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Jabil Circuit Reports Fiscal Year 1998 Third Quarter Results

Earnings Increase 18 Percent

16 June 1998
St. Petersburg, Florida

Forward - Looking Statement

Jabil Circuit, Inc. (NYSE: JBL), electronics contract manufacturer to the world market for circuit board assemblies, today reported earnings for the third fiscal quarter of 1998 ended May 31, 1998. Revenue for the quarter increased 25 percent to $309.6 million compared to $247.6 million for the same period of fiscal 1997.

Jabil's third quarter of fiscal 1998 net income increased 19 percent to $17.3 million or $.45 per diluted share compared with $14.6 million or $.38 per diluted share for the third quarter of fiscal 1997.

Gross profit for Jabil's third quarter increased 24 percent to $39.8 million or 12.8 percent of revenues compared to $32.0 million or 12.9 percent of revenue for the corresponding quarter of fiscal 1997.

Operating income for the third fiscal quarter of 1998 increased 17 percent to $25.8 million or 8.3 percent of revenue compared to $22.0 million or 8.9 percent of revenue for the third fiscal quarter of 1997.

"Earnings for the quarter were $.45 per share on revenues of $310 million," said Jabil Circuit President Thomas A. Sansone. "Year over year, these results reflect an 18 percent growth in quarterly EPS. In addition to the Hewlett-Packard acquisition deal announced May 12th, we have established two significant new customers for next year and will launch an 180,000 square foot greenfield site in San Jose, California." Sansone said that the Company anticipates beginning California production in the second quarter of fiscal 1999.

Income Statement -- Sequential Trend Highlights

  • Revenue in the third fiscal quarter decreased by $21.1 million, a six percent decrease from the second quarter, reflecting a decrease in production levels.
  • Gross margin decreased to 12.8 percent of revenue, reflecting the ongoing concentration of product mix in high value added products offset by some reduction in plant loading.
  • SG&A remained at $12.9 million, or 4.2 percent of reduced revenue.
  • R & D increased slightly in absolute dollars to $1.06 million, continuing to represent .3 percent of revenue.
  • Operating income decreased sequentially to $25.8 million, or 8.3 percent of revenue. Operating income growth is the Company's key financial objective.
  • Net interest expense decreased by $412 thousand, to $722 thousand, representing .2 percent of revenue.
  • Income tax rates decreased to 31 percent of income, consistent with the prior fiscal quarter.
  • Net income after tax was $17.3 million or 5.6 percent of revenue, as compared to 6.1 percent in the prior sequential quarter. Earnings per share for the quarter were $.45 on an average 38,615,000 shares during the period, fully diluted.

Balance Sheet -- Sequential Trend Highlights

  • Accounts receivable increased by $4 million to $124 million in the third quarter of fiscal 1998. This compares to $120 million in the second quarter of fiscal 1998.
  • Inventories decreased by $6 million in the third quarter to $84 million as compared to $90 million as of the end of February. Calculated inventory turns were approximately 13, consistent with the Company's performance in the second quarter.
  • Cash balances were $43 million at the end of the third fiscal quarter, as compared to $56 million at the end of the second quarter of fiscal 1998.
  • Fixed assets increased by $3 million to $186 million reflecting $12 million in capital expenditures, offset by $9 million in depreciation.
  • The Company is not currently utilizing the $100 million credit facility. Plans to establish a $200 million credit facility to fund future growth are underway and should be complete by the close of the fiscal year.
  • Long-term debt and current installments of long-term debt remained constant at $50 million in the third quarter. Long-term debt is represented by the $50 million private placement debt funded in May of fiscal 1996. Principal payments on this debt begin mid-1999.
  • The Company's debt-to-capitalization ratio is now at 17 percent. Total liabilities-to-equity ratio at the end of the quarter was .8 to 1.
  • For the quarter, average return on assets was 15.3 percent, with an average return on equity of 29.1 percent.

Business Outlook

Outlook

Sansone indicated that the while the Company's results for the third quarter were on target, near term production schedules have remained soft as a result of significantly lower production levels for one communications product line. For the balance of fiscal 1998, the Company anticipates that revenue will remain flat, with a significant revenue growth in the fall quarter. The Company expects lower operating income over the next two quarters resulting from decreased demand for production, start up costs of the new California operation and Hewlett-Packard start up and transition expenses.

"With the announcement of two new customers, the new location in California and the Hewlett Packard acquisition, the outlook for the Company in fiscal 1999 is very favorable," Sansone said. According to guidance from the Company, longer-term production levels are anticipated to grow significantly, as production begins for the two new customers. Jabil will make important design contributions to the new notebook PC product, which is anticipated to attain significant production levels in the third quarter of fiscal 1999. In addition, the new data communications customer is anticipated to begin production in the first quarter of fiscal 1999 and expand materially during the year.

About Jabil

Jabil Circuit, Inc. is an electronic manufacturer of circuit board assemblies for international original equipment manufacturers in the communications, personal computer, computer peripheral, automotive and consumer markets. Jabil offers circuit design, board design from schematic, prototype assembly, volume board assembly and system assembly services from automated manufacturing facilities in Florida, Michigan, California, Scotland, Malaysia and Mexico.

This release contains certain forward-looking statements, which are subject to a number of risks and uncertainties. Some factors that could cause actual results to differ materially include: business conditions and growth in the contract manufacturing industry and the general economy; variability of operating results; dependence on a limited number of customers; limited availability of components; dependence on certain industries; variability of customer requirements; and other risk factors described in the company's most recently filed SEC documents such as the Form 10-K, filed 12/1/97.