Fabrinet (NYSE:FN)

Csaba Sverha Named Chief Financial Officer

Fabrinet has named Csaba Sverha to succeed Toh-Seng ("TS") Ng as Chief Financial Officer, effective February 17, 2020, as part of a CFO search that was announced in August 2018. Mr. Sverha currently holds the position of Vice President of Operations Finance at Fabrinet, having joined the company in March 2018, after 13 years at Sanmina in roles of increasing responsibility, most recently as Vice President of Finance & Controller for Sanmina Mechanical Systems Division.

Mr. Grady added, "We are very grateful to TS for his contributions to Fabrinet over the past 13 years, including serving as Chief Financial Officer since 2012. We are excited that Csaba Sverha will be stepping up to the role of CFO, completing our CFO search. Csaba brings a wealth of financial operations experience to the role enabling us to extend our strong reputation for financial stewardship and track record of success under TS’ leadership. TS will be serving as EVP, Special Projects reporting to me to help transition the CFO role before he retires in February 2021."

Second Quarter 2020 Financial Results

• Non-GAAP net income for the second quarter of fiscal year 2020 was $37.7 million, compared to non-GAAP net income of $36.5 million for the second quarter of fiscal year 2019.
• Non-GAAP net income for the second quarter of fiscal year 2020 included a foreign exchange loss of $1.0 million, or $0.03 per diluted share, compared to a foreign exchange loss of $0.4 million, or $0.01 per diluted share, for the second quarter of fiscal year 2019.
• Non-GAAP net income per diluted share for the second quarter of fiscal year 2020 was $1.00, compared to non-GAAP net income per diluted share of $0.97 for the same period a year ago.

Seamus Grady, Chief Executive Officer of Fabrinet, said, “Our second quarter revenue and earnings exceeded our guidance ranges. Sequential growth across nearly all our markets resulted in a record quarterly revenue performance. We expect to see continued year-over-year growth in the third quarter, even after considering the impact of the coronavirus outbreak in our guidance. From a longer-term perspective, our ongoing market momentum makes us very optimistic about our ability to continue to drive profitable growth and reinforce our leadership position in the market.”

Business Outlook

Based on information available as of February 3, 2020, Fabrinet is issuing guidance for its third fiscal quarter of 2020 ending March 27, 2020, as follows:

Fabrinet expects third quarter revenue to be in the range of $410 million to $418 million.
GAAP net income per diluted share is expected to be in the range of $0.75 to $0.78, based on approximately 37.9 million fully diluted shares outstanding.
Non-GAAP net income per diluted share is expected to be in the range of $0.92 to $0.95, based on approximately 37.9 million fully diluted shares outstanding.

Third Quarter 2019 Financial Results

• Revenue for the third quarter of fiscal year 2019 was $399.0 million, compared to revenue of $332.2 million for the comparable period in fiscal year 2018.

• Non-GAAP net income for the third quarter of fiscal year 2019 was $34.3 million, compared to non-GAAP net income of $26.9 million for the third quarter of fiscal year 2018. Non-GAAP net income for the third quarter of fiscal year 2019 included a foreign exchange loss of ($3.1) million, or ($0.08) per diluted share, compared to a foreign exchange loss of ($2.4) million, or ($0.06) per diluted share, for the third quarter of fiscal year 2018.
• Non-GAAP net income per diluted share for the third quarter of fiscal year 2019 was $0.92, compared to non-GAAP net income per diluted share of $0.71 for the same period in fiscal year 2018.

Seamus Grady, Chief Executive Officer of Fabrinet, said, “We exceeded our guidance for revenue and profitability in the third quarter on both an ASC 605 and ASC 606 basis, primarily due to increasing demand from the telecom market. In addition, we were pleased to see non-GAAP gross margins return to within our target range. With new business wins and strong customer relationships, we are optimistic that we can deliver a strong fourth quarter resulting in a record year for revenue and profitability.”

Business Outlook

The guidance provided below for the fourth quarter of fiscal 2019 is based on ASC 605; however, we will report revenues for such quarter based on ASC 606. As of the first quarter of fiscal 2019, Fabrinet is reporting results under ASC 606, which it is adopting for fiscal year 2019 on a modified retrospective method. A reconciliation to ASC 605 is included at the end of this press release.

Based on information available as of May 6, 2019, Fabrinet is issuing guidance for the fourth quarter of its fiscal year 2019 ending June 28, 2019, as follows:

• Fabrinet expects fourth quarter revenue to be in the range of $396 million to $404 million.
• GAAP net income per diluted share is expected to be in the range of $0.78 to $0.82, based on approximately 37.6 million fully diluted shares outstanding.
• Non-GAAP net income per diluted share is expected to be in the range of $0.92 to $0.96, based on approximately 37.6 million fully diluted shares outstanding.

First Quarter 2019 Financial Results

• Revenue for the first quarter of fiscal year 2019 was $377.2 million, compared to revenue of $357.3 million for the comparable period in fiscal year 2018.
• GAAP net income per diluted share for the first quarter of fiscal year 2019 was $0.75, compared to GAAP net income per diluted share of $0.55 for the first quarter of fiscal year 2018.

Seamus Grady, Chief Executive Officer of Fabrinet, said, “With a strong start to the year, we exceeded our guidance for revenue and profitability in the first quarter. Our sequential growth, which was better than anticipated, was driven primarily by double-digit growth in both telecom and datacom optical communications products. We are optimistic that the momentum we experienced during the first quarter will continue into the second quarter, as we leverage the combination of our leading market position and strong execution to deliver further financial success.”

Business Outlook

The guidance provided below is based on ASC 605. As of the first quarter of fiscal 2019, Fabrinet is reporting results under ASC 606, which it is adopting for fiscal year 2019 on a modified retrospective method. A reconciliation to ASC 605 is included at the end of this press release.

Based on information available as of November 5, 2018, Fabrinet is issuing guidance for its second fiscal quarter of 2019 ending December 28, 2018, as follows:

Fabrinet expects second quarter revenue to be in the range of $380 million to $388 million.
GAAP net income per diluted share is expected to be in the range of $0.77 to $0.80, based on approximately 37.6 million fully diluted shares outstanding.
Non-GAAP net income per diluted share is expected to be in the range of $0.91 to $0.94, based on approximately 37.6 million fully diluted shares outstanding.

Fourth Quarter 2018 Financial Results

• Revenue for the fourth quarter of fiscal year 2018 was $345.3 million, compared to revenue of $370.5 million for the comparable period in fiscal year 2017.
• Non-GAAP net income per diluted share for the fourth quarter of fiscal year 2018 was $0.81, compared to non-GAAP net income per diluted share of $0.86 for the same period a year ago.

Seamus Grady, Chief Executive Officer of Fabrinet, said, “Our financial results for the fourth quarter exceeded our guidance for revenue and profitability. Our sequential revenue growth was driven by modest growth from optical communications products, and strong growth from non-optical communications products, with a particularly notable performance in the industrial laser and automotive markets. We are encouraged by the broadly improving demand dynamics we see and are optimistic that we will see continued sequential growth in the first quarter of fiscal year 2019 as we expand our leadership as a manufacturer of complex products.”

Toh-Seng Ng, Chief Financial Officer of Fabrinet, added, “On a personal note, at my request, our board of directors has initiated a CFO succession plan. We have retained an executive search firm to assist in identifying and evaluating candidates, and there is no set timeline for this process.”

Business Outlook

The guidance provided below is based on ASC 605. In the first quarter of fiscal 2019, Fabrinet will report results under ASC 606, which it is adopting for fiscal year 2019 on a modified retrospective transition method, and will provide a reconciliation to ASC 605 at that time.

Based on information available as of August 20, 2018, Fabrinet is issuing guidance for its first fiscal quarter of 2019 ending September 28, 2018, as follows:

Fabrinet expects first quarter revenue to be in the range of $347 million to $355 million.
GAAP net income per diluted share is expected to be in the range of $0.58 to $0.61, based on approximately 37.9 million fully diluted shares outstanding.
Non-GAAP net income per diluted share is expected to be in the range of $0.80 to $0.83, based on approximately 37.9 million fully diluted shares outstanding.

Second Quarter 2018 Financial Results

• Revenue for the second quarter of fiscal year 2018, was $337.1 million, compared to revenue of $351.2 million for the comparable period in fiscal year 2017.
• Non-GAAP net income per diluted share for the second quarter of fiscal year 2018 was $0.72, a decrease from non-GAAP net income per diluted share of $0.91 for the same period a year ago. Non-GAAP net income for the second quarter of fiscal year 2018 included a foreign exchange loss of $1.3 million, or $0.04 per diluted share.

Share Repurchase Program Increase

Fabrinet also announced that its Board of Directors has approved the repurchase of up to an additional $30.0 million of Fabrinet’s ordinary shares, bringing the aggregate authorization under Fabrinet’s existing share repurchase program to $60.0 million. Fabrinet repurchased approximately 316,000 shares of its ordinary shares at an average price of $31.36 during the second quarter.

