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Jabil Circuit Inc · 10-Q · For 2/28/01

Filed On 4/13/01 4:24pm ET · SEC File 1-14063 · Accession Number 950144-1-500778

  As Of               Filer                 Filing     As/For/On Docs:Pgs              Issuer               Agent

 4/13/01  Jabil Circuit Inc                 10-Q        2/28/01    1:16                                     Bowne of Atlanta Inc/FA

Quarterly Report · Form 10-Q
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-Q        Jabil Circuit, Inc.                                   16     70K

Document Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (RTF, XML, et al.) Exhibits and Reports on Form 8-K Financial Statements Liquidity and Capital Resources Management's Discussion and Analysis of Financial Condition and Results of Operations Quantitative and Qualitative Disclosures about Market Risk Signatures Submission of Matters to a Vote of Security Holders
1	1st Page
2	Item 1. Financial Statements
10	Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
13	Liquidity and Capital Resources
14	Item 3. Quantitative and Qualitative Disclosures about Market Risk
15	Item 4:. Submission of Matters to a Vote of Security Holders
"	Item 6:. Exhibits and Reports on Form 8-K
16	Signatures

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SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549 

FORM 10-Q 

(Mark One)                                                                      

[X]   Quarterly report pursuant to Section 13 or 15(d) of the   
Securities Exchange Act of 1934                     

For the quarterly period ended February 28, 2001.   

[ ]   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:  0-21308                                                

   JABIL CIRCUIT, INC.
   -------------------
    (Exact name of registrant as specified in its charter)

     DELAWARE                                             38-1886260
     --------                                             ----------
(State or other jurisdiction of                              (I.R.S. Employer   
incorporation or organization)                             Identification No.)

10560 Ninth Street North
St. Petersburg, FL 33716
------------------------
(Address of principal executive offices, including zip code)

Registrant's Telephone No., including area code: (727) 577-9749                 
                                --------------

    --------------------------------

Indicate by check mark whether the Registrant (1) has filed all reports         
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of   
1934 during the preceding 12 months (or for such shorter period that the        
Registrant was required to file such reports), and (2) has been subject to such 
filing requirements for the past 90 days:                                       

Yes [X]    No [ ]   

As of March 31, 2001, there were 191,263,934 shares of the Registrant's Common  
Stock outstanding.                                                              

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JABIL CIRCUIT, INC. AND SUBSIDIARIES

INDEX 

PART I. FINANCIAL INFORMATION 

PART I.  FINANCIAL INFORMATION                                                  

Item 1.  Financial Statements                                                   

Consolidated Balance Sheets at                                
       February 28, 2001 and August 31, 2000...........................  3

Consolidated Statements of Earnings for the three and six     
       months ended February 28, 2001 and February 29, 2000............  4

Consolidated Statements of Cash Flows for the six             
      months ended February 28, 2001 and February 29, 2000.............  5

      Notes to Consolidated Financial Statements.......................  6

Item 2.  Management's Discussion and Analysis of                                
       Financial Condition and Results of Operations....................  10

Item 3.  Quantitative and Qualitative Disclosures about Market Risk.......  14  

PART II. OTHER INFORMATION                                                      

Item 4.  Submission of Matters to a Vote of Security Holders..............  15  

Item 6.  Exhibits and Reports on Form 8-K.................................  15  

       Signatures.......................................................  16

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PART I. FINANCIAL INFORMATION                                                   

JABIL CIRCUIT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS 
(IN THOUSANDS)

                                               February 28,       August 31,
                                                2001              2000
                                               -----------       -----------
                             (Unaudited)
ASSETS                                                                          

Current assets                                                                  

Cash and cash equivalents                      $   146,125       $   337,602
Accounts receivable, net                           535,763           523,096
Inventories                                        631,746           477,548
Prepaid expenses and other current assets           41,883            30,984
Deferred income taxes                               18,053            18,040
                                               -----------       -----------

      Total current assets                       1,373,570         1,387,270

Property, plant and equipment, net                   742,985           587,494  
Other assets                                          43,660            43,428  
                                               -----------       -----------

                                               $ 2,160,215       $ 2,018,192
                                               ===========       ===========

LIABILITIES AND STOCKHOLDERS' EQUITY                                            

Current liabilities                                                             

Current installments of long term debt         $     8,333       $     8,333
Accounts payable                                   645,946           594,111
Accrued expenses                                    67,358            72,261
Income taxes payable                                11,021            17,270
                                               -----------       -----------

