-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, D0GlAMH77Im6JxdpFqfCiWMoUnBfgynMrNKbMnH/zYb2avYDCyOm+BlCusF0lnPg JcWCDUUpsO2fZiki57TH/w== 0000950144-98-004468.txt : 19980414 0000950144-98-004468.hdr.sgml : 19980414 ACCESSION NUMBER: 0000950144-98-004468 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980228 FILED AS OF DATE: 19980413 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: JABIL CIRCUIT INC CENTRAL INDEX KEY: 0000898293 STANDARD INDUSTRIAL CLASSIFICATION: PRINTED CIRCUIT BOARDS [3672] IRS NUMBER: 381886260 STATE OF INCORPORATION: DE FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-21308 FILM NUMBER: 98592129 BUSINESS ADDRESS: STREET 1: 10800 ROOSEVELT BLVD CITY: ST PETERSBURG STATE: FL ZIP: 33716 BUSINESS PHONE: 8135779749 MAIL ADDRESS: STREET 1: 10800 ROOSEVELT BLVD CITY: ST PETERSBURG STATE: FL ZIP: 33716 10-Q 1 JABIL CIRCUIT FORM 10-Q 1 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 February 28, 1998. 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 March 27, 1998, there were 37,169,780 shares of the Registrant's Common Stock outstanding. 2 JABIL CIRCUIT, INC. AND SUBSIDIARIES INDEX PART I. FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets at August 31, 1997 and February 28, 1998.................................. 3 Consolidated Statements of Earnings for the three months and six months ended February 28, 1997 and 1998........................ 4 Consolidated Statements of Cash Flows for the six months ended February 28, 1997 and 1998.................... 5 Notes to Consolidated Financial Statements............................. 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.......................... 9 PART II. OTHER INFORMATION - -------------------------- Item 4. Submission of Matters to a Vote of Security Holders.................... 11 Item 6. Exhibits and Reports on Form 8-K....................................... 11 Signatures............................................................. 12
2 3 PART I. FINANCIAL INFORMATION JABIL CIRCUIT, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands)
August 31, February 28, 1997 1998 ---------- ------------ (Unaudited) ASSETS Current assets Cash $ 45,457 $ 55,680 Accounts receivable - Net 116,987 119,545 Inventories 96,187 90,114 Prepaid expenses and other current assets 776 1,054 Deferred income taxes 6,591 6,046 -------- -------- Total current assets 265,998 272,439 Property, plant and equipment, net 139,520 182,465 Other assets 385 370 -------- -------- $405,903 $455,274 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Current installments of long term debt $ 2,475 $ 0 Accounts payable 125,741 126,530 Accrued expenses 34,248 34,093 Income taxes payable 6,186 9,977 -------- -------- Total current liabilities 168,650 170,600 Long term debt, less current installments 50,000 50,000 Deferred income taxes 3,663 3,824 Deferred grant revenue 2,105 1,699 -------- -------- Total liabilities 224,418 226,123 -------- -------- Stockholders' equity Common stock 37 37 Additional paid-in capital 61,632 70,088 Retained earnings 119,816 159,026 -------- -------- Total stockholders' equity 181,485 229,151 $405,903 $455,274 ======== ========
See Accompanying Notes to Consolidated Financial Statements 3 4 JABIL CIRCUIT, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (IN THOUSANDS, EXCEPT FOR PER SHARE DATA) (UNAUDITED)
Three months ended Six months ended February 28, February 28, ---------------------- ---------------------- 1997 1998 1997 1998 -------- -------- -------- -------- Net revenue $222,187 $330,688 $425,257 $650,200 Cost of revenue 195,711 286,628 375,689 564,795 -------- -------- -------- -------- Gross profit 26,476 44,060 49,568 85,405 Operating expenses: Selling, general and administrative 7,918 12,858 15,645 23,935 Research and development 804 879 1,509 1,791 -------- -------- -------- -------- Operating income 17,754 30,323 32,414 59,679 Interest expense, net 389 1,134 1,047 1,847 -------- -------- -------- -------- Income before income taxes 17,365 29,189 31,367 57,832 Income taxes 6,306 9,050 11,480 18,622 -------- -------- -------- -------- Net income $ 11,059 $ 20,139 $ 19,887 $ 39,210 ======== ======== ======== ======== Basic earnings per share $ 0.31 $ 0.54 $ 0.55 $ 1.06 ======== ======== ======== ======== Diluted earnings per share $ 0.29 $ 0.52 $ 0.52 $ 1.02 ======== ======== ======== ======== Common shares used in the calculations of basic earnings per share 36,181 37,080 35,925 37,050 ======== ======== ======== ======== Common and common equivalent shares used in the calculations of diluted earnings per share 38,327 38,564 38,105 38,620 ======== ======== ======== ========
See Accompanying Notes to Consolidated Financial Statements 4 5 JABIL CIRCUIT, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS) (UNAUDITED)
For the six months ended February 28, ----------------------- 1997 1998 -------- -------- Cash flows from operating activities: Net income $ 19,887 $ 39,210 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 11,447 15,303 Recognition of grant revenue (1,065) (406) Deferred income taxes (1,695) 706 (Gain) loss on sale of property (308) 115 Changes in operating assets and liabilities: Accounts receivable (5,999) (2,558) Inventories (13,412) 6,073 Prepaid expenses and other current assets (123) (278) Other assets 14 9 Accounts payable and accrued expenses 12,134 11,539 -------- -------- Net cash provided by operating activities 20,880 69,713 -------- -------- Cash flows from investing activities: Acquisition of property, plant and equipment (32,021) (58,420) Proceeds from sale of property and equipment 369 63 -------- -------- Net cash used in investing activities (31,652) (58,357) -------- -------- Cash flows from financing activities: Increase in note payable to bank -- -- Payments of long-term debt (1,040) (2,475) Payments of capital lease obligations (139) 0 Net proceeds from issuance of common stock 2,868 1,342 Proceeds from Scottish grant 922 -- -------- -------- Net cash provided (used) by financing activities 2,611 (1,133) -------- -------- Net increase (decrease) in cash (8,161) 10,223 Cash at beginning of period 73,319 45,457 -------- -------- Cash at end of period $ 65,158 $ 55,680 ======== ======== Non-cash transactions: Tax benefit of options exercised $ 1,103 $ 7,114 ======== ========