Business Outlook

Based on information available as of February 5, 2018, Fabrinet is issuing guidance for its third fiscal quarter ending March 30, 2018, as follows:

Fabrinet expects third quarter revenue to be in the range of $316 million to $324 million.
GAAP net income per diluted share is expected to be in the range of $0.50 to $0.53, based on approximately 37.9 million fully diluted shares outstanding.
Non-GAAP net income per diluted share is expected to be in the range of $0.70 to $0.73, based on approximately 37.9 million fully diluted shares outstanding.

First Quarter 2018 Financial Results

• Revenue for the first quarter of fiscal year 2018, a 13-week quarter, was $357.3 million, an increase of 8% compared to revenue of $332.0 for the comparable period in fiscal year 2017, a 14-week quarter.
• Non-GAAP net income per diluted share for the first quarter of fiscal year 2018 was $0.75, a decrease from non-GAAP net income per diluted share of $0.80 for the same period a year ago. Non-GAAP net income for the first quarter of fiscal year 2018 included a foreign exchange loss of $1.9 million, or $0.05 per diluted share.

Fabrinet (FN), a leading provider of advanced optical packaging and precision optical, electro-mechanical and electronic manufacturing services to original equipment manufacturers of complex products, today announced its financial results for its first quarter ended September 29, 2017.

Tom Mitchell, Executive Chairman of Fabrinet, said, “Our first quarter revenue was within our guidance range. Growth from datacom and non-optical communications products were healthy compared to a year ago, with new programs and advanced technologies including silicon photonics and QSFP28 as notable contributors. However, tempered demand for telecom products resulted in a flat performance in that category compared to a year ago.”

“We believe our strategy to drive our growth by attracting new customers and winning new programs from existing customers, while supporting increased production of existing programs continues to be successful,” added Mr. Mitchell. “We are optimistic that by continuing to execute on this strategy we can continue to drive profitable growth as we look ahead.”

Business Outlook

Based on information available as of November 6, 2017, Fabrinet is issuing guidance for its second fiscal quarter ending December 29, 2017, as follows:

Fabrinet expects second quarter revenue to be in the range of $328 million to $332 million.
GAAP net income per diluted share is expected to be in the range of $0.43 to $0.45, based on approximately 38.2 million fully diluted shares outstanding.
Non-GAAP net income per diluted share is expected to be in the range of $0.69 to $0.71, based on approximately 38.2 million fully diluted shares outstanding.

Third Quarter 2017 Financial Results

• Revenue for the third quarter of fiscal year 2017 was $366.8 million, an increase of 46% compared to revenue of $250.9 million for the comparable period in fiscal year 2016.
• GAAP net income for the third quarter of fiscal year 2017 included a foreign exchange loss of $3.7 million, or $0.10 per diluted share.
  GAAP net income per diluted share for the third quarter of fiscal year 2017 was $0.57, compared to GAAP net income per diluted share of $0.56 in the third quarter of fiscal year 2016.

Business Outlook

Based on information available as of May 8, 2017, Fabrinet is issuing guidance for the fourth quarter of fiscal year 2017 ending June 30, 2017, as follows:

• Fabrinet expects revenue for the fourth quarter to be in the range of $361 million to $365 million.
• GAAP net income per diluted share is expected to be in the range of $0.65 to $0.67, based on approximately 38.2 million fully diluted shares outstanding.
• Non-GAAP net income per diluted share is expected to be in the range of $0.82 to $0.84, based on approximately 38.2 million fully diluted shares outstanding.

First Quarter 2017 Financial Results

• Non-GAAP net income in the first quarter of fiscal 2017 was $29.7 million, an increase of 83% compared to non-GAAP net income of $16.2 million in the same period a year ago.
• Non-GAAP net income per diluted share in the first quarter of fiscal 2017 was $0.80, an increase from non-GAAP net income per diluted share of $0.45 in the same period a year ago.

Business Outlook

Based on information available as of November 7, 2016, Fabrinet is issuing guidance for the second quarter of fiscal-year 2017 ending December 30, 2016, as follows:

• Fabrinet expects revenue for the second quarter, which is a 13-week quarter, to be in the range of $332 million to $336 million.
• GAAP net income per diluted share is expected to be in the range of $0.65 to $0.67, based on approximately 37.8 million fully diluted shares outstanding.
• Non-GAAP net income per diluted share is expected to be in the range of $0.78 to $0.80, based on approximately 37.8 million fully diluted shares outstanding.

Fourth Quarter 2016 Financial Results

• Revenue was $276.4 million for the fourth quarter of fiscal year 2016, an increase of 34% compared to total revenue of $206.5 million for the comparable period in fiscal year 2015.

• Non-GAAP net income per diluted share in the fourth quarter of fiscal 2016 was $0.60, an increase from non-GAAP net income per diluted share of $0.40 in the same period a year ago.

Tom Mitchell, Chief Executive Officer of Fabrinet, said, �Strong revenue growth of 34% exceeded our expectations for the fourth quarter. These results capped a year of significant growth for Fabrinet, which was driven by a combination of momentum in the optical industry, growing contributions from new customers, and increasing demand for our advanced packaging and precision assembly capabilities. We believe that we are in a strong position to serve the industry�s growth as we scale our Fabrinet West New Product Introduction facility and complete construction of the first building at our new campus in Thailand. As a result of these factors, we are entering fiscal 2017 with optimism, as reflected in our guidance for the first quarter.�

Business Outlook

Based on information available as of August 15, 2016, Fabrinet is issuing guidance for the first quarter of fiscal 2017 ending September 30, 2016, as follows:

• Fabrinet expects first quarter revenue to be in the range of $306 million to $310 million.
• GAAP net income per diluted share is expected to be in the range of $0.62 to $0.64, based on approximately 37.6 million fully diluted shares outstanding.
• Non-GAAP net income per diluted share is expected to be in the range of $0.70 to $0.72, based on approximately 37.6 million fully diluted shares outstanding.

FABRINET

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

Management Discussion and Analysis

Total revenues.

Our total revenues increased by $61.4 million, or 32.4%, to $250.9 million for the three months ended March 25, 2016, compared with $189.5 million for the three months ended March 27, 2015. This increase was primarily due to (i) an increase in customers’ demand for both optical and non-optical communications manufacturing services during the three months ended March 25, 2016 and (ii) our inability to recognize $4.6 million of consignment revenue during the three months ended March 27, 2015 because of certain consignment revenue recognition issues previously disclosed that result in lower revenue in the prior period. Revenues from optical communications products represented 76.6% of our total revenues for the three months ended March 25, 2016, compared to 72.1% for the three months ended March 27, 2015.

Our total revenues increased by $133.2 million, or 23.5%, to $700.4 million for the nine months ended March 25, 2016, compared with $567.1 million for the nine months ended March 27, 2015. This increase was primarily due to (i) an increase in customers’ demand for both optical and non-optical communications manufacturing services during the nine months ended March 25, 2016 and (ii) our inability to recognize $4.6 million of consignment revenue during the nine months ended March 27, 2015 because of certain consignment revenue recognition issues previously disclosed that result in lower revenue in the prior period. Revenues from optical communications products represented 73.6% of our total revenues for the nine months ended March 25, 2016, compared to 71.5% for the nine months ended March 27, 2015.

Net income.

We recorded net income of $20.8 million, or 8.3% of total revenues, for the three months ended March 25, 2016, compared with $10.8 million, or 5.7% of total revenues, for the three months ended March 27, 2015.

We recorded net income of $42.2 million, or 6.0% of total revenues, for the nine months ended March 25, 2016, compared with $30.6 million, or 5.4% of total revenues, for the nine months ended March 27, 2015.

Second quarter 2016 Financial Results

• Revenue was $233.0 million for the second quarter of fiscal year 2016, an increase of 24% compared to total revenue of $188.4 million for the comparable period in fiscal year 2015.
• Non-GAAP net income per diluted share in the second quarter of fiscal 2016 was $0.50, an increase from non-GAAP net income per diluted share of $0.40 in the same period a year ago.

Business Outlook

Based on information available as of February 1, 2016, Fabrinet is issuing guidance for the third quarter of fiscal 2016 ending March 25, 2016, as follows:

• Fabrinet expects third quarter revenue to be in the range of $240 million to $244 million.
• GAAP net income per diluted share is expected to be in the range of $0.47 to $0.49, based on approximately 36.8 million fully diluted shares outstanding.
• Non-GAAP net income per diluted share is expected to be in the range of $0.52 to $0.54, based on approximately 36.8 million fully diluted shares outstanding.

Item 1.01 Entry into a Material Definitive Agreement.

On October 30, 2015, Fabrinet Co., Ltd. (the “Company”), a wholly-owned subsidiary of Fabrinet, entered into a construction contract (the “Construction Agreement”) with Standard Performance Co., Ltd. (the “Contractor”), pursuant to which the Company engaged the Contractor to design and construct a manufacturing building on the Company’s land located at Hemaraj Eastern Seaboard Industrial Estate 2, Plot H1, Highway 331, Si Racha District, Chonburi, Thailand. Pursuant to the Construction Agreement, the Company has agreed to pay the Contractor 1,100,863,000 Thai Baht (approximately $31.0 million) to complete the project, subject to variations and change orders, which may increase or decrease the price. The building is currently expected to be completed within 305 days from the date the Company issues a notice to the Contractor to commence the project.

