Item 1. Financial Statements
Item 1.
Financial Statements
JABIL INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except for share data)
February 28, 2021
(Unaudited)
August 31, 2020
ASSETS
Current assets:
Cash and cash equivalents
$
838,099
$
1,393,557
Accounts receivable, net of allowance for doubtful accounts of $ 26,916 as of February 28, 2021 and $ 25,827 as of August 31, 2020
3,062,742
2,847,743
Contract assets
993,363
1,104,700
Inventories, net
3,558,970
3,131,783
Prepaid expenses and other current assets
690,479
657,102
Total current assets
9,143,653
9,134,885
Property, plant and equipment, net of accumulated depreciation of $ 4,762,227 as of February 28, 2021 and $ 4,525,758 as of August 31, 2020
3,696,373
3,665,312
Operating lease right-of-use asset
365,043
362,847
Goodwill
717,660
696,853
Intangible assets, net of accumulated amortization of $ 418,635 as of February 28, 2021 and $ 395,074 as of August 31, 2020
206,389
209,870
Deferred income taxes
154,706
165,407
Other assets
210,339
162,242
Total assets
$
14,494,163
$
14,397,416
LIABILITIES AND EQUITY
Current liabilities:
Current installments of notes payable and long-term debt
$
50,197
$
50,194
Accounts payable
5,644,359
5,687,038
Accrued expenses
3,037,158
3,211,528
Current operating lease liabilities
110,663
110,723
Total current liabilities
8,842,377
9,059,483
Notes payable and long-term debt, less current installments
2,679,819
2,678,288
Other liabilities
305,410
268,925
Non-current operating lease liabilities
306,044
302,035
Income tax liabilities
161,416
148,629
Deferred income taxes
97,155
114,657
Total liabilities
12,392,221
12,572,017
Commitments and contingencies
Equity:
Jabil Inc. stockholders’ equity:
Preferred stock, $ 0.001 par value, authorized 10,000,000 shares; no shares issued and no shares outstanding
—
—
Common stock, $ 0.001 par value, authorized 500,000,000 shares; 266,842,954 and 263,830,270 shares issued and 149,366,501 and 150,330,358 shares outstanding as of February 28, 2021 and August 31, 2020, respectively
267
264
Additional paid-in capital
2,488,366
2,413,616
Retained earnings
2,368,012
2,040,922
Accumulated other comprehensive loss
( 4,270 )
( 34,168 )
Treasury stock at cost, 117,476,453 and 113,499,912 shares as of February 28, 2021 and August 31, 2020, respectively
( 2,763,214 )
( 2,609,250 )
Total Jabil Inc. stockholders’ equity
2,089,161
1,811,384
Noncontrolling interests
12,781
14,015
Total equity
2,101,942
1,825,399
Total liabilities and equity
$
14,494,163
$
14,397,416
See accompanying notes to Condensed Consolidated Financial Statements.
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JABIL INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except for per share data)
(Unaudited)
Three months ended
Six months ended
February 28, 2021
February 29, 2020
February 28, 2021
February 29, 2020
Net revenue
$
6,828,546
$
6,125,083
$
14,661,075
$
13,630,781
Cost of revenue
6,258,621
5,694,958
13,456,590
12,646,817
Gross profit
569,925
430,125
1,204,485
983,964
Operating expenses:
Selling, general and administrative
305,942
285,024
608,694
613,923
Research and development
9,368
11,290
17,486
22,060
Amortization of intangibles
11,639
13,577
23,094
29,717
Restructuring, severance and related charges
6,626
29,604
4,911
74,855
Operating income
236,350
90,630
550,300
243,409
Impairment on securities
—
12,205
—
12,205
Other (income) expense
( 1,559 )
8,501
( 3,481 )
19,673
Interest income
( 1,655 )
( 5,336 )
( 3,536 )
( 11,280 )
Interest expense
31,026
46,183
63,372
91,094
Income before income tax
208,538
29,077
493,945
131,717
Income tax expense
56,184
31,658
140,584
93,584
Net income (loss)
152,354
( 2,581 )
353,361
38,133
Net income attributable to noncontrolling interests, net of tax
700
702
1,265
994
Net income (loss) attributable to Jabil Inc.
$
151,654
$
( 3,283 )
$
352,096
$
37,139
Earnings (loss) per share attributable to the stockholders of Jabil Inc.:
Basic
$
1.01
$
( 0.02 )
$
2.34
$
0.24
Diluted
$
0.99
$
( 0.02 )
$
2.30
$
0.24
Weighted average shares outstanding:
Basic
150,257
152,058
150,206
152,579
Diluted
152,975
152,058
153,051
156,171
See accompanying notes to Condensed Consolidated Financial Statements.
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JABIL INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
(Unaudited)
Three months ended
Six months ended
February 28, 2021
February 29, 2020
February 28, 2021
February 29, 2020
Net income (loss)
$
152,354
$
( 2,581 )
$
353,361
$
38,133
Other comprehensive income (loss):
Change in foreign currency translation
286
( 10,346 )
11,004
( 10,875 )
Change in derivative instruments:
Change in fair value of derivatives
31,324
( 9,474 )
56,235
1,471
Adjustment for net (gains) losses realized and included in net income
( 21,534 )
( 3,548 )
( 37,085 )
3,335
Total change in derivative instruments
9,790
( 13,022 )
19,150
4,806
Unrealized loss on available for sale securities
—
( 5,253 )
—
( 14,080 )
Actuarial loss
—
—
( 256 )
—
Total other comprehensive income (loss)
10,076
( 28,621 )
29,898
( 20,149 )
Comprehensive income (loss)
$
162,430
$
( 31,202 )
$
383,259
$
17,984
Comprehensive income attributable to noncontrolling interests
700
702
1,265
994
Comprehensive income (loss) attributable to Jabil Inc.
