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Press release from Business Wire

Jabil Posts Record Fourth Quarter & Fiscal Year Results

<p class='bwalignc'> <i><b>Company's Performance Substantially Ahead of Long-Term Growth Goals</b></i> </p>

Tuesday, September 27, 2011

Jabil Posts Record Fourth Quarter & Fiscal Year Results16:02 EDT Tuesday, September 27, 2011 ST. PETERSBURG, Fla. (Business Wire) -- Jabil Circuit, Inc. (NYSE: JBL), reported its preliminary, unaudited financial results for the fourth quarter and full fiscal 2011, ended August 31, 2011, announcing fiscal year revenue growth of 23 percent, operating income growth of 77 percent and earnings growth of 126 percent. “Posting a record quarter and fiscal year in the present environment is remarkable,” said Timothy L. Main, President and CEO of Jabil. “Demand for our expertise in managing global supply chain networks remains robust, especially now as customers increasingly focus on growth in developing economies.” Jabil believes that its strength in managing complex products and process technologies on a global scale has been important to exceeding its long-term growth targets in fiscal 2011. Jabil achieved growth through a combination of market share gains, new customer wins and new production from its existing customer base. Management indicated that their success rate allowed them to grow their Diversified Manufacturing Services business 43 percent in fiscal 2011, well above the long-term growth target of 20 to 30 percent per year. Performance in Enterprise & Infrastructure and High Velocity business areas were also above long-term growth targets, posting revenue growth of 18 percent and 11 percent, respectively. “In addition to progress against our long-term objectives, we generated significantly higher cash flow in fiscal 2011, enabling the return of $262 million in capital to shareholders via our dividend and share-repurchase program,” said Main. Jabil generated $828 million in cash flow from operations over the course of the year. Business expansion combined with a focus on lean manufacturing principles and capital efficiency continue to be areas of emphasis for the company. FISCAL 2011 HIGHLIGHTS Revenue from Diversified Manufacturing Services flourished by 43 percent over fiscal 2010. Specialized Services revenue improved 76 percent from fiscal 2010. Healthcare & Instrumentation revenue increased 31 percent from fiscal 2010. Industrial & Clean Tech revenue grew 19 percent from fiscal 2010. Enterprise & Infrastructure revenue increased by 18 percent over fiscal 2010. High Velocity revenue expanded 11 percent over fiscal 2010. Lean manufacturing savings increased approximately 400 percent. Generated $828 million in cash flow from operations during the fiscal year. Return on invested capital of 26 percent. Return on equity of 24 percent. Jabil returned $62 million to shareholders via dividends during fiscal 2011. Repurchased 11.5 million shares of common stock during the quarter. (Definitions used: “GAAP” means U.S. generally accepted accounting principles. Jabil defines core operating income as GAAP operating income before amortization of intangibles, stock-based compensation expense and related charges, restructuring and impairment charges, goodwill impairment charges, certain distressed customer charges, settlement of receivables and related charges and loss on disposal of subsidiaries.Jabil defines core earnings as GAAP net income before amortization of intangibles, stock-based compensation expense and related charges, restructuring and impairment charges, goodwill impairment charges, certain distressed customer charges, settlement of receivables and related charges, loss on disposal of subsidiaries, certain other expenses, net of tax and certain deferred tax valuation allowance charges.Jabil defines core earnings per share as core earnings divided by the weighted average number of outstanding shares determined under GAAP. Jabil calculates core return on invested capital by annualizing its after-tax core operating income for its most recently-ended quarter and dividing that by a two quarter average net invested capital base. Jabil reports core operating income, core earnings, core earnings per share and core return on invested capital to provide investors an additional method for assessing operating income, earnings, earnings per share and return on invested capital from what it believes are its core manufacturing operations.See the accompanying reconciliation of Jabil's core operating income to its GAAP operating income, Jabil's core earnings and core earnings per share to its GAAP net income and GAAP earnings per share, its calculation of core return on invested capital and additional information in the supplemental information.)                     