ANAHEIM, CA -- Multi-Fineline Electronix reported fiscal fourth-quarter net income fell 61% to $2.4 million on $2 million in restructuring costs and slower sales.

Fiscal 2010 fourth quarter net income was $6.1 million, including one-time charges of $5.9 million.

MFlex said net sales in the quarter ended Sept. 30 were $191.5 million, down 15.5% year-over-year, primarily due to lower sales to one key customer. Gross margin declined 410 basis points to 10% on higher labor costs in China, currency and new program startup costs. Cash flow from operations was $23.2 million.  Fourth-quarter pretax charges totaled $3.2 million, including $1.5 million in non-cash charges related the sale and relocation of the company's Anaheim headquarters, $1 million related to a headcount reduction, and $700,000 in non-cash charges related to other facility transactions.

MFlex makes flexible printed circuit boards and performs contract assembly.

Chief executive Reza Meshgin said, "Our revenue results were inline with the low end of our expected range, reflecting a shift in the timing of certain new programs for two of our key customers. While we anticipated a decline in gross margin, lower sales coupled with lower than expected yields further depressed our gross margin which came in below our expectations. As these and other new programs grow in fiscal 2012, we expect to leverage increasing revenue to generate improved profitability."

For the fiscal year ended Sept. 30, net sales increased 5.1% to a record $831.6 million, and net income rose 27% to $37.9 million.

MFlex guided for a sequential increase in December quarter sales to $200 million to $230 million, and gross margins of 10 to 11%. "We are cautious as the recent flooding in Thailand may negatively affect our industry's supply chain and handset assembly volumes," Meshgin said. "As a result, we anticipate our capacity utilization to temporarily remain below optimal levels which is expected to negatively impact our first quarter gross margin. Going forward in 2012, we expect to benefit from strong market share at our key customers and remain focused on continuing to diversify our customer base to grow revenue. In turn, we anticipate that increased capacity utilization, in conjunction with additional manufacturing efficiencies, will improve gross margin performance later in 2012."

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