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8-K - FORM 8-K - JABIL INCd832623d8k.htm

Exhibit 99.1

LOGO

Jabil Posts First Quarter Results

Company Exceeds Guidance and Increases Full-Year Outlook

St. Petersburg, FL – December 17, 2014... Today Jabil Circuit, Inc. (NYSE: JBL), reported preliminary, unaudited financial results for its first quarter of fiscal year 2015. The company reported first quarter net revenue of $4.55 billion, a 5 percent increase from the first quarter of fiscal 2014.

“We had a very strong start to the fiscal year as our team exceeded expectations,” said Mark T. Mondello, Chief Executive Officer. “Our results reflect strong demand within our Diversified Manufacturing Services segment as well as solid execution and performance across the entire business,” he added.

Jabil’s two reporting segments delivered the following revenue results for the company’s first fiscal quarter:

 

    Electronics Manufacturing Services: $2.63 billion.

 

    Diversified Manufacturing Services: $1.92 billion.

Generally accepted accounting principles (GAAP) operating income for the first quarter was $144.8 million and GAAP net diluted earnings per share was $0.37.

Core operating income (as defined below) was $180.6 million and core diluted earnings per share (as defined below) was $0.55.

(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 related charges, distressed customer charges, acquisition costs and certain purchase accounting adjustments, loss on disposal of subsidiaries, settlement of receivables and related charges, impairment of notes receivable and related charges and goodwill impairment charges. Jabil defines core earnings as GAAP net income before amortization of intangibles, stock-based compensation expense and related charges, restructuring and related charges, distressed customer charges, acquisition costs and certain purchase accounting adjustments, loss on disposal of subsidiaries, settlement of receivables and related charges, impairment of notes receivable and related charges, goodwill impairment charges, income (loss) from discontinued operations, gain (loss) on sale of discontinued operations and certain other expenses, net of tax and certain deferred tax valuation allowance charges. Jabil defines core diluted earnings per share as core earnings divided by the weighted average number of outstanding diluted shares as determined under GAAP. Jabil calculates its 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 diluted and basic earnings per share and core return on invested capital to provide investors an additional method for assessing operating income, earnings, diluted 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, its calculation of core earnings and core diluted 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 Results    Q1 2015      Q1 2014

Net revenue

   $4.6 billion      $4.3 billion

GAAP operating income

   $144.8 million      $155.4 million

GAAP net income

   $72.2 million      $117.9 million

GAAP net diluted earnings per share

   $0.37      $0.57

GAAP return on invested capital

   14.2%      16.3%

Core operating income

   $180.6 million      $160.1 million

Core earnings

   $108.2 million      $89.0 million

Core diluted earnings per share

   $0.55      $0.43

Core return on invested capital

   19.0%      14.8%

 

Business Update

“I’m encouraged by how we’ve positioned Jabil to capture transformative technologies that we see on the horizon. As a result, we will continue to expand in key areas through thoughtful investment across our business,” Mondello said. Management increased its fiscal year 2015 revenue outlook to $17.5 - $18.5 billion and core earnings per share to $1.85 - $2.15.

Second quarter fiscal 2015 guidance:

 

•    Net revenue

  $4.15 billion to $4.35 billion

•    GAAP operating income

  $106 million to $142 million

•    GAAP net diluted earnings per share

  $0.25 to $0.38 per diluted share

•    Core operating income

  $135 million to $165 million

•    Core diluted earnings per share

  $0.39 to $0.50 per diluted share

•    Electronics Manufacturing Services

  Increase 3 percent year over year

•    Diversified Manufacturing Services

  Increase 53 percent year over year

(GAAP net diluted earnings per share for the second quarter of fiscal year 2015 are currently estimated to include $0.03 per share for amortization of intangibles, $0.07 per share for stock-based compensation expense and related charges and $0.02 to $0.04 per share for restructuring and related charges.)

