3/17/98 Bus. Wire 17:03:00
Business Wire
Copyright (c) 1998, Business Wire
Tuesday, March 17, 1998
Jabil Circuit Results Set Earnings Record; Earnings Increase 82 Percent
ST. PETERSBURG, Fla.--(BUSINESS WIRE)--March 17, 1998--Jabil Circuit, Inc.
(NASDAQ: JBIL), electronics contract manufacturer to the world market for
circuit board assemblies, today reported record earnings for the second fiscal
quarter of 1998 ended February 28, 1998. Revenue for the quarter increased 49
percent to $330.7 million compared to $222.1 million for the same period of
fiscal 1997.
Jabil's second quarter of fiscal 1998 net income increased 82 percent to
$20.1 million or $.52 per diluted share compared with $11.1 million or $.29 per
diluted share for the second quarter of fiscal 1997.
Gross profit for Jabil's second quarter increased 66 percent to $44.1 million
or 13.3 percent of revenues compared to $26.5 million or 11.9 percent of
revenue for the corresponding quarter of fiscal 1997.
Operating income for the second fiscal quarter of 1998 increased 71 percent
to $30.3 million or 9.2 percent of revenue compared to $17.8 million or 8.0
percent of revenue for the second fiscal quarter of 1997.
"We are pleased with the record revenue and earnings level for the second
quarter of fiscal 1998," said Jabil Circuit President Thomas A. Sansone. "These
results reflect a strong performance, although reduced revenues from our
peripheral business slowed overall operating income growth to a 14 percent
compound annual growth rate," he said.
Income Statement -- Sequential Trend Highlights
-- Revenue in the second fiscal quarter increased by $11.2 million,
a three percent increase from the first quarter, reflecting an
increase in production levels.
-- Gross margin increased to 13.3 percent of revenue, reflecting the
ongoing concentration of product mix in high value added products
and continued high levels of plant loading.
-- SG&A increased to $12.9 million, or 3.9 percent of revenue. The
increase reflects increases in Mexico, information technology and
corporate staff.
-- R & D decreased slightly in absolute dollars to $879 thousand,
continuing to represent .3 percent of revenue.
-- Operating income increased sequentially to $30.3 million, or 9.2
percent of revenue. This represents a 14 percent compound annual
growth rate (CAGR) over the first quarter. Operating income
growth is the Company's key financial objective.
-- Net interest expense increased by $421 thousand, to $1.1 million,
representing .3 percent of revenue.
-- Income tax rates decreased to 31 percent of income compared to
33.4 percent in the prior sequential quarter, reflecting an
increase in profitability in lower tax rate areas.
-- Net income after tax was $20.1 million or 6.1 percent of revenue,
as compared to 6.0 in the prior sequential quarter. Earnings per
share for the quarter were $.52 on an average 38,564,000 shares
during the period, fully diluted.
Balance Sheet -- Sequential Trend Highlights
For our second fiscal quarter, asset turnover ratios improved from November,
generating positive cash flow from operations for the ninth consecutive
quarter.
-- Accounts receivable decreased by $14 million to $120 million in
the second quarter of fiscal 1998. This compares to $134 million
in the first quarter of fiscal 1997.
-- Inventories decreased by $22 million in the second quarter to $90
million as compared to $112 million as of the end of February.
Calculated inventory turns were approximately 13, as compared to
10 turns in the November quarter.
-- Cash balances were $56 million at the end of the second fiscal
quarter, as compared to $43 million at the end of the first
quarter of fiscal 1998.
-- Fixed assets increased by $18 million to $182 million reflecting
$26 million in capital expenditures, offset by $8 million in
depreciation.
-- The Company is not currently utilizing the $100 million credit
facility.
-- Long term debt remained constant at $50 million in the second
quarter. Long-term debt is represented by the $50 million private
placement debt funded in May of fiscal 1996. Principal payments
on this debt begin mid-1999.
-- The Company's debt-to-capitalization ratio is now at 18 percent.
