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 2, 2015

 

 

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 February 2, 2015, Fabrinet issued a press release regarding its financial results for the fiscal quarter ended December 26, 2014. 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 2, 2015

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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: February 2, 2015

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EXHIBIT INDEX

 

Exhibit No.		Description
99.1		Press release dated February 2, 2015

Exhibit 99.1

Fabrinet Announces Second Quarter Fiscal 2015 Financial Results

BANGKOK, Thailand – February 2, 2015 – 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 ended December 26, 2014.

Fabrinet reported total revenue of $188.4 million for the second quarter of fiscal 2015, an increase of 5.5% compared to total revenue of $178.6 million for the comparable period in fiscal 2014. GAAP net income for the second quarter of fiscal 2015 was $8.7 million, or $0.24 per diluted share, compared to GAAP net income of $14.5 million, or $0.41 per diluted share, in the second quarter of fiscal 2014. Non-GAAP net income in the second quarter of fiscal 2015 was $14.4 million, or $0.40 per diluted share, a decrease of 10.0% compared to non-GAAP net income of $16.0 million, or $0.45 per diluted share, in the same period a year ago.

Tom Mitchell, Chief Executive Officer of Fabrinet, said, “Our fiscal second quarter results demonstrate our commitment to profitably growing our business while making key investments for the future. These investments are beginning to bear fruit as we had another quarter of strong revenue growth from new customers.”

Business Outlook

Based on information available as of February 2, 2015, Fabrinet is issuing guidance for the third quarter of fiscal 2015 as follows:

Fabrinet expects third quarter revenue to be in the range of $181 million to $185 million. GAAP net income per share is expected to be in the range of $0.27 to $0.29 with expected non-GAAP net income per share of $0.33 to $0.35, based on approximately 36 million fully diluted shares outstanding.

Conference Call Information

 

What:		Fabrinet Second Quarter 2015 Financial Results Conference Call
When:		Monday, February 2, 2015
Time:		5:00 p.m. ET
Live Call:		(888) 357-3694, domestic (253) 237-1137, international Passcode: 61174290
Replay:		(855) 859-2056, domestic (404) 537-3406, international Passcode: 61174290
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 third 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 November 5, 2014. 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, audit committee internal investigation costs, expenses related to reduction in workforce, amortization of debt issuance costs 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.

 

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SOURCE: Fabrinet

Investor Contact:

Jennifer Predmore

215-428-1797

ir@fabrinet.com

 

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Fabrinet

Consolidated Balance Sheets

As of December 26, 2014 and June 27, 2014

 

 

(in thousands of U.S. dollars, except share data)		December 26, 2014				June 27, 2014
Assets
Current assets
Cash and cash equivalents		$	111,971			$	233,477
Marketable securities			141,299				—
Trade accounts receivable, net			104,096				101,168
Inventory, net			127,804				124,570
Deferred tax assets			1,557				1,561
Prepaid expenses			1,366				1,691
Other current assets			2,356				2,010
Total current assets			490,449				464,477
Non-current assets
Property, plant and equipment, net			106,498				97,244
Intangibles, net			52				72
Deferred tax assets			1,690				1,775
Deferred debt issuance costs			2,507				989
Total non-current assets			110,747				100,080
Total assets		$	601,196			$	564,557
Liabilities and Shareholders’ Equity
Current liabilities
Long-term loans from bank, current portion		$	6,000			$	6,000
Trade accounts payable			98,651				94,853
Equipment-related payables			10,919				1,130
Income tax payable			1,410				1,024
Accrued payroll, bonus and related expenses			7,619				8,612
Accrued expenses			7,521				4,345
Other payables			4,461				4,665
Total current liabilities			136,581				120,629
Non-current liabilities
Long-term loans from bank, non-current portion			7,500				10,500
Deferred tax liability			867				1,040
Severance liabilities			4,771				4,453
Other non-current liabilities			1,446				1,099
Total non-current liabilities			14,584				17,092
Total liabilities			151,165				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 December 26, 2014 and June 27, 2014)			—				—
Ordinary shares (500,000,000 shares authorized, $0.01 par value; 35,371,886 shares and 35,152,772 shares issued and outstanding as of December 26, 2014 and June 27, 2014, respectively)			354				352
Additional paid-in capital			84,799				80,882
Retained earnings			365,364				345,602
Accumulated other comprehensive loss			(486	)			—
Total shareholders’ equity			450,031				426,836
Total Liabilities and Shareholders’ Equity		$	601,196			$	564,557

 

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Fabrinet

Consolidated Statements of Operations and Comprehensive Income

For the three and six months ended December 26, 2014 and December 27, 2013 

 

 

		Three Months Ended								Six Months Ended
(in thousands of U.S. dollars, except share data)		December 26, 2014				December 27, 2013				December 26, 2014				December 27, 2013
Revenues		$	188,353			$	178,562			$	377,678			$	350,113
Cost of revenues			(167,292	)			(158,032	)			(336,111	)			(310,938	)
Gross profit			21,061				20,530				41,567				39,175
Selling, general and administrative expenses			(10,314	)			(6,913	)			(19,051	)			(13,607	)
Expenses related to reduction in workforce			(1,153	)			—				(1,153	)			—
Income related to flooding			—				—				—				6,597
Operating income			9,594				13,617				21,363				32,165
Interest income			324				338				698				702
Interest expense			(117	)			(188	)			(250	)			(394	)
Foreign exchange gain (loss), net			83				(788	)			(23	)			300
Other (expense) income			(134	)			187				(31	)			371
Income before income taxes			9,750				13,166				21,757				33,144
Income tax (expense) benefit			(1,024	)			1,373				(1,995	)			592
Net income			8,726				14,539				19,762				33,736
Other comprehensive loss, before tax:
Change in fair value of marketable securities			(493	)			—				(493	)			—
Less : Reclassification adjustment for net loss realized and included in net income			7				—				7				—
Total change in unrealized loss on marketable securities, before of tax			(486	)			—				(486	)			—
Income tax expense related to items of other comprehensive income			—				—				—				—
Total other comprehensive loss, net of tax			(486	)			—				(486	)			—
Net comprehensive income		$	8,240			$	14,539			$	19,276			$	33,736
Earnings per share
Basic		$	0.25			$	0.42			$	0.56			$	0.97
Diluted		$	0.24			$	0.41			$	0.55			$	0.95
Weighted average number of ordinary shares outstanding (thousands of shares)
Basic			35,349				34,882				35,289				34,778
Diluted			35,917				35,583				35,752				35,361