$
161,730
$
( 31,904 )
$
381,994
$
16,990
See accompanying notes to Condensed Consolidated Financial Statements.
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JABIL INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands)
(Unaudited)
Three months ended
Six months ended
February 28, 2021
February 29, 2020
February 28, 2021
February 29, 2020
Total stockholders' equity, beginning balances
$
1,993,951
$
1,849,293
$
1,825,399
$
1,900,758
Common stock:
Beginning balances
266
262
264
260
Shares issued under employee stock purchase plan
1
1
1
1
Vesting of restricted stock
—
—
2
2
Ending balances
267
263
267
263
Additional paid-in capital:
Beginning balances
2,445,582
2,332,307
2,413,616
2,304,552
Shares issued under employee stock purchase plan
20,354
16,179
20,354
16,179
Vesting of restricted stock
—
—
( 2 )
( 2 )
Recognition of stock-based compensation
22,430
15,353
54,398
43,110
Ending balances
2,488,366
2,363,839
2,488,366
2,363,839
Retained earnings:
Beginning balances
2,228,729
2,064,758
2,040,922
2,037,037
Declared dividends
( 12,371 )
( 12,521 )
( 25,006 )
( 25,222 )
Net income (loss) attributable to Jabil Inc.
151,654
( 3,283 )
352,096
37,139
Ending balances
2,368,012
2,048,954
2,368,012
2,048,954
Accumulated other comprehensive loss:
Beginning balances
( 14,346 )
( 74,322 )
( 34,168 )
( 82,794 )
Other comprehensive income (loss)
10,076
( 28,621 )
29,898
( 20,149 )
Ending balances
( 4,270 )
( 102,943 )
( 4,270 )
( 102,943 )
Treasury stock:
Beginning balances
( 2,680,860 )
( 2,487,319 )
( 2,609,250 )
( 2,371,612 )
Purchases of treasury stock under employee stock plans
( 388 )
( 3,693 )
( 21,969 )
( 23,010 )
Treasury shares purchased
( 81,966 )
( 72,270 )
( 131,995 )
( 168,660 )
Ending balances
( 2,763,214 )
( 2,563,282 )
( 2,763,214 )
( 2,563,282 )
Noncontrolling interests:
Beginning balances
14,580
13,607
14,015
13,315
Net income attributable to noncontrolling interests
700
702
1,265
994
Declared dividends to noncontrolling interests
( 2,499 )
( 2,000 )
( 2,499 )
( 2,000 )
Ending balances
12,781
12,309
12,781
12,309
Total stockholders' equity, ending balances
$
2,101,942
$
1,759,140
$
2,101,942
$
1,759,140
See accompanying notes to Condensed Consolidated Financial Statements.
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JABIL INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
Six months ended
February 28, 2021
February 29, 2020
Cash flows provided by operating activities:
Net income
$
353,361
$
38,133
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
420,416
402,347
Restructuring and related charges
3,036
33,061
Recognition of stock-based compensation expense and related charges
57,354
45,332
Deferred income taxes
( 8,330 )
3,087
Provision for allowance for doubtful accounts
5,313
10,185
Other, net
15,489
13,838
Change in operating assets and liabilities, exclusive of net assets acquired:
Accounts receivable
( 200,130 )
424,971
Contract assets
123,258
( 63,302 )
Inventories
( 421,255 )
( 279,664 )
Prepaid expenses and other current assets
( 31,279 )
( 62,881 )
Other assets
( 20,688 )
( 8,438 )
Accounts payable, accrued expenses and other liabilities
( 210,600 )
( 472,503 )
Net cash provided by operating activities
85,945
84,166
Cash flows used in investing activities:
Acquisition of property, plant and equipment
( 661,153 )
( 448,765 )
Proceeds and advances from sale of property, plant and equipment
266,725
36,624
Cash paid for business and intangible asset acquisitions, net of cash
( 49,394 )
( 141,195 )
Other, net
( 3,367 )
( 2,013 )
Net cash used in investing activities
( 447,189 )
( 555,349 )
Cash flows (used in) provided by financing activities:
Borrowings under debt agreements
379,111
5,063,358
Payments toward debt agreements
( 392,878 )
( 4,835,697 )
Payments to acquire treasury stock
( 131,995 )
( 168,660 )
Dividends paid to stockholders
( 25,879 )
( 26,280 )
Net proceeds from exercise of stock options and issuance of common stock under employee stock purchase plan
20,354
16,179
Treasury stock minimum tax withholding related to vesting of restricted stock
( 21,969 )
( 23,010 )
Other, net
( 15,999 )
( 11,617 )
Net cash (used in) provided by financing activities
( 189,255 )
14,273
Effect of exchange rate changes on cash and cash equivalents
( 4,959 )
( 9,688 )
Net decrease in cash and cash equivalents
( 555,458 )
( 466,598 )
Cash and cash equivalents at beginning of period
1,393,557
1,163,343
Cash and cash equivalents at end of period
$
838,099
$
696,745
See accompanying notes to Condensed Consolidated Financial Statements.
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JABIL INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) necessary to present fairly the information set forth therein have been included. 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 Jabil Inc. (the “Company”) for the fiscal year ended August 31, 2020. Results for the six months ended February 28, 2021 are not necessarily an indication of the results that may be expected for the full fiscal year ending August 31, 2021.
2. Trade Accounts Receivable Sale Programs
The Company regularly sells designated pools of high credit quality trade accounts receivable under uncommitted trade accounts receivable sale programs to unaffiliated financial institutions without recourse. As these accounts receivable are sold without recourse, the Company does not retain the associated risks following the transfer of such accounts receivable to the respective financial institutions. 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 28, 2021 and February 29, 2020 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.