Total liabilities-to-equity ratio at the end of the quarter was 1
to 1.
-- For the quarter, average return on assets was 17.6 percent, with
an average return on equity of 37.5 percent.
Business Notes
(NOTE: The following statements are forward looking; actual results
may differ materially. Please refer to the Company's most recent 10-K
for a complete description of risk factors.)
Outlook
Sansone indicated that the while the Company's results for the second quarter
were excellent, the overall business outlook is not as robust as has been over
the last few quarters. "We believe that fears of the Asian economic situation
may be leading some of our customers to reduce inventory levels for the sub
assemblies we provide them," said Sansone. The Company indicated that it is
currently seeing some near term softness in production schedules for several
major customers. "History would suggest that global electronics production
schedules will rebound after our customers' competitive positions are reset and
that contract manufacturers will resume growth patterns amplified by the trend
to outsourcing and growth in electronic products," said Sansone.
For the balance of fiscal 1998, the Company anticipates that revenue will
slow to near the level of the first fiscal quarter of the year, with a
resumption of growth in the fall quarter. The Company expects lower operating
income over the next two quarters resulting from lower demand for production
and new product transitions for existing customers.
Jabil Circuit, Inc. is an electronic manufacturer of circuit board assemblies
for international original equipment manufacturers in the communications,
personal computer, computer peripheral, automotive, medical and consumer
markets. Jabil offers circuit design, board design from schematic, prototype
assembly, volume board assembly and system assembly services from automated
manufacturing facilities in Florida, Michigan, California, Scotland, Malaysia
and Mexico.
Statement of operations and balance sheet data for Q298 attached.
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, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except for per share data)
(Unaudited)
Three months ended Six months ended
February 28, February 28,
-------------------- --------------------
1997 1998 1997 1998
---------- --------- ---------- --------
Net revenue $ 222,187 $ 330,688 $ 425,257 $ 650,200
Cost of revenue 195,711 286,628 375,689 564,795
---------- ---------- ---------- ---------
Gross profit 26,476 44,060 49,568 85,405
Operating expenses:
Selling, general and
administrative 7,918 12,858 15,645 23,935
Research and development 804 879 1,509 1,791
---------- --------- ----------- --------
Operating income 17,754 30,323 32,414 59,679
Interest expense, net 389 1,134 1,047 1,847
--------- -------- ---------- -------
Income before income taxes 17,365 29,189 31,367 57,832
Income taxes 6,306 9,050 11,480 18,622
-------- -------- --------- -------
Net income $ 11,059 $ 20,139 $ 19,887 $ 39,210
========== ========= ========= ========
Basic earnings per share $ 0.31 $ 0.54 $ 0.55 $ 1.06
========== ========= ========= ========
Diluted earnings per share $ 0.29 $ 0.52 $ 0.52 $ 1.02
========== ========= ========= ========
Common shares used in the
calculations of basic
earnings per share 36,181 37,080 35,925 37,050
========== ========= ========= ========
Common and common equivalent shares
used in the calculations of diluted
earnings per share 38,326 38,564 38,105 38,620
========== ======== ========= ========
JABIL CIRCUIT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
August 31, February 28,
1997 1998
---------------- ----------------
(Unaudited)
ASSETS
Current assets
Cash $ 45,457 $ 55,680
Accounts receivable - Net 116,987 119,545
Inventories 96,187 90,114
Prepaid expenses and other
current assets 776 1,054
Deferred income taxes 6,591 6,046
--------------- ----------------
Total current assets 265,998 272,439
---- INDEX REFERENCES ----
COMPANY (TICKER): JABIL CIRCUIT INC. (JBIL)
NEWS SUBJECT: Earnings (ERN)
MARKET SECTOR: Technology (TEC)
INDUSTRY: Semiconductors (SEM)
PRODUCT: Computer Hardware; Semiconductors (DCO DSE)
REGION: Florida; North America; United States; Southern U.S. (FL NME
US USS)
Word Count: 1409
3/17/98 BWIRE 17:03:00
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