MFLEX Reports Fiscal 2013 Second Quarter Financial Results

          MFLEX Reports Fiscal 2013 Second Quarter Financial Results

PR Newswire

IRVINE, Calif., May 2, 2013

IRVINE, Calif., May 2, 2013 /PRNewswire/ -- Multi-Fineline Electronix, Inc.
(NASDAQ: MFLX), a leading global provider of high-quality, technologically
advanced flexible printed circuit and value-added component assembly solutions
to the electronics industry, today reported financial results for its fiscal
second quarter ended March 31, 2013. Net sales in the second quarter of
fiscal 2013 were $173.7 million, down 16 percent from net sales of $208.0
million in the same quarter last year. This decrease was primarily due to
lower sales to key customers.

Non-GAAP gross margin during the second quarter of fiscal 2013, which excludes
the impact of an inventory write-down, was (2.7) percent. This compares to
12.5 percent for the same period in the prior year. The year-over-year decline
was primarily driven by lower overhead absorption due to reduced production
levels. In anticipation of softer demand during the quarter, the Company
lowered production levels in order to reduce inventory. Inventory declined by
$50 million during the second quarter. The Company recorded a $10.9 million
inventory write-down as a result of unusable components, as well as a small
portion that was written-down as a result of uncertainty in near-term demand
forecasts. Including the inventory write-down, fiscal 2013 second quarter GAAP
gross margin was (8.9) percent.

Net loss for the second quarter of fiscal 2013 was $23.9 million, or $1.00 per
diluted share, compared to net income of $12.1 million, or $0.50 per diluted
share, for the same period in the prior year. 

Net cash provided by operating activities for the second quarter of fiscal
2013 was $47.6 million. At March 31, 2013, the Company had cash and cash
equivalents of $129.8 million, or $5.46 per diluted share, and remained debt

Non-GAAP Results
A reconciliation of GAAP gross margin, net income and earnings per share to
non-GAAP gross margin, net income and earnings per share is provided in the
table at the end of this press release. 

Share Repurchase Program
MFLEX also announced today that it is in the process of entering into a 10b5-1
plan providing for the repurchase of up to approximately 535,000 shares in the
aggregate of the Company's common stock under its current repurchase
authorization. The timing, price, volume and terms of the repurchases will be
based on market conditions, relevant securities laws and other factors.

For the third quarter of fiscal 2013, the Company expects net sales to be
between $155 and $185 million and gross margin to be approximately breakeven
based on production build plans, projected sales volume and anticipated
product mix.

Reza Meshgin, Chief Executive Officer of MFLEX, commented "Due to continued
soft market conditions, we plan to continue to focus on reducing inventory
levels during the third quarter. Therefore, we plan to again minimize
production which we expect to continue to pressure our gross margin during the
quarter. We believe these conditions are temporary and continue to expect a
rebound in revenue and profitability in the fourth quarter and further into
fiscal 2014, when we anticipate an increase in demand from both long-standing
and newer customers. During the second quarter, newer customers comprised
approximately 8 percent of sales and we expect this contribution to double in
the third quarter. We are optimistic that this new customer momentum will
continue, and that a broader customer and product base will alleviate the
current challenges associated with seasonality and product cycles as we enter
into fiscal 2014."

Conference Call
MFLEX will host a conference call at 5:30 p.m. Eastern time (2:30 p.m. Pacific
time) today to review its fiscal 2013 second quarter financial results. The
dial-in number for the call in North America is 1-888-549-7880 and
1-480-629-9772 for international callers. The call also will be webcast live
on the Internet and can be accessed by logging onto

The webcast will be archived on the Company's website for at least 60 days
following the call. An audio replay of the conference call will be available
for seven days beginning at 8:30 p.m. Eastern time (5:30 p.m. Pacific time)
today. The audio replay dial-in number for North America is 1-800-406-7325
and 1-303-590-3030 for international callers. The replay passcode is 4615200.

MFLEX ( is a global provider of high-quality, technologically
advanced flexible printed circuit and value-added component assembly solutions
to the electronics industry. The Company is one of a limited number of
manufacturers that provides a seamless, integrated end-to-end flexible printed
circuit solution for customers, ranging from design and application
engineering, prototyping and high-volume manufacturing to turnkey component
assembly and testing. The Company targets its solutions within the electronics
market and, in particular, focuses on applications where flexible printed
circuits are the enabling technology in achieving a desired size, shape,
weight or functionality of an electronic device. Current applications for the
Company's products include smartphones, tablets, computer/data storage,
portable bar code scanners and other consumer electronic devices. MFLEX's
common stock is quoted on the Nasdaq Global Select Market under the symbol

