MFLEX Reports Fiscal 2013 Third Quarter Financial Results

          MFLEX Reports Fiscal 2013 Third Quarter Financial Results

Expects material rebound in revenues in fiscal fourth quarter and
profitability recovery in fiscal 2014

PR Newswire

IRVINE, Calif., Aug. 8, 2013

IRVINE, Calif., Aug. 8, 2013 /PRNewswire/ -- Multi-Fineline Electronix, Inc.
(NASDAQ: MFLX), a leading global provider of high-quality, technologically
advanced flexible printed circuits and value-added component assembly
solutions to the electronics industry, today reported financial results for
its fiscal third quarter ended June 30, 2013 that were in-line with the
preliminary results reported on July 25, 2013.

Net sales in the third quarter of fiscal 2013 were $136.1 million, down 20
percent from net sales of $170.0 million in the same quarter last year
primarily due to lower sales to a key customer. Revenues were below the
Company's expectations due to soft market conditions, as well as a number of
new programs that shifted out to the fiscal fourth quarter.

Gross margin during the third quarter of fiscal 2013 was (3.1) percent,
compared to 9.2 percent for the same period in the prior year. The
year-over-year decline was primarily driven by the reduced sales level and
overhead under-absorption.

As a result of recent losses, the Company recorded the following non-cash
charges during the third quarter: a $7.5 million goodwill impairment charge
and a $3.1 million charge to reflect a valuation allowance to reduce the value
of certain deferred tax assets. Due to the change in control that was
triggered by the acquisition of the Company's majority shareholder, WBL
Corporation Limited, the Company also recorded $9.6 million in additional
non-cash stock-based compensation expense.

Net loss for the third quarter of fiscal 2013 was $31.5 million, or $1.32 per
diluted share, compared to net income of $3.8 million, or $0.16 per diluted
share, for the same period in the prior year. Non-GAAP net loss excluding the
impact of stock-based compensation expense and impairment and restructuring
for the third quarter of fiscal 2013 was $18.5 million, or $0.77 per diluted
share, compared to non-GAAP net income of $4.3 million, or $0.18 per diluted
share, in the prior year period. A reconciliation of GAAP net (loss) income
and earnings per share to non-GAAP net (loss) income and earnings per share is
provided in the table at the end of this press release. 

Despite challenging market conditions, the Company increased its cash and cash
equivalents by $31.8 million year-to-date to $114.1 million, or $4.76 per
diluted share, at June 30, 2013. The Company continues to maintain a strong
balance sheet with no debt. 

Outlook
For the fourth quarter of fiscal 2013, the Company expects net sales to be
between $195 and $215 million and gross margin to range between 1 to 3 percent
based on production build plans, projected sales volume and anticipated
product mix.

Reza Meshgin, Chief Executive Officer of MFLEX, commented "We believe our
third quarter results will serve as an inflection point as we anticipate a
meaningful sequential improvement in revenue in the fourth quarter with
continued momentum into fiscal 2014. As a result, we expect to return to
profitability in the first quarter of fiscal 2014, as well as on a full year
basis in fiscal 2014. Our customer relationships are strong and we are
aggressively pursuing new customer and product opportunities to diversify our
revenue streams and support our longer-term growth objectives."

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 third quarter financial results. The
dial-in number for the call in North America is 1-877-941-6009 and
1-480-629-9866 for international callers. The call also will be webcast live
on the Internet and can be accessed by logging onto www.mflex.com.

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 4631141.

About MFLEX
MFLEX (www.mflex.com) is a global provider of high-quality, technologically
advanced flexible printed circuits 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
MFLX.

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:
revenue; net sales; sales; net income; profitability; gross margins; revenue
growth; cash flow; overhead absorption; demand forecasts; impairment charges
and asset write-downs; expansion and diversification of the Company's
customer base and product base; labor costs; new customer opportunities;
customer relationships; inventory levels; production build plans; and the
ramping of new programs. 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 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; 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 June 30, 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
         Email: investor_relations@mflex.com

(SUMMARY FINANCIAL INFORMATION FOLLOWS)



Multi-Fineline Electronix, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
                              Three Months Ended       Nine Months Ended
                              June 30,                 June 30,
                              2013         2012        2013         2012
Net sales                     $136,066     $170,038    $599,390     $617,344
Cost of sales                 140,312      154,382     594,466      546,445
 Gross (loss) profit        (4,246)      15,656      4,924        70,899
Operating expenses:
 Research and development   1,997        1,900       5,812        6,210
 Sales and marketing        5,676        5,726       16,925       18,615
 General and administrative 2,647        4,223       12,614       15,335
 Stock-based compensation
expense                       9,582        -           9,582        -
 resulting from change
in control
 Impairment and             7,537        (732)       7,537        (2,468)
restructuring
 Total operating         27,439       11,117      52,470       37,692
expenses
Operating (loss) income       (31,685)     4,539       (47,546)     33,207
Other income (expense), net:
 Interest income            248          419         404          1,065
 Interest expense           (112)        (206)       (361)        (440)
 Other income (expense),    73           58          228          1,861
net
 (Loss) income before    (31,476)     4,810       (47,275)     35,693
income taxes
(Provision for) benefit from  (53)         (984)       215          (6,219)
income taxes
 Net (loss) income       $ (31,529)   $  3,826  $ (47,060)   $ 29,474
Net (loss) income per share:
 Basic                      $  (1.32)  $   0.16  $  (1.97)  $   1.24
 Diluted                    $  (1.32)  $   0.16  $  (1.97)  $   1.22
Shares used in computing net
(loss) income per share:
 Basic                      23,948       23,752      23,847       23,790
 Diluted                    23,948       24,044      23,847       24,101