See Accompanying Notes to Consolidated Financial Statements 5 6 JABIL CIRCUIT, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 1. 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, 1997 contained in the Company's 1997 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 six month period ended February 28, 1998 are not necessarily indicative of the results that should be expected for a full fiscal year. EARNINGS PER SHARE The Company adopted Statement of Financial Accounting Standards No. 128 (SFAS 128), "Earnings per Share," in the second quarter of fiscal 1998. Under SFAS 128, the Company presents two earnings per share (EPS) amounts. Basic EPS is calculated based on net earnings available to common shareholders and the weighted-average number of shares outstanding during the reported period. Diluted EPS includes additional dilution from potential common stock, such as stock issuable pursuant to the exercise of stock options outstanding. All earnings per share amounts for all periods have been presented, and where necessary, restated to conform to the Statement 128 requirements. 6 7
In thousands Three months ended Six months ended February 28, February 28, 1997 1998 1997 1998 ---------------------------------------------- Numerator: Net income $11,059 $20,139 $19,887 $39,210 Denominator: Denominator for basic EPS- weighted-average shares 36,181 37,080 35,925 37,050 Effect of dilutive securities: Employee stock options 2,146 1,484 2,180 1,570 ---------------------------------------------- Denominator for diluted EPS-adjusted weighted-average shares 38,327 38,564 38,105 38,620 ============================================== Basic EPS $ 0.31 $ 0.54 $ 0.55 $ 1.06 ============================================== Diluted EPS $ 0.29 $ 0.52 $ 0.52 $ 1.02 ==============================================
For the three-month and six-month periods ended February 28, 1998, options to purchase 15,000 shares of common stock were outstanding during the period but were not included in the computation of diluted earnings per share because the options' exercise prices were greater than the average market price of the common shares, and therefore, the effect would be antidilutive. For the three-month and six-month periods ended February 28, 1997, no such antidilutive options existed. COMMITMENTS AND CONTINGENCIES At February 28, 1998, the Company had approximately $25 million in new facility and equipment purchase commitments outstanding. The Company is party to certain lawsuits 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. NEW ACCOUNTING PRONOUNCEMENTS In June 1997, the FASB issued Statement of Financial Accounting Standards No. 130, Reporting Comprehensive Income. Statement 130 establishes standards for reporting comprehensive income. The Statement defines comprehensive income as the change in equity of an enterprise except those resulting from shareholder transactions. All components of comprehensive income are required to be reported in a new financial 7 8 statement that is displayed with equal prominence as existing financial statements. The Company will be required to adopt this statement September 1, 1998. As the Statement addresses reporting and presentation issues only, there will be no impact on earnings from its adoption. In June 1997, the FASB issued Statement of Financial Accounting Standards No. 131, Disclosures About Segments of an Enterprise and Related Information. Statement 131 establishes standards for related disclosures about the products and services, geographic areas, and major customers of an enterprise. The Company will be required to adopt this Statement for financial statements for the fiscal year ending August 31, 1998. As this Statement addresses reporting and disclosure issues only, there will be no impact on earnings from its adoption. NOTE 2. BALANCE SHEET DETAIL The components of inventories consist of the following:
In thousands August 31, February 28, 1997 1998 ---------- ------------ (Unaudited) Finished goods 5,594 9,520 Work-in-process 15,160 16,124 Raw materials 75,433 64,470 ------ ------ 96,187 90,114 ====== ------
