Jabil sales up, profits down

Published May 16, 2007

Jabil Circuit filed its long-awaited financial results Tuesday, taking a big step toward ending the stock options controversy that has dogged the St. Petersburg company for a year.

The contract electronics manufacturer is the second-largest public company in the Tampa Bay area, after Tech Data Corp., based on revenue, and the largest based on market value.

The numbers, filed Tuesday with the Securities and Exchange Commission, show Jabil grew to $10.3-billion for the fiscal year ended Aug. 31, but profits didn't keep pace with the 36.4 percent increase in revenue. Net income fell 19.3 percent, to $164.5-million, partly as a result of restructuring costs, including employee severance pay and a decline in the value of assets.

Jabil is one of more than 200 companies that has come under scrutiny in a nationwide probe of backdated stock options grants. The inquiries followed a report published in the Wall Street Journal in March 2006 that noted Jabil president and CEO Tim Main had particularly lucky timing in his option grants. Grants on dates when prices are low lead to bigger profits.

Jabil has put its financial reporting on hold and launched a lengthy investigation of how it accounted for stock options. The company still has not reported its results for the first half of the current fiscal year, although it said it hopes to have those numbers out "as soon as possible."

The company previously reported that its investigation found no evidence Jabil's officers issued themselves backdated options or attempted to get others to issue them.

However, it did find other mistakes and Tuesday it said correcting those trimmed $41.1-million from net income from 1996 through 2005.

One example the company gave of a mistake: canceling options to a large group of non-executive employees after the stock price fell, then issuing new options.

The proper procedure would have been to reprice the original options, which would have changed the accounting, the company said.

Jabil said its review of prior financial statements found inadequate documentation for both the recognition of $6-million of revenue in the third quarter of 2001 and an offsetting expense associated with the return of those funds in the second quarter of 2002.

"There's no evidence of stock option manipulation or backdating of stocks and that's consistent with what we thought, " said Brian Alexander, an analyst with Raymond James & Associates. "The restatement of revenues of $6-million is not very meaningful."

In its filing, Jabil said it is continuing to cooperate with the SEC and the Department of Justice in its investigations of stock options. In addition, the company board is reviewing whether changes should be made to company practices.

As part of its filing, Jabil reported the compensation in 2006 for its top six executives. CEO Main earned a salary of $996, 154, a $561, 100 bonus as well as a stock reward worth $2.4-million.

Jabil said it would not comment further beyond what is contained in its SEC filing, but plans to schedule a conference call when the company is ready to release more recent quarterly numbers.

Times staff writer Madhusmita Bora contributed to this report. Helen Huntley can be reached at hhuntley@sptimes.com">href="mailto:hhuntley@sptimes.com" mce_href="mailto:hhuntley@sptimes.com">hhuntley@sptimes.com or 727 893-8230.