(RTTNews) - Contract electronics manufacturer Flextronics International Ltd. (FLEX: News ) said Monday after the markets closed that its second quarter profit dropped 49% from last year, as sales fell 34% amid a difficult industry environment. However, the company's quarterly earnings per share, excluding items, came in above analysts' expectations. At the same time, the company forecast third quarter earnings above analysts' current consensus estimate.

The Singapore-based company reported GAAP net income for the second quarter of $19.7 million or $0.02 per share, compared to $38.5 million or $0.05 per share for the year-ago quarter.

During the current year second quarter, Flextronics recognized $13 million of pretax restructuring charges, in connection with its previously announced restructuring plans, comprised of $9 million of cash charges mainly related to employee severance costs and $4 million of non-cash asset impairment charges.

The company said Monday it remains confident that it is on track to realize the expected annualized savings of $230 million to $260 million upon the completion of its restructuring activities, which will be completed by the end of Fiscal 2010.

Excluding items, adjusted net income for the second quarter was $104.0 million or $0.13 per share, compared to $229.5 million or $0.28 per share in the prior year quarter.

On average, 14 analysts polled by Thomson Reuters expected the company to earn $0.09 per share for the second quarter. Analysts' estimates typically exclude special items.

GAAP gross margin for the second quarter improved to 5.1% from 4.7% a year ago, while non-GAAP gross margin fell to 5.4% from 5.8% last year.
GAAP operating income for the quarter dropped to $123.1 million from $158.8 million a year ago, while adjusted operating income for the quarter fell to $149.1 million from $294.8 million last year.

Net sales for the second quarter fell 34% to $5.83 billion from $8.86 billion in the same quarter last year. Twelve analysts had a consensus revenue estimate of $5.77 billion for the second quarter.

"During the second quarter, Flextronics posted solid financial progress across all aspects of our business, reflecting our efforts to re-size our business to adapt to current market conditions. We are very pleased with the healthy expansion of our adjusted gross margin, which rose by 90 basis points sequentially," said Paul Read, chief financial officer of Flextronics.

During the second quarter, the company received proceeds of $255 million from the sale of a non-core investment and note receivable and recorded non-cash charges to impair certain other non-core investments and notes receivable amounting to $92 million. Also during the quarter, the company recognized about $60 million of non-cash tax benefits as a result of settlements in various tax jurisdictions.

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