      Total current liabilities                    732,658           691,975

Long term debt, less current installments             25,000            25,000  
Deferred income taxes                                 19,484            28,112  
Deferred grant revenue                                 8,332             2,922  
                                               -----------       -----------

      Total liabilities                            785,474           748,009
                                               -----------       -----------

Stockholders' equity                                                            

Common stock                                           196               190
Additional paid-in capital                         859,653           843,784
Retained earnings                                  515,282           426,814
 Cumulative translation adjustment                     (390)             (605)
                                               -----------       -----------

      Total stockholders' equity                 1,374,741         1,270,183
                                               -----------       -----------

                                               $ 2,160,215       $ 2,018,192
                                               ===========       ===========

See Accompanying Notes to Consolidated Financial Statements 

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JABIL CIRCUIT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS 
(IN THOUSANDS, EXCEPT FOR PER SHARE DATA) 
(UNAUDITED) 

                                                        [Enlarge/Download Table]


                                             Three months ended               Six months ended       
                                        February 28,     February 29,  February 28,      February 29,
                                            2001             2000         2001              2000     
                                        -----------      -----------   -----------       ----------- 
                                                                                                     

Net revenue                             $ 1,211,175       $ 837,562    $ 2,340,130       $ 1,527,384 
  Cost of revenue                         1,102,737         753,479      2,120,219         1,369,914 
                                        -----------       ---------    -----------       ----------- 

Gross profit                                108,438          84,083        219,911           157,470 

Operating expenses:                                                                                  
  Selling, general and administrative        46,892          31,612         90,972            58,663 
  Research and development                    1,553           1,203          2,981             2,385 
  Amortization of intangibles                   828             644          1,605             1,243 
  Acquisition-related charges                   843              --            843             5,153 
                                        -----------       ---------    -----------       ----------- 
Operating income                             58,322          50,624        123,510            90,026 

  Interest income                            (1,365)            (32)        (3,859)           (1,212)
  Interest expense                            2,320           1,474          2,759             2,039 
                                        -----------       ---------    -----------       ----------- 

Income before income taxes                   57,367          49,182        124,610            89,199 

  Income taxes                               16,641          15,246         36,142            28,775 
                                        -----------       ---------    -----------       ----------- 

Net income                              $    40,726       $  33,936    $    88,468       $    60,424 
                                        ===========       =========    ===========       =========== 

Earnings per share:                                                                                  
Basic                                   $      0.21       $    0.19    $      0.46       $      0.34 
                                        ===========       =========    ===========       =========== 
Diluted                                 $      0.21       $    0.18    $      0.45       $      0.33 
                                        ===========       =========    ===========       =========== 

Common shares used in the calculations                                                               
of earnings per share:                                                                               

Basic                                       190,931         175,715        190,729           175,268 
                                        ===========       =========    ===========       =========== 
Diluted                                     198,326         184,518        198,617           183,648 
                                        ===========       =========    ===========       =========== 

See Accompanying Notes to Consolidated Financial Statements 

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JABIL CIRCUIT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS 
(IN THOUSANDS)
(UNAUDITED) 

                                                        [Enlarge/Download Table]

                                                                 Six months ended      
                                                           February 28,    February 29,
                                                               2001           2000     
                                                           -----------     ----------- 
                                                                                       

Cash flows from operating activities:                                                  

  Net income                                                $  88,468       $  60,424  
  Adjustments to reconcile net income to net cash                                      
    provided by operating activities:                                                  
      Depreciation and amortization                            72,203          43,524  
      Recognition of grant revenue                               (519)           (606) 
      Deferred income taxes                                    (8,641)         10,702  
      Loss on sale of property                                  1,224           2,654  
      Changes in operating assets and liabilities:                                     
        Accounts receivable                                   (12,667)       (114,960) 
        Inventories                                          (154,198)       (132,146) 
        Prepaid expenses and other current assets             (10,899)         (9,302) 
        Other assets                                           (1,622)          2,579  
        Accounts payable and accrued expenses                  55,382         125,996  
        Income taxes payable                                   (6,249)         (9,648) 
                                                            ---------       ---------  

      Net cash provided by/(used) in operating activities      22,482         (20,783) 
                                                            ---------       ---------  

Cash flows from investing activities:                                                  

