What changed in this filing

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Item 1. Financial Statements

2020-06-29 compared with 2020-04-01 · 133 added, 159 removed, 665 unchanged (31% of the section changed)

5 unchanged sentences

Cash and cash equivalents

Accounts receivable, net of allowance for doubtful accounts of $30,191 as of February 29, 2020 and $17,221 as of August 31, 2019

Accounts receivable, net of allowance for doubtful accounts of $32,239 as of May 31, 2020 and $17,221 as of August 31, 2019

Contract assets

2 unchanged sentences

Total current assets

Property, plant and equipment, net of accumulated depreciation of $4,344,338 as of February 29, 2020 and $4,110,496 as of August 31, 2019

Property, plant and equipment, net of accumulated depreciation of $4,452,228 as of May 31, 2020 and $4,110,496 as of August 31, 2019

Operating lease right-of-use asset

Intangible assets, net of accumulated amortization of $367,299 as of February 29, 2020 and $337,841 as of August 31, 2019

Intangible assets, net of accumulated amortization of $380,850 as of May 31, 2020 and $337,841 as of August 31, 2019

Deferred income taxes

17 unchanged sentences

Common stock, $0.001 par value, authorized 500,000,000 shares;

263,299,124 and 260,406,796 shares issued and 151,407,526 and 153,520,380 shares outstanding as of February 29, 2020 and August 31, 2019, respectively

263,312,358 and 260,406,796 shares issued and 150,574,036 and 153,520,380 shares outstanding as of May 31, 2020 and August 31, 2019, respectively

Additional paid-in capital

1 unchanged sentence

Accumulated other comprehensive loss

Treasury stock at cost, 111,891,598 and 106,886,416 shares as of February 29, 2020 and August 31, 2019, respectively

Treasury stock at cost, 112,738,322 and 106,886,416 shares as of May 31, 2020 and August 31, 2019, respectively

Total Jabil Inc.

7 unchanged sentences

Three months ended

Six months ended

Nine months ended

Cost of revenue

3 unchanged sentences

Amortization of intangibles

Restructuring and related charges

Restructuring, severance and related charges

Operating income

15 unchanged sentences

Three months ended

Six months ended

Nine months ended

Net (loss) income

3 unchanged sentences

Change in fair value of derivatives

Adjustment for net (gains) losses realized and included in net income

Adjustment for net losses (gains) realized and included in net income

Total change in derivative instruments

10 unchanged sentences

Three months ended

Six months ended

Nine months ended

Total stockholders' equity, beginning balances

18 unchanged sentences

Beginning balances

Other comprehensive (loss) income

Other comprehensive loss

Ending balances

16 unchanged sentences

(in thousands)

Six months ended

Nine months ended

Cash flows provided by operating activities:

Net (loss) income

Adjustments to reconcile net income to net cash provided by operating activities:

16 unchanged sentences

Net cash used in investing activities

Cash flows provided by (used in) financing activities:

Cash flows (used in) provided by financing activities:

Borrowings under debt agreements

4 unchanged sentences

Treasury stock minimum tax withholding related to vesting of restricted stock

Net cash provided by (used in) financing activities

Net cash (used in) provided by financing activities

Effect of exchange rate changes on cash and cash equivalents

13 unchanged sentences

The accompanying unaudited Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and footnotes included in the Annual Report on Form 10-K of the Company for the fiscal year ended August 31, 2019 .

Results for the six months ended February 29, 2020 are not necessarily an indication of the results that may be expected for the full fiscal year ending August 31, 2020 .

Results for the nine months ended May 31, 2020 are not necessarily an indication of the results that may be expected for the full fiscal year ending August 31, 2020 .

The full impact on the Company’s business and results of operations related to COVID-19 depends on future developments and cannot be fully predicted.

The Company has considered all information available as of the date of these financial statements and is not aware of any circumstances that would result in an update to its estimates or judgments, or any adjustment to the carrying value of its assets or liabilities.

Estimates are dependent on certain events and may change as future events occur or additional information becomes available and thus actual results could differ materially from these estimates and judgments.

Trade Accounts Receivable Sale Programs

2 unchanged sentences

The Company continues servicing the receivables sold and in exchange receives a servicing fee under each of the trade accounts receivable sale programs.

Servicing fees related to each of the trade accounts receivable sale programs recognized during the three months and six months ended February 29, 2020 and February 28, 2019 were not material.

Servicing fees related to each of the trade accounts receivable sale programs recognized during the three months and nine months ended May 31, 2020 and 2019 were not material.

The Company does not record a servicing asset or liability on the Condensed Consolidated Balance Sheets as the Company estimates that the fee it receives to service these receivables approximates the fair market compensation to provide the servicing activities.