Transfers of the receivables under the trade accounts receivable sale programs are accounted for as sales and, accordingly, net receivables sold under the trade accounts receivable sale programs are excluded from accounts receivable on the Condensed Consolidated Balance Sheets and are reflected as cash provided by operating activities on the Condensed Consolidated Statements of Cash Flows.
The following is a summary of the trade accounts receivable sale programs with unaffiliated financial institutions where the Company may elect to sell receivables and the unaffiliated financial institution may elect to purchase, at a discount, on an ongoing basis:
Program
Maximum
Amount
(in millions) (1)
Type of
Facility
Expiration
Date
A
$
600.0
Uncommitted
December 5, 2021 (2)
B
$
150.0
Uncommitted
November 30, 2021
C
400.0
CNY
Uncommitted
August 31, 2023
D
$
150.0
Uncommitted
May 4, 2023 (3)
E
$
150.0
Uncommitted
January 25, 2022 (4)
F
$
50.0
Uncommitted
February 23, 2023 (5)
G
$
100.0
Uncommitted
August 10, 2021 (6)
H
$
100.0
Uncommitted
July 21, 2021 (7)
I
$
650.0
Uncommitted
December 4, 2021 (8)
J
$
135.0
Uncommitted
April 11, 2021 (9)
K
100.0
CHF
Uncommitted
December 5, 2021 (2)
(1) Maximum amount of trade accounts receivable that may be sold under a facility at any one time.
(2) The program will be automatically extended through December 5, 2025 unless either party provides 30 days’ notice of termination.
(3) Any party may elect to terminate the agreement upon 30 days’ prior notice.
(4) The program will be automatically extended through January 25, 2023 unless either party provides 30 days’ notice of termination.
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(5) Any party may elect to terminate the agreement upon 15 days’ prior notice.
(6) The program will be automatically extended through August 10, 2023 unless either party provides 30 days’ notice of termination.
(7) The program will be automatically extended through August 21, 2023 unless either party provides 30 days’ notice of termination.
(8) The program will be automatically extended through December 5, 2024 unless either party provides 30 days’ notice of termination.
(9) The program will be automatically extended through April 11, 2025 unless either party provides 30 days’ notice of termination.
In connection with the trade accounts receivable sale programs, the Company recognized the following (in millions):
Three months ended
Six months ended
February 28, 2021
February 29, 2020
February 28, 2021
February 29, 2020
Trade accounts receivable sold
$
1,335
$
2,201
$
2,552
$
4,163
Cash proceeds received
$
1,334
$
2,196
$
2,550
$
4,153
Pre-tax losses on sale of receivables (1)
$
1
$
5
$
2
$
10
(1) Recorded to other expense within the Condensed Consolidated Statement of Operations.
3. Inventories
Inventories consist of the following (in thousands):
February 28, 2021
August 31, 2020
Raw materials
$
2,616,353
$
2,389,719
Work in process
539,446
450,781
Finished goods
484,035
376,542
Reserve for excess and obsolete inventory
( 80,864 )
( 85,259 )
Inventories, net
$
3,558,970
$
3,131,783
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4. Notes Payable and Long-Term Debt
Notes payable and long-term debt outstanding as of February 28, 2021 and August 31, 2020 are summarized below (in thousands):
Maturity Date
February 28, 2021
August 31, 2020
4.700 % Senior Notes
Sep 15, 2022
$
498,983
$
498,659
4.900 % Senior Notes
Jul 14, 2023
299,420
299,300
3.950 % Senior Notes
Jan 12, 2028
495,745
495,440
3.600 % Senior Notes
Jan 15, 2030
495,032
494,756
3.000 % Senior Notes
Jan 15, 2031
590,708
590,162
Borrowings under credit facilities (1)
Apr 23, 2021, Jan 22, 2023 and Jan 22, 2025
—
—
Borrowings under loans
Jan 22, 2025
350,128
350,165
Total notes payable and long-term debt
2,730,016
2,728,482
Less current installments of notes payable and long-term debt
50,197
50,194
Notes payable and long-term debt, less current installments
$
2,679,819
$
2,678,288
(1) As of February 28, 2021, the Company has $ 3.8 billion in available unused borrowing capacity under its revolving credit facilities. The Revolving Credit Facility under the five-year unsecured credit facility entered into on January 22, 2020 (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.
Debt Covenants
Borrowings under the Company’s debt agreements are subject to various covenants that limit the Company’s ability to: incur additional indebtedness, sell assets, effect mergers and certain transactions, and effect certain transactions with subsidiaries and affiliates. In addition, the revolving credit facilities and the 4.900 % Senior Notes contain debt leverage and interest coverage covenants. The Company is also subject to certain covenants requiring the Company to offer to repurchase the 4.700 %, 4.900 %, 3.950 %, 3.600 % or 3.000 % Senior Notes upon a change of control. As of February 28, 2021 and August 31, 2020, the Company was in compliance with its debt covenants.
Fair Value
Refer to Note 16 – “Fair Value Measurements” for the estimated fair values of the Company’s notes payable and long-term debt.
5. Asset-Backed Securitization Programs
The Company continuously sells designated pools of trade accounts receivable, at a discount, under its foreign asset-backed securitization program and its North American asset-backed securitization program to special purpose entities, which in turn sell certain of the receivables under the foreign program to an unaffiliated financial institution and a conduit administered by an unaffiliated financial institution and certain of the receivables under the North American program to conduits administered by an unaffiliated financial institution on a monthly basis.
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 28, 2021 and February 29, 2020 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.
Transfers of the receivables under the asset-backed securitization programs are accounted for as sales and, accordingly, net receivables sold under the asset-backed securitization programs are excluded from accounts receivable on the Condensed Consolidated Balance Sheets and are reflected as cash provided by operating activities on the Condensed Consolidated Statements of Cash Flows.