8 9 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 second quarter and first six months of fiscal 1998 increased 49% and 53% to $331 million and $650, million, respectively from $222 million and $425 million in the second quarter and first six months of fiscal 1997. This increase from the previous fiscal year was primarily due to increased production of communications and computer peripherals products. Foreign source revenue represented 31% and 33% of net revenue for the second quarter and first six months of fiscal 1998, respectively, compared to 34% and 32% for the same periods of fiscal 1997. The decrease in foreign source revenue in the second quarter was attributable to increased production at the Company's domestic locations. Gross margin increased to 13.3% and 13.1% for the second quarter and first six months, respectively, of fiscal 1998 from 11.9% and 11.7% for the second quarter and first six months of fiscal 1997. This increase resulted from a shift in product mix to higher value-added products. Selling, general and administrative expenses in the second quarter of fiscal 1998 increased to 3.9% of net revenue compared to 3.6% in the prior fiscal year, while increasing in absolute dollars from $7.9 million in fiscal 1997 to $12.9 million in fiscal 1998. Selling, general and administrative expenses of 3.7% of net revenue in the first six months of fiscal 1998 were consistent with the same period of the prior fiscal year, while increasing in absolute dollars from $15.6 million in fiscal 1997 to $23.9 million in fiscal 1998. The dollar increases were primarily due to increased staffing and related departmental expenses at all the Company's locations along with increased information systems staff to support the expansion of the Company's business. Research and development expenses decreased to 0.3% of net revenue for the second quarter and first six months of fiscal 1998 from 0.4% for the same periods of fiscal 1997. In absolute dollars, the expenses increased approximately $75,000 and $282,000, respectively, versus the same periods of fiscal 1997 due to the expansion of circuit design activities. Interest expense increased approximately $745,000 and $800,000, respectively, in the second quarter and first six months of fiscal 1998 to $1.1 million from $0.4 million and $1.8 million from $1.0 million due to an increase in short-term borrowings and decreased interest income earned on cash balances. The Company's effective tax rate decreased to 31.0% and 32.2% in the second quarter and first six months, respectively, of fiscal 1998 from 36.3% and 36.6% in the second quarter and first six months of fiscal 1997. The fiscal 1998 tax rate is lower primarily due to the granting of 9 10 "pioneer" tax status to the Company's Malaysia subsidiary. This status allows tax free treatment of the subsidiary's income for the period November 1, 1995 to October 30, 2000. 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 level and timing of orders, the level of capacity utilization of its manufacturing facilities and associated fixed costs, fluctuations in material costs, and by the mix of material 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 on the Company's results of operations. LIQUIDITY AND CAPITAL RESOURCES At February 28, 1998, 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 $100 million of working capital borrowing capacity. The Company generated $69.7 million of cash in operating activities for the six months ended February 28, 1998. The generation of cash was primarily due to net income of $39.2 million, depreciation and amortization of $15.3 million, an increase of accounts payable and accrued expenses of $11.5 million and a decrease of $6.1 million in inventories, offset by an increase in accounts receivable of $2.6 million. Net cash used in investing activities of $58.4 million for the six months ended February 28, 1998 was a result of the Company's capital expenditures for equipment worldwide in order to support increased activities and the construction of new manufacturing facilities. Net cash of $1.1 million was used by financing activities for the six months ended February 28, 1998. This was primarily attributable to $2.5 million in payments of long term debt, offset by $1.3 million in net proceeds from the issuance of common stock. The Company believes that cash on-hand, funds provided by operations and available borrowings under the credit facility will be sufficient to satisfy its currently anticipated working capital and capital expenditure requirements for the next twelve months. 10 11 JABIL CIRCUIT, INC. AND SUBSIDIARIES PART II - OTHER INFORMATION ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. At the Company's Annual Meeting of Shareholders, held on January 27, 1998, the following proposals were voted upon by the shareholders as indicated below: 1. To elect the board of directors
Number of Shares ---------------- For Withheld --- -------- William D. Morean 15,699,844 257,202 Thomas A. Sansone 15,699,434 257,612 Ronald J. Rapp 15,692,779 264,267 Lawrence J. Murphy 15,699,874 257,172 Mel S. Lavitt 15,699,414 257,632 Steven A. Raymund 15,704,814 252,232 Frank A. Newman 15,698,399 258,647
2. To ratify the selection of KPMG Peat Marwick, LLP as independent auditors for the Company
For Against Abstain --- ------- ------- 15,824,970 16,203 115,873
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 27. Financial Data Schedule. (b) Reports on Form 8-K There were no reports on Form 8-K filed by the Registrant during the quarter ended February 28, 1998. 11 12 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. Registrant Date: April 13, 1998 By: s/ Thomas A. Sansone ------------- -------------------- Thomas A. Sansone President Date: April 13, 1998 By: s/ Chris A. Lewis -------------- ----------------- Chris A. Lewis Chief Financial Officer 12 EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET AND THE CONSOLIDATED STATEMENT OF INCOME FILED AS PART OF THE QUARTERLY REPORT ON FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH QUARTERLY REPORT ON FORM 10-Q. 1,000 6-MOS AUG-31-1998 FEB-28-1998 55,680 0 120,449 904 90,114 272,439 268,110 85,645 455,274 170,600 0 0 0 37 229,114 455,274 650,200 650,200 564,795 564,795 25,726 0 1,847 57,832 18,622 39,210 0 0 0 39,210 1.06 1.02
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