14 unchanged sentences

December 5, 2020 (2)

Maximum amount available at any one time.

Maximum amount of trade accounts receivable that may be sold under a facility at any one time.

The program will be automatically extended each year through December 5, 2025 unless either party provides 30 days ’ notice of termination.

9 unchanged sentences

Three months ended

Six months ended

February 29, 2020

February 28, 2019

February 29, 2020

February 28, 2019

Nine months ended

Trade accounts receivable sold

3 unchanged sentences

Inventories consist of the following (in thousands):

February 29, 2020

August 31, 2019

15 unchanged sentences

Right-of-use assets represent the right to use an underlying asset for the lease term and lease liabilities represent an obligation to make lease payments arising from the lease.

Right-of-use assets and lease liabilities are recognized based on the present value of future lease payments over the lease term at the lease commencement date.

Right-of-use assets and lease liabilities are recognized based on the

present value of future lease payments over the lease term at the lease commencement date.

When determining the present value of future payment, the Company uses the incremental borrowing rate when the implicit rate is not readily determinable.

8 unchanged sentences

Financial Statement Line Item

February 29, 2020

Operating lease assets (1)

16 unchanged sentences

Three months ended

Six months ended

February 29, 2020

Nine months ended

Operating lease cost

5 unchanged sentences

The following table is a summary of the weighted-average remaining lease terms and weighted-average discount rates of the Company's leases, as of the period indicated:

February 29, 2020

Weighted-average remaining lease term

3 unchanged sentences

The following table sets forth other supplemental information related to the Company's lease portfolio (in thousands):

Six months ended

February 29, 2020

Nine months ended

Cash paid for amounts included in the measurement of lease liabilities:

7 unchanged sentences

Included in payments toward debt agreements in Financing Activities of the Company's Condensed Consolidated Statements of Cash Flows.

The future minimum lease payments under operating and finance leases as of February 29, 2020 were as follows (in thousands):

Twelve months ended February 29,

The future minimum lease payments under operating and finance leases as of May 31, 2020 were as follows (in thousands):

Twelve months ended May 31,

Operating Leases (1)

9 unchanged sentences

Notes Payable and Long-Term Debt

Notes payable and long-term debt outstanding as of February 29, 2020 and August 31, 2019 are summarized below (in thousands):

Notes payable and long-term debt outstanding as of May 31, 2020 and August 31, 2019 are summarized below (in thousands):

5.625% Senior Notes

4 unchanged sentences

Borrowings under credit facilities (2)(3)(4)

Jan 22, 2023 and Jan 22, 2025

Borrowings under commercial paper program (4)

Apr 23, 2021, Jan 22, 2023 and Jan 22, 2025

Borrowings under loans (2)

8 unchanged sentences

In connection with the Company’s entry into the Credit Facility, the Company terminated the Company’s amended and restated five-year credit agreement dated November 8, 2017 and the credit agreement dated August 24, 2018.

During the three months ended February 29, 2020, the interest rates on the Revolving Credit Facility ranged from 2.5 % to 3.0 % and the Term Loan Facility ranged from 2.9 % to 3.2 % .

During the nine months ended May 31, 2020 , the interest rates on the Revolving Credit Facility ranged from 1.2 % to 4.3 % and the Term Loan Facility ranged from 1.6 % to 3.5 % .

Interest is charged at a rate equal to (a) for the Revolving Credit Facility, either 0.000 % to 0.450 % above the base rate or 0.975 % to 1.450 % above the Eurocurrency rate and (b) for the Term Loan Facility, either 0.125 % to 0.750 % above the base rate or 1.125 % to 1.750 % above the Eurocurrency rate.

3 unchanged sentences

Fees include a facility fee based on the revolving credit commitments of the lenders and a letter of credit fee based on the amount of outstanding letters of credit.

As of February 29, 2020 , the Company has $ 3.1 billion in available unused borrowing capacity under its revolving credit facilities, net of outstanding commercial paper borrowings.

On April 24, 2020, the Company entered into an unsecured 364 -day revolving credit agreement up to an initial aggregate amount of $ 375.0 million , which was increased to $ 425.0 million on May 29, 2020 (the “ 364 -Day Revolving Credit Agreement”).

The 364 -Day Revolving Credit Agreement expires on April 23, 2021.

Interest and fees on the 364 -Day Revolving Credit Agreement advances are based on the Company’s non-credit enhanced long-term senior unsecured debt rating as determined by Standard & Poor’s Ratings Service, Moody’s Investors Service and Fitch Ratings.

As of May 31, 2020 , no draws were made on the 364 -Day Revolving Credit Agreement.

Interest is charged at a rate equal to either (i) 0.450 % , 0.525 % or 0.800 % above the base rate or (ii) 1.450 % , 1.525 % or 1.800 % above the Eurodollar rate.

