SAN JOSE -- Sanmina-SCI reported third-quarter net income of $22 million, reversing a net loss of $42 million a year ago.

For the period ended July 3, the contract electronics manufacturer reported GAAP revenue of $1.63 billion, up 6.4% sequentially and 34.4% from a year ago. The company said revenue from communications customers was up 28% sequentially, but all other segments were flat or down sequentially.

Gross profit was $129 million, or 7.9% of revenue, up 10 basis points sequentially and 150 basis points from last year.

During the period, Sanmina was affected by one customer declaring bankruptcy and another refusing to pay, coupled with the embezzlement of $3 million by an employee in Asia -- all which management expects to be favorably resolved.

Sanmina guided for October quarter sales of $1.65 billion to $1.70 billion on broader end-market demand. The book-to-bill ratio at quarter's end was 1.1, and several expected projects ramps give the company confidence that revenue growth could reach double-digits in the next fiscal year.

At quarter's end, cash and cash equivalents amounted to $665 million, down from $673 million in April. Cash cycle days were 43 days and inventory turns were 7.2 times for the quarter. Cash flow from operations was a loss of $25 million.

Sanmina-SCI took restructuring costs of $7.4 million related to its May 28 acquisition of EMS provider BreconRidge, and over the next three quarters expects total restructuring costs for BreconRidge to be $16 million to $18 million.

The embezzlement, which CFO Bob Eulau said appears to have occurred over several years, cost the company $3 million, but the firm believes insurance will cover all but $500,000.

On a conference call with analysts, CEO Jure Sola said the acquisition of Breconridge created certain overlaps in footprint. As a result, the company will close one of its two factories in Canada and as well as Breconridge's plant in China, moves that are expected to be completed in the next few quarters. The new revenue potential from Breconridge could be $250 million to $300 million over the next four months and accretive in the first year, Sola said.

Sola said Sanmina's  printed circuit board fabrication plants are at 85% to 90% capacity, while in North America one plant is over 90% and another is at 55% to 60%.

Sola added that the company expects wages in China to rise 25% to 30% or more this year, and in most cases the costs were being passed on to customers.

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