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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 February 28, 1997.

  ---   Transition report pursuant to Section 13 or 15(d) of the Securities
        Exchange Act of 1934

        For the transition period from _______________ to ______________.

Commission file number:  0-21308

                             JABIL CIRCUIT, INC.

            (Exact name of registrant as specified in its charter)

          DELAWARE                                           38-1886260        
(State or other jurisdiction of                           (I.R.S. Employer     
incorporation or organization)                            Identification No.)
                   

                            10800 Roosevelt Blvd.
                          St. Petersburg, FL  33716
         (Address of principal executive offices, including zip code)

       Registrant's Telephone No., including area code:  (813) 577-9749

                       ________________________________


Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days:

                             Yes   X      No 
                                  ---        ---

As of February 28, 1997, there were 18,213,614 shares of the Registrant's 
Common Stock outstanding.

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                     JABIL CIRCUIT, INC. AND SUBSIDIARIES

                                    INDEX


                        PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

        Consolidated Balance Sheets at
        February 28, 1997 and August 31, 1996.............................. 3 

        Consolidated Statements of Operations
        for the six months ended February 28, 1997 and 1996................ 4
                
        Consolidated Statements of Cash Flows
        for the six months ended February 28, 1997 and 1996................ 5

        Notes to Consolidated Financial Statements......................... 6

Item 2. Management's Discussion and Analysis of 
        Financial Condition and Results of Operations...................... 8



                         PART II.  OTHER INFORMATION

Item 4. Submission of matters to a vote of security holders................11

Item 6. Exhibits and Reports on Form 8-K...................................12   
        
Signatures.................................................................13
        


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PART I.  FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS
        JABIL CIRCUIT, INC. AND SUBSIDIARIES
                CONSOLIDATED BALANCE SHEETS
            (in thousands, except for share and per share data)


