Commitments and contingencies

12 Months Ended

Jun. 29, 2012

Commitments and contingencies

19. Commitments and contingencies

Bank guarantees

As of June 29, 2012 and June 24, 2011, there were outstanding bank guarantees given by banks on behalf of Fabrinet Thailand for electricity usage and other normal business amounting to $660 and $686, respectively.

Operating lease commitments

The Group leases a portion of its capital equipment and certain land and buildings for its facilities in Thailand, China and New Jersey under operating lease arrangements that expire in various years through 2015. Rental expense under these operating leases amounted to $1,777, $1,938 and $1,791 for the years ended June 29, 2012, June 24, 2011 and June 25, 2010, respectively. On March 23, 2012, the Group notified its landlord of its intent to terminate the lease agreement for land and buildings at its Chokchai Campus in Thailand effective on April 30, 2012.

As of June 29, 2012, the future minimum lease payments due under non-cancelable leases are as follows at the end of each fiscal year below:

2013	$	778
2014		180
2015		59
2016		15
Total minimum operating lease payments	$	1,032

Purchase obligations

Purchase obligations represent legally-binding commitments to purchase inventory and other commitments made in the normal course of business to meet operational requirements. Although open purchase orders are considered enforceable and legally binding, the terms generally give the Group the option to cancel, reschedule and/or adjust its requirements based on its business needs prior to the delivery of goods or performance of services. Obligations to purchase inventory and other commitments are generally expected to be fulfilled within one year.

As of June 29, 2012, there was an outstanding commitment to third parties of $899 relating to the development of Pinehurst Building 6.

Indemnification of directors and officers

Cayman Islands law does not limit the extent to which a company’s memorandum and articles of association may provide for indemnification of directors and officers, except to the extent any such provision may be held by the Cayman Islands courts to be contrary to public policy, such as to provide indemnification against civil fraud or the consequences of committing a crime. The Company’s amended and restated memorandum and articles of association provide for indemnification of directors and officers for actions, costs, charges, losses, damages and expenses incurred in their capacities as such, except that such indemnification does not extend to any matter in respect of any fraud or dishonesty that may attach to any of them.

In accordance with the Company’s form of indemnification agreement for its directors and officers, the Company has agreed to indemnify its directors and officers against certain liabilities and expenses incurred by such persons in connection with claims by reason of their being such a director or officer. The Company has a director and officer liability insurance policy that may enable it to recover a portion of any future amounts paid under the indemnification agreements.