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Jabil Posts First Quarter Results



  Jabil Posts First Quarter Results

          Also Announces $200 Million Stock Repurchase Authorization

Business Wire

ST. PETERSBURG, Fla. -- December 17, 2013

Today Jabil Circuit, Inc. (NYSE: JBL), announced preliminary, unaudited
financial results for its first quarter of fiscal year 2014.

The company reported first quarter revenue of $4.6 billion.

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

  * Diversified Manufacturing: $2.3 billion.
  * Enterprise & Infrastructure: $1.3 billion.
  * High Velocity: $1.0 billion.

Generally accepted accounting principles (GAAP) operating income for the first
quarter was $172.7 million and GAAP diluted earnings per share were $0.57. The
company indicated that $21.3 million in restructuring costs during the quarter
impacted GAAP operating income.

Core operating income results, excluding amortization of intangibles,
stock-based compensation and related charges and restructuring and related
charges, was $177.1 million and core diluted earnings per share was $0.51.

(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, impairment of notes receivable and
related charges, goodwill impairment charges, certain distressed customer
charges, settlement of receivables and related charges, loss on disposal of
subsidiaries and acquisition costs and purchase accounting adjustments. Jabil
defines core earnings as GAAP net income before amortization of intangibles,
stock-based compensation expense and related charges, restructuring and
related charges, impairment of notes receivable and related charges, goodwill
impairment charges, certain distressed customer charges, settlement of
receivables and related charges, loss on disposal of subsidiaries, acquisition
costs and purchase accounting adjustments, 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 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 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 2014          Q1 2013
Net revenue                       $4.6 billion     $4.6 billion
GAAP operating income             $172.7 million   $170.3 million
GAAP net income                   $117.9 million   $105.8 million
GAAP diluted earnings per share   $0.57            $0.51
GAAP return on invested capital   18.3%            20.6%
Core operating income             $177.1 million   $192.5 million
Core earnings                     $105.4 million   $127.8 million
Core diluted earnings per share   $0.51            $0.61
Core return on invested capital   16.8%            24.0%

Business Update

Jabil provided guidance for its second fiscal quarter of 2014, which began on
December 1, ^ 2013.

Net revenue                    $3.5 billion to $3.7 billion
Core operating income          $40 million to $80 million
Core earnings per share        $0.05 to $0.15 per diluted share
GAAP operating (loss) income   ($17) million to $33 million
GAAP (loss) per share          ($0.20) to ($0.06) per diluted share

(GAAP earnings per share for the second quarter of fiscal year 2014 are
currently estimated to include $0.03 per share for amortization of
intangibles, $0.07 per share for stock-based compensation and $0.15 to $0.11
per share for restructuring and related charges.)

Year over Year Second Quarter Segment Revenue Guidance:

  * Diversified Manufacturing Services to decrease 25 percent.
  * Enterprise & Infrastructure consistent.
  * High Velocity to decline 25 percent.

Beyond the segment guidance, the company also announced that its Board of
Directors has authorized the repurchase of up to $200 million of the company's
common stock over the next 12 months. The shares will be repurchased from
time-to-time in open market transactions at the Company's discretion, subject
to market conditions and other factors.

FORWARD LOOKING STATEMENT: This news release contains forward-looking
statements, including those regarding our anticipated financial results for
our first quarter of fiscal year 2014; our currently expected second quarter
of fiscal year 2014 net revenue (including that of our segments), core
operating income, GAAP operating income, core and GAAP earnings per share
results and the components thereof; and our potential repurchases of our
common stock. 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 2014 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; 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, 2013, 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,
impairment of notes receivable and related charges, goodwill impairment
charges, certain distressed customer charges, settlement of receivables and
related charges, loss on disposal of subsidiaries, acquisition costs and
purchase accounting adjustments, 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 fiscal quarter 2014 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, 2013 at approximately 7:30 p.m. ET through
midnight on December 31, 2013. 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: 20315410. 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 aftermarket product management services
to global electronics and technology companies. Offering complete product
supply chain management from facilities in 31 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.

