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                       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, 1996.

         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 November 30, 1996, there were 17,875,114 shares of the Registrant's Common Stock outstanding. 1 2 JABIL CIRCUIT, INC. AND SUBSIDIARIES INDEX PART I. FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets at November 30, 1996 and August 31, 1996.................................................................3 Consolidated Statements of Operations for the three months ended November 30, 1996 and 1995.................................................4 Consolidated Statements of Cash Flows for the three months ended November 30, 1996 and 1995.................................................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
2 3 JABIL CIRCUIT, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except for share and per share data)
August 31 November 30 1996 1996 --------- ----------- (unaudited) ASSETS Current assets Cash $73,319 $72,419 Accounts receivable - Net 84,839 77,923 Inventories 64,869 67,496 Refundable income taxes -- -- Prepaid expenses and other current assets 340 308 Deferred income taxes 3,971 5,142 -------- -------- Total current assets 227,338 223,288 Property, plant and equipment, net 70,704 78,609 Other assets 1,898 292 -------- -------- $299,940 $302,189 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Current installments of long term debt 1,979 1,979 Current installments of capital lease obligations 472 480 Accounts payable 78,600 73,994 Accrued expenses 24,550 23,284 Income taxes payable 5,979 6,161 -------- -------- Total current liabilities 111,580 105,898 Long term debt, less current installments 57,257 56,713 Capital lease obligations, less current 1,114 1,034 installments Deferred income taxes 2,883 2,699 Deferred grant revenue 2,872 2,297 -------- -------- Total liabilities 175,706 168,641 -------- -------- Stockholders' equity Common stock 18 18 Additional paid in capital 56,924 57,390 Retained earnings 67,319 76,147 -------- -------- 124,261 133,555 Less: Unearned compensation from grant of stock option 27 7 -------- -------- Net stockholders' equity 124,234 133,548 -------- -------- $299,940 $302,189 ======== ========
See Accompanying Notes to Consolidated Financial Statements 3 4 JABIL CIRCUIT, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except for per share data)
Three months ended November 30 ------------------------- (Unaudited) 1995 1996 -------- -------- Net revenue $233,855 $203,070 Cost of revenue 216,537 179,978 -------- -------- Gross profit 17,318 23,092 Operating expenses: Selling, general and administrative 5,561 7,727 Research and development 399 705 -------- -------- Operating income 11,358 14,660 Interest expense, net 2,663 658 -------- -------- Income before income taxes 8,695 14,002 Income taxes 3,480 5,174 -------- -------- Net income $5,215 $8,828 ======== ======== Net income per share $0.31 $0.47 ======== ======== Weighted average number of shares of common stock and common stock equivalents 16,967 18,942
See Accompanying Notes to Consolidated Financial Statements 4 5 JABIL CIRCUIT, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited)
For the three months ended November 30, 1995 1996 ------- ------- Operating Activities Net Income 5,215 8,828 Adjustments to reconcile Net Income to Net Cash Provided by operating activities: Depreciation & Amortization 4,037 5,433 Recognition of Grant Revenue (568) (575) Deferred income taxes (485) (1,355) (Gain) Loss on sale of property (2) (17) Changes in operating assets & liabilities: Accounts Receivable 3,381 6,916 Inventories (53,923) (2,627) Prepaid expenses & other current assets 371 32 Refundable Income Taxes 2,079 - Other Assets (229) 1,603 Accounts payable & accrued expenses 16,138 (5,872) Income taxes payable - 182 ------- ------- Net cash provided by (used in) operating activities (23,986) 12,548 ------- ------- Cash flow from investing activities - Net Acquisition of property, plant and equipment (12,885) (13,318) Proceeds from the sale of property and equipment 35 20 ------- ------- Net cash used in investing activities (12,850) (13,298) ------- ------- Cash flows from financing activities: Note Payable - Net (5,500) - Proceeds from long-term debt 3,042 - Payments of long-term debt (1,786) (544) Payments of capital lease obligations (283) (72) Net proceeds from issuance of common stock 39,286 466 ------- ------- Net cash provided by financing activities 34,759 (150) Net increase/(decrease) in cash (2,077) (900) Cash at beginning of period 5,486 73,319 ------- ------- Cash at end of period $3,409 $72,419 ======= ======= Supplemental disclosure information: Cash Paid Interest 2,252 1,546 Income Taxes 1,550 5,250 Non-Cash Investing and Financing activities: Tax benefit of options exercised 36 -
