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SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-Q
(Mark One)
X Quarterly report pursuant to Section 13 or 15(d) of the Securities
--- Exchange Act of 1934
For the quarterly period ended November 30, 1996.
Transition report pursuant to Section 13 or 15(d) of the Securities
--- Exchange Act of 1934
For the transition period from _______________ to ______________.
Commission file number: 0-21308
JABIL CIRCUIT, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 38-1886260
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10800 Roosevelt Blvd.
St. Petersburg, FL 33716
(Address of principal executive offices, including zip code)
Registrant's Telephone No., including area code: (813) 577-9749
________________________________
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days:
Yes X No
--- ---
As of November 30, 1996, there were 17,875,114 shares of the Registrant's
Common Stock outstanding.
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JABIL CIRCUIT, INC. AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets at
November 30, 1996 and August 31, 1996.................................................................3
Consolidated Statements of Operations
for the three months ended November 30, 1996 and 1995.................................................4
Consolidated Statements of Cash Flows
for the three months ended November 30, 1996 and 1995.................................................5
Notes to Consolidated Financial Statements............................................................6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.........................................................8
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.....................................................................10
Signatures...........................................................................................11
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JABIL CIRCUIT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except for share and per share data)
August 31 November 30
1996 1996
--------- -----------
(unaudited)
ASSETS
Current assets
Cash $73,319 $72,419
Accounts receivable - Net 84,839 77,923
Inventories 64,869 67,496
Refundable income taxes -- --
Prepaid expenses and other current assets 340 308
Deferred income taxes 3,971 5,142
-------- --------
Total current assets 227,338 223,288
Property, plant and equipment, net 70,704 78,609
Other assets 1,898 292
-------- --------
$299,940 $302,189
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current installments of long term debt 1,979 1,979
Current installments of capital lease obligations 472 480
Accounts payable 78,600 73,994
Accrued expenses 24,550 23,284
Income taxes payable 5,979 6,161
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Total current liabilities 111,580 105,898
Long term debt, less current installments 57,257 56,713
Capital lease obligations, less current 1,114 1,034
installments
Deferred income taxes 2,883 2,699
Deferred grant revenue 2,872 2,297
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Total liabilities 175,706 168,641
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Stockholders' equity
Common stock 18 18
Additional paid in capital 56,924 57,390
Retained earnings 67,319 76,147
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124,261 133,555
Less:
Unearned compensation from grant of stock
option 27 7
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Net stockholders' equity 124,234 133,548
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$299,940 $302,189
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See Accompanying Notes to Consolidated Financial Statements
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JABIL CIRCUIT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except for per share data)
Three months ended
November 30
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(Unaudited)
1995 1996
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Net revenue $233,855 $203,070
Cost of revenue 216,537 179,978
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Gross profit 17,318 23,092
Operating expenses:
Selling, general and administrative 5,561 7,727
Research and development 399 705
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Operating income 11,358 14,660
Interest expense, net 2,663 658
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Income before income taxes 8,695 14,002
Income taxes 3,480 5,174
-------- --------
Net income $5,215 $8,828
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Net income per share $0.31 $0.47
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Weighted average number of
shares of common stock and
common stock equivalents 16,967 18,942
See Accompanying Notes to Consolidated Financial Statements
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JABIL CIRCUIT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
For the three months
ended November 30,
1995 1996
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Operating Activities
Net Income 5,215 8,828
Adjustments to reconcile Net Income to Net Cash
Provided by operating activities:
Depreciation & Amortization 4,037 5,433
Recognition of Grant Revenue (568) (575)
Deferred income taxes (485) (1,355)
(Gain) Loss on sale of property (2) (17)
Changes in operating assets & liabilities:
Accounts Receivable 3,381 6,916
Inventories (53,923) (2,627)
Prepaid expenses & other current assets 371 32
Refundable Income Taxes 2,079 -
Other Assets (229) 1,603
Accounts payable & accrued expenses 16,138 (5,872)
Income taxes payable - 182
------- -------