First Quarter 2016 Financial Results

• Non-GAAP net income in the first quarter of fiscal 2016 was $16.2 million, an increase of 12% compared to non-GAAP net income of $14.5 million in the same period a year ago.
• Non-GAAP net income in the first quarter of fiscal 2016 was $0.45 per diluted share, an increase from non-GAAP net income of $0.41 per diluted share, in the same period a year ago.

Tom Mitchell, Chief Executive Officer of Fabrinet, said, "We are off to a strong start in fiscal 2016 with first quarter revenue and non-GAAP profitability that exceeded our expectations. In addition to beginning production at our new product introduction and advanced packaging facility in Santa Clara, we recently broke ground on the first building of what will become a second manufacturing campus in Thailand. We expect this added space to enable us to continue scaling our business as our current facilities reach capacity levels. With overall manufacturing space at our new campus that will ultimately represent a more than doubling of capacity, we are setting the stage for continued profitable growth as we look ahead.”

Business Outlook

Based on information available as of November 2, 2015, Fabrinet is issuing guidance for the second quarter of fiscal 2016 as follows:

• Fabrinet expects second quarter revenue to be in the range of $218 million to $222 million.
• GAAP net income per diluted share is expected to be in the range of $0.41 to $0.43, based on approximately 36.6 million fully diluted shares outstanding.
• Non-GAAP net income per diluted share is expected to be in the range of $0.45 to $0.47, based on approximately 36.6 million fully diluted shares outstanding.

NEW YORK, September 10, 2015 /PRNewswire/ --

ACI Association has initiated research coverage on Fabrinet (NYSE: FN). Select highlights from the internally released reports are being made available to the general public (included below), with access to the entirety of the research available to new members.

Today, membership is open to readers on a complementary basis at the following URL:http://www.aciassociation.com/?c=FN  

Highlights from our FN Report include:

• Announcement of Fourth Quarter Financial Results - Fabrinet, the company that assembles optical, electro-mechanical and electronic devices for other companies, published results for the fourth quarter and fiscal year ended June 26, 2015, on August 17, 2015. For Q4 2015, the Company reported a 29% growth in total revenue to $206.5 million, as against $160.1 million in the corresponding period of the previous year. As per the Company, this was the highest quarterly revenue till date, Fabrinet has ever earned. Further, GAAP net income stood at $13.0 million, or $0.36 per diluted share, for the fourth quarter of fiscal 2015, compared to GAAP net income of $10.3 million, or $0.29 per diluted share in the year-ago period.

• Results for Fiscal 2015 - For the full year, the Company observed a 14% growth in total revenue to$773.6 million, compared to total revenue of $677.9 million in the same period a year earlier. GAAP net income for 2015 was seen at $43.6 million, or $1.21 per diluted share compared to GAAP net income of$91.7 million, or $2.58 per diluted share, in 2014. The Company informed that the collection of insurance proceeds positively impacted the GAAP net income for 2014 by $44.0 million, or $1.24 per diluted share.

• Management Comments and Outlook for Q1 2016 - Commenting on the healthy financial performance, the Company's Chief Executive Officer, Tom Mitchell remarked, "We ended fiscal 2015 on a strong note with record revenue and growth across all our market segments." He added, "As we start fiscal 2016, I am confident that our initiatives to expand our new product introduction and advanced packaging capabilities, combined with our focus on total customer satisfaction and world-class quality will enable us to deliver another year of profitable growth in fiscal 2016." While providing guidance for the first quarter of the fiscal year ending 2016, Fabrinet said that it expects the revenue to be in the range of$206 million to $210 million. Furthermore, Based on approximately 36.5 million fully diluted shares outstanding, Fabrinet said that for Q1 2016 GAAP net income per diluted share is expected to be in the range of $0.33 to $0.35 while non-GAAP net income per diluted share is anticipated to range $0.41 to $0.43.

Fourth Quarter 2015 Financial Results  

Total revenue of $206.5 million for the fourth quarter of fiscal year 2015, its highest quarterly revenue to-date and an increase of 29% compared to total revenue of $160.1 million for the comparable period in fiscal year 2014.

Non-GAAP net income in the fourth quarter of fiscal 2015 was $14.5 million, or $0.40 per diluted share, an increase of 20% compared to non-GAAP net income of $12.1 million, or $0.34 per diluted share, in the same period a year ago.

Tom Mitchell, Chief Executive Officer of Fabrinet, said, "We ended fiscal 2015 on a strong note with record revenue and growth across all our market segments. As we start fiscal 2016, I am confident that our initiatives to expand our new product introduction and advanced packaging capabilities, combined with our focus on total customer satisfaction and world-class quality will enable us to deliver another year of profitable growth in fiscal 2016.�

Business Outlook

Based on information available as of August 17, 2015, Fabrinet is issuing guidance for the first quarter of fiscal 2016 as follows:

Fabrinet expects first quarter revenue to be in the range of $206 million to $210 million. GAAP net income per diluted share is expected to be in the range of $0.33 to $0.35 with expected non-GAAP net income per diluted share of $0.41 to $0.43, based on approximately 36.5 million fully diluted shares outstanding.

Item 1.01 Entry into a Material Agreement. 

On July 31, 2015, Fabrinet (NYSE:FN) entered into the Third Amendment to Credit Agreement (the “Amendment”) which amends that certain Credit Agreement, dated as of May 22, 2014, among Fabrinet, certain of its subsidiaries as designated borrowers thereunder, certain of its subsidiaries from time to time party thereto as guarantors, the lenders from time to time party thereto and Bank of America, N.A., as administrative agent (the “Administrative Agent”) for the lenders (as amended, the “Credit Agreement”).

Among other things, the Amendment amends the Credit Agreement to extend the availability period for draws on the term loan facility from July 31, 2015 to July 31, 2016.

Third Quarter 2015 Financial Results 

• Total revenue of $189.5 million for the third quarter of fiscal 2015, an increase of 13% compared to total revenue of $167.7 million for the comparable period in fiscal 2014.
• Non-GAAP net income in the third quarter of fiscal 2015 was $13.0 million, or $0.36 per diluted share, compared to non-GAAP net income of $12.3 million, or $0.34 per diluted share, in the same period a year ago.

Tom Mitchell, Chief Executive Officer of Fabrinet, said, �Our third quarter results were solid, with revenue and EPS ahead of our expectations. Our initiatives to expand our new product introduction and advanced packaging capabilities are well underway and we are on track to ship our first products from our new west coast facility in the current quarter.�

Business Outlook

Based on information available as of May 4, 2015, Fabrinet is issuing guidance for the fourth quarter of fiscal 2015 as follows:

Fabrinet expects fourth quarter revenue to be in the range of $195 million to $199 million. GAAP net income per share is expected to be in the range of $0.33 to $0.35 with expected non-GAAP net income per share of $0.37 to $0.39, based on approximately 36 million fully diluted shares outstanding.

Item 1.01 Entry into a Material Agreement.

On February 26, 2015, Fabrinet (NYSE:FN) entered into the Second Amendment to Credit Agreement (the “Amendment”) which amends that certain Credit Agreement, dated as of May 22, 2014, among Fabrinet, certain of its subsidiaries from time to time party thereto as guarantors, the lenders from time to time party thereto and Bank of America, N.A., as administrative agent (the “Administrative Agent”) for the lenders (as amended, the “Credit Agreement”).

Item 1.01 Entry into a Material Definitive Agreement. 

Effective February 11, 2015, Fabritek, Inc. (the “Company”), a wholly-owned subsidiary of Fabrinet, entered into a sale, purchase and escrow agreement (the “Purchase Agreement”) with Drawbridge Patrick Henry, LLC, to purchase a certain parcel of real estate located at 4900 Patrick Henry Drive, Santa Clara, California (the “Property”).
The Property consists of a combination office and manufacturing building of approximately 74,035 square feet and the associated 4.05 acres of land. The net purchase price of the Property, after certain credits, is approximately $25.5 million, of which approximately $750,000 has been deposited into escrow. The Company will pay the balance of the purchase price at the close of escrow, which is expected in late February 2015, subject to the satisfaction of closing conditions and the execution of certain ancillary agreements. If the Purchase Agreement is terminated prior to the close of escrow, the Company may forfeit its deposit.

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On February 8, 2015, Harpal Gill, President and Chief Operating Officer of Fabrinet USA, Inc. (“FUSA”), a wholly-owned subsidiary of Fabrinet, and Toh-Seng Ng, Executive Vice President and Chief Financial Officer of FUSA, entered into amended and restated offer letters of employment, which provide for certain severance and retirement benefits.