See Accompanying Notes to Consolidated Financial Statements 5 6 JABIL CIRCUIT, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION The accompanying consolidated financial statements of Jabil Circuit, Inc. and subsidiaries ("the Company") are unaudited and have been prepared based upon prescribed guidance of the Securities and Exchange Commission ("SEC"). As such, they do not include all disclosures required by generally accepted accounting principles, and should be read in conjunction with the annual audited consolidated statements as of and for the year ended August 31, 1996 contained in the Company's 1996 annual report on Form 10-K. In the opinion of management, the accompanying consolidated financial statements include all adjustments, consisting of normal and recurring adjustments necessary for a fair presentation of the financial position, results of operations and cash flows for the periods presented when read in conjunction with the annual audited consolidated financial statements and related notes thereto. The results of operations for the three month period ended November 30, 1996 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, 1996 the Company had outstanding approximately $10,440,000 in equipment purchase commitments, and approximately $4,800,000 in purchase commitments related to the construction of new manufacturing facilities. During the 1994 fiscal year, the Company instituted a breach of contract action against Epson of America Inc. requesting certain specified and unspecified monetary damages. On July 21, 1995, Epson filed a counterclaim citing damages for, among other things, breach of contract and negligent misrepresentation. The Company expects discovery to conclude during the first half of fiscal 1997 and the trial to commence in the second half of fiscal 1997 in the United States District Court for the Middle District of Florida. The parties have been unsuccessful in mediating or arbitrating the dispute, despite participation in several non-binding mediation and arbitration sessions. The Company intends to pursue aggressively its legal claims and contest vigorously Epson's counterclaims. The Company believes strongly in the validity of its claims and believes that any potential exposure to the Company is substantially less than the 6 7 amount claimed by Epson. The Company believes that adequate provision has been made in its consolidated financial statements for adverse exposure related to this matter. However, such litigation may result in substantial costs and diversion of resources and, given the uncertainties inherent in litigation, could have a material adverse effect on the Company's operating results and financial condition, if decided adversely to the Company. The Company is party to certain other law suits in the ordinary course of business. Management does not believe that these proceedings, individually or in aggregate, are material or that any adverse outcomes of these lawsuits will have a material adverse effect on the Company's financial statements. 7 8 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 of fiscal 1997 decreased 13% to $203.1 million from $233.9 million in the first quarter of fiscal 1996. This decrease was primarily due to the end of production of certain hard drive and personal computer products, offset by increased production of communications products. Foreign source revenue represented 31% of net revenue for the first quarter of fiscal 1997, compared to 40% for the same period of fiscal 1996. The decrease in foreign source revenue was attributable to decreased exports form the Company's domestic locations. Gross margin increased to 11.4% for the first quarter of fiscal 1997 from 7.4% for the first quarter of fiscal 1996. This increase resulted from a shift in product mix to higher value added products along with increased utilization of the Company's international operations. Selling, general and administrative expenses in the first quarter of fiscal 1997 increased to 3.8% of net revenue, compared to 2.4% in the first quarter of the prior fiscal year, or $2.1 million in absolute dollars. The increase was due to additional staffing at an operational level and increased resources at a corporate level. Research and development expenses increased as a percentage of net revenue in the first quarter of fiscal 1997 to 0.4% as compared to 0.2% for the first quarter of fiscal 1996. In absolute dollars, the expenses increased approximately $306,000 versus the same period of fiscal 1996 due to expansion of circuit design activities. Interest expense decreased $2.0 million in the first quarter of fiscal 1997 to $0.7 million from $2.7 million in the first quarter of fiscal 1996 due to a decrease in total borrowings, lower effective interest rates and interest income earned on cash balances. The Company's effective tax rate decreased to 37% in the first quarter of fiscal 1997 from 40% in the first quarter of fiscal 1996. The reduced effective income tax rate was due to lower effective tax rates of the Company's international operations in fiscal 1997. 