News Release

BANGKOK--(BUSINESS WIRE)-- 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 fourth quarter and fiscal year ended June 28, 2013.

Fabrinet reported total revenue of $159.9 million for the fourth quarter of fiscal 2013, an increase of 12.0% compared to total revenue of $142.8 million for the comparable period in fiscal 2012. GAAP net income for the fourth quarter of fiscal 2013 was $15.1 million, or $0.43 per diluted share, compared to GAAP net income of $7.5 million, or $0.22 per diluted share, in the fourth quarter of fiscal 2012. Non-GAAP net income in the fourth quarter of fiscal 2013 was $12.4 million, or $0.35 per diluted share, an increase of 16.1% compared to non-GAAP net income of $10.7 million, or $0.31 per diluted share, in the same period a year ago.

For fiscal year 2013, Fabrinet reported total revenue of $641.5 million, an increase of 13.6% compared to total revenue of $564.7 million for fiscal year 2012. GAAP net income for fiscal 2013 was $69.0 million, or $1.98 per diluted share, compared to a GAAP net loss of $(56.5) million, or $(1.64) per diluted share, in fiscal 2012. Non-GAAP net income in fiscal 2013 was $50.5 million, or $1.44 per diluted share, an increase of 16.4% compared to non-GAAP net income of $43.4 million, or $1.25 per diluted share, in fiscal 2012.

Tom Mitchell, Chief Executive Officer of Fabrinet, said, "I am pleased to end the fiscal year on a positive note, with our fourth quarter results demonstrating sequential increases in revenue, margins and earnings per share. As we enter fiscal 2014, I am confident that our healthy pipeline of new business, strong customer relationships and intense focus on quality and total customer satisfaction, will deliver another year of profitable growth."

Business Outlook

Based on information available as of August 12, 2013, Fabrinet is issuing guidance for the first quarter of fiscal 2014 as follows:

Fabrinet expects first quarter revenue to be in the range of $158 million to $162 million. GAAP net income per share is expected to be in the range of $0.46 to $0.48 with expected non-GAAP net income per share of $0.31 to $0.33, based on approximately 35 million fully diluted shares outstanding.

Conference Call Information
What:		Fabrinet Fourth Quarter and Fiscal Year 2013 Financial Results Conference Call
When:		Monday, August 12, 2013
Time:		5:00 p.m. ET
Live Call:		(888) 357-3694, domestic
		(253) 237-1137, international
Passcode:		21827886
Replay:		(855) 859-2056, domestic
		(404) 537-3406, international
Passcode:		21827886
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 Deutsche Bank dbAccess Technology Conference in Las Vegas on Tuesday, September 10, 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.

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 first quarter of fiscal 2014. 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 quarterly report on Form 10-Q, filed on May 3, 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, follow-on offering expenses, expenses related to reduction in workforce 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
Consolidated Balance Sheets
As of June 28, 2013 and June 29, 2012
(in thousands of U.S. dollars, except share data)			June 28, 2013			June 29, 2012
Assets
Current assets
Cash and cash equivalents		$	149,716		$	115,507
Trade accounts receivable, net			118,475			128,253
Inventory, net			88,962			103,223
Deferred tax assets			1,937			4,088
Prepaid expenses			1,931			3,571
Other current assets			3,505			6,029
Total current assets			364,526			360,671
Non-current assets
Property, plant and equipment, net			97,206			97,923
Intangibles, net			164			380
Deferred tax assets			2,905			1,764
Deposits and other non-current assets			107			624
Total non-current assets			100,382			100,691
Total assets		$	464,908		$	461,362
Liabilities and Shareholders' Equity
Current liabilities
Long-term loans from bank, current portion		$	9,668		$	9,668
Trade accounts payable			77,139			86,000
Construction-related payable			-			2,222
Income tax payable			1,825			927
Deferred tax liability			2,481			1,405
Accrued payroll, bonus and related expenses			6,220			5,181
Accrued expenses			3,121			2,630
Other payables			5,163			6,601
Liabilities to third parties due to flood losses			9,812			61,198
Total current liabilities			115,429			175,832
Non-current liabilities
Long-term loans from bank, non-current portion			19,243			28,911
Severance liabilities			4,382			4,420
Other non-current liabilities			536			1,490
Total non-current liabilities			24,161			34,821
Total liabilities			139,590			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 June 28, 2013 and June 29, 2012)			-			-
Ordinary shares (500,000,000 shares authorized, $0.01 par value;
34,634,967 shares and 34,470,829 shares issued and
outstanding as of June 28, 2013 and June 29, 2012, respectively)			346			345
Additional paid-in capital			71,101			65,462
Retained earnings			253,871			184,902
Total shareholders' equity			325,318			250,709
Total Liabilities and Shareholders' Equity		$	464,908		$	461,362

