Fabrinet

Previous wording

•our expectation that the portion of our revenues attributable to customers in regions outside of North America for the remainder of fiscal year 2026 will be in line with the portion of revenues attributable to such customers during the three months ended September 26, 2025;

Current wording

•our expectation that the portion of our revenues attributable to customers in regions outside of North America for the remainder of fiscal year 2026 will be in line with the portion of revenues attributable to such customers during the six months ended December 26, 2025;

Previous wording

The percentage of our revenues generated from a bill-to location outside of North America decreased from 61.5% in the three months ended September 27, 2024 to 56.9% in the three months ended September 26, 2025, primarily because of an increase in revenue from customers in the United States.

Current wording

The percentage of our revenues generated from a bill-to location outside of North America decreased from 55.3% in the three months ended December 27, 2024 to 53.1% in the three months ended December 26, 2025, primarily because of an increase in revenue from customers in the United States.

Previous wording

Based on the short and medium-term indications and forecasts from our customers, we expect that the portion of our future revenues attributable to customers in regions outside North America for the remainder of fiscal year 2026 will be in line with the portion of revenues attributable to such customers during the three months ended September 26, 2025.

Current wording

Based on the short and medium-term indications and forecasts from our customers, we expect that the portion of our future revenues attributable to customers in regions outside North America for the remainder of fiscal year 2026 will be in line with the portion of revenues attributable to such customers during the six months ended December 26, 2025.

Previous wording

A second significant element of our cost of revenues is employee costs, including indirect employee costs related to design, configuration and optimization of manufacturing processes for our customers, quality testing, materials testing and other engineering services, and direct costs related to our manufacturing employees. Direct employee costs include employee salaries, insurance and benefits, merit-based bonuses, recruitment, training and retention. Historically, our employee costs have increased primarily due to increases in the number of employees necessary to support our growth and, to a lesser extent, costs to recruit, train and retain employees. Our cost of revenues is significantly impacted by salary levels in Thailand and the PRC, the fluctuation of the Thai baht and Chinese Renminbi ("RMB") against our functional currency, the U.S. dollar, and our ability to retain our employees. We expect our employee costs to increase as wages continue to increase in Thailand and the PRC. Wage increases may impact our ability to sustain our competitive advantage and may reduce our profit margin. We seek to mitigate these cost increases through improvements in employee productivity, employee retention and asset utilization.

Current wording

A second significant element of our cost of revenues is employee costs, including indirect employee costs related to design, configuration and optimization of manufacturing processes for our customers, quality testing, materials testing and other engineering services, and direct costs related to our manufacturing employees. Direct employee costs include employee salaries, insurance and benefits, merit-based bonuses, recruitment, training and retention. Historically, our employee costs have increased primarily due to increases in the number of employees necessary to support our growth and, to a lesser extent, costs to recruit, train and retain employees. Our cost of revenues is significantly impacted by salary levels in Thailand and the PRC, the fluctuation of the Thai baht and RMB against our functional currency, the U.S. dollar, and our ability to retain our employees. We expect our employee costs to increase as wages continue to increase in Thailand and the PRC. Wage increases may impact our ability to sustain our competitive advantage and may reduce our profit margin. We seek to mitigate these cost increases through improvements in employee productivity, employee retention and asset utilization.

Previous wording

The Thai baht assets represent cash and cash equivalents, trade accounts receivable, deposits and other current assets. The Thai baht liabilities represent trade accounts payable, accrued expenses, income tax payable, accrued employee benefits and other payables. We manage our exposure to fluctuations in foreign exchange rates by the use of foreign currency contracts and offsetting assets and liabilities denominated in the same currency in accordance with management’s policy. As of September 26, 2025, there was $196.0 million of foreign currency forward contracts outstanding on the Thai baht payables. As of June 27, 2025, there was $165.0 million of foreign currency forward contracts outstanding on the Thai baht payables.