QUARTERLY RESULTSQ4 2011Q4 2010 Net revenue $4.3 billion $3.9 billion GAAP operating income $165.6 million $103.0 million GAAP net income $114.3 million $58.7 million GAAP diluted earnings per share $0.52 $0.27 GAAP Return on Invested Capital 26% 15% Core operating income $187.2 million $157.0 million Core earnings $136.3 million $112.1 million Core diluted earnings per share $0.62 $0.52 Core Return on Invested Capital 30% 26%   FISCAL YEAR RESULTSFISCAL 2011FISCAL 2010 Net revenue $16.5 billion $13.4 billion GAAP operating income $578.7 million $327.6 million GAAP net income $381.1 million $168.8 million GAAP diluted earnings per share $1.73 $0.78 Core operating income $715.2 million $490.9 million Core earnings $516.3 million $330.4 million Core diluted earnings per share $2.34 $1.52   Business Update “While macroeconomic conditions remain uncertain, our expectation for continuing growth underscores our belief in the benefit of diversification and the sustained demand for our services,” said Jabil CEO Timothy Main. “Customers are most concerned with driving higher levels of performance from their supply chain networks. We intend to drive superior levels of customer loyalty by giving them peerless performance throughout our organization.”                     Fiscal Q1 2012 Guidance RangeY/Y Fiscal Q1 2011 * Net revenue $4.3 billion - $4.5 billion 8% Core operating income $185 million - $205 million 7% Core earnings per share $0.62 to $0.70 per diluted share 8% GAAP earnings per share $0.52 to $0.60 per diluted share 14%   (GAAP earnings per share for the first quarter of fiscal 2012 are currently estimated to include $0.02 per share for amortization of intangibles and $0.08 per share for stock-based compensation). * Annual growth based on mid-point of guidance. FORWARD LOOKING STATEMENT: This news release contains forward-looking statements, including those regarding our anticipated financial results for our fourth fiscal quarter and fiscal year 2011; the demand for global supply chain services; the focus of our customers on growth in developing economies; our emphasis on business expansion combined with a focus on lean manufacturing principles and capital efficiency; the uncertainty of macroeconomic conditions; our expectation for continuing growth; our belief in the benefit of diversification and the sustained demand for our services; customers' concern with driving higher levels of performance from their supply chain networks; our intention to drive superior levels of customer loyalty by giving customers peerless performance throughout our organization and our currently expected first quarter of fiscal year 2012 net revenue, core operating income, core and GAAP earnings per share results and the components thereof.The statements in this news release are based on current expectations, forecasts and assumptions involving risks and uncertainties that could cause actual outcomes and results to differ materially. These risks and uncertainties include, but are not limited to: our determination as we finalize our financial results for our fourth fiscal quarter and fiscal year 2011 that our financial results and conditions differ from our current preliminary unaudited numbers set forth herein; adverse changes in the demand, or expected demand, of our customers; changes in the demand for global supply chain services; changes in the focus of our customers; changes in our emphasis and focus on business expansion, lean manufacturing principles and capital efficiency; the expected new business opportunities in targeted segments failing to arise; changes in macroeconomic conditions, both in the U.S. and internationally; our financial performance during and after the current economic conditions; our ability to maintain and improve costs, quality and delivery for our customers; risks and costs inherent in litigation; whether our realignment of our capacity will adversely affect our cost structure, ability to service customers and labor relations; our ability to take advantage of perceived benefits of offering customers vertically integrated services; changes in technology; competition; anticipated growth for us and our industry that may not occur; managing rapid growth; managing rapid declines in customer demand that may occur; our ability to successfully consummate acquisitions and divestitures; managing the integration of businesses we acquire (including, with respect to the acquisition ofthe Italian and French sites, potential unknown liabilities and the costs associated with addressing potential reduced business activity at these sites); risks associated with international sales and