What changed in this filing

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Item 1. Financial Statements

2022-01-07 compared with 2021-07-02 · 159 added, 274 removed, 411 unchanged (51% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except for share data)

(in millions, except for share data)

November 30, 2021

August 31, 2021

1 unchanged sentence

Cash and cash equivalents

Accounts receivable, net of allowance for doubtful accounts of $ 26,939 as of May 31, 2021 and $ 25,827 as of August 31, 2020

Accounts receivable, net of allowance for doubtful accounts

Contract assets

2 unchanged sentences

Total current assets

Property, plant and equipment, net of accumulated depreciation of $ 4,922,191 as of May 31, 2021 and $ 4,525,758 as of August 31, 2020

Property, plant and equipment, net of accumulated depreciation of $ 5,189 as of November 30, 2021 and $ 5,033 as of August 31, 2021

Operating lease right-of-use asset

Intangible assets, net of accumulated amortization of $ 430,994 as of May 31, 2021 and $ 395,074 as of August 31, 2020

Intangible assets, net of accumulated amortization of $ 449 as of November 30, 2021 and $ 442 as of August 31, 2021

Deferred income taxes

17 unchanged sentences

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

266,865,062 and 263,830,270 shares issued and 146,837,466 and 150,330,358 shares outstanding as of May 31, 2021 and August 31, 2020, respectively

269,843,564 and 267,418,092 shares issued and 144,166,009 and 144,496,077 shares outstanding as of November 30, 2021 and August 31, 2021, respectively

Additional paid-in capital

1 unchanged sentence

Accumulated other comprehensive loss

Treasury stock at cost, 120,027,596 and 113,499,912 shares as of May 31, 2021 and August 31, 2020, respectively

( 2,893,193 )

( 2,609,250 )

Treasury stock at cost, 125,677,555 and 122,922,015 shares as of November 30, 2021 and August 31, 2021, respectively

Total Jabil Inc.

5 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except for per share data)

(in millions, except for per share data)

Three months ended

Nine months ended

November 30, 2021

November 30, 2020

Cost of revenue

5 unchanged sentences

Operating income

(Gain) impairment on securities

Other (income) expense

Other expense (income)

Interest income

2 unchanged sentences

Income tax expense

Net income (loss)

Net income attributable to noncontrolling interests, net of tax

Net income (loss) attributable to Jabil Inc.

Earnings (loss) per share attributable to the stockholders of Jabil Inc.:

Net income attributable to Jabil Inc.

Earnings per share attributable to the stockholders of Jabil Inc.:

Weighted average shares outstanding:

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

(in millions)

Three months ended

Nine months ended

Net income (loss)

Other comprehensive income (loss):

November 30, 2021

November 30, 2020

Other comprehensive (loss) income:

Change in foreign currency translation

1 unchanged sentence

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

Unrealized loss on available for sale securities

Actuarial loss

Total other comprehensive income (loss)

Comprehensive income (loss)

Prior service credit

Total other comprehensive (loss) income

Comprehensive income

Comprehensive income attributable to noncontrolling interests

Comprehensive income (loss) attributable to Jabil Inc.

Comprehensive income attributable to Jabil Inc.

See accompanying notes to Condensed Consolidated Financial Statements.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands)

(in millions)

Three months ended

Nine months ended

November 30, 2021

November 30, 2020

Total stockholders' equity, beginning balances

Common stock:

Beginning balances

Shares issued under employee stock purchase plan

Vesting of restricted stock

Ending balances

Additional paid-in capital:

Beginning balances

Shares issued under employee stock purchase plan

Vesting of restricted stock

Purchase of noncontrolling interest

Recognition of stock-based compensation

3 unchanged sentences

Declared dividends

Net income (loss) attributable to Jabil Inc.

Net income attributable to Jabil Inc.

