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 4, 2013

 

 

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)

Walker House

87 Mary Street

George Town

Grand Cayman

KY1-9005

Cayman Islands

 

 

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 4, 2013, Fabrinet issued a press release regarding its financial results for the fiscal quarter ended December 28, 2012. 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 February 4, 2013


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/ Paul Kalivas

 

Paul Kalivas

Chief Administrative Officer, General Counsel and Secretary

Date: February 4, 2013


EXHIBIT INDEX

 

Exhibit
No.

  

Description

99.1    Press release dated February 4, 2013
EX-99.1

Exhibit 99.1

Fabrinet Announces Second Quarter 2013 Financial Results

BANGKOK, Thailand – February 4, 2013 – 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 second quarter of fiscal 2013 ended December 28, 2012.

Fabrinet reported total revenue of $167.4 million for the second quarter of fiscal 2013, an increase of 73.3% compared to total revenue of $96.6 million for the comparable period in fiscal 2012. GAAP net income for the second quarter of fiscal 2013 was $16.7 million, or $0.48 per diluted share, compared to GAAP net loss of ($33.3) million, or ($0.97) per diluted share, in the second quarter of fiscal 2012. Non-GAAP net income in the second quarter of fiscal 2013 was $13.8 million, or $0.39 per diluted share, an increase of more than 100% compared to non-GAAP net income of $6.2 million, or $0.18 per diluted share, in the same period a year ago.

Tom Mitchell, Chief Executive Officer of Fabrinet, said, “Despite what remains a challenging macro environment, I am pleased with the results that we delivered in the second quarter of fiscal 2013, highlighted by solid revenue and earnings per share growth. We continue to work closely with new and existing customers and we remain committed to delivering value to all of our stakeholders.”

Business Outlook

Based on information available as of February 4, 2013, Fabrinet is issuing guidance for the third quarter of fiscal 2013 as follows:

Fabrinet expects third quarter revenue to be in the range of $147 million to $151 million. GAAP net income per share is expected to be in the range of $0.26 to $0.28 with expected non-GAAP net income per share of $0.29 to $0.31, based on approximately 35 million fully diluted shares outstanding.

Conference Call Information

 

What:

   Fabrinet Second Quarter 2013 Financial Results Conference Call

When:

   Monday, February 4, 2013

Time:

   5:00 p.m. ET

Live Call:

   (888) 357-3694, domestic
   (253) 237-1137, international
   Passcode: 89547259

Replay:

   (855) 859-2056, domestic
   (404) 537-3406, international
   Passcode: 89547259

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 Stifel Nicolaus Technology Conference in San Francisco on Tuesday, February 5, 2013; the Morgan Stanley Technology, Media & Telecom Conference in San Francisco on Tuesday, February 26, 2013; and the Piper Jaffray Technology, Media and Telecommunications Conference in New York City on Wednesday, March 13, 2013.

 

Page 1


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.

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 2013. 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 limited number of customers and suppliers; difficulties in accurately forecasting demand for our services; 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 November 6, 2012. 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 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.

 

Page 2


Fabrinet

Unaudited Condensed Consolidated Balance Sheets

As of December 28, 2012 and June 29, 2012

 

(in thousands of U.S. dollars, except share data)    December 28,
2012
     June 29,
2012
 

Assets

     

Current assets

     

Cash and cash equivalents

   $ 128,098       $ 115,507   

Trade accounts receivable, net

     131,358         128,253   

Inventory, net

     99,681         103,223   

Deferred tax assets

     1,744         4,088   

Prepaid expenses

     1,334         3,571   

Other current assets

     6,934         6,029   
  

 

 

    

 

 

 

Total current assets

     369,149         360,671   
  

 

 

    

 

 

 

Non-current assets

     

Property, plant and equipment, net

     98,248         97,923   

Intangibles, net

     239         380   

Deferred tax assets

     2,914         1,764   

Deposits and other non-current assets

     635         624   
  

 

 

    

 

 

 

Total non-current assets

     102,036         100,691   
  

 

 

    

 

 

 

Total assets

   $ 471,185       $ 461,362   
  

 

 

    

 

 

 