Current wording

The Thai baht assets represent cash and cash equivalents, trade accounts receivable, deposits and other current assets. The Thai baht liabilities represent trade accounts payable, accrued expenses, income tax payable, accrued employee benefits and other payables. We manage our exposure to fluctuations in foreign exchange rates by the use of foreign currency contracts and offsetting assets and liabilities denominated in the same currency in accordance with management’s policy. As of December 26, 2025, there was $200.0 million of foreign currency forward contracts outstanding on the Thai baht payables. As of June 27, 2025, there was $165.0 million of foreign currency forward contracts outstanding on the Thai baht payables.

Previous wording

For the three months ended September 26, 2025 and September 27, 2024, we recorded an unrealized loss of $1.3 million and unrealized gain of $4.1 million, respectively, related to derivatives that are not designated as hedging instruments in the unaudited condensed consolidated statements of operations and comprehensive income.

Current wording

For the three months ended December 26, 2025 and December 27, 2024, we recorded an unrealized gain of $1.2 million and unrealized loss of $5.1 million, respectively, related to derivatives that are not designated as hedging instruments in the unaudited condensed consolidated statements of operations and comprehensive income.

Previous wording

Throughout the period of our operations in Thailand, we have generally received income tax and other incentives from the Thailand Board of Investment. Preferential tax treatment from the Thai government in the form of a corporate tax exemption on income generated from projects to manufacture certain products at our Chonburi campus is currently available to us through June 2026. Similar preferential tax treatment was available to us through June 2020 with respect to products manufactured at our Pinehurst campus Building 6. Between June 2020 and June 2025, 50% of our income generated from products manufactured at our Pinehurst campus was exempted from tax. Preferential tax treatment is available to us for products manufactured at our Chonburi campus Building 9, where income generated will be tax exempt through 2031, capped at our actual investment amount. Such preferential tax treatment is contingent on various factors, including the export of our customers’ products out of Thailand and our agreement not to move our manufacturing facilities out of our current province in Thailand for at least 15 years from the date on which preferential tax treatment was granted. Currently, the corporate income tax rate for our Thai subsidiary is 20%.

Current wording

Throughout the period of our operations in Thailand, we have generally received income tax and other incentives from the Thailand Board of Investment. Preferential tax treatment from the Thai government in the form of a corporate tax exemption on income generated from projects to manufacture certain products at our Chonburi campus is currently available to us through June 2026. Preferential tax treatment is available to us for products manufactured at our Chonburi campus Building 9, where income generated will be tax exempt through 2031, capped at our actual investment amount. Such preferential tax treatment is contingent on various factors, including the export of our customers’ products out of Thailand and our agreement not to move our manufacturing facilities out of our current province in Thailand for at least 15 years from the date on which preferential tax treatment was granted. Currently, the corporate income tax rate for our Thai subsidiary is 20%.

Previous wording

Comparison of Three Months Ended September 26, 2025 with Three Months Ended September 27, 2024

Current wording

Comparison of Three and Six Months Ended December 26, 2025 with Three and Six Months Ended December 27, 2024

Previous wording

Our revenues increased by $173.9 million, or 21.6%, to $978.1 million for the three months ended September 26, 2025, compared with $804.2 million for the three months ended September 27, 2024. This increase was primarily due to an increase in our key customers’ demand for both optical communications products and non-optical communications products. Revenues from optical communications products, which represented $746.9 million, or 76.4%, of our revenues for the three months ended September 26, 2025, increased by $120.6 million, or 19.3%, compared to the same period in the prior fiscal year, mainly due to an increase in revenues from telecommunication products and datacenter interconnect products, and partially offset with a decrease in revenues from data communication products during the three months ended September 26, 2025. Revenues from non-optical communications products, which represented $231.2 million, or 23.6%, of our revenues for the three months ended September 26, 2025, increased by $53.3 million, or 30.0%, compared to the same period in the prior fiscal year, primarily due to growth in automotive revenue and high-performance computing.

