MULTI FINELINE ELECTRONIX INC - FORM 10-Q

MULTI FINELINE ELECTRONIX INC - FORM 10-Q - August 3, 2012

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file	filename
EXCEL - IDEA: XBRL DOCUMENT - MULTI FINELINE ELECTRONIX INC	Financial_Report.xls
EX-32.1 - EX-32.1 - MULTI FINELINE ELECTRONIX INC	d342205dex321.htm
EX-31.2 - EX-31.2 - MULTI FINELINE ELECTRONIX INC	d342205dex312.htm
EX-31.1 - EX-31.1 - MULTI FINELINE ELECTRONIX INC	d342205dex311.htm
EX-10.83 - EX-10.83 - MULTI FINELINE ELECTRONIX INC	d342205dex1083.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 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 June 30, 2012

¨	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 000-50812

MULTI-FINELINE ELECTRONIX, INC.

(Exact name of registrant as specified in its charter)

Delaware

95-3947402

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

8659 Research Drive

Irvine, CA 92618

(Address of principal executive offices, Zip Code)

(949) 453-6800

(Registrant’s telephone number, including area code)

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 ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2). Yes ¨ No x

The number of outstanding shares of the registrant’s Common Stock, $0.0001 par value, as of July 31, 2012 was 23,758,590.

Multi-Fineline Electronix, Inc.

Index


PART I. FINANCIAL INFORMATION

Item 1.	Condensed Consolidated Financial Statements (unaudited)	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Comprehensive Income	2
	Condensed Consolidated Statements of Cash Flows	3
	Notes to Condensed Consolidated Financial Statements	4

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	18

Item 4.	Controls and Procedures	19

PART II. OTHER INFORMATION

Item 1A.	Risk Factors	19

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	28

Item 6.	Exhibits	29

	Signatures	31

PART I. FINANCIAL INFORMATION

Item 1.

Condensed Consolidated Financial Statements

MULTI-FINELINE ELECTRONIX, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In Thousands, Except Share Data)


	June 30, 2012		September 30, 2011
	*(unaudited)*
ASSETS
Cash and cash equivalents	$	127,431	$	97,890
Accounts receivable, net of allowances of $1,137 and $2,402 at June 30, 2012 and September 30, 2011, respectively		108,997		150,507
Inventories		87,317		87,166
Deferred taxes		5,993		6,097
Income taxes receivable		2,362		5,083
Other current assets		3,962		6,656

Total current assets		336,062		353,399
Property, plant and equipment, net		255,599		244,026
Land use rights		7,103		6,831
Deferred taxes		8,873		6,341
Goodwill		7,537		7,537
Other assets		10,678		7,611

Total assets	$	625,852	$	625,745

LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable	$	138,036	$	162,790
Accrued liabilities		25,922		27,936
Income taxes payable		2,643		3,608

Total current liabilities		166,601		194,334
Other liabilities		17,359		15,328

Total liabilities		183,960		209,662
Commitments and contingencies (Note 2)
Stockholders’ equity
Preferred stock, $0.0001 par value, 5,000,000 and 5,000,000 shares authorized at June 30, 2012 and September 30, 2011, respectively; 0 and 0 shares issued and outstanding at June 30, 2012 and September 30, 2011, respectively		—		—
Common stock, $0.0001 par value; 100,000,000 and 100,000,000 shares authorized at June 30, 2012 and September 30, 2011, respectively; 23,758,016 and 24,049,780 shares issued and outstanding at June 30, 2012 and September 30, 2011, respectively		2		2
Additional paid-in capital		82,162		87,577
Retained earnings		318,176		288,702
Accumulated other comprehensive income		41,552		39,802

Total stockholders’ equity		441,892		416,083

Total liabilities and stockholders’ equity	$	625,852	$	625,745

The accompanying notes are an integral part of these condensed consolidated financial statements.

MULTI-FINELINE ELECTRONIX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In Thousands, Except Share and Per Share Data)

(unaudited)


	Three Months Ended June 30,						Nine Months Ended June 30,
	2012			2011			2012			2011
Net sales	$	170,038		$	191,838		$	617,344		$	640,062
Cost of sales		154,382			168,525			546,445			554,520

Gross profit		15,656			23,313			70,899			85,542
Operating expenses:
Research and development		1,900			2,378			6,210			7,960
Sales and marketing		5,726			5,512			18,615			19,259
General and administrative		4,223			3,800			15,335			13,468
Impairment and restructuring		(732	)		999			(2,468	)		999

Total operating expenses		11,117			12,689			37,692			41,686

Operating income		4,539			10,624			33,207			43,856
Other income (expense), net:
Interest income		419			213			1,065			651
Interest expense		(206	)		(123	)		(440	)		(348	)
Other income (expense), net		58			261			1,861			342

Income before income taxes		4,810			10,975			35,693			44,501
Provision for income taxes		(984	)		(2,157	)		(6,219	)		(9,005	)

Net income		3,826			8,818			29,474			35,496

Other comprehensive income, net of tax:
Foreign currency translation adjustment		(1,125	)		3,573			1,750			9,025

Total comprehensive income	$	2,701		$	12,391		$	31,224		$	44,521

Net income per share:
Basic	$	0.16		$	0.37		$	1.24		$	1.48

Diluted	$	0.16		$	0.36		$	1.22		$	1.46

Shares used in computing net income per share:
Basic		23,752,067			24,092,048			23,790,072			24,004,063
Diluted		24,043,920			24,331,731			24,100,672			24,325,067

The accompanying notes are an integral part of these condensed consolidated financial statements.

MULTI-FINELINE ELECTRONIX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands)

(unaudited)


	Nine Months Ended June 30,
	2012			2011
Cash flows from operating activities
Net income	$	29,474		$	35,496
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		40,097			33,717
Provision for doubtful accounts and returns		1,232			9,094
Deferred taxes		(2,436	)		(202	)
Stock-based compensation expense		4,304			2,989
Income tax benefit related to stock option exercises		(76	)		(16	)
Asset impairments		(2,468	)		999
(Gain) loss on disposal of equipment		(697	)		233
Changes in operating assets and liabilities:
Accounts receivable		40,372			4,985
Inventories		736			8,747
Other current assets		(83	)		860
Other assets		(4,661	)		(9,313	)
Accounts payable		(25,376	)		(45,364	)
Accrued liabilities		(3,601	)		(5,131	)
Income taxes payable		4,111			(3,472	)
Other liabilities		1,564			3,513

Net cash provided by operating activities		82,492			37,135

Cash flows from investing activities
Sales of investments		—			14,991
Purchases of property and equipment		(54,644	)		(53,546	)
Proceeds from sale of equipment and assets held for sale		11,471			601

Net cash used in investing activities		(43,173	)		(37,954	)

Cash flows from financing activities
Proceeds from exercise of stock options		162			1,250
Income tax benefit related to stock option exercises		76			16
Tax withholdings for net share settlement of equity awards		(1,112	)		(1,315	)
Repurchase of common stock		(8,844	)		(924	)

Net cash used in financing activities		(9,718	)		(973	)

Effect of exchange rate changes on cash		(60	)		1,925

Net increase in cash		29,541			133

Cash and cash equivalents at the beginning of the period		97,890			99,875

Cash and cash equivalents at the end of the period	$	127,431		$	100,008

Non-cash investing activities
Purchases of property and equipment	$	29,670		$	18,084

The accompanying notes are an integral part of these condensed consolidated financial statements.

MULTI-FINELINE ELECTRONIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Share and Per Share Data)

(unaudited)

1. Description of Business

Multi-Fineline Electronix, Inc. (“MFLEX” or the “Company”) was incorporated in 1984 in the State of California and reincorporated in the State of Delaware in June 2004. The Company is primarily engaged in the engineering, design and manufacture of flexible printed circuit boards along with related component assemblies.

Affiliates and subsidiaries of WBL Corporation Limited (collectively “WBL”), a Singapore company, beneficially owned approximately 62% of the Company’s outstanding common stock as of each of June 30, 2012 and September 30, 2011, which provided WBL with control over the outcome of stockholder votes, except with respect to certain related-party transactions.

2. Basis of Presentation

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. The Company has two wholly owned subsidiaries located in China: MFLEX Suzhou Co., Ltd., (“MFC”) formerly known as Multi-Fineline Electronix (Suzhou No. 2) Co., Ltd. (“MFC2”) and into which Multi-Fineline Electronix (Suzhou) Co., Ltd (“MFC1”) was merged in fiscal 2010, and MFLEX Chengdu Co., Ltd. (“MFLEX Chengdu”); one located in the Cayman Islands: M-Flex Cayman Islands, Inc. (“MFCI”); one located in Singapore: Multi-Fineline Electronix Singapore Pte. Ltd. (“MFLEX Singapore”); one located in Malaysia: Multi-Fineline Electronix Malaysia Sdn. Bhd. (“MFM”); one located in Arizona: Aurora Optical, Inc. (“Aurora Optical”); one located in Cambridge, England: MFLEX UK Limited, formerly known as Pelikon Limited (“MFE”); and one located in Korea: MFLEX Korea Limited (“MKR”). All significant intercompany transactions and balances have been eliminated in consolidation.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (the “U.S.”) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes contained in the Company’s 2011 Annual Report on Form 10-K. The financial information presented in the accompanying statements reflects all adjustments that are, in the opinion of management, necessary for a fair statement of the periods indicated. All such adjustments are of a normal recurring nature. The year-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the U.S. Operating results for the three and nine months ended June 30, 2012 are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, 2012. Unless otherwise indicated, the financial information in these notes is presented in thousands (except per share amounts).

Fair Value of Financial Instruments

The carrying amounts of certain of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximated fair value due to their short maturities. Derivative financial instruments were recognized at fair value based on observable market-based inputs of foreign currency spot and forward rates quoted by major financial institutions.

Inventories

Inventories, net of related allowances, were comprised of the following:


	June 30, 2012		September 30, 2011
Raw materials and supplies	$	15,620	$	27,735
Work-in-progress		15,049		16,526
Finished goods		56,648		42,905

	$	87,317	$	807,166

MULTI-FINELINE ELECTRONIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Share and Per Share Data)

(unaudited)

Property, Plant and Equipment

Property, plant and equipment, net, was comprised of the following:


	June 30, 2012			September 30, 2011
Land	$	—		$	2,942
Building		68,103			73,708
Machinery and equipment		343,686			300,539
Computers and capitalized software		11,706			11,184
Leasehold improvements		12,858			15,270
Construction-in-progress		25,045			27,795

		461,398			431,438
Accumulated depreciation and amortization		(205,799	)		(187,412	)

	$	255,599		$	244,026

Product Warranty Accrual

The Company typically warrants its products for up to 36 months. The standard warranty requires the Company to replace defective products returned to the Company at no cost to the customer. The Company records an estimate for warranty-related costs at the time revenue is recognized based on historical amounts incurred for warranty expense and historical return rates. The warranty accrual is included in accrued liabilities in the accompanying condensed consolidated balance sheets.

Changes in the product warranty accrual for the three months ended June 30, 2012 and 2011 were as follows:


	Balance at April 1		Warranty Expenditures			Provision for Estimated Warranty Cost		Balance at June 30
Fiscal 2012	$	300	$	(170	)	$	95	$	225
Fiscal 2011	$	177	$	(366	)	$	740	$	551

Changes in the product warranty accrual for the nine months ended June 30, 2012 and 2011 were as follows:


	Balance at October 1		Warranty Expenditures			Provision for Estimated Warranty Cost		Balance at June 30
Fiscal 2012	$	279	$	(821	)	$	767	$	225
Fiscal 2011	$	463	$	(790	)	$	878	$	551

Net Income Per Share—Basic and Diluted

Basic earnings per share are computed by dividing net income by the weighted average number of common shares outstanding. In computing diluted earnings per share, the weighted average number of shares outstanding is adjusted to reflect the effect of potentially dilutive securities. The impact of potentially dilutive securities is determined using the treasury stock method.

The following table presents a reconciliation of basic and diluted shares:


	Three Months Ended June 30,				Nine Months Ended June 30,
	2012		2011		2012		2011
Basic weighted-average number of common shares outstanding		23,752,067		24,092,048		23,790,072		24,004,063
Dilutive effect of potential common shares		291,853		239,683		310,600		321,004

Diluted weighted-average number of common and potential common shares outstanding		24,043,920		24,331,731		24,100,672		24,325,067

Potential common shares excluded from the per share computations as the effect of their inclusion would be anti-dilutive		404,146		301,476		368,488		280, 817

MULTI-FINELINE ELECTRONIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Share and Per Share Data)

(unaudited)

Commitments and Contingencies

Litigation

The Company is involved in litigation from time to time in the ordinary course of business. Management does not believe the outcome of any currently pending matters will have a material adverse effect on the Company’s financial position, results of operations or cash flows.

Other Commitments

As of June 30, 2012 and September 30, 2011, the Company had outstanding purchase and other commitments, primarily related to capital projects at its various facilities, which totaled $29,586 and $8,068, respectively.

