(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 ...

Fabrinet (NYSE:FN) Q3 2021 Earnings Conference Call May 3, 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 Alex Henderson - Needham Danny Cheng - B. Riley Operator Good afternoon. Welcome to Fabrinet's Financial Results Conference Call for the Third Quarter of Fiscal Year 2021. [Operator Instructions] As a reminder, today's ...

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 26, 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 its ...

fabrinet February 1, 2021 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, po ...

Financial Data and Key Metrics Changes - Revenue for Q2 2021 reached a record $453.8 million, exceeding guidance by nearly $14 million, representing year-over-year and sequential growth [5][12] - Earnings per share (EPS) increased to a record $1.10, reflecting year-over-year and sequential growth [5][15] - Gross margin improved to 12.1%, up from 12% in the prior quarter, driven by manufacturing efficiencies [15] Business Line Data and Key Metrics Changes - Optical communications revenue was $347.8 million, accounting for 77% of total revenue, up 1% from Q1 [12] - Telecom revenue within optical communications was $273.2 million, up 5% sequentially, while datacom revenue was $74.6 million, down 10% sequentially [12] - Automotive revenue grew to $47 million, up 34% sequentially and more than 100% year-over-year, becoming the largest category in non-optical communications [13] Market Data and Key Metrics Changes - Automotive programs, particularly LIDAR, were significant growth drivers, with automotive revenue growing more than 30% from Q1 and more than doubling from a year ago [6][13] - Industrial laser revenue was approximately flat at $33.7 million, with expectations for improvement in Q3 [7][14] - Optical communications saw modest growth, with telecom strength offsetting softness in datacom products [7][12] Company Strategy and Development Direction - The company is expanding its manufacturing footprint with a new 1 million square foot building in Chonburi, Thailand, expected to triple its capacity in the region [9] - The expansion reflects confidence in long-term growth and aims to support anticipated revenue increases from new products and programs [9][10] - The company is optimistic about continued growth in automotive and telecom sectors, with plans to enhance manufacturing capabilities [17][18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for Q3, expecting revenue growth across all key categories, including optical communications and automotive [17][18] - The company is addressing supply chain challenges, particularly in the automotive sector, by securing critical parts and working closely with customers [37] - Management noted that the faster ramp of Cisco's transfer program is expected to contribute positively to future revenue growth [8][28] Other Important Information - The company anticipates total revenue for Q3 to be between $455 million and $475 million, with EPS guidance of $1.10 to $1.17 [18] - The effective tax rate is expected to be around 4% for the year, influenced by tax incentives at the Chonburi facility [15][24] - The company repurchased approximately 102,000 shares at an average price of $69.64 during the quarter [16] Q&A Session Summary Question: Impact of SolarWinds hack on customers - Management confirmed no issues related to the SolarWinds hack, stating they were fortunate not to be affected [20][21] Question: Clarification on tax rate guidance - The anticipated effective tax rate is about 4%, driven by increased profits from the Chonburi campus [22][24] Question: Impact of Acacia and Cisco merger - Management feels positive about the relationship with Cisco post-merger, indicating no major impact expected [25] Question: Lumentum acquisition implications - Management is optimistic about the potential benefits from the Lumentum acquisition, given their longstanding relationships [26] Question: Supply constraints in automotive market - Management acknowledged supply challenges but emphasized their proactive approach to securing parts [36] Question: Growth drivers in automotive segment - Growth in automotive is primarily driven by LIDAR and traditional automotive business, with strong demand noted [40] Question: Capacity addition and new building impact - The new building is expected to support increased capacity driven by growth in various sectors, including automotive and telecom [30][32] Question: Future revenue expectations from new building - The new facility is estimated to account for roughly $1 billion in revenue potential [41] Question: Datacom revenue outlook - Management expects datacom revenue to improve, indicating that the inflection point may be behind them [34][49] Question: Co-packaged optics interest - Management noted increasing interest in co-packaged optics as a future growth driver [62] Question: Currency hedging strategy - The company has a layered hedging strategy in place to mitigate currency fluctuations, with expectations of some pressure on Q3 gross margins [63][64]