Liabilities and Shareholders’ Equity

     

Current liabilities

     

Long-term loans from banks, current portion

   $ 9,668       $ 9,668   

Trade accounts payable

     73,744         86,000   

Construction-related payable

     9         2,222   

Income tax payable

     724         353   

Deferred tax liability

     1,654         1,405   

Accrued payroll, bonus and related expenses

     5,805         5,181   

Accrued expenses

     2,707         2,630   

Other payables

     5,598         6,601   

Liabilities to third parties due to flood losses

     54,401         61,198   
  

 

 

    

 

 

 

Total current liabilities

     154,310         175,258   
  

 

 

    

 

 

 

Non-current liabilities

     

Long-term loans from banks, non-current portion

     24,077         28,911   

Severance liabilities

     5,017         4,420   

Other non-current liabilities

     1,582         2,064   
  

 

 

    

 

 

 

Total non-current liabilities

     30,676         35,395   
  

 

 

    

 

 

 

Total liabilities

     184,986         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 December 28, 2012 and June 29, 2012)

     —           —     

Ordinary shares (500,000,000 shares authorized, $0.01 par value; 34,535,980 shares and 34,470,829 shares issued and outstanding as of December 28, 2012 and June 29, 2012, respectively)

     345         345   

Additional paid-in capital

     68,251         65,462   

Retained earnings

     217,603         184,902   
  

 

 

    

 

 

 

Total shareholders’ equity

     286,199         250,709   
  

 

 

    

 

 

 

Total Liabilities and Shareholders’ Equity

   $ 471,185       $ 461,362   
  

 

 

    

 

 

 

 

Page 3


Fabrinet

Unaudited Condensed Consolidated Statements of Operations

For the three and six months ended December 28, 2012 and December 30, 2011 

 

     Three Months Ended     Six Months Ended  
(in thousands of U.S. dollars)    December 28,
2012
    December 30,
2011
    December 28,
2012
    December 30,
2011
 

Revenues

   $ 167,426      $ 96,609      $ 326,051      $ 282,956   

Cost of revenues

     (149,056     (87,680     (289,959     (251,143
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     18,370        8,929        36,092        31,813   

Selling, general and administrative expenses

     (5,787     (5,319     (11,646     (11,957

Income (expense) related to flooding

     4,825        (40,265     9,645        (40,265
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

     17,408        (36,655     34,091        (20,409

Interest income

     271        224        459        419   

Interest expense

     (263     (68     (549     (142

Foreign exchange (loss) gain, net

     (170     787        107        600   

Other income

     183        59        373        156   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income taxes

     17,429        (35,653     34,481        (19,376

Income tax (expense) benefit

     (747     2,399        (1,780     1,777   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

   $ 16,682      $ (33,254   $ 32,701      $ (17,599
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings (loss) per share

        

Basic

   $ 0.48      $ (0.97   $ 0.95      $ (0.51

Diluted

     0.48        (0.97     0.94        (0.51

Weighted average number of ordinary shares outstanding

        

(thousands of shares)

        

Basic

     34,517        34,396     34,501        34,309

Diluted

     34,804        34,396     34,737        34,309

 

* In accordance with the antidilutive provisions of ASC 260-10-45, basic and dilutive shares are the same for the period ended December 30, 2011

 

Page 4


Fabrinet

Unaudited Condensed Consolidated Statements of Cash Flows

For the six months ended December 28, 2012 and December 30, 2011

 

     Six Months Ended  
(in thousands of U. S. dollars)    December 28,
2012
    December 30,
2011
 

Cash flows from operating activities

    

Net income (loss) for the period

   $ 32,701      $ (17,599

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

    

Depreciation

     5,002        4,937   

Amortization of intangibles

     142        199   

(Gain) loss on disposal of property, plant and equipment

     (1     9   

Income related to flooding

     (9,645     —     

Proceeds from insurers for business interruption losses related to flooding

     4,741        —     

Reversal of allowance for doubtful accounts

     (36     (24

Unrealized gain on exchange rate and fair value of derivative

     (722     (43

Share-based compensation

     2,632        2,591   

Deferred income tax

     1,443        (2,291

Other non-cash expenses

     115        374   

Inventory obsolescence

     (376     475   

Loss from written-off assets and liabilities to third parties due to flood losses

