce world-class components products that offer significant price and/or performance advantages over competitive products; the impact on our margins and profitability resulting from substantial investments and start-up and integration costs in our components, design and ODM businesses; production difficulties, especially with new products; changes in government regulations and tax laws, including any effects related to the expiration of tax holidays; our exposure to potential litigation relating to intellectual property rights, product warranty and product liability; our dependence on the continued trend of outsourcing by OEMs; supply shortages of required electronic components; the challenges of international operations, including fluctuations in exchange rates beyond hedged boundaries leading to unexpected charges; our dependence on our key personnel; and our ability to comply with environmental laws. Additional information concerning these and other risks is described under "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our reports on Form 10-K, 10-Q and 8-K that we file with the U.S. Securities and Exchange Commission. The forward-looking statements in this press release are based on current expectations and Flextronics assumes no obligation to update these forward-looking statements.

SCHEDULE I

FLEXTRONICS INTERNATIONAL LTD.