Pursuant to the laws applicable to the Peoples’ Republic of China’s Foreign Investment Enterprises, the Company’s two wholly owned subsidiaries in China, MFC and MFLEX Chengdu, are restricted from paying cash dividends on 10% of after-tax profit, subject to certain cumulative limits. These restrictions on net income as of June 30, 2012 and September 30, 2011 were $17,787 and $16,255, respectively.

Significant Concentrations

Net sales to the Company’s largest Original Equipment Manufacturer (“OEM”) customers, inclusive of net sales made to their designated sub-contractors, as a percentage of total sales, are presented below:


	Three Months Ended June 30,						Nine Months Ended June 30,
	2012			2011			2012			2011
OEM C		73	%		54	%		71	%		41	%
OEM D		12	%		34	%		18	%		45	%

The Company’s sales into its largest industry sectors, as a percentage of total sales, are presented below:


	Three Months Ended June 30,						Nine Months Ended June 30,
	2012			2011			2012			2011
Smartphones		52	%		72	%		70	%		85	%
Tablets		41	%		23	%		27	%		10	%

3. Lines of Credit

In March 2012, MFLEX Chengdu entered into a Line of Credit Agreement (the “MCH Credit Line”) with Bank of China Co., Ltd. Chengdu Development West Zone Sub-Branch (“BC”), providing for a line of credit to MFLEX Chengdu in an amount of $11,000 (69,574 Chinese Renminbi (“RMB”) at June 30, 2012). The MCH Credit Line will mature in October 2012. MFLEX Chengdu and BC have also entered into a Facility Offer Letter (the “Facility Offer Letter”) which sets forth basic pricing and favorable pricing negotiated by BC and MFLEX Chengdu. The loan interest rate for U.S. dollar borrowings under the MCH Credit Line shall not be lower than the one-year LIBOR rate plus 550 basis points. The basis points shall be negotiated by the parties based on the lending cost in the Chinese market for U.S. dollars on the day the loan is made.

MULTI-FINELINE ELECTRONIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Share and Per Share Data)

(unaudited)

In January 2012, MFLEX Singapore entered into a Facility Agreement (the “Facility Agreement”) with JPMorgan Chase Bank, N.A., Singapore Branch, as mandated lead arranger, the financial institutions from time to time party thereto, as lenders (the “Lenders”), and JPMorgan Chase Bank, N.A. acting through its Hong Kong Branch (“JPM”), as facility agent and as security agent. The Facility Agreement provides for a three-year, revolving credit facility, under which MFLEX Singapore may obtain loans and other financial accommodations in an aggregate principal amount of up to $50,000. The obligations of MFLEX Singapore under the Facility Agreement are (i) secured by MFLEX Singapore’s physical assets, book debt, and bank accounts; (ii) secured by the stock in MFLEX Singapore held by its parent company, MFCI; and (iii) guaranteed by the Company pursuant to a Parent Guaranty (the “Guaranty”). Borrowings under the Facility Agreement will bear interest at a rate per annum equal to the sum of (a) the applicable margin, which initially is equal to 1.50 percent per annum, subject to adjustment in accordance with the Facility Agreement and (b) the bank’s cost of funds, which approximates SIBOR. All outstanding principal, and accrued and unpaid interest, under the Facility Agreement will be due and payable in January, 2015, the termination date of the Facility Agreement.

In July 2010, MFC entered into a credit line agreement with Agricultural Bank of China, Suzhou Wuzhong Sub-branch (“ABC”), which provides for a borrowing facility for 200,000 RMB ($31,621 at June 30, 2012). The line of credit will mature in July 2013.

In March 2010, MFC1 and MFC2 entered into credit line agreements with China Construction Bank, Suzhou Industry Park Sub-Branch (“CCB”), which provide for two borrowing facilities for 150,000 RMB each ($23,716 each at June 30, 2012). The lines of credit will mature in March 2013.

In February 2009, the Company and MFLEX Singapore entered into a Loan and Security Agreement with Bank of America, N.A., as a lender and agent (“BOA”), for a senior revolving credit facility in an amount up to $30,000, which may be increased to $60,000 at the Company’s discretion upon satisfaction of certain additional requirements. The line of credit was terminated by the Company in January 2012.

A summary of the lines of credit is as follows:


	Amounts Available at				Amounts Outstanding at
	June 30, 2012		September 30, 2011		June 30, 2012		September 30, 2011
Line of credit (BC)	$	11,000	$	—	$	—	$	—
Line of credit (JPM)		50,000		—		—		—
Line of credit (ABC)		31,621		31,472		—		—
Lines of credit (CCB)		47,432		47,208		—		—
Line of credit (BOA)		—		22,285		—		—

	$	140,053	$	100,965	$	—	$	—

As of June 30, 2012, the Company was in compliance with all covenants under its lines of credit.

MULTI-FINELINE ELECTRONIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Share and Per Share Data)

(unaudited)

4. Segment information

Based on the evaluation of the Company’s internal financial information, management believes that the Company operates in one reportable segment. The Company is primarily engaged in the engineering, design and manufacture of flexible circuit boards along with related component assemblies. For the periods presented, the Company operated in four geographical areas: United States, China, Singapore and Other (which includes Malaysia, Korea and the United Kingdom). Net sales are presented based on the country in which the sales originate, which is where the legal entity is domiciled. The financial results of the Company’s geographic segments are presented on a basis consistent with the condensed consolidated financial statements. Segment net sales and assets amounts include intra-company product sales transactions and subsidiary investment amounts, respectively, which are offset in the eliminations line.

Financial information by geographic segment is as follows:


	Three Months Ended June 30,						Nine Months Ended June 30,
	2012			2011			2012			2011
Net sales
United States	$	5,690		$	4,980		$	19,412		$	16,985
China		149,384			176,566			574,049			577,280
Singapore		163,532			184,916			595,310			619,920
Other		—			233			184			374
Eliminations		(148,568	)		(174,857	)		(571,611	)		(574,497	)

Total	$	170,038		$	191,838		$	617,344		$	640,062

Operating income (loss)
United States	$	(1,667	)	$	(3,081	)	$	(3,789	)	$	(8,412	)
China		(2,152	)		5,498			5,262			13,637
Singapore		8,001			9,246			35,104			41,754
Other		(695	)		(783	)		(2,241	)		(2,586	)
Eliminations		1,052			(256	)		(1,129	)		(537	)

Total	$	4,539		$	10,624		$	33,207		$	43,856

Depreciation and amortization
United States	$	584		$	934		$	1,945		$	2,733
China		12,780			10,688			37,936			30,750
Singapore		23			24			71			72
Other		47			48			145			162

Total	$	13,434		$	11,694		$	40,097		$	33,717


	June 30, 2012			September 30, 2011
Total assets
United States	$	155,548		$	167,813
China		406,287			389,807
Singapore		286,720			293,146
Other		4,684			4,716
Eliminations		(227,387	)		(229,737	)

Total	$	625,852		$	625,745

MULTI-FINELINE ELECTRONIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Share and Per Share Data)

(unaudited)

5. Stock-Based Compensation

Service and Performance-Based Restricted Stock Units

During the three and nine months ended June 30, 2012, the Company granted service-based restricted stock units (“RSU” or “RSUs”) equal to 1,627 and 184,710 shares, respectively, of the Company’s common stock. These grants were made under the 2004 Plan to certain employees (including executive officers) and directors at no cost to such individual. Each RSU represents one hypothetical share of the Company’s common stock, without voting or dividend rights. The RSUs granted to employees generally vest over a period of three years with one-third vesting on each of the anniversary dates of the grant date. Unearned compensation related to the RSUs is determined based on the fair value of the Company’s common stock on the date of grant and is amortized into expense over the vesting period using the straight-line method.

The Company also grants performance-based RSUs to certain employees (including executive officers) from time to time, under the 2004 Plan. For such performance-based RSUs, the Company records share-based compensation cost based on the grant-date fair value and the probability that the performance metrics will be achieved per the related FASB authoritative guidance. Management generally considers the probability that the performance metrics will be achieved to be a 70% chance or greater (“Probability Threshold”). At the end of each reporting period, the Company evaluates the awards to determine if the related performance metrics meet the Probability Threshold. If the Company determines that the vesting of any of the outstanding performance-based RSUs does not meet the Probability Threshold, the compensation expense related to those performance-based RSUs is reversed in the period in which this determination is made. However, if at a future date conditions have changed and the Probability Threshold is deemed to be met, the previously reversed stock compensation expense, as well as all subsequent projected stock compensation expense through the date of evaluation, is recognized in the period in which this new determination is made.

On November 14, 2011, the Company granted 110,046 performance-based RSUs (the “November 2011 Awards”) to certain employees (including executive officers). The November 2011 Awards vest upon the achievement of defined performance objectives pertaining to the grants, with vesting to occur on or about November 15, 2014. The November 2011 Awards contained performance conditions whereby the Company recorded share-based compensation cost based on the grant-date fair value and the probability that the performance metrics will be achieved. As of June 30, 2012, the Company considers the vesting of the November 2011 Awards to be probable.

RSU activity for the nine months ended June 30, 2012 under the 2004 Plan is summarized as follows:


	Number of Shares			Weighted- Average Grant- Date Fair Value
Non-vested shares outstanding at September 30, 2011		542,942		$	22.69
Granted		294,756			20.20
Vested		(178,947	)		21.00
Forfeited		(48,312	)		22.65

Non-vested shares outstanding at June 30, 2012		610,439		$	21.99

The Company recognized compensation costs related to RSUs of $1,108 and $3,467 during the three and nine months ended June 30, 2012 and $(406) and $2,272 during the three and nine months ended June 30, 2011, respectively. The weighted-average grant-date fair value of nonvested RSUs granted during the nine months ended June 30, 2012 and 2011 was $20.20 and $22.38, respectively. The weighted-average fair value of RSUs vested during the nine months ended June 30, 2012 and 2011 was $21.00 and $19.34, respectively. The aggregate intrinsic value of vested RSUs was $287 and $3,891 during the three and nine months ended June 30, 2012 and was $276 and $4,650 during the three and nine months ended June 30, 2011, respectively. Unearned compensation of $6,649 existed as of June 30, 2012 related to nonvested RSUs, which will be recognized into expense over the weighted-average remaining contractual life of the nonvested RSUs of 1.3 years.

MULTI-FINELINE ELECTRONIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Share and Per Share Data)

(unaudited)

Stock Appreciation Rights

From time to time, the Company grants stock appreciation rights to be settled in Company common stock (“SSAR” or “SSARs”). These grants are made under the 2004 Plan to certain employees (including executive officers) at no cost to such individual. Each SSAR has a base appreciation amount that is equal to the closing price of a share of the Company’s common stock on each applicable grant date as reported on the NASDAQ Global Select Market. The SSARs are treated as equity awards and are measured using the initial compensation element of the award at the time of grant and the expense is recognized over the requisite service period (the vesting period).

On November 14, 2011, the Company granted 141,107 SSARs (the “November 2011 SSARs”). The November 2011 SSARs vest over a period of three years with one-third vesting on each November 15, 2012, 2013 and 2014, and will expire on November 14, 2021. The grant date fair value of the SSAR awards was estimated at $7.25 using the Black-Scholes valuation pricing model assuming a risk-free interest rate of 0.40%, zero expected dividends, expected volatility of 51.73% and an expected term of 3.4 years.

SSAR activity for the nine months ended June 30, 2012 under the 2004 Plan is summarized as follows:


	Number of Shares			Weighted- Average Exercise Price		Aggregate Intrinsic Value		Weighted- Average Remaining Contractual Life
SSARs outstanding at September 30, 2011		370,403		$	21.44
Granted		141,107			19.65
Exercised		(11,175	)		16.07
Forfeited		(20,754	)		25.02

SSARs outstanding at June 30, 2012		479,581		$	20.88	$	2,018		8.0

SSARs vested and expected to vest at June 30, 2012		468,409		$	20.88	$	1,976		8.0

The Company recognized compensation costs of $308 and $837 during the three and nine months ended June 30, 2012 and $192 and $717 during the three and nine months ended June 30, 2011, respectively, related to the SSARs. The aggregate intrinsic value of SSARs exercised was $0 and $69 during the three and nine months ended June 30, 2012 and $0 during both the three and nine months ended June 30, 2011, respectively. Unearned compensation as of June 30, 2012 was $1,429 related to non-vested SSARs, which will be recognized into expense over a weighted-average period of 1.5 years.

6. Share Repurchase Program

The Board has provided a committee with the discretion to execute a share repurchase program for up to 1,100,000 shares in the aggregate of the Company’s common stock on the open market. These shares represented approximately five percent of the Company’s common stock outstanding as of June 30, 2012. On September 2, 2011, the Company entered into a 10b5-1 Repurchase Plan Agreement, which expired on June 2, 2012 and provided for the repurchase of up to 500,000 of such shares. As of June 30, 2012, a total of 488,400 of such shares were repurchased under such 10b5-1 Repurchase Plan Agreement, at a weighted-average purchase price of $20.17 per share, for a total value of $9,853. All repurchased shares were retired and the excess of the repurchase price over par value was booked as an adjustment to additional paid-in capital in the periods in which the respective shares were retired.

