8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 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): May 2, 2013

MULTI-FINELINE ELECTRONIX, INC.

(Exact name of registrant as specified in its charter)

Delaware	000-50812	95-3947402
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

8659 Research Drive

Irvine, CA 92618

(Address of Principal Executive Offices) (Zip Code)

(949) 453-6800

(Registrant’s telephone number, including area code)

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:

¨ 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))

Item 2.02. Results of Operations and Financial Condition.

The information in this Current Report is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that Section. The information in this Current Report shall not be incorporated by reference into any registration statement or filing of Multi-Fineline Electronix, Inc., except as shall be expressly set forth by specific reference in such a filing.

On May 2, 2013, Multi-Fineline Electronix, Inc. issued a news release announcing its financial results for the second quarter of fiscal 2013 and providing forward-looking financial guidance. A copy of the news release is attached hereto as Exhibit 99.1.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

99.1 News release announcing the Company’s financial results for the second quarter of fiscal 2013 and providing forward-looking financial guidance.

SIGNATURE

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.

	Multi-Fineline Electronix, Inc.,
	a Delaware corporation
Date: May 2, 2013	By:	/s/ Reza Meshgin
		Reza Meshgin
		President and Chief Executive Officer

EXHIBIT INDEX

Exhibit No.	Description
99.1	News release announcing the Company’s financial results for the second quarter of fiscal 2013 and providing forward-looking financial guidance.

EX-99.1

Exhibit 99.1

NEWS RELEASE

Contact: Stacy Feit

Investor Relations

Tel: 213-486-6549

Email: investor_relations@mflex.com

MFLEX REPORTS FISCAL 2013 SECOND QUARTER FINANCIAL RESULTS

Irvine, CA, May 2, 2013 – Multi-Fineline Electronix, Inc. (NASDAQ: MFLX), a leading global provider of high-quality, technologically advanced flexible printed circuit and value-added component assembly solutions to the electronics industry, today reported financial results for its fiscal second quarter ended March 31, 2013. Net sales in the second quarter of fiscal 2013 were $173.7 million, down 16 percent from net sales of $208.0 million in the same quarter last year. This decrease was primarily due to lower sales to key customers.

Non-GAAP gross margin during the second quarter of fiscal 2013, which excludes the impact of an inventory write-down, was (2.7) percent. This compares to 12.5 percent for the same period in the prior year. The year-over-year decline was primarily driven by lower overhead absorption due to reduced production levels. In anticipation of softer demand during the quarter, the Company lowered production levels in order to reduce inventory. Inventory declined by $50 million during the second quarter. The Company recorded a $10.9 million inventory write-down as a result of unusable components, as well as a small portion that was written-down as a result of uncertainty in near-term demand forecasts. Including the inventory write-down, fiscal 2013 second quarter GAAP gross margin was (8.9) percent.

Net loss for the second quarter of fiscal 2013 was $23.9 million, or $1.00 per diluted share, compared to net income of $12.1 million, or $0.50 per diluted share, for the same period in the prior year.

Net cash provided by operating activities for the second quarter of fiscal 2013 was $47.6 million. At March 31, 2013, the Company had cash and cash equivalents of $129.8 million, or $5.46 per diluted share, and remained debt free.

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Non-GAAP Results

A reconciliation of GAAP gross margin, net income and earnings per share to non-GAAP gross margin, net income and earnings per share is provided in the table at the end of this press release.

Share Repurchase Program

MFLEX also announced today that it is in the process of entering into a 10b5-1 plan providing for the repurchase of up to approximately 535,000 shares in the aggregate of the Company’s common stock under its current repurchase authorization. The timing, price, volume and terms of the repurchases will be based on market conditions, relevant securities laws and other factors.

Outlook

For the third quarter of fiscal 2013, the Company expects net sales to be between $155 and $185 million and gross margin to be approximately breakeven based on production build plans, projected sales volume and anticipated product mix.

