Flextronics to Lay Off 10,000

Net sales for the quarter reached a record $3.24 billion, but the company plans to cut its workforce by 15%

October 26, 2001

2 Min Read

SINGAPORE -- Flextronics (NASDAQ: FLEX), a global providerof operational services focused on delivering design, engineering,manufacturing and logistic solutions to branded technology companies, todayannounced results for its second quarter ended September 30, 2001.Net sales for the quarter ended September 30, 2001, reached a record $3.24billion, up 5% from $3.08 billion a year ago. This also represents anincrease of $134 million or 4% over the prior quarter. Before amortizationand one-time charges, cash operating income was $103 million, cash netincome was $73 million and diluted cash earnings per share was 15 cents.“The Company has achieved its growth in this difficult market environmentthrough the continuous addition of new customers as well as the addition ofnew programs with existing customers,” stated Michael E. Marks, Chairman andChief Executive Officer of Flextronics. “I am pleased with the positiveresults of our continued tight focus on operating metrics,"continued Marks. Inventory has declined by $367 million since the beginning of the fiscal year while inventory turns reached 8.2 turns in the quarter ending September 30, 2001. Quarter over quarter, inventory decreased by $105 million while receivables remained flat and revenues increased. Flextronics’ balance sheet also remained strong through this period with total debt to total capitalization of 26%.

“While we believe the pipeline of new opportunities remains robust, we continue to plan our operations as though no new business will come our way,” said Mr. Marks. As a result, the Company recorded a one-time charge of $399 million to complete integration activities with recent acquisitions as well as to reduce excess capacity in response to the current economic downturn. The Company is eliminating 4 million square feet of manufacturing space, or 20% of the prior quarter’s total and reducing headcount by 10,000, or 15% of the global workforce at the end of the prior quarter. As before, the reductions were primarily in high cost locations that Flextronics does not expect to use again as its customers are accelerating their transition of manufacturing requirements to lower cost locations, where Flextronics continues to expand.

Flextronics International

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