The base rate represents the greatest of:

(i) Mizuho’s base rate, (ii) 0.50 % above the federal funds rate, and (iii) 1.0 % above one-month LIBOR, subject to a floor of 0.75 % .

The Eurodollar rate represents adjusted LIBOR for the applicable interest period, subject to a floor of 0.75 % .

Fees include a facility fee based on the revolving credit commitments of the lenders.

As of May 31, 2020 , the Company has $ 3.7 billion in available unused borrowing capacity under its revolving credit facilities.

The Revolving Credit Facility under the Credit Facility acts as the back-up facility for commercial paper outstanding, if any.

The Company has a borrowing capacity of up to $ 1.8 billion under its commercial paper program.

The revolving credit facility supports commercial paper outstanding, if any.

As of February 29, 2020, the outstanding commercial paper has maturities of 90 days or less.

During the three months ended February 29, 2020, the interest rates on the commercial paper program ranged from 2.0 % to 2.6 % .

Debt Covenants

3 unchanged sentences

The Company is also subject to certain covenants requiring the Company to offer to repurchase the 5.625 % , 4.700 % , 4.900 % , 3.950 % or 3.600 % Senior Notes upon a change of control.

As of February 29, 2020 and August 31, 2019 , the Company was in compliance with its debt covenants.

As of May 31, 2020 and August 31, 2019 , the Company was in compliance with its debt covenants.

Refer to Note 17 – “Fair Value Measurements” for the estimated fair values of the Company’s notes payable and long-term debt.

2 unchanged sentences

The Company continues servicing the receivables sold and in exchange receives a servicing fee under each of the asset-backed securitization programs.

Servicing fees related to each of the asset-backed securitization programs recognized during the three months and six months ended February 29, 2020 and February 28, 2019 were not material.

Servicing fees related to each of the asset-backed securitization programs recognized during the three months and nine months ended May 31, 2020 and 2019 were not material.

3 unchanged sentences

Accordingly, the special purpose entity associated with the foreign asset-backed securitization program is included in the Company’s Condensed Consolidated Financial Statements.

As of February 29, 2020 , the special purpose entity has liabilities for which creditors do not have recourse to the general credit of the Company (primary beneficiary).

As of May 31, 2020 , the special purpose entity has liabilities for which creditors do not have recourse to the general credit of the Company (primary beneficiary).

The liabilities cannot exceed the maximum amount of net cash proceeds under the foreign asset-backed securitization program.

The foreign asset-backed securitization program contains a guarantee of payment by the special purpose entity, in an amount approximately equal to the net cash proceeds under the program.

No liability has been recorded for obligations under the guarantee as of February 29, 2020 .

No liability has been recorded for obligations under the guarantee as of May 31, 2020 .

The special purpose entity in the North American asset-backed securitization program is a wholly-owned subsidiary of the Company and is included in the Company’s Condensed Consolidated Financial Statements.

Certain unsold receivables covering the maximum amount of net cash proceeds available under the North American asset-backed securitization program are pledged as collateral to the unaffiliated financial institution as of February 29, 2020 .

Following is a summary of the asset-backed securitization programs and key terms:

5 unchanged sentences

Maximum amount available at any one time.

As of February 29, 2020 , the Company had up to $ 76.3 million in available liquidity under its asset-backed securitization programs.

As of May 31, 2020 , the Company had up to $ 136.6 million in available liquidity under its asset-backed securitization programs.

In connection with the asset-backed securitization programs, the Company recognized the following (in millions):

Three months ended

Six months ended

February 29, 2020

February 28, 2019

February 29, 2020

February 28, 2019 (3)

Nine months ended

May 31, 2019 (3)

Trade accounts receivable sold

5 unchanged sentences

The asset-backed securitization programs require compliance with several covenants.

The North American asset-backed securitization program covenants include compliance with the interest ratio and debt to EBITDA ratio of the five-year unsecured credit facility entered into on January 22, 2020 (the “Credit Facility”).

The North American asset-backed securitization program covenants include compliance with the interest ratio and debt to EBITDA ratio of the five-year

unsecured credit facility entered into on January 22, 2020 (the “Credit Facility”).

The foreign asset-backed securitization program covenants include limitations on certain corporate actions such as mergers and consolidations.

As of February 29, 2020 and August 31, 2019 , the Company was in compliance with all covenants under the asset-backed securitization programs.

As of May 31, 2020 and August 31, 2019 , the Company was in compliance with all covenants under the asset-backed securitization programs.