7. Income Taxes

As of June 30, 2012 and September 30, 2011, the liability for income taxes associated with uncertain tax positions was $15,410 and $14,354, respectively. As of June 30, 2012 and September 30, 2011, these liabilities can be reduced by $4,903 and $4,817, respectively, primarily from offsetting tax benefits associated with the correlative effects of potential transfer pricing adjustments. The resulting net amount of $10,507 at June 30, 2012 and $9,537 at September 30, 2011, if recognized, would favorably affect the Company’s effective tax rate. The Company anticipates that there will be changes to the unrecognized tax benefit associated with uncertain tax positions due to the expiration of statutes of limitation, payment of tax on amended returns, audit settlements and other changes in reserves. However, due to the uncertainty regarding the timing of these events, a current estimate of the range of changes that may occur within the next twelve months cannot be made.

The Company currently enjoys certain tax incentives for certain of its Asian operations. Certain Asian operations are subject to taxes at a rate lower than the statutory rates and for the nine months ended June 30, 2012, the Company realized tax savings for these operations. However, the tax holidays and tax incentives may be challenged, modified or even eliminated by taxing authorities or future changes in law.

MULTI-FINELINE ELECTRONIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Share and Per Share Data)

(unaudited)

On August 1, 2012, the Company received a Revenue Agent Report (the “Report”) from the Internal Revenue Service (“IRS”) relating to its examination of the Company’s income tax returns for fiscal years 2007 and 2008. The IRS has proposed adjustments primarily related to the Company’s valuation of intellectual property and intercompany cost sharing arrangement. The proposed adjustments would result in approximately $120 million of additional taxable income for those two years. Management believes there are numerous errors in the Report, does not agree with the proposed adjustments and intends to vigorously contest the proposed adjustments. After reviewing the Report, management continues to believe that an adequate provision has been made for all of the Company’s uncertain tax positions. However, the outcome of tax audits cannot be predicted with certainty. If any issues addressed in the Company’s tax audits are resolved in a manner not consistent with management’s expectations, the Company could be required to adjust its provision for income tax in the period such resolution occurs. Any significant proposed adjustments could have a material adverse effect on the Company’s results of operations, cash flows and financial position if not resolved favorably.

8. Impairment and Restructuring

Tucson, Arizona

During the second fiscal quarter of 2012, the Company evaluated its Tucson, Arizona facility consisting of land and building (the “Tucson Facility”) under the “Long-Lived Assets to Be Disposed of by Sale” classification in the relevant FASB authoritative guidance. The Tucson Facility was closed during fiscal 2008, as part of the restructuring of Aurora Optical. Based on an arms-length offer received during the second fiscal quarter of 2012, the Company recorded $1,231 as assets held for sale related to such land and building. During the third fiscal quarter of 2012, the Company completed the sale of the Tucson Facility, which resulted in a net gain of $684 recorded during the third fiscal quarter of 2012 as a reduction of impairment and restructuring in the condensed consolidated statements of comprehensive income.

Anaheim, California

During the fourth fiscal quarter of 2011, the Company committed to a plan to relocate its corporate headquarters to a smaller location in Orange County, California (the “Relocation Plan”). In fiscal 2012, as a result of the Relocation Plan, the Company completed the sale of certain of its machinery and equipment and incurred relocation costs. The Company recorded net gains of $48 and $717 during the three and nine months ended June 30, 2012. During the second fiscal quarter of 2012, the Company completed the sale of its corporate headquarters in Anaheim, California which was previously classified as assets held for sale as of December 31, 2011. The completion of the sale resulted in a net gain of $1,067 which was recorded during the second fiscal quarter of 2012. The net gains related to the sale of the Company’s corporate headquarters and certain machinery and equipment under the Relocation Plan were recorded as a reduction of impairment and restructuring in the condensed consolidated statements of comprehensive income.

Restructuring Reserve Activity

The following table reflects the movement activity of the restructuring reserve for the nine months ended June 30, 2012:


	One-Time Termination Benefits
Accrual balance as of September 30, 2011	$	802
Restructuring charges		—
Utilization		(778	)
Adjustments		(24	)

Accrual balance as of June 30, 2012	$	—

9. Derivative Financial Instruments

Foreign Currency Forward Contracts

The Company transacts business in various foreign countries and is therefore exposed to gains and losses resulting from fluctuations in foreign currency exchange rates relating to purchases, obligations, and monetary assets and liabilities that are denominated in currencies other than the Company’s reporting currency. The Company has established foreign currency risk management programs to attempt to protect against volatility in the value of non-U.S. dollar denominated monetary assets and liabilities, and of future cash flows caused by changes in foreign currency exchange rates. As a result, the Company enters into certain foreign currency forward contracts to hedge its aforementioned currency exposures.

MULTI-FINELINE ELECTRONIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Share and Per Share Data)

(unaudited)

The Company accounts for all of its derivative instruments in accordance with the relevant FASB authoritative accounting guidance for derivatives and hedges, which requires companies to recognize all derivative instruments as either assets or liabilities at fair value in the condensed consolidated balance sheets. As of June 30, 2012, the aggregate notional amount of the Company’s outstanding foreign currency forward contracts is summarized below:


	Foreign Currency Amount				Notional Contract Value in USD
Currency	Buy		Sell		Buy		Sell
Foreign currency non-hedge derivatives:
RMB	¥	442,030	¥	442,030	$	70,000	$	69,403

The changes in fair value of the Company’s derivative instruments are recognized in earnings during the period of change as other income (expense), net in the condensed consolidated statements of comprehensive income. The Company recognized (losses) gains of ($619) and $270 during the three and nine months ended June 30, 2012 and ($50) during both the three and nine months ended June 30, 2011, respectively, related to forward contracts. In July 2012, the Company closed all of its outstanding foreign currency forward contracts. In July 2012, the Company closed all of its outstanding foreign currency forward contracts.

Recurring basis measurements

For recognition purposes, on a recurring basis, the Company’s assets and liabilities related to derivative financial instruments are measured at fair value at the end of each reporting period. The fair values as of June 30, 2012 and September 30, 2011 were determined based on Level 2 inputs, which consist of observable market-based inputs of foreign currency spot and forward rates quoted by major financial institutions. The Company’s derivative financial instruments had a fair value of $597 recorded as accrued liabilities at June 30, 2012 and $7 recorded as other current assets at September 30, 2011.

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Quarterly Report on Form 10-Q (“Quarterly Report”) contains forward-looking statements that involve a number of risks and uncertainties. These forward-looking statements include, but are not limited to, statements and predictions as to our expectations regarding our revenues, net sales, sales, full year net sales growth, net income, operating expenses, research and development expenses, earnings, operations, gross margins, including without limitation, our targeted gross margin range, achievement of margins within or outside of such range and factors that could affect gross margins, yields, anticipated cash needs and uses of cash, capital requirements and capital expenditures, payment terms, expected tax rates, results of audits of us in China and the U.S., needs for additional financing, use of working capital, the benefits and risks of our China operations, anticipated growth strategies, ability to attract customers and diversify our customer base, including without limitation the relative size of each customer to us, sources of net sales, anticipated trends and challenges in our business and the markets in which we operate, trends regarding the use of flex in smartphones, feature phones, tablets and other consumer electronic devices, the adequacy and expansion of our facilities, capability, capacity and equipment, the impact of economic and industry conditions on our customers and our business, current and upcoming programs and product mix and the learning curves associated with our programs, market opportunities and the utilizations of flex and flex assemblies, customer demand, our competitive position, critical accounting policies and the impact of recent accounting pronouncements. Additional forward-looking statements include, but are not limited to, statements pertaining to other financial items, plans, strategies or objectives of management for future operations, our financial condition or prospects, and any other statement that is not historical fact, including any statement which is preceded by the word “may,” “might,” “will,” “intend,” “should,” “could,” “can,” “would,” “expect,” “believe,” “anticipate,” “estimate,” “predict,” “aim,” “potential,” “plan,” or similar words. For all of the foregoing forward-looking statements, we claim the protection of the Private Securities Litigation Reform Act of 1995. Actual events or results may differ materially from our expectations. Important factors that could cause actual results to differ materially from those stated or implied by our forward-looking statements include, but are not limited to, the impact of changes in demand for our products, our success with new and current customers, our ability to develop and deliver new technologies, our ability to diversify our customer base, our effectiveness in managing manufacturing processes and costs and expansion of our operations, the degree to which we are able to utilize available manufacturing capacity, achieve expected yields and obtain expected gross margins, the impact of competition, the economy and technological advances, and the risks set forth below under “Item 1A. – Risk Factors.” These forward-looking statements represent our judgment as of the date hereof. We disclaim any intent or obligation to update these forward-looking statements.

Overview

We are a global provider of high-quality, technologically advanced flexible printed circuits and value-added component assembly solutions to the electronics industry. We believe that we are one of a limited number of manufacturers that provide a seamless, integrated flexible printed circuit and assembly solution from design and application engineering and prototyping through high-volume fabrication, component assembly and testing. We target our solutions within the electronics market and, in particular, we focus on applications where flexible printed circuits are the enabling technology in achieving a desired size, shape, weight or functionality of the device. Current applications for our products include mobile phones, smartphones, tablets, consumer products, portable bar code scanners, computer/data storage and medical devices. We provide our solutions to original equipment manufacturers (“OEMs”) such as Apple, Inc. and Research In Motion Limited and to electronic manufacturing services (“EMS”) providers such as Foxconn Electronics, Inc., Jabil Circuit, Inc., and Flextronics International Ltd. Our business model, and the way we approach the markets which we serve, is based on value added engineering and providing technology solutions to our customers facilitating the miniaturization of portable electronics. We currently rely on a core mobility end-market for nearly all of our revenue. We believe this dynamic market offers fewer, but larger, opportunities than other electronic markets do, and changes in market leadership can occur with little to no warning. Through early supplier involvement with customers, we look to assist in the development of new designs and processes for the manufacturing of their products and, through value added component assembly of components on flex, seek to provide a higher level of product within their supply chain structure. This approach is relatively unique and may or may not always fit with the operating practices of all OEMs. Our ability to add to our customer base may have a direct impact on the relative percentage of each customer’s revenue to total revenues during any reporting period.

We typically have numerous programs in production at any particular time, the life cycle for which is typically around one year. The programs’ prices are subject to intense negotiation and are determined on a program by program basis, dependent on a wide variety of factors, including without limitation, expected volumes, assumed yields, material costs, actual yields, and the amount of third party components within the program. Our profitability is dependent upon how we perform against our targets and the assumptions on which we base our prices for each particular program. Our volumes, margins and yields also vary from program to program and, given various factors and assumptions on which we base our prices, are not necessarily indicative of our profitability. In fact, some lower-priced programs have higher margins while other higher-priced programs have lower margins. Given that the programs in production vary from period to period and the pricing and margins between programs vary widely, volumes are not necessarily indicative of our performance. For example, we could experience an increase in volumes for a particular program during a particular period, but depending on that program’s margins and yields and the other programs in production during that period, those higher volumes may or may not result in an increase in overall profitability.

Critical Accounting Policies

Information with respect to our critical accounting policies which we believe have the most significant effect on our reported results and require subjective or complex judgments of management are contained on pages 28-30 in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended September 30, 2011.

Comparison of the Three Months Ended June 30, 2012 and 2011

The following table sets forth our Statement of Operations data expressed as a percentage of net sales for the periods indicated:


	Three Months Ended June 30,
	2012			2011
Net sales		100.0	%		100.0	%
Cost of sales		90.8			87.8

Gross profit		9.2			12.2
Operating expenses:
Research and development		1.1			1.2
Sales and marketing		3.4			2.9
General and administrative		2.5			2.0
Impairment and restructuring		(0.5	)		0.5

Total operating expenses		6.5			6.6

Operating income		2.7			5.6
Other income (expense), net:
Interest income		0.2			0.1
Interest expense		(0.1	)		(0.1	)
Other income (expense), net		0.0			0.1

Income before income taxes		2.8			5.7
Provision for income taxes		(0.6	)		(1.1	)

Net income		2.2	%		4.6	%

Net Sales. Net sales decreased to $170.0 million for the three months ended June 30, 2012, from $191.8 million for the three months ended June 30, 2011. The decrease of $21.8 million, or 11.4%, was primarily due to decreased net sales into our smartphones sector, partially offset by increased net sales into our tablets sector, as further quantified below.

Net sales into our smartphones sector decreased to $88.5 million for the three months ended June 30, 2012, from $137.4 million for the three months ended June 30, 2011. The decrease of $48.9 million, or 35.6%, was primarily due to lower sales volumes to one major customer. For the three months ended June 30, 2012 and 2011, our smartphones sector accounted for approximately 52% and 72% of total net sales, respectively.

