Fabrinet (Form: 8-K, Received: 05/06/2019 16:33:33)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported)

May 1, 2019

Fabrinet

(Exact name of registrant as specified in its charter)

Cayman Islands

001-34775

Not Applicable

(State or other jurisdiction of incorporation)

(Commission File Number)

(IRS Employer

Identification No.)

c/o Intertrust Corporate Services (Cayman) Limited

190 Elgin Avenue

George Town

Grand Cayman

KY1-9005

Cayman Islands

(Address of principal executive offices, including zip code)

+66 2-524-9600

(Registrant’s telephone number, including area code)

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2):

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Ordinary Shares, $0.01 par value	FN	New York Stock Exchange

Item 2.02

Results of Operations and Financial Condition.

On May 6, 2019, Fabrinet issued a press release regarding its financial results for its fiscal quarter ended March 29, 2019. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

The information in this Form 8-K and the exhibit attached shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

Item 5.02

Results of Operations and Financial Condition.

On May 1, 2019, Fabrinet and David T. Mitchell, Fabrinet’s Chairman of the Board, entered into a letter agreement (the “Amendment”) to amend Mr. Mitchell’s two, performance-based restricted share unit awards, each covering 69,885 ordinary shares of Fabrinet (at target and maximum performance), that were granted to him on August 24, 2017 (the “PSU Awards”) under Fabrinet’s 2010 Performance Incentive Plan and applicable award agreements thereunder. Under the terms of the PSU Award agreements, each of the PSU Awards is settled entirely in the form of Fabrinet ordinary shares if and when the PSU Award vests. As a result of the Amendment, upon any vesting and settlement of the PSU Awards, 42% of the shares otherwise issuable upon such vesting automatically will be settled instead in the form of cash.

The foregoing description of the Amendment is a summary and is qualified in its entirety by the terms of the Amendment, a copy of which is attached hereto as Exhibit 10.1.

Item 9.01

Financial Statements and Exhibits.

(d)

Exhibits.


Exhibit No.		Description

10.1		Letter agreement, dated May 1, 2019, regarding amendment of David T. Mitchell’s PSUs

99.1		Press release dated May 6, 2019

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 hereunto duly authorized.


FABRINET

By:		/s/ Toh-Seng Ng
		Toh-Seng Ng Executive Vice President, Chief Financial Officer

Date: May 6, 2019

Exhibit 10.1

LOGO

c/o Intertrust Services, Ltd.

190 Elgin Avenue

George Town

Cayman Islands

May 1, 2019

David T. Mitchell

[Address]

Re:	Amendment to Performance-based Restricted Share Unit Awards

Dear Tom,

On August 24, 2017, you were granted two performance-based restricted share unit awards (the “PSU Awards”), each covering 69,885 ordinary shares (“Shares”) of Fabrinet, a company formed under the laws of the Cayman Islands (“Fabrinet” or the “Company”), under Fabrinet’s 2010 Performance Incentive Plan (the “Plan”) and performance-based restricted share unit award agreements thereunder (the “PSU Agreements”).

Pursuant to this letter agreement (the “Letter”), each of your PSU Agreements is hereby amended to provide that, notwithstanding Section 2 of the PSU Agreements specifying the settlement of the PSU Awards in whole Shares, upon any vesting and settlement of the PSU Awards on or after the date hereof, 42% of the Shares otherwise issuable upon such vesting (rounded to the nearest whole Share) automatically will be settled in the form of cash, with the amount of cash payable for a Share equal to the last sales price in regular trading for a Share as furnished by the Financial Industry Regulatory Authority through the New York Stock Exchange on the date of vesting (or if such date is not a trading day with respect to the New York Stock Exchange, then the most recent trading day, as applicable).

Except as modified by this Letter, your PSU Agreements remain in full force and effect. This Letter, together with the PSU Agreements (to the extent not amended hereby), the Plan and that certain Separation Agreement and Release dated July 16, 2018, entered into between you and the Company, represent the entire agreement between you and the Company and will supersede any and all previous contracts, agreements or understandings between you and the Company with respect to the PSU Awards.

Please sign and return one copy of Letter to Colin Campbell, General Counsel, to acknowledge and agree to the amendment of your PSU Agreements pursuant to this Letter. This Letter will be governed by the laws of the State of California, with the exception of its conflict of laws provision.

