Fabrinet Announces Third Quarter 2013 Financial Results

Fabrinet Announces Third 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 third quarter of fiscal 2013 ended March 29, 2013.

Fabrinet reported total revenue of $155.6 million for the third quarter of fiscal 2013, an increase of 11.9% compared to total revenue of $139.0 million for the comparable period in fiscal 2012. GAAP net income for the third quarter of fiscal 2013 was $21.1 million, or $0.61 per diluted share, compared to a GAAP net loss of ($46.3) million, or ($1.35) per diluted share, in the third quarter of fiscal 2012. Non-GAAP net income in the third quarter of fiscal 2013 was $11.5 million, or $0.33 per diluted share, an increase of 16.8% compared to non-GAAP net income of $9.9 million, or $0.28 per diluted share, in the same period a year ago.


Tom Mitchell, Chief Executive Officer of Fabrinet, said, "While overall industry demand remains muted, I am pleased that our third quarter results demonstrate the consistency of our operating model, with revenue and earnings per share performance above expectations. Our customer relationships remain strong and we continue to have success with new customers and new programs from existing customers. The net result is that we have continuing confidence in our ability to deliver profitable growth over the long-term."

Business Outlook

Based on information available as of April 29, 2013, Fabrinet is issuing guidance for the fourth quarter of fiscal 2013 as follows:

Fabrinet expects fourth quarter revenue to be in the range of $148 million to $152 million. Non-GAAP net income per share is expected to be in the range of $0.26 to $0.28, assuming approximately 35 million fully diluted shares outstanding.

Conference Call Information

What:

Fabrinet Third Quarter 2013 Financial Results Conference Call

When:

Monday, April 29, 2013

Time:

5:00 p.m. ET

Live Call:

(888) 357-3694, domestic

(253) 237-1137, international

Passcode:

34166014

Replay:

(855) 859-2056, domestic

(404) 537-3406, international

Passcode:

34166014

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.

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.

Forward-Looking Statements

"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 fourth 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 February 5, 2013. 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 share-based compensation expenses, income (expense) related to flooding and follow-on offering expenses. 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 March 29, 2013 and June 29, 2012

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

March 29,
2013

June 29,
2012

Assets

Current assets

Cash and cash equivalents

$

157,479

$

115,507

Trade accounts receivable, net

122,926

128,253

Inventory, net

94,310

103,223

Deferred tax assets

2,158

4,088

Prepaid expenses

2,605

3,571

Other current assets

7,593

6,029

Total current assets

387,071

360,671

Non-current assets

Property, plant and equipment, net

98,173

97,923

Intangibles, net

196

380

Deferred tax assets

2,435

1,764

Deposits and other non-current assets

655

624

Total non-current assets

101,459

100,691

Total assets

$

488,530

$

461,362

Liabilities and Shareholders' Equity

Current liabilities

Long-term loans from bank, current portion

$

9,668

$

9,668

Trade accounts payable

74,329

86,000

Construction-related payable

-

2,222

Income tax payable

1,171

353

Deferred tax liability

1,761

1,405

Accrued payroll, bonus and related expenses

7,442

5,181

Accrued expenses

3,254

2,630

Other payables

4,760

6,601

Liabilities to third parties due to flood losses

48,390

61,198

Total current liabilities

150,775

175,258

Non-current liabilities

Long-term loans from bank, non-current portion

21,660

28,911

Severance liabilities

5,464

4,420

Other non-current liabilities

1,618

2,064

Total non-current liabilities

28,742

35,395

Total liabilities

179,517

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 March 29, 2013 and June 29, 2012)

-

-

Ordinary shares (500,000,000 shares authorized, $0.01 par value; 34,626,335 shares and 34,470,829 shares issued and outstanding as of March 29, 2013 and June 29, 2012, respectively)

346

345

Additional paid-in capital

69,938

65,462

Retained earnings

238,729

184,902

Total shareholders' equity

309,013

250,709

Total Liabilities and Shareholders' Equity

$

488,530

$

461,362

Fabrinet

Unaudited Condensed Consolidated Statements of Operations

For the three and nine months ended March 29, 2013 and March 30, 2012

Three Months Ended

Nine Months Ended

March 29,

March 30,

March 29,

March 30,

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

2013

2012

2013

2012

Revenues

$

155,557

$

139,019

$

481,608

$

421,975

Cost of revenues

(139,302

)

(124,138

)

(429,261

)

(375,281

)

Gross profit

16,255

14,881

52,347

46,694

Selling, general and administrative expenses

(6,801

)

(6,586

)

(18,447

)

(18,543

)

Income (expense) related to flooding

11,419

(55,623

)

21,064

(95,888

)

Operating income (loss)

20,873

(47,328

)

54,964

(67,737

)

Interest income

302

209

761

628

Interest expense

(239

)

(64

)

(788

)

(206

)

Foreign exchange gain, net

978

714

1,085

1,314

Other income

139

57

512

213

Income (loss) before income taxes

22,053

(46,412

)

56,534

(65,788

)

Income tax (expense) benefit

(927

)

87

(2,707

)

1,864

Net income (loss)

$

21,126

$

(46,325

)

$

53,827

$

(63,924

)

Earnings (loss) per share

Basic

$

0.61

$

(1.35

)

$

1.56

$

(1.86

)

Diluted

0.61

(1.35

)

1.55

(1.86

)

Weighted average number of ordinary shares outstanding

(thousands of shares)

Basic

34,596

34,440

34,532

34,353

Diluted

34,909

34,440

*

34,794

34,353

*

* In accordance with the antidilutive provisions of ASC 260-10-45, basic and dilutive shares are the same for the period ended March 30, 2012

Fabrinet

Unaudited Condensed Consolidated Statements of Cash Flows

For the nine months ended March 29, 2013 and March 30, 2012

Nine Months Ended

March 29,

March 30,

(in thousands of U. S. dollars)

2013

2012

Cash flows from operating activities

Net income (loss) for the period

$

53,827

$

(63,924

)

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

Depreciation

7,512

6,995

Amortization of intangibles

185

288

Gain on disposal of property, plant and equipment

(23

)

(7

)

Income related to flooding

(21,064

)

Proceeds from insurers for business interruption losses related to flooding

4,741

Proceeds from insurers for inventory losses related to flooding

11,419

(Reversal of) allowance for doubtful accounts

(94

)

28

Unrealized gain on exchange rate and fair value of derivative

(1,566

)

(1,364

)

Share-based compensation

3,969

3,930

Deferred income tax

1,615

(2,331

)

Other non-cash expenses

598

637

(Reversal of ) inventory obsolescence

(589

)

528

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

83,871

Changes in operating assets and liabilities

Trade accounts receivable

3,421

(807

)

Inventory

8,945

(9,550

)

Other current assets and non-current assets

(2,775

)

(2,758

)

Trade accounts payable

(11,671

)

(17,289

)

Income tax payable

818

(1,038

)

Other current liabilities and non-current liabilities

48

2,929

Liabilities to third parties due to flood losses

(8,059

)

Net cash provided by operating activities

51,257

138

Cash flows from investing activities

Purchase of property, plant and equipment

(8,634

)

(26,394

)

Purchase of intangibles

(1

)

(17

)

Purchase of assets for lease under direct financing leases

(2,940

)

Proceeds from direct financing leases

1,217

Proceeds from disposal of property, plant and equipment

25

22

Proceeds from insurers in settlement of claims related to flood damage

4,904