Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ____________________________ FORM 10-Q (Mark One) ☒ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended March 25, 2022 OR ☐ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from__________to__________ Commission File Number: 001-34775 FABRINET (Exact name of registrant as specified in its ...

Fabrinet (NYSE:FN) Q2 2022 Earnings Conference Call January 31, 2022 5:00 PM ET Company Participants Garo Toomajanian - IR Seamus Grady - CEO Csaba Sverha - CFO Conference Call Participants Alex Henderson - Needham Samik Chatterjee - JPMorgan Operator Good afternoon. Welcome to Fabrinet's Financial Results Conference Call for the Second Quarter of Fiscal Year 2022. [Operator Instructions] As a reminder, today's call is being recorded. I would now like to turn the call over to your host, Garo Toomajanian, In ...

Financial Performance - Fabrinet achieved record Q2 revenue of $566.6 million, exceeding the guidance range[16] - Year-over-year revenue increased by 25% from $453.8 million in the previous year[15] - Non-GAAP gross profit was $70.8 million, resulting in a gross margin of 12.5%[15] - Non-GAAP operating profit reached $58.7 million, with an operating margin of 10.4%[15] - Non-GAAP net income was $56.2 million, leading to a diluted EPS of $1.50, which was above the guidance range[15, 16] Revenue Breakdown - Optical communications accounted for 80% of total revenue in F2Q22[22] - Non-optical communications represented 20% of total revenue in F2Q22[22] Balance Sheet - The company's cash, cash equivalents, including marketable securities and restricted cash, totaled $520.2 million[17] - Working capital stood at $478.4 million[17] - Total debt was $33.4 million[17] - Total shareholders' equity amounted to $1,199.2 million[17]

[Risk Factors Summary](index=4&type=section&id=RISK%20FACTORS%20SUMMARY) [Risk Factors Summary](index=4&type=section&id=RISK%20FACTORS%20SUMMARY) This section outlines principal investment risks, including customer dependence, market consolidation, operational challenges, international exposures, financial risks, and cybersecurity threats - Sales are dependent on a small number of customers, and a reduction in orders or loss of any of these customers could significantly harm business results[9](index=9&type=chunk) - The business is exposed to risks from international operations, including political unrest in Thailand, the ongoing U.S.-China trade dispute, and fluctuations in foreign currency exchange rates[9](index=9&type=chunk) - Supply chain risks are significant, as the company relies on single-source or limited suppliers for critical materials, which could lead to shortages and increased costs[9](index=9&type=chunk) - Financial risks include the potential impairment of business due to financial ratio covenants in loan agreements and the impact of the phase-out of the London Interbank Offered Rate (LIBOR)[11](index=11&type=chunk) - The company faces risks related to cybersecurity attacks on its IT infrastructure and potential intellectual property infringement claims[11](index=11&type=chunk) [PART I. FINANCIAL INFORMATION](index=8&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=8&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, comprehensive income, shareholders' equity, and cash flows, with accompanying notes [Condensed Consolidated Balance Sheets](index=8&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased to $1.75 billion, driven by receivables and inventories, while liabilities rose to $551.6 million, and shareholders' equity reached $1.20 billion Condensed Consolidated Balance Sheet Highlights (as of December 24, 2021 vs. June 25, 2021) | Account | Dec 24, 2021 (in thousands) | June 25, 2021 (in thousands) | | :--- | :--- | :--- | | **Total Current Assets** | $1,439,987 | $1,352,507 | | Inventories | $484,873 | $422,133 | | **Total Assets** | **$1,750,795** | **$1,616,122** | | **Total Current Liabilities** | $500,037 | $444,358 | | Trade accounts payable | $391,176 | $346,555 | | **Total Liabilities** | **$551,604** | **$503,602** | | **Total Shareholders' Equity** | **$1,199,191** | **$1,112,520** | [Condensed Consolidated Statements of Operations and Comprehensive Income](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income) Revenues for the three months ended December 24, 2021, increased 24.9% to $566.6 million, with net income rising to $48.9 million and diluted EPS reaching $1.30 Statement of Operations Highlights (Three Months Ended) | Metric | Dec 24, 2021 (in thousands) | Dec 25, 2020 (in thousands) | YoY Change | | :--- | :--- | :--- | :--- | | Revenues | $566,633 | $453,827 | +24.9% | | Gross