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Electronics Production | April 30, 2009

Plexus post $389 million in revenue in Q2

Plexus has announced its Q2 Fiscal 2009 results. Revenue: $389 million, relative to guidance of $375 to $405 million. Restructuring and goodwill impairment charges of approximately $8.0 million.
Dean Foate, President and CEO, commented, "We are pleased to have delivered revenues at the mid-point of our guidance range and non-GAAP diluted EPS above the high end of our guidance range. As expected, overall revenues declined 15% sequentially from the fiscal first quarter with all sectors declining sequentially. While our fiscal second quarter was as challenging as expected, we have cause for cautious optimism. During our monthly forecast cycle in April we experienced a modest uptick in our full-year fiscal 2009 forecast for the first time in eight months. This improvement was due in part to forecast stabilization with some of our legacy customer programs, as well as the revenue forecasted with our many recent program wins. While it would be a stretch to call the results of one forecast cycle a trend, we are encouraged that we may be experiencing the demand trough. Additionally, our business development teams continue to leverage the strength of our brand in the EMS market, turning in another exceptional quarter with 21 new program wins that we currently anticipate will generate approximately $220 million in annualized revenue when the programs are fully ramped in production over the coming quarters, subject to risks around the timing and ultimate realization of the forecasted revenues. We believe we are gaining market share."

Mr. Foate continued, "We are establishing fiscal third quarter 2009 revenue guidance of $355 to $385 million with diluted EPS of $0.18 to $0.25, excluding any restructuring charges and including approximately $0.04 per share of stock-based compensation expense. Our guidance suggests that we will likely see another quarter with a sequential decline in revenue, although we currently expect the percentage decline to be moderate when compared to the decline in the fiscal second quarter. Despite this relative optimism, the fiscal third quarter could still be quite challenging and we are not immune to the difficulties our customers may experience in their end markets as well as the overall economic conditions."

Ginger Jones, Vice President and CFO, commented, "Our diluted EPS was impacted by four significant items. As previously announced, we recognized approximately $8.0 million of pre-tax restructuring and non-cash goodwill impairment charges resulting in a negative $0.18 EPS impact. Offsetting these charges were three positive impacts to diluted EPS. First, we recognized a $1.4 million benefit from a discrete tax adjustment during the quarter delivering a $0.03 benefit. Second, as a consequence of aggressive cost reductions, our selling & administrative ("S&A") expenses were $2.0 million lower than earlier expectations, delivering a $0.05 benefit. Third, our tax rate for fiscal 2009 is now estimated to be 7%, before the discrete tax adjustment, due to lower forecasted earnings in higher tax jurisdictions. This is lower than the 10% tax rate used when we established our guidance for this quarter; consequently, diluted EPS for the quarter reflects a $0.02 benefit. The total of these three positive items reflects a net increase of $0.10 per share. As compared to our fiscal second quarter non-GAAP diluted EPS guidance, excluding the $0.15 associated with the restructuring and non-cash goodwill impairment charges as well as the discrete tax adjustment, we achieved non-GAAP diluted EPS of $0.28, which is above the high end of our guidance range."

Ms. Jones continued, "We have moved aggressively to remove costs from the business over the quarter. We ceased operations as planned at our Ayer, Massachusetts facility in March 2009. We also reduced our workforce in our North American manufacturing operations, which includes our site in Juarez, Mexico, totaling approximately 17 percent of North American operations headcount. Turning to S&A expense, we have completed reductions in workforce totaling approximately 10 percent of that headcount."

Ms. Jones concluded, "Looking forward to the fiscal third quarter, we do not currently anticipate any further significant restructuring. We have identified other cost-cutting measures that could be implemented quickly if forecasted revenues decline further or market conditions worsen. We feel we have struck the proper balance of cost management and modest investments to support our many new program wins as well as our long-term growth strategy."

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