We refer you to our documents the company files from time to time with the Securities & Exchange Commission. These documents contain and identify important factors that could cause actual results to differ materially from our projections or forward-looking statements. You'll note in our press release issued today that we have provided you with a statement of operations for the three months ending July 3, 2010, on a GAAP basis, as well as certain non-GAAP financial information.A reconciliation between the GAAP and non-GAAP financial information is also provided in the press release and is posted on our website. In general, our non-GAAP information excludes restructuring costs, acquisition and integration costs, impairment charges, gains or losses on extinguishment of debt, non-cash stock-based compensation expense, amortization expense and other infrequent or unusual items to the extent material. Any comments we make on this call as they relate to the income statement measures will be directed at our non-GAAP financial results. Accordingly, unless otherwise stated in this conference call, when we refer to gross profit, gross margin, operating income, operating margin, net income and earnings per share, we are referring to our non-GAAP information. I would now like to turn the call over to Jure Sola, Chairman and Chief Executive Officer. Jure Sola Thanks, Paige. Good afternoon, ladies and gentlemen. Welcome. Thank you all for being here today. Joining me on this conference today is Hari Pillai, our President and Chief Operating Officer; and also Bob Eulau, our Executive Vice President and CFO. Our agenda today we have is Bob Eulau will review our financial results for the third quarter of fiscal year 2010. Then I will follow up with traditional comments relative to Sanmina-SCI's results and future goals. Then Bob, Hari and I will open for Q&A. And now, I would like to turn this call over to Bob.
Bob EulauThanks, Jure. If you could turn to slide three, overall this was our fifth consecutive quarter of growth and improved profitability. Revenue $1.63 billion was up 6% on a sequential basis and up 34% over the third quarter last year. This was at the high end of our guidance of $1.55 billion to $1.65 billion. Gross margin was also in the range we expected with a 10 basis point sequential increase to 7.9% on a non-GAAP basis. This is also the fifth consecutive quarter of gross margin improvement. This implies a contribution margin of 9.6% on the incremental revenue, which was a little lower than the 10% to 15% we had expected. This was primarily driven by the business mix for the quarter. As an aside, while there has been some variability by quarter, our contribution margin over the last 12 months has been 12.5%. Accordingly, we believe that a 10% to 15% contribution margin over the next few quarters continues to be very achievable. One of the highlights for the quarter was that for the first time in several years, the gross margin for the components business exceeded our corporate average gross margin for the quarter. Non-GAAP EPS was at $0.32 per share. While this is in the range of our previous guidance, our plan was to do better than this and we were hit by several unusual items during the quarter. Specifically, our non-GAAP EPS includes total reserves for a small telecom customer based in Europe of $3.2 million and losses on foreign exchange of $1.5 million. We have filed to recover the bad debt, which we're confident we will win, but it may take several quarters to recover the bad debt. One of the items that we anticipated was our acquisition of BreconRidge, which we announced in our call last quarter and completed on May 28. The integration process has begun and we continue to expect the transaction to be accretive within a year.
In aggregate, the various usual items negatively impacted our EPS by over $0.06 per share. Taxes are always difficult to project, but the fact that our quarterly rate came in at 26% rather than our 21% expectation reduced EPS by another $0.02. This was based on 83.7 million shares outstanding on a fully diluted basis.Read the rest of this transcript for free on seekingalpha.com