Fabrinet Consolidated Statements of Operations For the three and twelve months ended June 28, 2013 and June 29, 2012
				Three Months Ended							Twelve Months Ended
				June 28,			June 29,				June 28,			June 29,
(in thousands of U.S. dollars, except share data)				2013			2012				2013			2012
Revenues		$		159,934		$	142,757			$	641,542		$	564,732
Cost of revenues				(142,863	)		(127,537	)			(572,124	)		(502,818	)
Gross profit				17,071			15,220				69,418			61,914
Selling, general and administrative expenses				(5,340	)		(4,923	)			(23,787	)		(23,466	)
Income (expense) related to flooding				6,147			(1,398	)			27,211			(97,286	)
Expenses related to reduction in workforce				(2,052	)		(1,978	)			(2,052	)		(1,978	)
Operating income (loss)				15,826			6,921				70,790			(60,816	)
Interest income				322			216				1,083			844
Interest expense				(222	)		(221	)			(1,010	)		(427	)
Foreign exchange (loss) gain, net				(731	)		255				354			1,569
Other income				180			182				692			395
Income (loss) before income taxes				15,375			7,353				71,909			(58,435	)
Income tax (expense) benefit				(233	)		104				(2,940	)		1,968
Net income (loss)		$		15,142		$	7,457			$	68,969		$	(56,467	)
Earnings (loss) per share
Basic		$		0.44		$	0.22			$	2.00		$	(1.64	)
Diluted		$		0.43		$	0.22			$	1.98		$	(1.64	)
Weighted average number of ordinary shares outstanding
(thousands of shares)
Basic				34,629			34,469				34,557			34,382*
Diluted				35,000			34,624				34,846			34,382*

* In accordance with the antidilutive provisions of ASC 260-10-45, basic and dilutive shares are the same for twelve months ended June 29, 2012