Ending balances

Accumulated other comprehensive income (loss):

Accumulated other comprehensive loss:

Beginning balances

Other comprehensive income (loss)

Other comprehensive income

Ending balances

1 unchanged sentence

Beginning balances

( 2,763,214 )

( 2,563,282 )

( 2,609,250 )

( 2,371,612 )

Purchases of treasury stock under employee stock plans

1 unchanged sentence

Ending balances

( 2,893,193 )

( 2,584,198 )

( 2,893,193 )

( 2,584,198 )

Noncontrolling interests:

1 unchanged sentence

Net income attributable to noncontrolling interests

Purchase of noncontrolling interest

Declared dividends to noncontrolling interests

Ending balances

3 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

Nine months ended

Cash flows provided by operating activities:

Net income (loss)

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

Depreciation and amortization

Restructuring and related charges

Recognition of stock-based compensation expense and related charges

Deferred income taxes

Provision for allowance for doubtful accounts

(in millions)

Three months ended

November 30, 2021

November 30, 2020

Cash flows (used in) provided by operating activities:

Depreciation, amortization, and other, net

Change in operating assets and liabilities, exclusive of net assets acquired

Accounts receivable

Contract assets

Prepaid expenses and other current assets

Accounts payable, accrued expenses and other liabilities

Net cash provided by operating activities

Net cash (used in) provided by operating activities

Cash flows used in investing activities:

6 unchanged sentences

Payments toward debt agreements

( 9,533,522 )

Payments to acquire treasury stock

Dividends paid to stockholders

Net proceeds from exercise of stock options and issuance of common stock under employee stock purchase plan

Treasury stock minimum tax withholding related to vesting of restricted stock

14 unchanged sentences

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 “Company”) has made certain reclassification adjustments to conform prior periods’ Condensed Consolidated Financial Statements to the current presentation.

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, 2021.

Results for the nine months ended May 31, 2021 are not necessarily an indication of the results that may be expected for the full fiscal year ending August 31, 2021.

Results for the three months ended November 30, 2021 are not necessarily an indication of the results that may be expected for the full fiscal year ending August 31, 2022.

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.

The Company regularly sells designated pools of high credit quality trade accounts receivable, at a discount, 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.

As of November 30, 2021, the Company may elect to sell receivables and the unaffiliated financial institution may elect to purchase specific accounts receivable at any one time up to a:

(i) maximum aggregate amount available of $ 2.0 billion under nine trade accounts receivable sale programs, (ii) maximum amount available of 400 million CNY under one trade accounts receivable sale program and (iii) maximum amount available of 100 million CHF under one trade accounts receivable sale program.

The trade accounts receivable sale programs expire on various dates through 2025.

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 nine months ended May 31, 2021 and 2020 were not material.

Servicing fees related to the trade accounts receivable sale programs recognized during the three months ended November 30, 2021 and 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:

(in millions) (1)

December 5, 2021 (2)

November 30, 2021

August 31, 2023

May 4, 2023 (3)

January 25, 2022 (4)

February 23, 2023 (5)

August 10, 2021 (6)

July 21, 2021 (7)

December 4, 2021 (8)

April 11, 2022 (9)

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.

(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

Nine months ended

November 30, 2021

November 30, 2020

Trade accounts receivable sold (1)

1 unchanged sentence

Pre-tax losses on sale of receivables (2)

(1) Receivables sold 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.

(2) Recorded to other expense within the Condensed Consolidated Statement of Operations.

Inventories consist of the following (in thousands):

Inventories consist of the following (in millions):

November 30, 2021

August 31, 2021

4 unchanged sentences

Inventories, net

During fiscal year 2022, the Company entered into new operating and finance leases.

The future minimum lease payments under these new leases as of November 30, 2021 were as follows (in millions):

Payments due by period (in millions)

After 5 years

Operating lease obligations (1)

Finance lease obligations (1)

(1) Excludes $ 28 million of payments related to leases signed but not yet commenced.

Additionally, certain leases signed but not yet commenced contain residual value guarantees and purchase options not deemed probable.

Notes Payable and Long-Term Debt

Notes payable and long-term debt outstanding as of May 31, 2021 and August 31, 2020 are summarized below (in thousands):

Notes payable and long-term debt outstanding as of November 30, 2021 and August 31, 2021 are summarized below (in millions):

Maturity Date

November 30, 2021

August 31, 2021

11 unchanged sentences

Notes payable and long-term debt, less current installments

(1) On April 14, 2021, the Company issued $ 500.0 million of publicly registered 1.700 % Senior Notes due 2026 (the “ 1.700 % Senior Notes”).