  Net cash paid for business acquisitions                          --         (33,085) 
  Proceeds from sale of short-term investments                     --          27,176  
  Acquisition of property, plant and equipment               (228,983)       (127,698) 
  Proceeds from sale of property and equipment                  1,670           1,608  
                                                            ---------       ---------  

      Net cash used in investing activities                  (227,313)       (131,999) 
                                                            ---------       ---------  

Cash flows from financing activities:                                                  

  Increase in note payable to bank                                 --          73,499  
  Payments of long-term debt                                       --          (2,656) 
  Net proceeds from issuance of common stock                    7,425          10,351  
  Proceeds from Scottish grant                                  5,929           2,251  
                                                            ---------       ---------  

      Net cash provided by financing activities                13,354          83,445  
                                                            ---------       ---------  

Net decrease in cash and cash equivalents                    (191,477)        (69,337) 
Cash and cash equivalents at beginning of period              337,602         125,949  
                                                            ---------       ---------  

Cash and cash equivalents at end of period                  $ 146,125       $  56,612  
                                                            =========       =========  

See Accompanying Notes to Consolidated Financial Statements 

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JABIL CIRCUIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) 

NOTE 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                             

BASIS OF PRESENTATION                                                 

               The accompanying consolidated financial statements of Jabil
     Circuit, Inc. and subsidiaries are unaudited and have been prepared
based upon prescribed guidance of the Securities and Exchange 
        Commission ("SEC") for interim reporting. As such, they do not include
       all disclosures required by generally accepted accounting principles,
        and should be read in conjunction with the annual audited consolidated
    financial statements as of and for the year ended August 31, 2000,
       contained in our 2000 annual report on Form 10-K. In our opinion, the
accompanying consolidated financial statements include all    
        adjustments, consisting of normal and recurring adjustments, necessary
for a fair presentation of the financial position, results of 
     operations and cash flows for the periods presented. The results of
     operations for the three-month and six-month periods ended February
        28, 2001, are not necessarily indicative of the results that should be
expected for a full fiscal year.                              

EARNINGS PER SHARE                                                    

               The following table sets forth the calculation of basic and
   diluted earnings per share (in thousands, except per share data):

EARNINGS PER SHARE                                                    
(Unaudited)                                                   

                                                                [Download Table]

                                     Three Months Ended     Six Months Ended  
                                          February              February      
                                      2001        2000      2001        2000  
                                    --------    --------  --------    --------
                                                                              

Numerator:                                                                    
Net income                          $ 40,726    $ 33,936  $ 88,468    $ 60,424

Denominator:                                                                  
Denominator for basic EPS-                                                    
  Weighted-average shares            190,931     175,715   190,729     175,268
Effect of dilutive securities:                                                
    Employee stock options             7,395       8,803     7,888       8,380
                                    --------    --------  --------    --------
Denominator for diluted EPS-                                                  
  Adjusted weighted-average shares   198,326     184,518   198,617     183,648
                                    ========    ========  ========    ========

Basic EPS                           $   0.21    $   0.19  $   0.46    $   0.34
                                    ========    ========  ========    ========
Diluted EPS                         $   0.21    $   0.18  $   0.45    $   0.33
                                    ========    ========  ========    ========

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                For the three-month and six-month periods ended February 28,
       2001, options to purchase 759,846 and 475,449 shares of common stock,
respectively, were outstanding but were not included in the   
computation of diluted earnings per share because the options'
   exercise prices were greater than the average market price of the
       common shares, and therefore, their effect would be antidilutive. For
       the three-month and six-month periods ended February 29, 2000, 21,377
  and 172,924 of options, respectively, were excluded for the same
reason.                                                       

COMPREHENSIVE INCOME                                                            

            The Company's balance of accumulated other comprehensive
   income is composed exclusively of the cumulative foreign currency
   translation adjustment. For the three and six month periods ended
      February 28, 2001, the Company recorded foreign currency translation
   adjustments of approximately $241,000 and $215,000, respectively,
    resulting in total comprehensive income of $40.9 million and $88.7
       million. For the three and six month periods ended February 29, 2000,
currency translation adjustments of $1,000 and $(324,000),    
        respectively, were recorded resulting in total comprehensive income of
$33.9 million and $60.1 million, respectively.                

COMMITMENTS AND CONTINGENCIES                                                   

              We are party to certain lawsuits in the ordinary course of
        business. We do not believe that these proceedings, individually or in
     the aggregate, will have a material adverse effect on our financial
position, results of operations or cash flows.                