Sincerely,

/s/ Frank Levinson

Frank Levinson, Chairman of the Compensation Committee (duly authorized on behalf of the Board of Directors of Fabrinet)

ACKNOWLEDGED AND AGREED:



/s/ David T. Mitchell	Date:	May 1, 2019
David T. Mitchell

Exhibit 99.1

Fabrinet Announces Third Quarter Fiscal Year 2019 Financial Results

•

Revenue and EPS Exceed Guidance Ranges

•

Gross Margin Increases to Highest Level in Seven Quarters

•

Year-to-Date Cash Flow From Operations of $105.5 Million Up 17% From Year-Ago Period

BANGKOK, Thailand – May 6, 2019 – Fabrinet (NYSE: FN), a leading provider of advanced optical packaging and precision optical, electro-mechanical and electronic manufacturing services to original equipment manufacturers of complex products, today announced its financial results for its third quarter ended March 29, 2019.

Seamus Grady, Chief Executive Officer of Fabrinet, said, “We exceeded our guidance for revenue and profitability in the third quarter on both an ASC 605 and ASC 606 basis, primarily due to increasing demand from the telecom market. In addition, we were pleased to see non-GAAP gross margins return to within our target range. With new business wins and strong customer relationships, we are optimistic that we can deliver a strong fourth quarter resulting in a record year for revenue and profitability.”

Third Quarter Fiscal Year 2019 Financial Highlights

As of the first quarter of fiscal 2019, Fabrinet is reporting results under the new revenue recognition standard Accounting Standards Codification Topic 606 (“ASC 606”), using the modified retrospective method. Financial results for reporting periods prior to fiscal year 2019 are presented as previously disclosed in conformity with the old revenue recognition standard Accounting Standards Codification Topic 605 (“ASC 605”). A reconciliation to ASC 605 is included at the end of this press release.

GAAP Results

•

Revenue for the third quarter of fiscal year 2019 was $399.0 million, compared to revenue of $332.2 million for the comparable period in fiscal year 2018.

•

GAAP net income for the third quarter of fiscal year 2019 was $28.6 million, compared to GAAP net income of $21.1 million for the third quarter of fiscal year 2018. GAAP net income for the third quarter of fiscal year 2019 included a foreign exchange loss of ($3.1) million, or ($0.08) per diluted share, compared to a foreign exchange loss of ($2.4) million, or ($0.06) per diluted share, for the third quarter of fiscal year 2018.

•

GAAP net income per diluted share for the third quarter of fiscal year 2019 was $0.76, compared to GAAP net income per diluted share of $0.55 for the third quarter of fiscal year 2018.

•

Cash flow from operations for the first three quarters of fiscal 2019 was $105.5 million, compared to $89.8 million for the first three quarters of fiscal 2018.

Non-GAAP Results

•

Non-GAAP net income for the third quarter of fiscal year 2019 was $34.3 million, compared to non-GAAP net income of $26.9 million for the third quarter of fiscal year 2018. Non-GAAP net income for the third quarter of fiscal year 2019 included a foreign exchange loss of ($3.1) million, or ($0.08) per diluted share, compared to a foreign exchange loss of ($2.4) million, or ($0.06) per diluted share, for the third quarter of fiscal year 2018.

•

Non-GAAP net income per diluted share for the third quarter of fiscal year 2019 was $0.92, compared to non-GAAP net income per diluted share of $0.71 for the same period in fiscal year 2018.

Share Repurchase Program Update

During the third quarter of fiscal 2019, Fabrinet repurchased 100,000 ordinary shares at an average price of $53.78. On May 1, 2019, Fabrinet’s Board of Directors approved the repurchase of up to an additional $50.0 million of Fabrinet’s ordinary shares, bringing the aggregate authorization under Fabrinet’s existing share repurchase program to $110.0 million, with $62.2 million currently remaining.

Business Outlook

The guidance provided below for the fourth quarter of fiscal 2019 is based on ASC 605; however, we will report revenues for such quarter based on ASC 606. As of the first quarter of fiscal 2019, Fabrinet is reporting results under ASC 606, which it is adopting for fiscal year 2019 on a modified retrospective method. A reconciliation to ASC 605 is included at the end of this press release.

