Flextronics today announced results for its fourth quarter and fiscal year ended 31 March 2005. Net sales were $3.6 billion and $15.9 billion, respectively, which represent a quarterly decrease of $155.3 million or 4%, and an annual increase of $1.4 billion or 9%, as compared with the respective prior periods.
Excluding intangibles amortisation, restructuring and other charges, net income for the fourth quarter increased 31% to $95.3 million, or $0.16 per diluted share, compared with $72.8 million, or $0.13 per diluted share in the year ago quarter. GAAP net income for the fourth quarter increased by $58.2 million to $74.2 million, or $0.12 per diluted share, as compared to $16 million, or $0.03 per diluted share in the year ago quarter.
Excluding intangibles amortization, restructuring and other charges, net income for the fiscal year increased 65% to $388.4 million, or $0.66 per diluted share, compared with $234.8 million, or $0.42 per diluted share in the prior fiscal year. GAAP net income for the fiscal year increased by $692.3 million to $339.9 million, or $0.58 per diluted share, as compared to a loss of $352.4 million, or $0.67 per diluted share in the prior fiscal year.
The quarterly results reflect continued industry-leading working capital management, with a cash conversion cycle of 14.6 days. Return on invested tangible capital (ROITC) increased to 25% in the March 2005 quarter from 19% in the prior year quarter. Excluding restructuring charges, gross margin increased for the sixth consecutive quarter to 7.3% and gross profit in fiscal year 2005 reached an all-time high of $1.08 billion.
"While our quarterly revenue and operating profits were less than expected due to a more than expected decline in handset customer demand, we are extremely pleased that we were able to increase our gross margins for the sixth consecutive quarter. Many of our fourth quarter and fiscal year operating metrics, such as sales, gross profit, GAAP net income, cash conversion cycle, fixed assets to sales, cash and liquidity, and ROITC are at record levels," said Michael E Marks, Chief Executive Officer of Flextronics.
"We continue to believe we can increase gross margins and operating margins, while reducing SG&A as a percentage of sales. The gross margin improvement over the past several quarters demonstrates that our many initiatives to enhance returns and profitability are working. In addition, as we return to a period of reduced capital expenditures, cash flow should continue to improve. Of course this all translates into higher returns on capital as well," added Marks.
"The new business opportunities for which we have been selected during the quarter further indicate that our major long-term initiatives, including our industrial parks, vertical integration and design activities, continue to win support from customers. These wins together with our robust pipeline of potential opportunities should continue to diversify our exposure to end-market segments and drive revenue and earnings growth. We continue to believe the combination of our industry-leading working capital management with our low-cost geographic footprint and these diversified opportunities places us in good competitive shape," Marks concluded.
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