Current wording

Our revenues increased by $299.3 million, or 35.9%, to $1,132.9 million for the three months ended December 26, 2025, compared with $833.6 million for the three months ended December 27, 2024. This increase was primarily due to an increase in our key customers’ demand for both optical communications products and non-optical communications products. Revenues from optical communications products, which represented $832.6 million, or 73.5%, of our revenues for the three months ended December 26, 2025, increased by $185.4 million, or 28.7%, compared to the same period in the prior fiscal year, mainly due to an increase in revenues from telecommunication products and datacenter interconnect products, and partially offset with a decrease in revenues from data communication products during the three months ended December 26, 2025. Revenues from non-optical communications products, which represented $300.3 million, or 26.5%, of our revenues for the three months ended December 26, 2025, increased by $113.8 million, or 61.1%, compared to the same period in the prior fiscal year, primarily due to high demand for high-performance computing, and growth in automotive revenue, as short-term inventory absorption issues have substantially subsided.

Previous wording

Our cost of revenues increased by $156.5 million, or 22.2%, to $861.7 million, or 88.1% of revenues, for the three months ended September 26, 2025, compared with $705.2 million, or 87.7% of revenues, for the three months ended September 27, 2024. This increase was in line with the increase in sales volume.

Current wording

Our cost of revenues increased by $262.4 million, or 35.8%, to $995.2 million, or 87.8% of revenues, for the three months ended December 26, 2025, compared with $732.8 million, or 87.9% of revenues, for the three months ended December 27, 2024. The increase was in line with the increase in sales volume.

Previous wording

Our SG&A expenses increased by $0.2 million, or 0.9%, to $22.2 million, or 2.3% of revenues, for the three months ended September 26, 2025, compared with $22.0 million, or 2.7% of revenues, for the three months ended September 27, 2024. The increase was primarily due to (1) an increase in information technology related expenses of $0.6 million, mainly from network, security system and new hardware costs, and (2) an increase in executive compensation related expenses of $0.3 million, offset by a decrease in severance expenses of $0.7 million.

Current wording

Our SG&A expenses increased by $2.1 million, or 9.9%, to $23.3 million, or 2.1% of revenues, for the three months ended December 26, 2025, compared with $21.2 million, or 2.6% of revenues, for the three months ended December 27, 2024. The increase was primarily due to (1) a net increase in the allowance for expected credit losses of $0.6 million, (2) an increase in information technology related expenses of $0.5 million, mainly from network, security system and new hardware costs, (3) an increase in a net realized loss from financial instruments of $0.5 million, (4) an increase in executive compensation related expenses of $0.4 million, and (5) an increase in share-based compensation expenses of $0.4 million, offset by a decrease from the true-up of other employee benefits of $0.3 million.

Previous wording

Our operating income increased by $17.3 million, or 22.5%, to $94.2 million, or 9.6% of revenues, for the three months ended September 26, 2025, compared with $76.9 million, or 9.6% of revenues, for the three months ended September 27, 2024. The increase was primarily due to an increase in revenues.

Current wording

Our operating income increased by $34.8 million, or 43.7%, to $114.4 million, or 10.1% of revenues, for the three months ended December 26, 2025, compared with $79.6 million, or 9.5% of revenues, for the three months ended December 27, 2024. The increase was primarily due to an increase in revenues.

Previous wording

Our interest income decreased by $1.5 million, or 13.8%, to $9.4 million, or 1.0% of revenues, for the three months ended September 26, 2025, compared with $10.9 million, or 1.3% of revenues, for the three months ended September 27, 2024. The decrease was primarily due to a decrease of weighted average interest income rate following to global interest rate trend, offset by higher average cash balance and short-term investment during the three months ended September 26, 2025 compared to same period in the prior fiscal year.

Current wording

Our interest income decreased by $2.7 million, or 23.9%, to $8.6 million, or 0.8% of revenues, for the three months ended December 26, 2025, compared with $11.3 million, or 1.4% of revenues, for the three months ended December 27, 2024. The decrease was primarily due to a decrease in average cash balance and short-term investment and a decrease of weighted average interest income rate following to global interest rate trend from 4.2% to 3.8% during the three months ended December 26, 2025 compared to the same period in the prior fiscal year.