Profit | $69,371 | $53,021 | +30.8% | | Operating Income | $51,445 | $35,865 | +43.4% | | Net Income | $48,879 | $35,384 | +38.1% | | Diluted EPS | $1.30 | $0.94 | +38.3% | Statement of Operations Highlights (Six Months Ended) | Metric | Dec 24, 2021 (in thousands) | Dec 25, 2020 (in thousands) | YoY Change | | :--- | :--- | :--- | :--- | | Revenues | $1,109,955 | $890,466 | +24.6% | | Gross Profit | $132,968 | $103,501 | +28.5% | | Operating Income | $94,455 | $69,482 | +35.9% | | Net Income | $93,530 | $68,435 | +36.7% | | Diluted EPS | $2.50 | $1.83 | +36.6% | [Condensed Consolidated Statements of Shareholders' Equity](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders%27%20Equity) Total shareholders' equity increased from $1.11 billion to $1.20 billion, primarily due to net income, partially offset by share settlements and repurchases - For the six months ended December 24, 2021, total shareholders' equity increased by **$86.7 million**, from **$1,112.5 million** to **$1,199.2 million**[20](index=20&type=chunk) - Key activities affecting shareholders' equity during the six-month period included net income of **$93.5 million**, share-based compensation of **$16.0 million**, share repurchases of **$4.4 million**, and tax withholdings on restricted share units of **$19.5 million**[20](index=20&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=12&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operations was $57.6 million, while investing activities used $53.8 million and financing activities used $29.8 million, resulting in $276.8 million cash at period-end Cash Flow Summary (Six Months Ended) | Cash Flow Activity | Dec 24, 2021 (in thousands) | Dec 25, 2020 (in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $57,568 | $41,314 | | Net cash used in investing activities | ($53,777) | ($24,346) | | Net cash used in financing activities | ($29,773) | ($23,629) | | **Net decrease in cash** | **($25,982)** | **($6,661)** | | Cash at end of period | $276,845 | $226,776 | - The increase in cash from operations was mainly due to higher net income, offset by significant increases in inventories (**$62.7 million**) and trade accounts receivable (**$48.0 million**)[27](index=27&type=chunk) - Investing activities included **$51.9 million** for the purchase of property, plant, and equipment[27](index=27&type=chunk) - Financing activities included **$19.5 million** for withholding tax on restricted share units, **$6.1 million** for repayment of long-term borrowings, and **$4.2 million** for share repurchases[27](index=27&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=15&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed information on accounting policies, revenue recognition, financial instruments, inventory, leases, borrowings, taxes, share-based compensation, and commitments Revenue by End Market (Three Months Ended) | End Market | Dec 24, 2021 (in thousands) | % of Total | Dec 25, 2020 (in thousands) | % of Total | | :--- | :--- | :--- | :--- | :--- | | Optical communications | $450,783 | 79.6% | $347,840 | 76.6% | | Lasers, sensors and other | $115,850 | 20.4% | $105,987 | 23.4% | | **Total** | **$566,633** | **100.0%** | **$453,827** | **100.0%** | Revenue by Geographic Region (Three Months Ended Dec 24, 2021) | Region | Revenue (in thousands) | % of Total | | :--- | :--- | :--- | | North America | $247,277 | 43.6% | | Asia-Pacific and others | $222,040 | 39.2% | | Europe | $97,316 | 17.2% | | **Total** | **$566,633** | **100.0%** | - As of December 24, 2021, the company had a purchase obligation of **$1,301.7 million** and capital expenditure commitments of **$19.9 million**, primarily for a new manufacturing building[117](index=117&type=chunk)[120](index=120&type=chunk) - The company repurchased **38,269 shares** for **$4.4 million** during the three and six months ended December 24, 2021, with **$76.7 million** remaining under the share repurchase authorization[112](index=112&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=37&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial condition and results, highlighting strong revenue growth, improved margins, and solid liquidity, alongside COVID-19 impacts, cost structures, and foreign exchange risks [Overview and COVID-19 Impact](index=38&type=section&id=Overview%20and%20COVID-19%20Impact) Fabrinet provides optical manufacturing services, navigating COVID-19 supply chain challenges with strong liquidity of $519.9 million in cash and investments, while benefiting from long-term internet bandwidth demand - The company believes that growing global demand for internet bandwidth, driven by work-from-home protocols, will have a