Accrued Expenses

Accrued expenses consist of the following (in thousands):

February 29, 2020

August 31, 2019

3 unchanged sentences

Accrued expenses

Revenue recognized during the six months ended February 29, 2020 and February 28, 2019 that was included in the contract liability balance as of September 1, 2019 and 2018 was $ 201.1 million and $ 267.0 million , respectively.

Revenue recognized during the nine months ended May 31, 2020 and 2019 that was included in the contract liability balance as of September 1, 2019 and 2018 was $ 260.9 million and $ 350.9 million , respectively.

Postretirement and Other Employee Benefits

1 unchanged sentence

Net Periodic Benefit Cost

The following table provides information about the net periodic benefit cost for all plans for the three months and six months ended February 29, 2020 and February 28, 2019 (in thousands):

The following table provides information about the net periodic benefit cost for all plans for the three months and nine months ended May 31, 2020 and 2019 (in thousands):

Three months ended

Six months ended

February 29, 2020

February 28, 2019

February 29, 2020

February 28, 2019

Nine months ended

Service cost (1)

12 unchanged sentences

Benefit Obligation and Plan Assets

The benefit obligations and plan assets, changes to the benefit obligation and plan assets and the funded status of the Switzerland plan as of September 30, 2019 are as follows (in thousands):

The benefit obligations, plan assets and the funded status of the Switzerland plan as of September 30, 2019 are as follows (in thousands):

September 30, 2019

19 unchanged sentences

Forward contracts are put in place to manage the foreign currency risk associated with the anticipated foreign currency denominated revenues and expenses.

A hedging relationship existed with an aggregate notional amount outstanding of $ 257.2 million and $ 334.1 million as of February 29, 2020 and August 31, 2019 , respectively.

A hedging relationship existed with an aggregate notional amount outstanding of $ 389.7 million and $ 334.1 million as of May 31, 2020 and August 31, 2019 , respectively.

The related forward foreign exchange contracts have been designated as hedging instruments and are accounted for as cash flow hedges.

The forward foreign exchange contract transactions will effectively lock in the value of anticipated foreign currency denominated revenues and expenses against foreign currency fluctuations.

The anticipated foreign currency denominated revenues and expenses being hedged are expected to occur between March 1, 2020 and November 30, 2020 .

The anticipated foreign currency denominated revenues and expenses being hedged are expected to occur between June 1, 2020 and May 31, 2021 .

In addition to derivatives that are designated as hedging instruments and qualify for hedge accounting, the Company also enters into forward contracts to economically hedge transactional exposure associated with commitments arising from trade accounts receivable, trade accounts payable, fixed purchase obligations and intercompany transactions denominated in a currency other than the functional currency of the respective operating entity.

The aggregate notional amount of these outstanding contracts as of February 29, 2020 and August 31, 2019 , was $ 2.4 billion and $ 2.5 billion , respectively.

The aggregate notional amount of these outstanding contracts as of May 31, 2020 and August 31, 2019 , was $ 2.6 billion and $ 2.5 billion , respectively.

Refer to Note 17 – “Fair Value Measurements” for the fair values and classification of the Company’s derivative instruments.

The gains and losses recognized in earnings due to hedge ineffectiveness and the amount excluded from effectiveness testing were not material for all periods presented and are included as components of net revenue, cost of revenue and selling, general and administrative expense, which are the same line items in which the hedged items are recorded.

The following table presents the gains from forward contracts recorded in the Condensed Consolidated Statements of Operations for the periods indicated (in thousands):

The following table presents the losses and gains from forward contracts recorded in the Condensed Consolidated Statements of Operations for the periods indicated (in thousands):

Derivatives Not Designated as Hedging Instruments Under ASC 815

Location of Gain on Derivatives Recognized in Net Income

Amount of Gain Recognized in Net Income on Derivatives

Location of (Loss) Gain on Derivatives Recognized in Net Income

Amount of (Loss) Gain Recognized in Net Income on Derivatives

Three months ended

Six months ended

February 29, 2020

February 28, 2019

February 29, 2020

February 28, 2019

Nine months ended

Forward foreign exchange contracts (1)

Cost of revenue

For the three months and six months ended February 29, 2020 , the Company recognized $ 7.6 million and $ 36.4 million , respectively, of foreign currency losses in cost of revenue, which are offset by the gains from the forward foreign exchange contracts.

During the three months and six months ended February 28, 2019 , the Company recognized $ 57.1 million and $ 52.6 million , respectively, of foreign currency losses in cost of revenue, which are offset by the gains from the forward foreign exchange contracts.

For the three months and nine months ended May 31, 2020 , the Company recognized $ 36.9 million and $ 0.4 million , respectively, of foreign currency gains in cost of revenue, which are offset by the losses from the forward foreign exchange contracts.