8 9 BUSINESS FACTORS Due to the nature of turnkey manufacturing and the Company's relatively small number of customers, the Company's quarterly operating results are affected by the levels and timing of orders; the level of capacity utilization of its manufacturing facilities and associated fixed costs; fluctuations in materials costs; and by the mix of materials costs versus manufacturing costs. Similarly, operating results are affected by price competition; level of experience in manufacturing a particular product; degree of automation used in the assembly process; efficiencies achieved by the Company in managing inventories and fixed assets; timing of expenditures in anticipation of increased sales; customer product delivery requirements; and shortages of components or labor. In the past, some of the Company's customers have terminated their manufacturing arrangement with the Company, and other customers have significantly reduced or delayed the volume of manufacturing services ordered from the Company. Any such termination of a manufacturing relationship or change, reduction or delay in orders could have an adverse affect of the Company's results of operations. LIQUIDITY AND CAPITAL RESOURCES At November 30, 1996 the Company's principal sources of liquidity consisted of cash and available borrowings under the Company's credit facilities. The Company and its subsidiaries have committed line of credit facilities in place with a syndicate of banks that provide up to $60 million of working capital borrowing capacity. The Company generated $12.5 million of cash in operating activities for the three months ended November 30, 1996. The generation of cash was primarily due to net income of $8.8 million, depreciation and amortization of $5.4 million and a reduction in accounts receivable of $6.9 million, offset by a reduction of accounts payable and accrued expenses of $5.8 million and an increase in inventories of $2.6 million. Net cash used in investing activities of $13.3 million for the three months ended November 30, 1996 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 $0.2 million was used in financing activities for the three months ended November 30, 1996. This was primarily attributable to $0.5 million payments of long term debt offset by $0.5 million of proceeds from the issuance of common stock. The Company believes that cash on hand, funds provided by operations and available under the credit agreements will be sufficient to satisfy its currently anticipated working capital and capital expenditure requirements for the next twelve months. 9 10 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, 1996. 10 11 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: 1/14/97 /s/ Thomas A. Sansone ------- --------------------------- Thomas A. Sansone President Date: 1/14/97 /s/ Chris A. Lewis ------- --------------------------- Chris A. Lewis Chief Financial Officer 11
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                                                                EXHIBIT 11.1


                              JABIL CIRCUIT INC.
                STATEMENT OF COMPUTATION OF EARNINGS PER SHARE
                 (in thousands, except for per share amounts)
                                 (Unaudited)


Three months ended November 30, 1995 1996 ------ ------ Net income 5,215 8,828 ====== ====== Computation of weighted average common and equivalent shares outstanding: Common stock 15,666 17,834 Options 1,301 1,108 ------ ------ Total number of shares used in computing per share amounts 15,967 18,942 ====== ====== Net income per share 0.31 0.47 ====== ======
 

5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET AND THE CONSOLIDATED STATEMENT OF INCOME FILED AS PART OF THE ANNUAL REPORT ON FORM 10-K AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ANNUAL REPORT ON FORM 10-K. 1,000 3-MOS AUG-31-1997 NOV-30-1996 72,419 0 79,063 1,170 67,496 223,288 140,240 61,631 302,189 105,898 0 0 0 18 133,530 302,189 203,070 203,070 179,978 179,978 8,432 0 658 14,002 5,174 8,828 0 0 0 8,828 0.47 0.47