RECENT ACCOUNTING PRONOUNCEMENTS                                                

         Statement of Financial Accounting Standards No. 133 -
  Accounting for Derivative Instruments and Hedging Activities. As
      amended by Statements 137 and 138, Statement 133 establishes methods
of accounting for derivative financial instruments and hedging
  activities related to those instruments as well as other hedging
   activities. The Company adopted Statement 133, as amended, in the
      first quarter of this fiscal year. The adoption of the Statement did
        not have an impact on our financial position, results of operations or
cash flows.                                                   

      SEC Staff Accounting Bulletin Number 101 - Revenue
       Recognition in Financial Statements. We will be required to implement
      this bulletin in the fourth fiscal quarter of our fiscal year ending
August 31, 2001. As we have historically made a practice of   
        recognizing revenue in accordance with the provisions of this bulletin
     as currently interpreted, we do not anticipate that the adoption of
        the bulletin will have a material impact on our consolidated financial
statements.                                                   

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NOTE 2.  INVENTORIES                                                            

           The components of inventories consist of the following:

               In thousands              February 28,       August 31,
                                          2001              2000
                                         ------------       ----------

              Finished goods              $ 81,555          $ 54,477
              Work-in-process               74,938            54,288
              Raw materials                475,253           368,783
                                          --------          --------
                                          $631,746          $477,548
                                          ========          ========

NOTE 3.  SEGMENT INFORMATION                                                    

           Financial Accounting Standards Board Statement No. 131,
     Disclosures about Segments of an Enterprise and Related Information
   establishes standards for reporting information about segments in
       financial statements. Operating segments are defined as components of
       an enterprise about which separate financial information is available
       and that is evaluated regularly by the chief operating decision maker
     in deciding how to allocate resources and in assessing performance.

               We derive our revenue from providing manufacturing services
       to major electronic companies on a contract basis. Operating segments
    consist of our manufacturing locations. The services provided, the
      manufacturing processes, class of customers, economic circumstances,
    operating margins and the order fulfillment process is similar and
   generally interchangeable across manufacturing locations. We have
     aggregated our operating segments into the Electronic Manufacturing
Services ("EMS") segment.                                     

          The following table sets forth segment information (in
thousands):                                                   

                                                        [Enlarge/Download Table]

                                      Three Months Ended            Six Months Ended      
                                           February                     February          
                                      2001          2000          2001            2000    
                                  -----------     ---------   -----------     ----------- 
                                                                                          

Net revenue                       $ 1,211,175     $ 837,562   $ 2,340,130     $ 1,527,384 
Depreciation and amortization     $    41,633     $  20,518   $    72,203     $    43,524 
Interest (income)                 $    (1,365)    $     (32)  $    (3,859)    $    (1,212)
Interest expense                  $     2,320     $   1,474   $     2,759     $     2,039 

Segment income before income tax  $    60,718     $  51,827   $   127,334     $    97,564 
 Corporate (income) expense             2,508         2,645         1,881           3,212 
 Non-recurring charges                    843            --           843           5,153 
                                  -----------     ---------   -----------     ----------- 
Income before income taxes        $    57,367     $  49,182   $   124,610     $    89,199 
                                  ===========     =========   ===========     =========== 

                                        February 28, 2001            August 31, 2000      
                                        -----------------            ---------------      

Long-lived assets                            $786,645                    $630,922         

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                 Foreign source revenue represented 48% of net revenue for the
        second quarter and first six months of fiscal 2001 compared to 41% and
  42% for the same periods of fiscal 2000. The increase in foreign
source revenue was attributable to increased production at our
      international locations, the acquisition of facilities in Brazil and
      Ireland, and the start of production in our greenfield facilities in
Chihuahua, Mexico and Tiszaujvaros, Hungary.                  

NOTE 4.  BUSINESS ACQUISITION                                                   

                On January 11, 2001, we announced that we had entered into a
business sale agreement with Marconi plc to purchase certain  
       operations of its communications division. The operations are located
in the United States, United Kingdom, Italy and Germany. Total
  consideration to be paid, subject to pre-closing adjustments, is
 estimated to have a present value of approximately $390 million
      payable two years from closing and an additional $20 million payable
        three years from closing. The completion of the transaction is subject
  to a number of customary and other closing conditions, including
    obtaining various anti-trust and other approvals and clearances in
four countries, certain consents from third parties, including
  customers of the seller, and the seller being satisfied that the
  Company will be able to perform its obligations under the supply
     agreement to be entered into in connection with the closing that is
  described below. The transaction will be accounted for under the
     purchase method of accounting and will result in approximately $146
million of goodwill and other intangibles. Funding for this   
acquisition will be provided by our existing revolving credit 
facility. See "Liquidity and Capital Resources."              