Net sales into our tablets sector increased to $70.6 million for the three months ended June 30, 2012, from $44.4 million for the three months ended June 30, 2011. The increase of $26.2 million, or 59.0%, was due to higher unit sales volume of approximately 174% coupled with higher flex content per unit of 91%. For the three months ended June 30, 2012 and 2011, sales into our tablets sector accounted for approximately 41% and 23% of total net sales, respectively.

Cost of Sales and Gross Profit. Cost of sales as a percentage of net sales increased to 90.8% for the three months ended June 30, 2012, versus 87.8% for the three months ended June 30, 2011. The increase in cost of sales as a percentage of net sales of 3.0% was primarily attributable to an increase of 180 basis points as a result of higher capacity related costs for plant and equipment additions, an increase of 80 basis points due to the appreciating Chinese Renminbi (“RMB”), an increase of 40 basis points due to maintaining extra headcount required for increased production during our fourth fiscal quarter of 2012 and an increase of 35 basis points due to increased labor rates in China. These increases were partially offset by a decrease of 35 basis points primarily from lower material costs. Gross profit decreased to $15.7 million for the three months ended June 30, 2012, versus $23.3 million for the three months ended June 30, 2011, or 32.6%. As a percentage of net sales, gross profit decreased to 9.2% for the three months ended June 30, 2012 from 12.2% for the three months ended June 30, 2011.

Research and Development. Research and development expense decreased by $0.5 million to $1.9 million for the three months ended June 30, 2012, from $2.4 million for the three months ended June 30, 2011. The decrease was primarily due to our decision to realign our global research and development activities in California and to move certain research and development activities to China, where labor costs are lower. As a percentage of net sales, research and development expense decreased to 1.1% for the three months ended June 30, 2012 versus 1.2% for the three months ended June 30, 2011.

Sales and Marketing. Sales and marketing expense increased by $0.2 million to $5.7 million for the three months ended June 30, 2012, from $5.5 million in the comparable period of the prior year, an increase of 3.6%. The increase was primarily attributable to costs associated with the establishment of a new customer support office in Korea. As a percentage of net sales, sales and marketing expense increased to 3.4% for the three months ended June 30, 2012 versus 2.9% for the three months ended June 30, 2011.

General and Administrative. General and administrative expense increased to $4.2 million for the three months ended June 30, 2012, from $3.8 million for the three months ended June 30, 2011. The increase of $0.4 million, or 10.5%, was primarily due to the prior year reversal of $1.0 million from performance-based equity awards that were, during the third fiscal quarter of 2011, deemed not to meet our defined Probability Threshold for the defined performance objectives, partially offset by gains on sale of machinery and equipment in China of $0.6 million during the third fiscal quarter of 2012. As a percentage of net sales, general and administrative expense increased to 2.5% for the three months ended June 30, 2012 versus 2.0% for the three months ended June 30, 2011.

Impairment and Restructuring. Impairment and restructuring was a gain of $0.7 million for the three months ended June 30, 2012 which consisted primarily of a gain on sale of our previously impaired property in Arizona.

Other Income (Expense), Net. Other income, net, decreased to $0.1 million for the three months ended June 30, 2012 from other income, net, of $0.3 million for the three months ended June 30, 2011, a decrease of $0.2 million. The decrease in other income, net, was primarily the result of net losses from our forward contracts that were used in an effort to mitigate the risk of unfavorable movements of the U.S. dollar, partially offset by foreign exchange gains due to the movement of the U.S. dollar versus the RMB and other foreign currencies.

Income Taxes. The effective tax rate for three months ended June 30, 2012 and 2011 was 20.5% and 19.7%, respectively. We expect future tax rates to vary if current tax regulations change.

Comparison of the Nine Months Ended June 30, 2012 and 2011

The following table sets forth our Statement of Operations data expressed as a percentage of net sales for the periods indicated:


	Nine Months Ended June 30,
	2012			2011
Net sales		100.0	%		100.0	%
Cost of sales		88.5			86.6

Gross profit		11.5			13.4
Operating expenses:
Research and development		1.0			1.2
Sales and marketing		3.0			3.0
General and administrative		2.5			2.1
Impairment and restructuring		(0.4	)		0.2

Total operating expenses		6.1			6.5

Operating income		5.4			6.9
Other income (expense), net:
Interest income		0.2			0.1
Interest expense		(0.1	)		—
Other income (expense), net		0.3			—

Income before income taxes		5.8			7.0
Provision for income taxes		(1.0	)		(1.4	)

Net income		4.8	%		5.6	%

Net Sales. Net sales decreased to $617.3 million for the nine months ended June 30, 2012, from $640.1 million for the nine months ended June 30, 2011. The decrease of $22.8 million, or 3.6%, was primarily due to decreased net sales into our smartphones sector, partially offset by increased net sales into our tablets sector, as further quantified below.

Net sales into our smartphones sector decreased to $431.2 million for the nine months ended June 30, 2012, from $545.0 million for the nine months ended June 30, 2011. The decrease of $113.8 million, or 20.9%, was primarily due to lower sales volumes to one major customer. For the nine months ended June 30, 2012 and 2011, our smartphones sector accounted for approximately 70% and 85% of total net sales, respectively.

Net sales into our tablets sector increased to $165.5 million for the nine months ended June 30, 2012, from $64.4 million for the nine months ended June 30, 2011. The increase of $101.1 million, or 157.0%, was due to higher flex content per unit of approximately 231%, coupled with higher unit sales volume of approximately 112%. For the nine months ended June 30, 2012 and 2011, sales into our tablets sector accounted for approximately 27% and 10% of total net sales, respectively.

Cost of Sales and Gross Profit. Cost of sales as a percentage of net sales increased to 88.5% for the nine months ended June 30, 2012, versus 86.6% for the nine months ended June 30, 2011. The increase in cost of sales as a percentage of net sales of 1.9% primarily attributable to an increase of 130 basis points as a result of higher capacity related costs for plant and equipment additions, an increase of 110 basis points due to the appreciating RMB, an increase of 10 basis points due to maintaining extra headcount required for increased production during our fourth fiscal quarter of 2012 and an increase of 40 basis points due to increased labor rates in China. These increases were partially offset by a decrease of 100 basis points primarily from lower material costs. Gross profit decreased to $70.9 million for the nine months ended June 30, 2012, versus $85.5 million for the nine months ended June 30, 2011, or 17.1%. As a percentage of net sales, gross profit decreased to 11.5% for the nine months ended June 30, 2012 from 13.4% for the nine months ended June 30, 2011.

Research and Development. Research and development expense decreased by $1.8 million to $6.2 million for the nine months ended June 30, 2012, from $8.0 million for the nine months ended June 30, 2011. The decrease was primarily due to our decision to realign our global research and development activities in California and to move certain research and development activities to China, where labor costs are lower. As a percentage of net sales, research and development expense decreased to 1.0% versus 1.2% in the comparable period of the prior year.

Sales and Marketing. Sales and marketing expense decreased by $0.7 million to $18.6 million for the nine months ended June 30, 2012, from $19.3 million in the comparable period of the prior year, a decrease of 3.6%. The decrease was primarily attributable to decreased variable selling costs associated with our customer mix and volume, partially offset by costs associated with the establishment of a new customer support office in Korea. As a percentage of net sales, sales and marketing expense was 3.0% for the nine month period in both the current and prior year.

General and Administrative. General and administrative expense increased to $15.3 million, or 2.5% as a percentage of net sales, for the nine months ended June 30, 2012, as compared to $13.5 million or 2.1% as a percentage of net sales, for the nine months ended June 30, 2011. The increase of $1.8 million, or 13.3%, was primarily due to the prior year reversal of $1.0 million of performance-based equity awards that were deemed, during the third quarter of fiscal 2011, not to meet our defined Probability Threshold for the defined performance objectives, coupled with increased technical services fees related to our information technology migration to Singapore of $0.8 million.

Impairment and Restructuring. Impairment and restructuring was a gain of $2.5 million for the nine months ended June 30, 2012, which consisted primarily of a gain on sale of our previously impaired properties in Arizona and California.

Other Income (Expense), Net. Other income, net, increased to $1.9 million for the nine months ended June 30, 2012, from other income, net, of $0.3 million for the nine months ended June 30, 2011, an increase of $1.6 million. The increase in other income, net, was primarily the result of net gains from our forward contracts that were used in an effort to mitigate the risk of unfavorable movements of the U.S. dollar, coupled with foreign exchange gains due to the movement of the U.S. dollar versus the RMB and other foreign currencies.

Income Taxes. The effective tax rate for nine months ended June 30, 2012 and 2011 was 17.4% and 20.2%, respectively. The decrease in the effective tax rate was primarily a result of international operations that favorably affected our consolidated tax rate. We expect future tax rates to vary if current tax regulations change.

Guidance

Net Sales. For our fourth quarter of fiscal 2012, we expect net sales to range between $180 million and $210 million, based on the projected product mix and sales volume.

Cost of Sales and Gross Profit. For our fourth quarter of fiscal 2012, we expect gross margin to range between 9.0% and 11.0% based on the projected product mix and sales volume.

Operating Expenses. We expect operating expenses to be approximately $13 million during the fourth fiscal quarter of 2012.

Income Taxes. We expect the effective tax rate, on average, to be in the high teens on an annual basis.

Capital Expenditures. For fiscal 2012, we are anticipating approximately $85 million in capital expenditures reflecting normal equipment replacement, further investments in automation and capacity expansion in certain of our China facilities.

These projections are subject to substantial uncertainty. See Item 1A of Part I, “Risk Factors.”

Liquidity and Capital Resources

Our principal sources of liquidity have been cash provided by operations and our ability to borrow under our various credit facilities. Our principal uses of cash have been to finance working capital, facility expansions, stock repurchases and other capital expenditures. We anticipate these uses will continue to be our principal uses of cash in the future. Global financial and credit markets have been volatile in recent years, and future adverse conditions of these markets could negatively affect our ability to secure funds or raise capital at a reasonable cost, if needed.

It is our policy to carefully monitor the state of our business, cash requirements and capital structure. We believe that funds generated from our operations and available from our borrowing facilities will be sufficient to fund current business operations as well as anticipated growth over at least the next twelve months, without the need to repatriate earnings.

Changes in the principal components of operating cash flows during our nine months ended June 30, 2012 were as follows:

•

Our net accounts receivable balance decreased to $109.0 million as of June 30, 2012 from $150.5 million as of September 30, 2011, or 27.6%, primarily the result of reduced net sales when compared to the fourth fiscal quarter of the prior year, coupled with improved collection efforts during the second and third fiscal quarters of 2012. Days sales outstanding on a quarterly basis at September 30, 2011 decreased 13 days to 58 days at June 30, 2012. Our net inventory balance remained relatively unchanged at $87.3 million as of June 30, 2012 versus $87.2 million as of September 30, 2011. Days in inventory on a quarterly basis at June 30, 2012 increased 6 days to 51 days from 45 days at September 30, 2011. Our accounts payable balance decreased to $138.0 million as of June 30, 2012 from $162.8 million as of September 30, 2011, a decrease of 15.2%. The decrease in accounts payable was primarily the result of lower production volumes when compared to the fourth fiscal quarter of the prior year. Days payable on a quarterly basis decreased 4 days from 85 days at September 30, 2011 to 81 days at June 30, 2012.

•

Depreciation and amortization expense was $40.1 million for the nine months ended June 30, 2012, versus $33.7 million for the comparable period of the prior year, primarily due to an increased fixed asset base in manufacturing operations at our facilities in China.

Our principal investing and financing activities during the nine months ended June 30, 2012 were as follows:

•

Net cash used in investing activities was $43.2 million for the nine months ended June 30, 2012. Capital expenditures included cash payments of $54.6 million of capital equipment and other assets, which were primarily related to our manufacturing capacity expansion in China. Proceeds from sales of equipment and assets held for sale of $11.5 million was primarily due to cash proceeds of $7.5 million and $1.9 million from the sale of our corporate headquarters previously located in Anaheim, California and our former Aurora Optical facility in Arizona, respectively.

•

Net cash used in financing activities was approximately $9.7 million for the nine months ended June 30, 2012 and consisted primarily of repurchases of common stock of $8.8 million and $1.1 million of cash used to net share settle equity awards. Our loans payable and borrowings outstanding against our credit facilities were $0 at June 30, 2012 and September 30, 2011.

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Market Risk

Market risk represents the risk of loss arising from adverse changes in liquidity, market rates and foreign exchange rates. At June 30, 2012, no amounts were outstanding under our loan agreements with Bank of China Co., Ltd., JPMorgan Chase Bank, N.A., Agricultural Bank of China or China Construction Bank. The amounts outstanding under these or any new loan agreements at any time may fluctuate and we may from time to time be subject to refinancing risk. We do not believe that a change of 100 basis points in interest would have a material effect on our results of operations or financial condition based on our current borrowing level.