 

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Fabrinet

Consolidated Statements of Cash Flows

For the six months ended December 26, 2014 and December 27, 2013

 

 

		Six Months Ended
(in thousands of U. S. dollars)		December 26, 2014				December 27, 2013
Cash flows from operating activities
Net income for the period		$	19,762			$	33,736
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation			5,907				5,030
Amortization of intangibles			42				51
Gain on disposal of property, plant and equipment			(46	)			(1	)
Amortization of investment premium			298				—
Amortization of deferred debt issuance costs			228				—
Income related to flooding			—				(6,597	)
Proceeds from insurers for inventory losses related to flooding			—				6,597
Reversal of allowance for doubtful accounts			(3	)			(53	)
Unrealized (gain) loss on exchange rate and fair value of derivative
and available-for-sale securities			(109	)			681
Share-based compensation			3,797				3,060
Deferred income tax			(84	)			188
Other non-cash expenses			665				232
Reversal of uncertain tax positions			—				(1,538	)
Inventory obsolescence			317				104
Changes in operating assets and liabilities
Trade accounts receivable			(2,925	)			(3,244	)
Inventory			(3,551	)			(7,856	)
Other current assets and non-current assets			(21	)			171
Trade accounts payable			3,798				10,886
Income tax payable			386				232
Other current liabilities and non-current liabilities			2,140				1,099
Liabilities to third parties due to flood losses			—				(5,974	)
Net cash provided by operating activities			30,601				36,804
Cash flows from investing activities
Purchase of available-for-sale securities			(143,684	)			—
Proceeds from maturities of available-for-sale securities			543				—
Proceeds from sales of available-for-sale securities			1,056				—
Purchase of property, plant and equipment			(5,372	)			(4,198	)
Purchase of Intangibles			(22	)			—
Proceeds from disposal of property, plant and equipment			46				1
Net cash used in investing activities			(147,433	)			(4,197	)
Cash flows from financing activities
Payment of debt issuance costs			(1,746	)			—
Repayment of long-term loans from bank			(3,000	)			(4,834	)
Proceeds from issuance of ordinary shares under employee share option plans			415				3,531
Withholding tax related to net share settlement of restricted share units			(293	)			(162	)
Net cash used in financing activities			(4,624	)			(1,465	)
Net (decrease) increase in cash and cash equivalents		$	(121,456	)		$	31,142

 

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Fabrinet

Consolidated Statements of Cash Flows

For the six months ended December 26, 2014 and December 27, 2013

 

 

		Six Months Ended
(in thousands of U.S. dollars)		December 26, 2014				December 27, 2013
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			(121,456	)			31,142
Effect of exchange rate on cash and cash equivalents			(50	)			(800	)
Cash and cash equivalents at end of period		$	111,971			$	180,058
Non-cash investing and financing activities
Equipment-related payables			10,919				2,825

 

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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																Six Months Ended
		December 26, 2014				December 26, 2014				December 27, 2013				December 27, 2013				December 26, 2014				December 26, 2014				December 27, 2013				December 27, 2013
		Net income				Diluted EPS				Net income				Diluted EPS				Net income				Diluted EPS				Net income				Diluted EPS
GAAP measures			8,726				0.24				14,539				0.41				19,762				0.55				33,736				0.95
Items reconciling GAAP net income & EPS to non-GAAP net income & EPS:
Related to cost of revenues:
Share-based compensation expenses			360				0.01				291				0.01				728				0.02				598				0.02
Total related to gross profit			360				0.01				291				0.01				728				0.02				598				0.02
Related to selling, general and administrative expenses:
Share-based compensation expenses			1,570				0.04				1,206				0.03				3,069				0.09				2,462				0.07
Investigation costs			2,500				0.07				—				—				4,100				0.11				—				—
Total related to selling, general and administrative expenses			4,070				0.11				1,206				0.03				7,169				0.20				2,462				0.07
Related to other incomes and other expenses:
Income related to flooding			—				—				—				—				—				—				(6,597	)			(0.19	)
Expenses related to reduction in workforce			1,153				0.03				—				—				1,153				0.03				—				—
Amortization of debt issuance costs			228				0.01				—				—				228				0.01				—				—
Total related to other incomes and other expenses			1,381				0.04				—				—				1,381				0.04				(6,597	)			(0.19	)
Related to income tax expense
Income tax expense			(187	)			(0.01	)			—				—				(187	)			(0.01	)			—				—
Total related to income tax expense			(187	)			(0.01	)			—				—				(187	)			(0.01	)			—				—
Total related to net income & EPS			5,624				0.16				1,497				0.04				9,091				0.25				(3,537	)			(0.10	)
Non-GAAP measures			14,350				0.40				16,036				0.45				28,853				0.81				30,199				0.85
Shares used in computing diluted net income per share
GAAP diluted shares							35,917								35,583								35,752								35,361
Non-GAAP diluted shares							35,917								35,583								35,752								35,361

 

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