Reza Meshgin, Chief Executive Officer of MFLEX, commented “Due to continued soft market conditions, we plan to continue to focus on reducing inventory levels during the third quarter. Therefore, we plan to again minimize production which we expect to continue to pressure our gross margin during the quarter. We believe these conditions are temporary and continue to expect a rebound in revenue and profitability in the fourth quarter and further into fiscal 2014, when we anticipate an increase in demand from both long-standing and newer customers. During the second quarter, newer customers comprised approximately 8 percent of sales and we expect this contribution to double in the third quarter. We are optimistic that this new customer momentum will continue, and that a broader customer and product base will alleviate the current challenges associated with seasonality and product cycles as we enter into fiscal 2014.”

Conference Call

MFLEX will host a conference call at 5:30 p.m. Eastern time (2:30 p.m. Pacific time) today to review its fiscal 2013 second quarter financial results. The dial-in number for the call in North America is 1-888-549-7880 and 1-480-629-9772 for international callers. The call also will be webcast live on the Internet and can be accessed by logging onto www.mflex.com.

The webcast will be archived on the Company’s website for at least 60 days following the call. An audio replay of the conference call will be available for seven days beginning at 8:30 p.m. Eastern time (5:30 p.m. Pacific time) today. The audio replay dial-in number for North America is 1-800-406-7325 and 1-303-590-3030 for international callers. The replay passcode is 4615200.

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About MFLEX

MFLEX (www.mflex.com) is a global provider of high-quality, technologically advanced flexible printed circuit and value-added component assembly solutions to the electronics industry. The Company is one of a limited number of manufacturers that provides a seamless, integrated end-to-end flexible printed circuit solution for customers, ranging from design and application engineering, prototyping and high-volume manufacturing to turnkey component assembly and testing. The Company targets its solutions within the electronics market and, in particular, focuses on applications where flexible printed circuits are the enabling technology in achieving a desired size, shape, weight or functionality of an electronic device. Current applications for the Company’s products include smartphones, tablets, computer/data storage, portable bar code scanners and other consumer electronic devices. MFLEX’s common stock is quoted on the Nasdaq Global Select Market under the symbol MFLX.

Forward-Looking Statements

Certain statements in this news release are forward-looking statements that involve a number of risks and uncertainties. These forward-looking statements include, but are not limited to, statements and predictions regarding: revenues; sales; net income; profitability; revenue growth; cash flow; gross margins; overhead absorption; product cycles and the ramping of new programs; labor costs; new customer opportunities; customer relationships; customer and product mix; inventory levels; production build plans; write offs; demand forecasts; seasonality; customer and market diversification strategies; capacity, utilization and expansion of the Company’s facilities; headcount levels; yields; and labor efficiency. Additional forward-looking statements include, but are not limited to, statements pertaining to other financial items, plans, strategies or objectives of management for future operations, the Company’s future operations and financial condition or prospects, and any other statement that is not historical fact, including any statement which is preceded by the words “forecast,” “guidance,” “preliminary,” “scheduled,” “assume,” “can,” “will,” “plan,” “should,” “expect,” “estimate,” “aim,” “intend,” “look,” “see,” “project,” “foresee,” “target,” “anticipate,” “may,” “believe,” or similar words. Actual events or results may differ materially from those stated or implied by the Company’s forward-looking statements as a result of a variety of factors including the effect of the economy and seasonality on the demand for electronic devices; the Company’s success with new and current customers, those customers’ success in the marketplace and usage of flex in their products; demand for the Company’s products; product mix; the Company’s ability to develop and deliver new technologies; the

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Company’s ability to diversify and expand its customer base and markets; the Company’s effectiveness in managing manufacturing processes, inventory levels, costs and yields; the ramping and launch of new programs; currency fluctuations; pricing pressure; the Company’s ability to manage quality assurance and workforce issues; the degree to which the Company is able to utilize available manufacturing capacity, enter into new markets and execute its strategic plans; electricity, material and component shortages; the impact of natural disasters, competition and technological advances; the outcome of tax audits; labor issues in the jurisdictions in which the Company operates; and other risks detailed from time to time in the Company’s SEC reports, including its Quarterly Report on Form 10-Q for the quarter ended December 31, 2012 and its Quarterly Report on Form 10-Q to be filed for the quarter ended March 31, 2013. These forward-looking statements represent management’s judgment as of the date of this news release. The Company disclaims any intent or obligation to update these forward-looking statements.