        Simultaneous with the closings, we will enter into a
     three-year product supply agreement to manufacture existing and new
   products for Marconi in new product introduction, printed circuit
     board assembly, final systems assembly as well as repair of access,
    optical transmission and broadband switching products. The company
       currently estimates that such agreement will generate in excess of $4
billion of revenue over the term of the agreement.            

               Under the proposed terms of the deal, up to 2,900 employees
      in Bedford, Texas; Liverpool and Coventry, UK; Marcianise, Italy and
     Offenburg, Germany will progressively transfer to Jabil Circuit. No
    involuntary job losses are expected and existing employment rights
will be protected. The transaction is currently intended to be
     implemented over the course of the summer and fall of 2001 assuming
that all of the closing conditions occur.                     

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JABIL CIRCUIT, INC. AND SUBSIDIARIES

     This Quarterly Report on Form 10-Q contains certain statements that
are, or may be deemed to be, forward-looking statements within the meaning of   
section 27A of the Securities Act of 1933 and section 21E of the Securities     
Exchange Act of 1934, and are made in reliance upon the protections provided by 
such acts for forward-looking statements. These forward-looking statements      
(such as when we describe what we "believe," "expect" or "anticipate" will      
occur, and other similar statements) include, but are not limited to,           
statements regarding future sales and operating results, future prospects,      
anticipated benefits of proposed (or future) acquisitions and new facilities,   
growth, the capabilities and capacities of business operations, any financial   
or other guidance and all statements that are not based on historical fact, but 
rather reflect our current expectations concerning future results and events.   
The ultimate correctness of these forward-looking statements is dependent upon  
a number of known and unknown risks and events, and is subject to various       
uncertainties and other factors that may cause our actual results, performance  
or achievements to be different from any future results, performance or         
achievements expressed or implied by these statements. The following important  
factors, among others, could affect future results and events, causing those    
results and events to differ materially from those expressed or implied in our  
forward-looking statements: business conditions and growth in the contract      
manufacturing industry and the general economy, variability of operating        
results, dependence on a limited number of customers, limited availability of   
components, dependence on certain industries, variability of customer           
requirements, ability to consummate acquisitions and to integrate operations    
following consummation of acquisitions, other economic, business and            
competitive factors affecting our industry and business generally and other     
factors that we may not have currently identified or quantified. For a further  
list and description of various risks, relevant factors and uncertainties that  
could cause future results or events to differ materially from those expressed  
or implied in our forward-looking statements, see our Annual Report on Form     
10-K for the fiscal year ended August 31, 2000, any subsequent Reports on Form  
10-Q and Form 8-K and our other securities filings. All forward-looking         
statements included in this Report on Form 10-Q are made only as of the date of 
this Report on Form 10-Q, and we do not undertake any obligation to publicly    
update or correct any forward-looking statements to reflect events or           
circumstances that subsequently occur or which we hereafter become aware of.    

        You should read this document and the documents that we incorporate by
reference into this Quarterly Report on Form 10-Q completely and with the       
understanding that our actual future results may be materially different from   
what we expect. We may not update these forward-looking statements, even if our 
situation changes in the future. All forward-looking statements attributable to 
us are expressly qualified by these cautionary statements.                      

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND        
RESULTS OF OPERATIONS                                         

       Our net revenue for the second quarter and first six months of fiscal
2001 increased 45% and 53% to $1.2 billion and $2.3 billion, respectively, from 
$838 million and $1.5 billion in the second quarter and first six months of     
fiscal 2000. This increase from the previous fiscal year was primarily due to   
increased production of communications and personal computer products. Foreign  
source revenue represented 48% of net revenue for the second quarter and first  
six months of fiscal 2001 compared to 41% and 42% for the same periods of       
fiscal 2000. The increase in foreign source revenue was attributable to         
increased production at our international locations, the acquisition of         
facilities in Brazil and Ireland, and the start of production in our greenfield 
facilities in Chihuahua, Mexico and Tiszaujvaros, Hungary.                      

    Gross profit decreased to 9.0% and 9.4% for the second quarter and
first six months of fiscal 2001 from 10.0% and 10.3% for the same periods of    
fiscal 2000 primarily reflecting a                                              

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higher content of material-based revenue as well as relatively lower levels of  
capacity utilization than the prior periods.                                    