Amended and Restated Gill Offer Letter

Pursuant to Dr. Gill’s amended and restated offer letter (the “Amended Gill Offer Letter”), in the event Dr. Gill’s employment is terminated prior to May 7, 2018 (the “Gill Transition Date”) either by FUSA without “good cause” or by Dr. Gill for “good reason” (as such terms are defined in the Amended Gill Offer Letter), Dr. Gill will (A) be eligible to receive a lump sum payment equal to the sum of (i) twelve (12) months of his then present base salary, and (ii) any earned but unpaid bonus as of the date of termination of employment; (B) be eligible to receive a lump sum payment equal to two times his cost of COBRA coverage for twelve months; (C) become 100% vested immediately prior to his termination date in any outstanding stock options, restricted stock, restricted stock units, stock appreciation rights, phantom stock or other equity based awards, which have not previously fully vested; and (D) receive continued tax equalization benefits under FUSA’s expatriate policy, as in effect on the date of termination, for the calendar year in which the termination date occurs, and the following calendar year.

In the event Dr. Gill terminates his employment on the Gill Transition Date or within ten (10) calendar days after the Gill Transition Date, Dr. Gill will be eligible to receive (1) a lump sum payment equal to the product of one month’s base salary multiplied by the total number of full and fractional years of his employment with FUSA as of his termination date, and (2) all of the payments and benefits described in subsections (B), (C) and (D) of the preceding paragraph (collectively, the “Gill Retention Benefits”). In the event Dr. Gill’s employment is terminated prior to the Gill Transition Date or more than ten (10) calendar days after the Gill Transition Date, no Gill Retention Benefits shall be due, owed, or paid to him.

In the event Dr. Gill’s employment is terminated on account of death or disability prior to the Gill Transition Date, he will become 100% vested immediately prior to the termination date in any outstanding stock options, restricted stock, restricted stock units, stock appreciation rights, phantom stock or other equity based awards, which have not previously fully vested.

Amended and Restated Ng Offer Letter

Pursuant to Mr. Ng’s amended and restated offer letter (the “Amended Ng Offer Letter”), in the event Mr. Ng’s employment is terminated prior to December 30, 2018 (the “Ng Transition Date”) either by FUSA without “good cause” or by Mr. Ng for “good reason” (as such terms are defined in the Amended Ng Offer Letter), Mr. Ng will (A) be eligible to receive a lump sum payment equal to the sum of (i) twelve (12) months of his then present base salary, and (ii) any earned but unpaid bonus as of the date of termination of employment; (B) be eligible to receive a lump sum payment equal to two times his cost of COBRA coverage for twelve months; (C) become 100% vested immediately prior to his termination date in any outstanding stock options, restricted stock, restricted stock units, stock appreciation rights, phantom stock or other equity based awards, which have not previously fully vested; and (D) receive continued tax equalization benefits under FUSA’s expatriate policy, as in effect on the date of termination, for the calendar year in which the termination date occurs, and the following calendar year.

In the event Mr. Ng terminates his employment on the Ng Transition Date or within ten (10) calendar days after the Ng Transition Date, Mr. Ng will be eligible to receive (1) a lump sum payment equal to the product of one month’s base salary multiplied by the total number of full and fractional years of his employment with FUSA as of his termination date, and (2) all of the payments and benefits described in subsections (B), (C) and (D) of the preceding paragraph (collectively, the “Ng Retention Benefits”). In the event Mr. Ng’s employment is terminated prior to the Ng Transition Date or more than ten (10) calendar days after the Ng Transition Date, no Ng Retention Benefits shall be due, owed, or paid to him.

In the event Mr. Ng’s employment is terminated on account of death or disability prior to the Ng Transition Date, he will become 100% vested immediately prior to the termination date in any outstanding stock options, restricted stock, restricted stock units, stock appreciation rights, phantom stock or other equity based awards, which have not previously fully vested.

The descriptions of the Amended Gill Offer Letter and Amended Ng Offer Letter are qualified in their entirety by reference to the Amended Gill Offer Letter and Amended Ng Offer Letter, each of which is incorporated herein by reference and attached to this Current Report on Form 8-K as Exhibit 10.1 and Exhibit 10.2, respectively.

Second Quarter 2015 Financial Results:

• Fabrinet reported total revenue of $188.4 million for the second quarter of fiscal 2015, an increase of 5.5% compared to total revenue of $178.6 million for the comparable period in fiscal 2014.
• Non-GAAP net income in the second quarter of fiscal 2015 was $14.4 million, or $0.40 per diluted share, a decrease of 10.0% compared to non-GAAP net income of $16.0 million, or $0.45 per diluted share, in the same period a year ago.

Tom Mitchell, Chief Executive Officer of Fabrinet, said, "Our fiscal second quarter results demonstrate our commitment to profitably growing our business while making key investments for the future. These investments are beginning to bear fruit as we had another quarter of strong revenue growth from new customers."

Business Outlook 

Based on information available as of February 2, 2015, Fabrinet is issuing guidance for the third quarter of fiscal 2015 as follows:

Fabrinet expects third quarter revenue to be in the range of $181 million to $185 million. GAAP net income per share is expected to be in the range of $0.27 to $0.29 with expected non-GAAP net income per share of $0.33 to $0.35, based on approximately 36 million fully diluted shares outstanding.

First Quarter 2015 Financial Results:

• Total revenue of $189.3 million for the first quarter of fiscal 2015, an increase of 10.3% compared to total revenue of $171.6 million for the comparable period in fiscal 2014.
• Non-GAAP net income in the first quarter of fiscal 2015 was $14.5 million, or $0.41 per diluted share, an increase of 2.1% compared to non-GAAP net income of $14.2 million, or $0.40 per diluted share, in the same period a year ago.

Tom Mitchell, Chief Executive Officer of Fabrinet, said, �Fiscal 2015 is off to a strong start and I am particularly pleased with the contribution from new programs in the quarter. While the demand environment remains uncertain, I am confident that our focus on total customer satisfaction will enable us to deliver on our financial goals for the fiscal year.�

Business Outlook 

Based on information available as of November 3, 2014, Fabrinet is issuing guidance for the second quarter of fiscal 2015 as follows:

Fabrinet expects second quarter revenue to be in the range of $181 million to $185 million. GAAP net income per share is expected to be in the range of $0.22 to $0.24 with expected non-GAAP net income per share of $0.37 to $0.39, based on approximately 36 million fully diluted shares outstanding.

Fourth Quarter 2014 Financial Results 

• Fabrinet reported total revenue of $160.1 million for the fourth quarter of fiscal year 2014, an increase of less than 1% compared to total revenue of $159.9 million for the comparable period in fiscal year 2013.
• Non-GAAP net income in the fourth quarter of fiscal 2014 was $12.1 million, or $0.34 per diluted share, a decrease of 2.4% compared to non-GAAP net income of $12.4 million, or $0.35 per diluted share, in the same period a year ago.

Tom Mitchell, Chief Executive Officer of Fabrinet, said, "As we begin our new fiscal year, I am optimistic, as our relationships with customers have never been stronger and our pipeline of new engagements continues to grow. Despite a demand environment that remains challenging, I am confident that our focus on total customer satisfaction and world-class quality will enable us to deliver another year of profitable growth in fiscal 2015.�

Business Outlook

Based on information available as of October 16, 2014, Fabrinet expects first quarter revenue to be approximately $189 million, which includes approximately $3 million of consigned shipment revenue excluded from fiscal 2014, as discussed above. GAAP net income per share is expected to be approximately $0.30 with expected non-GAAP net income per share of approximately $0.40, based on approximately 36 million fully diluted shares outstanding.

Item 3.01 Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing. 

On September 26, 2014, Fabrinet (the “Company”) received a notice from the New York Stock Exchange (the “NYSE”) indicating that the Company is not in compliance with the NYSE’s continued listing requirements under the timely filing criteria outlined in Section 802.01E of the NYSE Listed Company Manual as a result of its failure to timely file its Annual Report on Form 10-K for the fiscal year ended June 27, 2014 (the “Form 10-K”). The Company anticipated receiving such notice given that, as previously disclosed, it was unable to file its Form 10-K with the Securities and Exchange Commission (the “SEC”) by the extended September 25, 2014 deadline.

The NYSE has informed the Company that, under the NYSE rules, the Company will have six months from the Form 10-K filing due date to file its Form 10-K with the SEC. The Company can regain compliance with the NYSE listing standards at any time prior to such date by filing the Form 10-K with the SEC. If the Company fails to file its Form 10-K prior to such date, then the NYSE may grant at its discretion, a further extension of up to six months, depending on the specific circumstances. The letter from the NYSE also notes that the NYSE may commence delisting proceedings at any time if the circumstances warrant.

Item 1.01 Entry into a Material Definitive Agreement. 

Effective as of September 25, 2014, Fabrinet entered into the First Amendment (the “Amendment”) to its Credit Agreement, dated as of May 22, 2014, among Fabrinet, the subsidiaries of Fabrinet from time to time party thereto as guarantors, the lenders from time to time party thereto and Bank of America, N.A., as administrative agent (the “Credit Agreement”).