During the three months ended May 31, 2019 , the Company recognized $ 28.3 million of foreign currency gains in cost of revenue, which are offset by the losses from the forward foreign exchange contracts.

During the nine months ended May 31, 2019 , the Company recognized $ 24.3 million of foreign currency losses in cost of revenue, which are offset by the gains from the forward foreign exchange contracts.

Interest Rate Risk Management

1 unchanged sentence

Cash Flow Hedges

The following table presents the interest rate swaps outstanding as of February 29, 2020 , which have been designated as hedging instruments and accounted for as cash flow hedges:

The following table presents the interest rate swaps outstanding as of May 31, 2020 , which have been designated as hedging instruments and accounted for as cash flow hedges:

Interest Rate Swap Summary

14 unchanged sentences

Accumulated Other Comprehensive Income

The following table sets forth the changes in accumulated other comprehensive (loss) income (“AOCI”), net of tax, by component for the six months ended February 29, 2020 (in thousands):

The following table sets forth the changes in accumulated other comprehensive (loss) income (“AOCI”), net of tax, by component for the nine months ended May 31, 2020 (in thousands):

Available for

4 unchanged sentences

Other comprehensive (loss) income (1)

Balance as of February 29, 2020

Balance as of May 31, 2020

Amounts are net of tax, which are immaterial.

1 unchanged sentence

Three months ended

Six months ended

Nine months ended

Comprehensive Income Components

7 unchanged sentences

The Company expects to reclassify $ 4.4 million into earnings during the next twelve months, which will primarily be classified as a component of cost of revenue.

Amounts are net of tax, which are immaterial for the three months and six months ended February 29, 2020 and February 28, 2019 .

Amounts are net of tax, which are immaterial for the three months and nine months ended May 31, 2020 and 2019 .

Stockholders’ Equity

1 unchanged sentence

Three months ended

Six months ended

February 29, 2020

February 28, 2019

February 29, 2020

February 28, 2019

Nine months ended

Restricted stock units

Employee stock purchase plan

As of February 29, 2020 , the shares available to be issued under the 2011 Stock Award and Incentive Plan were 10,502,993 .

As of May 31, 2020 , the shares available to be issued under the 2011 Stock Award and Incentive Plan were 10,519,566 .

Restricted Stock Units

5 unchanged sentences

The market-based restricted stock units have a vesting condition that is tied to the Company’s total shareholder return based on the Company’s stock performance in relation to the companies in the Standard and Poor’s (S&P) Super Composite Technology Hardware and Equipment Index excluding the Company.

During the six months ended February 29, 2020 and February 28, 2019 , the Company awarded approximately 1.1 million and 1.6 million time-based restricted stock units, respectively, 0.3 million and 0.4 million performance-based restricted stock units, respectively and 0.3 million and 0.4 million market-based restricted stock units, respectively.

During the nine months ended May 31, 2020 and 2019 , the Company awarded approximately 1.1 million and 1.6 million time-based restricted stock units, respectively, 0.3 million and 0.4 million performance-based restricted stock units, respectively and 0.3 million and 0.4 million market-based restricted stock units, respectively.

The following represents the stock-based compensation information for the period indicated (in thousands):

Six months ended

February 29, 2020

Nine months ended

Unrecognized stock-based compensation expense—restricted stock units

3 unchanged sentences

Three months ended

Six months ended

February 29, 2020

February 28, 2019

February 29, 2020

February 28, 2019

Nine months ended

Common stock outstanding:

7 unchanged sentences

In September 2019, the Company’s Board of Directors authorized the repurchase of up to $ 600.0 million of the Company’s common stock as part of a two-year capital allocation framework (the “2020 Share Repurchase Program”).

As of February 29, 2020 , 4.4 million shares had been repurchased for $ 168.7 million and $ 431.3 million remains available under the 2020 Share Repurchase Program.

As of May 31, 2020 , 5.2 million shares had been repurchased for $ 188.9 million and $ 411.1 million remains available under the 2020 Share Repurchase Program.

Concentration of Risk and Segment Data

1 unchanged sentence

Sales of the Company’s products are concentrated among specific customers.

During the six months ended February 29, 2020 , the Company’s five largest customers accounted for approximately 47 % of its net revenue and 72 customers accounted for approximately 90 % of its net revenue.

During the nine months ended May 31, 2020 , the Company’s five largest customers accounted for approximately 47 % of its net revenue and 72 customers accounted for approximately 90 % of its net revenue.

Sales to these customers were reported in the Electronics Manufacturing Services (“EMS”) and Diversified Manufacturing Services (“DMS”) operating segments.

4 unchanged sentences

Segment income is defined as net revenue less cost of revenue, segment selling, general and administrative expenses, segment research and development expenses and an allocation of corporate manufacturing expenses and selling, general and administrative expenses.

