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)

October 30, 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)

 

 

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))

 

 

 

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Item 2.02 Results of Operations and Financial Condition.

On November 4, 2013, Fabrinet (the “Company”) issued a press release regarding its financial results for the fiscal quarter ended September 27, 2013. 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 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On October 30, 2013, the Compensation Committee of the Board of Directors of the Company approved increases to the annual base salaries of certain of the Company’s named executive officers as set forth below. Such salary increases are deemed effective as of November 1, 2013.

 

Name		Title		Current Annual Base Salary				Fiscal 2013 Annual Base Salary
Dr. Harpal Gill		President and Chief Operating Officer of Fabrinet USA, Inc.; Executive Vice President, Operations of Fabrinet Co., Ltd.		$	650,000			$	575,000
Toh-Seng Ng		Executive Vice President, Chief Financial Officer of Fabrinet USA, Inc.		$	425,000			$	325,000

Item 9.01 Financial Statements and Exhibits.

 

(d)

Exhibits.

 

Exhibit No.		Description
99.1		Press release dated November 4, 2013

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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.

 

Date: November 4, 2013

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EXHIBIT INDEX

 

Exhibit No.		Description
99.1		Press release dated November 4, 2013

Exhibit 99.1

Fabrinet Announces First Quarter 2014 Financial Results

BANGKOK, Thailand – November 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 first quarter ended September 27, 2013.

Fabrinet reported total revenue of $171.6 million for the first quarter of fiscal 2014, an increase of 8.2% compared to total revenue of $158.6 million for the comparable period in fiscal 2013. GAAP net income for the first quarter of fiscal 2014 was $19.2 million, or $0.55 per diluted share, compared to GAAP net income of $16.0 million, or $0.46 per diluted share, in the first quarter of fiscal 2013. Non-GAAP net income in the first quarter of fiscal 2014 was $14.2 million, or $0.40 per diluted share, an increase of 10.9% compared to non-GAAP net income of $12.8 million, or $0.36 per diluted share, in the same period a year ago.

Tom Mitchell, Chief Executive Officer of Fabrinet, said, “Fiscal 2014 is off to a strong start and I am particularly pleased that our fiscal first quarter results demonstrated another strong quarter of revenue, margin and EPS growth. With our strong customer relationships and expanding pipeline of new business, I am confident that we will be able to build off our successful first quarter and deliver strong year of profitable growth.”

Business Outlook

Based on information available as of November 4, 2013, Fabrinet is issuing guidance for the second quarter of fiscal 2014 as follows:

Fabrinet expects second quarter revenue to be in the range of $170 million to $174 million. GAAP net income per share is expected to be in the range of $1.54 to $1.56 with expected non-GAAP net income per share of $0.40 to $0.42, based on approximately 35 million fully diluted shares outstanding.

Conference Call Information

 

What:		Fabrinet First Quarter 2014 Financial Results Conference Call
When:		Monday, November 4, 2013
Time:		5:00 p.m. ET
Live Call:		(888) 357-3694, domestic
		(253) 237-1137, international
		Passcode: 75876616
Replay:		(855) 859-2056, domestic
		(404) 537-3406, international
		Passcode: 75876616
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.

 

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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 second 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 annual report on Form 10-K, filed on August 16, 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 and income 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.

SOURCE: Fabrinet

 

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Investor Contact:

Jennifer Predmore

215-428-1797

ir@fabrinet.com

 

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Fabrinet

Consolidated Balance Sheets

As of September 27, 2013 and June 28, 2013

 

(in thousands of U.S. dollars, except share data)		September 27, 2013				June 28, 2013
Assets
Current assets
Cash and cash equivalents		$	163,860			$	149,716
Trade accounts receivable, net			125,876				118,475
Inventory, net			94,528				88,962
Deferred tax assets			1,618				1,937
Prepaid expenses			1,398				1,931
Other current assets			2,105				3,505
Total current assets			389,385				364,526
Non-current assets
Property, plant and equipment, net			97,133				97,206
Intangibles, net			136				164
Deferred tax assets			2,912				2,905
Deposits and other non-current assets			102				107
Total non-current assets			100,283				100,382
Total assets		$	489,668			$	464,908
Liabilities and Shareholders’ Equity
Current liabilities
Long-term loans from bank, current portion		$	9,668			$	9,668
Trade accounts payable			90,328				77,139
Income tax payable			1,985				1,825
Deferred tax liability			2,607				2,481
Accrued payroll, bonus and related expenses			6,954				6,220
Accrued expenses			4,174				3,121
Other payables			4,437				5,163
Liabilities to third parties due to flood losses			1,558				9,812
Total current liabilities			121,711				115,429
Non-current liabilities
Long-term loans from bank, non-current portion			16,826				19,243
Severance liabilities			4,564				4,382
Other non-current liabilities			536				536
Total non-current liabilities			21,926				24,161
Total liabilities			143,637				139,590
Commitments and contingencies
Shareholders’ equity
Preferred shares (5,000,000 shares authorized, $0.01 par value; no shares issued and outstanding as of September 27, 2013 and June 28, 2013)			—				—
Ordinary shares (500,000,000 shares authorized, $0.01 par value; 34,733,691 shares and 34,634,967 shares issued and outstanding as of September 27, 2013 and June 28, 2013, respectively)			347				346
Additional paid-in capital			72,616				71,101
Retained earnings			273,068				253,871
Total shareholders’ equity			346,031				325,318
Total Liabilities and Shareholders’ Equity		$	489,668			$	464,908