Fabrinet (FN), a leading provider of advanced optical packaging and precision optical, electro-mechanical and electronic manufacturing services to original equipment manufacturers of complex products, today announced that it is delaying the filing of its Annual Report on Form 10-K for the year ended June 27, 2014 (the �Form 10-K�).

Prior to the completion of Fabrinet�s fiscal year 2014 financial results, Fabrinet discovered potential accounting violations with respect to consignment shipments and inventory. Subsequently and as previously disclosed, the Audit Committee of Fabrinet�s Board of Directors began conducting an internal investigation concerning various accounting cut-off issues, specifically procedures surrounding consignment revenue and inventory. The investigation identified certain process weaknesses concerning shipments of goods to consignment and the need for certain remedial measures, including (1) process improvements, (2) personnel training regarding revenue recognition policies and inventory management techniques and their relevant accounting considerations, and (3) certain personnel actions. The Audit Committee provided these findings to Fabrinet�s management.

On September 10, 2014, Fabrinet filed with the SEC a Form 12b-25, Notification of Late Filing, with regard to its Form 10-K. At the time of filing, Fabrinet expected that it would be able to file its Form 10-K within the 15-day extension period provided by the form. However, Fabrinet recently determined that it requires additional time to file its Form 10-K because it is currently evaluating and discussing with its auditors its accounting practices concerning consignment goods.

Item 1.01 Entry into a Material Definitive Agreement. 

On May 28, 2014, Fabrinet (the “Company”) entered into an Underwriting Agreement (the “Underwriting Agreement”) with Morgan Stanley & Co. LLC (the “U.S. Underwriter”) and Morgan Stanley & Co. International plc (the “International Underwriter,” and together with the U.S. Underwriter, the “Underwriters”), and Asia Pacific Growth Fund III, L.P. (the “Selling Shareholder”). Pursuant to the terms of the Underwriting Agreement, the Selling Shareholder agreed to sell 3,150,000 ordinary shares of the Company (the “Shares”) to the U.S. Underwriter at a purchase price per share of $18.00 (the “Offering”).

The Company is not selling any shares in the Offering and will not receive any proceeds from the sale of the Shares by the Selling Shareholder in the Offering.

The Shares are being offered and sold pursuant to the prospectus supplement dated May 28, 2014 and the accompanying base prospectus dated June 28, 2012, filed with the Securities and Exchange Commission (the “SEC”) pursuant to the Company’s registration statement on Form S-3, as amended (File No. 333-178722) (the “Registration Statement”), which was declared effective by the SEC on July 27, 2012.

The closing of the Offering and the delivery of the Shares is expected to occur on June 3, 2014, subject to customary closing conditions. The Underwriting Agreement contains customary representations, warranties and agreements of the Company, indemnification rights and obligations of the parties, and termination provisions. Under the terms of the Underwriting Agreement, the Company has agreed to indemnify the Underwriters against various liabilities, including liabilities under the Securities Act of 1933, as amended, or to contribute to payments the Underwriters may be required to make in respect of such liabilities.

The above summary of the Underwriting Agreement does not purport to be complete and is qualified in its entirety by the Underwriting Agreement, a copy of which is attached hereto as Exhibit 1.1 and incorporated herein by reference.

Fabrinet

ORDINARY SHARES

OFFERED BY THE SELLING SHAREHOLDER

 
The selling shareholder identified in this prospectus supplement is offering 3,150,000 ordinary shares of Fabrinet to the Underwriters named in “Underwriting.” The selling shareholder will receive all of the net proceeds from the sale of our ordinary shares in this offering.

The selling shareholder is selling to the underwriters the ordinary shares at a price of $ per share, resulting in aggregate net proceeds to the selling shareholder of approximately $ million before expenses.

Item 1.01 Entry into a Material Definitive Agreement.

On May 22, 2014, Fabrinet (NYSE:FN) entered into a credit agreement (the “Credit Agreement”) among Fabrinet, certain of its direct subsidiaries from time to time party thereto as guarantors, the lenders from time to time party thereto and Bank of America, N.A., as administrative agent (the “Administrative Agent”) for the lenders.

The Credit Agreement provides for a $200 million secured credit facility, which includes a $150 million revolving loan facility and a $50 million delayed draw term loan facility, each scheduled to mature on May 22, 2019 (the “Maturity Date”). Fabrinet will be permitted to borrow under the Credit Agreement upon satisfaction of certain terms and conditions, including, without limitation, entering into control agreements with the Administrative Agent for each of Fabrinet’s deposit and securities accounts, subject to certain exceptions. In the event such conditions are not fulfilled within 120 days after the date of the Credit Agreement, the revolving loan and term loan commitments will expire and the Credit Agreement will terminate. The Credit Agreement contains an accordion feature permitting Fabrinet to request an increase in the revolving loan facility to provide up to an aggregate of $100 million in additional commitments, subject to customary terms and conditions, and provided that no default or event of default exists at the time of such request. Proceeds of the loans made under the Credit Agreement may be used for working capital and other general corporate purposes, including to finance a future manufacturing building in Thailand.

Loans under the Credit Agreement will bear interest, at Fabrinet’s option, at a rate per annum equal to a LIBOR rate plus a spread of 1.75% to 2.50%, or a base rate, determined in accordance with the Credit Agreement, plus a spread of 0.75% to 1.50%, in each case with such spread determined based on Fabrinet’s consolidated total leverage ratio for the preceding four fiscal quarter period. Interest is due and payable quarterly in arrears for loans bearing interest at the base rate and at the end of an interest period (or at each three month interval in the case of loans with interest periods greater than three months) in the case of loans bearing interest at the LIBOR rate. In the event that Fabrinet does not fulfill the conditions to borrowing within 60 days after the date of the Credit Agreement, Fabrinet will be obligated to pay the Administrative Agent, for the account of each lender, a fee equal to 0.05% of the total commitments. Once Fabrinet is permitted to borrow under the Credit Agreement, Fabrinet will be obligated to pay other customary commitment fees, arrangement fees, and administration fees for a credit facility of this size and type. The applicable spreads and commitment fees will increase in the event that Fabrinet’s Thailand subsidiary is unable to guarantee the obligations under the Credit Agreement within 180 days after the closing date.

Fabrinet may prepay the loans made under the credit facility in whole or in part at any time without premium or penalty. Revolving loans that are repaid or prepaid may be reborrowed. The revolving loan facility shall terminate and all principal and accrued and unpaid interest thereunder shall be due and payable in full on the Maturity Date. Term loans made under the Credit Agreement shall be repaid in quarterly installments equal to $2,500,000, beginning on June 30, 2015, with the remaining outstanding principal and accrued and unpaid interest being due and payable on the Maturity Date. Term loans repaid or prepaid may not be reborrowed.

Fabrinet’s obligations under the Credit Agreement are guaranteed by certain of its existing and future direct material subsidiaries. Pursuant to a security and pledge agreement (the “Security Agreement”) by and between Fabrinet and the Administrative Agent, Fabrinet’s obligations under the Credit Agreement are also secured by Fabrinet’s present and future accounts receivable, deposit accounts, cash, cash equivalents and marketable securities, as well as Fabrinet’s equity interests in certain of its direct subsidiaries.

The Credit Agreement contains customary affirmative and negative covenants. Negative covenants include, among other things, limitations on liens, indebtedness, investments, mergers, sales of assets, changes in the nature of the business, dividends and distributions, affiliate transactions and capital expenditures. Fabrinet is also obligated to maintain cash, cash equivalents and marketable securities of at least $40 million at financial institutions located in the United States. Any deposit or securities accounts with aggregate balances in excess of $10 million must be maintained with financial institutions where a control agreement, or the equivalent under the local law, can be effected in favor of the Administrative Agent. In addition, the Credit Agreement requires Fabrinet to maintain, on a consolidated basis: (i) a minimum tangible net worth of not less than $200 million plus 50% of quarterly net income for each full fiscal quarter ending after March 31, 2014, exclusive of quarterly losses; (ii) a minimum debt service coverage ratio of not less than 1.50:1.00; (iii) a maximum senior leverage ratio of not more than 2.50:1.00; and (iv) a minimum quick ratio of not less than 1.10:1.00, in each case determined in accordance with the Credit Agreement and tested as of the end of each fiscal quarter.

The Credit Agreement also contains customary events of default including, among other things, payment defaults, breaches of covenants or representations and warranties, cross-defaults with certain other indebtedness, bankruptcy and insolvency events and change in control of Fabrinet, subject to grace periods in certain instances. Upon an event of default, the lenders may declare all or a portion of the outstanding obligations payable by Fabrinet to be immediately due and payable and exercise other rights and remedies provided for under the Credit Agreement. Under certain circumstances, a default interest rate will apply on all obligations during the existence of an event of default under the Credit Agreement at a per annum rate equal to 2.00% above the applicable interest rate or 2.00% above the rate applicable for base rate loans if a rate is not specified or available.

Certain of the lenders under the Credit Agreement and their affiliates have engaged in, and may in the future engage in, investment banking and other commercial dealings in the ordinary course of business with Fabrinet or its affiliates. They have received, or may in the future receive, customary fees and commissions for these transactions.