The Company used the net proceeds for general corporate purposes, including repayment of the prior $ 300.0 million Term Loan Facility.

(2) On April 28, 2021, the Company entered into an amendment (the “Amendment”) to its senior unsecured credit agreement dated as of January 22, 2020 (the “Credit Facility”).

The Amendment, among other things, (i) increased the commitments available under the three-year revolving credit facility (the “ Three-Year Revolving Credit Facility”) from $ 700.0 million to $ 1.2 billion, (ii) instituted certain sustainability-linked adjustments to the interest rates applicable to borrowings under the Credit Facility and (iii) extended the termination date of the Three-Year Revolving Credit Facility to January 22, 2024, and of the Five-Year Revolving Credit Facility of $ 2.0 billion to January 22, 2026.

(3) As of May 31, 2021, the Company has $ 3.8 billion in available unused borrowing capacity under its revolving credit facilities.

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

(1) As of November 30, 2021, the Company has $ 3.8 billion in available unused borrowing capacity under its revolving credit facilities.

The senior unsecured credit agreement dated as of January 22, 2020 and amended on April 28, 2021 (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.

4 unchanged sentences

The Company is also subject to certain covenants requiring the Company to offer to repurchase the 4.700 %, 4.900 %, 3.950 %, 3.600 %, 3.000 % or 1.700 % Senior Notes upon a change of control.

As of May 31, 2021 and August 31, 2020, the Company was in compliance with its debt covenants.

As of November 30, 2021 and August 31, 2021, the Company was in compliance with its debt covenants.

Refer to Note 15 – “Fair Value Measurements” for the estimated fair values of the Company’s notes payable and long-term debt.

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 nine months ended May 31, 2021 and 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 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 May 31, 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 May 31, 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 May 31, 2021.

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

Maximum Amount of

Net Cash Proceeds (in millions) (1)(2)

North American

November 22, 2021

(1) Maximum amount available at any one time.

(2) As of May 31, 2021, the Company had up to $ 148.5 million in available liquidity under its asset-backed securitization programs, of which all available liquidity related to the foreign asset-backed securitization program.

Asset-Backed Securitization Program

Certain Jabil entities participating in the global asset-backed securitization program continuously sell designated pools of trade accounts receivable to a special purpose entity, which in turn sells certain of the receivables at a discount to conduits administered by an unaffiliated financial institution on a monthly basis.

In addition, a foreign entity participating in the global

asset-backed securitization program sells certain receivables at a discount to conduits administered by an unaffiliated financial institution on a daily basis.

The Company terminated the foreign asset-backed securitization program on June 28, 2021.

In connection with the termination, the Company paid approximately $ 167.0 million in cash, which consisted of a remittance of collections received prior to that date in the Company’s role as servicer of sold receivables, and a repurchase at fair value of all previously sold receivables that remained outstanding as of that date.

The Company expects to receive payment on the repurchased receivables from the related customers during the fourth quarter of fiscal year 2021.

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

The Company continues servicing the receivables sold and in exchange receives a servicing fee under the global asset-backed securitization program.

Servicing fees related to the asset-backed securitization programs recognized during the three months ended November 30, 2021 and 2020 were not material.

The special purpose entity in the global 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 up to the maximum amount of net cash proceeds available under the domestic, or U.S., portion of the global asset-backed securitization program are pledged as collateral to the unaffiliated financial institution as of November 30, 2021.

The global asset-backed securitization program expires on November 25, 2024 and the maximum amount of net cash proceeds available at any one time is $ 600 million.

As of November 30, 2021, the Company had no available liquidity under its global asset-backed securitization program.

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

Three months ended

Nine months ended

November 30, 2021

November 30, 2020 (4)

Trade accounts receivable sold (1)

1 unchanged sentence

Pre-tax losses on sale of receivables (3)

(2) The amounts primarily represent proceeds from collections reinvested in revolving-period transfers.