(SUMMARY FINANCIAL INFORMATION FOLLOWS)

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Multi-Fineline Electronix, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except per share amounts)

(unaudited)

	Three Months Ended						Six Months Ended
	March 31,						March 31,
	2013			2012			2013			2012
Net sales	$	173,674		$	207,963		$	463,324		$	447,306
Cost of sales		189,207			181,880			454,154			392,062
Gross (loss) profit		(15,533	)		26,083			9,170			55,244
Operating expenses:
Research and development		1,782			2,231			3,815			4,310
Sales and marketing		4,712			6,503			11,249			12,890
General and administrative		4,295			5,484			9,967			11,112
Impairment and restructuring		—			(1,171	)		—			(1,736	)
Total operating expenses		10,789			13,047			25,031			26,576
Operating (loss) income		(26,322	)		13,036			(15,861	)		28,668
Other income (expense), net:
Interest income		86			353			156			646
Interest expense		(138	)		(81	)		(249	)		(235	)
Other income (expense), net		170			1,333			155			1,804
(Loss) income before income taxes		(26,204	)		14,641			(15,799	)		30,883
Benefit from (provision for) income taxes		2,325			(2,537	)		268			(5,235	)
Net (loss) income	$	(23,879	)	$	12,104		$	(15,531	)	$	25,648
Net (loss) income per share:
Basic	$	(1.00	)	$	0.51		$	(0.65	)	$	1.08
Diluted	$	(1.00	)	$	0.50		$	(0.65	)	$	1.06
Shares used in computing net (loss) income per share:
Basic		23,799			23,870			23,797			23,809
Diluted		23,799			24,104			23,797			24,113

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Multi-Fineline Electronix, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

	March 31,		September 30,
	2013		2012
Cash and cash equivalents	$	129,841	$	82,322
Accounts receivable, net		101,573		165,408
Inventories		55,105		124,770
Other current assets		17,010		19,217
Total current assets		303,529		391,717
Property, plant and equipment, net		255,900		274,886
Other assets		29,729		29,807
Total assets	$	589,158	$	696,410
Accounts payable	$	119,081	$	199,737
Other current liabilities		20,664		36,111
Total current liabilities		139,745		235,848
Other liabilities		19,153		18,573
Stockholders’ equity		430,260		441,989
Total liabilities and stockholders’ equity	$	589,158	$	696,410

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Multi-Fineline Electronix, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

	Three Months Ended						Six Months Ended
	March 31,						March 31,
	2013			2012			2013			2012
Cash flows from operating activities
Net (loss) income	$	(23,879	)	$	12,104		$	(15,531	)	$	25,648
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization		14,740			13,954			29,158			26,663
Provision for doubtful accounts and allowances		(1,247	)		38			685			1,837
Deferred taxes		(56	)		(71	)		(106	)		(74	)
Stock-based compensation expense		1,241			1,503			2,548			2,888
Income tax benefit related to stock option exercises		(29	)		(53	)		(29	)		(70	)
Restructuring asset recoveries		—			(1,171	)		—			(1,736	)
(Loss) gain on disposal of equipment		(130	)		(8	)		(124	)		5
Changes in operating assets and liabilities		56,918			38,642			59,414			15,517
Net cash provided by operating activities		47,558			64,938			76,015			70,678
Cash flows from investing activities
Purchases of property and equipment		(10,879	)		(13,604	)		(26,792	)		(33,950	)
Proceeds from sale of equipment and assets held for sale		136			7,833			136			8,532
Net cash used in investing activities		(10,743	)		(5,771	)		(26,656	)		(25,418	)
Cash flows from financing activities
Income tax benefit related to stock option exercises		29			53			29			70
Tax withholdings for net share settlement of equity awards		(66	)		(239	)		(803	)		(1,039	)
Proceeds from exercise of stock options		568			114			597			149
Repurchase of common stock		(212	)		(984	)		(1,444	)		(8,844	)
Net cash used in financing activities		319			(1,056	)		(1,621	)		(9,664	)
Effect of exchange rate changes on cash		55			(879	)		(219	)		(446	)
Net increase in cash		37,189			57,232			47,519			35,150
Cash and cash equivalents at beginning of period		92,652			75,808			82,322			97,890
Cash and cash equivalents at end of period	$	129,841		$	133,040		$	129,841		$	133,040

