How much did Jabil Circuit's revenue and earnings grow in fiscal 1996?

Net revenue grew 54.3% to $863.3 million in fiscal 1996 from $559.5 million in fiscal 1995. Net income rose to $24.3 million, or $1.34 per share, from $7.3 million, or $0.47 per share. Net revenue growth was driven primarily by manufacturing services for established customers, five new customers and new divisions within existing customers.

How concentrated is the company's customer base?

Very concentrated. In fiscal 1996, Hewlett Packard accounted for 20% of net revenue, Quantum Corporation for 23%, NEC Technologies for 15%, 3Com for 11% and Cisco Systems for 10%. The filing states that 18 customers accounted for substantially all net revenue in fiscal 1996, and that significant reductions or delays in sales to large customers would have a material adverse effect on results.

What is the status of the Epson litigation?

In fiscal 1994 Jabil sued Epson of America, Inc. for breach of contract, and Epson filed a counterclaim on July 21, 1995 alleging breach of contract and negligent misrepresentation. The company expects discovery to conclude in the first half of fiscal 1997 and trial to begin in the second half of fiscal 1997. The company believes its exposure is substantially less than the amount Epson claims and states that adequate provision has been made in its financial statements.

How did the company fund its growth and strengthen its balance sheet in fiscal 1996?

Jabil completed a secondary public offering in November 1995 that provided net proceeds of approximately $39.2 million. It also completed a $50 million private placement of 6.89% Senior Notes due 2004 in May 1996 and established a $60 million unsecured revolving credit facility. Notes payable to bank were repaid, falling to zero from $73.0 million, and cash rose to $73.3 million at August 31, 1996.

JBL 10-K FY1996 Annual Report — Revenue, Net Income, EPS

01—Abstract

Summary

Summary of the 10-K filed November 27, 1996. Cited figures are marked; the original filing is the authoritative source.

Jabil Circuit, Inc. reported results for the fiscal year ended August 31, 1996 in this Form 10-K, filed November 27, 1996.

The company is an independent supplier of turnkey manufacturing services for circuit board assemblies, subsystems and systems to OEMs in the personal computer, computer peripherals, communications and automotive industries. Net revenue rose 54.3% to $863.3 million^a in fiscal 1996, from $559.5 million in fiscal 1995, driven mainly by established customers, five new customers and new divisions within existing customers. Net income increased to $24.3 million, or $1.34 per share, from $7.3 million, or $0.47 per share, in fiscal 1995.

Gross margin improved to 8.5% from 6.4%, which the filing attributes mainly to a shift toward manufacturing-based revenue and higher capacity utilization. The balance sheet strengthened over the year. Cash and cash equivalents rose to $73.3 million^b from $5.5 million, and operating cash flow was $100.1 million.

Net stockholders' equity increased to $124.2 million^c from $59.6 million, supported by a secondary public offering that netted approximately $39.2 million and by the year's earnings. Notes payable to bank fell to zero from $73.0 million, and the company established a $60 million unsecured revolver. It also completed a $50 million private placement of 6.89% Senior Notes due 2004.

Customer concentration remains high: Quantum Corporation accounted for 23%^d of fiscal 1996 net revenue, NEC Technologies for 15%, and Hewlett Packard for 20%. The filing also discloses a pending lawsuit against Epson of America, Inc., in which Jabil is the plaintiff and Epson has filed a counterclaim.

The company states that trial is expected in the second half of fiscal 1997 and that it believes adequate provision has been made in its financial statements for adverse exposure. Investors should weigh the company's reliance on a small number of customers and the risks typical of contract manufacturing, including price pressure, short product life cycles and component shortages.

02—Key points

Key Highlights

Net revenue increased 54.3% to $863.3 million in fiscal 1996, compared with $559.5 million in fiscal 1995.
Net income rose to $24.3 million, or $1.34 per share, from $7.3 million, or $0.47 per share, in fiscal 1995.
Gross margin improved to 8.5% in fiscal 1996 from 6.4% in fiscal 1995, attributed to a shift toward manufacturing-based revenue and higher capacity utilization.
Cash and cash equivalents increased to $73.3 million, and net cash from operating activities was $100.1 million.
Net stockholders' equity rose to $124.2 million from $59.6 million, aided by a secondary public offering that netted approximately $39.2 million.
Notes payable to bank were reduced to zero from $73.0 million, and a $60 million unsecured revolver was established in May 1996.
Customer concentration remains significant, with Hewlett Packard (20%), Quantum Corporation (23%) and NEC Technologies (15%) accounting for a large share of fiscal 1996 net revenue.

03—Questions

Frequently Asked Questions

How much did Jabil Circuit's revenue and earnings grow in fiscal 1996?
Net revenue grew 54.3% to $863.3 million in fiscal 1996 from $559.5 million in fiscal 1995. Net income rose to $24.3 million, or $1.34 per share, from $7.3 million, or $0.47 per share. Net revenue growth was driven primarily by manufacturing services for established customers, five new customers and new divisions within existing customers.
How concentrated is the company's customer base?
Very concentrated. In fiscal 1996, Hewlett Packard accounted for 20% of net revenue, Quantum Corporation for 23%, NEC Technologies for 15%, 3Com for 11% and Cisco Systems for 10%. The filing states that 18 customers accounted for substantially all net revenue in fiscal 1996, and that significant reductions or delays in sales to large customers would have a material adverse effect on results.
What is the status of the Epson litigation?
In fiscal 1994 Jabil sued Epson of America, Inc. for breach of contract, and Epson filed a counterclaim on July 21, 1995 alleging breach of contract and negligent misrepresentation. The company expects discovery to conclude in the first half of fiscal 1997 and trial to begin in the second half of fiscal 1997. The company believes its exposure is substantially less than the amount Epson claims and states that adequate provision has been made in its financial statements.
How did the company fund its growth and strengthen its balance sheet in fiscal 1996?
Jabil completed a secondary public offering in November 1995 that provided net proceeds of approximately $39.2 million. It also completed a $50 million private placement of 6.89% Senior Notes due 2004 in May 1996 and established a $60 million unsecured revolving credit facility. Notes payable to bank were repaid, falling to zero from $73.0 million, and cash rose to $73.3 million at August 31, 1996.

04—Continue

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