News Release

BANGKOK--(BUSINESS WIRE)--Feb. 6, 2012-- Fabrinet (NYSE: FN), a provider of 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 2012, ended December 30, 2011.

Fabrinet reported total revenue of $96.6 million for the second quarter of fiscal 2012, a decrease of 47.7% compared to revenue of $184.6 million for the comparable period in fiscal 2011. GAAP net loss in the second quarter was $(33.3) million, or $(0.96) per diluted share, a decrease of 310.4% compared to GAAP net income of $15.8 million, or $0.46 per diluted share in the second quarter of 2011. Non-GAAP net income in the second quarter was $6.2 million, or $0.18 per diluted share, a decrease of 63.6% compared to non-GAAP net income of 17.0 million, or $0.49 per share in the second quarter of 2011.

Tom Mitchell, Chief Executive Officer of Fabrinet, said, “Following the most severe flooding season of the last century in Thailand, I’m pleased to report that we are executing on a strong recovery plan. We are grateful to our employees, who overcame great personal hardship and loss, to undertake extraordinary efforts to protect and restore the equipment and inventory of our customers, and to our customers for their ongoing confidence and close collaboration during these trying times. We are making solid progress and look forward to getting back to business as usual.”

John Marchetti, Chief Strategy Officer, and Mark Schwartz, Chief Financial Officer, will be available to meet investors in upcoming weeks at the following conferences –

• February 9th at the Stifel Conference in Dana Point, CA at 1:05pm PT
• February 14th at the Deutsche Bank Small Mid Cap Conference in South Beach, FL
• February 27th at the Morgan Stanley Conference in San Francisco, CA at 3:40pm PT

Business Outlook

Based on information available as of February 6, 2012, Fabrinet is issuing guidance for the third quarter of fiscal 2012 as follows:

The company expects third quarter revenue to be in the range of $131 million to $136 million. Non-GAAP net income per share is expected to be in the range of $0.22 to $0.24, based on approximately 34.9 million fully diluted, weighted average shares outstanding.

Conference Call Information

What:			Fabrinet second quarter 2012 financial results conference call
When:			Monday, February 6, 2012
Time:			5:00 p.m. ET
Live Call:			(888) 357-3694, domestic
			(253) 237-1137, international
			Passcode 45335033
Replay:			(855) 859-2056, domestic
			(404) 537-3406, international
			Passcode 45335033
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 provides precision optical, electro-mechanical and electronic manufacturing services to original equipment manufacturers of complex products, such as optical communication components, modules and sub-systems, 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, 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: http://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 year 2012 and statements about our progress towards returning to normal operations. 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: our ability to recover expected amounts under our insurance policies; post-flood recovery and rebuilding efforts in Thailand; 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 new markets; increasing 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; and other important factors as described in Fabrinet reports and documents filed from time to time with the Securities and Exchange Commission (SEC), including the factors described under the sections captioned “Risk Factors” in our quarterly report on Form 10-Q, filed on November 9, 2011 and our annual report on Form 10-K, filed on August 31, 2011. 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 other expenses in relation to flood. 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 30, 2011 and June 24, 2011
(in thousands of U.S. dollars, except share data)																		December 30, 2011							June 24, 2011
Assets
Current assets
	Cash and cash equivalents														$			112,078				$			127,282
	Trade accounts receivable, net																	97,824							117,705
	Inventories, net																	103,287							106,467
	Investment in leases																	-							448
	Deferred tax assets																	3,705							1,308
	Prepaid expenses and other current assets																	4,716							4,466
	Total current assets																	321,610							357,676
Non-current assets
	Property, plant and equipment, net																	88,436							75,410
	Intangibles, net																	555							892
	Investment in leases																	-							1,163
	Deferred tax assets																	1,972							1,953
	Deposits and other non-current assets																	669							681
	Total non-current assets																	91,632							80,099
	Total assets														$			413,242				$			437,775
Liabilities and Shareholders’ Equity
Current liabilities
	Long-term loans from banks, current portion														$			6,368				$			4,398
	Trade accounts payable																	57,052							92,563
	Construction payable																	3,437							2,475
	Income tax payable																	1,046							1,858
	Deferred tax liability																	1,181							1,056
	Accrued payroll, profit sharing and related expenses																	5,697							7,677
	Accrued expenses																	4,575							3,986
	Other payables																	4,721							3,796
	Liabilities to third parties due to flood losses																	11,684							-
	Total current liabilities																	95,761							117,809
Non-current liabilities
	Long-term loans from banks, non-current portion																	23,545							11,979
	Severance liabilities																	4,751							4,478
	Other non-current liabilities																	2,027							1,982
	Total non-current liabilities																	30,323							18,439
	Total liabilities																	126,084							136,248
Commitments and contingencies
Shareholders’ equity
	Preferred shares (5,000,000 shares authorized, $0.01 par value;
	no shares issued and outstanding as of December 30, 2011 and June 24, 2011, respectively)																	-							-
	Ordinary shares (500,000,000 shares authorized, $0.01 par value;
	34,422,252 shares and 34,207,579 shares issued and
	outstanding as of December 30, 2011 and June 24, 2011, respectively)																	344							342
	Additional paid-in capital																	63,044							59,816
	Retained earnings																	223,770							241,369
	Total shareholders’ equity																	287,158							301,527
	Total Liabilities and Shareholders’ Equity														$			413,242				$			437,775
Fabrinet
Unaudited Condensed Consolidated Statements of Operations
For the three and six months ended December 30, 2011 and December 24, 2010
						Three Months Ended										Six Months Ended
						December 30,			December 24,							December 30,							December 24,
(in thousands of U.S. dollars)						2011			2010							2011							2010
Revenues					$	96,609		$	184,631					$		282,956				$			358,371
Cost of revenues						(87,680)			(160,968)							(251,143)							(312,932)
	Gross profit					8,929			23,663							31,813							45,439
Selling, general and administrative expenses						(5,319)			(5,951)							(11,957)							(10,778)
Other expenses in relation to flood						(40,265)			-							(40,265)							-
Operating income						(36,655)			17,712							(20,409)							34,661
Interest income						224			114							419							212
Interest expense						(68)			(90)							(142)							(201)
Foreign exchange gain (loss), net						787			(670)							600							(1,048)
Other income						59			11							156							15
Income (loss) before income taxes						(35,653)			17,077							(19,376)							33,639
Income tax benefit (expense)						2,399			(1,271)							1,777							(2,628)
Net income (loss)					$	(33,254)		$	15,806					$		(17,599)				$			31,011
Earnings (loss) per share
	Basic				$	(0.97)		$	0.47					$		(0.51)				$			0.92
	Diluted				$	(0.96)		$	0.46					$		(0.51)				$			0.90
Weighted average number of ordinary shares outstanding
	(thousands of shares)
	Basic					34,396			33,768							34,309							33,765
	Diluted					34,544			34,450							34,523							34,401

