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 third quarter ended March 27, 2015.

Fabrinet reported total revenue of $189.5 million for the third quarter of fiscal 2015, an increase of 13% compared to total revenue of $167.7 million for the comparable period in fiscal 2014. GAAP net income for the third quarter of fiscal 2015 was $10.8 million, or $0.30 per diluted share, compared to GAAP net income of $47.7 million, or $1.33 per diluted share, in the third quarter of fiscal 2014. GAAP net income for the third quarter of fiscal 2014 was positively impacted by $38.2 million, or $1.07 per diluted share, due to the collection of final insurance proceeds. Non-GAAP net income in the third quarter of fiscal 2015 was $13.0 million, or $0.36 per diluted share, compared to non-GAAP net income of $12.3 million, or $0.34 per diluted share, in the same period a year ago.

Tom Mitchell, Chief Executive Officer of Fabrinet, said, "Our third quarter results were solid, with revenue and EPS ahead of our expectations. Our initiatives to expand our new product introduction and advanced packaging capabilities are well underway and we are on track to ship our first products from our new west coast facility in the current quarter."

Business Outlook

Based on information available as of May 4, 2015, Fabrinet is issuing guidance for the fourth quarter of fiscal 2015 as follows:

Fabrinet expects fourth quarter revenue to be in the range of $195 million to $199 million. GAAP net income per share is expected to be in the range of $0.33 to $0.35 with expected non-GAAP net income per share of $0.37 to $0.39, based on approximately 36 million fully diluted shares outstanding.

Conference Call Information

What:				Fabrinet Third Quarter 2015 Financial Results Conference Call
When:				Monday, May 4, 2015
Time:				5:00 p.m. ET
Live Call:				(888) 357-3694, domestic
				(253) 237-1137, international
				Passcode: 18428518
Replay:				(855) 859-2056, domestic
				(404) 537-3406, international
				Passcode: 18428518
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 statements regarding the expected timing of shipping our first products from our new west coast facility and all of the statements under the "Business Outlook" section relating to our forecasted operating results for the fourth quarter of fiscal 2015. 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 February 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, 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 March 27, 2015 and June 27, 2014
(in thousands of U.S. dollars, except share data)				March 27, 2015			June 27, 2014
Assets
Current assets
Cash and cash equivalents			$	128,946		$	233,477
Marketable securities				125,398			-
Trade accounts receivable, net				120,054			101,168
Inventory, net				126,660			124,570
Deferred tax assets				1,486			1,561
Prepaid expenses				2,272			1,691
Other current assets				1,822			2,010
Total current assets				506,638			464,477
Non-current assets
Property, plant and equipment, net				133,998			97,244
Intangibles, net				45			72
Deferred tax assets				1,690			1,775
Deferred debt issuance cost				2,573			989
Total non-current assets				138,306			100,080
Total assets			$	644,944		$	564,557
Liabilities and Shareholders' Equity
Current liabilities
Bank borrowings, including revolving loan and current portion of long-term loan from banks			$	36,000		$	6,000
Trade accounts payable				103,053			94,853
Equipment-related payable				4,170			1,130
Income tax payable				979			1,024
Accrued payroll, bonus and related expenses				9,977			8,612
Accrued expenses				7,120			4,345
Other payables				6,258			4,665
Total current liabilities				167,557			120,629
Non-current liabilities
Long-term loans from bank, non-current portion				6,000			10,500
Deferred tax liability				1,017			1,040
Severance liabilities				5,001			4,453
Other non-current liabilities				1,691			1,099
Total non-current liabilities				13,709			17,092
Total liabilities				181,266			137,721
Commitments and contingencies
Shareholders' equity
Preferred shares (5,000,000 shares authorized, $0.01 par value;
no shares issued and outstanding as of March 27, 2015 and June 27, 2014)				-			-
Ordinary shares (500,000,000 shares authorized, $0.01 par value;
35,426,140 shares and 35,152,772 shares issued and
outstanding as of March 27, 2015 and June 27, 2014, respectively)				354			352
Additional paid-in capital				87,088			80,882
Retained earnings				376,210			345,602
Accumulated other comprehensive income				26			-
Total shareholders' equity				463,678			426,836
Total Liabilities and Shareholders' Equity			$	644,944		$	564,557