operations; retaining key personnel; our dependence on a limited number of large customers; business and competitive factors generally affecting the electronic manufacturing services industry, our customers and our business; other factors that we may not have currently identified or quantified; and other risks, relevant factors and uncertainties identified in our Annual Report on Form 10-K for the fiscal year ended August 31, 2010, subsequent Reports on Form 10-Q and Form 8-K and our other securities filings. Jabil disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.Supplemental Information: The financial results disclosed in this release include certain measures calculated and presented in accordance with GAAP. In addition to the GAAP financial measures, Jabil provides supplemental, non-GAAP financial measures to facilitate evaluation of Jabil's core operating performance. The non-GAAP financial measures disclosed in this release exclude certain amounts that are included in the most directly comparable GAAP measures. The non-GAAP or core financial measures disclosed in this release do not have standard meanings and may vary from the non-GAAP financial measures used by other companies. Management believes core financial measures (which exclude the effects of the amortization of intangibles, stock-based compensation expense and related charges, restructuring and impairment charges, goodwill impairment charges, certain distressed customer charges, settlement of receivables and related charges, loss on disposal of subsidiaries, certain other expenses, net of tax and certain deferred tax valuation allowance charges) are a useful measure that facilitates evaluating the past and future performance of Jabil's ongoing operations on a comparable basis. Jabil reports core operating income, core return on invested capital, core earnings and core earnings per share to provide investors an additional method for assessing operating income, earnings and earnings per share from what it believes are its core manufacturing operations. Included in this release are Condensed Consolidated Statements of Operations as well as a reconciliation of the disclosed core financial measures to the most directly comparable GAAP financial measures. Company Conference Call Information: Jabil will hold a conference call to discuss the fourth fiscal quarter 2011 earnings today at 4:30 p.m. ET live on the Internet at http://www.jabil.com. The call will be recorded and archived on the web at http://www.jabil.com. A taped replay of the conference call will also be available September 27, 2011 at approximately 7:30 p.m. ET through midnight on October 4, 2011. To access the replay, call (800) 642-1687 from within the United States, or (706) 645-9291 outside the United States. The pass code is: 99762902. An archived webcast of the conference call will be available at http://www.jabil.com/investors/. About Jabil Jabil is an electronic product solutions company providing comprehensive electronics design, manufacturing and product management services to global electronics and technology companies. Offering complete product supply chain management from facilities in 25 countries, Jabil provides comprehensive, individualized-focused solutions to customers in a broad range of industries. Jabil common stock is traded on the New York Stock Exchange under the symbol, “JBL”. Further information is available on Jabil'swebsite: jabil.com.   JABIL CIRCUIT, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS(In thousands)(Unaudited)     August 31, August 31, 2011 2010 ASSETS Current assets: Cash and cash equivalents $ 888,611 $ 744,329 Trade accounts receivable, net 1,100,926 1,408,319 Inventories 2,227,339 2,094,135 Prepaid expenses and other current assets 868,892 349,165 Income taxes receivable 33,855 35,560 Deferred income taxes   15,737     22,510     Total current assets 5,135,360 4,654,018   Property, plant and equipment, net 1,641,335 1,451,392 Goodwill and intangible assets, net 125,305 132,568 Deferred income taxes 74,989 55,101 Other assets   80,951     74,668     Total assets $ 7,057,940   $ 6,367,747     LIABILITIES AND EQUITY Current liabilities: Current installments of notes payable and long-term debt $ 74,160 $ 167,566 Accounts payable 2,885,168 2,741,719 Accrued expenses 892,391 672,252 Income taxes payable 32,987 19,236 Deferred income taxes   5,182     4,401     Total current liabilities 3,889,888 3,605,174   Notes payable and long-term debt, less current installments 1,112,594 1,018,930 Income tax liability 88,451 86,351 Deferred income taxes 15,761 1,462 Other liabilities   67,423     63,058     Total liabilities   5,174,117     4,774,975   Equity: Jabil Circuit, Inc. stockholders' equity Common