    Selling, general and administrative expenses remained at a rate of
3.9% of net revenue in the second quarter of fiscal 2001 as compared to the     
same period in the prior fiscal year, while increasing in absolute dollars from 
$31.6 million in the second quarter of fiscal 2000 to $46.9 million in the      
second quarter of fiscal 2001. Selling, general and administrative expenses in  
the first six months of fiscal 2001 were 3.8% of net revenue which is           
consistent with the same period of the prior fiscal year, while increasing in   
absolute dollars from $58.7 million to $90.9 million. The dollar increases were 
primarily due to increased staffing and related departmental expenses at all    
our locations as well as increased information systems staff to support the     
expansion of our business.                                                      

    Research and development expenses were 0.1% of net revenue for the
second quarter and first six months of fiscal 2001, as compared to 0.1% and     
0.2% for each of the same periods of fiscal 2000. In absolute dollars, the      
expenses increased approximately $0.4 million and $0.6 million versus the same  
periods of fiscal 2000.                                                         

        Amortization of intangibles remained a constant 0.1% of net revenue in
the second quarter and first six months of fiscal 2001, while increasing from   
$0.6 million to $0.8 million and $1.2 million to $1.6 million, respectively, as 
compared to the same periods of fiscal 2000.                                    

   During the second quarter of fiscal 2001, we announced a proposed
acquisition of certain manufacturing operations of Marconi plc ("Marconi") and  
recorded an acquisition-related charge of $0.8 million ($0.6 million after-tax) 
consisting of costs to prepare for the integration of the business. We expect   
to incur certain charges totaling $20 million to $25 million pre-tax over the   
next two quarters associated with reductions in our cost structure and          
acquisition integration costs in the amounts of $13 million to $18 million and  
$7 million, respectively.                                                       

    Interest income increased to $1.4 million in the second quarter of
fiscal 2001 from $32 thousand in the second quarter of fiscal 2000 as a result  
of increased cash on hand. Interest income increased approximately $2.7 million 
in the first six months of fiscal 2001 to $3.9 million from $1.2 million for    
the same period in fiscal 2000 as a result of increased cash on hand in the     
first quarter of fiscal 2001.                                                   

     Interest expense increased approximately $0.8 million in the second
quarter of fiscal 2001 to $2.3 million as compared to $1.5 million in the       
second quarter of fiscal 2000. Interest expense increased approximately $0.8    
million for the first six months of fiscal 2001, to $2.8 million from $2.0      
million. These increases are primarily a result of increased borrowings to      
support working capital needs.                                                  

        Our effective tax rate decreased to 29% in both the second quarter and
first six months of fiscal 2001 from 30% and 32%, respectively, in each of the  
second quarter and first six months of fiscal 2000. The tax rate is             
predominantly a function of the mix of domestic versus international            

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income from operations. Our international operations are being taxed at a lower 
rate than in the United States, primarily due to the tax holiday granted to our 
Malaysian subsidiary.                                                           

BUSINESS FACTORS                                                                

     Due to the nature of turnkey manufacturing and our relatively small
number of customers, our quarterly operating results are affected by the level  
and timing of orders, the level of capacity utilization of our manufacturing    
facilities and associated fixed costs, fluctuations in material costs and by    
the mix of material costs versus manufacturing costs. Similarly, operating      
results are affected by price competition, level of experience in manufacturing 
a particular product, degree of automation used in the assembly process,        
efficiencies we achieve in managing inventories and fixed assets, timing of     
expenditures in anticipation of increased sales, customer product delivery      
requirements, and shortages of components or labor. In the past, some of our    
customers have terminated their manufacturing arrangement with us, and other    
customers have significantly reduced or delayed the volume of manufacturing     
services ordered from us. Subsequent to February 28, 2001, we experienced       
reduction in demand as a result of overall deteriorating economic conditions in 
our industry. Any such termination of a manufacturing relationship or change,   
reduction or delay in orders could have an adverse effect on our results of     
operations.                                                                     