Based on information available as of May 6, 2019, Fabrinet is issuing guidance for the fourth quarter of its fiscal year 2019 ending June 28, 2019, as follows:

•

Fabrinet expects fourth quarter revenue to be in the range of $396 million to $404 million.

•

GAAP net income per diluted share is expected to be in the range of $0.78 to $0.82, based on approximately 37.6 million fully diluted shares outstanding.

•

Non-GAAP net income per diluted share is expected to be in the range of $0.92 to $0.96, based on approximately 37.6 million fully diluted shares outstanding.

Conference Call Information


What:		Fabrinet Third Quarter Fiscal Year 2019 Financial Results Call
When:		Monday, May 6, 2019
Time:		5:00 p.m. ET
Live Call:		(888) 357-3694, domestic
		(253) 237-1137, international
		Passcode: 1558338
Replay:		(855) 859-2056, domestic
		(404) 537-3406, international
		Passcode: 1558338
Webcast:		http://investor.fabrinet.com/ (live and replay)

This press release and any other information related to the call will also be posted on Fabrinet’s website at http://investor.fabrinet.com. A recorded version of this webcast will be available approximately two hours after the call and will be archived on Fabrinet’s website for a period of one year.

About Fabrinet

Fabrinet is a leading provider of advanced optical packaging and precision optical, electro-mechanical, and electronic manufacturing services to original equipment manufacturers of complex products, such as optical communication components, modules and subsystems, automotive components, medical devices, industrial lasers and sensors. Fabrinet offers a broad range of advanced optical and electro-mechanical capabilities across the entire manufacturing process, including process design and engineering, supply chain management, manufacturing, advanced packaging, integration, final assembly and testing. Fabrinet focuses on production of high complexity products in any mix and any volume. Fabrinet maintains engineering and manufacturing resources and facilities in Thailand, the United States of America, the People’s Republic of China and the United Kingdom. For more information visit: www.fabrinet.com.

Forward-Looking Statements

“Safe Harbor” Statement Under U.S. Private Securities Litigation Reform Act of 1995

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include: (1) statements regarding our optimism that the fourth quarter will result in a record year for both revenue and profitability; and (2) all of the statements under the “Business Outlook” section regarding our expected revenue, GAAP and non-GAAP net income per share, and fully diluted shares outstanding for the fourth quarter of fiscal year 2019. These forward-looking statements involve risks and uncertainties, and actual results could vary materially from these forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to: less customer demand for our products and services than forecasted; less growth in the optical communications, industrial lasers and sensors markets than we forecast; difficulties expanding into additional markets, such as the semiconductor processing, biotechnology, metrology and materials processing markets; increased competition in the optical manufacturing services markets; difficulties in delivering products and services that compete effectively from a price and performance perspective; our reliance on a small number of customers and suppliers; difficulties in managing our operating costs; difficulties in managing and operating our business across multiple countries (including Thailand, the People’s Republic of China, the U.S. and the U.K.); and other important factors as described in reports and documents we file from time to time with the Securities and Exchange Commission (SEC), including the factors described under the section captioned “Risk Factors” in our Quarterly Report on Form 10-Q, filed on February 5, 2019. We disclaim any obligation to update information contained in these forward-looking statements whether as a result of new information, future events, or otherwise.

Use of Non-GAAP Financials

We refer to the non-GAAP financial measures cited above in making operating decisions because they provide meaningful supplemental information regarding our ongoing operational performance. Non-GAAP net income excludes: share-based compensation expenses; depreciation of fair value uplift; severance payments; executive search expenses; amortization of intangibles; business combination expenses; amortization of debt issuance costs; restructuring charges; and ASC 606 adjustments. We have excluded these items in order to enhance investors’ understanding of our underlying operations. The use of these non-GAAP financial measures has material limitations because they should not be used to evaluate our company without reference to their corresponding GAAP financial measures. As such, we compensate for these material limitations by using these non-GAAP financial measures in conjunction with GAAP financial measures.

These non-GAAP financial measures are used to: (1) measure company performance against historical results, (2) facilitate comparisons to our competitors’ operating results, and (3) allow greater transparency with respect to information used by management in making financial and operational decisions. In addition, these non-GAAP financial measures are used to measure company performance for the purposes of determining employee incentive plan compensation.