Fabrinet Consolidated Statements of Operations and Comprehensive Income For the three and nine months ended March 27, 2015 and March 28, 2014
			Three Months Ended				Nine Months Ended
			March 27,		March 28,		March 27,		March 28,
(in thousands of U.S. dollars, except share data)			2015		2014		2015		2014
Revenues		$	189,453	$	167,657	$	567,131	$	517,770
Cost of revenues			(167,796)		(150,374)		(503,907)		(461,312)
Gross profit			21,657		17,283		63,224		56,458
Selling, general and administrative expenses			(9,670)		(7,352)		(28,721)		(20,959)
Expenses related to reduction in workforce			-		-		(1,153)		-
Income related to flooding, net			-		38,151		-		44,748
Operating income			11,987		48,082		33,350		80,247
Interest income			258		560		956		1,262
Interest expense			(125)		(172)		(375)		(566)
Foreign exchange (loss) gain, net			(87)		(254)		(110)		46
Other (expense) income			(75)		173		(106)		544
Income before income taxes			11,958		48,389		33,715		81,533
Income tax expense			(1,113)		(727)		(3,108)		(135)
Net income			10,845		47,662		30,607		81,398
Other comprehensive income, before tax:
Change in fair value of marketable securities			450		-		(43)		-
Less: Reclassification adjustment for net loss realized
and included in net income			62		-		69		-
Total change in unrealized gain on marketable
securities, before tax			512		-		26		-
Income tax expense related to items of other
comprehensive income			-		-		-		-
Total other comprehensive income, net of tax			512		-		26		-
Net comprehensive income		$	11,357	$	47,662	$	30,633	$	81,398
Earnings per share
Basic		$	0.31	$	1.36	$	0.87	$	2.33
Diluted		$	0.30	$	1.33	$	0.85	$	2.29
Weighted-average number of ordinary shares outstanding (thousands of shares)
Basic			35,406		35,078		35,328		34,878
Diluted			36,110		35,790		35,871		35,504

Fabrinet Consolidated Statements of Cash Flows For the nine months ended March 27, 2015 and March 28, 2014
				Nine Months Ended
				March 27,			March 28,
(in thousands of U. S. dollars)				2015			2014
Cash flows from operating activities
Net income for the period			$	30,607		$	81,398
Adjustments to reconcile net income to net cash provided by operating activities
	Depreciation			9,261			7,685
	Amortization of intangibles			61			72
	Loss from sales and maturities of available-for-sale securities			62			-
	Gain on disposal of property, plant and equipment			(41)			(1)
	Amortization of investment premium			757			-
	Amortization of deferred debt issuance costs			377			-
	Income related to flooding			-			(45,211)
	Proceeds from insurers for inventory losses related to flooding			-			7,416
	Reversal of allowance for doubtful accounts			3			(62)
	Unrealized (gain) loss on exchange rate and fair value of derivative			(55)			1,027
	Share-based compensation			5,806			4,538
	Deferred income tax			137			(132)
	Other non-cash expenses			1,141			255
	Reversal of uncertain tax positions			-			(1,538)
	Inventory obsolescence			332			673
Changes in operating assets and liabilities
	Trade accounts receivable			(18,889)			37
	Inventory			(2,422)			(19,537)
	Other current assets and non-current assets			(574)			(889)
	Trade accounts payable			8,200			24,392
	Income tax payable			(45)			351
	Other current liabilities and non-current liabilities			5,763			5,642
	Liabilities to third parties due to flood losses			-			(7,512)
	Net cash provided by operating activities			40,481			58,604
Cash flows from investing activities
Purchase of available-for-sale securities				(159,396)			-
Proceeds from sales of available-for-sale securities				22,873			-
Proceeds from maturities of available-for-sale securities				10,332			-
Purchase of property, plant and equipment				(42,980)			(7,280)
Purchase of intangibles				(34)			(1)
Proceeds from disposal of property, plant and equipment				46			1
Proceeds from insurers in settlement of claims related to flood damage				-			37,795
	Net cash (used in) provided by investing activities			(169,159)			30,515
Cash flows from financing activities
Payment of debt issuance costs				(1,780)			-
Proceed from revolving loan				30,000			-
Repayment of long-term loans from bank				(4,500)			(7,251)
Proceeds from issuance of ordinary shares under employee share option plans				736			3,956
Withholding tax related to net share settlement of restricted share units				(334)			(198)
	Net cash provided by (used in) financing activities			24,122			(3,493)
Net (decrease) increase in cash and cash equivalents			$	(104,556)		$	85,626