Segment income does not include amortization of intangibles, stock-based compensation expense and related charges, restructuring and related charges, distressed customer charges, acquisition and integration charges, impairment on securities, loss on disposal of subsidiaries, settlement of receivables and related charges, impairment of notes receivable and related charges, restructuring of securities loss, goodwill impairment charges, business interruption and impairment charges, net, income (loss) from discontinued operations, gain (loss) on sale of discontinued operations, other expense (excluding certain components of net periodic benefit cost), interest income, interest expense, income tax expense or adjustment for net income (loss) attributable to noncontrolling interests.

Segment income does not include amortization of intangibles, stock-based compensation expense and related charges, restructuring, severance and related charges, distressed customer charges, acquisition and integration charges, impairment on securities, loss on disposal of subsidiaries, settlement of receivables and related charges, impairment of notes receivable and related charges,

restructuring of securities loss, goodwill impairment charges, business interruption and impairment charges, net, income (loss) from discontinued operations, gain (loss) on sale of discontinued operations, other expense (excluding certain components of net periodic benefit cost), interest income, interest expense, income tax expense or adjustment for net income (loss) attributable to noncontrolling interests.

Transactions between operating segments are generally recorded at amounts that approximate those at which we would transact with third parties.

1 unchanged sentence

Three months ended

February 29, 2020

February 28, 2019

Timing of transfer

Point in time

Six months ended

February 29, 2020

February 28, 2019

Nine months ended

Timing of transfer

2 unchanged sentences

Three months ended

Six months ended

February 29, 2020

February 28, 2019

February 29, 2020

February 28, 2019

Nine months ended

Segment income and reconciliation of income before income tax

3 unchanged sentences

Stock-based compensation expense and related charges

Restructuring and related charges

Restructuring, severance and related charges

Distressed customer charge

6 unchanged sentences

Income before income tax

(1) Charges, net of insurance proceeds of $ 2.9 million for the six months ended February 28, 2019 , relate to business interruption and asset impairment costs associated with damage from Hurricane Maria, which impacted our operations in Cayey, Puerto Rico.

As of February 29, 2020 , the Company operated in 31 countries worldwide.

(1) Charges for the three and nine months ended May 31, 2020, relate to a flood that impacted our facility in Huangpu, China.

Charges, net of insurance proceeds of $ 2.9 million for the nine months ended May 31, 2019 , relate to business interruption and asset impairment costs associated with damage from Hurricane Maria, which impacted our operations in Cayey, Puerto Rico.

As of May 31, 2020 , the Company operated in 31 countries worldwide.

Sales to unaffiliated customers are based on the Company location that maintains the customer relationship and transacts the external sale.

1 unchanged sentence

Three months ended

Six months ended

February 29, 2020

February 28, 2019

February 29, 2020

February 28, 2019

Nine months ended

External net revenue:

Foreign source revenue

February 29, 2020

August 31, 2019

1 unchanged sentence

Long-lived assets related to foreign operations

Restructuring and Related Charges

Following is a summary of the Company’s restructuring and related charges (in thousands):

Restructuring, Severance and Related Charges

Following is a summary of the Company’s restructuring, severance and related charges (in thousands):

Three months ended

Six months ended

February 29, 2020 (2)

February 28, 2019 (3)

February 29, 2020 (2)

February 28, 2019 (3)

Nine months ended

May 31, 2020 (2)

May 31, 2019 (3)

May 31, 2020 (2)

May 31, 2019 (3)

Employee severance and benefit costs

Asset write-off costs

Total restructuring and related charges (1)

Includes $ 14.7 million and $ 0.3 million recorded in the EMS segment, $ 14.5 million and $ 0.5 million recorded in the DMS segment and $ 0.4 million and $ 0.0 million of non-allocated charges for the three months ended February 29, 2020 and February 28, 2019 , respectively.

Includes $ 32.1 million and $ 4.7 million recorded in the EMS segment, $ 39.7 million and $ 2.1 million recorded in the DMS segment and $ 3.1 million and $ 0.0 million of non-allocated charges for

the six months ended February 29, 2020 and February 28, 2019 , respectively.

Except for asset write-off costs, all restructuring and related charges are cash costs.

Primarily relates to the 2020 Restructuring Plan.

Total restructuring, severance and related charges (1)

Includes $ 23.7 million and $ 7.6 million recorded in the EMS segment, $ 29.3 million and $ 0.0 million recorded in the DMS segment and $ 16.2 million and $ 1.7 million of non-allocated charges for the three months ended May 31, 2020 and 2019 , respectively.

Includes $ 55.8 million and $ 12.3 million recorded in the EMS segment, $ 69.0 million and $ 2.1 million recorded in the DMS segment and $ 19.2 million and $ 1.8 million of non-allocated charges for the nine months

ended May 31, 2020 and 2019 , respectively.