SOURCE: Fabrinet

Investor Contact:

Garo Toomajanian

ir@fabrinet.com

FABRINET

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)


(in thousands of U.S. dollars, except share data)	March 29, 2019			June 29, 2018
Assets
Current assets
Cash and cash equivalents	$	166,407		$	158,102
Restricted cash in connection with business acquisition		—			3,331
Short-term investments		242,484			174,269
Trade accounts receivable, net		265,110			246,912
Contract assets		10,543			—
Inventory, net		285,431			257,687
Prepaid expenses		12,299			8,061
Other current assets		5,236			5,948

Total current assets		987,510			854,310

Non-current assets
Property, plant and equipment, net		209,084			219,640
Intangibles, net		4,112			4,880
Goodwill		3,823			3,828
Deferred tax assets		5,734			5,280
Other non-current assets		354			80

Total non-current assets		223,107			233,708

Total Assets	$	1,210,617		$	1,088,018

Liabilities and Shareholders’ Equity
Current liabilities
Bank borrowings	$	3,250		$	3,250
Trade accounts payable		256,282			220,159
Capital lease liability, current portion		417			451
Income tax payable		2,651			709
Deferred liability in connection with business acquisition		—			3,331
Accrued payroll, bonus and related expenses		17,900			13,476
Accrued expenses		8,772			9,013
Other payables		16,370			19,728

Total current liabilities		305,642			270,117

Non-current liabilities
Long-term loan from bank		58,500			60,938
Deferred tax liability		3,177			2,284
Capital lease liability, non-current portion		209			516
Severance liabilities		11,837			10,162
Other non-current liabilities		2,364			3,062

Total non-current liabilities		76,087			76,962

Total Liabilities		381,729			347,079

Commitments and contingencies
Shareholders’ equity
Preferred shares (5,000,000 shares authorized, $0.01 par value; no shares issued and outstanding as of March 29, 2019 and June 29, 2018)		—			—
Ordinary shares (500,000,000 shares authorized, $0.01 par value; 38,216,231 shares and 37,723,733 shares issued; and 36,827,128 shares and 36,434,630 shares outstanding as of March 29, 2019 and June 29, 2018, respectively)		382			377
Additional paid-in capital		154,738			151,797
Less: Treasury shares (1,389,103 shares and 1,289,103 shares as of March 29, 2019 and June 29, 2018, respectively)		(47,779	)		(42,401	)
Accumulated other comprehensive loss		(79	)		(1,257	)
Retained earnings		721,626			632,423

Total Shareholders’ Equity		828,888			740,939

Total Liabilities and Shareholders’ Equity	$	1,210,617		$	1,088,018

FABRINET

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME (unaudited)


	Three Months Ended						Nine Months Ended
(in thousands of U.S. dollars, except per share amounts)	March 29, 2019			March 30, 2018			March 29, 2019			March 30, 2018
Revenues	$	398,951		$	332,213		$	1,179,208		$	1,026,598
Cost of revenues		(352,193	)		(295,280	)		(1,046,610	)		(912,167	)

Gross profit		46,758			36,933			132,598			114,431
Selling, general and administrative expenses		(14,132	)		(12,418	)		(41,296	)		(41,253	)
Expenses related to reduction in workforce		(323	)		—			(727	)		(1,776	)

Operating income		32,303			24,515			90,575			71,402
Interest income		2,144			1,149			4,770			2,554
Interest expense		(1,423	)		(820	)		(3,673	)		(2,499	)
Foreign exchange loss, net		(3,055	)		(2,428	)		(408	)		(5,710	)
Other income, net		159			91			798			438

Income before income taxes		30,128			22,507			92,062			66,185
Income tax expense		(1,493	)		(1,454	)		(4,064	)		(4,786	)

Net income		28,635			21,053			87,998			61,399

Other comprehensive income (loss), net of tax:
Change in net unrealized gain (loss) on available-for-sale securities		513			(616	)		1,399			(1,048	)
Change in net unrealized loss on derivative instruments		(1	)		—			(2	)		(1	)
Change in foreign currency translation adjustment		486			789			(219	)		1,358