stock 225 220 Additional paid-in capital 1,649,431 1,541,507 Retained earnings 441,793 123,303 Accumulated other comprehensive income 194,706 122,062 Treasury stock at cost   (419,035 )   (209,046 )   Total Jabil Circuit, Inc. stockholders' equity   1,867,120     1,578,046     Noncontrolling interests   16,703     14,726     Total equity   1,883,823     1,592,772     Total liabilities and equity $ 7,057,940   $ 6,367,747         JABIL CIRCUIT, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(In thousands, except for per share data)(Unaudited)   Three months ended Twelve months ended August 31,   August 31, August 31,   August 31, 2011   2010 2011   2010   Net revenue $ 4,280,295 $ 3,860,933 $ 16,518,827 $ 13,409,411 Cost of revenue   3,951,092     3,573,425   15,264,257     12,405,267   Gross profit 329,203 287,508 1,254,570 1,004,144   Operating expenses: Selling, general and administrative 152,204 160,512 590,572 589,738 Research and development 6,209 6,632 25,034 28,085 Amortization of intangibles 5,230 5,980 22,051 25,934 Restructuring and impairment charges - 2,512 628 8,217 Loss on disposal of subsidiaries - 8,882 23,944 24,604 Settlement of receivables and related charges   -     -   13,607     - Operating income 165,560 102,990 578,734 327,566     Interest, net and other   24,527     19,704   97,547     80,299   Income before income taxes 141,033 83,286 481,187 247,267   Income tax expense   25,492     23,910   98,229     76,501   Net income 115,541 59,376 382,958 170,766   Net income (loss) attributable to noncontrolling interests, net of income tax expense   1,253     685   1,895     1,926   Net income attributable to Jabil Circuit, Inc. $ 114,288   $ 58,691 $ 381,063   $ 168,840   Earnings per share: Income attributable to the stockholders of Jabil Circuit, Inc.: Basic $ 0.54   $ 0.27 $ 1.78   $ 0.79 Diluted $ 0.52   $ 0.27 $ 1.73   $ 0.78   Weighted average shares outstanding: Basic   212,753     214,011   214,502     214,332 Diluted   219,494     215,997   220,719     217,597     JABIL CIRCUIT, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(in thousands)(Unaudited)   Twelve months endedAugust 31,2011   August 31,2010 Cash flows from operating activities: Net income $ 382,958 $ 170,766 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 319,179 283,284 Recognition of stock-based compensation expense 76,230 104,609 Settlement of receivables and related charges 12,673 — Loss on disposal of subsidiaries 23,944 18,671 Other, net 12,804 20,036 Change in operating assets and liabilities, exclusive of net assets acquired: Trade accounts receivable 48,232 (247,133 ) Inventories (158,545 ) (969,348 ) Prepaid expenses and other current assets (212,265 ) (143,639 ) Other assets 3,205 448 Accounts payable and accrued expenses 305,814 1,172,770 Income taxes payable 13,780   16,946     Net cash provided by operating activities 828,009   427,410     Cash flows from investing activities: Cash paid for business and intangible asset acquisitions, net of cash acquired 3,985 — Acquisition of property, plant and equipment (458,989 ) (398,425 ) Proceeds from sale of property, plant and equipment 23,483 10,280 Cost of receivables acquired, net of cash collections (557 ) — Proceeds from disposal of available for sale investments 5,800 — Notes receivable from sale — (24,972 ) Proceeds from disposal of subsidiaries, net of cash —   (27,140 )   Net cash used in investing activities (426,278 ) (440,257 )   Cash flows from financing activities: Repayments, net of borrowings, under debt agreements (14,597 ) (49,435 ) Net proceeds from exercise of stock options and issuance of common stock under employee stock purchase plan 31,644 10,744 Treasury stock minimum tax withholding related to vesting of restricted stock (9,763 ) (5,505 ) Payments to acquire treasury stock (200,226 ) — Dividends paid to stockholders (60,411 ) (59,869 ) Debt issuance costs (14,549 ) — Net proceeds from issuance of ordinary shares of certain subsidiaries — 586 Bank overdraft of subsidiary — 3,067 Excess tax benefit of options exercised 180   132     Net cash used in financing activities (267,722 ) (100,280 )   Effect of exchange rate changes on cash and cash equivalents 10,273   (18,816 )   Net increase (decrease) in cash and cash equivalents 144,282 (131,943 ) Cash and cash equivalents at beginning of period 744,329   876,272     Cash and cash equivalents at end of period $ 888,611   $ 744,329       JABIL CIRCUIT, INC. AND SUBSIDIARIESSUPPLEMENTAL DATARECONCILIATION OF GAAP FINANCIAL RESULTS TO NON-GAAP MEASURES(In thousands, except for per share data)(Unaudited)     Three months ended   Twelve months ended August 31,   August 31, August 31,   August 31, 2011   2010 2011   2010   Operating