Net cash provided by (used in) operating activities (23,986) 12,548
------- -------
Cash flow from investing activities - Net
Acquisition of property, plant and equipment (12,885) (13,318)
Proceeds from the sale of property and equipment 35 20
------- -------
Net cash used in investing activities (12,850) (13,298)
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Cash flows from financing activities:
Note Payable - Net (5,500) -
Proceeds from long-term debt 3,042 -
Payments of long-term debt (1,786) (544)
Payments of capital lease obligations (283) (72)
Net proceeds from issuance of common stock 39,286 466
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Net cash provided by financing activities 34,759 (150)
Net increase/(decrease) in cash (2,077) (900)
Cash at beginning of period 5,486 73,319
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Cash at end of period $3,409 $72,419
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Supplemental disclosure information:
Cash Paid
Interest 2,252 1,546
Income Taxes 1,550 5,250
Non-Cash Investing and Financing activities:
Tax benefit of options exercised 36 -
See Accompanying Notes to Consolidated Financial Statements
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JABIL CIRCUIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying consolidated financial statements of Jabil Circuit,
Inc. and subsidiaries ("the Company") are unaudited and have been prepared
based upon prescribed guidance of the Securities and Exchange Commission
("SEC"). As such, they do not include all disclosures required by generally
accepted accounting principles, and should be read in conjunction with the
annual audited consolidated statements as of and for the year ended August
31, 1996 contained in the Company's 1996 annual report on Form 10-K. In the
opinion of management, the accompanying consolidated financial statements
include all adjustments, consisting of normal and recurring adjustments
necessary for a fair presentation of the financial position, results of
operations and cash flows for the periods presented when read in conjunction
with the annual audited consolidated financial statements and related notes
thereto. The results of operations for the three month period ended November
30, 1996 are not necessarily indicative of the results that should be
expected for a full fiscal year.
NET INCOME PER SHARE
Net income per share is computed using the weighted average number of
common shares and dilutive common equivalent shares outstanding during the
applicable period. Common equivalent shares consist of stock options, using
the treasury stock method.
COMMITMENTS AND CONTINGENCIES
At November 30, 1996 the Company had outstanding approximately
$10,440,000 in equipment purchase commitments, and approximately $4,800,000
in purchase commitments related to the construction of new manufacturing
facilities.
During the 1994 fiscal year, the Company instituted a breach of contract
action against Epson of America Inc. requesting certain specified and
unspecified monetary damages. On July 21, 1995, Epson filed a counterclaim
citing damages for, among other things, breach of contract and negligent
misrepresentation. The Company expects discovery to conclude during the
first half of fiscal 1997 and the trial to commence in the second half of
fiscal 1997 in the United States District Court for the Middle District of
Florida. The parties have been unsuccessful in mediating or arbitrating the
dispute, despite participation in several non-binding mediation and
arbitration sessions. The Company intends to pursue aggressively its legal
claims and contest vigorously Epson's counterclaims. The Company believes
strongly in the validity of its claims and believes that any potential
exposure to the Company is substantially less than the
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amount claimed by Epson. The Company believes that adequate provision
has been made in its consolidated financial statements for adverse exposure
related to this matter. However, such litigation may result in substantial
costs and diversion of resources and, given the uncertainties inherent in
litigation, could have a material adverse effect on the Company's operating
results and financial condition, if decided adversely to the Company.
The Company is party to certain other law suits in the ordinary course
of business. Management does not believe that these proceedings,
individually or in aggregate, are material or that any adverse outcomes of
these lawsuits will have a material adverse effect on the Company's
financial statements.
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JABIL CIRCUIT, INC. AND SUBSIDIARIES
This management's Discussion and Analysis of Financial Condition and
Results of Operations contains trend analysis and a number of forward
looking statements. These statements are based on current expectations
and actual results may differ materially. Among the factors which
could cause actual results to vary are those described in "Business
Factors" below.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The Company's net revenue for the first quarter of fiscal 1997
decreased 13% to $203.1 million from $233.9 million in the first quarter of
fiscal 1996. This decrease was primarily due to the end of production of
certain hard drive and personal computer products, offset by increased
production of communications products. Foreign source revenue represented 31%
of net revenue for the first quarter of fiscal 1997, compared to 40% for the
same period of fiscal 1996. The decrease in foreign source revenue was
attributable to decreased exports form the Company's domestic locations.