The foregoing descriptions of the Credit Agreement and Security Agreement are qualified in their entirety by reference to the Credit Agreement and Security Agreement, copies of which are attached as Exhibit 10.1 and 10.2, respectively, hereto and incorporated herein by reference.

Third Quarter 2014 Financial Results

• Total revenue is $167.7 million for the third quarter of fiscal 2014, an increase of 7.8% compared to total revenue of $155.6 million for the comparable period in fiscal 2013.
• Non-GAAP net income in the third quarter of fiscal 2014 was $12.3 million, or $0.34 per diluted share, an increase of 6.6% compared to non-GAAP net income of $11.5 million, or $0.33 per diluted share, in the same period a year ago.

Tom Mitchell, Chief Executive Officer of Fabrinet, said, "The third quarter was another period of solid execution for the company, with revenue and non-GAAP earnings per share demonstrating growth over the prior year. With industry demand showing signs of improving, I am confident that we will continue to execute on our vision of providing world-class service to our customers and delivering profitable growth for our shareholders.”

Business Outlook

Based on information available as of May 5, 2014, Fabrinet is issuing guidance for the fourth quarter of fiscal 2014 as follows:

Fabrinet expects fourth quarter revenue to be in the range of $169 million to $173 million. GAAP net income per share is expected to be in the range of $0.29 to $0.31 with expected non-GAAP net income per share of $0.33 to $0.35, based on approximately 36 million fully diluted shares outstanding.

First Quarter 2014 Financial Results

• Fabrinet reported total revenue of $171.6 million for the first quarter of fiscal 2014, an increase of 8.2% compared to total revenue of $158.6 million for the comparable period in fiscal 2013.
• GAAP net income for the first quarter of fiscal 2014 was $19.2 million, or $0.55 per diluted share, compared to GAAP net income of $16.0 million, or $0.46 per diluted share, in the first quarter of fiscal 2013. Non-GAAP net income in the first quarter of fiscal 2014 was $14.2 million, or $0.40 per diluted share, an increase of 10.9% compared to non-GAAP net income of $12.8 million, or $0.36 per diluted share, in the same period a year ago.

Tom Mitchell, Chief Executive Officer of Fabrinet, said, "Fiscal 2014 is off to a strong start and I am particularly pleased that our fiscal first quarter results demonstrated another strong quarter of revenue, margin and EPS growth. With our strong customer relationships and expanding pipeline of new business, I am confident that we will be able to build off our successful first quarter and deliver strong year of profitable growth.�

Business Outlook

Based on information available as of November 4, 2013, Fabrinet is issuing guidance for the second quarter of fiscal 2014 as follows:

Fabrinet expects second quarter revenue to be in the range of $170 million to $174 million. GAAP net income per share is expected to be in the range of $1.54 to $1.56 with expected non-GAAP net income per share of $0.40 to $0.42, based on approximately 35 million fully diluted shares outstanding.

Fourth Quarter 2013 Financial Results

• Total revenue of $159.9 million for the fourth quarter of fiscal 2013, an increase of 12.0% compared to total revenue of $142.8 million for the comparable period in fiscal 2012.
• GAAP net income for the fourth quarter of fiscal 2013 was $15.1 million, or $0.43 per diluted share, compared to GAAP net income of $7.5 million, or $0.22 per diluted share, in the fourth quarter of fiscal 2012.
• Non-GAAP net income in the fourth quarter of fiscal 2013 was $12.4 million, or $0.35 per diluted share, an increase of 16.1% compared to non-GAAP net income of $10.7 million, or $0.31 per diluted share, in the same period a year ago.

Tom Mitchell, Chief Executive Officer of Fabrinet, said, "I am pleased to end the fiscal year on a positive note, with our fourth quarter results demonstrating sequential increases in revenue, margins and earnings per share. As we enter fiscal 2014, I am confident that our healthy pipeline of new business, strong customer relationships and intense focus on quality and total customer satisfaction, will deliver another year of profitable growth.�

Business Outlook

Based on information available as of August 12, 2013, Fabrinet is issuing guidance for the first quarter of fiscal 2014 as follows:

Fabrinet expects first quarter revenue to be in the range of $158 million to $162 million. GAAP net income per share is expected to be in the range of $0.46 to $0.48 with expected non-GAAP net income per share of $0.31 to $0.33, based on approximately 35 million fully diluted shares outstanding.

Third Quarter 2013 Financial Results

• Revenue was $155.6 million for the third quarter of fiscal 2013, an increase of 11.9% compared to total revenue of $139.0 million for the comparable period in fiscal 2012.
• GAAP net income for the third quarter of fiscal 2013 was $21.1 million, or $0.61 per diluted share, compared to a GAAP net loss of ($46.3) million, or ($1.35) per diluted share, in the third quarter of fiscal 2012.
• Non-GAAP net income in the third quarter of fiscal 2013 was $11.5 million, or $0.33 per diluted share, an increase of 16.8% compared to non-GAAP net income of $9.9 million, or $0.28 per diluted share, in the same period a year ago.

Tom Mitchell, Chief Executive Officer of Fabrinet, said, "While overall industry demand remains muted, I am pleased that our third quarter results demonstrate the consistency of our operating model, with revenue and earnings per share performance above expectations. Our customer relationships remain strong and we continue to have success with new customers and new programs from existing customers. The net result is that we have continuing confidence in our ability to deliver profitable growth over the long-term.�

Business Outlook

Based on information available as of April 29, 2013, Fabrinet is issuing guidance for the fourth quarter of fiscal 2013 as follows:

Fabrinet expects fourth quarter revenue to be in the range of $148 million to $152 million. Non-GAAP net income per share is expected to be in the range of $0.26 to $0.28, assuming approximately 35 million fully diluted shares outstanding.

BANGKOK--(BUSINESS WIRE)--Fabrinet (NYSE: FN), a leading provider of advanced optical packaging and precision optical, electro-mechanical and electronic manufacturing services to original equipment manufacturers of complex products, announced today that an underwritten public offering of 3,800,000 ordinary shares offered by selling shareholders has been priced at $14.00 per share. The offering is expected to close on March 20, 2013, subject to customary closing conditions. Fabrinet will not sell any ordinary shares in the offering and will not receive any of the proceeds from the offering.

Morgan Stanley is acting as the sole underwriter for the offering and has an option to purchase up to 570,000 ordinary shares from the selling shareholders to cover over-allotments, if any.

BANGKOK--(BUSINESS WIRE)--Fabrinet (NYSE: FN), a leading provider of advanced optical packaging and precision optical, electro-mechanical and electronic manufacturing services to original equipment manufacturers of complex products, today announced its financial results for the fourth quarter and fiscal year ended June 29, 2012.

• Fabrinet reported total revenue of $142.8 million for the fourth quarter of fiscal 2012, a decrease of 25% compared to total revenue of $190.3 million for the comparable period in fiscal 2011.
• GAAP net income in the fourth quarter of fiscal 2012 was $7.5 million, or $0.22 per diluted share, a decrease of 55% compared to GAAP net income of $16.7 million, or $0.48 per diluted share, in the fourth quarter of fiscal 2011.
• Non-GAAP net income in the fourth quarter of fiscal 2012 was $10.7 million, or $0.31 per diluted share, a decrease of 39% compared to non-GAAP net income of $17.5 million, or $0.50 per diluted share, in the fourth quarter of fiscal 2011.

For fiscal year 2012, Fabrinet reported total revenue of $564.7 million, a decrease of 24% compared to total revenue of $743.6 million for fiscal year 2011. For fiscal 2012, Fabrinet reported GAAP net loss of $(56.5) million, or $(1.64) per diluted share, compared to GAAP net income of $64.3 million, or $1.87 per diluted share for fiscal 2011. Non-GAAP net income in fiscal 2012 was $43.4 million, or $1.25 per diluted share, a decrease of 37% compared to non-GAAP net income of $68.8 million, or $1.99 per share, in fiscal 2011.

Tom Mitchell, Chief Executive Officer of Fabrinet, said, We are pleased to report that our recovery from the flooding in Thailand is complete. Despite the challenges of fiscal 2012, we have re-established our production capabilities to pre-flood levels, completed construction on a new manufacturing facility, and won new business from both new and existing customers. We enter fiscal 2013 well positioned for a return to growth and remain confident in our ability to deliver profitable results.

Additionally, Fabrinet announced that its Board of Directors has appointed Dr. Homa Bahrami to the Board, as well as to the nominating and corporate governance committee of the Board.

Dr. Bahrami, 57, is a Senior Lecturer at the Haas School of Business, University of California, Berkeley. She is also a Faculty Director of the Center for Executive Education and a Board Member of the Center for Teaching Excellence at the Haas School of Business, where she has served on the faculty since 1986. She received a B.A. degree with honors in Sociology & Social Administration from Hull University and an M.Sc. in Industrial Administration and a Ph.D. in Organizational Behavior from Aston University in the United Kingdom. She was a member of the board of directors of FormFactor, Inc. from 2004 through 2010 and has been a member of the board of directors of FEI Company since February 2012.

