Form 8-K Fabrinet For: Feb 01

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported)

February 1, 2016

 

 

Fabrinet

(Exact name of registrant as specified in its charter)

 

 

 

Cayman Islands		001-34775		Not Applicable
(State or other jurisdiction of incorporation)		(Commission File Number)		(IRS Employer Identification No.)

c/o Intertrust Corporate Services (Cayman) Limited

190 Elgin Avenue

George Town

Grand Cayman

KY1-9005

Cayman Islands

(Address of principal executive offices, including zip code)

+66 2-524-9600

(Registrant’s telephone number, including area code)

N/A

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2):

 

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

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Item 2.02

Results of Operations and Financial Condition.

On February 1, 2016, Fabrinet (the “Company”) issued a press release regarding its financial results for the fiscal quarter ended December 25, 2015. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

This information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

 

Item 9.01

Financial Statements and Exhibits.

 

(d)

Exhibits.

 

Exhibit No.		Description
99.1		Press release dated February 1, 2016

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date: February 1, 2016

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EXHIBIT INDEX

 

Exhibit No.		Description
99.1		Press release dated February 1, 2016

Exhibit 99.1

Fabrinet Announces Second Quarter Fiscal-Year 2016 Financial Results

BANGKOK, Thailand – February 1, 2016 – Fabrinet (NYSE: 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 its second fiscal quarter ended December 25, 2015.

Tom Mitchell, Chief Executive Officer of Fabrinet, said, “We delivered a strong second quarter with record revenue and strong profitability. Upside in the quarter was driven by a combination of growth from new customer programs and increasing production from existing customer programs, as we benefit from technology investments that we continue to make. While we have sufficient capacity to meet our growing customer demand for several quarters, construction of the first new building at our new campus outside Bangkok is underway, which will help drive further profitable growth over the longer-term.”

Second quarter Fiscal-Year 2016 Financial Highlights

GAAP Results

 

•

Revenue was $233.0 million for the second quarter of fiscal year 2016, an increase of 24% compared to total revenue of $188.4 million for the comparable period in fiscal year 2015.

 

•

GAAP net income for the second quarter of fiscal year 2016 was $19.8 million, compared to GAAP net income of $8.7 million in the second quarter of fiscal year 2015.

 

•

GAAP net income per diluted share for the second quarter of fiscal year 2016 was $0.54, compared to GAAP net income per diluted share of $0.24 in the second quarter of fiscal year 2015.

Non-GAAP Results

 

•

Non-GAAP net income in the second quarter of fiscal 2016 was $18.2 million, an increase of 26% compared to non-GAAP net income of $14.4 million in the same period a year ago.

 

•

Non-GAAP net income per diluted share in the second quarter of fiscal 2016 was $0.50, an increase from non-GAAP net income per diluted share of $0.40 in the same period a year ago.

Business Outlook

Based on information available as of February 1, 2016, Fabrinet is issuing guidance for the third quarter of fiscal 2016 ending March 25, 2016, as follows:

 

•

Fabrinet expects third quarter revenue to be in the range of $240 million to $244 million.

 

•

GAAP net income per diluted share is expected to be in the range of $0.47 to $0.49, based on approximately 36.8 million fully diluted shares outstanding.

 

•

Non-GAAP net income per diluted share is expected to be in the range of $0.52 to $0.54, based on approximately 36.8 million fully diluted shares outstanding.

Conference Call Information

 

What:		Fabrinet Second quarter Fiscal-Year 2016 Financial Results Conference Call
When:		Monday, February 1, 2016
Time:		5:00 p.m. ET
Live Call:		(888) 357-3694, domestic (253) 237-1137, international Passcode: 25405326
Replay:		(855) 859-2056, domestic (404) 537-3406, international Passcode: 25405326
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.

 

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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 of America. 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 our expectation that we will complete construction of a new manufacturing building in Thailand and continue to achieve profitable growth, as well as all of the statements under the “Business Outlook” section regarding our expected revenue and GAAP and non-GAAP net income per share for the third quarter of fiscal 2016. 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 small number of customers and suppliers; 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); delays in construction of our new manufacturing building in Thailand; 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 3, 2015. 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, executive separation costs, investigation cost, expenses related to flooding, expenses related to reduction in workforce, amortization of debt issuance costs and unrealized gain or loss on foreign currency. We have excluded these items in order to enhance investors’ understanding of our underlying 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.