Total other comprehensive income, net of tax		998			173			1,178			309

Net comprehensive income	$	29,633		$	21,226		$	89,176		$	61,708

Earnings per share
Basic	$	0.78		$	0.56		$	2.39		$	1.64
Diluted	$	0.76		$	0.55		$	2.35		$	1.61
Weighted-average number of ordinary shares outstanding (thousands of shares)
Basic		36,891			37,275			36,786			37,400
Diluted		37,539			38,055			37,383			38,125

FABRINET

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)


	Nine Months Ended
(in thousands of U.S. dollars)	March 29, 2019			March 30, 2018
Cash flows from operating activities
Net income for the period	$	87,998		$	61,399
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization		22,521			21,288
Loss (gain) on disposal of property, plant and equipment		81			(153	)
Loss on disposal of intangibles		149			—
(Gain) loss from sales and maturities of available-for-sale securities		(196	)		362
Amortization of investment premium		(604	)		(31	)
Amortization of deferred debt issuance costs		—			433
Allowance for doubtful accounts		12			44
Unrealized (gain) loss on exchange rate and fair value of derivative instruments		(5,351	)		1,393
Share-based compensation		13,373			17,704
Deferred income tax		438			19
Other non-cash expenses		1,142			1,941
Inventory (reversal of inventory) obsolescence		280			(291	)
Changes in operating assets and liabilities
Trade accounts receivable		(17,942	)		21,411
Contract assets		(666	)		—
Inventory		(36,698	)		(973	)
Other current assets and non-current assets		(1,568	)		(9,853	)
Trade accounts payable		37,576			(22,518	)
Income tax payable		1,942			(1,678	)
Other current liabilities and non-current liabilities		3,017			(703	)

Net cash provided by operating activities		105,504			89,794

Cash flows from investing activities
Purchase of short-term investments		(202,328	)		(84,519	)
Proceeds from sales of short-term investments		85,941			22,169
Proceeds from maturities of short-term investments		50,370			42,977
Purchase of property, plant and equipment		(13,211	)		(28,268	)
Purchase of intangibles		(290	)		(1,487	)
Proceeds from disposal of property, plant and equipment		473			202

Net cash used in investing activities		(79,045	)		(48,926	)

Cash flows from financing activities
Proceeds of short-term loans from bank		—			5,000
Repayment of short-term loans from bank		—			(1,003	)
Repayment of long-term loans from bank		(2,438	)		(10,200	)
Repayment of capital lease liability		(342	)		(293	)
Repurchase of ordinary shares		(5,378	)		(22,407	)
Proceeds from issuance of ordinary shares under employee share option plans		—			993
Release of restricted cash held in connection with business acquisition		(3,478	)		—
Withholding tax related to net share settlement of restricted share units		(10,427	)		(4,030	)

Net cash used in financing activities		(22,063	)		(31,940	)

Net increase in cash, cash equivalents and restricted cash		4,396			8,928

Movement in cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash at beginning of period		161,433			137,137
Increase in cash, cash equivalents and restricted cash		4,396			8,928
Effect of exchange rate on cash, cash equivalents and restricted cash		578			(89	)

Cash, cash equivalents and restricted cash at end of period	$	166,407		$	145,976

Non-cash investing and financing activities
Construction, software-related and equipment-related payables	$	3,286		$	4,684

FABRINET

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

(Continued)

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same amounts shown in the condensed consolidated statements of cash flows:


(amount in thousands)	As of March 29, 2019		As of March 30, 2018
Cash and cash equivalents	$	166,407	$	142,407
Restricted cash in connection with business acquisition		—		3,569

Cash, cash equivalents and restricted cash	$	166,407	$	145,976

FABRINET

RECONCILIATION OF ASC 605 TO ASC 606


	Three Months Ended March 29, 2019
(in thousands of U.S. dollars, except per share amounts)	As reported under ASC 606			Adjustment			ASC 605
Revenues	$	398,951		$	2,793		$	401,744
Cost of revenues		(350,874	)		(2,699	)		(353,573	)

Gross profit		48,077			94			48,171
Selling, general and administrative expenses		(10,061	)		—			(10,061	)