Fabrinet Consolidated Statements of Cash Flows For the twelve months ended June 28, 2013 and June 29, 2012
				Twelve Months Ended
				June 28,			June 29,
(in thousands of U. S. dollars)				2013			2012
Cash flows from operating activities
Net income (loss) for the year			$	68,969		$	(56,467)
Adjustments to reconcile net income to net cash provided by operating activities
	Depreciation			9,994			9,339
	Amortization of intangibles			217			374
	(Gain) write-off on disposal of property, plant and equipment			(24)			17
	Income related to flooding			(29,465)			-
	Proceeds from insurers for business interruption losses related to flooding			13,143			-
	Proceeds from insurers for inventory losses related to flooding			11,419			-
	(Reversal of) allowance for doubtful accounts			(94)			124
	Unrealized (gain) loss on exchange rate and fair value of derivative			(1,043)			(925)
	Share-based compensation			5,100			4,649
	Deferred income tax			2,086			(2,242)
	Other non-cash expenses			(89)			93
	(Reversal of) inventory obsolescence			(584)			499
	Loss from written-off assets and liabilities to third parties due to flood losses			2,255			83,871
Changes in operating assets and liabilities
	Trade accounts receivable			4,739			(10,672)
	Inventory			14,229			(13,867)
	Other current assets and non-current assets			(1,207)			(5,291)
	Trade accounts payable			(8,861)			(6,563)
	Income tax payable			(5)			(1,505)
	Other current liabilities and non-current liabilities			(35)			817
	Liabilities to third parties due to flood losses			(41,994)			-
	Net cash provided by operating activities			48,750			2,251
Cash flows from investing activities
Purchase of property, plant and equipment				(10,793)			(35,535)
Purchase of intangibles				(2)			(147)
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				29			27
Proceeds from insurers in settlement of claims related to flood damage				4,904			-
	Net cash used in investing activities			(5,862)			(37,378)
Cash flows from financing activities
Receipt of long-term loans from bank				-			28,000
Repayment of long-term loans from bank				(9,668)			(5,798)
Proceeds from issuance of ordinary shares under employee share option plans				561			1,000
Withholding tax related to net share settlement of restricted share units				(21)			-
	Net cash (used in) provided by financing activities			(9,128)			23,202
Net increase (decrease) in cash and cash equivalents			$	33,760		$	(11,925)
Fabrinet
Consolidated Statements of Cash Flows
For the twelve months ended June 28, 2013 and June 29, 2012
				Twelve Months Ended
				June 28,			June 29,
(in thousands of U.S. dollars)				2013			2012
Movement in cash and cash equivalents
Cash and cash equivalents at beginning of period			$	115,507		$	127,282
Increase (decrease) in cash and cash equivalents				33,760			(11,925)
Effect of exchange rate on cash and cash equivalents				449			150
Cash and cash equivalents at end of period			$	149,716		$	115,507

Fabrinet
Reconciliation of GAAP measures to non-GAAP measures
(in thousands of U.S. dollars, except per share data)
(unaudited)
			Three Months Ended									Twelve Months Ended
			June 28,		June 28,		June 29,		June 29,			June 28,		June 28,		June 29,		June 29,
			2013		2013		2012		2012			2013		2013		2012		2012
			Net income		Diluted EPS		Net loss		Diluted EPS			Net income		Diluted EPS		Net loss		Diluted EPS
GAAP measures			15,142		0.43		7,457		0.22			68,969		1.98		(56,467)		(1.64)
	Items reconciling GAAP net income (loss) & EPS to non-GAAP net income & EPS:
	Related to cost of revenues:
	Share-based compensation expenses		186		0.01		254		0.01			1,105		0.03		1,546		0.04
	Total related to gross profit		186		0.01		254		0.01			1,105		0.03		1,546		0.04
	Related to selling, general and administrative expenses:
	Share-based compensation expenses		945		0.03		464		0.01			3,995		0.11		3,103		0.09
	Follow-on offering expenses		(79)		(0.00)		-		-			393		0.01		-		-
	Total related to selling, general and administrative expenses		866		0.02		464		0.01			4,388		0.12		3,103		0.09
	Related to other incomes and other expenses:
	(Income) expense related to flooding		(6,147)		(0.17)		1,398		0.04			(27,211)		(0.77)		97,286		2.80
	Expenses related to reduction in workforce		2,052		0.06		1,978		0.06			2,052		0.06		1,978		0.06
	Total related to other incomes and other expenses		(4,095)		(0.12)		3,376		0.10			(25,159)		(0.72)		99,264		2.85
	Related to income tax expense (benefit)
	Income tax expense (benefit)		272		0.01		(893)		(0.03)			1,179		0.03		(4,095)		(0.12)
	Total related to income tax expense (benefit)		272		0.01		(893)		(0.03)			1,179		0.03		(4,095)		(0.12)
	Total related to net income & EPS		(2,771)		(0.08)		3,201		0.09			(18,487)		(0.53)		99,818		2.87
Non-GAAP measures			12,371		0.35		10,658		0.31			50,482		1.44		43,351		1.25
Shares used in computing diluted net income per share
	GAAP diluted shares				35,000				34,624					34,846				34,382
	Non-GAAP diluted shares				35,240				34,748					35,159				34,769

Fabrinet
Investor:
Jennifer Predmore, 215-428-1797
ir@fabrinet.com

Source: Fabrinet

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