SOURCE: Fabrinet

Investor Contact:

Garo Toomajanian

[email protected]

 

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Fabrinet

Unaudited Condensed Consolidated Balance Sheets

As of December 25, 2015 and June 26, 2015

 

(in thousands of U.S. dollars, except share data)		December 25, 2015				June 26, 2015
Assets
Current assets
Cash and cash equivalents		$	131,359			$	112,978
Marketable securities			135,199				142,866
Trade accounts receivable, net			147,430				134,952
Inventory, net			140,862				130,613
Deferred tax assets			1,555				1,662
Prepaid expenses			1,003				2,135
Other current assets			1,612				1,833
Total current assets			559,020				527,039
Non-current assets
Property, plant and equipment, net			159,415				140,654
Intangibles, net			321				137
Deferred tax assets			2,249				2,249
Deferred debt issuance costs and others			2,581				2,424
Total non-current assets			164,566				145,464
Total Assets		$	723,586			$	672,503
Liabilities and Shareholders’ Equity
Current liabilities
Bank borrowings, including revolving loan and current portion of Long-term loan from bank		$	54,000			$	36,000
Trade accounts payable			114,911				115,319
Income tax payable			1,757				1,470
Accrued payroll, bonus and related expenses			9,528				9,804
Accrued expenses			12,512				6,405
Other payables			14,445				12,050
Total current liabilities			207,153				181,048
Non-current liabilities
Long-term loans from bank, non-current portion			1,500				4,500
Deferred tax liability			1,043				737
Severance liabilities			5,767				5,477
Other non-current liabilities			1,899				1,797
Total non-current liabilities			10,209				12,511
Total Liabilities			217,362				193,559
Commitments and contingencies
Shareholders’ equity
Preferred shares (5,000,000 shares authorized, $0.01 par value; no shares issued and outstanding as of December 25, 2015 and June 26, 2015)			—				—
Ordinary shares (500,000,000 shares authorized, $0.01 par value; 35,871,740 shares and 35,437,654 shares issued and outstanding as of December 25, 2015 and June 26, 2015, respectively)			359				354
Additional paid-in capital			95,482				89,390
Retained earnings			410,650				389,244
Accumulated other comprehensive loss			(267	)			(44	)
Total Shareholders’ Equity			506,224				478,944
Total Liabilities and Shareholders’ Equity		$	723,586			$	672,503

 

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Fabrinet

Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income

For the three and six months ended December 25, 2015 and December 26, 2014

 

		Three Months Ended								Six Months Ended
(in thousands of U.S. dollars, except per share amounts)		December 25, 2015				December 26, 2014				December 25, 2015				December 26, 2014
Revenues		$	233,038			$	188,353			$	449,471			$	377,678
Cost of revenues			(204,545	)			(167,292	)			(394,967	)			(336,111	)
Gross profit			28,493				21,061				54,504				41,567
Selling, general and administrative expenses			(13,715	)			(10,314	)			(25,615	)			(19,051	)
Other expenses in relation to flood			—				—				(864	)			—
Expenses related to reduction in workforce			—				(1,153	)			—				(1,153	)
Operating income			14,778				9,594				28,025				21,363
Interest income			455				324				897				698
Interest expense			(419	)			(117	)			(821	)			(250	)
Foreign exchange gain (loss), net			6,166				83				(4,326	)			(23	)
Other income (expense)			106				(134	)			209				(31	)
Income before income taxes			21,086				9,750				23,984				21,757
Income tax expense			(1,283	)			(1,024	)			(2,578	)			(1,995	)
Net income			19,803				8,726				21,406				19,762
Other comprehensive loss, net of tax:
Change in net unrealized holding losses on marketable securities			(262	)			(486	)			(175	)			(486	)
Other			(48	)			—				(48	)			—
Total other comprehensive loss, net of tax			(310	)			(486	)			(223	)			(486	)
Net comprehensive income		$	19,493			$	8,240			$	21,183			$	19,276
Earnings per share
Basic		$	0.55			$	0.25			$	0.60			$	0.56
Diluted		$	0.54			$	0.24			$	0.59			$	0.55
Weighted-average number of ordinary shares outstanding (thousands of shares)
Basic			35,812				35,349				35,695				35,289
Diluted			36,826				35,917				36,570				35,752

 

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Fabrinet

Unaudited Condensed Consolidated Statements of Cash Flows

For the six months ended December 25, 2015 and December 26, 2014

 