Fabrinet
Reconciliation of GAAP measures to non-GAAP measures
(in thousands of U.S. dollars, except per share data)
(unaudited)
					Three Months Ended													Six Months Ended
					December 30,			December 30,			December 24,			December 24,				December 30,			December 30,			December 24,			December 24,
					2011			2011			2010			2010				2011			2011			2010			2010
					Net loss			Diluted EPS			Net income			Diluted EPS				Net loss			Diluted EPS			Net income			Diluted EPS
GAAP measures					(33,254)			(0.96)			15,806			0.46				(17,599)			(0.51)			31,011			0.90
	Items reconciling GAAP net income (loss) & EPS to non-GAAP net income & EPS:
	Related to cost of revenues:
		Share-based compensation expenses			465			0.01			386			0.01				911			0.03			478			0.01
	Total related to gross profit				465			0.01			386			0.01				911			0.03			478			0.01
	Related to selling, general and administrative expenses:
		Share-based compensation expenses			1,138			0.03			806			0.02				1,680			0.05			942			0.03
	Total related to selling, general and administrative expenses				1,138			0.03			806			0.02				1,680			0.05			942			0.03
	Related to other expenses:
		Other expenses in relation to flood			40,265			1.16			-			-				40,265			1.16			-			-
	Total related to other expenses				40,265			1.16			-			-				40,265			1.16			-			-
	Related to income tax (benefit) expense
		Income tax (benefit) expense			(2,422)			(0.07)			-			-				(2,422)			(0.07)			-			-
	Total related to income tax (benefit) expense				(2,422)			(0.07)			-			-				(2,422)			(0.07)			-			-
	Total related to net income & EPS				39,446			1.14			1,192			0.03				40,434			1.17			1,420			0.04
Non-GAAP measures					6,192			0.18			16,998			0.49				22,835			0.66			32,431			0.94
Shares used in computing diluted net income per share
	GAAP diluted shares							34,544						34,450							34,523						34,401
	Non-GAAP diluted shares							34,738						34,645							34,707						34,525

Source: Fabrinet

Investor Contact:
ICR, Inc.
Abhi Kanitkar, 617-956-6735
ir@fabrinet.com