Previous wording

We recorded foreign exchange loss, net of $2.1 million, or 0.2% of revenues, for the three months ended September 26, 2025, compared with foreign exchange loss, net of $7.1 million, or 0.9% or revenues, for the three months ended September 27, 2024. The decrease in foreign exchange loss was mainly due to (1) unrealized gain from revaluation of outstanding Thai baht assets and liabilities of $10.8 million, and (2) unrealized gain from revaluation of currencies other than Thai baht of $1.7 million, offset by (1) unrealized loss from mark-to-market forward contracts of $5.4 million, (2) higher in realized loss from payment/receipt of $1.4 million, and (3) lower foreign exchange gain, totaling $0.7 million from our subsidiaries in the PRC and the U.K.

Current wording

We recorded foreign exchange loss, net of $3.2 million, or 0.3% of revenues, for the three months ended December 26, 2025, compared with foreign exchange gain, net of $4.0 million, or 0.5% of revenues, for the three months ended December 27, 2024. The foreign exchange loss was mainly due to (1) unrealized loss from revaluation of outstanding Thai baht assets and liabilities of $12.3 million, (2) unrealized loss from revaluation of currencies other than Thai baht of $1.6 million, and (3) higher realized loss from payment/receipt of $0.1 million, offset by (1) unrealized gain from mark-to-market forward contracts of $6.3 million, and (2) lower foreign exchange loss, totaling $0.5 million from our subsidiaries in the PRC and the U.K.

Previous wording

We recorded income before income taxes of $101.4 million for the three months ended September 26, 2025, compared with $80.8 million for the three months ended September 27, 2024.

Current wording

We recorded income before income taxes of $119.7 million for the three months ended December 26, 2025, compared with $94.9 million for the three months ended December 27, 2024.

Previous wording

Our provision for income tax reflects effective tax rates of 5.4% and 4.2% for the three months ended September 26, 2025 and September 27, 2024, respectively. The increase was due to higher income subject to tax.

Current wording

Our provision for income tax reflects effective tax rates of 5.9% and 8.7% for the three months ended December 26, 2025 and December 27, 2024, respectively. The decrease was due to an increase in income not subject to tax.

Previous wording

We recorded net income of $95.9 million, or 9.8% of revenues, for the three months ended September 26, 2025, compared with $77.4 million, or 9.6% of revenues, for the three months ended September 27, 2024.

Current wording

We recorded net income of $112.6 million, or 10.0% of revenues, for the three months ended December 26, 2025, compared with $86.6 million, or 10.4% of revenues, for the three months ended December 27, 2024.

Previous wording

We recorded other comprehensive loss of $3.0 million, or 0.3% of revenues, for the three months ended September 26, 2025, compared with other comprehensive income of $15.0 million, or 1.9% of revenues, for the three months ended September 27, 2024. The change was mainly due to (1) unrealized loss from mark-to-market of forward contracts and interest rate swap agreements of $10.6 million, and (2) unrealized loss from mark-to-market of available-for-sale debt securities of $7.6 million, offset by lower unrealized loss from foreign currency translation adjustment of $0.2 million

Current wording

We recorded other comprehensive income of $7.1 million, or 0.6% of revenues, for the three months ended December 26, 2025, compared with other comprehensive loss of $9.5 million, or 1.1% of revenues, for the three months ended December 27, 2024. The change was mainly due to (1) unrealized gain from mark-to-market of forward contracts of $14.0 million, and (2) unrealized gain from mark-to-market of available-for-sale debt securities of $3.0 million, offset by lower unrealized gain from foreign currency translation adjustment of $0.4 million.

Previous wording

We primarily finance our operations through cash flow from operating activities. As of September 26, 2025 and September 27, 2024, we had cash, cash equivalents, and short-term investments of $968.8 million and $908.9.0 million, respectively, and no outstanding debt.

Current wording

We primarily finance our operations through cash flow from operating activities. As of December 26, 2025 and December 27, 2024, we had cash, cash equivalents, and short-term investments of $960.8 million and $934.6 million, respectively, and no outstanding debt.

