<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 November 30, 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 January 5, 1998, there were 37,034,732 shares of the Registrant's
Common Stock outstanding.
1
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JABIL CIRCUIT, INC. AND SUBSIDIARIES
INDEX
<TABLE>
PART I. FINANCIAL INFORMATION
<S> <C> <C>
Item 1. Financial Statements
Consolidated Balance Sheets at
August 31, 1997 and November 30, 1997............................................ 3
Consolidated Statements of Earnings
for the three months ended November 30, 1996 and 1997............................ 4
Consolidated Statements of Cash Flows
for the three months ended November 30, 1996 and 1997............................ 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
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
JABIL CIRCUIT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
August 31, November 30,
1997 1997
----------- ------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets
Cash $ 45,457 $ 43,151
Accounts receivable - Net 116,987 134,357
Inventories 96,187 111,779
Prepaid expenses and other current assets 776 801
Deferred income taxes 6,591 6,046
-------- --------
Total current assets 265,998 296,134
Property, plant and equipment, net 139,520 163,989
Other assets 385 962
-------- --------
$405,903 $461,085
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Note payable to bank $ - $ 10,000
Current installments of long term debt 2,475 0
Accounts payable 125,741 149,847
Accrued expenses 34,248 30,424
Income taxes payable 6,186 14,448
-------- --------
Total current liabilities 168,650 204,719
Long term debt, less current installments 50,000 50,000
Deferred income taxes 3,663 3,824
Deferred grant revenue 2,105 1,902
-------- --------
Total liabilities 224,418 260,445
-------- --------
Stockholders' equity
Common stock 37 37
Additional paid in capital 61,632 61,716
Retained earnings 119,816 138,887
-------- --------
Total stockholders' equity 181,485 200,640
$405,903 $461,085
======== ========
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
3
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JABIL CIRCUIT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except for per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three months ended
November 30,
---------------------
1996 1997
-------- --------
<S> <C> <C>
Net revenue $203,070 $319,512
Cost of revenue 179,978 278,167
-------- --------
Gross profit 23,092 41,345
Operating expenses:
Selling, general and administrative 7,727 11,077
Research and development 705 912
-------- --------
Operating income 14,660 29,356
Interest expense 658 713
-------- --------
Income before income taxes 14,002 28,643
Income taxes 5,174 9,572
-------- --------
Net income $ 8,828 $ 19,071
======== ========
Net income per share $ 0.23 $ 0.49
======== ========
Weighted average number of
shares of common stock and
common stock equivalents 37,884 38,675
======== ========
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
4
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JABIL CIRCUIT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three months ended
November 30,
------------------------
1996 1997
------- -------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 8,828 $ 19,071
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 5,433 7,128
Recognition of grant revenue (575) (203)
Deferred income taxes (1,355) 706
(Gain) loss on sale of property (17) 18
Changes in operating assets and
liabilities:
Accounts receivable 6,916 (17,370)
Inventories (2,627) (15,592)
Prepaid expenses and other current assets 32 (25)
Other assets 1,603 (784)
Accounts payable and accrued expenses (5,690) 28,544
-------- --------
Net cash provided by operating activities 12,548 21,493
-------- --------
Cash flows from investing activities:
Acquisition of property, plant and equipment (13,318) (31,418)
Proceeds from sale of property and equipment 20 10
-------- --------
Net cash used in investing activities (13,298) (31,408)
-------- --------
Cash flows from financing activities:
Increase in note payable to bank 0 10,000
Payments of long-term debt (544) (2,475)
Payments of capital lease obligations (72) 0
Net proceeds from issuance of common stock 466 84
-------- --------
Net cash provided (used) by financing activities (150) 7,609
-------- --------
Net decrease in cash (900) (2,306)
Cash at beginning of period 73,319 45,457
-------- --------
Cash at end of period $ 72,419 $ 43,151
======== ========
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
5
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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 three month period
ended November 30, 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 November 30, 1997 the Company had outstanding approximately $32.1
million in equipment purchase commitments, and approximately $6.8 million
in commitments related to the construction of new manufacturing facilities.