The special purpose entity in the foreign asset-backed securitization program is a separate bankruptcy-remote entity whose assets would be first available to satisfy the creditor claims of the unaffiliated financial institution. The Company is
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deemed the primary beneficiary of this special purpose entity as the Company has both the power to direct the activities of the entity that most significantly impact the entity’s economic performance and the obligation to absorb losses or the right to receive the benefits that could potentially be significant to the entity from the transfer of the trade accounts receivable into the special purpose entity. 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 28, 2021, 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 28, 2021.
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 28, 2021.
Following is a summary of the asset-backed securitization programs and key terms:
Maximum Amount of
Net Cash Proceeds (in millions) (1)(2)
Expiration
Date
North American
$
390.0
November 22, 2021
Foreign
$
400.0
September 30, 2021
(1) Maximum amount available at any one time.
(2) As of February 28, 2021, the Company had up to $ 53.3 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 28, 2021
February 29, 2020
February 28, 2021
February 29, 2020
Trade accounts receivable sold
$
1,140
$
1,095
$
2,313
$
2,257
Cash proceeds received (1)
$
1,137
$
1,089
$
2,308
$
2,245
Pre-tax losses on sale of receivables (2)
$
3
$
6
$
5
$
12
(1) The amounts primarily represent proceeds from collections reinvested in revolving-period transfers.
(2) Recorded to other expense within the Condensed Consolidated Statements of Operations.
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 Credit Facility. The foreign asset-backed securitization program covenants include limitations on certain corporate actions such as mergers and consolidations. As of February 28, 2021 and August 31, 2020, the Company was in compliance with all covenants under the asset-backed securitization programs.
6. Accrued Expenses
Accrued expenses consist of the following (in thousands):
February 28, 2021
August 31, 2020
Contract liabilities (1)
$
524,053
$
496,219
Accrued compensation and employee benefits
666,808
703,250
Other accrued expenses
1,846,297
2,012,059
Accrued expenses
$
3,037,158
$
3,211,528
(1) Revenue recognized during the six months ended February 28, 2021 and February 29, 2020 that was included in the contract liability balance as of August 31, 2020 and 2019 was $ 233.3 million and $ 201.1 million, respectively.
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7 . Postretirement and Other Employee Benefits
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 28, 2021 and February 29, 2020 (in thousands):
Three months ended
Six months ended
February 28, 2021
February 29, 2020
February 28, 2021
February 29, 2020
Service cost (1)
$
6,453
$
6,638
$
12,531
$
11,101
Interest cost (2)
1,176
809
2,297
1,572
Expected long-term return on plan assets (2)
( 3,979 )
( 3,789 )
( 7,849 )
( 6,575 )
Recognized actuarial (gain) loss (2)
( 1,270 )
226
( 2,513 )
449
Amortization of actuarial gain (2)
( 1,766 )
—
( 3,490 )
—
Amortization of prior service credit (2)
( 13 )
( 11 )
( 26 )
( 22 )
Net periodic benefit cost
$
601
$
3,873
$
950
$
6,525
(1) Service cost is recognized in cost of revenue in the Condensed Consolidated Statement of Operations.
(2) Components are recognized in other expense in the Condensed Consolidated Statement of Operations.
8. Derivative Financial Instruments and Hedging Activities
The Company is directly and indirectly affected by changes in certain market conditions. These changes in market conditions may adversely impact the Company’s financial performance and are referred to as market risks. The Company, where deemed appropriate, uses derivatives as risk management tools to mitigate the potential impact of certain market risks. The primary market risks managed by the Company through the use of derivative instruments are foreign currency risk and interest rate risk.
Foreign Currency Risk Management
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 $ 658.1 million and $ 355.2 million as of February 28, 2021 and August 31, 2020, 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, 2021 and November 30, 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 28, 2021 and August 31, 2020, was $ 3.2 billion and $ 2.9 billion, respectively.
Refer to Note 16 – “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):
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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
Three months ended
Six months ended
February 28, 2021
February 29, 2020
February 28, 2021
February 29, 2020
Forward foreign exchange contracts (1)
Cost of revenue
$
36,437
$
6,801
$
120,443
$
33,518
(1) For the three months and six months ended February 28, 2021, the Company recognized $ 26.2 million and $ 99.1 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 29, 2020, the Company recognized $ 7.6 million and $ 36.4 million, respectively, of foreign currency losses in cost revenue, which are offset by the gains from the forward foreign exchange contracts.
Interest Rate Risk Management
The Company periodically enters into interest rate swaps to manage interest rate risk associated with the Company’s borrowings.
Cash Flow Hedges
The following table presents the interest rate swaps outstanding as of February 28, 2021, which have been designated as hedging instruments and accounted for as cash flow hedges:
Interest Rate Swap Summary
Hedged Interest Rate Payments
Aggregate Notional Amount (in millions)
Effective Date
Expiration Date (1)
Forward Interest Rate Swap
Anticipated Debt Issuance
Fixed
$
250.0
November 2, 2020
July 31, 2024
(2)
(1) The contracts will be settled with the respective counterparties on a net basis at the expiration date for the forward interest rate swap.
(2) If the anticipated debt issuance occurs before July 31, 2024, the contracts will be terminated simultaneously with the debt issuance.
Contemporaneously with the issuance of our 3.000 % Notes in July 2020, the Company amended interest rate swap agreements with a notional value of $ 200.0 million, with mandatory termination dates from August 15, 2020 to February 15, 2022 (the “2020 Extended Interest Rate Swaps”). In addition, the Company entered into interest rate swaps to offset future exposures of fluctuations in the fair value of the 2020 Extended Interest Rate Swaps (the “Offsetting Interest Rate Swaps”).
