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Technology Stocks : Jabil Circuit (JBL) -- Ignore unavailable to you. Want to Upgrade?

To: David E. Henry who wrote (2315)	12/19/1997 7:57:00 AM
From: Dr. Doktor	Read Replies (2) \| Respond to of 6317

Here is the earnings release with expanded comments. This release contains certain forward-looking statements, which are subject to a number of risks and uncertainties. Some factors that could cause actual results to differ materially include: business conditions and growth in the contract manufacturing industry and the general economy; variability of operating results; dependence on a limited number of customers; limited availability of components; dependence on certain industries; variability of customer requirements; and other risk factors described in the company's most recently filed SEC documents such as the Form 10-K, filed 12/1/97. JABIL CIRCUIT RESULTS SET EARNINGS RECORD EARNINGS INCREASE 112 PERCENT St. Petersburg, FL - December 16, 1998....Jabil Circuit, Inc. (NASDAQ: JBIL), electronics contract manufacturer to the world market for circuit board assemblies, today reported record earnings for the first fiscal quarter of 1998 ended November 30, 1997. Revenue for the quarter increased 57 percent to $320 million compared to $203 million for the same period of fiscal 1997. Jabil's first quarter of fiscal 1998 net income increased 116 percent to $19.1 million or $.49 per share compared with $8.8 million or $.23 per share for the first quarter of fiscal 1997. Gross profit for Jabil's first quarter increased 79 percent to $41.3 million or 12.9 percent of revenues compared to $23.1 million or 11.4 percent of revenue for the corresponding quarter of fiscal 1997. Operating income for the first fiscal quarter of 1998 increased 100 percent to $29.4 or 9.2 percent of revenue compared to $14.7 or 7.2 percent of revenue for the first fiscal quarter of 1997. Jabil Circuit President Thomas A. Sansone said, "We are pleased with the record earnings level for the first quarter of fiscal 1998, especially in light of the fact that during the quarter we moved into new facilities in Malaysia, Scotland and Mexico. These results reflect a 32 percent compound annual growth rate (CAGR) in operating income. This demonstrates the kind of operational capability we have developed over the last several years." Income Statement -- Sequential Trend Highlights Revenue in the first fiscal quarter increased by $14.3 million, a five percent increase from the fourth quarter, reflecting an increase in production levels. Gross margin continued at 12.9 percent of revenue, as in the prior quarter, reflecting the ongoing concentration of product mix in high value added products and continued high levels of plant loading. SG&A increased slightly to $11.1 million, or 3.5 percent of revenue. This is a reduction from 3.6 percent of revenue in the previous quarter. R & D increased slightly in absolute dollars to $912 thousand, continuing to represent .3 percent of revenue. Operating income increased sequentially by 7.2 percent to $29.4 million, or 9.2 percent of revenue. Operating income growth is our key financial objective. Net interest expense increased by $554 thousand, to $713 thousand, representing .2 percent of revenue. Income tax rates decreased to 33.4 percent of income compared to 33.7 percent in the prior sequential quarter, slightly lower than our normalized rate of 34.5 percent. Net income after tax was $19.1 million or 6.0 percent of revenue, as in the prior sequential quarter. This resulted in an EPS of $.49 on an average 38,675,000 shares during the period, fully diluted. Balance Sheet -- Sequential Trend Highlights For the first quarter, we maintained similar asset turnover ratios from August, generating positive cash flow from operations for the eighth consecutive quarter. Accounts receivable increased by $17 million to $134 million in the first quarter of fiscal 1998 as compared to $117 million in the fourth quarter of fiscal 1997. Inventories increased by $16 million in the first quarter to $112 million as compared to $96 million as of the end of August. Calculated inventory turns were approximately 10, lower than 11 turns in the August quarter, but on target to the Company goal. Cash balances were $43 million at the end of the first fiscal quarter, as compared to $45 million at the end of the fourth quarter of fiscal 1997. Fixed Assets increased by $24 million to $164 million reflecting $31 million in capital expenditures, offset by $7 million in depreciation. We are currently utilizing $10 million of our revolving credit facility in order to fund expansion in Mexico, and growth in other international locations. Long term debt decreased by $2 million to $50 million in the first quarter. Our long-term debt is represented by the $50 million private placement debt funded in May of last fiscal year. Principal payments on this debt begin mid1999. The Company's debt to capitalization ratio is now at 23 percent. Total liabilities to equity ratio at the end of the quarter was 1.3 to 1. For the quarter, our average return on assets was 17.6 percent, with an average return on equity of 39.9 percent. Business Notes (NOTE: The following statements are forward looking; actual results may differ materially.) Recent Developments. Fears about Asian financial turmoil and earnings pre-announcement comments from some of our customers have led to speculation on adverse impact to our future business. We think this speculation is not well grounded, because we do not produce the products significantly affected by these developments. Asia. The financial decline of Asian economies is of modest impact to us. We estimate that less than six percent of our revenue is ultimately consumed in Asian markets. The short-term effect of devaluation of the Malaysian currency will be to reduce manufacturing costs from our Malaysian factory. This could have the effect of modestly increasing Malaysian income. 3 Com. 3Com recently announced that they would not attain current earnings estimates. We do not produce the modem products and systems products that 3Com identified as the source of shortfalls in earnings. We anticipate that 3Com will continue to drive near 20 percent of revenue and operating income growth for our Company. Quantum. Quantum pre-announced anticipated earnings shortfalls based primarily on lower demand for hard disk drive products. Our production for Quantum is exclusively for tape drive products, which currently enjoy strong demand. New product transitions may slow growth somewhat, but demand appears solid. New Business. Jabil launched production for Gateway computer during the first quarter in both the Florida and Mexico plants. Gateway is anticipated to become a truly global customer in a few months when additional parallel production launches in both Malaysia and Scotland. Initial products produced for Gateway will be business class desktop personal computer motherboards. New Plants. Mexico Plant. Factory fit out, equipment installation and launch of mass production was completed in November. Current plans call for aggressive increases in production volume for Gateway, with the launch of production for additional customers planned in the next several months. Scotland Plant. Transfer of equipment, production and staff is underway and will be largely completed by the end of December. Malaysian Plant. The Malaysian plant completed the transfer of all production to the new factory during November. Outlook Sansone commented that the results for the first quarter were excellent and show continuing delivery of targeted growth rates in operating income. "We think the fear in financial markets is overstated and is painting the electronics industry with too broad a brush. We look forward to continuing strength in our business for the balance of fiscal 1998," said Sansone.

To: David E. Henry who wrote (2315)	12/19/1997 8:01:00 AM
From: Tom Latham	Read Replies (1) \| Respond to of 6317

Your comment is "hold tight" and I hope people do. This ASIA thing is going to be a copout for every company that has a penny shortfall thru ASIA realism or any other reason and the media IS NOT GOING TO LET UP ON THIS because it sells them to the public as a media source. Hanging on as a long. ** Doc.,,,, thanks for this, this a MUST READ they are VERY BULLISH. re earning statement ... their tax rate looks high and has been continually, but they are wading thru this ** expansion in MEXICO... KEMET is moving some operations to MEX an says it saving about 2 dollars per man hour involved in production. Increase in margins could be expected after this.