FORWARD LOOKING STATEMENT: This news release contains forward-looking statements, including those regarding our anticipated financial results for our first quarter of fiscal year 2015; the positioning of Jabil to capture transformative technologies that we believe are on the horizon; our expectation that we will continue to expand in key areas through thoughtful investment across our business; our currently expected fiscal year 2015 revenues and core earnings per share; and our currently expected second quarter of fiscal year 2015 net revenue (including that of our segments), core and GAAP operating income, core and GAAP diluted 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 first quarter of fiscal year 2015 that our financial results and conditions differ from our current preliminary unaudited numbers set forth herein; fluctuations in our stock’s market price; fluctuations in operating results and cash flows; unexpected, adverse seasonal impacts on demand; changes in macroeconomic conditions, both in the U.S. and internationally; the occurrence of, success and expected financial results from, product ramps; 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 and other related customer challenges that may occur; our ability to successfully consummate acquisitions and divestitures; managing the integration of businesses we acquire; 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, 2014, subsequent Reports on Forms 10-Q and 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 related charges, distressed customer charges, acquisition costs and certain purchase accounting adjustments, loss on disposal of subsidiaries, settlement of receivables and related charges, impairment of notes receivable and related charges, goodwill impairment charges, income (loss) from discontinued operations, gain (loss) on sale of discontinued operations and 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 diluted and basic 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 first quarter of fiscal year 2015 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 December 17, 2014 at approximately 7:30 p.m. ET through midnight on December 31, 2014. To access the replay, call (855) 859-2056 from within the United States, or (404) 537-3406 outside the United States. The pass code is: 44928993. 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 and manufacturing product management services to global electronics and technology companies. Offering complete product supply chain management from facilities in 24 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’s website: jabil.com.

Investor & Media Contact:

Beth Walters

Senior Vice President, Investor Relations & Communications

Jabil Circuit, Inc.

(727) 803-3511

beth_walters@jabil.com


JABIL CIRCUIT, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

 

     November 30,
2014
(Unaudited)
    August 31,
2014
 
ASSETS     

Current assets:

    

Cash and cash equivalents

   $ 921,504      $ 1,000,249   

Accounts receivable, net

     1,584,794        1,208,516   

Inventories

     2,099,214        2,008,077   

Prepaid expenses and other current assets

     1,049,745        1,057,562   

Deferred income taxes

     61,595        64,944   

Assets of discontinued operations

     20,505        19,669   
  

 

 

   

 

 

 

Total current assets

     5,737,357        5,359,017   

Property, plant and equipment, net

     2,314,464        2,271,705   

Goodwill and intangible assets, net

     620,944        627,700   

Deferred income taxes

     89,428        92,702   

Other assets

     107,715        128,622   
  

 

 

   

 

 

 

Total assets

   $ 8,869,908      $ 8,479,746   
  

 

 

   

 

 

 
LIABILITIES AND EQUITY     

Current liabilities:

    

Current installments of notes payable, long-term debt and capital lease obligations

   $ 11,487      $ 12,960   

Accounts payable

     3,358,871        3,060,814   

Accrued expenses

     1,340,732        1,235,106   

Deferred income taxes

     5,040        5,094   

Liabilities of discontinued operations

     6,798        7,123   
  

 

 

   

 

 

 

Total current liabilities

     4,722,928        4,321,097   

Notes payable, long-term debt and capital lease obligations, less current installments

     1,666,377        1,669,585   

Other liabilities

     74,314        79,471   

Income tax liabilities

     93,268        87,555   

Deferred income taxes

     59,109        61,670   
  

 

 

   

 

 

 

Total liabilities

     6,615,996        6,219,378   
  

 

 

   

 

 

 

Commitments and contingencies

Equity:

    

Jabil Circuit, Inc. stockholders’ equity:

    

Preferred stock

     —          —     

Common stock

     245        244   

Additional paid-in capital

     1,892,279        1,874,219   

Retained earnings

     1,305,041        1,245,772   

Accumulated other comprehensive income

     49,710        86,962   

Treasury stock, at cost

     (1,012,117     (965,369
  

 

 

   

 

 

 

Total Jabil Circuit, Inc. stockholders’ equity

     2,235,158        2,241,828   
  

 

 

   

 

 

 

Noncontrolling interests

     18,754        18,540   
  

 

 

   

 

 

 

Total equity

     2,253,912        2,260,368   
  

 

 

   

 

 

 

Total liabilities and equity

   $ 8,869,908      $ 8,479,746   
  

 

 

   

 

 

 


JABIL CIRCUIT, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except for per share data)

(Unaudited)

 

     Three months ended  
     November 30,
2014
    November 30,
2013
 

Net revenue

   $ 4,550,418      $ 4,342,711   

Cost of revenue

     4,167,431        4,008,460   
  

 