Foreign Currency Risk

We derive a substantial portion of our sales outside of the U.S. Approximately $596.5 million, or 97%, of total shipments to these foreign manufacturers during the nine months ended June 30, 2012 were made in U.S. dollars with the remaining balance of our net sales denominated in RMB. We currently have a significant portion of our expenses, more specifically cost of sales, denominated in RMB, whereby a significant appreciation or depreciation in the RMB could materially affect our reported expenses in U.S. dollars. The exchange rate for the RMB to the U.S. dollar has been an average of 6.32 RMB per U.S. dollar for the nine months ended June 30, 2012. To date, we attempt to manage our working capital in a manner to minimize foreign currency exposure and, from time to time, we engage in currency hedging activities through use of forward contracts. Such activities, however, may not be able to limit the risks of currency fluctuations and we continue to be vulnerable to appreciation or depreciation of foreign currencies against the U.S. dollar. At June 30, 2012, we had outstanding “buy” non-deliverable forward contracts with notional amounts aggregating to approximately 442.0 million RMB, with offsetting “sell” non-deliverable forward contracts with identical notional foreign currency amounts. The notional contract values in U.S. dollars, when netted, approximated their fair values of $0.6 million, which were recorded as current liabilities in our condensed consolidated balance sheets at June 30, 2012. In July 2012, we closed all of our outstanding foreign currency forward contracts and the resulting realized losses were not material to our consolidated financial position, results of operations or cash flows.

Liquidity Risk

We believe our anticipated cash flows from operations are sufficient to fund our operations, including capital expenditure requirements, through at least the next twelve months. If there was a need for additional cash to fund our operations, we would access our global credit lines.

Item 4.

Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Based on an evaluation carried out as of the end of the period covered by this Quarterly Report, under the supervision and with the participation of our management, including our Chief Executive Officer, or CEO, and Chief Financial Officer, or CFO, our CEO and CFO have concluded that, as of the end of such period, our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) are effective.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended June 30, 2012 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1A.

Risk Factors

FACTORS THAT MAY AFFECT OUR OPERATING RESULTS

Our business, financial condition, operating results and cash flows can be impacted by a number of factors, including, but not limited to, those set forth below, any of which could cause our results to be adversely impacted and could result in a decline in the value or loss of an investment in our common stock. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also affect our business.

Risks Related to Our Business

We are, and have historically been, heavily dependent upon the smartphone, tablet and consumer electronics industries, and any downturn in these sectors may reduce our net sales.

For the nine months ended June 30, 2012, 2011, and 2010, approximately 70%, 85% and 63%, respectively, of our net sales were derived from sales to companies that provide products or services into the smartphone sector; approximately 27%, 10% and 1%, respectively, of our net sales derived from sales were to companies that provide products or services into the tablet sector; and approximately 1%, 1% and 30%, respectively, of our net sales were derived from sales to companies that provide products or services into the consumer electronics sector (excluding tablets). In general, these sectors are subject to economic cycles, changes in customer order patterns and periods of slowdown. Intense competition, relatively short product life cycles and significant fluctuations in product demand characterize these sectors, and these sectors are also generally subject to rapid technological change and product obsolescence. Fluctuations in demand for our products as a result of periods of slowdown in these markets (including the current economic downturn) or discontinuation of products or modifications developed in connection with next generation products could reduce our net sales.

We depend on a very limited number of key customers, and a limited number of programs from those customers, for significant portions of our net sales and if we lose business with any of these customers, our net sales could decline substantially.

For the past several years, a substantial portion of our net sales has been derived from products that are incorporated into products manufactured by or on behalf of a very limited number of key customers and their subcontractors, including Apple Inc. and Research in Motion Limited. In addition, a substantial portion of our sales to each customer is often tied to only one program or a small number of programs. In the fiscal years ended September 30, 2011, 2010 and 2009 approximately 99%, 98% and 96% respectively, of our net sales were to only four customers in the aggregate. Approximately 44%, 43% and 43% of our net sales in each of the fiscal years ended September 30, 2011, 2010 and 2009, respectively, were to one customer (not the same customer in each of the three years) and approximately 86%, 85% and 80% of our net sales were to two of our customers in each of the three years, respectively. In addition, two customers constituted approximately 89% of our net sales in the nine months ended June 30, 2012 and 86% of our net sales in the fiscal year ended September 30, 2011. The loss of a major customer or a significant reduction in sales to a major customer, including due to the lack of commercial success, a product failure of a customer’s program upon which we were relying or limited flex content in a program on which we were relying, would seriously harm our business. Although we are continuing our efforts to reduce dependence on a limited number of customers, net sales attributable to a limited number of customers and their subcontractors are expected to continue to represent a substantial portion of our business for the foreseeable future.

We will have difficulty selling our products if customers do not design flexible printed circuits and assemblies into their product offerings or our customers’ product offerings are not commercially successful.

We sell our flexible printed circuits and assemblies directly or indirectly to OEMs, who include our flexible circuits and component assemblies in their product offerings. We must continue to design our products into our customers’ product offerings in order to remain competitive. However, our OEM customers may decide not to design flexible printed circuits into their product offerings (or may reduce the amount of flex in a product offering), or may procure flexible printed circuits from one of our competitors. If an OEM selects one of our competitors to provide a product instead of us or switches to alternative technologies developed or manufactured by one or more of our competitors, it becomes significantly more difficult for us to sell our products to that OEM because changing component providers after the initial production runs begin involves significant cost, time, effort and risk for the OEM. Even if an OEM designs one of our products into its product offering, the product may not be commercially successful or may experience product failures, we may not receive any orders from that manufacturer, the OEM may qualify additional vendors for the product or we could be undercut by a competitor’s pricing. Additionally, if an OEM selects one or more of our competitors, they may rely upon such competitors for the life of specific offering and subsequent generations of similar offerings. Any of these events would result in fewer sales and reduced profits for us, and could adversely affect the accuracy of any forward-looking guidance we may give.

Changes in the products our customers buy from us can significantly affect our capacity, net sales and profitability.

We sell our flexible printed circuits and flex assemblies to a very limited number of customers, who typically purchase these products from us for numerous programs at any particular time. Customer programs differ in design and material content and our products’ prices and profitability are dependent on a wide variety of factors, including without limitation, expected volumes, assumed yields, material costs, actual yields and the amount of third-party components within the program. If we lose sales for a program that has higher material content, we may have to replace it with sales for a program that has lower material content, thus requiring additional capacity to generate the same amount of net sales. We may not have such capacity available (or it may not be economically advantageous to acquire such capacity), which could then result in lower net sales. Furthermore, if we were unable to increase our capacity to match our customers’ requests, we may lose existing business from such customer, in addition to losing future sales. In addition, if we were to utilize our capacity to increase sales of bare flex (flex without assembly), this could also generate lower net sales at potentially different (higher or lower) profitability levels.

Our customers have in the past and likely will continue to cancel their orders, change production quantities, delay production or qualify additional vendors, any of which could reduce our net sales and/or increase our expenses.

Substantially all of our sales are made on a purchase order basis, and we are not always able to predict with certainty the number of orders we will receive or the timing or magnitude of the orders. Our customers may cancel, change or delay product purchase orders with little or no advance notice to us, and we believe customers are doing so with increased frequency. These changes may be for a variety of reasons, including changes in their prospects, the success of their products in the market, reliance on a new vendor and the overall economic forecast. In general, we do not have long-term contractual relationships with our customers that require them to order minimum quantities of our products, and our customers may decide to use another manufacturer or discontinue ordering from us in their discretion. In addition, many of our products are shipped to hubs, and we often have limited visibility and no control as to when our customers pull the inventory from the hub. We have recently seen an increase in the use of hubs by our customers, and our hub balances have been growing. We also have increased risks with respect to inventory control and potential inventory loss, and must rely on third parties for recordkeeping when our products are shipped to a hub. As a result of these factors, we are not always able to forecast accurately the net sales that we will make in a given period. Changes in orders can also result in layoffs and associated severance costs, which in any given financial period could materially adversely affect our financial results.

In addition, we are increasingly being required to purchase materials, components and equipment before a customer becomes contractually committed to an order so that we may timely deliver the expected order to the customer. We may increase our production capacity, working capital and overhead in expectation of orders that may never be placed, or, if placed, may be delayed, reduced or canceled. As a result, we may be unable to recover costs that we incur in anticipation of orders that are never placed, such as costs associated with purchased raw materials, components or equipment. Delayed, reduced or canceled orders could also result in write-offs of obsolete inventory and the underutilization of our manufacturing capacity if we decline other potential orders because we expect to use our capacity to produce orders that are later delayed, reduced or canceled.

Our industry is extremely competitive, and if we are unable to respond to competitive pressures we may lose sales and our market share could decline.

We compete primarily with large flexible printed circuit board manufacturers located throughout Asia, including Taiwan, China, Korea, Japan and Singapore. We believe that the number of companies producing flexible printed circuit boards has increased materially in recent years and may continue to increase. In addition, certain former competitors are in the process of re-instituting their flexible printed circuit production which will increase competition in our market. Certain EMS providers have developed or acquired their own flexible printed circuit manufacturing capabilities or have extensive experience in electronics assembly, and in the future may cease ordering products from us or even compete with us on OEM programs. In addition, the number of customers in the market has been decreasing through consolidation and otherwise and the smartphone and tablet markets continue to become more competitive in terms of pricing. Furthermore, many companies in our target customer base may move the design and manufacturing of their products to original design manufacturers in Asia. These factors, among others, make our industry extremely competitive. If we are not successful in addressing these competitive aspects of our business, including maintaining or establishing close relationships with customers in markets in which we compete, we may not be able to grow or maintain our market share or net sales.

Our products and their terms of sale are subject to various pressures from our customers, competitors and market forces, any of which could harm our gross profits.

Our selling prices are affected by changes in overall demand for our products, changes in the specific products our customers buy, pricing of competitors’ products, our products’ life cycles and general economic conditions. In addition, from time to time we may elect to reduce the price of certain products we produce in order to gain additional orders on a particular program. A typical life cycle for one of our products has our selling price decrease as the program matures. To offset price decreases during a product’s life cycle, we rely primarily on higher sales volume and improving our manufacturing yield and productivity to reduce a product’s cost. If we cannot reduce our manufacturing costs as prices decline during a product’s life cycle, or if we are required to pay damages to a customer due to a breach of contract or other claim, including due to quality or delivery issues, our cost of sales may increase, which would harm our profitability and could affect our working capital levels.

In addition, our key customers and their subcontractors are able to exert significant pricing pressure on us and often require us to renegotiate the terms of our arrangements with them, including increasing or removing liability and indemnification thresholds and increasing the length of payment terms, among other terms. Increases in our labor costs, especially in China where we may have little or no advance notice of such increases, changes in contract terms and regular price reductions have historically resulted in lower gross margins for us and may continue to do so in future periods. Furthermore, our competitive position is dependent upon the yields and quality we are able to achieve on our products and our level of automation as compared to our competitors. These trends and factors may harm our business and make it more difficult to compete effectively.

Significant product failures or safety concerns about our or our customers’ products could harm our reputation and our business.

Continued improvement in manufacturing capabilities, quality control, material costs and successful product testing capabilities are critical to our growth. Our efforts to monitor, develop, modify and implement stringent testing and manufacturing processes for our products may not be sufficient. If any flaw in the design, production, assembly or testing of our or our customers’ products were to occur or if our, or our customers’, products were believed to be unsafe, it could result in significant delays in product shipments by, or cancellation of orders or, substantial penalties from, our customers and their customers, substantial refund, recall, repair or replacement costs, an increased return rate for our products, potential damage to our reputation, or potential lawsuits which could prove to be time consuming and costly. Recent pronouncements by the World Health Organization listing mobile phone use as possibly carcinogenic may affect our customers’ sales and in turn affect our sales to our customers. Because we normally provide a warranty for our products, a significant claim for damages related to a breach of warranty could materially affect our financial results.

Problems with manufacturing yields and/or our inability to ramp up production could impair our ability to meet customer demand for our products.

We could experience low manufacturing yields due to, among other things, design errors, manufacturing failures in new or existing products, the inexperience of new employees, component defects, or the learning curve experienced during the initial and ramp up stages of new product introduction. If we cannot achieve expected yields in the manufacture of our products, this could result in higher operating costs, which could result in higher per unit costs, reduced product availability and may be subject to substantial penalties by our customers. Reduced yields or an inability to successfully ramp up products can significantly harm our gross margins, resulting in lower profitability or even losses. In addition, if we were unable to ramp up our production in order to meet customer demand, whether due to yield or other issues, it would impair our ability to meet customer demand for our products, and our net sales and profitability would be negatively affected.

We must develop and adopt new technology and manufacture new products and product features in order to remain competitive, and we may not be able to do so successfully.