August 31, February 28, 1996 1997 ---------- ------------ ASSETS Current assets Cash $ 73,319 $ 65,158 Accounts receivable - Net 84,839 90,838 Inventories 64,869 78,281 Refundable income taxes 0 0 Prepaid expenses and other current assets 340 463 Deferred income taxes 3,971 5,142 -------- -------- Total current assets 227,338 239,882 Property, plant and equipment, net 70,704 91,254 Other assets 1,898 1,882 -------- -------- $299,940 $333,018 ======== ======== 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 93,372 Accrued expenses 24,550 24,745 Income taxes payable 5,979 3,146 -------- -------- Total current liabilities 111,580 123,722 Long term debt, less current installments 57,257 56,217 Capital lease obligations, less current installments 1,114 975 Deferred income taxes 2,883 2,359 Deferred grant revenue 2,872 2,729 -------- -------- Total liabilities 175,706 186,002 -------- -------- Stockholders' equity Common stock 18 18 Additional paid in capital 56,924 59,792 Retained earnings 67,319 87,206 -------- -------- 124,261 147,016 Less: Unearned compensation from grant of stock option 27 0 -------- -------- Net stockholders' equity 124,234 147,016 -------- -------- $299,940 $333,018 ======== ========
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 Six months ended -------------------------- --------------------------- Feb. 29, Feb. 28, Feb. 29, Feb. 28, 1996 1997 1996 1997 -------- -------- -------- --------- Net revenue $235,628 $222,187 $469,483 $425,257 Cost of revenue 217,360 195,711 433,897 375,689 -------- -------- -------- -------- Gross profit 18,268 26,476 35,586 49,568 Operating expenses: Selling, general and administrative 6,070 7,918 11,631 15,645 Research and development 528 804 927 1,509 -------- -------- -------- -------- Operating income 11,670 17,754 23,028 32,414 Interest expense 2,323 389 4,986 1,047 -------- -------- -------- -------- Income before income taxes 9,347 17,365 18,042 31,367 Income taxes 3,009 6,306 6,489 11,480 -------- -------- -------- -------- Net income $ 6,338 $ 11,059 $ 11,553 $ 19,887 ======== ======== ======== ======== Net income per share $ 0.34 $ 0.58 $ 0.65 $ 1.04 ======== ======== ======== ======== Weighted average number of shares of common stock and common stock equivalents 18,818 19,163 17,892 19,053 ======== ======== ======== ========
See Accompanying Notes to Consolidated Financial Statements 4 5 JABIL CIRCUIT, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (Unaudited)
February 29, February 28, 1996 1997 Cash flows from operating activities: Net income $11,553 $19,887 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 8,624 11,447 Recognition of grant revenue (1,082) (1,065) Deferred income taxes (1,102) (1,695) (Gain) loss on sale of property (6) (307) Foreign currency translation loss 80 0 Changes in operating assets and liabilities: Accounts receivable 4,059 (5,999) Inventories (20,128) (13,412) Prepaid expenses and other current assets 256 (123) Refundable income taxes 2,154 0 Other assets (630) 14 Accounts payable and accrued expenses (5,768) 12,134 ------- ------- Net cash provided by (used in) operating activities (1,990) 20,881 ------- ------- Cash flows from investing activities: Acquisition of property, plant and equipment (19,376) (32,036) Proceeds from sale of property and equipment 197 375 ------- ------- Net cash used in investing activities (19,179) (31,661) ------- ------- Cash flows from financing activities: Increase/(Decrease) in note payable to bank (22,000) 0 Proceeds from long-term debt 9,222 0 Payments of long-term debt (6,405) (1,040) Payments of capital lease obligations (445) (131) Net proceeds from issuance of common stock 39,651 2,868 Proceeds from Scottish grant 0 922 ------- ------- Net cash provided/(used) by financing activities 20,023 2,619 ------- ------- Net increase (decrease) in cash (1,146) (8,161) Cash at beginning of period 5,486 73,319 ------- ------- Cash at end of period $ 4,340 $65,158 ======= ======= Supplemental disclosure information: Cash Paid: Interest $ 2,252 $ 2,196 ------- ------- Income taxes $ 1,550 $12,340 ------- ------- Non-Cash Investing and Financing activities: Tax benefit of options exercised $ 111 $ 1,103 ======= =======
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 six month period ended February 28, 1997 are not necessarily indicative of the results that should be expected for a full fiscal year. Net Income Per Share Net income per share is computed using the weighted average number of common shares and dilutive common equivalent shares outstanding during the applicable period. Common equivalent shares consist of stock options, using the treasury stock method. Commitments and Contingencies At February 28, 1997 the Company had outstanding approximately $14 million in equipment purchase commitments, and approximately $30.0 million in 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 second 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 amount claimed by Epson. The Company believes that adequate provision has been 6 7 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 second quarter and first six months of fiscal 1997 decreased 5.7% and 9.4% to $222 million and $425 million respectively from $236 million and $469 million in the second quarter and first six months 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 37% and 34% of net revenue for the second quarter and first six months of fiscal 1997 respectively, compared to 39% and 40% for the same periods of fiscal 1996. The decrease in foreign source revenue was attributable to decreased exports form the Company's domestic locations. Gross margin increased to 11.9% and 11.7% for the