     —          33,263   

Changes in operating assets and liabilities

    

Trade accounts receivable

     (3,069     19,868   

Inventory

     3,918        (12,813

Other current assets and non-current assets

     1,342        (451

Trade accounts payable

     (12,256     (35,511

Income tax payable

     371        (812

Other current liabilities and non-current liabilities

     (1,573     (1,583

Liabilities to third parties due to flood losses

     (6,797     —     
  

 

 

   

 

 

 

Net cash provided by (used in) operating activities

     17,932        (9,411
  

 

 

   

 

 

 

Cash flows from investing activities

    

Purchase of property, plant and equipment

     (6,085     (18,337

Purchase of intangibles

     (1     (21

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

     2        5   

Proceeds from insurers in settlement of claims related to flood damage

     4,904        —     
  

 

 

   

 

 

 

Net cash used in investing activities

     (1,180     (20,076
  

 

 

   

 

 

 

Cash flows from financing activities

    

Receipt of long-term loans from banks

     —          16,000   

Repayment of long-term loans from banks

     (4,834     (2,464

Proceeds from issuance of ordinary shares under employee share option plans

     167        639   

Withholding tax related to net share settlement of restricted share units

     (10     —     
  

 

 

   

 

 

 

Net cash (used in) provided by financing activities

     (4,677     14,175   
  

 

 

   

 

 

 
Net increase (decrease) in cash and cash equivalents    $ 12,075      $ (15,312
  

 

 

   

 

 

 

 

Page 5


Fabrinet

Unaudited Condensed Consolidated Statements of Cash Flows

For the six months ended December 28, 2012 and December 30, 2011

 

     Six Months Ended  
(in thousands of U.S. dollars)    December 28,
2012
     December 30,
2011
 

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

     12,075         (15,312

Effect of exchange rate on cash and cash equivalents

     516         108   
  

 

 

    

 

 

 
Cash and cash equivalents at end of period    $ 128,098       $ 112,078   
  

 

 

    

 

 

 

 

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     Six Months Ended  
    December 28,
2012
    December 28,
2012
    December 30,
2011
    December 30,
2011
    December 28,
2012
    December 28,
2012
    December 30,
2011
    December 30,
2011
 
    Net income     Diluted EPS     Net loss     Diluted EPS     Net income     Diluted EPS     Net loss     Diluted EPS  

GAAP measures

    16,682        0.48        (33,254     (0.97     32,701        0.94        (17,599     (0.51

Items reconciling GAAP net income (loss) & EPS to non-GAAP net income & EPS:

               

Related to cost of revenues:

               

Share-based compensation expenses

    299        0.01        465        0.01        644        0.02        911        0.03   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total related to gross profit

    299        0.01        465        0.01        644        0.02        911        0.03   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Related to selling, general and administrative expenses:

               

Share-based compensation expenses

    1,079        0.03        1,138        0.03        1,988        0.06        1,680        0.05   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total related to selling, general and administrative expenses

    1,079        0.03        1,138        0.03        1,988        0.06        1,680        0.05   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Related to other incomes and other expenses:

               

(Income) expense related to flooding

    (4,825     (0.14     40,265        1.16        (9,645     (0.27     40,265        1.16   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total related to other incomes and other expenses

    (4,825     (0.14     40,265        1.16        (9,645     (0.27     40,265        1.16   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Related to income tax expense (benefit)

               

Income tax expense (benefit)

    594        0.02        (2,422     (0.07     907        0.03        (2,422     (0.07
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total related to income tax expense (benefit)

    594        0.02        (2,422     (0.07     907        0.03        (2,422     (0.07
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total related to net income & EPS

    (2,853     (0.08     39,446        1.14        (6,106     (0.17     40,434        1.17   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP measures

    13,829        0.39        6,192        0.18        26,595        0.76        22,835        0.66   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Shares used in computing diluted net income per share

               

GAAP diluted shares

      34,804          34,396          34,737          34,309   

Non-GAAP diluted shares

      35,190          34,738          35,086          34,707   

 

Page 7