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Jabil Circuit Inc. Reports Operating Results (10-K)
Posted by: gurufocus (IP Logged)
Date: October 25, 2012 04:34PM
Jabil Circuit Inc. (JBL) filed Annual Report for the period ended 2012-08-31.
Highlight of Business Operations:Net revenues for fiscal year 2012 increased approximately 3.8% to $17.2 billion compared to $16.5 billion for fiscal year 2011 largely due to increased revenue from certain of our existing customers, including new program wins with these customers.
Selling, General and Administrative. Selling, general and administrative expenses increased to $644.5 million (3.7% of net revenue) for fiscal year 2012 compared to $590.6 million (3.6% of net revenue) for fiscal year 2011. The increase in selling, general and administrative expenses as a percentage of net revenue between fiscal years 2012 and 2011 is due to additional salary and salary related expenses associated with increased headcount to support the continued growth of our business and additional selling, general and administrative expenses associated with acquisitions, including F-I Holding Company (which directly or indirectly wholly owns certain French and Italian operations) during the second quarter of fiscal year 2011 and Telmar Network Technology, Inc. (Telmar) during the second quarter of fiscal year 2012.
Selling, General and Administrative. Selling, general and administrative expenses remained relatively constant at $590.6 million (3.6% of net revenue) for fiscal year 2011 compared to $589.7 million (4.4% of net revenue) for fiscal year 2010. The decrease in selling, general and administrative expenses as a percentage of net revenue between fiscal years 2011 and 2010 is due to an increased focus on controlling costs, as well as being able to better absorb fixed costs as revenue levels increase.
Core operating income in fiscal year 2012 increased 2.9% to $736.2 million compared to $715.2 million in fiscal year 2011. Core earnings in fiscal year 2012 decreased 1.8% to $507.1 million compared to $516.3 million in fiscal year 2011. These variances were the result of the same factors described above in Managements Discussion and Analysis of Financial Condition and Results of Operations Fiscal Year Ended August 31, 2012 Compared to Fiscal Year Ended August 31, 2011 Gross Profit.
On March 19, 2012, we entered into the Amended and Restated Credit Facility, which amended and restated the Old Amended and Restated Credit Facility. The Amended and Restated Credit Facility provides for a revolving credit facility in the initial amount of $1.3 billion, which may, subject to lenders discretion, potentially be increased up to $1.6 billion and expires on March 19, 2017. Interest and fees on the Amended and Restated Credit Facility advances are based on our non-credit enhanced long-term senior unsecured debt rating as determined by S&P and Moodys. Interest is charged at a rate equal to either 0.175% to 0.850% above the base rate or 1.175% to 1.850% above the Eurocurrency rate, where the base rate represents the greatest of Citibank, N.A.s prime rate, 0.50% above the federal funds rate, or 1.0% above one-month LIBOR, and the Eurocurrency rate represents adjusted LIBOR for the applicable interest period, each as more fully described in the Amended and Restated Credit Facility agreement. Fees include a facility fee based on the revolving credit commitments of the lenders and a letter of credit fee based on the amount of outstanding letters of credit. We, along with our subsidiaries, are subject to the following financial covenants: (1) a maximum ratio of (a) Debt (as defined in the Amended and Restated Credit Facility agreement) to (b) Consolidated EBITDA (as defined in the Amended and Restated Credit Facility agreement) and (2) a minimum ratio of (a) Consolidated EBITDA to (b) interest payable on, and amortization of debt discount in respect of, all Debt (as defined in the Amended and Restated Credit Facility agreement) and loss on sale of accounts receivables. In addition, we are subject to other covenants, such as: limitation upon liens; limitation upon mergers, etc.; limitation upon accounting changes; limitation upon subsidiary debt; limitation upon sales, etc. of assets; limitation upon changes in nature of business; payment restrictions affecting subsidiaries; compliance with laws, etc.; payment of taxes, etc.; maintenance of insurance; preservation of corporate existence, etc.; visitation rights; keeping of books; maintenance of properties, etc.; transactions with affiliates; and reporting requirements.
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