Net sales up 6% for Flextronics in Q1

Excluding intangibles amortization, restructuring and other charges which includes stock based compensation, net income for the first quarter ended June 30, 2006 increased 4% to $104 million, or $0.18 per diluted share, compared to $100 million, or $0.17 per diluted share, in the year ago quarter. After-tax amortization, restructuring and other charges which includes stock based compensation amounted to $19 million in the current quarter compared to $41 million in the year ago quarter. GAAP net income amounted to $85 million, or $0.14 per diluted share, in the first quarter ended June 30, 2006, compared to $59 million, or $0.10 per diluted share, in the year ago quarter. On a sequential basis, net sales from continuing operations increased by $528 million, or 15%, non-GAAP operating margin improved sequentially by 20 basis points to 3.1% and GAAP operating margin improved sequentially by 180 basis points. Return on Invested Tangible Capital ("ROITC") improved to 30% in the first quarter ended June 30, 2006 from 26% in the year ago quarter while Return on Invested Capital ("ROIC") improved to 10% from 9% in the year ago quarter. "There has been a reacceleration of significant growth in our core EMS business, which includes design, vertically-integrated manufacturing services, components and logistics," said Mike McNamara, chief executive officer of Flextronics. "Fiscal 2006 was a very strong year in terms of incremental business wins from both new and existing customers. As a result, we exceeded revenue and earnings expectations in the June quarter and have increased our revenue growth rate expectations for fiscal 2007 to approximately 25%." For the second quarter ended September 30, 2006, revenue from continuing operations is expected to grow 25-30% on a year-over-year basis to a range of $4.7 billion to $4.9 billion and earnings are expected to grow 10-25% on a year-over-year basis to a range of $0.19-$0.21 per diluted share. For the fiscal year ended March 31, 2007, revenue from continuing operations is expected to grow in the range of 25% on a year-over-year basis to approximately $19 billion and earnings are expected to grow in the range of 15% on a year-over-year basis to approximately $0.80 per diluted share. Management emphasized that there is a range around the fiscal 2007 guidance as demand trends and the economy are dynamic.