9. Accumulated Other Comprehensive (Loss) 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 28, 2021 (in thousands):
Foreign
Currency
Translation
Adjustment
Derivative
Instruments
Actuarial
Loss
Prior
Service Cost
Total
Balance as of August 31, 2020
$
( 36,595 )
$
( 30,996 )
$
34,093
$
( 670 )
$
( 34,168 )
Other comprehensive income (loss) before reclassifications
11,004
56,235
( 256 )
—
66,983
Amounts reclassified from AOCI
—
( 37,085 )
—
—
( 37,085 )
Other comprehensive income (loss) (1)
11,004
19,150
( 256 )
—
29,898
Balance as of February 28, 2021
$
( 25,591 )
$
( 11,846 )
$
33,837
$
( 670 )
$
( 4,270 )
(1) Amounts are net of tax, which are immaterial.
The following table sets forth the amounts reclassified from AOCI into the Condensed Consolidated Statements of Operations, and the associated financial statement line item, net of tax, for the periods indicated (in thousands):
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Three months ended
Six months ended
Comprehensive Income Components
Financial Statement Line Item
February 28, 2021
February 29, 2020
February 28, 2021
February 29, 2020
Realized (gains) losses on derivative instruments: (1)
Foreign exchange contracts
Cost of revenue
$
( 22,344 )
$
( 3,117 )
$
( 38,712 )
$
4,197
Interest rate contracts
Interest expense
810
( 431 )
1,627
( 862 )
Total amounts reclassified from AOCI (2)
$
( 21,534 )
$
( 3,548 )
$
( 37,085 )
$
3,335
(1) The Company expects to reclassify $ 4.7 million into earnings during the next twelve months, which will primarily be classified as a component of cost of revenue.
(2) Amounts are net of tax, which are immaterial for the three months and six months ended February 28, 2021 and February 29, 2020.
10. Stockholders’ Equity
The Company recognized stock-based compensation expense within selling, general and administrative expense as follows (in thousands):
Three months ended
Six months ended
February 28, 2021
February 29, 2020
February 28, 2021
February 29, 2020
Restricted stock units
$
20,324
$
12,301
$
51,597
$
40,484
Employee stock purchase plan
3,489
2,808
5,757
4,848
Total
$
23,813
$
15,109
$
57,354
$
45,332
On January 21, 2021, the 2021 Equity Incentive Plan (the “2021 EIP”) was approved by the shareholders of the Company. The 2021 EIP replaced the Company’s 2011 Stock Award and Incentive Plan, which terminated on October 21, 2020. As of February 28, 2021, the shares available to be issued under the 2021 EIP were 10,919,155 .
Restricted Stock Units
Certain key employees have been granted time-based, performance-based and market-based restricted stock unit awards (“restricted stock units”). The time-based restricted stock units generally vest on a graded vesting schedule over three years . T he performance-based restricted stock units generally vest on a cliff vesting schedule over three years and up to a maximum of 150 %, depending on the specified performance condition and the level of achievement obtained. The performance-based restricted stock units have a vesting condition that is based upon the Company’s cumulative adjusted core earnings per share during the performance period. The market-based restricted stock units generally vest on a cliff vesting schedule over three years and up to a maximum of 200 %, depending on the specified performance condition and the level of achievement obtained. The market-based restricted stock units ha ve 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 28, 2021 and February 29, 2020, the Company awarded approximately 1.2 million and 1.1 million time-based restricted stock units, respectively, 0.4 million and 0.3 million performance-based restricted stock units, respectively, and 0.3 million and 0.3 million market-based restricted stock units, respectively.
The following represents the stock-based compensation information as of the period indicated (in thousands):
February 28, 2021
Unrecognized stock-based compensation expense—restricted stock units
$
58,206
Remaining weighted-average period for restricted stock units expense
1.5 years
Common Stock Outstanding
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The following represents the common stock outstanding for the periods indicated:
Three months ended
Six months ended
February 28, 2021
February 29, 2020
February 28, 2021
February 29, 2020
Common stock outstanding:
Beginning balances
150,471,570
152,300,356
150,330,358
153,520,380
Shares issued upon exercise of stock options
—
43,069
—
56,999
Shares issued under employee stock purchase plan
771,548
595,717
771,548
595,717
Vesting of restricted stock
24,054
322,872
2,241,136
2,239,612
Purchases of treasury stock under employee stock plans
( 8,873 )
( 86,706 )
( 610,279 )
( 617,123 )
Treasury shares purchased (1)
( 1,891,798 )
( 1,767,782 )
( 3,366,262 )
( 4,388,059 )
Ending balances
149,366,501
151,407,526
149,366,501
151,407,526
(1) 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 28, 2021, 9.4 million shares had been repurchased for $ 345.9 million and $ 254.1 million remains available under the 2020 Share Repurchase Program. The 2020 Share Repurchase Program authorization expires at the end of fiscal year 2021.
11. Concentration of Risk and Segment Data
Concentration of Risk
Sales of the Company’s products are concentrated among specific customers. During the six months ended February 28, 2021, the Company’s five largest customers accounted for approximately 49 % of its net revenue and 75 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.
The Company procures components from a broad group of suppliers. Some of the products manufactured by the Company require one or more components that are available from only a single source.
Segment Data
Net revenue for the operating segments is attributed to the segment in which the service is performed. An operating segment’s performance is evaluated based on its pre-tax operating contribution, or segment income. 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, 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.
As of September 1, 2020, certain customers have been realigned within the Company’s operating segments. As there have been no changes to how the Company’s chief operating decision maker assesses operating performance and allocates resources, the Company’s operating segments which are the reporting segments continue to consist of the DMS and EMS segments. Customers within the automotive and transportation and smart home and appliances industries are now presented within the DMS segment. Prior period disclosures are restated to reflect the realignment.
