Fabrinet Announces Second Quarter 2013 Financial Results

Fabrinet Announces Second Quarter 2013 Financial Results

BANGKOK--(BUSINESS WIRE)-- Fabrinet (NYS: FN) , a leading provider of advanced optical packaging and precision optical, electro-mechanical and electronic manufacturing services to original equipment manufacturers of complex products, today announced its financial results for the second quarter of fiscal 2013 ended December 28, 2012.

Fabrinet reported total revenue of $167.4 million for the second quarter of fiscal 2013, an increase of 73.3% compared to total revenue of $96.6 million for the comparable period in fiscal 2012. GAAP net income for the second quarter of fiscal 2013 was $16.7 million, or $0.48 per diluted share, compared to GAAP net loss of ($33.3) million, or ($0.97) per diluted share, in the second quarter of fiscal 2012. Non-GAAP net income in the second quarter of fiscal 2013 was $13.8 million, or $0.39 per diluted share, an increase of more than 100% compared to non-GAAP net income of $6.2 million, or $0.18 per diluted share, in the same period a year ago.


Tom Mitchell, Chief Executive Officer of Fabrinet, said, "Despite what remains a challenging macro environment, I am pleased with the results that we delivered in the second quarter of fiscal 2013, highlighted by solid revenue and earnings per share growth. We continue to work closely with new and existing customers and we remain committed to delivering value to all of our stakeholders."

Business Outlook

Based on information available as of February 4, 2013, Fabrinet is issuing guidance for the third quarter of fiscal 2013 as follows:

Fabrinet expects third quarter revenue to be in the range of $147 million to $151 million. GAAP net income per share is expected to be in the range of $0.26 to $0.28 with expected non-GAAP net income per share of $0.29 to $0.31, based on approximately 35 million fully diluted shares outstanding.

Conference Call Information

What:

Fabrinet Second Quarter 2013 Financial Results Conference Call

When:

Monday, February 4, 2013

Time:

5:00 p.m. ET

Live Call:

(888) 357-3694, domestic

(253) 237-1137, international

Passcode: 89547259

Replay:

(855) 859-2056, domestic

(404) 537-3406, international

Passcode: 89547259

Webcast:

http://investor.fabrinet.com (live and replay)

This press release and any other information related to the call will also be posted on Fabrinet's website at http://investor.fabrinet.com. A recorded version of this webcast will be available approximately two hours after the call and will be archived on Fabrinet's website for a period of one year.

Investor Conferences

Management will be presenting at the Stifel Nicolaus Technology Conference in San Francisco on Tuesday, February 5, 2013; the Morgan Stanley Technology, Media & Telecom Conference in San Francisco on Tuesday, February 26, 2013; and the Piper Jaffray Technology, Media and Telecommunications Conference in New York City on Wednesday, March 13, 2013.

About Fabrinet

Fabrinet is a leading provider of advanced optical packaging and precision optical, electro-mechanical, and electronic manufacturing services to original equipment manufacturers of complex products, such as optical communication components, modules and subsystems, industrial lasers and sensors. Fabrinet offers a broad range of advanced optical and electro-mechanical capabilities across the entire manufacturing process, including process design and engineering, supply chain management, manufacturing, advanced packaging, integration, final assembly and test. Fabrinet focuses on production of high complexity products in any mix and any volume. Fabrinet maintains engineering and manufacturing resources and facilities in Thailand, the People's Republic of China and the United States. For more information visit: www.fabrinet.com.

Safe Harbor

"Safe Harbor" Statement Under U.S. Private Securities Litigation Reform Act of 1995

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include all of the statements under the "Business Outlook" section relating to our forecasted operating results for the third quarter of fiscal 2013. These forward-looking statements involve risks and uncertainties, and actual results could vary materially from these forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to: less customer demand for our products and services than forecasted; less growth in the optical communications, industrial lasers and sensors markets than we forecast; difficulties expanding into additional markets, such as the semiconductor processing, biotechnology, metrology and materials processing markets; increased competition in the optical manufacturing services markets; difficulties in delivering products and services that compete effectively from a price and performance perspective; our reliance on a limited number of customers and suppliers; difficulties in accurately forecasting demand for our services; difficulties in managing our operating costs; difficulties in managing and operating our business across multiple countries (including the U.S., Thailand and the People's Republic of China); and other important factors as described in reports and documents we file from time to time with the Securities and Exchange Commission (SEC), including the factors described under the section captioned "Risk Factors" in our quarterly report on Form 10-Q, filed on November 6, 2012. We disclaim any obligation to update information contained in these forward-looking statements whether as a result of new information, future events, or otherwise.

Use of Non-GAAP Financials

The Company refers to the non-GAAP financial measures cited above in making operating decisions because they provide meaningful supplemental information regarding the Company's ongoing operational performance. Non-GAAP net income excludes stock-based compensation expenses and income (expense) related to flooding. We have excluded these items in order to enhance investors' understanding of our ongoing operations. The use of these non-GAAP financial measures has material limitations because they should not be used to evaluate our company without reference to their corresponding GAAP financial measures. As such, we compensate for these material limitations by using these non-GAAP financial measures in conjunction with GAAP financial measures.

These non-GAAP financial measures are used to: (1) measure company performance against historical results, (2) facilitate comparisons to our competitors' operating results, and (3) allow greater transparency with respect to information used by management in financial and operational decision making. In addition, these non-GAAP financial measures are used to measure company performance for the purposes of determining employee incentive plan compensation.