positive long-term impact on its business[137](index=137&type=chunk) - Near-term challenges from COVID-19 include disruptions in the supply chain and fluctuations in material availability, which are expected to continue impacting revenue generation and negatively affecting gross margins[137](index=137&type=chunk) - As of December 24, 2021, the company reported a strong capital position with **$519.9 million** in cash, cash equivalents, and short-term investments, and total debt of approximately **$33.5 million**[137](index=137&type=chunk) [Results of Operations](index=44&type=section&id=Results%20of%20Operations) Quarterly revenues grew 24.9% to $566.6 million, with gross margin improving to 12.2% and operating income increasing 43.2% to $51.4 million Quarterly Performance Comparison (Q2 FY22 vs Q2 FY21) | Metric | Q2 FY22 | Q2 FY21 | Change | | :--- | :--- | :--- | :--- | | Revenues | $566.6M | $453.8M | +24.9% | | Gross Profit | $69.4M | $53.0M | +30.8% | | Gross Margin | 12.2% | 11.7% | +50 bps | | Operating Income | $51.4M | $35.9M | +43.2% | | Operating Margin | 9.1% | 7.9% | +120 bps | - The increase in revenue for both the three and six-month periods was primarily due to higher demand for optical communications manufacturing services from key customers[176](index=176&type=chunk)[177](index=177&type=chunk) - SG&A expenses increased by **$0.6 million** for the quarter, mainly due to higher share-based compensation and R&D expenses, offset by lower start-up costs in Israel[182](index=182&type=chunk) [Liquidity and Capital Resources](index=48&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with $519.9 million in cash and investments, generating $57.6 million from operations, and believes it can meet future capital needs Six-Month Cash Flow Summary | Activity | Six Months Ended Dec 24, 2021 (in thousands) | | :--- | :--- | | Net cash provided by operating activities | $57,568 | | Net cash used in investing activities | ($53,777) | | Net cash used in financing activities | ($29,773) | - Cash from operations of **$57.6 million** was driven by net income of **$93.5 million**, offset by increases in inventories (**$62.7 million**) and accounts receivable (**$48.0 million**)[207](index=207&type=chunk) - The company believes its current cash, investments, and cash flow from operations will be sufficient to meet its needs for at least the next 12 months[204](index=204&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=50&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks from interest rates, foreign currency fluctuations (especially Thai baht), and credit exposure, which are managed through derivative instruments and diversified investments - The company has significant foreign currency risk, particularly from the Thai baht, as most revenues are in USD while a substantial portion of payroll and operating expenses are in THB. A **10% weakening** of the USD against the THB, RMB, and GBP would have resulted in a net dollar position decrease of approximately **$6.6 million** as of December 24, 2021[220](index=220&type=chunk)[222](index=222&type=chunk) - Interest rate risk exists for both investment income and debt expense. A **10 basis point decline** in interest rates would have decreased interest income by approximately **$0.2 million** for the six-month period. A **100 basis point increase** in LIBOR would have increased interest expense by a similar amount, though this is mitigated by interest rate swap agreements[214](index=214&type=chunk)[215](index=215&type=chunk) - The company uses derivative instruments, including foreign currency forward contracts and interest rate swaps, to manage market risks. Certain foreign currency and interest rate hedges are designated as cash flow hedges and qualify for hedge accounting[216](index=216&type=chunk)[222](index=222&type=chunk) [Item 4. Controls and Procedures](index=52&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of December 24, 2021, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[224](index=224&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[225](index=225&type=chunk) [PART II. OTHER INFORMATION](index=53&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=53&type=section&id=Item%201.%20Legal%20Proceedings) The company reports no material legal claims or actions currently pending or threatened against it - There are currently no material legal claims or actions pending or threatened against the company[227](index=227&type=chunk) [Item 1A. Risk Factors](index=53&type=section&id=Item%201A.