ACQUISITIONS AND EXPANSION                                                      

     The EMS industry has experienced rapid growth over the past several
years as an increasing number of electronics companies have outsourced their    
manufacturing requirements and divested their manufacturing facilities, such as 
our acquisition of certain manufacturing facilities from Hewlett-Packard        
Company in fiscal 1998 and our impending acquisition of certain Marconi         
manufacturing assets. Electronics companies are turning to outsourcing in order 
to reduce product cost; achieve accelerated time-to-market and time-to-volume   
production; access advanced design and manufacturing technologies; improve      
inventory management and purchasing power; reduce their capital investment in   
manufacturing facilities; and achieve parallel manufacturing of the same        
product throughout the world. We believe that additional acquisition            
opportunities exist and we regularly seek and evaluate such acquisition         
opportunities. We also seek and evaluate acquisition opportunities that may     
arise as a result of consolidation in the EMS industry, as evidenced by our     
acquisition of GET Manufacturing, Inc. and Bull Information Technology during   
fiscal 2000 and our proposed acquisition of operations from Marconi. We also    
intend to continue to evaluate strategic acquisitions of ancillary services to  
round out our service offerings, similar to our fiscal year 2000 acquisition of 
Telenor Technology Services, a repair and logistics provider, based in Dublin,  
Ireland. However, we cannot be assured that we will be able to consummate or,   
if consummated, successfully integrate the operations and management of any     
such acquisitions. Acquisitions involve significant risks which could have a    
material adverse effect on us, including financial and operating risks, such as 
(1) potential liabilities of the acquired businesses; (2) the dilutive effect   
of the issuance of additional equity securities; (3) the incurrence of          
additional debt; (4) the financial impact of amortizing goodwill and other      
intangible assets involved in any acquisitions that are accounted for using the 
purchase                                                                        

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method of accounting; (5) possible adverse tax and accounting effects; (6) the  
diversion of management's attention to the assimilation of the businesses to be 
acquired; (7) the risk that the acquired businesses will fail to maintain the   
quality of services that we have historically provided; (8) the need to         
implement financial and other systems and add management resources; (9) the     
risk that key employees of the acquired businesses will leave after the         
acquisition; (10) the impact on the Company of any unionized work force it may  
acquire; and (11) unforeseen difficulties in the acquired operations.           

   During this fiscal year, we completed the greenfield expansion in
Tiszaujvaros, Hungary and continued construction in Chihuahua, Mexico. When     
completed, the Chihuahua facility will consist of two 250,000 square-foot       
facilities.                                                                     

       On January 11, 2001, we announced that we had entered into a business
sale agreement with Marconi plc to purchase certain operations of its           
communications division. The operations are located in the United States,       
United Kingdom, Italy and Germany. Total consideration to be paid, subject to   
pre-closing adjustments, is estimated to have a present value of approximately  
$390 million payable two years from closing and an additional $20 million       
payable three years from closing. The completion of the transaction is subject  
to a number of customary and other closing conditions, including obtaining      
various anti-trust and other approvals and clearances in four countries,        
certain consents from third parties, including customers of the seller, and the 
seller being satisfied that the Company will be able to perform its obligations 
under the supply agreement to be entered into in connection with the closing    
that is described below. The transaction will be accounted for under the        
purchase method of accounting and will result in approximately $146 million of  
goodwill and other intangibles. Funding for this acquisition will be provided   
by our existing banking facilities. See "Liquidity and Capital Resources."      

 Simultaneous with the closings, we will enter into a three-year
product supply agreement to manufacture existing and new products for Marconi   
in new product introduction, printed circuit board assembly, final systems      
assembly as well as repair of access, optical transmission and broadband        
switching products. The company currently estimates that such agreement will    
generate in excess of $4 billion of revenue over the term of the agreement.     

Under the proposed terms of the deal, up to 2,900 employees in
Bedford, Texas; Liverpool and Coventry, UK; Marcianise, Italy and Offenburg,    
Germany will progressively transfer to Jabil Circuit. No involuntary job losses 
are expected and existing employment rights will be protected. The transaction  
is currently intended to be implemented over the course of the summer and fall  
of 2001 assuming that all of the closing conditions occur.                      