 

   

 

 

 

Gross profit

     382,987        334,251   

Operating expenses:

    

Selling, general and administrative

     214,380        142,470   

Research and development

     6,005        9,054   

Amortization of intangibles

     5,590        6,321   

Restructuring and related charges

     12,257        21,003   
  

 

 

   

 

 

 

Operating income

     144,755        155,403   

Interest and other, net

     31,833        33,774   
  

 

 

   

 

 

 

Income from continuing operations before tax

     112,922        121,629   

Income tax expense

     39,788        19,676   
  

 

 

   

 

 

 

Income from continuing operations, net of tax

     73,134        101,953   
  

 

 

   

 

 

 

Discontinued operations:

    

Income from discontinued operations, net of tax

     853        16,112   

Loss on sale of discontinued operations, net of tax

     (1,611     —     
  

 

 

   

 

 

 

Discontinued operations, net of tax

     (758     16,112   
  

 

 

   

 

 

 

Net income

     72,376        118,065   

Net income attributable to noncontrolling interests, net of tax

     214        143   
  

 

 

   

 

 

 

Net income attributable to Jabil Circuit, Inc.

   $ 72,162      $ 117,922   
  

 

 

   

 

 

 

Earnings per share attributable to the stockholders of Jabil Circuit, Inc.:

    

Basic:

    

Income from continuing operations, net of tax

   $ 0.38      $ 0.50   
  

 

 

   

 

 

 

Discontinued operations, net of tax

   $ 0.00      $ 0.08   
  

 

 

   

 

 

 

Net income

   $ 0.37      $ 0.58   
  

 

 

   

 

 

 

Diluted:

    

Income from continuing operations, net of tax

   $ 0.37      $ 0.49   
  

 

 

   

 

 

 

Discontinued operations, net of tax

   $ 0.00      $ 0.08   
  

 

 

   

 

 

 

Net income

   $ 0.37      $ 0.57   
  

 

 

   

 

 

 

Weighted average shares outstanding:

    

Basic

     193,502        204,762   
  

 

 

   

 

 

 

Diluted

     195,314        206,813   
  

 

 

   

 

 

 


JABIL CIRCUIT, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

     Three months ended  
     November 30,
2014
    November 30,
2013
 

Cash flows from operating activities:

    

Net income

   $ 72,376      $ 118,065   

Adjustments to reconcile net income to net cash provided by operating activities:

    

Depreciation and amortization

     122,380        125,596   

Restructuring and related charges

     3,292        782   

Recognition of stock-based compensation expense and related charges

     18,043        (24,566

Deferred income taxes

     2,618        (5,429

Other, net

     14,388        2,977   

Changes in operating assets and liabilities:

    

Accounts receivable

     (398,334     (146,619

Inventories

     (100,831     137,407   

Prepaid expenses and other current assets

     (1,491     (11,909

Other assets

     15,077        5,259   

Accounts payable and accrued expenses

     441,583        (83,857
  

 

 

   

 

 

 

Net cash provided by operating activities

     189,101        117,706   
  

 

 

   

 

 

 

Cash flows from investing activities:

    

Acquisition of property, plant and equipment

     (197,676     (202,992

Proceeds from sale of property, plant and equipment

     3,764        5,819   

Other, net

     3,600        —     
  

 

 

   

 

 

 

Net cash used in investing activities

     (190,312     (197,173
  

 

 

   

 

 

 

Cash flows from financing activities:

    

Borrowings under debt agreements

     1,458,495        2,066,000   

Payments towards debt agreements

     (1,461,871     (2,180,326

Payments to acquire treasury stock

     (40,040     —     

Dividends paid to stockholders

     (16,607     (19,261

Treasury stock minimum tax withholding related to vesting of restricted stock

     (6,708     (32,717

Other, net

     63        2,390   
  

 

 

   

 

 

 

Net cash used in financing activities

     (66,668     (163,914
  

 

 

   

 

 

 

Effect of exchange rate changes on cash and cash equivalents

     (10,866     1,231   
  

 

 

   

 

 

 

Net decrease in cash and cash equivalents

     (78,745     (242,150

Cash and cash equivalents at beginning of period

     1,000,249        1,011,373   
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 921,504      $ 769,223   
  

 

 

   

 

 

 