Operating income		38,016			94			38,110
Interest income		2,144			—			2,144
Interest expense		(1,423	)		—			(1,423	)
Foreign exchange loss		(3,055	)		—			(3,055	)
Other income		159			—			159

Income before income taxes		35,841			94			35,935
Income tax expense		(1,493	)		—			(1,493	)

Net income		34,348			94			34,442

Other comprehensive income, net of tax:
Change in net unrealized gain on available-for-sale securities		513			—			513
Change in net unrealized loss on derivative instruments		(1	)		—			(1	)
Change in foreign currency translation adjustment		486			—			486

Total other comprehensive income, net of tax		998			—			998

Net comprehensive income	$	35,346		$	94		$	35,440

Earnings per share
Basic	$	0.93		$	0.00		$	0.93
Diluted	$	0.92		$	0.00		$	0.92
Weighted-average number of ordinary shares outstanding (thousands of shares)
Basic		36,891			—			36,891
Diluted		37,539			—			37,539


FABRINET RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES
	Three Months Ended								Nine Months Ended
	March 29, 2019 (ASC 606)				March 30, 2018 (ASC 605)				March 29, 2019 (ASC 606)						March 30, 2018 (ASC 605)
(in thousands of U.S. dollars, except per share data)	Net income		Diluted EPS		Net income		Diluted EPS		Net income			Diluted EPS			Net income		Diluted EPS
GAAP measures		28,635		0.76		21,053		0.55		87,998			2.35			61,399		1.61
Items reconciling GAAP net income & EPS to non-GAAP net income & EPS:
Related to cost of revenues:
Share-based compensation expenses		1,237		0.03		1,564		0.04		4,384			0.12			5,277		0.14
Depreciation of fair value uplift		82		0.00		88		0.00		255			0.01			241		0.00
ASC 606 adoption impact on gross profit		—		—		—		—		(31	)		(0.00	)		—		—

Total related to gross profit		1,319		0.04		1,652		0.04		4,608			0.12			5,518		0.14

Related to selling, general and administrative expenses:
Share-based compensation expenses		3,187		0.08		3,762		0.10		8,989			0.24			12,427		0.33
Expenses related to CFO/CEO search		285		0.01		—		—		857			0.02			204		0.00
Amortization of intangibles		163		0.00		205		0.01		531			0.01			582		0.02
Business combination expenses		88		0.00		—		—		328			0.01			117		0.00
Severance payment		348		0.01		—		—		949			0.03			—		—

Total related to selling, general and administrative expenses		4,071		0.11		3,967		0.11		11,654			0.31			13,329		0.35

Related to other incomes and other expenses:
Other expenses in relation to reduction in workforce		323		0.01		—		—		727			0.02			1,776		0.05
Amortization of debt issuance costs		—		—		238		0.01		—			—			778		0.02

Total related to other incomes and other expenses		323		0.01		238		0.01		727			0.02			2,554		0.07

Total related to net income & EPS		5,713		0.15		5,857		0.16		16,989			0.45			21,401		0.56

Non-GAAP measures		34,348		0.92		26,910		0.71		104,987			2.81			82,800		2.17

Shares used in computing diluted net income per share
GAAP diluted shares				37,539				38,055					37,383					38,125
Non-GAAP diluted shares				37,539				38,055					37,383					38,125

FABRINET

RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW


(amount in thousands)	Three Months Ended						Nine Months Ended
	March 29, 2019			March 30, 2018			March 29, 2019			March 30, 2018
Net cash provided by operating activities	$	36,206		$	52,681		$	105,504		$	89,794
Less: Purchase of property, plant and equipment		(3,479	)		(6,863	)		(13,211	)		(28,268	)

Non-GAAP free cash flow	$	32,727		$	45,818		$	92,293		$	61,526

FABRINET

GUIDANCE FOR QUARTER ENDING JUNE 28, 2019

RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES


	Diluted EPS
GAAP net income per diluted share:	$	0.78 to $0.82
Related to cost of revenues:
Share-based compensation expenses		0.04

Total related to gross profit		0.04


Related to selling, general and administrative expenses:
Share-based compensation expenses		0.09
Expenses related to our CFO search		0.01

Total related to selling, general and administrative expenses		0.10

Total related to net income & EPS		0.14

Non-GAAP net income per diluted share	$	0.92 to $0.96