How did Jabil's revenue and profitability change in fiscal 2004?

Net revenue increased 32.2% to $6.3 billion, and net income rose to $166.9 million from $43.0 million. Operating income increased to $216.0 million from $44.5 million, primarily because fiscal 2003 included $85.3 million of restructuring and impairment charges that did not recur. Gross margin, however, fell to 8.6% from 9.2% of net revenue.

How concentrated is Jabil's customer base?

Royal Philips Electronics accounted for 18% of fiscal 2004 net revenue and Cisco Systems for 12%. The filing states that 40 customers accounted for more than 93% of net revenue, and that the company expects to keep depending on a relatively small number of customers. Customers may terminate, reduce or delay orders, which could materially affect results.

Does Jabil pay dividends, and what is its debt position?

Jabil has never paid cash dividends on its capital stock and does not anticipate doing so in the foreseeable future; financing covenants also restrict dividends. Total notes payable, long-term debt and lease obligations were $309.6 million at August 31, 2004, mostly the $300.0 million 5.875% senior notes due 2010, and $405.5 million was available under its revolving credit facilities and receivables securitization program.

What are Jabil's capital spending plans?

Capital expenditures were $217.7 million in fiscal 2004. Management expects capital expenditures of $150.0 million to $200.0 million over the next twelve months, principally for machinery and equipment and expansion in China, Eastern Europe and India, and believes existing resources will be adequate to fund them.

JBL 10-K FY2004 Annual Report — Revenue, Net Income, EPS

01—Abstract

Summary

Summary of the 10-K filed November 5, 2004. Cited figures are marked; the original filing is the authoritative source.

Jabil Circuit, Inc. is one of the leading worldwide independent providers of electronic manufacturing services (EMS), designing and manufacturing electronic circuit board assemblies and systems for major OEMs across aerospace, automotive, computing, consumer, defense, instrumentation, medical, networking, peripherals, storage and telecommunications.

For fiscal year 2004 (ended August 31, 2004), net revenue rose 32.2% to $6.3 billion^a from $4.7 billion, and net income increased to $166.9 million, or $0.81 per diluted share, from $43.0 million, or $0.21 per diluted share, in fiscal 2003. Gross margin narrowed to 8.6% of net revenue from 9.2%, driven by a higher share of materials-based revenue and the shift of production to lower-cost regions, while operating income rose to $216.0 million from $44.5 million, helped by the absence of fiscal 2003's $85.3 million restructuring charges. Customer concentration remains significant: Royal Philips Electronics accounted for 18% of net revenue and Cisco Systems for 12%, and 40 customers made up more than 93% of revenue.

Backlog stood at approximately $1.8 billion^b at August 31, 2004, versus $1.3 billion a year earlier, though the filing notes customers may cancel or reschedule deliveries. Liquidity is solid: cash and equivalents were $621.3 million, and the company retired its $345.0 million 1.75% convertible notes in May 2004, leaving $309.6 million of total debt, mostly $300.0 million of 5.875% senior notes due 2010 (swapped to a variable rate). Capital expenditures were $217.7 million, and management expects $150.0 million to $200.0 million in the next twelve months, principally for expansion in China, Eastern Europe and India.

The company has never paid cash dividends. Management reported no material weaknesses in internal control, while noting Section 404 compliance becomes effective for fiscal 2005. A planned acquisition of a Philips television assembly factory in Kwidzyn, Poland was announced October 7, 2004, with closing anticipated in November 2004, subject to regulatory approval.

02—Key points

Key Highlights

Net revenue of $6.25 billion for fiscal 2004, up 32.2% from $4.73 billion in fiscal 2003, with growth in every industry sector
Net income of $166.9 million ($0.81 diluted EPS) versus $43.0 million ($0.21) in fiscal 2003; no restructuring charges in fiscal 2004 versus $85.3 million in fiscal 2003
Gross profit margin declined to 8.6% of net revenue from 9.2%, reflecting a higher mix of materials-based revenue and continued shift to lower-cost regions
Customer concentration: Royal Philips Electronics (18%) and Cisco Systems (12%) of net revenue; 40 customers accounted for more than 93%
Backlog of approximately $1.8 billion at August 31, 2004, compared with $1.3 billion at August 31, 2003
Cash and cash equivalents of $621.3 million; the 1.75% convertible notes were fully retired in May 2004 for about $345.0 million in principal, leaving $309.6 million of total debt
Planned acquisition of Philips' television assembly factory in Kwidzyn, Poland, expected to close in November 2004 subject to regulatory approval

03—Questions

Frequently Asked Questions

How did Jabil's revenue and profitability change in fiscal 2004?
Net revenue increased 32.2% to $6.3 billion, and net income rose to $166.9 million from $43.0 million. Operating income increased to $216.0 million from $44.5 million, primarily because fiscal 2003 included $85.3 million of restructuring and impairment charges that did not recur. Gross margin, however, fell to 8.6% from 9.2% of net revenue.
How concentrated is Jabil's customer base?
Royal Philips Electronics accounted for 18% of fiscal 2004 net revenue and Cisco Systems for 12%. The filing states that 40 customers accounted for more than 93% of net revenue, and that the company expects to keep depending on a relatively small number of customers. Customers may terminate, reduce or delay orders, which could materially affect results.
Does Jabil pay dividends, and what is its debt position?
Jabil has never paid cash dividends on its capital stock and does not anticipate doing so in the foreseeable future; financing covenants also restrict dividends. Total notes payable, long-term debt and lease obligations were $309.6 million at August 31, 2004, mostly the $300.0 million 5.875% senior notes due 2010, and $405.5 million was available under its revolving credit facilities and receivables securitization program.
What are Jabil's capital spending plans?
Capital expenditures were $217.7 million in fiscal 2004. Management expects capital expenditures of $150.0 million to $200.0 million over the next twelve months, principally for machinery and equipment and expansion in China, Eastern Europe and India, and believes existing resources will be adequate to fund them.

04—Continue

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