 

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Fabrinet

Consolidated Statements of Operations

For the three months ended September 27, 2013 and September 28, 2012 

 

		Three Months Ended
		September 27,				September 28,
(in thousands of U.S. dollars, except share data)		2013				2012
Revenues		$	171,551			$	158,625
Cost of revenues			(152,906	)			(140,903	)
Gross profit			18,645				17,722
Selling, general and administrative expenses			(6,694	)			(5,859	)
Income related to flooding			6,597				4,820
Operating income			18,548				16,683
Interest income			364				188
Interest expense			(206	)			(286	)
Foreign exchange gain, net			1,088				277
Other income			184				190
Income before income taxes			19,978				17,052
Income tax expense			(781	)			(1,033	)
Net income		$	19,197			$	16,019
Earnings per share
Basic		$	0.55			$	0.46
Diluted		$	0.55			$	0.46
Weighted average number of ordinary shares outstanding (thousands of shares)
Basic			34,674				34,485
Diluted			35,138				34,670

 

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Fabrinet

Consolidated Statements of Cash Flows

For the three months ended September 27, 2013 and September 28, 2012

 

		Three Months Ended
(in thousands of U. S. dollars)		September 27, 2013				September 28, 2012
Cash flows from operating activities
Net income for the period		$	19,197			$	16,019
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation			2,509				2,522
Amortization of intangibles			28				75
Loss on disposal of property, plant and equipment			—				1
Income related to flooding			(6,597	)			(4,820	)
Proceeds from insurers for business interruption losses related to flooding			—				4,741
Proceeds from insurers for inventory losses related to flooding			6,597				—
Reversal of allowance for doubtful accounts			(53	)			(49	)
Unrealized gain on exchange rate and fair value of derivative			(808	)			(714	)
Share-based compensation			1,563				1,254
Deferred income tax			438				256
Other non-cash expenses			218				588
Reversal of inventory obsolescence			—				(166	)
Changes in operating assets and liabilities
Trade accounts receivable			(7,348	)			(9,556	)
Inventory			(5,566	)			(7,302	)
Other current assets and non-current assets			60				1,299
Trade accounts payable			13,189				5,919
Income tax payable			124				231
Other current liabilities and non-current liabilities			550				(349	)
Liabilities to third parties due to flood losses			(5,964	)			(4,000	)
Net cash provided by operating activities			18,137				5,949
Cash flows from investing activities
Purchase of property, plant and equipment			(1,253	)			(4,126	)
Proceeds from insurers in settlement of claims related to flood damage			—				79
Net cash used in investing activities			(1,253	)			(4,047	)
Cash flows from financing activities
Repayment of long-term loans from bank			(2,417	)			(2,417	)
Proceeds from issuance of ordinary shares under employee share option plans			43				124
Withholding tax related to net share settlement of restricted share units			(90	)			—
Net cash used in financing activities			(2,464	)			(2,293	)
Net increase (decrease) in cash and cash equivalents		$	14,420			$	(391	)

 

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Fabrinet

Consolidated Statements of Cash Flows

For the three months ended September 27, 2013 and September 28, 2012

 

		Three Months Ended
(in thousands of U.S. dollars)		September 27, 2013				September 28, 2012
Movement in cash and cash equivalents
Cash and cash equivalents at beginning of period		$	149,716			$	115,507
Increase (decrease) in cash and cash equivalents			14,420				(391	)
Effect of exchange rate on cash and cash equivalents			(276	)			278
Cash and cash equivalents at end of period		$	163,860			$	115,394

 

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Fabrinet

Reconciliation of GAAP measures to non-GAAP measures

(in thousands of U.S. dollars, except per share data)

(unaudited)

 

		Three Months Ended
		September 27, 2013				September 27, 2013				September 28, 2012				September 28, 2012
		Net income				Diluted EPS				Net income				Diluted EPS
GAAP measures			19,197				0.55				16,019				0.46
Items reconciling GAAP net income & EPS to non-GAAP net income & EPS:
Related to cost of revenues:
Share-based compensation expenses			307				0.01				345				0.01
Total related to gross profit			307				0.01				345				0.01
Related to selling, general and administrative expenses:
Share-based compensation expenses			1,256				0.04				909				0.03
Total related to selling, general and administrative expenses			1,256				0.04				909				0.03
Related to other incomes and other expenses:
Income related to flooding			(6,597	)			(0.19	)			(4,820	)			(0.14	)
Total related to other incomes and other expenses			(6,597	)			(0.19	)			(4,820	)			(0.14	)
Related to income tax expense
Income tax expense			—				—				313				0.01
Total related to income tax expense			—				—				313				0.01
Total related to net income & EPS			(5,034	)			(0.14	)			(3,253	)			(0.09	)
Non-GAAP measures			14,163				0.40				12,766				0.36
Shares used in computing diluted net income per share
GAAP diluted shares							35,138								34,670
Non-GAAP diluted shares							35,138								34,983

 

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