JABIL CIRCUIT, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
                                                                
                                                 November 30,
                                                 2013            August 31,

                                                 (Unaudited)     2013
ASSETS
Current assets:
Cash and cash equivalents                        $ 769,223       $ 1,011,373
Accounts receivable, net                           1,430,997       1,281,425
Inventories                                        2,166,797       2,302,155
Prepaid expenses and other current assets          1,165,090       1,165,984
Income taxes receivable                            26,280          13,048
Deferred income taxes                              50,308          46,260     
                                                                  
Total current assets                               5,608,695       5,820,245
                                                                  
Property, plant and equipment, net                 2,474,466       2,395,598
Goodwill and intangible assets, net                762,666         740,435
Deferred income taxes                              87,170          94,069
Other assets                                       96,405          103,434    
                                                                  
Total assets                                     $ 9,029,402     $ 9,153,781  
                                                                  
LIABILITIES AND EQUITY
Current liabilities:
Current installments of notes payable,           $ 117,230       $ 215,536
long-term debt and capital lease obligations
Accounts payable                                   3,185,090       3,301,235
Accrued expenses                                   1,351,125       1,301,078
Income taxes payable                               18,129          40,332
Deferred income taxes                              7,836           6,253      
                                                                  
Total current liabilities                          4,679,410       4,864,434
                                                                  
Notes payable, long-term debt and capital          1,677,824       1,690,426
lease obligations, less current installments
Other liabilities                                  85,242          89,813
Income tax liabilities                             90,490          80,368
Deferred income taxes                              78,688          73,173     
                                                                  
Total liabilities                                  6,611,654       6,798,214  
                                                                  
Commitments and contingencies

Equity:
Jabil Circuit, Inc. stockholders’ equity:
Preferred stock                                    —               —
Common stock                                       242             238
Additional paid-in capital                         1,828,111       1,853,409
Retained earnings                                  1,172,105       1,071,175
Accumulated other comprehensive income             93,914          81,248
Treasury stock, at cost                            (703,500  )     (670,783  )
                                                                  
Total Jabil Circuit, Inc. stockholders’ equity     2,390,872       2,335,287  
                                                                  
Noncontrolling interests                           26,876          20,280     
                                                                  
Total equity                                       2,417,748       2,355,567  
                                                                  
Total liabilities and equity                     $ 9,029,402     $ 9,153,781  

JABIL CIRCUIT, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except for per share data)
(Unaudited)
                                                 
                                                  Three months ended
                                                  November 30,   November 30,
                                                  2013           2012         
 
Net revenue                                       $  4,611,442   $ 4,637,018
Cost of revenue                                      4,242,672     4,286,423  
                                                                  
Gross profit                                         368,770       350,595
                                                                  
Operating expenses:
Selling, general and administrative                  158,095       169,600
Research and development                             9,054         7,263
Amortization of intangibles                          7,678         3,451
Restructuring and related charges                    21,275        —          
Operating income                                     172,668       170,281
                                                                  
Interest and other, net                              33,822        30,663     
                                                                  
Income before income tax                             138,846       139,618
                                                                  
Income tax expense                                   20,781        34,034     
                                                                  
Net income                                           118,065       105,584
                                                                  
Net income (loss) attributable to
noncontrolling interests, net of income tax          143           (263      )
expense
                                                                  
Net income attributable to Jabil Circuit, Inc.    $  117,922     $ 105,847    
                                                                  
Earnings per share attributable to the
stockholders of Jabil Circuit, Inc.:
Basic                                             $  0.58        $ 0.52       
Diluted                                           $  0.57        $ 0.51       
                                                                  
Weighted average shares outstanding:
Basic                                                204,762       204,318    
Diluted                                              206,813       207,816    

JABIL CIRCUIT, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)
                                               
                                                Three months ended
                                                November 30,     November 30,
                                                2013             2012
Cash flows from operating activities:
Net income                                      $ 118,065        $ 105,584
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization                     125,596          95,203
Recognition of stock-based compensation           (24,566    )     18,803
expense and related charges
Deferred income taxes                             (5,429     )     (1,288    )
Restructuring and related charges                 782              —
Excess tax benefits related to stock awards       (714       )     (330      )
Other, net                                        3,691            3,116
Changes in operating assets and liabilities:
Accounts receivable                               (146,619   )     (308,487  )
Inventories                                       137,407          (195,316  )
Prepaid expenses and other current assets         1,323            10,256
Other assets                                      (6,136     )     233
Accounts payable and accrued expenses             (73,700    )     424,119
Income taxes payable                              (11,994    )     21         
                                                                  
