Flextronics today announced results for its second quarter ended 30 September 2005 were $3.9 billion compared to $4.1 billion in the year ago quarter.
Excluding intangibles amortisation, restructuring and other charges, net income for the second quarter increased 3% to $101.3 million, or $0.17 per diluted share, compared with $98.5 million, or $0.17 per diluted share in the year ago quarter.
After-tax amortisation, restructuring and other charges amounted to $103.8 million in the second quarter compared to $5.9 million in the year ago quarter, resulting in a GAAP net loss of $2.4 million, or nil earnings per diluted share in the second quarter as compared to net income of $92.6 million, or $0.16 per diluted share in the year ago quarter.
Return on invested tangible capital (ROITC) increased to 27% in the second quarter ended 30 September 2005, from 24% in the year ago quarter. The company`s cash conversion cycle decreased to 16 days in the second quarter from 20 days in the previous sequential quarter. Excluding intangibles amortisation, restructuring and other charges, operating margin increased 20 basis points to 3.4% in the second quarter from 3.2% in the year ago quarter, representing the eighth consecutive quarter of year-over-year operating margin improvement.
The company ended the quarter with a record high $1.2 billion in cash, up from $830 million and the end of the previous sequential quarter. Total debt has decreased by $197 million since the end of the previous sequential quarter. Net debt amounted to $439 million at the end of the quarter and has been reduced by $517 million since the end of the previous sequential quarter. Free cash flow, which is cash flow from operations less capital expenditures, generated $327 million in the second quarter, which closely approximated the $339 million used to fund acquisitions during the quarter. The previously announced divestures of the Network Services and Semiconductor divisions generated $519 million, which closely approximated the $197 million reduction in debt and the $320 million increase in cash in the second quarter.
With regard to the September quarter operating results, Michael E Marks, Chief Executive of Flextronics, stated: "We are extremely pleased with our working capital management and cash flows for the quarter. To this end, we are pleased that we were able to reduce our cash conversion cycle to 16 days from 20 days in the previous quarter. Our cash also increased by $320 million and our debt decreased by $197 million from the end of the previous quarter while our cash flow from operations of $381 million was sufficient to fund our capital expansion and acquisition activity during the quarter. We were also able to increase operating margins for the eighth consecutive quarter on a year-on-year basis."
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