Our long-term strategy relies in part on timely adopting, developing and manufacturing technological advances and new products and product features to meet our customers’ needs, including advanced technologies such as high density interconnect. However, any new technology and products adopted or developed by us may not be selected by existing or potential customers. Our customers could decide to switch to alternative technologies or materials, adopt new or competing industry standards with which our products are incompatible or fail to adopt standards with which our products are compatible. If we choose to focus on new technology or a standard that is ultimately not accepted by the industry and/or does not become the industry standard, we may be unable to sell those products. If we are unable to obtain customer qualifications for new products or product features, cannot qualify our products for high-volume production quantities or do not execute our operational and strategic plans for new products or advanced technologies in a timely manner, our net sales may decrease. In addition, we may incur higher manufacturing costs in connection with new technology, materials, products or product features, as we may be required to replace, modify, design, build and install equipment, all of which would require additional capital expenditures.

We must continue to be able to procure raw materials and components on commercially reasonable terms to manufacture our products profitably.

Generally we do not maintain a large surplus stock of raw materials or components for our products because the specific assemblies are uniquely applicable to the products we produce for our customers; therefore, we rely on third-party suppliers to provide these raw materials and components in a timely fashion and on commercially reasonable terms. In addition, we are often required by our customers to seek components from a limited number of suppliers that have been pre-qualified by the customer. We, or our customers, may not be able to obtain the components or flex materials that are required for our customers’ programs, which in turn could forestall, delay, or halt our production or our customer’s programs. We expect that delays may occur in future periods for a variety of reasons, including but not limited to, natural disasters. Furthermore, the supply of certain precious metals required for our products is limited, and our suppliers could lose their export or import licenses on materials we require, any of which could limit or halt our ability to manufacture our products. We may not be successful in managing any shortage of raw materials or components that we may experience in the future, which could adversely affect our relationships with our customers and result in a decrease in our net sales. Component shortages could also increase our cost of goods sold because we may be required to pay higher prices for components in short supply. In addition, suppliers could go out of business, discontinue the supply of key materials, or consider us too small of a customer to sell to directly, and could require us to buy through distributors, increasing the cost of such components to us.

Our manufacturing and shipping costs may also be impacted by fluctuations in the cost of oil and gas. Any fluctuations in the supply or prices of these commodities could have an adverse effect on our profit margins and financial condition.

If we are unable to attract or retain personnel necessary to operate our business, our ability to develop and market our products successfully could be harmed.

We believe that our success is highly dependent on our current executive officers and management team. We do not have an employment contract with Reza Meshgin, our president and chief executive officer, or any of our other key personnel, and their knowledge of our business and industry would be extremely difficult to replace. The loss of any key employee or the inability to attract or retain qualified personnel, including engineers, sales and marketing personnel, management or finance personnel could delay the development and introduction of our products, harm our reputation or otherwise damage our business.

Furthermore, we have experienced very high employee turnover in our facilities in China, and are experiencing increased difficulty in recruiting employees for these facilities. In addition, we are noting the signs of wage inflation, labor unrest and increased unionization in China and expect these to be ongoing trends for the foreseeable future, which could cause employee issues, including work stoppages, excessive wage increases and increased activity of labor unions at our China facilities. A large number of our employees work in our facilities in China, and our costs associated with hiring and retaining these employees have increased over the past several years. The high turnover rate, increasing wages, our difficulty in recruiting and retaining qualified employees and the other labor trends we are noting in China have resulted in an increase in our employee expenses and a continuation of any of these trends could result in even higher costs or production disruptions or delays or the inability to ramp up production to meet increased customer orders, resulting in order cancellation, imposition of customer penalties if we were unable to timely deliver product or a negative impact on net sales and profits for us.

Our manufacturing capacity may be interrupted, limited or delayed if we cannot maintain sufficient sources of electricity in China.

The flexible printed circuit fabrication process requires a stable source of electricity. As our production capabilities increase in China and our business grows, our requirements for a stable source of electricity in China will grow substantially. We have periodically experienced and expect to continue to experience insufficient supplies of electrical power from time to time, especially during the warmer summer months in China. In addition, China has recently instituted energy conservation regulations which ration the amount of electricity that may be used by enterprises such as ours. Although we have purchased several generators, such generators do not produce sufficient electricity supply to run our manufacturing facilities and they are costly to operate. Power interruptions, electricity shortages, the cost of diesel fuel to run our back-up generators or government intervention, particularly in the form of rationing, are factors that could restrict our access to electricity at our Chinese manufacturing facilities, and affect our ability to manufacture and related costs. Any such shortages could result in delays in our shipments to our customers and, potentially, the loss of customer orders and penalties from such customers for the delay.

Our global operations expose us to additional risk and uncertainties.

We have operations in a number of countries, including the United States, China, Korea, Taiwan, the United Kingdom and Singapore. Our global operations may be subject to risks that may limit our ability to operate our business. We manufacture the bulk of our products in China and sell our products globally, which exposes us to a number of risks that can arise from international trade transactions, local business practices and cultural considerations, including:

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political unrest, terrorism and economic or financial instability;

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restrictions on our ability to repatriate earnings;

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unexpected changes in regulatory requirements and uncertainty related to developing legal and regulatory systems related to economic and business activities, real property ownership and application of contract rights;

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nationalization programs that may be implemented by foreign governments;

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import-export regulations;

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difficulties in enforcing agreements and collecting receivables;

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difficulties in ensuring compliance with the laws and regulations of multiple jurisdictions, including complying with local employment and overtime regulations, which regulations could affect our ability to quickly ramp production;

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difficulties in ensuring that health, safety, environmental and other working conditions are properly implemented and/or maintained by the local office;

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changes in labor practices, including wage inflation, frequent and extremely high increases in the minimum wage, labor unrest and unionization policies;

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limited intellectual property protection;

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longer payment cycles by international customers;

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currency exchange fluctuations;

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inadequate local infrastructure and disruptions of service from utilities or telecommunications providers, including electricity shortages;

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transportation delays and difficulties in managing international distribution channels;

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difficulties in staffing foreign subsidiaries and in managing an expatriate workforce;

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potentially adverse tax consequences;

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differing employment practices and labor issues;

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the occurrence of natural disasters, such as earthquakes, floods or other acts of force majeure; and

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public health emergencies such as SARS, avian flu and Swine flu.

We also face risks associated with currency exchange and convertibility, inflation and repatriation of earnings as a result of our foreign operations. In some countries, economic, monetary and regulatory factors could affect our ability to convert funds to U.S. dollars or move funds from accounts in these countries. We are also vulnerable to appreciation or depreciation of foreign currencies against the U.S. dollar. Although we have significant operations in Asia, a substantial portion of transactions are denominated in U.S. dollars, including approximately 96% of the total shipments made to foreign manufacturers during the fiscal year 2011. The balance of our net sales is denominated in RMB. As a result, as appreciation against the U.S. dollar increases, it will result in an increase in the cost of our business expenses in China. Further, downward fluctuations in the value of foreign currencies relative to the U.S. dollar may make our products less price competitive than local solutions. From time to time, we may engage in currency hedging activities, but such activities may not be able to limit the impact or risks of currency fluctuations.

In addition, our activities in China are subject to administrative review and approval by various national and local agencies of China’s government. Given the changes occurring in China’s legal and regulatory structure, we may not be able to secure required governmental approval for our activities or facilities or the government may not apply real property or contract rights in the same manner as one may expect in other jurisdictions.

During last year, the earthquake, tsunami and subsequent problems affecting nuclear power plants in Japan dramatically impacted Japan’s manufacturing capacity. Japanese industry supplies a significant portion of certain items essential to the flexible circuit board manufacturing process and may be adversely affected by these issues. As a result, our ability to produce and deliver products to our customers could be adversely affected. In addition, shortages of key items may result in price increases, which our suppliers may seek to pass on to us. This could also affect our profitability.

From time to time, we increase our manufacturing capacity, and we may have difficulty managing these changes.

From time to time, we engage in a number of manufacturing expansion projects. In addition, we have been engaged in an international restructuring effort to first transition and then expand various business functions to our offices in Singapore, in order to better align these activities with our international operations and to transition certain production and process research and development to China in continuation of our cost reduction efforts. These efforts require significant investment by us, and have in the past and could continue to result in increased expenses and inefficiencies and reduced gross margins.

Our management team may have difficulty managing our manufacturing expansion and transition projects or otherwise managing any growth in our business that we may experience. Risks associated with managing expansion and growth may include those related to:

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managing multiple, concurrent major manufacturing expansion projects;

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hiring and retaining employees, particularly in China;

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accurately predicting any increases or decreases in demand for our products and managing our manufacturing capacity appropriately;

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under-utilized capacity, particularly during the start-up phase of a new manufacturing facility and the effects on our gross margin of under-utilization;

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managing increased employment costs and scrap rates often associated with periods of growth;

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implementing, integrating and improving operational and financial systems, procedures and controls, including our computer systems;

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construction delays, equipment delays or shortages, labor shortages and disputes and production start-up problems;

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cost overruns and charges related to our expansion activities; and

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managing expanding operations in multiple locations and multiple time zones.

Our management team may not be effective in expanding our manufacturing facilities and operations, and our systems, procedures and controls may not be adequate to support such expansion. Any inability to manage our growth may harm our profitability and growth.

If we encounter problems during the expansion and continuing expanded use of our operations management and information systems, we could experience a disruption of our operations and unanticipated increases in our costs.

We are in the process of expanding our information systems for certain of our China facilities. Any problems encountered in the expansion of these systems and continued use and reliance on such systems could result in material adverse consequences, including disruption of operations, loss of information and unanticipated increases in costs.

WBL Corporation Limited beneficially owns approximately 62% of our outstanding common stock and is able to exert influence over us and our major corporate decisions.

WBL Corporation Limited, together with its affiliates and subsidiaries (“WBL”), beneficially owns approximately 62% of our outstanding common stock, and we expect to be a principal subsidiary of WBL for the foreseeable future. As a result of this ownership interest and the resulting influence over the composition of our board of directors, WBL has influence over our management, operations and potential significant corporate actions. WBL’s board or executive management composition

could change, and such change could affect the way WBL influences our corporate actions. For example, so long as WBL continues to control more than a majority of our outstanding common stock, it will have the ability to control who is elected to our board of directors each year. In addition, for so long as WBL effectively owns at least one-third of our voting stock, it has the ability, through a stockholders’ agreement with us, to approve the appointment of any new chief executive officer or the issuance of securities that would reduce WBL’s effective ownership of us to a level that is below a majority of our outstanding shares of common stock, as determined on a fully diluted basis. As a result, WBL could preclude us from engaging in an acquisition or other strategic opportunity that we may want to pursue if such acquisition or opportunity required the issuance of our common stock. This concentration of ownership may also discourage, delay or prevent a change of control of our company, which could deprive our other stockholders of an opportunity to receive a premium for their stock as part of a sale of our company, could harm the market price of our common stock and could impede the growth of our company. WBL could also sell a controlling interest in us, or a portion of their shares, to a third party, including a participant in our industry, which could adversely affect our operations or our stock price.

WBL and its designees on our board of directors may have interests that conflict with, or are different from, the interests of our other stockholders. These conflicts of interest could include potential competitive business activities, corporate opportunities, indemnity arrangements, sales or distributions by WBL of our common stock and the exercise by WBL of its ability to influence our management and affairs. In general, our certificate of incorporation does not contain any provision that is designed to facilitate resolution of actual or potential conflicts of interest. If any conflict of interest is not resolved in a manner favorable to our stockholders, it could adversely affect our operations and our stockholders’ interests may be substantially harmed.

WBL is currently unable to vote its shares on specified matters that require stockholder approval without obtaining its own stockholders’ and regulatory approval and it is possible that WBL’s stockholders or the relevant regulators may not approve the proposed corporate action.

WBL’s ordinary shares are listed on the Singapore Securities Exchange Trading Limited (the “Singapore Exchange”). Under the rules of the Singapore Exchange, to the extent that we constitute a principal subsidiary of WBL as defined by the rules of the Singapore Exchange at any time that we submit a matter for the approval of our stockholders, WBL may be required to obtain the approval of its own stockholders for such action before it can vote its shares with respect to our proposal or dispose of our shares of common stock. Examples of corporate actions we may seek to take that may require WBL to obtain its stockholders’ approval include an amendment of our certificate of incorporation, a sale of all or substantially all of our assets, a merger or reorganization transaction, and certain issuances of our capital stock. To obtain stockholder approval, WBL must prepare a circular describing the proposal, obtain approval from the Singapore Exchange and send the circular to its stockholders, which may take several weeks or longer. In addition, WBL is required under its corporate rules to give its stockholders advance notice of the meeting. Consequently, if we need to obtain the approval of WBL at a time in which we qualify as a principal subsidiary (including this year), the process of seeking WBL’s stockholder approval may delay our proposed action and it is possible that WBL’s stockholders may not approve our proposed corporate action. It is also possible that we might not be able to establish a quorum at our stockholder meeting if WBL was unable to vote at the meeting as a result of the Singapore Exchange rules. The rules of the Singapore Exchange that govern WBL are subject to revision from time to time, and policy considerations may affect rule interpretation and application. It is possible that any change to or interpretation of existing or future rules may be more restrictive and complex than the existing rules and interpretations.