Gross margin increased to 11.4% for the first quarter of fiscal 1997
from 7.4% for the first quarter of fiscal 1996. This increase resulted from a
shift in product mix to higher value added products along with increased
utilization of the Company's international operations.
Selling, general and administrative expenses in the first quarter of
fiscal 1997 increased to 3.8% of net revenue, compared to 2.4% in the first
quarter of the prior fiscal year, or $2.1 million in absolute dollars. The
increase was due to additional staffing at an operational level and increased
resources at a corporate level.
Research and development expenses increased as a percentage of net
revenue in the first quarter of fiscal 1997 to 0.4% as compared to 0.2% for the
first quarter of fiscal 1996. In absolute dollars, the expenses increased
approximately $306,000 versus the same period of fiscal 1996 due to expansion
of circuit design activities.
Interest expense decreased $2.0 million in the first quarter of fiscal
1997 to $0.7 million from $2.7 million in the first quarter of fiscal 1996 due
to a decrease in total borrowings, lower effective interest rates and interest
income earned on cash balances.
The Company's effective tax rate decreased to 37% in the first quarter
of fiscal 1997 from 40% in the first quarter of fiscal 1996. The reduced
effective income tax rate was due to lower effective tax rates of the Company's
international operations in fiscal 1997.
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BUSINESS FACTORS
Due to the nature of turnkey manufacturing and the Company's
relatively small number of customers, the Company's quarterly operating results
are affected by the levels and timing of orders; the level of capacity
utilization of its manufacturing facilities and associated fixed costs;
fluctuations in materials costs; and by the mix of materials costs versus
manufacturing costs. Similarly, operating results are affected by price
competition; level of experience in manufacturing a particular product; degree
of automation used in the assembly process; efficiencies achieved by the
Company in managing inventories and fixed assets; timing of expenditures in
anticipation of increased sales; customer product delivery requirements; and
shortages of components or labor. In the past, some of the Company's customers
have terminated their manufacturing arrangement with the Company, and other
customers have significantly reduced or delayed the volume of manufacturing
services ordered from the Company. Any such termination of a manufacturing
relationship or change, reduction or delay in orders could have an adverse
affect of the Company's results of operations.
LIQUIDITY AND CAPITAL RESOURCES
At November 30, 1996 the Company's principal sources of liquidity
consisted of cash and available borrowings under the Company's credit
facilities. The Company and its subsidiaries have committed line of credit
facilities in place with a syndicate of banks that provide up to $60 million of
working capital borrowing capacity.
The Company generated $12.5 million of cash in operating activities
for the three months ended November 30, 1996. The generation of cash was
primarily due to net income of $8.8 million, depreciation and amortization of
$5.4 million and a reduction in accounts receivable of $6.9 million, offset by
a reduction of accounts payable and accrued expenses of $5.8 million and an
increase in inventories of $2.6 million.
Net cash used in investing activities of $13.3 million for the three
months ended November 30, 1996 was a result of the Company's capital
expenditures for equipment world-wide in order to support increased activities
and the construction of new manufacturing facilities.
Net cash of $0.2 million was used in financing activities for the three months
ended November 30, 1996. This was primarily attributable to $0.5 million
payments of long term debt offset by $0.5 million of proceeds from the issuance
of common stock.
The Company believes that cash on hand, funds provided by operations
and available under the credit agreements will be sufficient to satisfy its
currently anticipated working capital and capital expenditure requirements for
the next twelve months.
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JABIL CIRCUIT, INC. AND SUBSIDIARIES
Part II - OTHER INFORMATION
Item 6: Exhibits and Reports on Form 8-K
(a) Exhibits
11.1 Statement re Computation of Net Income per Share
27 Financial Data Schedule (for SEC Use Only)
(b) Form 8-K
No Reports on Form 8-K were filed by the Registrant
during the quarter ended November 30, 1996.
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Jabil Circuit, Inc.
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Registrant
Date: 1/14/97 /s/ Thomas A. Sansone
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Thomas A. Sansone
President
Date: 1/14/97 /s/ Chris A. Lewis
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Chris A. Lewis
Chief Financial Officer
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