second quarter and first six months respectively of fiscal 1997 from 7.8% and 7.6% for the second quarter and first six months 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 second quarter and first six months of fiscal 1997 increased to 3.6% and 3.7% of net revenue respectively compared to 2.6% and 2.5% in the second quarter and first six months of the prior fiscal year, or $1.8 million and $4.0 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 second quarter and first six months of fiscal 1997 to 0.4% as compared to 0.2% for the second quarter and first six months of fiscal 1996. In absolute dollars, the expenses increased approximately $276,000 and $582,000 versus the same periods of fiscal 1996 due to expansion of circuit design activities. Interest expense decreased $2.0 million and $4.0 million respectively in the second quarter and first six months of fiscal 1997 to $0.4 million and $1.0 million from $2.3 million and $5.0 million in the second quarter and first six months of fiscal 1996 due to a decrease in total borrowings, lower effective interest rates and interest income earned on cash balances. 8 9 The Company's effective tax rate increased to 36.3% and 36.6% in the second quarter and first six months of fiscal 1997 respectively from 32.2% and 36.0% in the second quarter and first six months of fiscal 1996. Fiscal 1996 tax rates were lower due to utilization of net operating losses from international operations. 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 February 28, 1997 the Company's principal sources of liquidity consisted of cash and available borrowings under the Company's credit facilities. The Company and its subsidiaries have committed line of credit facilities in place with a syndicate of banks that provide up to $60 million of working capital borrowing capacity. The Company generated $20.9 million of cash in operating activities for the six months ended February 28, 1997. The generation of cash was primarily due to net income of $19.9 million, depreciation and amortization of $11.4 million and an increase of accounts payable and accrued expenses of $12.1 million, offset by an increase in inventories of $13.4 million and an increase in accounts receivable of $6.0 million. Net cash used in investing activities of $31.6 million for the six months ended February 28, 1997 was a result of the Company's capital expenditures for equipment world-wide in order to support increased activities and the construction of new manufacturing facilities. Net cash of $2.6 million was provided by financing activities for the six months ended February 28, 1997. This was primarily attributable to $1.0 million payments of long term debt offset by $2.8 million of proceeds from the issuance of common stock. 9 10 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. 10 11 JABIL CIRCUIT, INC. AND SUBSIDIARIES Part II - OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders. At the company's annual stockholders meeting on January 23, 1997, the following members were elected to the board of directors: FOR: WITHHELD ---- -------- William D. Morean 16,620,268 93,790 Thomas A. Sansone 16,620,268 93,790 Ronald J. Rapp 16,619,268 94,790 Lawrence J. Murphy 16,637,768 76,290 Mel S. Lavitt 16,619,568 94,490 Steven A. Raymund 16,638,668 75,390 The following proposals were approved at the annual shareholders meeting:
AFFIRMATIVE NEGATIVE VOTES VOTES WITHHELD ----------- -------- -------- 1 To approve amendment of the Company's 1992 Employee Stock Purchase Plan to increase by 200,000 shares the number of shares reserved for issuance thereunder. 16,563,604 143,986 4,468 2 To approve amendment to the Company's 1992 Stock Option Plan to increase by 400,000 shares the number of shares reserved for issuance thereunder. 15,288,245 1,287,472 6,868 3 To ratify selection of KPMG Peat Marwick as independent auditors for the Company. 16,707,335 3,117 3,606
11 12 JABIL CIRCUIT, INC. AND SUBSIDIARIES Part II - OTHER INFORMATION Item 6: Exhibits and Reports on Form 8-K (a) Exhibits 11.1 Statement re Computation of Net Income per Share 27.1 Financial Data Schedule (for SEC use only) (b) Form 8-K No Reports on Form 8-K were filed by the Registrant during the quarter ended February 28, 1997. 12 13 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: 4/14/97 /s/ Thomas A.Sansone ------------ ---------------------------- Thomas A. Sansone President Date: 4/14/97 /s/ Chris A. Lewis ------------ ---------------------------- Chris A. Lewis Chief Financial Officer 13
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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 Six months ended February 28, February 28, 1996 1997 1996 1997 ------- ----------------------------------------------- Net income $ 6,338 $11,059 $11,553 $19,887 ======= =============================================== Computation of weighted average common and common equivalent shares outstanding: Common stock 17,716 18,090 16,691 17,963 Options 1,102 1.073 1,201 1,090 ------- ----------------------------------------------- Total number of shares used in computing per share amounts 18,818 19,163 17,892 19,053 ======= =============================================== Net income per share $0.34 $0.58 $0.65 $1.04 ======= ===============================================
 

5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF JABIL CIRCUIT, INC. FOR THE SIX MONTHS ENDED FEBRUARY 28, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS AUG-31-1997 SEP-01-1996 FEB-28-1997 65,158 0 92,458 1,620 78,281 239,882 157,731 66,477 333,018 123,722 0 0 0 18 0 333,018 425,257 425,257 375,689 375,689 17,154 0 1,047 31,367 11,480 19,887 0 0 0 19,887 1.04 1.04