Our business requires significant investments in capital equipment, facilities and technological improvements, and we may not be able to obtain sufficient funds to make such capital expenditures.

To remain competitive we must continue to make significant investments in capital equipment, facilities and technological improvements. We expect that substantial capital will be required to expand our manufacturing capacity and fund working capital requirements for our anticipated growth. In addition, we expect that new technology requirements may increase the capital intensity of our business. We may need to raise additional funds through further debt or equity financings in order to fund our anticipated growth and capital expenditures, and we may not be able to raise additional capital on reasonable terms, or at all, particularly given the current uncertainty in global credit markets. If we are unable to obtain sufficient capital in the future, we may have to curtail our capital expenditures. Any curtailment of our capital expenditures could result in a reduction in net sales, reduced quality of our products, increased manufacturing costs for our products, harm to our reputation, reduced manufacturing efficiencies or other harm to our business.

In addition, WBL’s approval is required for the issuance of securities that would reduce its effective ownership of us to below a majority of the outstanding shares of our common stock as determined on a fully diluted basis. If WBL’s approval is required for a proposed financing, it is possible that it may not approve the financing and we may not be able to complete the transaction, which could make it more difficult to obtain sufficient funds to operate and expand our business.

The uncertainty regarding the status of the global credit market and overall global economic stagnation may adversely affect our earnings, liquidity and financial condition.

In recent years, global financial and credit markets have been, and continue to be, unstable and unpredictable. In addition, worldwide economic conditions have been weak and have had an effect on consumer spending. The instability of the markets and weakness of the economy could affect the demand for our customers’ products, the amount, timing and stability of their orders to us, the financial strength of our customers and suppliers, their ability or willingness to do business with us, our willingness to do business with them, interest rates, and/or our suppliers’ and customers’ ability to fulfill their obligations to us. These factors could adversely affect our operations, earnings and financial condition.

Tax positions we have taken may be challenged and we are subject to the risk of changing income tax rates and laws.

From time to time, we may be subject to various types of tax audits, during which tax positions we have taken may be challenged and overturned. If this were to occur, our tax rates could significantly increase and we may be required to pay significant back taxes, interests and/or penalties. For example, On August 1, 2012, we received a Revenue Agent Report (the “Report”) from the Internal Revenue Service (“IRS”) relating to its examination of our income tax returns for fiscal years 2007 and 2008. The IRS has proposed adjustments primarily related to our valuation of intellectual property and intercompany cost sharing arrangement. The proposed adjustments would result in approximately $120 million of additional taxable income for those two years. Management believes there are numerous errors in the Report, does not agree with the proposed adjustments and intends to vigorously contest the proposed adjustments. After reviewing the Report, management continues to believe that an adequate provision has been made for all of our uncertain tax positions. However, the outcome of tax audits cannot be predicted with certainty. If any issues addressed in our tax audits are resolved in a manner not consistent with management’s expectations, we could be required to adjust our provision for income tax in the period such resolution occurs. Any significant proposed adjustments could have a material adverse effect on our results of operations, cash flows and financial position if not resolved favorably.

In addition, a change in tax laws, treaties or regulations, or their interpretation, of any country in which we operate could result in a higher tax rate. For example, there has been increased scrutiny by the U.S. government on tax positions taken and in February 2011, the United States Department of the Treasury issued a high-level outline of proposed modifications to international tax laws for fiscal year 2012. If any of these, or similar, proposals are passed, our statements of financial position and results of operations could be negatively impacted.

Also, a number of countries in which we are located allow for tax holidays or provide other tax incentives to attract and retain business. For example, we currently enjoy tax incentives for our facility in Singapore. However, any tax holiday we have could be challenged, modified or even eliminated by taxing authorities or changes in law. In addition, the tax laws and rates in certain jurisdictions in which we operate (China, for example) can change with little or no notice, and any such change may even apply retroactively. Any of such changes could adversely affect our effective tax rate.

If we fail to secure or protect our intellectual property rights, competitors may be able to use our technologies, which could weaken our competitive position and harm our business.

We rely primarily on trade secrets and confidentiality procedures relating to our manufacturing processes to protect our proprietary rights. Despite our efforts, these measures can only provide limited protection. Unauthorized third parties may try to copy or reverse engineer portions of our products or otherwise obtain and use our intellectual property. If we fail to protect our proprietary rights adequately, our competitors could offer similar products using processes or technologies developed by us, potentially harming our competitive position. In addition, other parties may independently develop similar or competing technologies.

We also rely on patent protection for some of our intellectual property. Our patents may be expensive to obtain and there is no guarantee that either our current or future patents will provide us with any competitive advantages. A third party may challenge the validity of our patents, or circumvent our patents by developing competing products based on technology that does not infringe our patents. Further, patent protection is not available at all in certain countries and some countries that do allow registration of patents do not provide meaningful redress for patent violations. As a result, protecting intellectual property in those countries is difficult, and competitors could sell products in those countries that have functions and features that would otherwise infringe on our intellectual property. If we fail to protect our intellectual property rights adequately, our competitors may gain access to our technology and our business may be harmed.

We may be sued by third parties for alleged infringement of their proprietary rights.

From time to time, we have received, and expect to continue to receive, notices of claims of infringement, misappropriation or misuse of other parties’ proprietary rights. We could also be subject to claims arising from the allocation of intellectual property rights among us and our customers. Any claims brought against us or our customers, with or without merit, could be time-consuming and expensive to litigate or settle, and could divert management attention away from our business plan. Adverse determinations in litigation could subject us to significant liability and could result in the loss of our proprietary rights. A successful lawsuit against us could also force us to cease selling or require us to redesign any products

or marks that incorporate the infringed intellectual property. In addition, we could be required to seek a license from the holder of the intellectual property to use the infringed technology, and it is possible that we may not be able to obtain a license on reasonable terms, or at all. If we fail to develop a non-infringing technology on a timely basis or to license the infringed technology on acceptable terms, our business, financial condition and results of operations could be harmed.

Complying with environmental laws and regulations or the environmental policies of our customers may increase our costs and reduce our profitability.

We are subject to a variety of environmental laws and regulations relating to the storage, discharge, handling, emission, generation, manufacture, use and disposal of chemicals, solid and hazardous waste and other toxic and hazardous materials used in the manufacture of flexible printed circuits and component assemblies in our facilities in the United States, Europe and Asia. In addition, certain of our customers have, or may in the future have, environmental policies with which we are required to comply that are more stringent than applicable laws and regulations, and certain provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act may soon require us to report on “conflict metals” used in our products and the due diligence plan we put in place to track whether such metals originate from the Democratic Republic of Congo and/or other conflict areas of the world. A significant portion of our manufacturing operations are located in China, where we are subject to constantly evolving environmental regulation. The costs of complying with any change in such regulations or customer policies and the costs of remedying potential violations or resolving enforcement actions that might be initiated by governmental entities could be substantial.

In the event of a violation, we may be required to halt one or more segments of our operations until such violation is cured or we may be fined by a customer. The costs of remedying violations or resolving enforcement actions that might be initiated by governmental authorities could be substantial. Any remediation of environmental contamination would involve substantial expense that could harm our results of operations. In addition, we cannot predict the nature, scope or effect of future regulatory or customer requirements to which our operations may be subject or the manner in which existing or future laws or customer policies will be administered or interpreted. Future regulations may be applied to materials, products or activities that have not been subject to regulation previously. The costs of complying with new or more stringent regulations or policies could be significant.

Potential future acquisitions or strategic partnerships could be difficult to integrate, divert the attention of key management personnel, disrupt our business, dilute stockholder value and adversely affect our financial results.

As part of our business strategy, we intend to continue to consider acquisitions of, or partnerships with, companies, technologies and products that we feel could enhance our capabilities, complement our current products or expand the breadth of our markets or customer base. We have limited experience in acquiring or partnering with other businesses and technologies. Potential and completed acquisitions and strategic partnerships involve numerous risks, including:

•

difficulties in integrating operations, technologies, accounting and personnel;

•

problems maintaining uniform standards, procedures, controls and policies;

•

difficulties in supporting and transitioning customers of our acquired companies;

•

diversion of financial and management resources from existing operations;

•

potential costs incurred in executing on such a transaction, including any necessary debt or equity financing;

•

risks associated with entering new markets in which we have no or limited prior experience;

•

potential loss of key employees; and

•

inability to generate sufficient revenues to offset acquisition or start-up costs.

Acquisitions also frequently result in the recording of goodwill and other intangible assets which are subject to potential impairments in the future that could harm our financial results. In addition, if we finance acquisitions by issuing convertible debt or equity securities, our existing stockholders may be diluted, which could affect the market price of our stock. As a result, if we fail to properly evaluate acquisitions or partnerships, we may not achieve the anticipated benefits of any such acquisitions or partnerships, and we may incur costs in excess of what we anticipate.

We face potential risks associated with loss, theft or damage of our property or property of our customers.

Some of our customers have entrusted us with proprietary equipment or intellectual property to be used in the design, manufacture and testing of the products we make for them. In some instances, we face potentially millions of dollars in financial exposure to those customers if such equipment or intellectual property is lost, damaged or stolen. Although we take precautions against such loss, theft or damage and we may insure against a portion of these risks, such insurance is expensive, may not be applicable to any loss we may experience and, even if applicable, may not be sufficient to cover any such loss. Further, deductibles for such insurance may be substantial and may adversely affect our operations if we were to experience a loss, even if insured.

Litigation may distract us from operating our business.

Litigation that may be brought by or against us could cause us to incur significant expenditures and distract our management from the operations and conduct of our business. Furthermore, there can be no assurance that we would prevail in such litigation or resolve such litigation on terms favorable to us, which may adversely affect our operations.

If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results.

Effective internal controls are necessary for us to provide reliable financial reports. This effort is made more challenging by our significant overseas operations. If we cannot provide reliable financial reports, our operating results could be misstated, current and potential stockholders could lose confidence in our financial reporting and the trading price of our stock could be negatively affected. There can be no assurance that our internal controls over financial processes and reporting will be effective in the future.

Risks Related to Our Common Stock

The trading price of our common stock is volatile.

The trading prices of the securities of technology companies, including the trading price of our common stock, have historically been highly volatile. During the 12 month period from July 1, 2011 through June 30, 2012, our common stock price closed between $17.35 and $28.53 per share. Factors that could affect the trading price of our common stock include, but are not limited to:

•

fluctuations in our financial results;

•

the limited size of our public float;

•

announcements of technological innovations or events affecting companies in our industry;

•

changes in the estimates of our financial results;

•

changes in the recommendations of any securities analysts that elect to follow our common stock; and

•

market conditions in our industry, the industries of our customers and the economy as a whole.

In addition, although we have approximately 23.8 million shares of common stock outstanding as of June 30, 2012, approximately 14.8 million of those shares are held by WBL. As a result, there is a limited public float in our common stock. If any of our significant stockholders were to decide to sell a substantial portion of its shares the trading price of our common stock could decline.

Delaware law and our corporate charter and bylaws contain anti-takeover provisions that could delay or discourage takeover attempts that stockholders may consider favorable.

Provisions in our certificate of incorporation and bylaws may have the effect of delaying or preventing a change of control or changes in our management including, among other things, provisions providing for a classified board of directors, authorizing the board of directors to issue preferred stock and the elimination of stockholder voting by written consent. In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which may discourage, delay or prevent certain business combinations with stockholders owning 15% or more of our outstanding voting stock. These provisions in our charter, bylaws and under Delaware law could discourage delay or prevent potential takeover attempts that stockholders may consider favorable.

Because we do not intend to pay dividends, our stockholders will benefit from an investment in our common stock only if our stock price appreciates in value.

We have never declared or paid any cash dividends on our common stock. We currently intend to retain our future earnings, if any, to finance the expansion of our business and do not expect to pay any cash dividends in the foreseeable future. As a result, the success of an investment in our common stock will depend entirely upon any future appreciation in its value. There is no guarantee that our common stock will appreciate in value or even maintain the price at which it was purchased.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

The following table presents stock repurchases by month during the three months ended June 30, 2012:


Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs⁽¹⁾
4/01/2012 – 6/30/2012		—	$	—		—		611,600

(1)

Our Board of Directors has provided a committee with the discretion to execute a share repurchase program for up to 1,100,000 shares in the aggregate of our common stock on the open market. This amount represented approximately five percent of our common stock outstanding as of September 30, 2011, as reported in our Annual Report on Form 10-K filed with the SEC on November 14, 2011. In September 2011, we entered into a 10b5-1 Repurchase Plan Agreement, with a term of nine months, providing for the repurchase of up to 500,000 of such shares. As of June 30, 2012, under such 10b5-1 Repurchase Plan Agreement, we had repurchased a total of 488,400 shares for a total value of $9.9 million. During the third fiscal quarter of 2012, the 10b5-1 Repurchase Plan Agreement expired.

Item 6.

Exhibits


3.2⁽¹⁾		Restated Certificate of Incorporation of the Company.