JABIL CIRCUIT, INC. AND SUBSIDIARIES

SUPPLEMENTAL DATA

RECONCILIATION OF GAAP FINANCIAL RESULTS TO NON-GAAP MEASURES

(in thousands, except for per share data)

(Unaudited)

 

     Three months ended  
     November 30,
2014
    November 30,
2013
 

Operating income (GAAP)

   $ 144,755      $ 155,403   

Amortization of intangibles

     5,590        6,321   

Stock-based compensation expense and related charges

     18,043        (22,586

Restructuring and related charges

     12,257        21,003   
  

 

 

   

 

 

 

Core operating income (Non-GAAP)

   $ 180,645      $ 160,141   
  

 

 

   

 

 

 

Net income attributable to Jabil Circuit, Inc. (GAAP)

   $ 72,162      $ 117,922   

Amortization of intangibles, net of tax

     5,589        1,173   

Stock-based compensation expense and related charges, net of tax

     17,694        (22,606

Restructuring and related charges, net of tax

     11,948        17,697   

Acquisition costs and certain purchase accounting adjustments, net of tax

     —          (9,064

Income from discontinued operations, net of tax

     (853     (16,112

Loss on sale of discontinued operations, net of tax

     1,611        —     
  

 

 

   

 

 

 

Core earnings (Non-GAAP)

   $ 108,151      $ 89,010   
  

 

 

   

 

 

 

Earnings per share: (GAAP)

    

Basic

   $ 0.37      $ 0.58   
  

 

 

   

 

 

 

Diluted

   $ 0.37      $ 0.57   
  

 

 

   

 

 

 

Core earnings per share: (Non-GAAP)

    

Basic

   $ 0.56      $ 0.43   
  

 

 

   

 

 

 

Diluted

   $ 0.55      $ 0.43   
  

 

 

   

 

 

 

Weighted average shares outstanding used in the calculations of earnings per share (GAAP and Non-GAAP):

    

Basic

     193,502        204,762   
  

 

 

   

 

 

 

Diluted

     195,314        206,813   
  

 

 

   

 

 

 


JABIL CIRCUIT, INC. AND SUBSIDIARIES

SUPPLEMENTAL DATA

RECONCILIATION OF GAAP FINANCIAL RESULTS TO NON-GAAP MEASURES

(in thousands)

(Unaudited)

CALCULATION OF RETURN ON INVESTED CAPITAL AND

CORE RETURN ON INVESTED CAPITAL

The Company calculates: (1) its “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) its “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 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” as its non-GAAP core operating income less a certain tax effect (the calculation of which is explained below). 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 its “average net invested capital asset base” as the sum of the averages (the calculations of which are explained below) of its stockholders’ equity, current and non-current portions of its notes payable, long-term debt and capital lease obligations 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  
     November 30,
2014
    November 30,
2013
 

Numerator:

    

Operating income (GAAP)

   $ 144,755      $ 155,403   

Tax effect (1)

     (39,786     (19,752
  

 

 

   

 

 

 

After-tax operating income

     104,969        135,651   
     x4        x4   
  

 

 

   

 

 

 

Annualized after-tax operating income

   $ 419,876      $ 542,604   
  

 

 

   

 

 

 

Core operating income (Non-GAAP)

   $ 180,645      $ 160,141   

Tax effect (2)

     (40,445     (37,352
  

 

 

   

 

 

 

After-tax core operating income

     140,200        122,789   
     x4        x4   
  

 

 

   

 

 

 

Annualized after-tax core operating income

   $ 560,800      $ 491,156   
  

 

 

   

 

 

 

Denominator:

    

Average total Jabil Circuit, Inc. stockholders’ equity (3)

   $ 2,238,493      $ 2,363,080   

Average notes payable, long-term debt and capital lease obligations, less current installments (3)

     1,667,981        1,684,126   

Average current installments of notes payable, long-term debt and capital lease obligations (3)

     12,223        166,339   

Average cash and cash equivalents (3)

     (960,877     (890,298
  

 

 

   

 

 

 

Net invested capital asset base

   $ 2,957,820      $ 3,323,247   
  

 

 

   

 

 

 

Return on Invested Capital (GAAP)

     14.2     16.3

Adjustments noted above

     4.8     (1.5 )% 

Core Return on Invested Capital (Non-GAAP)

     19.0     14.8

 

(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.
(3) 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.