The following table presents the Company’s revenues disaggregated by segment (in thousands):
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Three months ended
February 28, 2021
February 29, 2020
EMS
DMS
Total
EMS
DMS
Total
Timing of transfer
Point in time
$
819,139
$
1,782,089
$
2,601,228
$
980,581
$
1,147,870
$
2,128,451
Over time
2,360,343
1,866,975
4,227,318
2,240,232
1,756,400
3,996,632
Total
$
3,179,482
$
3,649,064
$
6,828,546
$
3,220,813
$
2,904,270
$
6,125,083
Six months ended
February 28, 2021
February 29, 2020
EMS
DMS
Total
EMS
DMS
Total
Timing of transfer
Point in time
$
1,876,158
$
4,021,917
$
5,898,075
$
2,364,333
$
3,024,507
$
5,388,840
Over time
4,896,371
3,866,629
8,763,000
4,615,418
3,626,523
8,241,941
Total
$
6,772,529
$
7,888,546
$
14,661,075
$
6,979,751
$
6,651,030
$
13,630,781
The following tables set forth operating segment information (in thousands):
Three months ended
Six months ended
February 28, 2021
February 29, 2020
February 28, 2021
February 29, 2020
Segment income and reconciliation of income before income tax
EMS
$
98,117
$
72,501
$
220,095
$
161,855
DMS
186,489
86,947
429,448
274,908
Total segment income
$
284,606
$
159,448
$
649,543
$
436,763
Reconciling items:
Amortization of intangibles
( 11,639 )
( 13,577 )
( 23,094 )
( 29,717 )
Stock-based compensation expense and related charges
( 23,813 )
( 15,109 )
( 57,354 )
( 45,332 )
Restructuring, severance and related charges
( 6,626 )
( 29,604 )
( 4,911 )
( 74,855 )
Distressed customer charge
—
—
—
( 14,963 )
Business interruption and impairment charges, net
806
—
806
—
Acquisition and integration charges
( 1,261 )
( 7,752 )
( 3,374 )
( 23,886 )
Impairment on securities
—
( 12,205 )
—
( 12,205 )
Other expense (net of periodic benefit cost)
( 4,164 )
( 11,277 )
( 7,835 )
( 24,274 )
Interest income
1,655
5,336
3,536
11,280
Interest expense
( 31,026 )
( 46,183 )
( 63,372 )
( 91,094 )
Income before income tax
$
208,538
$
29,077
$
493,945
$
131,717
February 28, 2021
August 31, 2020
Total assets
EMS
$
3,765,147
$
3,233,681
DMS
6,798,932
6,641,764
Other non-allocated assets
3,930,084
4,521,971
$
14,494,163
$
14,397,416
As of February 28, 2021, 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.
The following table sets forth, for the periods indicated, foreign source revenue expressed as a percentage of net revenue:
14
Table of Contents
Three months ended
Six months ended
February 28, 2021
February 29, 2020
February 28, 2021
February 29, 2020
Foreign source revenue
84.7
%
82.6
%
84.1
%
82.2
%
12. 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 28, 2021
February 29, 2020
February 28, 2021
February 29, 2020
Employee severance and benefit costs
$
2,140
$
8,012
$
2,708
$
26,793
Lease costs
—
6,229
( 2,873 )
6,468
Asset write-off costs
4,592
9,109
4,590
25,425
Other costs
( 106 )
6,254
486
16,169
Total restructuring, severance and related charges (1)
$
6,626
$
29,604
$
4,911
$
74,855
(1) Primarily relates to the 2020 Restructuring Plan, and includes $ 2.5 million and $ 14.7 million recorded in the EMS segment, $ 4.0 million and $ 14.5 million recorded in the DMS segment and $ 0.1 million and $ 0.4 million of non-allocated charges for the three months ended February 28, 2021 and February 29, 2020, respectively. Includes $( 0.5 ) million and $ 32.1 million recorded in the EMS segment, $ 5.0 million and $ 39.7 million recorded in the DMS segment and $ 0.4 million and $ 3.1 million of non-allocated charges for the six months ended February 28, 2021 and February 29, 2020, respectively. Except for asset write-off costs, all restructuring, severance and related charges are cash costs.
2020 Restructuring Plan
On September 20, 2019, the Company’s Board of Directors formally approved a restructuring plan to realign the Company’s global capacity support infrastructure, particularly in the Company’s mobility footprint in China, in order to optimize organizational effectiveness. This action includes headcount reductions and capacity realignment (the “2020 Restructuring Plan”).
The 2020 Restructuring Plan, totaling $ 85.0 million in restructuring and other related costs, is substantially complete as of February 28, 2021.
The table below summarizes the Company’s liability activity, primarily associated with the 2020 Restructuring Plan
(in thousands):
Employee Severance
and Benefit Costs
Lease Costs
Asset Write-off Costs
Other Related Costs
Total
Balance as of August 31, 2020
$
8,143
$
2,316
$
—
$
426
$
10,885
Restructuring related charges
2,322
( 2,873 )
4,344
599
4,392
Asset write-off charge and other non-cash activity
( 9 )
1,554
( 4,344 )
2
( 2,797 )
Cash payments
( 6,395 )
( 113 )
—
( 629 )
( 7,137 )
Balance as of February 28, 2021
$
4,061
$
884
$
—
$
398
$
5,343
The Company’s liability associated with the worldwide workforce reduction initiated in the third quarter of fiscal year 2020 is $ 18.3 million as of February 28, 2021.