%20Risk%20Factors) This section details significant business and investment risks, including COVID-19 impacts, customer concentration, supply chain vulnerabilities, international operational risks, financial risks, and cybersecurity threats - Customer concentration is a major risk, with **three customers** accounting for **54.8%** of revenues in the three months ended December 24, 2021[232](index=232&type=chunk) - The company is currently experiencing impacts from the significant global semiconductor shortage, which can cause disruptions to production schedules and adversely affect financial results[248](index=248&type=chunk) - The majority of operations are in Thailand, exposing the company to political, social, and economic risks specific to that country[270](index=270&type=chunk) - The U.S. Commerce Department's addition of Huawei to the BIS Entity List has adversely affected orders from some of the company's customers and is expected to continue to do so[265](index=265&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=74&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased 38,269 ordinary shares for $4.4 million during the quarter, with $76.7 million remaining under the share repurchase authorization Share Repurchase Activity (Three Months Ended Dec 24, 2021) | Metric | Value | | :--- | :--- | | Total Shares Purchased | 38,269 | | Average Price Paid Per Share | $115.82 | | Total Purchase Price | $4.4 million | | Remaining Authorization | $76.7 million | [Item 6. Exhibits](index=75&type=section&id=Item%206.%20Exhibits) This section lists filed exhibits, including CEO and CFO certifications and Inline XBRL financial data - Filed exhibits include CEO and CFO certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act[335](index=335&type=chunk) - The filing includes financial data in Inline XBRL format as required by the SEC[335](index=335&type=chunk)

Fabrinet (NYSE:FN) Q1 2022 Earnings Conference Call November 1, 2021 5:00 PM ET Company Participants Garo Toomajanian - IR Seamus Grady - CEO Csaba Sverha - CFO Conference Call Participants Alex Henderson - Needham Fahad Najam - MKM Partners Operator Good afternoon. Welcome to Fabrinet's Results conference call for the first quarter of fiscal year 2022. [Operator Instructions] As a reminder, today's call is being recorded. I would now like to turn the call over to your host, Garo Toomajanian, Investor Relat ...

(Mark One) Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ____________________________ FORM 10-Q ☒ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended September 24, 2021 OR ☐ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from__________to__________ Commission File Number: 001-34775 FABRINET (Exact name of registrant as specified in ...

Company Overview - Fabrinet is a global leader in advanced precision optical/electronic/mechanical manufacturing services, focusing on high-mix/low-volume mission-critical components and modules[4] - The company has factories in Thailand, China, New Jersey, California, United Kingdom, and Israel, with over 10,000 employees and approximately 2.0 million sq ft of facilities[5] Financial Performance - Fabrinet's Q4 2021 revenue reached a record of $509.6 million, exceeding the guidance range, representing a 26% year-over-year increase compared to $405.1 million in Q4 2020[9, 13] - The company's Q4 2021 non-GAAP gross margin was 12.3%, within the target range of 12.0-12.5%[14] - Q4 2021 non-GAAP EPS was a record $1.31, surpassing the guidance range[14] - For the three months ended June 25, 2021, GAAP net income was $42.4 million ($1.13 diluted EPS), while non-GAAP net income was $49.4 million ($1.31 diluted EPS)[13] - The non-GAAP gross profit for the three months ended June 25, 2021, was $62.6 million, resulting in a gross margin of 12.3%[13, 16] - The non-GAAP operating profit for the three months ended June 25, 2021, was $50.5 million, resulting in an operating margin of 9.9%[13, 17] Balance Sheet - As of June 25, 2021, Fabrinet's cash, cash equivalents, and marketable securities totaled $548.1 million[15] - The company's total shareholders' equity as of June 25, 2021, was $1,112.5 million[15] Revenue Mix - In F4Q21, Optical Communications accounted for 76% of total revenue, while Non-Optical Communications accounted for 24%[10, 20]

Fabrinet (NYSE:FN) Q4 2021 Earnings Conference Call August 16, 2021 5:00 PM ET Company Participants Garo Toomajanian – Investor Relations Seamus Grady – Chief Executive Officer Csaba Sverha – Chief Financial Officer Conference Call Participants John Marchetti – Stifel Samik Chatterjee – JPMorgan Fahad Najam – MKM Partners Operator Good afternoon. Welcome to Fabrinet’s Financial Results Conference Call for the Fourth Quarter of Fiscal Year 2021. At this time all participants are in a listen-only mode. [Opera ...