We are very excited that Homa will be joining Fabrinet's Board of Directors,� said Tom Mitchell. She has a sharp business acumen and will provide valuable insight and perspective to the Board.

Business Outlook

Based on information available as of August 20, 2012, Fabrinet is issuing guidance for the first quarter of fiscal 2013 as follows:

Fabrinet expects first quarter revenue to be in the range of $145 million to $149 million. GAAP net income per share is expected to be in the range of $0.28 to $0.30 with expected non-GAAP net income per share of $0.30 to $0.32, based on approximately 35.02 million fully diluted shares outstanding.

Third quarter of fiscal 2012

• Total revenue of $139.0 million, a decrease of 28.7% compared to revenue of $194.9 million for the comparable period in fiscal 2011

• GAAP net loss in the third quarter was $(46.3) million, or $(1.35) per diluted share compared to GAAP net income of $16.7 million, or $0.49 per diluted share in the third quarter of 2011.

• Non-GAAP net income in the third quarter was $9.9 million, or $0.28 per diluted share, a decrease of 48.0% compared to non-GAAP net income of $19.0 million, or $0.55 per share in the third quarter of 2011.

Tom Mitchell, Chief Executive Officer of Fabrinet, said, �I am pleased to report that through the continued hard work and dedication of our staff, we remain on a strong recovery path. We are excited that building 6 is complete and fully available for customers. Despite the recent flooding, we continue to win new business and customer confidence in our value proposition remains solid.�

Business Outlook

Based on information available as of May 7, 2012, Fabrinet is issuing guidance for the fourth quarter of fiscal 2012 as follows:

The company expects fourth quarter revenue to be in the range of $139 million to $143 million. Non-GAAP net income per share is expected to be in the range of $0.25 to $0.27, based on approximately 34.9 million fully diluted, weighted average shares outstanding.

February 6, 2011

BANGKOK--(BUSINESS WIRE)--Fabrinet (NYSE: FN), a provider of precision optical, electro-mechanical and electronic manufacturing services to original equipment manufacturers of complex products, today announced its financial results for the second quarter of fiscal 2012, ended December 30, 2011.

Fabrinet reported

• total revenue of $96.6 million for the second quarter of fiscal 2012, a decrease of 47.7% compared to revenue of $184.6 million for the comparable period in fiscal 2011.
• GAAP net loss in the second quarter was $(33.3) million, or $(0.96) per diluted share, a decrease of 310.4% compared to GAAP net income of $15.8 million, or $0.46 per diluted share in the second quarter of 2011.
• Non-GAAP net income in the second quarter was $6.2 million, or $0.18 per diluted share, a decrease of 63.6% compared to non-GAAP net income of 17.0 million, or $0.49 per share in the second quarter of 2011.

Tom Mitchell, Chief Executive Officer of Fabrinet, said, “Following the most severe flooding season of the last century in Thailand, I’m pleased to report that we are executing on a strong recovery plan. We are grateful to our employees, who overcame great personal hardship and loss, to undertake extraordinary efforts to protect and restore the equipment and inventory of our customers, and to our customers for their ongoing confidence and close collaboration during these trying times. We are making solid progress and look forward to getting back to business as usual.”

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Resignation of Executive Officer

On February 3, 2012, Mark Schwartz, Fabrinet’s Chief Financial Officer, informed the Board of Directors of his intention to resign as Executive Vice President, Chief Financial Officer and Secretary of Fabrinet. His resignation from all of his officer duties will be effective Thursday, March 1, 2012. Mr. Schwartz will continue as an employee of Fabrinet USA, Inc. through March 2012 to help during the transition and will terminate his employment with Fabrinet USA, Inc. on Friday March 30. Fabrinet USA has agreed to reimburse Mr. Schwartz for his health care insurance premiums under COBRA through September 30, 2012.

First quarter of fiscal 2012:

• Revenue of $186.3 million for the first quarter of fiscal 2012, an increase of 7.3% compared to revenue of $173.7 million for the comparable period in fiscal 2011.
• GAAP net income in the first quarter was $15.7 million, or $0.45 per diluted share, an increase of 3.0% compared to GAAP net income of $15.2 million, or $0.44 per diluted share in the first quarter of 2011.
• Non-GAAP net income in the first quarter was $16.6 million, or $0.48 per diluted share, an increase of 7.8% compared to non-GAAP net income of $15.4 million, or $0.45 per share in the first quarter of 2011.

Tom Mitchell, Chief Executive Officer of Fabrinet, said, “While we are pleased to have achieved our 47th consecutive quarter of profitability during the September quarter, our attention is focused on recovering from the flood waters that have impacted our operations in Thailand. Through the tireless efforts and resourcefulness of our employees, and in the midst of this natural disaster, we are preparing to resume production at our Pinehurst campus, one of our two manufacturing campuses in Thailand. In fact, today we began production at Pinehurst on a limited scale and anticipate ramping to full production at the Pinehurst campus during the next two weeks.”

Business Outlook

Based on information available as of November 7, 2011, and due to the damage resulting from seasonal monsoon flood waters in Thailand that has caused the suspension of production at its manufacturing campuses in Thailand, Fabrinet is issuing limited guidance for the second quarter of fiscal 2012.

If the company generates no further revenues from Thailand operations during the quarter, the company anticipates total revenues for the quarter to be approximately $28M, representing primarily revenues generated before production shutdown at its Thailand facilities, together with revenues from its Casix and Vitrocom businesses throughout the quarter. The company anticipates generating additional revenue in excess of that minimum, but, at this time, is unable to determine to what level. The company cannot currently anticipate net operating results for the quarter, although it anticipates suffering a net loss due to the significant decline in revenue and the timing and result of insurance claims by the company.

Fabrinet today announced that as of approximately 11:00PM Saturday night, Bangkok time, flood waters had infiltrated the offices and manufacturing floorspace at its Chokchai campus in Pathum Thani, Thailand. The manufacturing buildings at Chokchai, known as buildings 1 and 2, remain filled with water to a level of approximately 3.5 feet. Prior to the factory infiltration, the company took precautionary measures, where possible, to move or protect production and test equipment, inventory and tooling. The company has not yet been able to make a full assessment of the damage but believes it is unlikely that production would recommence at Chokchai for the remainder of the current quarter.

The flooding has not breached the company's Pinehurst campus, located approximately 7 miles north of Chokchai. However, production at the Pinehurst campus buildings, known as buildings 3, 4 and 5, continues to be suspended due to the impacted local transportation and utilities that continue to affect both arterial and access roads to Fabrinet's factories and some employee residences.

Conditions with the continued flooding are evolving quickly, and the final extent of its impact cannot yet be determined.

On October 21, 2011, Fabrinet announced that production at its two Thailand manufacturing facilities, both located in Pathum Thani, Thailand, is currently suspended due to the logistics and infrastructure disruption resulting from severe flooding near the company's production facilities. While the flood waters have not to date breached the company's production facilities in Thailand, the flooding has materially impacted local transportation and utilities and has affected both arterial and access roads connected to Fabrinet's factories and some employee residences. Therefore, the company has decided to suspend production temporarily. Conditions with the continued flooding are evolving quickly, and the extent of the impact cannot yet be determined.

Fourth quarter and Fiscal Year 2011 Financial Results

• Fabrinet reported total revenue of $190.3 million for the fourth quarter of fiscal 2011, an increase of 21% compared to revenue of $157.4 million for the comparable period in fiscal 2010.
•  GAAP net income in the fourth quarter was $16.7 million, or $0.48 per diluted share, an increase of 23% compared to GAAP net income of $13.6 million, or $0.43 per diluted share, in the fourth quarter of 2010.
•  Non-GAAP net income in the fourth quarter was $17.5 million, or $0.50 per diluted share, an increase of 27% compared to non-GAAP net income of $13.7 million, or $0.44 per diluted share, in the fourth quarter of 2010.
• For fiscal year 2011, Fabrinet reported total revenue of $743.6 million, an increase of 47% compared to revenue of $505.7 million for fiscal year 2010.
• GAAP net income in fiscal 2011 was $64.3 million, or $1.87 per diluted share, an increase of 45% compared to GAAP net income of $44.3 million, or $1.41 per diluted share in fiscal 2010.
•  Non-GAAP net income in fiscal 2011 was $68.8 million, or $1.99 per diluted share, an increase of 53% compared to non-GAAP net income of $45.0 million, or $1.43 per share, in fiscal 2010.

Tom Mitchell, Chief Executive Officer of Fabrinet, said, “We are pleased to have achieved record fiscal year results, our 46th consecutive quarter of profitability and results which exceeded our guidance. Our customer relationships remain strong and we are witnessing robust levels of new project activity. The net result is that we have continuing confidence in our ability to penetrate these growing market opportunities, and to deliver profitable results.”