13. Income Taxes
Effective Income Tax Rate
The U.S. federal statutory income tax rate and the Company's effective income tax rate are as follows:
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Table of Contents
Three months ended
Six months ended
February 28, 2021
February 29, 2020
February 28, 2021
February 29, 2020
U.S. federal statutory income tax rate
21.0
%
21.0
%
21.0
%
21.0
%
Effective income tax rate
26.9
%
108.9
%
28.5
%
71.0
%
The effective income tax rate decreased for the three months and six months ended February 28, 2021, compared to the three months and six months ended February 29, 2020, primarily due to increased income for the three months and six months ended February 28, 2021, driven in part by decreased restructuring charges in tax jurisdictions with minimal related income tax benefit.
The effective income tax rate differed from the U.S. federal statutory income tax rate of 21.0% during the three months and six months ended February 28, 2021 and February 29, 2020, primarily due to: (i) losses in tax jurisdictions with existing valuation allowances and (ii) tax incentives granted to sites in Brazil, China, Malaysia, Singapore and Vietnam.
14. Earnings Per Share and Dividends
Earnings Per Share
The Company calculates its basic earnings per share by dividing net income attributable to the Company by the weighted average number of common shares outstanding during the period. The Company’s diluted earnings per share is calculated in a similar manner, but includes the effect of dilutive securities. The difference between the weighted average number of basic shares outstanding and the weighted average number of diluted shares outstanding is primarily due to dilutive unvested restricted stock units and dilutive stock appreciation rights.
Potential shares of common stock are excluded from the computation of diluted earnings per share when their effect would be antidilutive. Performance-based restricted stock units are considered dilutive when the related performance criteria have been met assuming the end of the reporting period represents the end of the performance period. All potential shares of common stock are antidilutive in periods of net loss. Potential shares of common stock not included in the computation of earnings per share because their effect would have been antidilutive or because the performance criterion was not met were as follows (in thousands):
Three months ended
Six months ended
February 28, 2021
February 29, 2020
February 28, 2021
February 29, 2020
Restricted stock units
1,104
4,499
1,074
1,035
Employee stock purchase plan
—
164
2
—
Stock appreciation rights
—
28
—
—
Dividends
The following table sets forth cash dividends declared by the Company to common stockholders during the six months ended February 28, 2021 and February 29, 2020 (in thousands, except for per share data):
Dividend
Declaration Date
Dividend
per Share
Total of Cash
Dividends
Declared
Date of Record for
Dividend Payment
Dividend Cash
Payment Date
Fiscal Year 2021:
October 15, 2020
$
0.08
$
12,417
November 16, 2020
December 2, 2020
January 21, 2021
$
0.08
$
12,371
February 15, 2021
March 2, 2021
Fiscal Year 2020:
October 17, 2019
$
0.08
$
12,647
November 15, 2019
December 2, 2019
January 23, 2020
$
0.08
$
12,517
February 14, 2020
March 4, 2020
15. Business Acquisitions
During fiscal year 2018, the Company and Johnson & Johnson Medical Devices Companies (“JJMD”) entered into a Framework Agreement to form a strategic collaboration and expand its existing relationship. The strategic collaboration expands the Company’s medical device manufacturing portfolio, diversification and capabilities.
On October 26, 2020, under the terms of the Framework Agreement, the Company completed the fourth closing of its acquisition of certain assets of JJMD. The preliminary aggregate purchase price paid for the fourth closing was approximately
16
Table of Contents
$ 18.4 million in cash, which remains subject to certain post-closing adjustments based on conditions within the Framework Agreement. Total assets acquired of $ 30.6 million and total liabilities assumed of $ 12.2 million were recorded at their estimated fair values as of the acquisition date.
The acquisition of the JJMD assets was accounted for as a business combination using the acquisition method of accounting. The Company is currently evaluating the fair value of the assets and liabilities related to the fourth closing. 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 October 26, 2020 for the fourth closing. The Company believes it is impracticable to provide pro forma information for the acquisition of the JJMD assets.
16. Fair Value Measurements
Fair Value Measurements on a Recurring Basis
The following table presents the fair value of the Company's financial assets and liabilities measured at fair value by hierarchy level on a recurring basis as of the periods indicated:
(in thousands)
Fair Value Hierarchy
February 28, 2021
August 31, 2020
Assets:
Cash and cash equivalents:
Cash equivalents
Level 1
(1)
$
46,900
$
33,869
Prepaid expenses and other current assets:
Short-term investments
Level 1
16,878
16,556
Forward foreign exchange contracts:
Derivatives designated as hedging instruments (Note 8)
Level 2
(2)
15,506
11,201
Derivatives not designated as hedging instruments (Note 8)
Level 2
(2)
73,371
58,893
Other assets:
Forward interest rate swap:
Derivatives designated as hedging instruments (Note 8)
Level 2
(3)
17,547
—
Liabilities:
Accrued expenses:
Forward foreign exchange contracts:
Derivatives designated as hedging instruments (Note 8)
Level 2
(2)
$
3,149
$
1,522
Derivatives not designated as hedging instruments (Note 8)
Level 2
(2)
6,922
9,100
Interest rate swaps:
Derivatives not designated as hedging instruments (Note 8)
Level 2
(3)
7,890
540
Extended interest rate swap not designated as a hedging instrument (Note 8)
Level 2
(4)
18,190
26,492
Other liabilities:
Interest rate swaps:
Derivatives not designated as hedging instruments (Note 8)
Level 2
(3)
—
329
Extended interest rate swap not designated as a hedging instrument (Note 8)
Level 2
(4)
—
13,111
(1) Consist of investments that are readily convertible to cash with original maturities of 90 days or less.
(2) The Company’s forward foreign exchange contracts are measured on a recurring basis at fair value, based on foreign currency spot rates and forward rates quoted by banks or foreign currency dealers.