Forward-Looking Statements

Certain statements in this news release are forward-looking statements that
involve a number of risks and uncertainties. These forward-looking statements
include, but are not limited to, statements and predictions regarding:
revenues; sales; net income; profitability; revenue growth; cash flow; gross
margins; overhead absorption; product cycles and the ramping of new programs;
labor costs; new customer opportunities; customer relationships; customer and
product mix; inventory levels; production build plans; write offs; demand
forecasts; seasonality; customer and market diversification strategies;
capacity, utilization and expansion of the Company's facilities; headcount
levels; yields; and labor efficiency. Additional forward-looking statements
include, but are not limited to, statements pertaining to other financial
items, plans, strategies or objectives of management for future operations,
the Company's future operations and financial condition or prospects, and any
other statement that is not historical fact, including any statement which is
preceded by the words "forecast," "guidance," "preliminary," "scheduled,"
"assume," "can," "will," "plan," "should," "expect," "estimate," "aim,"
"intend," "look," "see," "project," "foresee," "target," "anticipate," "may,"
"believe," or similar words. Actual events or results may differ materially
from those stated or implied by the Company's forward-looking statements as a
result of a variety of factors including the effect of the economy and
seasonality on the demand for electronic devices; the Company's success with
new and current customers, those customers' success in the marketplace and
usage of flex in their products; demand for the Company's products; product
mix; the Company's ability to develop and deliver new technologies; the
Company's ability to diversify and expand its customer base and markets; the
Company's effectiveness in managing manufacturing processes, inventory levels,
costs and yields; the ramping and launch of new programs; currency
fluctuations; pricing pressure; the Company's ability to manage quality
assurance and workforce issues; the degree to which the Company is able to
utilize available manufacturing capacity, enter into new markets and execute
its strategic plans; electricity, material and component shortages; the impact
of natural disasters, competition and technological advances; the outcome of
tax audits; labor issues in the jurisdictions in which the Company operates;
and other risks detailed from time to time in the Company's SEC reports,
including its Quarterly Report on Form 10-Q for the quarter ended December 31,
2012 and its Quarterly Report on Form 10-Q to be filed for the quarter ended
March 31, 2013. These forward-looking statements represent management's
judgment as of the date of this news release. The Company disclaims any intent
or obligation to update these forward-looking statements.

Contact: Stacy Feit
         Investor Relations
         Tel: 213-486-6549


Multi-Fineline Electronix, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
                              Three Months Ended       Six Months Ended
                              March 31,                March 31,
                              2013         2012        2013         2012
Net sales                     $173,674     $207,963    $463,324     $447,306
Cost of sales                 189,207      181,880     454,154      392,062
 Gross (loss) profit        (15,533)     26,083      9,170        55,244
Operating expenses:
 Research and development   1,782        2,231       3,815        4,310
 Sales and marketing        4,712        6,503       11,249       12,890
 General and administrative 4,295        5,484       9,967        11,112
 Impairment and             -            (1,171)     -            (1,736)
 Total operating         10,789       13,047      25,031       26,576
Operating (loss) income       (26,322)     13,036      (15,861)     28,668
Other income (expense), net:
 Interest income            86           353         156          646
 Interest expense           (138)        (81)        (249)        (235)
 Other income (expense),    170          1,333       155          1,804
 (Loss) income before    (26,204)     14,641      (15,799)     30,883
income taxes
Benefit from (provision for)  2,325        (2,537)     268          (5,235)
income taxes
 Net (loss) income       $ (23,879)   $ 12,104   $ (15,531)   $ 25,648
Net (loss) income per share:
 Basic                      $  (1.00)  $   0.51  $  (0.65)  $   1.08
 Diluted                    $  (1.00)  $   0.50  $  (0.65)  $   1.06
Shares used in computing net (loss)
income per share:
 Basic                      23,799       23,870      23,797       23,809
 Diluted                    23,799       24,104      23,797       24,113

Multi-Fineline Electronix, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
                                                    March 31,  September 30,
                                                    2013       2012
Cash and cash equivalents                           $129,841   $    82,322
Accounts receivable, net                           101,573    165,408
Inventories                                         55,105     124,770
Other current assets                                17,010     19,217
 Total current assets                      303,529    391,717
Property, plant and equipment, net                  255,900    274,886
Other assets                                       29,729     29,807
 Total assets                              $589,158   $   696,410
Accounts payable                                    $119,081   $   199,737
Other current liabilities                           20,664     36,111
 Total current liabilities                 139,745    235,848
Other liabilities                                   19,153     18,573
Stockholders' equity                                430,260    441,989
 Total liabilities and stockholders'       $589,158   $   696,410

