Form 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) February 3, 2012

 

 

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.)

Walker House

87 Mary Street

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 February 6, 2012, Fabrinet issued a press release regarding its financial results for the fiscal quarter ended December 30, 2011. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

The information in this Item 2.02 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 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Resignation of Executive Officer

On February 3, 2012, Mark Schwartz, Fabrinet’s Chief Financial Officer, informed the Board of Directors of his intention to resign as Executive Vice President, Chief Financial Officer and Secretary of Fabrinet. His resignation from all of his officer duties will be effective Thursday, March 1, 2012. Mr. Schwartz will continue as an employee of Fabrinet USA, Inc. through March 2012 to help during the transition and will terminate his employment with Fabrinet USA, Inc. on Friday March 30. Fabrinet USA has agreed to reimburse Mr. Schwartz for his health care insurance premiums under COBRA through September 30, 2012.

Appointment of Executive Officer

On February 3, 2012, Fabrinet announced that its Board of Directors had appointed Toh-Seng Ng (“T.S.”) as its Executive Vice President and Chief Financial Officer of Fabrinet, effective Thursday, March 1, 2012.

Mr. Ng, age 58, has worked as Operations Controller of Fabrinet and Senior Vice President and Managing Director of Casix, Inc, a wholly-owned subsidiary of Fabinet since March 2009. Prior to that, Mr. Ng. served as Fabrinet’s Senior Vice President of Finance from January 2007 through March 2009. Prior to Fabrinet, Mr. Ng managed financial operations at Magnecomp Precision Plc. in Thailand, Hitachi Global Storage Technologies in San Jose, and Read-Rite Corporation, culminating in his role as Corporate Controller and Vice President of Finance. Mr. Ng earned a Bachelor of Science degree in accountancy from the University of Singapore and an MBA in international management from Golden Gate University.

In connection with his promotion, Mr. Ng’s annual base salary has increased to $325,000. Since Mr. Ng already participates in Fabrinet’s Executive Incentive Plan, his targets have been increased from 35% of his annual base salary (for target) and 70% of base annual salary (for maximum) to 50% and 100% for target and maximum, respectively. Mr. Ng. also received an additional long-term incentive equity award with a compensation value of $100,000 (supplementing his current awards that aggregate to $300,000), which are evenly allocated between restricted stock units and options to purchase ordinary shares of Fabrinet under the terms of Fabrinet’s 2010 Performance Incentive Plan. Mr. Ng. will relocate from Fuzhou, the People’s Republic of China, where Casix is based, to Bangkok, Thailand.

Pursuant to the terms of Mr. Ng’s promotion, in the event Mr. Ng’s employment is terminated without good cause, he will receive (A) a lump sum payment of severance payable within ten (10) business days from the date of Mr. Ng’s termination of employment, equal to (i) twelve (12) months of his then present base salary, and (ii) any earned bonus as of the date of Mr. Ng’s termination from employment; and (B) if Mr. Ng timely elects continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), as amended, or a similar state program, reimbursement of the costs to continue family medical coverage for the first twelve (12) months following his termination of employment.

In addition, Mr. Ng. will receive a $1,000 monthly car allowance and will continue to receive an annual base salary adjustment of $112,000 (carried over from his service with Casix and Fabrinet Co. Ltd.) through December 31, 2012. Beginning January 1, 2013, Mr. Ng’s annual base salary adjustment will be reduced to $72,000.


A copy of the press release naming Mr. Ng to the position of Executive Vice President and Chief Financial Officer is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

Appointment of Corporate Secretary

In addition, on February 3, 2012, the Board of Directors appointed Paul Kalivas, Fabrinet’s General Counsel, as Corporate Secretary.

Neither Mr. Ng nor Mr. Kalivas has any family relationships or related party transactions that are required to be disclosed.

Item 9.01 – Financial Statements and Exhibits.

(d) Exhibits.

 

Exhibit
No.

  

Description

99.1    Press release issued by Fabrinet dated February 6, 2012


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/ Mark J. Schwartz

 

Mark J. Schwartz

Executive Vice President, Chief Financial Officer and Secretary

Date: February 6, 2012


EXHIBIT INDEX

 

Exhibit
No.

  

Description

99.1    Press release issued by Fabrinet dated February 6, 2012
Press Release

Exhibit 99.1

Fabrinet Announces Second Quarter 2012 Financial Results

BANGKOK, Thailand – February 6, 2011 – 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:

When:

Time:

Live Call:

 

 

Replay:

 

 

  

Fabrinet second quarter 2012 financial results conference call

Monday, February 6, 2012

5:00 p.m. ET

(888) 357-3694, domestic

(253) 237-1137, international

Passcode 45335033

(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.

 

Page 1


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.

 

Page 2


SOURCE: Fabrinet

 

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

 

Page 3


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   
  

 

 

    

 

 

 

 

Page 4


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  
(in thousands of U.S. dollars)    December 30,
2011
    December 24,
2010
    December 30,
2011
    December 24,
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   

 

Page 5


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   

 

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