Part I [Item 1. Business](index=8&type=section&id=Item%201.%20Business) Fabrinet provides advanced optical packaging and precision manufacturing services to OEMs, with fiscal year 2021 revenues growing 14.5% to **$1.88 billion**, driven by optical communications - Fabrinet provides advanced optical packaging and precision optical, electro-mechanical, and electronic manufacturing services to OEMs of complex products[23](index=23&type=chunk) Fiscal Year 2021 Financial Highlights | Metric | Fiscal Year 2021 | Fiscal Year 2020 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $1.88 billion | $1.64 billion | +$237.5 million | +14.5% | | Optical Communications Revenue % | 76.7% | 76.0% | - | - | | Lasers, Sensors, Other Revenue % | 23.3% | 24.0% | - | - | - The company manufactures a range of products including ROADMs, tunable lasers, active optical cables for data centers, industrial lasers for various applications, and sensors for automotive and medical use[26](index=26&type=chunk) - In response to COVID-19, the company implemented significant safety measures, including temperature checks, facility disinfection, and remote work policies. While operations were impacted, particularly in China initially, the company believes long-term demand for bandwidth will positively impact its business[29](index=29&type=chunk)[31](index=31&type=chunk)[33](index=33&type=chunk) [Item 1A. Risk Factors](index=19&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks including customer concentration, supply chain disruptions, international operational instability, and financial covenant restrictions - A small number of customers account for a significant percentage of revenue. In fiscal year 2021, **three customers accounted for 39.1% of total revenues**, creating concentration risk[78](index=78&type=chunk) - The business is exposed to supply chain disruptions, particularly from single-source suppliers for critical materials and a global shortage of semiconductors, which can impact production schedules and costs[94](index=94&type=chunk) - The majority of manufacturing operations are in Thailand, making the company susceptible to political, social, and economic instability in the country[116](index=116&type=chunk) - The ongoing U.S.-China trade dispute and associated tariffs could increase the cost of materials used in manufacturing, potentially harming operating results[112](index=112&type=chunk) - The company's loan agreements contain financial covenants (e.g., leverage ratio, debt service coverage) that could restrict business operations if breached[125](index=125&type=chunk) - Preferential tax treatment from the Thai government is contingent on various factors, and the loss of these benefits could significantly increase the company's tax liability[147](index=147&type=chunk)[148](index=148&type=chunk) [Item 1B. Unresolved Staff Comments](index=35&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments - Not applicable[174](index=174&type=chunk) [Item 2. Properties](index=35&type=section&id=Item%202.%20Properties) Fabrinet's principal facilities are globally located, with major owned manufacturing campuses in Thailand totaling over 1.6 million square feet Principal Facilities as of June 25, 2021 | Location | Owned/Leased | Approximate Square Footage | | :--- | :--- | :--- | | Pinehurst Campus, Bangkok, Thailand | Owned | 1,075,000 sq ft | | Hemaraj Campus, Chonburi, Thailand | Owned | 553,000 sq ft | | Fuzhou, Fujian, PRC | Leased | 300,000 sq ft | | Santa Clara, California, United States | Owned | 72,000 sq ft | | Wiltshire, United Kingdom | Leased | 71,000 sq ft | [Item 3. Legal Proceedings](index=36&type=section&id=Item%203.%20Legal%20Proceedings) The company reports no material legal claims or actions currently pending or threatened - From time to time, the company may be involved in litigation in the ordinary course of business, but there are currently no material claims or actions pending[177](index=177&type=chunk) [Item 4. Mine Safety Disclosures](index=36&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[178](index=178&type=chunk) Part II [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=37&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Fabrinet's ordinary shares trade on the NYSE under "FN", with no current dividend plans but an active share repurchase program with **$81.2 million** remaining authorization - The company's ordinary shares are listed on the New York Stock Exchange under the symbol "FN"[181](index=181&type=chunk) - The company currently intends to retain earnings for business use and does not plan to pay dividends[183](index=183&type=chunk) Share Repurchase Activity (Q4 FY2021) | Period | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | March 26, 2021 – April 23, 2021 | — | $ — | | April 24, 2021 – May 21, 2021 | 68,158 | $81.17 | | May 22, 2021 – June 25, 2021 | 54,425 | $91.79 | - As of June 25, 2021, the company had a remaining authorization to repurchase up to an additional **$81.2 million** worth of its ordinary shares[187](index=187&type=chunk) [Item 6. [RESERVED]](index=39&type=section&id=Item%206.