<PAGE> 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 May 31, 1997.
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 May 31, 1997, there were 18,251,632 shares of the Registrant's Common
Stock outstanding.
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JABIL CIRCUIT, INC. AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION
<TABLE>
<S> <C> <C>
Item 1. Financial Statements
Consolidated Balance Sheets at
May 31, 1997 and August 31, 1996...................................................... 3
Consolidated Statements of Operations
for the nine months ended May 31, 1997 and 1996....................................... 4
Consolidated Statements of Cash Flows
for the nine months ended May 31, 1997 and 1996....................................... 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...................................................... 11
Signatures............................................................................ 12
</TABLE>
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PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
JABIL CIRCUIT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
August 31, May 31,
1996 1997
------------ ---------
<S> <C> <C>
ASSETS
Current assets
Cash $73,319 $56,431
Accounts receivable - Net 84,839 95,196
Inventories 64,869 96,944
Refundable income taxes 0 0
Prepaid expenses and other current assets 340 486
Deferred income taxes 3,971 6,216
-------- --------
Total current assets 227,338 255,273
Property, plant and equipment, net 70,704 116,856
Other assets 1,898 2,092
-------- --------
$299,940 $374,221
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Note payable to bank 0 3,227
Current installments of long term debt 1,979 1,979
Current installments of capital lease obligations 472 0
Accounts payable 78,600 105,526
Accrued expenses 24,550 38,305
Income taxes payable 5,979 4,941
-------- --------
Total current liabilities 111,580 153,978
Long term debt, less current installments 57,257 53,344
Capital lease obligations, less current installments 1,114 0
Deferred income taxes 2,883 2,690
Deferred grant revenue 2,872 2,276
-------- --------
Total liabilities 175,706 212,288
-------- --------
Stockholders' equity
Common stock 18 18
Additional paid in capital 56,924 60,137
Retained earnings 67,319 101,778
-------- --------
124,261 161,933
Less:
Unearned compensation from grant of stock option 27 0
-------- --------
Net stockholders' equity 124,234 161,933
-------- --------
$299,940 $374,221
======== ========
</TABLE>
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)
(UNAUDITED)
<TABLE>
<CAPTION>
Three months ended Nine months ended
---------------------- ----------------------
May 31, May 31, May 31, May 31,
1996 1997 1996 1997
---------------------- ---------------------
<S> <C> <C> <C> <C>
Net revenue $219,701 $247,637 $689,184 $672,894
Cost of revenue 201,142 215,603 635,039 591,292
--------------------- ---------------------
Gross profit 18,559 32,034 54,145 81,602
Operating expenses:
Selling, general and administrative 6,612 9,252 18,243 24,897
Research and development 576 723 1,503 2,232
--------------------- ---------------------
Operating income 11,371 22,059 34,399 54,473
Interest expense 1,768 406 6,754 1,453
--------------------- ---------------------
Income before income taxes 9,603 21,653 27,645 53,020
Income taxes 3,366 7,081 9,855 18,561
--------------------- ---------------------
Net income $6,237 $14,572 $17,790 $34,459
===================== =====================
Net income per share $0.33 $0.76 $0.98 $1.80
===================== =====================
Weighted average number of
shares of common stock and
common stock equivalent 18,893 19,196 18,226 19,100
===================== =====================
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
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JABIL CIRCUIT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
<TABLE>
<CAPTION>
For the six months ended
May 31, May 31,
1996 1997
--------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income $17,790 $34,459
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 12,862 16,926
Recognition of grant revenue (1,533) (1,518)
Deferred income taxes (1,777) (2,438)
(Gain) loss on sale of property (1) 430
Changes in operating assets and
liabilities:
Accounts receivable 17,766 (10,357)
Inventories 32,268 (32,075)
Prepaid expenses and other current assets 236 (146)
Refundable income taxes 2,043 0
Other assets (475) (194)
Accounts payable and accrued expenses (28,765) 39,644
--------- --------
Net cash provided by (used in) operating activities 50,414 44,731
--------- --------
Cash flows from investing activities:
Acquisition of property, plant and equipment (23,426) (63,555)
Proceeds from sale of property and equipment 207 377
--------- --------
Net cash used in investing activities (23,219) (63,178)
--------- --------
Cash flows from financing activities:
Increase/(Decrease) in note payable to bank (73,000) 3,226
Proceeds from long-term debt 59,889 0
Payments of long-term debt (30,785) (3,913)
Payments of capital lease obligations (575) (1,586)
Net proceeds from issuance of common stock 39,794 3,213
Proceeds from Scottish grant 0 922
--------- --------
Net cash provided/(used) by financing activities (4,677) 1,862
--------- --------
Net increase (decrease) in cash 22,518 (16,585)
Cash at beginning of period 5,486 73,319
--------- --------
Cash at end of period $28,004 $56,431
========= ========
Supplemental disclosure information:
Cash Paid:
Interest 5,882 17,546
========= ========
Income taxes 7,105 13,982
========= ========
Non-Cash Investing and Financing activities:
Tax benefit of options exercised 111 1,103
========= ========
</TABLE>
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 nine
month period ended May 31, 1997 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 May 31, 1997 the Company had outstanding approximately $12.2
million in equipment purchase commitments, and approximately $26.5
million in commitments related to the construction of new
manufacturing facilities.
