01—Abstract
Summary
Summary of the 10-K filed October 16, 2015. Cited figures are marked; the original filing is the authoritative source.
Jabil Circuit, Inc. reported fiscal 2015 (year ended August 31, 2015) net revenue of $17.9 billiona, up 13.6% from $15.8 billion in fiscal 2014, driven primarily by increased revenue from customers in the mobility business as well as telecommunications and automotive.
Net income attributable to Jabil Circuit, Inc. was $284.0 millionb, compared with $241.3 million in fiscal 2014, which included a $223.3 million gain on the sale of the Aftermarket Services business. Gross profit rose to $1.5 billion (8.4% of net revenue) from $1.0 billion (6.5%), and operating income increased to $555.4 million from $204.1 million. Core operating income, a non-U.S. GAAP measure the company reports, rose 94.0% to $670.0 million.
The company remains highly dependent on a small number of customers: its five largest accounted for approximately 50% of net revenue in fiscal 2015, and Apple, Inc. alone accounted for 24%. Cash and cash equivalents were $914.0 millionc at year end, and net cash provided by operating activities was $1.24 billion. Capital expenditures were $963.1 million, and the company repurchased 4,392,664 shares during the year.
The filing also discloses an IRS Revenue Agent's Report proposing adjustments for fiscal 2009 through 2011, with the company stating it disagrees and will contest the matter, and it states that international operations generated 88.0% of net revenue. The company expects capital expenditures of $800.0 million to $1.0 billiond over the next 12 months and plans to repay its $312.0 million 7.750% Senior Notes maturing within the next year. Its $2.0 billion revolving credit facility and new $500.0 million term loan facility were amended in July 2015.
02—Key points
Key Highlights
- Net revenue rose 13.6% to $17.9 billion in fiscal 2015, led by DMS segment revenue growth of 39% tied to mobility customers.
- Gross profit increased to $1.5 billion (8.4% of net revenue) from $1.0 billion (6.5%), and operating income rose to $555.4 million from $204.1 million.
- Net income attributable to Jabil Circuit, Inc. was $284.0 million, or $1.45 diluted EPS, versus $241.3 million in fiscal 2014.
- Customer concentration remains high: five largest customers accounted for about 50% of net revenue, and Apple, Inc. represented 24%.
- Operating cash flow was $1.24 billion, while capital expenditures totaled $963.1 million, principally for DMS growth and maintenance.
- Cash and cash equivalents stood at $914.0 million, with $1.7 billion in total notes payable, long-term debt and capital lease obligations.
- The IRS proposed adjustments for fiscal 2009 through 2011 that could result in a tax payment of approximately $34.6 million; the company disagrees and will contest them.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2015, Jabil kept $0.02.
- Revenue$17.90B100.0%
- Cost of revenue−$16.40B91.6%
- Gross profit$1.50B8.4%
- Operating costs−$947.8M5.3%
- Operating income$555.4M3.1%
- Interest, other & tax−$271.4M1.5%
- Net income$284.0M1.6%
Where FY2015 revenue went
$17.90B- Cost of revenue: $16.40B, 92% of revenue
- Net income: $284.0M, 1.6% of revenue
- R&D: $27.6M, 0.2% of revenue
- SG&A: $862.6M, 4.8% of revenue
- Interest, other & tax: $271.4M, 1.5% of revenue
Kept 1.6% as net incomeNet income $284.0M · 1.6%R&D $27.6M · 0.2%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2015filed October 16, 2015Financial Statements
FY2015 against FY2014
| Line item | FY2015FY2014 | Change |
|---|---|---|
| Revenue | $17.90B$15.76B | +13.6% |
| Cost of Revenue | $16.40B$14.74B | +11.3% |
| Gross Profit | $1.50B$1.03B | +46.6% |
| R&D Expenses | $27.64M$28.61M | −3.4% |
| SG&A Expenses | $862.65M$675.73M | +27.7% |
| Operating Income | $555.41M$204.07M | +172.2% |
| Interest Expense | $128.09M$128.06M | 0.0% |
| Net Income | $284.02M$241.31M | +17.7% |
| EPS (Basic) | $1.47$1.19 | +23.5% |
| EPS (Diluted) | $1.45$1.19 | +21.8% |
| Shares Outstanding (Basic) | 194K202.50M | −99.9% |
| Shares Outstanding (Diluted) | 196K202.50M | −99.9% |
05—Questions
Frequently Asked Questions
How did Jabil's revenue and profitability change in fiscal 2015?
Net revenue increased 13.6% to $17.9 billion from $15.8 billion, primarily from mobility customers in the DMS segment. Gross profit rose to $1.5 billion (8.4% of net revenue) from $1.0 billion (6.5%), and net income attributable to Jabil Circuit, Inc. was $284.0 million compared with $241.3 million in fiscal 2014, which included a $223.3 million gain on the sale of discontinued operations.
How concentrated is Jabil's customer base?
In fiscal 2015 the five largest customers accounted for approximately 50% of net revenue and 81 customers accounted for approximately 90%. Apple, Inc. represented 24% of net revenue, up from 18% in fiscal 2014. The company states it expects to continue depending on a relatively small number of customers.
What is the status of the IRS examination?
The IRS completed its field examination of fiscal 2009 through 2011 returns and issued a Revenue Agent's Report on May 27, 2015, proposing adjustments mainly related to U.S. taxation of certain intercompany transactions. If the IRS prevails, the payment due would be approximately $34.6 million after utilization of loss carryforwards, plus proposed interest and penalties. The company disagrees and intends to contest the matter.
How is Jabil funding its operations and debt obligations?
At August 31, 2015 the company had $914.0 million in cash and cash equivalents, $1.8 billion in available revolving credit liquidity, $500.0 million in available term loan liquidity, and up to $235.2 million under receivables programs. Its $312.0 million 7.750% Senior Notes mature within twelve months, which the company expects to fund from cash and available borrowings.
What are management's capital expenditure and shareholder return plans?
Management anticipates capital expenditures of $800.0 million to $1.0 billion over the next 12 months, mainly for capacity, DMS investments and EMS support. The board authorized a new $100.0 million share repurchase in fiscal 2015, of which about $45.5 million was used in the fourth quarter and $54.5 million after year end. The company also paid quarterly dividends of $0.08 per share.
06—Continue