%20%5BRESERVED%5D) This item is reserved and contains no information [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=39&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses fiscal year 2021 financial results, highlighting a **14.5% revenue increase to $1.88 billion**, strong liquidity, and key accounting policies [Results of Operations](index=49&type=section&id=Results%20of%20Operations) Fiscal year 2021 saw total revenues increase **14.5% to $1.88 billion**, with gross profit rising to **$221.4 million** and net income reaching **$148.3 million** Consolidated Statements of Operations Summary (FY2021 vs. FY2020) | (in thousands) | FY 2021 | FY 2020 | | :--- | :--- | :--- | | **Revenues** | **$1,879,350** | **$1,641,836** | | Gross profit | $221,363 | $186,105 | | Operating income | $150,753 | $117,402 | | Net income | $148,341 | $113,479 | Revenues by End Market (FY2021 vs. FY2020) | (in thousands) | FY 2021 | FY 2020 | | :--- | :--- | :--- | | Optical communications | $1,441,338 | $1,248,174 | | Lasers, sensors, and other | $438,012 | $393,662 | | **Total** | **$1,879,350** | **$1,641,836** | - The increase in SG&A expenses in FY2021 was mainly due to a **$3.2 million** increase in share-based compensation, **$1.4 million** in start-up costs for the Israel subsidiary, and **$0.9 million** in severance for a senior management retirement[260](index=260&type=chunk) [Liquidity and Capital Resources](index=53&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with **$547.9 million** in cash and equivalents, primarily financing operations through **$118.7 million** in cash flow from operating activities Cash and Debt Position (as of June 25, 2021) | Metric | Amount (in millions) | | :--- | :--- | | Cash, cash equivalents, and short-term investments | $547.9 | | Outstanding debt | $39.5 | Cash Flow Summary (Fiscal Year 2021) | Cash Flow Activity | Amount (in millions) | | :--- | :--- | | Net cash provided by operating activities | $118.7 | | Net cash used in investing activities | ($5.4) | | Net cash used in financing activities | ($42.8) | - Capital expenditures were **$48.6 million** in fiscal year 2021, and are expected to increase in fiscal year 2022, mainly for investment in manufacturing facilities[298](index=298&type=chunk) [Critical Accounting Policies and Use of Estimates](index=44&type=section&id=Critical%20Accounting%20Policies%20and%20Use%20of%20Estimates) Critical accounting policies requiring significant judgment include revenue recognition, inventory valuation, and accounting for deferred income taxes - Revenue is recognized when control of products transfers to the customer, which is typically at shipment or delivery. The company's contracts generally do not have rights to bill for work-in-progress if terminated[237](index=237&type=chunk) - Inventory is valued at the lower of cost or market value, with provisions for excess and obsolete inventory made based on quarterly reviews of customer demand forecasts[246](index=246&type=chunk) - The company assesses the need for a valuation allowance against deferred tax assets based on the likelihood of generating sufficient future taxable income. In FY2021, a valuation allowance of **$1.5 million** was released for a U.S. subsidiary, while a new allowance of **$2.1 million** was set up for a U.K. subsidiary[249](index=249&type=chunk)[250](index=250&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures about Market Risk](index=56&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company is exposed to interest rate, foreign currency, and credit risks, which are managed through derivative instruments and credit evaluations - Interest rate risk on floating-rate debt is managed by using interest rate swap agreements to effectively convert the debt to a fixed interest rate[302](index=302&type=chunk) - The company has significant foreign currency risk exposure, particularly to the Thai baht, RMB, and GBP. This risk is managed using derivative instruments like foreign currency forward contracts[306](index=306&type=chunk)[308](index=308&type=chunk) - A hypothetical **10% weakening of the U.S. dollar** against the Thai baht, RMB, and GBP would have resulted in a decrease in the company's net dollar position of approximately **$1.4 million** as of June 25, 2021[308](index=308&type=chunk) - Credit risk is managed by holding cash and investments with highly-rated financial institutions and performing ongoing credit evaluations of customers[309](index=309&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=58&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the audited consolidated financial statements for fiscal year 2021, including the unqualified auditor's report and detailed notes [Report of Independent Registered Public Accounting Firm](index=59&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) PricewaterhouseCoopers ABAS Ltd. issued an unqualified opinion on the financial statements and internal controls, identifying revenue recognition as a Critical Audit Matter - The auditor, PricewaterhouseCoopers ABAS Ltd., issued an unqualified opinion on the consolidated financial statements and the effectiveness of internal control over financial reporting[315](index=315&type=chunk) - A Critical Audit Matter was identified concerning the timing of revenue recognition, highlighting the significant judgment management exercises in evaluating contract terms and conditions to determine when control is transferred[322](index=322&type=chunk)[323](index=323&type=chunk) [Consolidated Financial Statements](index=61&type=section&id=Consolidated%20Financial%20Statements) The