(3) Fair value measurements are based on the contractual terms of the derivatives and use observable market-based inputs. The interest rate swaps are valued using a discounted cash flow analysis on the expected cash flows of each derivative using observable inputs including interest rate curves and credit spreads.
(4) The 2020 Extended Interest Rate Swaps are considered a hybrid instrument and the Company elected the fair value option for reporting. Fair value measurements are based on the contractual terms of the contract and use observable market-based inputs. The interest rate swaps are valued using a discounted cash flow analysis of the expected cash flows using observable inputs including interest rate curves and credit spreads.
Assets Held for Sale
17
Table of Contents
The following table presents the assets held for sale:
February 28, 2021
August 31, 2020
(in thousands)
Carrying Amount
Carrying Amount
Assets held for sale (1)
$
60,580
$
67,380
(1) The fair value of assets held for sale exceeds the carrying value for $ 30.1 million of assets held for sale. For $ 30.5 million of assets held for sale, the carrying value approximates the fair value with the asset value measured using Level 2 inputs.
Fair Value of Financial Instruments
The carrying amounts of cash and cash equivalents, trade accounts receivable, prepaid expenses and other current assets, accounts payable and accrued expenses approximate fair value because of the short-term nature of these financial instruments. The carrying amounts of borrowings under credit facilities and under loans approximates fair value as interest rates on these instruments approximates current market rates.
Notes payable and long-term debt is carried at amortized cost; however, the Company estimates the fair values of notes payable and long-term debt for disclosure purposes. 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 28, 2021
August 31, 2020
(in thousands)
Fair Value Hierarchy
Carrying Amount
Fair Value
Carrying Amount
Fair Value
Notes payable and long-term debt:
4.700 % Senior Notes
Level 2
(1)
$
498,983
$
531,245
$
498,659
$
537,180
4.900 % Senior Notes
Level 3
(2)
$
299,420
$
327,954
$
299,300
$
329,435
3.950 % Senior Notes
Level 2
(1)
$
495,745
$
561,425
$
495,440
$
551,930
3.600 % Senior Notes
Level 2
(1)
$
495,032
$
535,905
$
494,756
$
536,110
3.000 % Senior Notes
Level 2
(1)
$
590,708
$
612,480
$
590,162
$
611,616
(1) The fair value estimates are based upon observable market data.
(2) This fair value estimate is based on the Company’s indicative borrowing cost derived from discounted cash flows.
17. Commitments and Contingencies
Leases
During the six months ended February 28, 2021, the Company entered into certain new finance leases with minimum lease payments of $ 95.3 million, due primarily in 2023.
Legal Proceedings
The Company is party to certain lawsuits in the ordinary course of business. The Company does not believe that these proceedings, individually or in the aggregate, will have a material adverse effect on the Company’s financial position, results of operations or cash flows.
18. New Accounting Guidance
Recently Adopted Accounting Guidance
During fiscal year 2016, the FASB issued an accounting standard, which replaces the existing incurred loss impairment model with an expected credit loss model and requires a financial asset measured at amortized cost to be presented at the net amount expected to be collected. The Company adopted the guidance during the first quarter of fiscal year 2021. The adoption of this standard did not have a material impact on the Company’s Consolidated Financial Statements.
During fiscal year 2018, the FASB issued a new accounting standard which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. This guidance is effective for the Company beginning
18
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in the first quarter of fiscal year 2021. The adoption of this standard did not have a material impact on the Company’s Consolidated Financial Statements.
Recently Issued Accounting Guidance
Recently issued accounting guidance is not applicable or did not have, or is not expected to have, a material impact to the Company.
19
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JABIL INC. AND SUBSIDIARIES
This Quarterly Report on Form 10-Q contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties. Many of the forward-looking statements are located in Item 2 of this Form 10-Q under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Forward-looking statements can also be identified by words such as “future,” “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “will,” “would,” “should,” “could,” “can,” “may,” and similar terms. Forward-looking statements are not guarantees of future performance and the Company’s actual results may differ significantly from the results discussed in the forward-looking statements. Achievement of anticipated results is subject to substantial risks, uncertainties and inaccurate assumptions. Should known or unknown risks or uncertainties materialize, or should underlying assumptions prove inaccurate, actual results could vary materially from past results and those anticipated, estimated or projected. You should bear this in mind as you consider forward-looking statements, and you are cautioned not to put undue reliance on forward-looking statements. We undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law or by the rules and regulations of the SEC. You are advised, however, to consult any further disclosures we make on related subjects. Factors that might cause such differences include, but are not limited to, those discussed in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the year ended August 31, 2020 such as, the scope and duration of the COVID-19 outbreak and its impact on our operations, sites, customers and supply chain; managing growth effectively; our dependence on a limited number of customers; competitive challenges affecting our customers; managing rapid declines or increases in customer demand and other related customer challenges that may occur; risks arising from relationships with emerging companies; changes in technology; our ability to introduce new business models or programs requiring implementation of new competencies; competition; transportation issues; our ability to maintain our engineering, technological and manufacturing expertise; retaining key personnel; our ability to purchase components efficiently and reliance on a limited number of suppliers for critical components; risks associated with international sales and operations; our ability to achieve expected profitability from acquisitions; risk arising from our restructuring activities; issues involving our information systems, including security issues; regulatory risks (including the expense of complying, or failing to comply, with applicable regulations; risk arising from design or manufacturing defects; and intellectual property risk); financial risks (including customers or suppliers who become financially troubled; turmoil in financial markets; tax risks; credit rating risks; risks of exposure to debt; currency fluctuations; energy prices; and asset impairment); changes in financial accounting standards or policies; and risk of natural disaster, climate change or other global events. References in this report to “the Company,” “Jabil,” “we,” “our,” or “us” mean Jabil Inc. together with its subsidiaries, except where the context otherwise requires.
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