Except for asset write-off costs, all restructuring, severance and related charges are cash costs.

As the Company continues to optimize its cost structure and improve operational efficiencies, $ 52.3 million of employee severance and benefit costs was incurred in connection with a reduction in the worldwide workforce during the three and nine months ended May 31, 2020.

The Company’s liability associated with the worldwide workforce reduction is $ 50.9 million as of May 31, 2020.

The remaining amount primarily relates to the 2020 Restructuring Plan.

Primarily relates to the 2017 Restructuring Plan.

3 unchanged sentences

The 2020 Restructuring Plan reflects the Company’s intention only and restructuring decisions, and the timing of such decisions, at certain locations are still subject to consultation with the Company’s employees and their representatives.

The Company currently expects to recognize approximately $ 85.0 million in pre-tax restructuring and other related costs primarily over the course of the Company’s fiscal year 2020.

The Company expects to recognize approximately $ 85.0 million in pre-tax restructuring and other related costs over the course of the Company’s fiscal year 2020.

This information will be subject to the finalization of timetables for the transition of functions, consultation with employees and their representatives as well as the statutory severance requirements of the particular jurisdictions impacted, and the amount and timing of the actual charges may vary due to a variety of factors.

10 unchanged sentences

Cash payments

Balance as of February 29, 2020

Balance as of May 31, 2020

Balance as of August 31, 2019 primarily relates to the 2017 Restructuring Plan.

2 unchanged sentences

Three months ended

Six months ended

Nine months ended

federal statutory income tax rate

Effective income tax rate

The effective income tax rate increased for the three months and six months ended February 29, 2020 , compared to the three months and six months ended February 28, 2019 , primarily due to:

(i) decreased income for the three months and six months ended February 29, 2020, driven in part by increased restructuring charges with minimal related tax benefit;

and (ii) adjustments related to the Tax Cuts and Jobs Act of 2017 (the “Tax Act”) for the six months ended February 28, 2019, including a $ 13.3 million income tax benefit recorded during the three months ended November 30, 2018.

The effective income tax rate increased for the three months and nine months ended May 31, 2020 , compared to the three months and nine months ended May 31, 2019 , primarily due to:

(i) decreased income for the three months and nine months ended May 31, 2020, driven in part by increased restructuring charges with minimal related tax benefit;

(ii) a $ 21.2 million income tax expense associated with the re-measurement of deferred tax assets related to an extension of a non-U.S.

tax incentive recorded during the three months ended May 31, 2020;

and (iii) adjustments related to the Tax Cuts and Jobs Act of 2017 (the “Tax Act”) for the nine months ended May 31, 2019, including a $ 13.3 million income tax benefit recorded during the three months ended November 30, 2018.

The effective tax rate differed from the U.S.

federal statutory rate of 21.0% during the three months and six months ended February 29, 2020 and February 28, 2019, primarily due to:

federal statutory rate of 21.0% during the three months and nine months ended May 31, 2020 and 2019 , primarily due to:

(i) losses in tax jurisdictions with existing valuation allowances;

(ii) tax incentives granted to sites in Brazil, China, Malaysia, Singapore and Vietnam;

and (iii) adjustments to amounts previously recorded for the Tax Act for the three months and six months ended February 28, 2019 .

incentives granted to sites in Brazil, China, Malaysia, Singapore and Vietnam;

(iii) a $ 21.2 million income tax expense associated with the re-measurement of deferred tax assets related to an extension of a non-U.S.

tax incentive recorded during the three months ended May 31, 2020;

and (iv) adjustments to amounts previously recorded for the Tax Act for the nine months ended May 31, 2019 .

Earnings Per Share and Dividends

8 unchanged sentences

Three months ended

Six months ended

February 29, 2020

February 28, 2019

February 29, 2020

February 28, 2019

Nine months ended

Restricted stock units

1 unchanged sentence

Stock appreciation rights

The following table sets forth cash dividends declared by the Company to common stockholders during the six months ended February 29, 2020 and February 28, 2019 (in thousands, except for per share data):

The following table sets forth cash dividends declared by the Company to common stockholders during the nine months ended May 31, 2020 and 2019 (in thousands, except for per share data):

Declaration Date

10 unchanged sentences

March 4, 2020

April 15, 2020

Fiscal Year 2019:

5 unchanged sentences

March 1, 2019

April 18, 2019

Business Acquisitions

2 unchanged sentences

On February 25, 2019 and April 29, 2019, under the terms of the Framework Agreement, the Company completed the initial and second closings, respectively, of its acquisition of certain assets of JJMD.