Fabrinet

Unaudited Condensed Consolidated Balance Sheets

As of December 28, 2012 and June 29, 2012

December 28,

June 29,

(in thousands of U.S. dollars, except share data)

2012

2012

Assets

Current assets

Cash and cash equivalents

$

128,098

$

115,507

Trade accounts receivable, net

131,358

128,253

Inventory, net

99,681

103,223

Deferred tax assets

1,744

4,088

Prepaid expenses

1,334

3,571

Other current assets

6,934

6,029

Total current assets

369,149

360,671

Non-current assets

Property, plant and equipment, net

98,248

97,923

Intangibles, net

239

380

Deferred tax assets

2,914

1,764

Deposits and other non-current assets

635

624

Total non-current assets

102,036

100,691

Total assets

$

471,185

$

461,362

Liabilities and Shareholders' Equity

Current liabilities

Long-term loans from banks, current portion

$

9,668

$

9,668

Trade accounts payable

73,744

86,000

Construction-related payable

9

2,222

Income tax payable

724

353

Deferred tax liability

1,654

1,405

Accrued payroll, bonus and related expenses

5,805

5,181

Accrued expenses

2,707

2,630

Other payables

5,598

6,601

Liabilities to third parties due to flood losses

54,401

61,198

Total current liabilities

154,310

175,258

Non-current liabilities

Long-term loans from banks, non-current portion

24,077

28,911

Severance liabilities

5,017

4,420

Other non-current liabilities

1,582

2,064

Total non-current liabilities

30,676

35,395

Total liabilities

184,986

210,653

Commitments and contingencies

Shareholders' equity

Preferred shares (5,000,000 shares authorized, $0.01 par value;

no shares issued and outstanding as of December 28, 2012 and June 29, 2012)

-

-

Ordinary shares (500,000,000 shares authorized, $0.01 par value;

34,535,980 shares and 34,470,829 shares issued and

outstanding as of December 28, 2012 and June 29, 2012, respectively)

345

345

Additional paid-in capital

68,251

65,462

Retained earnings

217,603

184,902

Total shareholders' equity

286,199

250,709

Total Liabilities and Shareholders' Equity

$

471,185

$

461,362

Fabrinet

Unaudited Condensed Consolidated Statements of Operations

For the three and six months ended December 28, 2012 and December 30, 2011

Three Months Ended

Six Months Ended

December 28,

December 30,

December 28,

December 30,

(in thousands of U.S. dollars)

2012

2011

2012

2011

Revenues

$

167,426

$

96,609

$

326,051

$

282,956

Cost of revenues

(149,056

)

(87,680

)

(289,959

)

(251,143

)

Gross profit

18,370

8,929

36,092

31,813

Selling, general and administrative expenses

(5,787

)

(5,319

)

(11,646

)

(11,957

)

Income (expense) related to flooding

4,825

(40,265

)

9,645

(40,265

)

Operating income (loss)

17,408

(36,655

)

34,091

(20,409

)

Interest income

271

224

459

419

Interest expense

(263

)

(68

)

(549

)

(142

)

Foreign exchange (loss) gain, net

(170

)

787

107

600

Other income

183

59

373

156

Income (loss) before income taxes

17,429

(35,653

)

34,481

(19,376

)

Income tax (expense) benefit

(747

)

2,399

(1,780

)

1,777

Net income (loss)

$

16,682

$

(33,254

)

$

32,701

$

(17,599

)

Earnings (loss) per share

Basic

$

0.48

$

(0.97

)

$

0.95

$

(0.51

)

Diluted

0.48

(0.97

)

0.94

(0.51

)

Weighted average number of ordinary shares outstanding

(thousands of shares)

Basic

34,517

34,396*

34,501

34,309*

Diluted

34,804

34,396*

34,737

34,309*

* In accordance with the antidilutive provisions of ASC 260-10-45, basic and dilutive shares are the same for the period ended December 30, 2011

Fabrinet

Unaudited Condensed Consolidated Statements of Cash Flows

For the six months ended December 28, 2012 and December 30, 2011

Six Months Ended

December 28,

December 30,

(in thousands of U. S. dollars)

2012

2011

Cash flows from operating activities

Net income (loss) for the period

$

32,701

$

(17,599

)

Adjustments to reconcile net income to net cash provided by operating activities

Depreciation

5,002

4,937

Amortization of intangibles

142

199

(Gain) loss on disposal of property, plant and equipment

(1

)

9

Income related to flooding

(9,645

)

-

Proceeds from insurers for business interruption losses related to flooding

4,741

-

Reversal of allowance for doubtful accounts

(36

)

(24

)

Unrealized gain on exchange rate and fair value of derivative

(722

)

(43

)

Share-based compensation

2,632

2,591

Deferred income tax

1,443

(2,291

)

Other non-cash expenses

115

374

Inventory obsolescence

(376

)

475

Loss from written-off assets and liabilities to third parties due to flood losses

-

33,263

Changes in operating assets and liabilities

Trade accounts receivable

(3,069

)

19,868

Inventory

3,918

(12,813

)

Other current assets and non-current assets

1,342

(451

)

Trade accounts payable

(12,256

)

(35,511

)

Income tax payable

371

(812

)

Other current liabilities and non-current liabilities