Business Outlook

Based on information available as of August 15, 2011, Fabrinet is issuing guidance for the first quarter of fiscal 2012 as follows:

The company expects first quarter revenue to be in the range of $173 million to $178 million. GAAP net income per share is expected to be in the range of $0.39 to $0.41 with expected non-GAAP net income per share of $0.41 to $0.43, based on approximately 34.5 million fully diluted shares outstanding.

BANGKOK--(BUSINESS WIRE)--Fabrinet today announced its financial results for the second quarter of fiscal 2011, ended December 24, 2010.

• Total revenue of $184.6 million for the second quarter of fiscal 2011, an increase of 61% compared to revenue of $114.4 million for the comparable period in fiscal 2010.
• GAAP net income in the second quarter was $15.8 million, or $0.46 per diluted share, an increase of 42% compared to GAAP net income of $11.1 million, or $0.35 per share in the second quarter of 2010.

Tom Mitchell, Chief Executive Officer of Fabrinet, said, "We are pleased to have achieved record revenues in the second quarter and continued our long history of profitability. Our strong revenue and earnings performance was above expectations. We saw strength in all product areas, with growth from optical communications above our overall growth rate. Looking ahead, we continue to be optimistic on the growth of our core markets."

Based on information available as of January 31, 2011, Fabrinet is issuing guidance for the third quarter of fiscal 2011 as follows:

The company expects third quarter revenue to be in the range of $182 million to $187 million. GAAP net income is expected to be in the range of $0.47 to $0.49 per share, based on approximately 34.6 million fully diluted weighted average shares outstanding.

We believe that our current cash and cash equivalents, short-term investments and cash flow from operations will be sufficient to meet our anticipated cash needs, including for working capital and capital expenditures, for at least the next 12 months. Our cash flows from operations have generally been sufficient to internally fund our working capital requirements in recent years. Additionally, we have access to short-term credit facilities of approximately $50.5 million to support any unanticipated liquidity requirements. Historically, our internally generated working capital and short-term credit facilities have been adequate to support our liquidity requirements.

We completed the construction of Pinehurst Building 5 in Thailand in May 2008. In June 2010, we entered into an agreement to purchase land in Thailand for Pinehurst Building 6 and completed the purchase in August 2010. We expect to complete construction of Building 6 by the first quarter of calendar year 2012. We believe that we will have sufficient manufacturing capacity in place until the completion of Building 6. We have two long-term loans that will come due within the next 11 months and one long-term loan that will come due within the next 50 months and anticipate that our internally generated working capital will be adequate to repay these obligations.

Financial results for the first quarter of fiscal 2011, ended September 24, 2010

• Revenue of $173.7 million for the first quarter of fiscal 2011, an increase of 79% compared to revenue of $97.0 million for the comparable period in 2010.

• GAAP net income in the first quarter was $15.2 million, or $0.44 per diluted share, an increase of 146% compared to GAAP net income of $6.2 million, or $0.20 per share in the first quarter of 2010.

Tom Mitchell, Chief Executive Officer of Fabrinet, said, “We are pleased to have achieved record revenues in the first quarter and continued our long history of profitability. The strong revenue and earnings performance was above expectations, despite component shortages which limited our production capacity. We saw strength in all product areas, with growth from lasers and sensors above our overall growth rate. Looking ahead, we believe that we are well positioned for further growth over the longer-term.”

Business Outlook

• The company expects second quarter revenue to be in the range of $170 million to $175 million.

• GAAP net income is expected to be in the range of $0.42 to $0.45 per share, based on approximately 34.3 million fully diluted weighted average shares outstanding. 

The company reported GAAP EPS of $0.36 in the comparable fiscal 2010 period.

2010 Fiscal Fourth Quarter:

• Revenue of $157.4 million for the quarter ended June 25, 2010, an increase of 91% compared to revenue of $82.4 million for the comparable period in 2009.
  
• GAAP net income in the fourth quarter was $13.6 million, or $0.43 per diluted share, an increase of 245% compared to GAAP net income of $3.9 million, or $0.13 per share in the fourth quarter of 2009.
  
• For fiscal year 2010, Fabrinet reported total revenue was $505.7 million, an increase of 15% compared to revenue of $441.1 million for the fiscal year 2009.
  
• GAAP net income was $44.3 million, or $1.41 per diluted share, a 42% increase compared to a GAAP net income of $31.3 million, or $1.00 per share in fiscal 2009.

Tom Mitchell, Chief Executive Officer of Fabrinet, said, “We are pleased with our solid revenue growth in the fourth quarter and full year, and in continuing our long history of profitability. We believe we are expanding our position as a leading specialized engineering and manufacturing partner for the growing optical communications, industrial laser, and sensor markets. We are currently managing the transfer of multiple projects from various customers to Fabrinet in all of these target markets. Our recently completed IPO provided us with approximately $24 million in additional working capital, and we expect our asset-light manufacturing model to continue to enable us to generate strong return on invested capital.”

Mitchell added, “Looking ahead, we believe that macro trends, including continuing demand for more bandwidth and an increasing number of applications for optics, industrial lasers and sensors, will continue to work in our favor. We believe we can continue to attract new customers, as well as engage in additional projects with existing customers. These growth drivers, combined with good revenue visibility from contracts that are currently under agreement, makes us optimistic about our prospects. With our unique engineering and manufacturing capabilities and expertise, and expanding opportunities, we believe we are well positioned to continue to grow our business and build value for our shareholders over the longer-term.”

Business Outlook

Based on information available as of August 18, 2010, Fabrinet is issuing guidance for the first quarter of fiscal 2011 as follows:

The company expects first quarter revenue to be in the range of $160 million to $165 million. GAAP net income is expected to be in the range of $0.38 to $0.40 per share, based on approximately 34.3 million fully diluted weighted average shares outstanding. The Company $0.20 in its prior year first quarter.

GeoTeam note: Even though EPS growth is expected to be healthty for its fiscal year, quarterly analyst EPS estimates indicate flat growth for the second, third and fourth quarters. 

Recall, from our original note:

We still need to gain an understanding of the EPS growth story.  Although its 2010 March ending fiscal third adjusted EPS rose 177% to $0.36, the nine months EPS growth rate was only around 4.0%.  Trailing adjusted EPS is about $0.90 giving the stock a P/E of 11 at its current price of $110.10.

We will still track this story for EPS upside surprises.

We will begin tracking Fabrinet which recently completed its IPO:

Industry Growth Appears Promising:

• According to Ovum-RHK, annual sales for the global optical communications components and modules market are expected to increase from approximately $3.1 billion in 2009 to approximately $5.2 billion in 2014.
• According to the Optoelectronics Industry Development Association, the diode and non-diode lasers market is expected to increase from approximately $8.3 billion in 2009 to approximately $10.3 billion in 2013.
• According to Frost & Sullivan, a business research and consulting firm, the total sensors market is expected to increase from approximately $44.1 billion in 2008 to approximately $69.2 billion in 2013.

Consistent Profitability:

"We have been consistently profitable since our inception, achieving 41 consecutive quarters of profitable operations. Over our last five fiscal years, despite the 13.7% decline in our revenues from fiscal 2008 to fiscal 2009, our total revenues increased from $202.0 million in fiscal 2005 to $441.1 million in fiscal 2009, representing a compound annual growth rate of 21.6%."

"Our gross profit margin increased from 5.6% in fiscal 2005 to 13.2% in fiscal 2009, while our operating income as a percentage of revenues increased from 2.4% in fiscal 2005 to 7.6% in fiscal 2009. As of March 26, 2010, our facilities comprised approximately 1,100,000 total square feet, including approximately 168,000 square feet of office space and approximately 932,000 square feet devoted to manufacturing and related activities, of which approximately 290,000 square feet were clean room facilities. Of the aggregate square footage of our facilities, approximately 832,000 square feet are located in Thailand and the balance is located in the PRC and the U.S."

Liquidity Intact:

"We believe that our current cash and cash equivalents, short-term investments, cash flow from operations and the net proceeds from this offering will be sufficient to meet our anticipated cash needs, including for working capital and capital expenditures, for at least the next 12 months. Our cash flows from operations have generally been sufficient to internally fund our working capital requirements in recent years. Additionally, we have access to short-term credit facilities of approximately $50 million to support any unanticipated liquidity requirements. Historically, our internally generated working capital and short-term credit facilities have been adequate to support our liquidity requirements."

"We completed the construction of Pinehurst Building 5 in Thailand in May 2008. With the addition of Building 5, we believe that we will have sufficient manufacturing capacity in place for the next 18 months. We have three long-term loans that will come due within the next 15 months and anticipate that our internally generated working capital will be adequate to repay these obligations."

We still need to gain an understanding of the EPS growth story.  Although its 2010 March ending fiscal third adjusted EPS rose 177% to $0.36, the nine months EPS growth rate was only around 4.0%.  Trailing adjusted EPS is about $0.90 giving the stock a P/E of 11 at its current price of $110.10.

GeoTeam Note:

• The company does have some debt on its balance sheet which could limit P/E expansion but 14.1% the Debt to Equity is under our 20% maximum threshold.

We will provide updates if we determine that EPS growth will continue the pattern set in the third quarter.