Multi-Fineline Electronix, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
                           Three Months Ended       Six Months Ended
                           March 31,                March 31,
                           2013           2012        2013          2012
Cash flows from
operating activities
Net (loss) income          $  (23,879)   $  12,104  $  (15,531)  $  25,648
Adjustments to reconcile net (loss)
income to net cash provided by operating
 Depreciation and      14,740         13,954      29,158        26,663
 Provision for
doubtful accounts and      (1,247)        38          685           1,837
 Deferred taxes        (56)           (71)        (106)         (74)
 Stock-based           1,241          1,503       2,548         2,888
compensation expense
 Income tax benefit
related to stock option    (29)           (53)        (29)          (70)
 Restructuring asset   -              (1,171)     -             (1,736)
 (Loss) gain on        (130)          (8)         (124)         5
disposal of equipment
Changes in operating       56,918         38,642      59,414        15,517
assets and liabilities
 Net cash
provided by operating      47,558         64,938      76,015        70,678
Cash flows from
investing activities
Purchases of property      (10,879)       (13,604)    (26,792)      (33,950)
and equipment
Proceeds from sale of
equipment and assets       136            7,833       136           8,532
held for sale
 Net cash
used in investing          (10,743)       (5,771)     (26,656)      (25,418)
Cash flows from
financing activities
Income tax benefit
related to stock option    29             53          29            70
Tax withholdings for net
share settlement of        (66)           (239)       (803)         (1,039)
equity awards
Proceeds from exercise     568            114         597           149
of stock options
Repurchase of common       (212)          (984)       (1,444)       (8,844)
 Net cash
used in financing          319            (1,056)     (1,621)       (9,664)
Effect of exchange rate    55             (879)       (219)         (446)
changes on cash
 Net           37,189         57,232      47,519        35,150
increase in cash
Cash and cash
equivalents at beginning   92,652         75,808      82,322        97,890
of period
Cash and cash
equivalents at end of      $ 129,841     $ 133,040   $ 129,841    $ 133,040

Multi-Fineline Electronix, Inc.
Selected Non-GAAP Financial Measures and Schedule Reconciling
Selected Non-GAAP Financial Measures to Comparable GAAP Financial Measures
                                       Three Months Ended
                                       March 31, 2013
GAAP gross margin percentage           (8.9)%
Effect of inventory write-down         6.2%
Non-GAAP gross margin percentage       (2.7)%

                                Three Months Ended      Six Months Ended
                                March 31,               March 31,
                                2013         2012       2013         2012
GAAP net (loss) income          $(23,879)    $12,104    $(15,531)    $25,648
Stock-based compensation        1,241        1,503      2,548        2,888
Impairment and restructuring    -            (1,171)    -            (1,736)
Income tax effect of non-GAAP   (406)        (30)       (826)        (249)
Non-GAAP net (loss) income      $(23,044)    $12,406    $(13,809)    $26,551
GAAP diluted earnings per share $  (1.00)  $  0.50  $  (0.65)  $  1.06
Effect of stock-based
compensation, net of tax on     0.03         0.04       0.07         0.08
diluted earnings per share
Effect of impairment and
restructuring, net of tax on    -            (0.03)     -            (0.04)
diluted earnings per share
Non-GAAP diluted earnings per   $  (0.97)  $  0.51  $  (0.58)  $  1.10
Weighted-average diluted shares
used in calculating non-GAAP    23,799       24,104     23,797       24,113
diluted earnings per share

Use of Non-GAAP Financial Information

To supplement the condensed consolidated financial results prepared in
accordance with Generally Accepted Accounting Principles ("GAAP"), the Company
uses non-GAAP financial measures (non-GAAP gross margin, non-GAAP net income
and non-GAAP diluted earnings per share) that exclude certain charges and
gains. Management excludes these items because it believes that the non-GAAP
measures enhance an investor's overall understanding of the Company's
financial performance and future prospects by being more reflective of the
Company's recurring operational activities and to be more comparable with the
results of the Company over various periods. Management uses non-GAAP
financial measures internally for strategic decision making, forecasting
future results and evaluating current performance. By disclosing non-GAAP
financial measures, management intends to provide investors with a more
meaningful, consistent comparison of the Company's core operating results and
trends for the periods presented. Non-GAAP financial measures are not prepared
in accordance with GAAP; therefore, the information is not necessarily
comparable to other companies' financial information and should be considered
as a supplement to, not a substitute for, or superior to, the corresponding
measures calculated in accordance with GAAP.

Non-GAAP gross margin excludes the charge to write-down inventory. The items
excluded from GAAP net income and diluted earnings per share in calculating
these non-GAAP financial measures are as follows: (a) stock-based compensation
expense; and (b) impairment and restructuring activities, including asset
impairments, one-time termination benefit, other restructuring-related costs
and gains on sale of previously impaired assets as part of restructuring

Multi-Fineline Electronix, Inc.
Product Mix
                      Three Months Ended
                      March 31,
                      2013         2012
Smartphones           65%          71%
Tablets               28%          26%
Consumer Electronics  5%           0%
Multi-Fineline Electronix, Inc.
Key Customer Revenue Contribution
                      Three Months Ended
                      March 31,
                      2013         2012
"OEM C"               77%          75%
"OEM D"               13%          13%

For competitive and customer confidentiality reasons, the Company does not
disclose its customers by name.

SOURCE Multi-Fineline Electronix, Inc.

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