Net cash provided by operating activities         117,706          151,914    
                                                                  
Cash flows from investing activities:
Acquisition of property, plant and equipment      (202,992   )     (166,485  )
Proceeds from sale of property, plant and         5,819            1,981      
equipment
                                                                  
Net cash used in investing activities             (197,173   )     (164,504  )
                                                                  
Cash flows from financing activities:
Borrowings under debt agreements                  2,066,000        776,517
Payments towards debt agreements                  (2,180,326 )     (787,196  )
Dividends paid to stockholders                    (19,261    )     (18,551   )
Cash paid to purchase noncontrolling interest     (1,720     )     —
Net proceeds from exercise of stock options
and issuance of common stock under employee       —                3,201
stock purchase plan
Payments to acquire treasury stock                —                (129,262  )
Treasury stock minimum tax withholding            (32,717    )     (19,908   )
related to vesting of restricted stock
Capital contribution to noncontrolling            —                317
interest
Excess tax benefit related to stock awards        714              330
Bank overdraft                                    3,396            —          
                                                                  
Net cash used in financing activities             (163,914   )     (174,552  )
                                                                  
Effect of exchange rate changes on cash and       1,231            (80       )
cash equivalents
                                                                  
Net decrease in cash and cash equivalents         (242,150   )     (187,222  )
Cash and cash equivalents at beginning of         1,011,373        1,217,256  
period
                                                                  
Cash and cash equivalents at end of period      $ 769,223        $ 1,030,034  

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,   November 30,
                                                   2013           2012
 
Operating income (GAAP)                            $  172,668     $   170,281
Amortization of intangibles                           7,678           3,451
Stock-based compensation expense and related          (24,566 )       18,803
charges
Restructuring and related charges                     21,275          —
Core operating income (Non-GAAP)                   $  177,055     $   192,535
                                                                   
Net income attributable to Jabil Circuit, Inc.     $  117,922     $   105,847
(GAAP)
Amortization of intangibles, net of tax               3,066           3,318
Stock-based compensation expense and related          (24,598 )       18,593
charges, net of tax
Restructuring and related charges, net of tax         18,067          —
Acquisition costs and purchase accounting             (9,064  )       —
adjustments, net of tax
Core earnings (Non-GAAP)                           $  105,393     $   127,758
                                                                   
Earnings per share: (GAAP)
Basic                                              $  0.58        $   0.52
Diluted                                            $  0.57        $   0.51
                                                                   
Core earnings per share: (Non-GAAP)
Basic                                              $  0.51        $   0.63
Diluted                                            $  0.51        $   0.61
                                                                   
Weighted average shares outstanding used in the
calculations of earnings per share (GAAP and
Non-GAAP):
Basic                                                 204,762         204,318
Diluted                                               206,813         207,816

                     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 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 calculations of which are explained below) of (1) its
stockholders’ equity, (2) the non-current portion of its notes payable,
long-term debt and capital lease obligations and (3) the current portion 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,     November 30,
                                               2013             2012          
Numerator:
Operating income (GAAP)                        $ 172,668        $ 170,281
Tax effect (1)                                   (20,857   )      (34,292    )
After-tax operating income                       151,811          135,989
                                                 x4               x4          
Annualized after-tax operating income          $ 607,244        $ 543,956     
                                                                 
Core operating income (Non-GAAP)               $ 177,055        $ 192,535
Tax effect (2)                                   (37,831   )      (34,602    )
After-tax core operating income                  139,224          157,933
                                                 x4               x4          
Annualized after-tax core operating income     $ 556,896        $ 631,732     
                                                                 
Denominator:
Average total Jabil Circuit, Inc.              $ 2,363,080      $ 2,089,385
stockholders’ equity (3)
Average notes payable, long-term debt and
capital lease obligations, less current          1,684,125        1,657,192
installments (3)
Average current installments of notes
payable, long-term debt and capital lease        166,383          13,841
obligations (3)
Average cash and cash equivalents (3)            (890,298  )      (1,123,645 )
Net invested capital asset base                $ 3,323,290      $ 2,636,773   
                                                                 
Return on Invested Capital (GAAP)                18.3      %      20.6       %
Adjustments noted above                          (1.5      )%     3.4        %
Core Return on Invested Capital (Non-GAAP)       16.8      %      24.0       %

(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.

Contact:

Jabil Circuit, Inc.
Investor & Media Contact:
Beth Walters, 727-803-3511
Senior Vice President, Investor Relations & Communications
beth_walters@jabil.com
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