3.4⁽²⁾		Amended and Restated Bylaws of the Company.

4.1⁽¹⁾		Form of Common Stock Certificate.

10.1⁽¹⁾⁽³⁾		Form of Indemnification Agreement between the Company and its officers, directors and agents.

10.20⁽⁵⁾		Amended and Restated Stockholders Agreement dated October 25, 2005 between Multi-Fineline Electronix, Inc., Wearnes Technology Pte. Ltd, United Wearnes Technology Pte. Ltd., and WBL Corporation Limited.

10.45⁽⁶⁾⁽³⁾		Form of Stock Appreciation Rights Agreement.

10.57⁽⁸⁾⁽³⁾		Form of Restricted Stock Unit Agreement.

10.60⁽⁹⁾		Line of Credit Agreement between Multi-Fineline Electronix (Suzhou) Co., Ltd., and China Construction Bank, Suzhou Industry Park Sub-Branch dated March 29, 2010.

10.61⁽⁹⁾		Facility Offer Letter between Multi-Fineline Electronix (Suzhou) Co., Ltd., and China Construction Bank, Suzhou Industry Park Sub-Branch dated March 29, 2010.

10.62⁽⁹⁾		Line of Credit Agreement between Multi-Fineline Electronix (Suzhou No. 2) Co., Ltd., and China Construction Bank, Suzhou Industry Park Sub-Branch dated March 29, 2010.

10.63⁽⁹⁾		Facility Offer Letter between Multi-Fineline Electronix (Suzhou No. 2) Co., Ltd., and China Construction Bank, Suzhou Industry Park Sub-Branch dated March 29, 2010.

10.67⁽¹⁰⁾		Line of General Credit Agreement between MFLEX Suzhou Co., Ltd. and Agricultural Bank of China, Suzhou Wuzhong Sub-branch dated July 31, 2010.

10.68⁽¹⁰⁾		Facility Offer Letter between MFLEX Suzhou Co., Ltd., and Agricultural Bank of China, Suzhou Wuzhong Sub-branch dated July 31, 2010.

10.76⁽⁴⁾		Facility Agreement, dated as of January 17, 2012, by and between Multi-Fineline Electronix Singapore Pte Ltd., as borrower; JPMorgan Chase Bank, N.A., Singapore Branch, as mandated lead arranger; the financial institutions listed in Schedule 1, as original lenders; JPMorgan Chase Bank, N.A., acting through its Hong Kong Branch, as facility agent of the other Finance Parties; and JPMorgan Chase Bank, N.A. acting through its Hong Kong Branch, as security agent of the other Finance Parties.

10.77⁽⁴⁾		Form of Parent Guaranty by Multi-Fineline Electronix, Inc., in favor of JPMorgan Chase Bank, N.A., acting through its Hong Kong Branch, as security agent, for the ratable benefit of the Holders of Guaranteed Obligations (as defined therein).

10.78⁽⁴⁾⁽³⁾		Change in Control Plan.

10.79⁽⁴⁾⁽³⁾		Amended and Restated 2004 Stock Incentive Plan.

10.80⁽⁷⁾		Line of Credit Agreement between MFLEX Chengdu Co., Ltd. and Bank of China Co., Ltd. Chengdu Development West Zone Sub-Branch dated March 23, 2012.

10.81⁽⁷⁾		Facility Offer Letter between MFLEX Chengdu Co., Ltd. and Bank of China Co., Ltd. Chengdu Development West Zone Sub-Branch dated March 23, 2012.

10.82⁽¹¹⁾		Master Development and Supply Agreement by and between Apple Computer, Inc. and Multi-Fineline Electronix, Inc. dated May 2, 2012.

10.83*⁽³⁾		Executive Officer Tax Audit Reimbursement Plan

31.1*		Section 302 Certification by the Company’s chief executive officer.

31.2*		Section 302 Certification by the Company’s principal financial officer.

32.1*		Section 906 Certification by the Company’s chief executive officer and principal financial officer.

101.INS**		XBRL Instance Document.

101.SCH**		XBRL Taxonomy Extension Schema Document.



101.CAL**		XBRL Taxonomy Extension Calculation Linkbase Document.

101.LAB**		XBRL Taxonomy Extension Label Linkbase Document.

101.PRE**		XBRL Taxonomy Extension Presentation Linkbase Document.

^*	Filed herewith

^**	Furnished, not filed

⁽¹⁾	Incorporated by reference to exhibits (with same exhibit numbers) to the Company’s Registration Statement on Form S-1, as amended (File No. 333-114510) declared effective by the Securities and Exchange Commission (“SEC”), on June 24, 2004.

⁽²⁾	Incorporated by reference to an exhibit (with same exhibit number) to the Company’s Current Report on Form 8-K filed with the SEC on December 8, 2009.

⁽³⁾	Indicates management contract or compensatory plan.

⁽⁴⁾	Incorporated by reference to exhibits to the Company’s Current Reports on Form 8-K filed with the SEC on January 19, 2012.

⁽⁵⁾	Incorporated by reference to exhibit (with same exhibit number) to the Company’s Current Report on Form 8-K filed with the SEC on October 25, 2005 (File No. 000-50812).

⁽⁶⁾	Incorporated by reference to exhibit (with same exhibit number) to the Company’s Annual Report on Form 10-K filed with the SEC for the year ended September 30, 2008.

⁽⁷⁾	Incorporated by reference to exhibits (with same exhibit numbers) to the Company’s Current Report on Form 8-K filed with the SEC on March 27, 2012.

⁽⁸⁾	Incorporated by reference to exhibits (with same exhibit numbers) to the Company’s Annual Report on Form 10-K filed with the SEC for the year ended September 30, 2009.

⁽⁹⁾	Incorporated by reference to exhibits (with same exhibit numbers) to the Company’s Current Report on Form 8-K filed with the SEC on April 1, 2010.

⁽¹⁰⁾	Incorporated by reference to exhibits (with same exhibit numbers) to the Company’s Quarterly Report on Form 10-Q filed with the SEC for the quarter ended June 30, 2010.

⁽¹¹⁾	Incorporated by reference to exhibit (with same exhibit number) to the Company’s Quarterly Report on Form 10-Q filed with the SEC for the quarter ended March 31, 2012. Confidential treatment has been granted for certain portions of this agreement.

SIGNATURE

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.


	Multi-Fineline Electronix, Inc., a Delaware corporation

Date: August 2, 2012	By:	/s/ Thomas Liguori
		Thomas Liguori
		Chief Financial Officer and Executive Vice-President
		(Duly Authorized Officer and Principal Financial Officer of the Registrant)

EXHIBIT INDEX

Item 6.

Exhibits


3.2⁽¹⁾		Restated Certificate of Incorporation of the Company.

3.4⁽²⁾		Amended and Restated Bylaws of the Company.

4.1⁽¹⁾		Form of Common Stock Certificate.

10.1⁽¹⁾⁽³⁾		Form of Indemnification Agreement between the Company and its officers, directors and agents.

10.20⁽⁵⁾		Amended and Restated Stockholders Agreement dated October 25, 2005 between Multi-Fineline Electronix, Inc., Wearnes Technology Pte. Ltd, United Wearnes Technology Pte. Ltd., and WBL Corporation Limited.

10.45⁽⁶⁾⁽³⁾		Form of Stock Appreciation Rights Agreement.

10.57⁽⁸⁾⁽³⁾		Form of Restricted Stock Unit Agreement.

10.60⁽⁹⁾		Line of Credit Agreement between Multi-Fineline Electronix (Suzhou) Co., Ltd., and China Construction Bank, Suzhou Industry Park Sub-Branch dated March 29, 2010.

10.61⁽⁹⁾		Facility Offer Letter between Multi-Fineline Electronix (Suzhou) Co., Ltd., and China Construction Bank, Suzhou Industry Park Sub-Branch dated March 29, 2010.

10.62⁽⁹⁾		Line of Credit Agreement between Multi-Fineline Electronix (Suzhou No. 2) Co., Ltd., and China Construction Bank, Suzhou Industry Park Sub-Branch dated March 29, 2010.

10.63⁽⁹⁾		Facility Offer Letter between Multi-Fineline Electronix (Suzhou No. 2) Co., Ltd., and China Construction Bank, Suzhou Industry Park Sub-Branch dated March 29, 2010.

10.67⁽¹⁰⁾		Line of General Credit Agreement between MFLEX Suzhou Co., Ltd. and Agricultural Bank of China, Suzhou Wuzhong Sub-branch dated July 31, 2010.

10.68⁽¹⁰⁾		Facility Offer Letter between MFLEX Suzhou Co., Ltd., and Agricultural Bank of China, Suzhou Wuzhong Sub-branch dated July 31, 2010.



10.76⁽⁴⁾		Facility Agreement, dated as of January 17, 2012, by and between Multi-Fineline Electronix Singapore Pte Ltd., as borrower; JPMorgan Chase Bank, N.A., Singapore Branch, as mandated lead arranger; the financial institutions listed in Schedule 1, as original lenders; JPMorgan Chase Bank, N.A., acting through its Hong Kong Branch, as facility agent of the other Finance Parties; and JPMorgan Chase Bank, N.A. acting through its Hong Kong Branch, as security agent of the other Finance Parties.

10.77⁽⁴⁾		Form of Parent Guaranty by Multi-Fineline Electronix, Inc., in favor of JPMorgan Chase Bank, N.A., acting through its Hong Kong Branch, as security agent, for the ratable benefit of the Holders of Guaranteed Obligations (as defined therein).

10.78⁽⁴⁾⁽³⁾		Change in Control Plan.

10.79⁽⁴⁾⁽³⁾		Amended and Restated 2004 Stock Incentive Plan.

10.80⁽⁷⁾		Line of Credit Agreement between MFLEX Chengdu Co., Ltd. and Bank of China Co., Ltd. Chengdu Development West Zone Sub-Branch dated March 23, 2012.

10.81⁽⁷⁾		Facility Offer Letter between MFLEX Chengdu Co., Ltd. and Bank of China Co., Ltd. Chengdu Development West Zone Sub-Branch dated March 23, 2012.

10.82⁽¹¹⁾		Master Development and Supply Agreement by and between Apple Computer, Inc. and Multi-Fineline Electronix, Inc. dated May 2, 2012.

10.83*⁽³⁾		Executive Officer Tax Audit Reimbursement Plan

31.1*		Section 302 Certification by the Company’s chief executive officer.

31.2*		Section 302 Certification by the Company’s principal financial officer.

32.1*		Section 906 Certification by the Company’s chief executive officer and principal financial officer.

101.INS**		XBRL Instance Document.

101.SCH**		XBRL Taxonomy Extension Schema Document.

101.CAL**		XBRL Taxonomy Extension Calculation Linkbase Document.

101.LAB**		XBRL Taxonomy Extension Label Linkbase Document.

101.PRE**		XBRL Taxonomy Extension Presentation Linkbase Document.

^*	Filed herewith

^**	Furnished, not filed

⁽¹⁾	Incorporated by reference to exhibits (with same exhibit numbers) to the Company’s Registration Statement on Form S-1, as amended (File No. 333-114510) declared effective by the Securities and Exchange Commission (“SEC”), on June 24, 2004.

⁽²⁾	Incorporated by reference to an exhibit (with same exhibit number) to the Company’s Current Report on Form 8-K filed with the SEC on December 8, 2009.

⁽³⁾	Indicates management contract or compensatory plan.

⁽⁴⁾	Incorporated by reference to exhibits to the Company’s Current Reports on Form 8-K filed with the SEC on January 19, 2012.

⁽⁵⁾	Incorporated by reference to exhibit (with same exhibit number) to the Company’s Current Report on Form 8-K filed with the SEC on October 25, 2005 (File No. 000-50812).

⁽⁶⁾	Incorporated by reference to exhibit (with same exhibit number) to the Company’s Annual Report on Form 10-K filed with the SEC for the year ended September 30, 2008.

⁽⁷⁾	Incorporated by reference to exhibits (with same exhibit numbers) to the Company’s Current Report on Form 8-K filed with the SEC on March 27, 2012.

⁽⁸⁾	Incorporated by reference to exhibits (with same exhibit numbers) to the Company’s Annual Report on Form 10-K filed with the SEC for the year ended September 30, 2009.

⁽⁹⁾	Incorporated by reference to exhibits (with same exhibit numbers) to the Company’s Current Report on Form 8-K filed with the SEC on April 1, 2010.

⁽¹⁰⁾	Incorporated by reference to exhibits (with same exhibit numbers) to the Company’s Quarterly Report on Form 10-Q filed with the SEC for the quarter ended June 30, 2010.

⁽¹¹⁾	Incorporated by reference to exhibit (with same exhibit number) to the Company’s Quarterly Report on Form 10-Q filed with the SEC for the quarter ended March 31, 2012. Confidential treatment has been granted for certain portions of this agreement.

Large accelerated filer

Accelerated filer

Non-accelerated filer

¨ (Do not check if a smaller reporting company)

Smaller reporting company