Revenue Growth and International Expansion - The percentage of revenues generated from locations outside North America increased from 47.6% in Q3 2019 to 50.5% in Q3 2020, indicating a growing international customer base[159] - Revenues from regions outside North America accounted for 51.5% in the first half of fiscal 2021, up from 48.6% in the same period of fiscal 2020[160] - Revenues for the three months ended December 25, 2020, increased to $453.8 million, up from $426.2 million for the same period in 2019, representing a growth of 6.5%[192] - Revenues increased by $27.6 million, or 6.5%, to $453.8 million for the three months ended December 25, 2020, compared to $426.2 million for the same period in 2019[196] - Revenues from optical communications products increased by $25.8 million, or 8.0%, for the three months ended December 25, 2020[196] Financial Position and Cash Management - The company reported $481.0 million in cash, cash equivalents, and short-term investments, with total debt of approximately $45.7 million as of December 25, 2020, positioning it well for future capital needs[160] - Cash, cash equivalents, and short-term investments were $481.0 million as of December 25, 2020, compared to $442.8 million as of December 27, 2019[218] - The company held cash, cash equivalents, and short-term investments totaling $488.6 million as of December 25, 2020[230] - The company anticipates that its current cash and cash equivalents, marketable securities, and cash flow from operations will be sufficient to meet working capital and capital expenditure needs for at least the next 12 months[222] Profitability and Income - Gross profit for the six months ended December 25, 2020, was $103.5 million, compared to $95.1 million for the same period in 2019, reflecting an increase of 8.5%[192] - Operating income increased by $3.8 million to $35.9 million, or 7.9% of revenues, for the three months ended December 25, 2020[204] - The company recorded a net income of $35.4 million for the three months ended December 25, 2020, compared to $31.2 million for the same period in 2019, marking an increase of 13.5%[192] - Net income for the three months ended December 25, 2020, was $35.4 million, or 7.8% of revenues, compared to $31.2 million, or 7.3% of revenues, for the same period in 2019[215] Costs and Expenses - Employee costs are expected to rise due to increasing wages in Thailand and the People's Republic of China, which may impact profit margins[165] - The company anticipates incurring incremental costs of revenue due to planned expansion into new geographic markets, although specific amounts are not yet determinable[167] - Selling, general and administrative (SG&A) expenses for the three months ended December 25, 2020, were $17.2 million, slightly up from $17.1 million in the same period of 2019[192] - SG&A expenses increased by $0.1 million, or 0.5%, to $17.2 million for the three months ended December 25, 2020[202] - The company expects SG&A expenses to increase in fiscal year 2021 compared to fiscal year 2020 due to higher start-up costs related to its subsidiary in Israel[168] Manufacturing and Operational Capabilities - The company maintains a flexible low-cost manufacturing platform and expects to sustain favorable pricing despite anticipated price decreases over time due to competitive market forces[157] - The company’s manufacturing capabilities include low-volume, high-mix production, which is critical for complex products in optical communications and industrial lasers[150] - The company’s customer base includes OEMs in complex industries, with many relying on the company as their sole outsourced manufacturing partner[151] - The company’s current manufacturing capacity is deemed sufficient to meet anticipated production requirements for at least the next few quarters[223] Taxation and Foreign Exchange - The effective corporate income tax rate for the company's U.S. subsidiaries is currently 21% following the Tax Cuts and Jobs Act enacted on December 22, 2017[187] - The corporate tax rate for the company's subsidiaries in China and the U.K. is 25% and 19%, respectively[188] - The company has received preferential tax treatment from the Thai government, including a corporate tax exemption on income generated from certain projects until June 2026[186] - As of December 25, 2020, the company had $130.0 million of foreign currency forward contracts outstanding on Thai baht payables[174] - The company reported a foreign exchange loss of $0.5 million for the three months ended December 25, 2020, compared to a loss of $1.0 million for the same period in 2019[192] - A 10% weakening in 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 $3.4 million as of December 25, 2020[238] Cash Flow and Financing Activities - The net cash provided by operating activities decreased by $11.3 million, or 21.5%, to $41.3 million for the six months ended December 25, 2020, compared to $52.6 million for the same period in 2019[225] - Net cash used in investing activities increased by $18.6 million, or 324.8%, to $24.3 million for the six months ended December 25, 2020, compared to net cash provided of $5.7 million in the prior year[226] - Net cash used in financing activities increased by $15.9 million, or 204.3%, to $23.6 million for the six months ended December 25, 2020, compared to $7.8 million for the same period in 2019[227] - As of December 25, 2020, the company repaid $6.1 million of its term loan, resulting in long-term borrowings of $45.7 million[221] - The company had one outstanding standby letter of credit of €6.0 million related to a customer's manufacturing operations transfer, backed by cash collateral of $7.4 million[228] Supply Chain and Operational Challenges - The company expects to continue experiencing supply chain disruptions and fluctuating availability of parts and materials, which may negatively affect gross margins[160] - The company has implemented significant safety protocols in response to COVID-19, ensuring the health and well-being of employees while maintaining operations[154] - The company has not incurred material losses due to credit risk exposures, as cash and cash equivalents are held with banks rated A minus or above[239]