(3) 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 May 31, 2021 and August 31, 2020, the Company was in compliance with all covenants under the asset-backed securitization programs.

(4) Activity includes the foreign asset-backed securitization program which terminated on June 28, 2021.

The global asset-backed securitization program requires compliance with several covenants including compliance with the interest ratio and debt to EBITDA ratio of the Credit Facility.

As of November 30, 2021 and August 31, 2021, the Company was in compliance with all covenants under the global asset-backed securitization program.

Accrued Expenses

Accrued expenses consist of the following (in thousands):

Accrued expenses consist of the following (in millions):

November 30, 2021

August 31, 2021

1 unchanged sentence

Accrued compensation and employee benefits

Inventory deposits

Other accrued expenses

Accrued expenses

(1) Revenue recognized during the nine months ended May 31, 2021 and 2020 that was included in the contract liability balance as of August 31, 2020 and 2019 was $ 306.0 million and $ 260.9 million , respectively.

(1) Revenue recognized during the three months ended November 30, 2021 and 2020 that was included in the contract liability balance as of August 31, 2021 and 2020 was $ 98 million and $ 170 million , respectively.

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 nine months ended May 31, 2021 and 2020 (in thousands):

The following table provides information about the net periodic benefit cost for all plans for the three months ended November 30, 2021 and 2020 (in millions):

Three months ended

Nine months ended

November 30, 2021

November 30, 2020

Service cost (1)

1 unchanged sentence

Expected long-term return on plan assets (2)

Recognized actuarial (gain) loss (2)

Recognized actuarial gain (2)

Amortization of actuarial gain (2)(3)

Amortization of prior service credit (2)

Amortization of prior service cost (2)

Net periodic benefit cost

1 unchanged sentence

(2) Components are recognized in other expense in the Condensed Consolidated Statement of Operations.

(3) Actuarial gains and losses are amortized using a corridor approach.

The gain/loss corridor is equal to 10 percent of the greater of the projected benefit obligation and the fair value of plan assets.

Gains and losses in excess of the corridor are generally amortized over the average future working lifetime of the plan participants.

Derivative Financial Instruments and Hedging Activities

5 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 $ 1.0 billion and $ 355.2 million as of May 31, 2021 and August 31, 2020, respectively.

A hedging relationship existed with an aggregate notional amount outstanding of $ 1.3 billion and $ 1.5 billion as of November 30, 2021 and August 31, 2021, 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 June 1, 2021 and May 31, 2022.

The anticipated foreign currency denominated revenues and expenses being hedged are expected to occur between December 1, 2021 and November 30, 2022.

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 May 31, 2021 and August 31, 2020, was $ 3.3 billion and $ 2.9 billion, respectively.

The aggregate notional amount of these outstanding contracts as of November 30, 2021 and August 31, 2021, was $ 3.5 billion and $ 3.6 billion, respectively.

Refer to Note 15 – “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 and losses from forward contracts recorded in the Condensed Consolidated Statements of Operations for the periods indicated (in thousands):

The gains and losses recognized in earnings due to 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 millions):

Derivatives Not Designated as Hedging Instruments Under ASC 815

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

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

Location of Gain on Derivatives Recognized in Net Income

Amount of Gain Recognized in Net Income on Derivatives

Three months ended

Nine months ended

November 30, 2021

November 30, 2020

Forward foreign exchange contracts (1)

Cost of revenue

(1) For the three months and nine months ended May 31, 2021, the Company recognized $ 21.5 million and $ 120.6 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 nine months ended May 31, 2020, the Company recognized $ 36.9 million and $ 0.4 million, respectively, of foreign currency gains in cost revenue, which are offset by the losses from the forward foreign exchange contracts.

(1) For the three months ended November 30, 2021 and 2020, the Company recognized $ 27 million and $ 73 million, respectively, 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 May 31, 2021, 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 November 30, 2021, which have been designated as hedging instruments and accounted for as cash flow hedges:

Interest Rate Swap Summary

13 unchanged sentences

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”).