The preliminary aggregate purchase price paid for the initial and second closings was approximately $ 166.2 million in cash.

The aggregate purchase price paid for the initial and second closings was approximately $ 167.4 million in cash.

For the initial and second closings, total assets acquired of $ 173.5 million and total liabilities assumed of $ 6.1 million were recorded at their estimated fair values as of the acquisition dates.

On September 30, 2019, under the terms of the Framework Agreement, the Company completed the third closing of its acquisition of certain assets of JJMD.

The preliminary aggregate purchase price paid for the third closing was approximately $ 111.8 million in cash, which remains subject to certain post-closing adjustments based on conditions within the Framework Agreement.

For the third closing, total assets acquired of $ 199.7 million , including $ 83.2 million in contract assets, $ 35.1 million in inventory and $ 70.4 million in goodwill, and total liabilities assumed of $ 87.9 million , including $ 73.5 million of pension obligations, were recorded at their estimated fair values as of the acquisition date.

2 unchanged sentences

The acquisition of the JJMD assets have been accounted for as separate business combinations for each closing using the acquisition method of accounting.

The Company is currently evaluating the fair values of the assets and liabilities related to the second and third closings of these business combinations.

The Company is currently evaluating the fair values of the assets and liabilities related to the third closing of these business combinations.

The preliminary estimates and measurements are, therefore, subject to change during the measurement period for assets acquired, liabilities assumed and tax adjustments.

The results of operations

were included in the Company’s condensed consolidated financial results beginning on February 25, 2019 for the initial closing, April 29, 2019 for the second closing and September 30, 2019 for the third closing.

The results of operations were included in the Company’s condensed consolidated financial results beginning on February 25, 2019 for the initial closing, April 29, 2019 for the second closing and September 30, 2019 for the third closing.

The Company believes it is impracticable to provide pro forma information for the acquisition of the JJMD assets.

4 unchanged sentences

Fair Value Hierarchy

February 29, 2020

August 31, 2019

14 unchanged sentences

Derivatives designated as hedging instruments (Note 9)

Forward interest rate swaps:

Derivatives designated as hedging instruments (Note 9)

Other liabilities:

4 unchanged sentences

The Senior Non-Convertible Preferred Stock is valued each reporting period using unobservable inputs based on a discounted cash flow model and is classified as an available for sale debt security with any unrealized loss recorded to AOCI.

As of February 29, 2020 and August 31, 2019 , the unobservable inputs have an immaterial impact on the fair value calculation.

As of May 31, 2020 and August 31, 2019 , the unobservable inputs have an immaterial impact on the fair value calculation.

Fair value measurements are based on the contractual terms of the derivatives and use observable market-based inputs.

2 unchanged sentences

The following table presents the assets held for sale (in thousands):

February 29, 2020

August 31, 2019

4 unchanged sentences

The fair value of assets held for sale exceeds the carrying value.

As a result, no impairment has been recorded for assets held for sale as of February 29, 2020 .

As a result, no impairment has been recorded for assets held for sale as of May 31, 2020 .

Fair Value of Financial Instruments

4 unchanged sentences

The following table presents the carrying amounts and fair values of the Company's notes payable and long-term debt, by hierarchy level as of the periods indicated:

February 29, 2020

August 31, 2019

33 unchanged sentences

The Company is currently assessing the impact this new standard may have on its Consolidated Financial Statements.

In March 2020, the FASB issued a new accounting standard which provides guidance in accounting for contracts, hedging relationships, and other transactions that reference U.S.

During the third quarter of fiscal year 2020, the FASB issued a new accounting standard which provides guidance in accounting for contracts, hedging relationships, and other transactions that reference U.S.

dollar LIBOR or another reference rate expected to be discontinued because of reference rate reform.

This guidance is effective for the Company beginning in the third quarter of fiscal year 2020.

The Company is currently assessing the impact this new standard may have on its Consolidated Financial Statements.

The amendments in this update are elective and were effective for the Company immediately upon issuance.

The Company is currently assessing the impact of the transition from U.S.

dollar LIBOR to alternative reference rates but does not expect this new standard to have a material impact on its Consolidated Financial Statements.

Recently issued accounting guidance not discussed above is not applicable or did not have, or is not expected to have, a material impact to the Company.

7 unchanged sentences

The following important factors, among others, could affect future results and events, causing those results and events to differ materially from those expressed or implied in our forward-looking statements:

the scope and duration of the COVID-19 outbreak and its impact on global economic systems, our employees, sites, operations, customers, and supply chain, managing growth effectively;

the scope and duration of the COVID-19 pandemic and its impact on global economic systems, our employees, sites, operations, customers, and supply chain, managing growth effectively;

our dependence on a limited number of customers;

18 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements