8-K

 

 

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) November 2, 2015

 

 

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))

 

 

 


Item 2.02 Results of Operations and Financial Condition.

On November 2, 2015, Fabrinet (the “Company”) issued a press release regarding its financial results for the fiscal quarter ended September 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 November 2, 2015


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.

 

  FABRINET
By:  

/s/ Toh-Seng Ng

 

Toh-Seng Ng

Executive Vice President, Chief Financial Officer

Date: November 2, 2015


EXHIBIT INDEX

 

Exhibit
No.

  

Description

99.1    Press release dated November 2, 2015
EX-99.1

Exhibit 99.1

Fabrinet Announces First Quarter Fiscal-Year 2016 Financial Results

BANGKOK, Thailand – November 2, 2015 – 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 the first fiscal quarter, ended September 25, 2015.

Tom Mitchell, Chief Executive Officer of Fabrinet, said, “We are off to a strong start in fiscal 2016 with first quarter revenue and non-GAAP profitability that exceeded our expectations. In addition to beginning production at our new product introduction and advanced packaging facility in Santa Clara, we recently broke ground on the first building of what will become a second manufacturing campus in Thailand. We expect this added space to enable us to continue scaling our business as our current facilities reach capacity levels. With overall manufacturing space at our new campus that will ultimately represent a more than doubling of capacity, we are setting the stage for continued profitable growth as we look ahead.”

First Quarter Fiscal-Year 2016 Financial Highlights

GAAP Results

 

    Revenue was $216.4 million for first quarter of fiscal year 2016, an increase of 14% compared to total revenue of $189.3 million for the comparable period in fiscal year 2015.

 

    GAAP net income for the first quarter of fiscal year 2016 was $1.6 million, compared to GAAP net income of $11.0 million in the first quarter of fiscal year 2015. The decrease in GAAP net income was primarily due to a $(10.9) million unrealized foreign exchange loss for the mark-to-market adjustment of forward contracts entered into to partially hedge against future variable costs.

 

    GAAP net income for the first quarter of fiscal year 2016 was $0.04 per diluted share, compared to GAAP net income of $0.31 per diluted share, in the first quarter of fiscal year 2015.

Non-GAAP Results

 

    Non-GAAP net income in the first quarter of fiscal 2016 was $16.2 million, an increase of 12% compared to non-GAAP net income of $14.5 million in the same period a year ago.

 

    Non-GAAP net income in the first quarter of fiscal 2016 was $0.45 per diluted share, an increase from non-GAAP net income of $0.41 per diluted share, in the same period a year ago.

Business Outlook

Based on information available as of November 2, 2015, Fabrinet is issuing guidance for the second quarter of fiscal 2016 as follows:

 

    Fabrinet expects second quarter revenue to be in the range of $218 million to $222 million.

 

    GAAP net income per diluted share is expected to be in the range of $0.41 to $0.43, based on approximately 36.6 million fully diluted shares outstanding.

 

    Non-GAAP net income per diluted share is expected to be in the range of $0.45 to $0.47, based on approximately 36.6 million fully diluted shares outstanding.

Conference Call Information

 

What:    Fabrinet First Quarter Fiscal-Year 2016 Financial Results Conference Call
When:    Monday, November 2, 2015
Time:    5:00 p.m. ET
Live Call:    (888) 357-3694, domestic
   (253) 237-1137, international
   Passcode: 58777039
Replay:    (855) 859-2056, domestic
   (404) 537-3406, international
   Passcode: 58777039
Webcast:    http://investor.fabrinet.com (live and replay)

 

Page 1


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 our expectation that we will continue to achieve profitable growth and all of the statements under the “Business Outlook” section regarding our expected revenue and GAAP and non-GAAP net income per share for the second 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); 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 annual report on Form 10-K, filed on August 19, 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, investigation cost, expenses related to flooding, amortization of debt issuance costs and unrealized loss on foreign currency. 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.

 

Page 2


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

ir@fabrinet.com

 

Page 3


Fabrinet

Unaudited Condensed Consolidated Balance Sheets

As of September 25, 2015 and June 26, 2015

 

 

(in thousands of U.S. dollars, except share data)    September 25, 
2015
     June 26,
2015
 

Assets

     

Current assets

     

Cash and cash equivalents

   $ 95,465       $ 112,978   

Marketable securities

     152,121         142,866   

Trade accounts receivable, net

     139,715         134,952   

Inventory, net

     143,380         130,613   

Deferred tax assets

     1,619         1,662   

Prepaid expenses

     2,404         2,135   

Other current assets

     1,739         1,833   
  

 

 

    

 

 

 

Total current assets

     536,443         527,039   
  

 

 

    

 

 

 

Non-current assets

     

Property, plant and equipment, net

     144,148         140,654   

Intangibles, net

     195         137   

Deferred tax assets

     2,249         2,249   

Deferred debt issuance costs

     2,542         2,360   

Deposits and other non-current assets

     2,623         64   
  

 

 

    

 

 

 

Total non-current assets

     151,757         145,464   
  

 

 

    

 

 

 

Total assets

   $ 688,200       $ 672,503   
  

 

 

    

 

 

 

Liabilities and Shareholders’ Equity

     

Current liabilities

     

Bank borrowings, including revolving loan and current portion of long-term loan from banks

   $ 36,000       $ 36,000   

Trade accounts payable

     117,978         115,319   

Income tax payable

     2,120         1,470   

Accrued payroll, bonus and related expenses

     8,488         9,804   

Accrued expenses

     16,427         6,405   

Other payables

     12,089         12,050   
  

 

 

    

 

 

 

Total current liabilities

     193,102         181,048   
  

 

 

    

 

 

 

Non-current liabilities

     

Long-term loans from bank, non-current portion

     3,000         4,500   

Deferred tax liability

     851         737   

Severance liabilities

     5,424         5,477   

Other non-current liabilities

     1,847         1,797   
  

 

 

    

 

 

 

Total non-current liabilities

     11,122         12,511   
  

 

 

    

 

 

 

Total liabilities

     204,224         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 September 25, 2015 and June 26, 2015)

     —           —     

Ordinary shares (500,000,000 shares authorized, $0.01 par value; 35,776,771 shares and 35,437,654 shares issued and outstanding as of September 25, 2015 and June 26, 2015, respectively)

     358         354   

Additional paid-in capital

     92,728         89,390   

Retained earnings

     390,847         389,244   

Accumulated other comprehensive income (loss)

     43         (44
  

 

 

    

 

 

 

Total shareholders’ equity

     483,976         478,944   
  

 

 

    

 

 

 

Total Liabilities and Shareholders’ Equity

   $ 688,200       $ 672,503   
  

 

 

    

 

 

 

 

Page 4


Fabrinet

Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income

For the three months ended September 25, 2015 and September 26, 2014

 

 

     Three Months Ended  
     September 25,     September 26,  
(in thousands of U.S. dollars, except share data)    2015     2014  

Revenues

   $ 216,433      $ 189,325   

Cost of revenues

     (190,422     (168,819
  

 

 

   

 

 

 

Gross profit

     26,011        20,506   

Selling, general and administrative expenses

     (11,900     (8,737

Other expenses in relation to flood

     (864     —     
  

 

 

   

 

 

 

Operating income

     13,247        11,769   

Interest income

     442        374   

Interest expense

     (402     (133

Foreign exchange loss, net

     (10,492     (106

Other income

     103        103   
  

 

 

   

 

 

 

Income before income taxes

     2,898        12,007   

Income tax expense

     (1,295     (971
  

 

 

   

 

 

 

Net income

     1,603        11,036   
  

 

 

   

 

 

 

Other comprehensive income, before tax:

    

Change in fair value of marketable securities

     (18     —     

Less: Reclassification adjustment for net loss realized and included in net income

     105        —     
  

 

 

   

 

 

 

Total change in unrealized gain on marketable securities, before tax

     87        —     

Income tax expense related to items of other comprehensive income

     —          —     
  

 

 

   

 

 

 

Total other comprehensive income, net of tax

     87        —     
  

 

 

   

 

 

 

Net comprehensive income

   $ 1,690      $ 11,036   
  

 

 

   

 

 

 

Earnings per share

    

Basic

   $ 0.05      $ 0.31   

Diluted

   $ 0.04      $ 0.31   

Weighted-average number of ordinary shares outstanding (thousands of shares)

    

Basic

     35,579        35,230   

Diluted

     36,315        35,587   

 

Page 5


Fabrinet

Unaudited Condensed Consolidated Statements of Cash Flows

For the three months ended September 25, 2015 and September 26, 2014

 

 

     Three Months Ended  
     September 25,     September 26,  
(in thousands of U.S. dollars)    2015     2014  

Cash flows from operating activities

    

Net income for the period

   $ 1,603      $ 11,036   

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

     4,053        2,887   

Amortization of intangibles

     10        21   

Gain on disposal of property, plant and equipment

     (26     (46

Loss from sales and maturities of available-for-sale securities

     92        —     

Amortization of investment premium

     298        —     

Amortization of deferred debt issuance costs

     171        —     

Reversal of allowance for doubtful accounts

     (4     (1

Unrealized loss (gain) on exchange rate and fair value of derivative

     10,855        (62

Share-based compensation

     2,673        1,867   

Deferred income tax

     157        6   

Other non-cash expenses

     386        360   

Inventory obsolescence

     150        515   

Loss from written-off inventory

     233        —     

Changes in operating assets and liabilities

    

Trade accounts receivable

     (4,948     (6,745

Inventory

     (13,150     (4,617

Other current assets and non-current assets

     (668     (396

Trade accounts payable

     3,053        6,860   

Income tax payable

     707        460   

Other current liabilities and non-current liabilities

     (1,106     3,688   
  

 

 

   

 

 

 

Net cash provided by operating activities

     4,539        15,833   
  

 

 

   

 

 

 

Cash flows from investing activities

    

Purchase of marketable securities

     (38,773     —     

Proceeds from sales of marketable securities

     16,687        —     

Proceeds from maturities of marketable securities

     12,528        —     

Purchase of property, plant and equipment

     (8,452     (1,510

Purchase of intangibles

     (68     —     

Deposits for land purchase

     (2,352     —     

Proceeds from disposal of property, plant and equipment

     28        46   
  

 

 

   

 

 

 

Net cash used in investing activities

     (20,402     (1,464
  

 

 

   

 

 

 

Cash flows from financing activities

    

Payment of debt issuance costs

     (353     (1,570

Repayment of long-term loans from bank

     (1,500     (1,500

Proceeds from issuance of ordinary shares under employee share option plans

     1,547        2   

Withholding tax related to net share settlement of restricted share units

     (878     (189
  

 

 

   

 

 

 

Net cash used in financing activities

     (1,184     (3,257
  

 

 

   

 

 

 

Net (decrease) increase in cash and cash equivalents

     (17,047     11,112   
  

 

 

   

 

 

 

Movement in cash and cash equivalents

    

Cash and cash equivalents at beginning of period

     112,978        233,477   

(Decrease) increase in cash and cash equivalents

     (17,047     11,112   

Effect of exchange rate on cash and cash equivalents

     (466     94   
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 95,465      $ 244,683   
  

 

 

   

 

 

 

 

Page 6


Fabrinet

Reconciliation of GAAP measures to non-GAAP measures

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

(unaudited)

 

     Three Months Ended  
     September 25,      September 25,      September 26,      September 26,  
     2015      2015      2014      2014  
     Net income      Diluted EPS      Net income      Diluted EPS  

GAAP measures

     1,603         0.04         11,036         0.31   

Items reconciling GAAP net income & EPS to non-GAAP net income & EPS:

           

Related to cost of revenues:

           

Share-based compensation expenses

     537         0.01         368         0.01   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total related to gross profit

     537         0.01         368         0.01   
  

 

 

    

 

 

    

 

 

    

 

 

 

Related to selling, general and administrative expenses:

           

Share-based compensation expenses

     2,136         0.06         1,499         0.04   

Investigation cost

     —           —           1,600         0.05   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total related to selling, general and administrative expenses

     2,136         0.06         3,099         0.09   
  

 

 

    

 

 

    

 

 

    

 

 

 

Related to other incomes and other expenses:

           

Expenses related to flooding

     864         0.02         —           —     

Amortization of debt issuance costs

     171         0.01         —           —     

Unrealized loss on foreign currency

     10,897         0.30         —           —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total related to other incomes and other expenses

     11,932         0.33         —           —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total related to net income & EPS

     14,605         0.40         3,467         0.10   
  

 

 

    

 

 

    

 

 

    

 

 

 

Non-GAAP measures

     16,208         0.45         14,503         0.41   
  

 

 

    

 

 

    

 

 

    

 

 

 

Shares used in computing diluted net income per share

           

GAAP diluted shares

        36,315            35,587   

Non-GAAP diluted shares

        36,315            35,587   

 

Page 7