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 nine months ended May 31, 2021 (in thousands):

The change in fair value of the 2020 Extended Interest Rate Swaps and Offsetting Interest Rate Swaps is recorded in the Consolidated Statements of Income through the maturity date as an adjustment to interest expense.

Accumulated Other Comprehensive Income

The following table sets forth the changes in accumulated other comprehensive income (“AOCI”), net of tax, by component for the three months ended November 30, 2021 (in millions):

Service (Cost) Credit

Balance as of August 31, 2021

Other comprehensive income (loss) before reclassifications

Other comprehensive (loss) income before reclassifications

Amounts reclassified from AOCI

Other comprehensive income (loss) (1)

Balance as of May 31, 2021

Other comprehensive (loss) income (1)

Balance as of November 30, 2021

(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):

Three months ended

Nine months ended

Comprehensive Income Components

Financial Statement Line Item

Realized (gains) losses on derivative instruments:

November 30, 2021

November 30, 2020

Realized losses (gains) on derivative instruments:

Foreign exchange contracts

2 unchanged sentences

Interest expense

Actuarial gain

Prior service cost

Total amounts reclassified from AOCI (3)

(1) The Company expects to reclassify $ 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 nine months ended May 31, 2021 and 2020.

(2) Amounts are included in the computation of net periodic benefit pension cost.

Refer to Note 8 – “Postretirement and Other Employee Benefits” for additional information.

(3) Amounts are net of tax, which are immaterial for the three months ended November 30, 2021 and 2020.

Stockholders’ Equity

The Company recognized stock-based compensation expense within selling, general and administrative expense as follows (in thousands):

The Company recognized stock-based compensation expense within selling, general and administrative expense as follows (in millions):

Three months ended

Nine months ended

November 30, 2021

November 30, 2020

Restricted stock units

Employee stock purchase plan

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 May 31, 2021, the shares available to be issued under the 2021 EIP w ere 10,965,250 .

As of November 30, 2021, the shares available to be issued under the 2021 Equity Incentive Plan w ere 9,852,269 .

Restricted Stock Units

5 unchanged sentences

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 nine months ended May 31, 2021 and 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):

During the three months ended November 30, 2021 and 2020, the Company awarded approximately 0.7 million and 1.1 million time-based restricted stock units, respectively, 0.2 million and 0.3 million performance-based restricted stock units, respectively, and 0.2 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 millions):

November 30, 2021

Unrecognized stock-based compensation expense—restricted stock units

3 unchanged sentences

Three months ended

Nine months ended

November 30, 2021

November 30, 2020

Common stock outstanding:

Beginning balances

Shares issued upon exercise of stock options

Shares issued under employee stock purchase plan

Vesting of restricted stock

3 unchanged sentences

( 1,474,464 )

( 5,231,975 )

Ending balances

(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 May 31, 2021, 11.9 million shares had been repurchased for $ 475.6 million and $ 124.4 million remains available under the 2020 Share Repurchase Program.

The 2020 Share Repurchase Program authorization expires at the end of fiscal year 2021.

(1) In July 2021, the Board of Directors approved an authorization for the repurchase of up to $ 1.0 billion of the Company’s common stock (“the 2022 Share Repurchase Program”).

As of November 30, 2021, 2.8 million shares had been repurchased for $ 169 million and $ 831 million remains available under the 2022 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 nine months ended May 31, 2021, the Company’s five largest customers accounted for approximately 47 % of its net revenue and 79 customers accounted for approximately 90 % of its net revenue.

During the three months ended November 30, 2021, the Company’s five largest customers accounted for approximately 49 % of its net revenue and 74 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, severance and related charges, distressed customer charges, acquisition and integration charges, (gain) 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.

Certain items are excluded from the calculation of segment income.

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

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):

Three months ended

Timing of transfer

Point in time

Nine months ended

Timing of transfer

Point in time

The following tables set forth operating segment information (in thousands):

The following table sets forth operating segment information (in millions):

Three months ended

Nine months ended

November 30, 2021

November 30, 2020

Segment income and reconciliation of income before income tax

4 unchanged sentences

Restructuring, severance and related charges

Distressed customer charge

Business interruption and impairment charges, net

Acquisition and integration charges

Gain (impairment) on securities

Other expense (net of periodic benefit cost)

2 unchanged sentences

Income before income tax

August 31, 2020

Other non-allocated assets

As of May 31, 2021, the Company operated in 31 countries worldwide.