The Company is party to certain 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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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 (EPS) 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 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 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:
<TABLE>
<CAPTION>
In thousands August 31, November 30,
1997 1997
---------- ------------
(Unaudited)
<S> <C> <C>
Finished goods 5,594 2,601
Work in process 15,160 18,840
Raw materials 75,433 90,338
------ ------
96,187 111,779
====== =======
</TABLE>
7
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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 increased 57% to $320
million compared to $203 million in the first quarter of fiscal 1997. The first
quarter increase from the previous fiscal year was primarily due to increased
production of communications and computer peripherals products. Foreign source
revenue represented 34% of net revenue for the first quarter of fiscal 1998
compared to 31% for the same period of fiscal 1997. The increase in foreign
source revenue was attributable to increased production at the Company's foreign
locations.
Gross margin increased to 12.9% for the first quarter of fiscal 1998 from
11.4% for the first quarter of fiscal 1997. This increase resulted from a shift
in product mix to higher value added products and increased utilization of the
Company's domestic and international operations.
Selling, general and administrative expenses in the first quarter of fiscal
1998 decreased to 3.5% of net revenue compared to 3.8% of the prior fiscal
year, while increasing in absolute dollars from $7.7 million in fiscal 1997 to
$11.1 million in fiscal 1998. The dollar increase was 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 of 0.3% in the first quarter of fiscal
1998 were consistent with the first quarter of fiscal 1997. In absolute
dollars, the expenses increased approximately $207,000 versus the same period of
fiscal 1997 due to expansion of circuit design activities.
Interest expense increased approximately $55,000 in the first quarter of
fiscal 1998 to $713,000 due to an increase in short term borrowings and
decreased interest income earned on cash balances.
The Company's effective tax rate decreased to 33.4% in the first quarter of
fiscal 1998 from 37.0% in the first quarter of fiscal 1997. The fiscal 1998 tax
rate is 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.
8
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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 on the
Company's results of operations.
LIQUIDITY AND CAPITAL RESOURCES
At November 30, 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 $100 million of working capital
borrowing capacity.
The Company generated $21.5 million of cash in operating activities for
the three months ended November 30, 1997. The generation of cash was primarily
due to net income of $19.1 million, depreciation and amortization of $7.1
million and an increase of accounts payable and accrued expenses of $28.5
million, offset by an increase in inventories of $15.6 million and an increase
in accounts receivable of $17.4 million.
Net cash used in investing activities of $31.4 million for the three months
ended November 30, 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 $7.6 million was provided by financing activities for the three
months ended November 30, 1997. This was primarily attributable to $10.0
million in proceeds of bank notes payable, offset by $2.5 million in payments of
long term debt.
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.
9
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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, 1997.
10
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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: January 9, 1998 /s/ Thomas A. Sansone
---------------------
Thomas A. Sansone
President
Date: January 9, 1998 /s/ Chris A. Lewis
----------------------
Chris A. Lewis
Chief Financial Officer
11
<PAGE> 1
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
November 30,
1996 1997
------ -------
<S> <C> <C>
Net income $ 8,828 $19,071
======= =======
Computation of weighted average common
and common equivalent shares outstanding:
Common stock 35,668 37,019
Options 2,216 1,656
------- -------
Total number of shares used in computing
per share amounts 37,884 38,675
======= =======
Net income per share $ 0.23 $ 0.49
======= =======
</TABLE>
12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
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.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-END> NOV-30-1997
<CASH> 43,151
<SECURITIES> 0
<RECEIVABLES> 133,215
<ALLOWANCES> 1,142
<INVENTORY> 111,779
<CURRENT-ASSETS> 296,134
<PP&E> 243,306
<DEPRECIATION> 79,317
<TOTAL-ASSETS> 461,085
<CURRENT-LIABILITIES> 204,719
<BONDS> 0
0
0
<COMMON> 37
<OTHER-SE> 200,603
<TOTAL-LIABILITY-AND-EQUITY> 461,085
<SALES> 319,512
<TOTAL-REVENUES> 319,512
<CGS> 278,167
<TOTAL-COSTS> 278,167
<OTHER-EXPENSES> 11,989
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 713
<INCOME-PRETAX> 28,643
<INCOME-TAX> 9,572
<INCOME-CONTINUING> 19,071
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 19,071
<EPS-PRIMARY> 0.49
<EPS-DILUTED> 0.49
</TABLE>