		Six Months Ended
(in thousands of U.S. dollars)		December 25, 2015				December 26, 2014
Cash flows from operating activities
Net income for the period		$	21,406			$	19,762
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation			8,268				5,907
Amortization of intangibles			26				42
Gain on disposal of property, plant and equipment			(49	)			(46	)
Loss from sales and maturities of available-for-sale securities			124				—
Amortization of investment premium			457				298
Amortization of deferred debt issuance costs			358				228
Reversal of allowance for doubtful accounts			(7	)			(3	)
Unrealized loss (gain) on exchange rate and fair value of derivative			5,566				(19	)
Share-based compensation			5,783				3,797
Deferred income tax			413				(84	)
Other non-cash expenses			765				725
(Reversal of) inventory obsolescence			(478	)			317
Loss from written-off inventory			233				—
Changes in operating assets and liabilities
Trade accounts receivable			(12,486	)			(2,949	)
Inventory			(10,004	)			(3,551	)
Other current assets and non-current assets			1,019				(34	)
Trade accounts payable			(405	)			3,852
Income tax payable			320				386
Other current liabilities and non-current liabilities			2,395				1,973
Net cash provided by operating activities			23,704				30,601
Cash flows from investing activities
Purchase of marketable securities			(53,258	)			(143,684	)
Proceeds from sales of marketable securities			25,709				1,056
Proceeds from maturities of marketable securities			34,460				543
Purchase of property, plant and equipment			(26,407	)			(5,372	)
Purchase of intangibles			(210	)			(22	)
Proceeds from disposal of property, plant and equipment			58				46
Net cash used in investing activities			(19,648	)			(147,433	)
Cash flows from financing activities
Payment of debt issuance costs			(359	)			(1,746	)
Proceeds from revolving loans			18,000				—
Repayment of long-term loans from bank			(3,000	)			(3,000	)
Proceeds from issuance of ordinary shares under employee share option plans			2,025				415
Withholding tax related to net share settlement of restricted share units			(1,711	)			(293	)
Net cash provided by (used in) financing activities			14,955				(4,624	)
Net increase (decrease) in cash and cash equivalents			19,011				(121,456	)
Movement in cash and cash equivalents
Cash and cash equivalents at beginning of period			112,978				233,477
Increase (decrease) in cash and cash equivalents			19,011				(121,456	)
Effect of exchange rate on cash and cash equivalents			(630	)			(50	)
Cash and cash equivalents at end of period		$	131,359			$	111,971
Non-cash investing and financing activities
Construction and equipment-related payables		$	6,657			$	10,919

 

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Fabrinet

Reconciliation of GAAP measures

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

(unaudited)

 

		Three Months Ended																Six Months Ended
		December 25, 2015				December 25, 2015				December 26, 2014				December 26, 2014				December 25, 2015				December 25, 2015				December 26, 2014				December 26, 2014
		Net income				Diluted EPS				Net income				Diluted EPS				Net income				Diluted EPS				Net income				Diluted EPS
GAAP measures			19,803				0.54				8,726				0.24				21,406				0.59				19,762				0.55
Items reconciling GAAP net income & EPS to non-GAAP net income & EPS:
Related to cost of revenues:
Share-based compensation expenses			540				0.01				360				0.01				1,077				0.03				728				0.02
Total related to gross profit			540				0.01				360				0.01				1,077				0.03				728				0.02
Related to selling, general and administrative expenses:
Share-based compensation expenses			2,570				0.07				1,570				0.04				4,706				0.13				3,069				0.09
Executive separation cost			552				0.01				—				—				552				0.01				—				—
Investigation cost			—				—				2,500				0.07				—				—				4,100				0.11
Total related to selling, general and administrative expenses			3,122				0.08				4,070				0.11				5,258				0.14				7,169				0.20
Related to other incomes and other expenses:
Expenses related to flooding			—				—				—				—				864				0.02				—				—
Expenses related to reduction in workforce			—				—				1,153				0.03				—				—				1,153				0.03
Amortization of debt issuance costs			187				0.01				228				0.01				358				0.01				228				0.01
(Gain)/loss on foreign currency			(5,418	)			(0.15	)			—				—				5,479				0.15				—				—
Total related to other incomes and other expenses			(5,231	)			(0.14	)			1,381				0.04				6,701				0.18				1,381				0.04
Related to income tax benefit:
Income tax benefit			—				—				(187	)			(0.01	)			—				—				(187	)			(0.01	)
Total related to income tax benefit			—				—				(187	)			(0.01	)			—				—				(187	)			(0.01	)
Total related to net income & EPS			(1,569	)			(0.04	)			5,624				0.16				13,036				0.35				9,091				0.25
Non-GAAP measures			18,234				0.50				14,350				0.40				34,442				0.94				28,853				0.81
Shares used in computing diluted net income per share
GAAP diluted shares							36,826								35,917								36,570								35,752
Non-GAAP diluted shares							36,826								35,917								36,570								35,752

 

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