Jabil Circuit Reports Fiscal Year 1999 Second Quarter Results

Record Revenue & Earnings: Sequential Operating Income Increases 12 Percent

16 March 1999
St. Petersburg, Florida

Forward - Looking Statement

Jabil Circuit, Inc. (NYSE: JBL), electronics manufacturer to the world market for circuit board assemblies and services, today reported record revenue for the second fiscal quarter of 1999, ended February 28, 1999. Revenue for the quarter increased 49 percent to $493.4 million compared to $ 330.7 million for the same period of fiscal 1998.

Jabil's second quarter of fiscal 1999 net income increased seven percent to $ 21.6 million or $0.28 per diluted share compared with $20.1 million or $0.26 per diluted share for the second quarter of fiscal 1998.

Gross profit for fiscal 1999 second quarter increased 26 percent to $55.5 million or 11.3 percent of revenue compared to $44.0 million or 13.3 percent of revenue for the corresponding quarter of fiscal 1998.

Operating income for the second fiscal quarter of 1999 increased 15 percent to $34.9 million or 7.1 percent of revenue compared to $30.3 million or 9.2 percent of revenue for the second fiscal quarter of 1998.

Revenues for the first six months of fiscal year 1999 increased 45 percent to $941.3 million, compared to $650.2 million for the same time period of fiscal 1998. Net income for the first six months of fiscal 1999 increased four percent to $ 40.9 million, compared with $39.2 million last fiscal year. Diluted earnings per share for the first six months of fiscal 1999 were $0.52 compared to $0.51 for the same period of fiscal 1998.

Jabil Vice Chairman Thomas Sansone said the results for the quarter were somewhat ahead of expectations because of solid performance in all locations. "We are pleased with the progress in all of our sites, with noteworthy performance to plan at our recently acquired and greenfield locations."

NOTE: All EPS amounts have been adjusted to reflect a two for one stock split effected in the form of a 100 percent stock dividend to shareholders on February 18, 1999.

Income Statement -- Sequential Trend Highlights

• Revenue in the second fiscal quarter increased by 10 percent from the first quarter, reflecting solid production levels in most business segments.
• Gross margin was 11.3 percent of revenue for the quarter, reflecting a consistent mix of business and improved efficiencies in some locations.
• SG&A was $19.6 million, or 4.0 percent of revenue, a slight decrease compared to 4.1 percent of revenue in the previous quarter.
• R & D decreased slightly in absolute dollars to $989 thousand, representing 0.2 percent of revenue.
• Operating income increased sequentially by 12 percent to $34.9 million, or 7.1 percent of revenue. Growth of operating income is Jabil's key financial objective.
• Net interest expense increased to $1.7 million representing 0.3 percent of revenue, unchanged from the fiscal first quarter.
• Income tax rates were 35 percent of pre-tax income.
• Net income after tax was $21.6 million or 4.4 percent of revenue, as compared to 4.3 percent in the prior sequential quarter.
• Earnings per share for second fiscal quarter of 1999 were $0.28 on an average 78.4 million shares during the period, fully diluted.

Balance Sheet -- Sequential Trend Highlights

• Accounts receivable increased by $28 million to $209 million in the second quarter of fiscal 1999, as compared to $181 million in the first quarter. Calculated days sales outstanding were 38, compared to 36 in the first quarter.
• Inventories increased by $10 million in the second quarter to $156 million as compared to $146 million as of the end of November. Calculated inventory turns were 11, ahead of the Company's goal of 10.
• Fixed assets increased by $37 million to $284 million reflecting $51 million in capital expenditures, offset by $14 million in depreciation. A significant portion of the capital expenditures is related to building and land activity for the Boise, Guadalajara and St. Petersburg facilities.
• Long-term debt increased to $130 million in the second quarter. The Company's long-term debt is represented by an $80 million credit facility utilization and a $50 million debt funded in May of fiscal 1996. Principal payments on this debt begin mid-1999.
• The Company's debt-to-capitalization ratio for the period was 31 percent. Total liabilities-to-equity ratio at the end of the quarter was 1.4 to 1. The March stock offering is expected to reduce the debt to capitalization to 10 percent. After paying off the revolving credit facility with a portion of the proceeds from the stock offering, the Company will have a cash balance of approximately $100 million.
• For the quarter, the Company's average return on assets was 13.1 percent, with an average return on equity of 30.8 percent.

Business Notes

New Plant Update.

Mexico. This plant was solidly profitable in the second fiscal quarter of fiscal 1999. During the quarter, the Company expanded its fourth and fifth business units and increased employment to 1,300 employees. Construction on the 125,000 square foot addition is progressing on target and will be available for production of two more business units in May 1999.

Boise.Continued solid operational performance. The Company completed the purchase of a 50-acre campus location in Boise. Site plans are being finalized and construction is anticipated to begin in early spring. The site should be ready for occupancy by the end of calendar 1999.

Bergamo. Continued solid operating performance. The Company is under active development of additional business opportunities, including those that require process engineering and design for manufacturing excellence.

California. The site has begun initial production for several customers. Start up costs at this site were $.01 EPS during the quarter. The Company anticipates that the site will contribute to operating income late in the third quarter of fiscal 1999. Demand for this site continues to be strong.

Florida. Construction is underway on a 60,000 square foot corporate headquarters building at its St. Petersburg location that should be completed by the fall of 1999.

Outlook

Sansone characterized the second quarter's performance as "right on track." "The results for the second quarter were excellent and we are pleased to deliver on our targeted growth goals in operating income," he said. "We look forward to continued strength from our existing customer base and anticipate exciting opportunities for growth in our industry," he said.

About Jabil

Jabil Circuit, Inc. is an electronic manufacturer of circuit board assemblies for international original equipment manufacturers in the communications, personal computer, peripheral, consumer and automotive markets. Jabil offers circuit design, board design from schematic, mechanical and production design, prototype assembly, volume board assembly and system assembly services from 11 automated manufacturing facilities in North America, Europe and Asia.

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 12/7/98.