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 first quarter of fiscal 2012, ended September 30, 2011.

Fabrinet reported total revenue of $186.3 million for the first quarter of fiscal 2012, an increase of 7.3% compared to revenue of $173.7 million for the comparable period in fiscal 2011. GAAP net income in the first quarter was $15.7 million, or $0.45 per diluted share, an increase of 3.0% compared to GAAP net income of $15.2 million, or $0.44 per diluted share in the first quarter of 2011. Non-GAAP net income in the first quarter was $16.6 million, or $0.48 per diluted share, an increase of 7.8% compared to non-GAAP net income of $15.4 million, or $0.45 per share in the first quarter of 2011.

Tom Mitchell, Chief Executive Officer of Fabrinet, said, “While we are pleased to have achieved our 47 th consecutive quarter of profitability during the September quarter, our attention is focused on recovering from the flood waters that have impacted our operations in Thailand. Through the tireless efforts and resourcefulness of our employees, and in the midst of this natural disaster, we are preparing to resume production at our Pinehurst campus, one of our two manufacturing campuses in Thailand. In fact, today we began production at Pinehurst on a limited scale and anticipate ramping to full production at the Pinehurst campus during the next two weeks."

Production at Fabrinet's Pinehurst campus had been suspended for approximately three weeks due to flooding of the main artery and access roads to the campus. Water breached the company's other Thailand campus, known as Chokchai, on Saturday evening, October 22 and the water level within the campus buildings rose to as high as five feet. Production will not recommence at Chokchai, located approximately seven miles south of Pinehurst, for the rest of the current quarter, and likely for significantly longer. The company acknowledges that it may never again manufacture at the Chokchai campus but, instead, divert manufacturing to the existing buildings 3, 4 & 5 at its Pinehurst campus, and its newest building 6 at Pinehurst, upon completion.

Business Outlook

Based on information available as of November 7, 2011, and due to the damage resulting from seasonal monsoon flood waters in Thailand that has caused the suspension of production at its manufacturing campuses in Thailand, Fabrinet is issuing limited guidance for the second quarter of fiscal 2012. If the company generates no further revenues from Thailand operations during the quarter, the company anticipates total revenues for the quarter to be approximately $28M, representing primarily revenues generated before production shutdown at its Thailand facilities, together with revenues from its Casix and Vitrocom businesses throughout the quarter. The company anticipates generating additional revenue in excess of that minimum, but, at this time, is unable to determine to what level. The company cannot currently anticipate net operating results for the quarter, although it anticipates suffering a net loss due to the significant decline in revenue and the timing and result of insurance claims by the company.

Conference Call Information
What:   Fabrinet first quarter 2012 financial results conference call
When: Monday, November 7, 2011
Time: 5:00 p.m. ET
Live Call: (800) 573-4842, domestic
(617) 224-4327, international
Passcode 70275126
Replay: (888) 286-8010, domestic
(617) 801-6888, international
Passcode 10687505
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.

The Company also announced today that, beginning on Tuesday, November 8, 2011, it will from time to time provide updates about the status of the flooding at and around its facilities in Thailand, its recovery and clean-up efforts there, its manufacturing operations in Thailand generally and other important information related to the flooding on its website. To access this information, please go to the Company’s website at www.fabrinet.com and click on the portion of the home page titled “Thai Flooding Updates”.

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 our expectations regarding the timing and scale of our future production at our Pinehurst facilities, our plans regarding our Chokchai facilities and the potential diversion of that production capacity to our operations at Pinehurst, all of the statements under the “Business Outlook” section relating to our forecasted operating results for the second quarter of fiscal year 2012 and the expectation that the company will be able to recover for insurance claims that it may make resulting from the floods in Thailand. 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: the flooding situation in Thailand could continue for an extended period of time and could even worsen; despite resuming limited production at our Pinehurst facilities, we may again have to suspend all operations at our Pinehurst facilities, which could be for an extended period of time; customers could scale back or cancel their orders in light of perceived or real production constraints; even if the flooding in Thailand subsides, the extent of damage to Thai roads, infrastructure and general public safety and health concerns could continue to have a material impact on our logistics, supply chain and employees; if the flooding continues for an extended period of time, the Thai government could order a state of emergency or take other emergency measures, which could constrain our operations in Thailand, 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 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, 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

Copyright Business Wire 2010

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