On May 31, 1997 the Company reached an agreement with Epson of
America, Inc. ("Epson") to settle all outstanding claims relating to
previous manufacturing agreements between the parties. Such claims
arose during fiscal years 1994 and 1995. The actual terms and
conditions of the agreement are subject to a confidentiality agreement
between the Company and Epson, however, the settlement had no
material impact on the Company's results of operations for the three
or nine month periods ended May 31, 1997.
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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.
NEW ACCOUNTING PRONOUNCEMENTS
In February 1997 the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standards No. 128, Earnings
Per Share (Statement 128). Statement 128 supersedes APB Opinion No.
15, Earnings Per Share (APB 15) and specifies the computation,
presentation and disclosure requirements for earnings per share (ESP)
for entities with publicly held common stock.
Statement 128 is effective for financial statements for both interim
and annual periods ending after December 15, 1997. Earlier application
is not permitted. After adoption, all prior period EPS data presented
shall be restated to conform with statement 128.
In October 1995 the FASB issued Statement of Financial Accounting
Standards No. 123, Accounting for Stock Based Compensation (Statement
123) effective for fiscal years beginning after December 15, 1995.
Statement 123 provides alternatives for the method used by entities to
record compensation expense associated with its stock-based
compensation plans.
Presently management intends to present the effects of Statement 123
only on a disclosure basis.
SUBSEQUENT EVENTS
On June 17, 1997 the Company announced that the board of directors had
approved a two-for-one stock split of the Company's common stock,
effected in the form of a stock dividend to holders of record on July
8, 1997. Financial information in this report has not been adjusted to
reflect the impact of the common stock split.
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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 third quarter increased 12.7% to $248
million compared to $220 million in the third quater of fiscal 1996. For the
first nine months of fiscal 1997 revenue was $673 million compared to $689
million for the same period of fiscal 1996, a decrease of 2.4% The third
quarter increase from the previous fiscal year was primarily due to increased
production of communications products. The decrease in the first nine months
was primarily due to the end of production of certain hard drive and personal
computer products largely offset by growth n communications products. Foreign
source revenue represented 26% and 31% of net revenue for the third quarter and
first nine months of fiscal 1997 respectively, compared to 28% and 33% for the
same periods of fiscal 1996. The decrease in foreign source revenue was
attributable to decreased exports from the Company's domestic locations.
Gross margin increased to 12.9% and 12.1% for the third quarter and first
nine months of fiscal 1997 respectively from 8.4% and 7.8% for the third
quarter and first nine months of fiscal 1996. This increase resulted from a
shift in product mix to higher value added products and increased utilization
of the Company's international operations.
Selling, general and administrative expenses in the third quarter and
first nine months of fiscal 1997 increased to 3.7% of net revenue compared to
3.0% and 2.6% in the third quarter and first nine months of the prior fiscal
year, or $2.6 million and $6.7 million in absolute dollars. The increase was
due to additional staffing at an operational level and increased resources at a
corporate level related to the expansion and development of the companies
information technology resources.