LIQUIDITY AND CAPITAL RESOURCES                                                 

      At February 28, 2001 our principal sources of liquidity consisted of
cash, available borrowings under our revolving credit facilities and an         
accounts receivable securitization program. We have committed line of credit    
facilities in place with a syndicate of banks that provide up to $500 million   
of working capital borrowing capacity. The accounts receivable securitization   

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program provides for the sale of up to $225 million of eligible accounts        
receivables of certain U.S. plants. As of February 28, 2001, we were not        
utilizing our revolving credit facility or the accounts receivable              
securitization program.                                                         

 Operating activities for the six months ended February 28, 2001
provided $22.5 million in cash. The generation of cash was primarily due to net 
income of $88.5 million, depreciation and amortization of $72.2 million, and    
increases in accounts payable and accrued expenses of $55.4 million, offset by  
increases in inventories of $154.2 million, increases in accounts receivable of 
$12.7 million, increases in prepaid and other current assets of $10.9 million,  
and increases in deferred and current income taxes payable of $14.9 million.    
The increase in accounts receivable, accounts payable, and inventory was due to 
commensurate increases in planned levels of business.                           

     Net cash used in investing activities of $227.3 million for the six
months ended February 28, 2001 consisted of our capital expenditures for        
construction and equipment worldwide in order to support increased activities.  

      Over the past several years, we have experienced significant growth.
As a result, we have used cash to finance increases in our inventory and        
accounts receivable. Excluding money needed to fund the Marconi acquisition and 
any other significant acquisition we may pursue, we currently believe that      
during fiscal year 2001, our capital expenditures will approximate $300 to $350 
million, principally for machinery, equipment, facilities and related expenses. 
It is our intent to increase the capacity of our existing $500 million          
revolving credit facility by $250 to $350 million to a total of $750 to $850    
million to fund our capital expenditures, working capital requirements and the  
purchase of the Marconi operations in fiscal 2001.                              

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK             

       There have been no material changes in our market risk during the six
months ended February 28, 2001. Market risk information is contained under the  
caption "Quantitative And Qualitative Disclosures About Market Risk" of our     
2000 Annual Report on Form 10-K for the fiscal year ended August 31, 2000 and   
is incorporated herein by reference.                                            

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PART II. OTHER INFORMATION                                                      

ITEM 4:  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                    

      At our Annual Meeting of Shareholders, held on January 18, 2001, the
following proposals were voted upon by the shareholders as indicated below:     

1.       To elect the board of directors                      

                                                  Number of Shares
                                                  ----------------
                                                     For          Withheld
                                                  -----------      ---------

       William D. Morean                          162,459,966      2,141,086
       Thomas A. Sansone                          162,458,598      2,142,454
       Timothy L. Main                            162,459,330      2,141,722
       Lawrence J. Murphy                         162,412,787      2,188,265
       Mel S. Lavitt                              161,652,436      2,948,616
       Steven A. Raymund                          162,607,484      1,993,568
       Frank A. Newman                            162,605,268      1,995,784

  2.       To approve an amendment to the Company's Certificate of
     Incorporation to increase the number of authorized shares of Common
Stock from 250,000,0000 to 500,000,000.                       

For                        Against                 Abstain  
---                        -------                 -------  
161,131,409                3,451,180               18,463   

      3.       To ratify the selection of KPMG LLP as independent auditors
for the Company.                            

For                        Against                 Abstain  
---                        -------                 -------  
164,522,651                63,141                  15,260   

ITEM 6:  EXHIBITS AND REPORTS ON FORM 8-K                                       

(a)      Exhibits - None                    

(b)      Reports on Form 8-K                

                       On December 20, 2000 we filed a Current Report on
                        Form 8-K reporting financial results for the first
quarter of fiscal 2001.   

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the        
registrant has duly caused this report to be signed on its behalf by the        
undersigned, thereunto duly authorized.                                         

                       Jabil Circuit, Inc.
              Registrant

Date:  April 13, 2001                     By: /s/ Timothy L. Main               
    --------------                         -------------------------------
                                   Timothy L. Main
                                 President/CEO

Date:  April 13, 2001                     By: /s/ Chris A. Lewis                
    --------------                         -------------------------------
                                  Chris A. Lewis
                                           Chief Financial Officer

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Dates Referenced Herein and Documents Incorporated By Reference

		Referenced-On Page
This 10-Q Filing	Date	First	Last	Other Filings

	2/29/00	2	7	10-Q
	8/31/00	2	14	10-K
	12/20/00	15		DEF 14A, 8-K
	1/11/01	9	13
	1/18/01	15		PRE 14A, DEF 14A
For The Period Ended	2/28/01	1	14	10-Q/A
	3/31/01	1
Filed On / Filed As Of	4/13/01	16
	8/31/01	7		10-K

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Jabil Circuit Inc · 10-Q · For 2/28/01

Filed On 4/13/01 4:24pm ET · SEC File 1-14063 · Accession Number 950144-1-500778

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