consolidated financial statements show total assets of **$1.62 billion**, total shareholders' equity of **$1.11 billion**, and net income of **$148.3 million** for FY2021 Key Balance Sheet Data (as of June 25, 2021) | (in thousands) | Amount | | :--- | :--- | | Total current assets | $1,352,507 | | Total Assets | $1,616,122 | | Total current liabilities | $444,358 | | Total Liabilities | $503,602 | | Total Shareholders' Equity | $1,112,520 | Key Income Statement Data (Year Ended June 25, 2021) | (in thousands, except per share data) | Amount | | :--- | :--- | | Revenues | $1,879,350 | | Gross profit | $221,363 | | Operating income | $150,753 | | Net income | $148,341 | | Diluted EPS | $3.95 | [Notes to Consolidated Financial Statements](index=68&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail accounting policies, including revenue recognition, income taxes, and segment information, highlighting significant customer concentration in FY2021 - The company operates as a single operating segment[554](index=554&type=chunk) Significant Customers (as % of Total Revenues) | Customer | FY 2021 | FY 2020 | | :--- | :--- | :--- | | Cisco Systems Inc. | 13.9% | * | | Lumentum Operations LLC | 13.6% | 19.0% | | Infinera Corporation | 11.6% | 10.0% | | Acacia Communications Inc. | * | 10.2% | *Represents less than 10% of total revenues.* - As of June 25, 2021, the company had purchase obligations and other commitments of **$918.7 million** and capital expenditure commitments of **$66.6 million**[548](index=548&type=chunk)[551](index=551&type=chunk) [Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=113&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) This item is not applicable to the company - Not applicable[571](index=571&type=chunk) [Item 9A. Controls and Procedures](index=113&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were effective as of June 25, 2021, a conclusion concurred by the independent auditor - Management concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[572](index=572&type=chunk) - Management concluded that the company maintained effective internal control over financial reporting as of June 25, 2021, based on the COSO framework[577](index=577&type=chunk) - There were no changes in internal control over financial reporting during the fourth quarter of fiscal 2021 that materially affected, or are reasonably likely to materially affect, internal controls[573](index=573&type=chunk) [Item 9B. Other Information](index=113&type=section&id=Item%209B.%20Other%20Information) This item is not applicable to the company - Not applicable[578](index=578&type=chunk) Part III [Item 10. Directors, Executive Officers and Corporate Governance](index=114&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference from the 2021 Proxy Statement - Information for this item is incorporated by reference from the 2021 Proxy Statement[580](index=580&type=chunk) [Item 11. Executive Compensation](index=114&type=section&id=Item%2011.%20Executive%20Compensation) Information on executive compensation is incorporated by reference from the 2021 Proxy Statement - Information for this item is incorporated by reference from the 2021 Proxy Statement[581](index=581&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=114&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information on security ownership and related stockholder matters is incorporated by reference from the 2021 Proxy Statement - Information for this item is incorporated by reference from the 2021 Proxy Statement[582](index=582&type=chunk) [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=114&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on certain relationships, related transactions, and director independence is incorporated by reference from the 2021 Proxy Statement - Information for this item is incorporated by reference from the 2021 Proxy Statement[583](index=583&type=chunk) [Item 14. Principal Accountant Fees and Services](index=114&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information on principal accountant fees and services is incorporated by reference from the 2021 Proxy Statement - Information for this item is incorporated by reference from the 2021 Proxy Statement[584](index=584&type=chunk) Part IV [Item 15. Exhibits, Financial Statement Schedules](index=115&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists financial statements, schedules, and exhibits filed as part of the Annual Report on Form 10-K, including an index of all exhibits - This section provides an index of all exhibits filed with or incorporated by reference into the Form 10-K[587](index=587&type=chunk)[588](index=588&type=chunk) [Item 16. Form 10-K Summary](index=118&type=section&id=Item%2016.%20Form%2010-K%20Summary) This item is not applicable to the company - Not applicable[593](index=593&type=chunk)

fabrinet May 3, 2021 . SEELLI TRUSTED MANUFACTURING PARTNER OF THE WORLD'S LEADING OEMS Company Overview Disclaimer This presentation and the accompanying oral presentation contain "forward-looking" statements that are based on our management's beliefs and assumptions and on information currently available to management. Forward-looking statements include all statements other than statements of historical fact contained in this presentation, including information concerning our business plans and objectives ...