Research and development expenses of 0.3% in the third quarter and first
nine months of fiscal 1997 were consistent with the third quarter and first
nine months of fiscal 1996. In absolute dollars, the expenses increased
approximately $147,000 and $729,000 versus the same periods of fiscal 1996 due
to expansion of circuit design activities.
Interest expense decreased $1.4 million and $5.3 million respectively in
the third quarter and first nine months of fiscal 1997 to $0.4 million and $1.4
million from $1.7 million and $6.8 million in the third quarter and first nine
months of fiscal 1996 due to a decrease in total borrowings, lower effective
interest rates and interest income earned on cash balances.
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The Company's effective tax rate decreased to 32.7% and 35.0% in the third
quarter and first nine months of fiscal 1997 respectively from 35.1% and 35.6%
in the third quarter and first nine months of fiscal 1996. Fiscal 1997 tax
rates were lower primarily due to the granting of "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. The
current period impact of this change in tax rates for prior periods was a
decrease in income tax expense of approximately $712,000, or 3.3% and 1.3% for
the third quarter and first nine months of fiscal 1997 respectively.
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 May 31, 1997 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 $44.7 million of cash in operating activities for
the nine months ended May 31, 1997. The generation of cash was primarily due to
net income of $34.5 million, depreciation and amortization of $16.9 million and
an increase of accounts payable and accrued expenses of $39.6 million, offset by
an increase in inventories of $32.1 million and an increase in accounts
receivable of $10.4 million.
Net cash used in investing activities of $63.2 million for the nine months
ended May 31, 1997 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 $1.9 million was provided by financing activities for the nine
months ended
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May 31, 1997. This was primarily attributable to $3.2 million of proceeds
from the issuance of common stock, $3.2 million in proceeds of bank notes
payable, offset by $3.9 million in payments of long term debt and $1.5 million
in payments of capital leases.
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
27.1 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 May 31, 1997.
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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.
-----------------------
Registrant
Date: 7/15/97 /s/ Thomas A. Sansone
- --------------- -----------------------
Thomas A. Sansone
President
Date: 7/15/97 /s/ Chris A. Lewis
- --------------- -----------------------
Chris A. Lewis
Chief Financial Officer
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EXHIBIT 11.1
JABIL CIRCUIT, INC.
STATEMENT OF COMPUTATION OF EARNINGS PER SHARE
(in thousands, except for per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Nine months ended
May 31, May 31,
1996 1997 1996 1997
----------------------------------------------------------
<S> <C> <C> <C> <C>
Net income $ 6,237 $14,572 $17,790 $34,459
==========================================================
Computation of weighted
average common and common
equivalent shares outstanding:
Common stock 17,749 18,251 17,044 18,058
Options 1,144 945 1,182 1,042
----------------------------------------------------------
Total number of shares
used in computing
per share amounts 18,893 19,196 18,226 19,100
==========================================================
Net income per share $ 0.33 $ 0.76 $ 0.98 $ 1.80
==========================================================
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF JABIL CIRCUIT INC. FOR THE NINE MONTHS ENDED MAY 31,
1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-START> SEP-01-1996
<PERIOD-END> MAY-31-1997
<CASH> 56,431
<SECURITIES> 0
<RECEIVABLES> 96,160
<ALLOWANCES> 964
<INVENTORY> 96,944
<CURRENT-ASSETS> 255,273
<PP&E> 185,959
<DEPRECIATION> 69,103
<TOTAL-ASSETS> 374,221
<CURRENT-LIABILITIES> 153,978
<BONDS> 0
0
0
<COMMON> 18
<OTHER-SE> 161,915
<TOTAL-LIABILITY-AND-EQUITY> 374,221
<SALES> 672,894
<TOTAL-REVENUES> 672,894
<CGS> 609,480
<TOTAL-COSTS> 618,471
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,453
<INCOME-PRETAX> 53,020
<INCOME-TAX> 18,561
<INCOME-CONTINUING> 34,459
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 39,459
<EPS-PRIMARY> 1.80
<EPS-DILUTED> 1.80
</TABLE>
