Electronics manufacturing services (EMS) provider Flextronics (Singapore) has announced results for its third fiscal quarter ended Dec.31, 2003. Net sales reached a record of $4.15 billion, an increase of 18.5% over the previous quarter, and up 7.8% from Q3 2002.

Pro forma net income was $93.9 million, or $0.17 per diluted share, a sequential increase of 97.6% and a year-on-year increase of 41.9%. Including after-tax amortization expense of $8.6 million, previously announced restructuring costs of $49.5 million and litigation settlement costs of $14.4 million, net income in the third quarter was $21.4 million. Last year, the company recorded a third quarter net loss of $6.5 million.

The quarterly results reflect a number of financial milestones, including record inventory turns of 13 times, a cash conversion cycle of 14 days and selling, general and administrative expense of 2.9% of sales. In addition, pro forma cash flow from operations was $356 million, which excludes approximately $68 million of payments for restructuring and other charges.

"As we begin to realize the earnings leverage imbedded in our business, our financial results will continue to improve," said Michael E. Marks, chief executive officer of Flextronics. "The improved operating results are what we expected to begin to see as we emerge from the technology downturn. While we are pleased that our margins, overall profitability, return on invested tangible capital, and many other financial metrics have improved this quarter, we continue to be completely focused on driving additional improvements in our operating performance."

Marks concluded, "Last week's announcement regarding our discussions with Nortel Networks has the potential to be a major transformational event for Flextronics in many ways. As currently being discussed, it has the potential to be the largest program award in the history of the EMS industry, with revenues exceeding $2 billion per year for Flextronics."

The company has increased its expectations for the March 2004 quarter by 10% for sales and 20% for pro forma earnings per share, to a range of $3.4 to $3.6 billion and $0.09 to $0.11, respectively.

www.flextronics.com

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