Fabrinet
Consolidated Statements of Cash Flows (continued)
For the nine months ended March 27, 2015 and March 28, 2014
				Nine Months Ended
				March 27,			March 28,
(in thousands of U.S. dollars)				2015			2014
Movement in cash and cash equivalents
Cash and cash equivalents at beginning of period			$	233,477		$	149,716
(Decrease) increase in cash and cash equivalents				(104,556)			85,626
Effect of exchange rate on cash and cash equivalents				25			(1,678)
Cash and cash equivalents at end of period			$	128,946		$	233,664

Fabrinet
Reconciliation of GAAP measures to non-GAAP measures
(in thousands of U.S. dollars, except per share data)
(unaudited)
		Three Months Ended								Nine Months Ended
		March 27,		March 27,		March 28,		March 28,		March 27,		March 27,		March 28,		March 28,
		2015		2015		2014		2014		2015		2015		2014		2014
		Net income		Diluted EPS		Net income		Diluted EPS		Net income		Diluted EPS		Net income		Diluted EPS
GAAP measures		10,845		0.30		47,662		1.33		30,607		0.85		81,398		2.29
Items reconciling GAAP net income & EPS to non-GAAP net income & EPS:
Related to cost of revenues:
Share-based compensation expenses		379		0.01		290		0.01		1,107		0.03		888		0.03
Total related to gross profit		379		0.01		290		0.01		1,107		0.03		888		0.03
Related to selling, general and administrative expenses:
Share-based compensation expenses		1,630		0.05		1,188		0.03		4,699		0.13		3,650		0.10
Executive separation cost		-		-		547		0.02		-		-		547		0.02
Investigation costs		-		-		-		-		4,100		0.11		-		-
Total related to selling, general and administrative expenses		1,630		0.05		1,735		0.05		8,799		0.25		4,197		0.12
Related to other incomes and other expenses:
Income related to flooding, net		-		-		(38,151)		(1.07)		-		-		(44,748)		(1.26)
Unrealized loss on exchange, net of interest income incurred from income related to flooding		-		-		744		0.02		-		-		744		0.02
Expenses related to reduction in workforce		-		-		-		-		1,153		0.03		-		-
Amortization of debt issuance costs		149		0.00		-		-		377		0.01		-		-
Total related to other incomes and other expenses		149		0.00		(37,407)		(1.05)		1,530		0.04		(44,004)		(1.24)
Related to income tax benefit
Income tax benefit		-		-		-		-		(187)		(0.01)		-		-
Total related to income tax benefit		-		-		-		-		(187)		(0.01)		-		-
Total related to net income & EPS		2,158		0.06		(35,382)		(0.99)		11,249		0.31		(38,919)		(1.10)
Non-GAAP measures		13,003		0.36		12,280		0.34		41,856		1.16		42,479		1.20
Shares used in computing diluted net income per share
GAAP diluted shares				36,110				35,790				35,871				35,504
Non-GAAP diluted shares				36,110				35,790				35,871				35,504

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

Source: Fabrinet

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