Previous wording

Our cash and cash equivalents, which primarily consist of cash on hand, demand deposits, and liquid investments with original maturities of three months or less, are placed with banks and other financial institutions. The weighted-average interest rate on our cash and cash equivalents was 4.0% and 4.6% for the three and three months ended September 26, 2025 and September 27, 2024, respectively.

Current wording

Our cash and cash equivalents, which primarily consist of cash on hand, demand deposits, and liquid investments with original maturities of three months or less, are placed with banks and other financial institutions. The weighted-average interest rate on our cash and cash equivalents was 3.8% and 3.9% for the three and six months ended December 26, 2025, respectively, and 4.2% and 4.4% for the three and six months ended December 27, 2024, respectively.

Previous wording

Our cash investments are made in accordance with an investment policy approved by the audit committee of our board of directors. In general, our investment policy requires that securities purchased be rated A1, P-1, F1 or better. No security may have an effective maturity that exceeds three years. Our investments in fixed income securities are primarily classified as available-for-sale and are recorded at fair value. The cost of securities sold is based on the specific identification method.

Current wording

Our cash investments are made in accordance with an investment policy approved by the audit committee of our board of directors. In general, our investment policy requires that securities purchased be rated A1, P-1, F1 or better. No security may have an effective maturity that exceeds three years. Our investments in fixed income securities are primarily classified as available-for-sale and are recorded at fair value. The cost of securities sold is based on the specific identification method. Unrealized gains and losses on these securities are recorded as other comprehensive income (loss) and are reported as a separate component of shareholders’ equity.

Previous wording

Cash provided by operating activities is net income adjusted for certain non-cash items and changes in certain assets and liabilities. The increase in cash provided by operating activities during the three months ended September 26, 2025 as compared to the three months ended September 27, 2024 was primarily more efficient cash-favorable working capital changes mainly from a decrease in trade receivables due to timing of collection, and an increase in inventories to support higher demand in next quarter.

Current wording

Cash provided by operating activities is net income adjusted for certain non-cash items and changes in certain assets and liabilities. The decrease in cash provided by operating activities during the six months ended December 26, 2025 as compared to the six months ended December 27, 2024 was primarily due to more efficient cash-favorable working capital changes mainly from an increase in inventories to support higher demand in the next quarter, partially offset by a decrease in trade receivables due to timing of collection and an increase in trade payables aligned with the increasing volume of inventories.

Previous wording

Investing cash flows consist primarily of investment purchases, sales, maturities, and disposals; and capital expenditures. The increase in cash used in investing activities for the three months ended September 26, 2025 as compared to cash used in investing activities for the three months ended September 27, 2024 was primarily due to (1) an increase related to the construction of a new manufacturing building at our Chonburi campus, and (2) an increase in capital expenditures to support certain customers, offset by an increase in net proceeds of investment.

Current wording

Investing cash flows consist primarily of investment purchases, sales, maturities, and disposals; and capital expenditures. The decrease in cash used in investing activities for the six months ended December 26, 2025 as compared to cash used in investing activities for the six months ended December 27, 2024 was primarily due to a decrease in net purchase of investment, offset by (1) an increase related to the construction of a new manufacturing building at our Chonburi campus, and (2) an increase in capital expenditures to support certain customers.

Previous wording

Financing cash flows consist primarily of repayment of long-term debt, share repurchases, and withholding tax related to net share settlement of restricted share units. The increase in cash used in financing activities for the three months ended September 26, 2025 as compared to the three months ended September 27, 2024 was due to higher withholding tax related to net share settlement of restricted share units and an increase in share repurchases.

Current wording

Financing cash flows consist primarily of repayment of long-term debt, share repurchases, and withholding tax related to net share settlement of restricted share units. The decrease in cash used in financing activities for the six months ended December 26, 2025 as compared to the six months ended December 27, 2024 was due to a decrease in share repurchases, offset by an increase in withholding tax related to net share settlement of restricted share units.