Multi-Fineline Electronix, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
                                                     June 30,  September 30,
                                                     2013      2012
Cash and cash equivalents                            $114,095  $    82,322
Accounts receivable, net                            94,646    165,408
Inventories                                          73,613    124,770
Other current assets                                 13,623    19,217
 Total current assets                       295,977   391,717
Property, plant and equipment, net                   245,563   274,886
Other assets                                        25,283    29,807
 Total assets                               $566,823  $   696,410
Accounts payable                                     $110,028  $   199,737
Other current liabilities                            27,118    36,111
 Total current liabilities                  137,146   235,848
Other liabilities                                    19,517    18,573
Stockholders' equity                                 410,160   441,989
 Total liabilities and stockholders' equity $566,823  $   696,410





Multi-Fineline Electronix, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
                                 Three Months Ended    Nine Months Ended
                                 June 30,              June 30,
                                 2013        2012        2013        2012
Cash flows from operating
activities
Net (loss) income                $ (31,529)  $  3,826  $ (47,060)  $ 29,474
Adjustments to reconcile net
(loss) income to net cash
provided by operating
activities:
 Depreciation and            14,869      13,434      44,027      40,097
amortization
 Provision for doubtful      776         (604)       1,461       1,232
accounts and allowances
 Deferred taxes              (2,802)     (2,362)     (2,908)     (2,436)
 Stock-based compensation    10,461      1,416       13,009      4,304
expense
 Income tax benefit related  -           (6)         (29)        (76)
to stock option exercises
 Asset impairments           7,537       -           7,537       -
 Restructuring asset         -           (732)       -           (2,468)
recoveries
 Gain on disposal of         (1,537)     (702)       (1,661)     (697)
equipment
Changes in operating assets and  (4,352)     (2,455)     55,062      13,062
liabilities
 Net cash (used in)
provided by operating            (6,577)     11,815      69,438      82,492
activities
Cash flows from investing
activities
Purchases of property and        (9,153)     (20,694)    (35,945)    (54,644)
equipment
Proceeds from sale of equipment  2,224       2,938       2,360       11,471
and assets held for sale
 Net cash used in    (6,929)     (17,756)    (33,585)    (43,173)
investing activities
Cash flows from financing
activities
Income tax benefit related to    -           6           29          76
stock option exercises
Tax withholdings for net share   (1,959)     (73)        (2,762)     (1,112)
settlement of equity awards
Proceeds from exercise of stock  11          13          608         162
options
Repurchase of common stock       (173)       -           (1,617)     (8,844)
 Net cash used in    (2,121)     (54)        (3,742)     (9,718)
financing activities
Effect of exchange rate changes  (119)       386         (338)       (60)
on cash
 Net (decrease)      (15,746)    (5,609)     31,773      29,541
increase in cash
Cash and cash equivalents at     129,841     133,040     82,322      97,890
beginning of period
Cash and cash equivalents at     $114,095    $127,431    $114,095    $127,431
end of period





Multi-Fineline Electronix, Inc.
Selected Non-GAAP Financial Measures and Schedule Reconciling Selected
Non-GAAP Financial Measures to Comparable GAAP Financial Measures
(in thousands, except per share amounts)
(unaudited)
                                Three Months Ended      Nine Months Ended
                                June 30,                June 30,
                                2013         2012       2013         2012
GAAP net (loss) income          $(31,529)    $ 3,826   $(47,060)    $29,474
Stock-based compensation        10,461       1,416      13,009       4,304
expense
Impairment and restructuring    7,537        (732)      7,537        (2,468)
Income tax effect of non-GAAP   (4,926)      (174)      (5,752)      (424)
adjustments
Non-GAAP net (loss) income      $(18,457)    $ 4,336   $(32,266)    $30,886
GAAP diluted earnings per share $  (1.32)  $  0.16  $  (1.97)  $  1.22
Effect of stock-based
compensation, net of tax on     0.29         0.04       0.36         0.12
diluted earnings per share
Effect of impairment and
restructuring, net of tax on    0.26         (0.02)     0.26         (0.06)
diluted earnings per share
Non-GAAP diluted earnings per   $  (0.77)  $  0.18  $  (1.35)  $  1.28
share
Weighted-average diluted shares
used in calculating non-GAAP    23,948       24,044     23,847       24,101
diluted earnings per share
                                Three Months Ended      Nine Months Ended
                                June 30,                June 30,
                                2013         2012       2013         2012
GAAP operating expenses         $ 27,439     $11,117    $ 52,470     $37,692
Stock-based compensation
expense resulting from change   (9,582)      -          (9,582)      -
in control
Impairment and restructuring    (7,537)      732        (7,537)      2,468
Non-GAAP operating expenses     $ 10,320     $11,849    $ 35,351     $40,160

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 net income, non-GAAP diluted
earnings per share and non-GAAP operating expenses) 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.

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 including additional expense resulting from the change in
control that was deemed to occur under the terms of the Company's stock
incentive plan following the acquisition of the Company's majority
shareholder, WBL Corporation Limited; and (b) impairment and restructuring
activities, including goodwill impairment charges and gains on sale of
previously impaired assets. Non-GAAP operating expenses exclude the
stock-based compensation expense resulting from the change in control and
impairment and restructuring activities.

SOURCE Multi-Fineline Electronix, Inc.

Website: http://www.mflex.com
 
Press spacebar to pause and continue. Press esc to stop.