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Fabrinet Announces First Quarter 2012 Financial Results

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, executive separation costs and our costs in connection with our follow-on offering earlier this year. 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

Unaudited Condensed Consolidated Balance Sheets

As of September 30, 2011 and June 24, 2011
   
(in thousands of U.S. dollars, except share data)

September 30, 2011

June 24, 2011
Assets
Current assets
  Cash and cash equivalents $ 132,349 $ 127,282
Trade accounts receivable, net 122,433 117,705
Inventories, net 106,552 106,467
Investment in leases 1,795 448
Deferred tax assets 1,471 1,308
Prepaid expenses and other current assets 2,983 4,466
  Total current assets 367,583 357,676
Non-current assets
Property, plant and equipment, net 82,786 75,410
Intangibles, net 649 892
Investment in leases 1,928 1,163
Deferred tax assets 2,060 1,953
Deposits and other non-current assets 667 681
Total non-current assets 88,090 80,099
Total assets $ 455,673 $ 437,775
Liabilities and Shareholders’ Equity
Current liabilities
Long-term loans from banks, current portion $ 4,898 $ 4,398
Trade accounts payable 85,791 92,563
Construction payable 5,266 2,475
Income tax payable 2,515 1,858
Deferred tax liability 1,125 1,056
Accrued payroll, profit sharing and related expenses 7,374 7,677
Accrued expenses 5,116 3,986
Other payables 4,158 3,796
Total current liabilities 116,243 117,809
Non-current liabilities
Long-term loans from banks, non-current portion 14,562 11,979
Severance liabilities 4,615 4,478
Other non-current liabilities 2,023 1,982
Total non-current liabilities 21,200 18,439
Total liabilities 137,443 136,248
Commitments and contingencies
Shareholders’ equity
Preferred shares (5,000,000 shares authorized, $0.01 par value;
no shares issued and outstanding as of September 30, 2011 and June 24, 2011, respectively) - -
Ordinary shares (500,000,000 shares authorized, $0.01 par value;
34,238,964 shares and 34,207,579 shares issued and
outstanding as of September 30, 2011 and June 24, 2011, respectively) 342 342
Additional paid-in capital 60,864 59,816
Retained earnings 257,024 241,369
Total shareholders’ equity 318,230 301,527
Total Liabilities and Shareholders’ Equity $ 455,673 $ 437,775

Fabrinet

Unaudited Condensed Consolidated Statements of Operations

For the three months ended September 30, 2011 and September 24, 2010
   
Three Months Ended
September 30, September 24,
(in thousands of U.S. dollars) 2011 2010
 
Revenues

Revenues
$ 186,347   $ 173,740  
Total revenues 186,347 173,740
Cost of revenues (163,463 ) (151,964 )
 

Gross profit
22,884 21,776
Selling, general and administrative expenses (6,638 ) (4,827 )
 
Operating income 16,246 16,949
 
Interest income 195 98
Interest expense (74 ) (111 )
Foreign exchange loss, net (187 ) (378 )
Other income 97   4  
 
Income before income taxes 16,277 16,562
Income taxes (622 ) (1,357 )
 
Net income $ 15,655   $ 15,205  
 
Earnings per share

Basic
$ 0.46 $ 0.45

Diluted
$ 0.45 $ 0.44
 

Weighted average number of ordinary shares outstanding

(thousands of shares)

Basic
34,223 33,761

Diluted
34,502 34,351
Fabrinet
Reconciliation of GAAP measures to non-GAAP measures
(in thousands of U.S. dollars, except per share data)
(unaudited)
      Three Months Ended
September 30,   September 30,   September 24,   September 24,
2011   2011 2010   2010
Net income Diluted EPS Net income Diluted EPS
 
GAAP measures 15,655 0.45 15,205 0.44
Items reconciling GAAP net income & EPS to non-GAAP net income & EPS:
Related to cost of revenues:
Share-based compensation expenses 445 0.01 92 0.00
       
Total related to gross profit 445 0.01 92 0.00
 
Related to selling, general and administrative expenses:
Share-based compensation expenses 543 0.02 136 0.00
       
Total related to selling, general and administrative expenses 543 0.02 136 0.00
 
Total related to net income & EPS 988 0.03 228 0.01
 
Non-GAAP measures 16,643 0.48 15,433 0.45
 
Shares used in computing diluted net income per share
GAAP diluted shares 34,502 34,351
Non-GAAP diluted shares 34,677 34,405

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