income (GAAP) $ 165,560 $ 102,990 $ 578,734 $ 327,566 Amortization of intangibles 5,230 5,980 22,051 25,934 Stock-based compensation expense and related charges 16,376 36,629 76,230 104,609 Restructuring and impairment charges - 2,512 628 8,217 Settlement of receivables and related charges - - 13,607 - Loss on disposal of subsidiaries   -   8,882 23,944     24,604   Core operating income (Non-GAAP) $ 187,166   $ 156,993 $ 715,194   $ 490,930     Net income (GAAP) $ 114,288 $ 58,691 $ 381,063 $ 168,840 Amortization of intangibles, net of tax 5,213 5,968 21,998 25,887 Stock-based compensation expense and related charges, net of tax 16,790 36,006 75,068 102,719 Restructuring and impairment charges, net of tax - 2,537 628 8,314 Settlement of receivables and related charges, net of tax - - 13,607 - Loss on disposal of subsidiaries, net of tax   -   8,882 23,944     24,604   Core earnings (Non-GAAP) $ 136,291   $ 112,084 $ 516,308   $ 330,364     Earnings per share: (GAAP) Basic $ 0.54   $ 0.27 $ 1.78   $ 0.79   Diluted $ 0.52   $ 0.27 $ 1.73   $ 0.78     Core earnings per share: (Non-GAAP) Basic $ 0.64   $ 0.52 $ 2.41   $ 1.54   Diluted $ 0.62   $ 0.52 $ 2.34   $ 1.52     Common shares used in the calculations of earnings per share (GAAP): Basic   212,753   214,011 214,502     214,332   Diluted   219,494   215,997 220,719     217,597     Common shares used in the calculations of earnings per share (Non-GAAP): Basic   212,753   214,011 214,502     214,332   Diluted   219,494   215,997 220,719     217,597           JABIL CIRCUIT, INC. AND SUBSIDIARIESSUPPLEMENTAL DATA RECONCILIATION OF GAAP FINANCIAL RESULTS TO NON-GAAP MEASURES (In thousands)CALCULATION OF RETURN ON INVESTED CAPITAL ANDCORE RETURN ON INVESTED CAPITAL The Company calculates (1) "Return on Invested Capital" by annualizing its "after-tax GAAP operating income" for its most recently-ended quarter and dividing that by a two quarter average of its "net invested capital asset base" and (2) "Core Return on Invested Capital" by annualizing its "after-tax non-GAAP core operating income" for its most recently-ended quarter and dividing that by a two quarter average of its "net invested capital asset base." The Company calculates: (1) its "after-tax GAAP operating income" by subtracting a certain tax effect (the calculation of which is explained below) from its GAAP operating income and (2) its "after-tax non-GAAP core operating income" by subtracting a certain tax effect (the calculation of which is explained below) from its non-GAAP core operating income. See elsewhere in this earnings release for a reconciliation of the Company's non-GAAP core operating income to its GAAP operating income. The Company calculates "net invested capital asset base" as the sum of the averages (the calculation of which are explained below) of (1) its stockholders' equity, (2) the non-current portion of its notes payable and long term debt and (3) the current portion of its notes payable and long term debt, less the average (the calculation of which is explained below) of its cash and cash equivalents. The following table reconciles (1) "Return on Invested Capital," as calculated using "after-tax GAAP operating income" to (2) "Core Return on Invested Capital," as calculated using "after-tax non-GAAP core operating income":   Three months ended August 31, 2011 Numerator:Operating income (GAAP) $ 165,560 Tax effect (1)   (25,478) After-tax operating income 140,082 x4 Annualized after-tax operating income $ 560,328   Core Operating Income (Non-GAAP) $ 187,166 Tax effect (2)   (25,083) After-tax core operating income 162,083 x4 Annualized after-tax core operating income $ 648,332   Denominator: Average total Jabil Circuit, Inc. stockholders' equity (3) $ 1,900,238 Average notes payable and long-term debt, less current installments (3) 1,109,895 Average current installments of notes payable and long-term debt (3) 77,305 Average cash and cash equivalents (3)   (899,878) Net invested capital asset base $ 2,187,560   Return on Invested Capital (GAAP)25.6%Adjustments noted above4.0%Core Return on Invested Capital (Non-GAAP)29.6%   (1) This amount is calculated by adding the amount of income taxes attributable to its operating income (GAAP) and its interest expense. (2) This amount is calculated by adding the amount of income taxes attributable to its core operating income (Non-GAAP) and its interest expense. The average is based on the addition of the account balance at the end of the most recently-ended quarter to the account balance at the end of the prior quarter and dividing by two. Jabil Circuit, Inc.Investor & Media Contact:Beth Walters, 727-803-3511Senior Vice President, Investor Relations & Communicationsbeth_walters@jabil.com