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Multi-Fineline Electronix, Inc.

Selected Non-GAAP Financial Measures and Schedule Reconciling

Selected Non-GAAP Financial Measures to Comparable GAAP Financial Measures

(unaudited)

	Three Months Ended
	March 31, 2013
GAAP gross margin percentage		(8.9	)%
Effect of inventory write-down		6.2	%
Non-GAAP gross margin percentage		(2.7	)%

	Three Months Ended						Six Months Ended
	March 31,						March 31,
	2013			2012			2013			2012
GAAP net (loss) income	$	(23,879	)	$	12,104		$	(15,531	)	$	25,648
Stock-based compensation		1,241			1,503			2,548			2,888
Impairment and restructuring		—			(1,171	)		—			(1,736	)
Income tax effect of non-GAAP adjustments		(406	)		(30	)		(826	)		(249	)
Non-GAAP net (loss) income	$	(23,044	)	$	12,406		$	(13,809	)	$	26,551
GAAP diluted earnings per share	$	(1.00	)	$	0.50		$	(0.65	)	$	1.06
Effect of stock-based compensation, net of tax on diluted earnings per share		0.03			0.04			0.07			0.08
Effect of impairment and restructuring, net of tax on diluted earnings per share		—			(0.03	)		—			(0.04	)
Non-GAAP diluted earnings per share	$	(0.97	)	$	0.51		$	(0.58	)	$	1.10
Weighted-average diluted shares used in calculating non-GAAP diluted earnings per share		23,799			24,104			23,797			24,113

Use of Non-GAAP Financial Information

To supplement the condensed consolidated financial results prepared in accordance with Generally Accepted Accounting Principles (“GAAP”), the Company uses non-GAAP financial measures (non-GAAP gross margin, non-GAAP net income and non-GAAP diluted earnings per share) that exclude certain charges and gains. Management excludes these items because it believes that the non-GAAP measures enhance an investor’s overall understanding of the Company’s financial performance and future prospects by being more reflective of the Company’s recurring operational activities and to be more comparable with the results of the Company over various periods. Management uses non-GAAP financial measures internally for strategic decision making, forecasting future results and evaluating current performance. By disclosing non-GAAP financial measures, management intends to provide investors with a more meaningful, consistent comparison of the Company’s core operating results and trends for the periods presented. Non-GAAP financial measures are not prepared in accordance with GAAP; therefore, the information is not necessarily comparable to other companies’ financial information and should be considered as a supplement to, not a substitute for, or superior to, the corresponding measures calculated in accordance with GAAP.

Non-GAAP gross margin excludes the charge to write-down inventory. The items excluded from GAAP net income and diluted earnings per share in calculating these non-GAAP financial measures are as follows: (a) stock-based compensation expense; and (b) impairment and restructuring activities, including asset impairments, one-time termination benefit, other restructuring-related costs and gains on sale of previously impaired assets as part of restructuring activities.

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Multi-Fineline Electronix, Inc.

Product Mix

	Three Months Ended
	March 31,
	2013			2012
Smartphones		65	%		71	%
Tablets		28	%		26	%
Consumer Electronics		5	%		0	%

Multi-Fineline Electronix, Inc.

Key Customer Revenue Contribution

	Three Months Ended
	March 31,
	2013			2012
“OEM C”		77	%		75	%
“OEM D”		13	%		13	%

For competitive and customer confidentiality reasons, the Company does not disclose its customers by name.

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