The following table presents the Company’s revenues disaggregated by segment (in millions):

Three months ended

November 30, 2021

November 30, 2020

Timing of transfer

Point in time

The Company operates in more than 30 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

Nine months ended

November 30, 2021

November 30, 2020

Foreign source revenue

Restructuring, Severance and Related Charges

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

Three months ended

Nine months ended

Employee severance and benefit costs

Asset write-off costs

Total restructuring, severance and related charges (1)

(1) Primarily relates to the 2020 Restructuring Plan, and includes $ 0.0 million and $ 23.7 million recorded in the EMS segment, $ 0.6 million and $ 29.3 million recorded in the DMS segment and $ 0.1 million and $ 16.2 million of non-allocated charges for the three months ended May 31, 2021 and 2020, respectively.

Includes $( 0.4 ) million and $ 55.8 million recorded in the EMS segment, $ 5.5 million and $ 69.0 million recorded in the DMS segment and $ 0.6 million and $ 19.2 million of non-allocated charges for the nine months ended May 31, 2021 and 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 May 31, 2021.

The table below summarizes the Company’s liability activity, primarily associated with the 2020 Restructuring Plan

(in thousands):

Employee Severance

and Benefit Costs

Asset Write-off Costs

Other Related Costs

Balance as of August 31, 2020

Restructuring related charges

Asset write-off charge and other non-cash activity

Cash payments

Balance as of May 31, 2021

The Company’s liability associated with the worldwide workforce reduction initiated in the third quarter of fiscal year 2020 is $ 14.0 million as of May 31, 2021.

Effective Income Tax Rate

1 unchanged sentence

Three months ended

Nine months ended

November 30, 2021

November 30, 2020

federal statutory income tax rate

Effective income tax rate

The effective income tax rate decreased for the three months and nine months ended May 31, 2021, compared to the three months and nine months ended May 31, 2020, primarily due to:

(i) increased income for the three months and nine months ended May 31, 2021, driven in part by decreased restructuring charges in tax jurisdictions with minimal related income tax benefit and (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.

The effective income tax rate decreased for the three months ended November 30, 2021, compared to the three months ended November 30, 2020, primarily due to decreased losses in tax jurisdictions with existing valuation allowances for the three months ended November 30, 2021.

The effective income tax rate differed from the U.S.

federal statutory income tax rate of 21.0% during the three months and nine months ended May 31, 2021 and 2020, 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) 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.

federal statutory income tax rate of 21.0% during the three months ended November 30, 2021 and 2020, primarily due to:

(i) losses in tax jurisdictions with existing valuation allowances and (ii) tax incentives granted to sites in China, Malaysia, Singapore and Vietnam .

Earnings Per Share and Dividends

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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.

3 unchanged sentences

Three months ended

Nine months ended

November 30, 2021

November 30, 2020

Restricted stock units

Employee stock purchase plan

Stock appreciation rights

The following table sets forth cash dividends declared by the Company to common stockholders during the nine months ended May 31, 2021 and 2020 (in thousands, except for per share data):

The following table sets forth cash dividends declared by the Company to common stockholders during the three months ended November 30, 2021 and 2020 (in millions, except for per share data):

Declaration Date

7 unchanged sentences

December 1, 2021

January 21, 2021

February 15, 2021

March 2, 2021

April 22, 2021

Fiscal Year 2021:

2 unchanged sentences

December 2, 2020

January 23, 2020

February 14, 2020

March 4, 2020

April 15, 2020

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 aggregate purchase price paid for the fourth closing was approximately $ 18.9 million in cash.

Total assets acquired of $ 29.8 million and total liabilities assumed of $ 10.9 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.

Fair Value Measurements

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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)

(in millions)

Fair Value Hierarchy

November 30, 2021

August 31, 2021

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Other liabilities:

Interest rate swaps:

Derivatives not designated as hedging instruments (Note 8)

Extended interest rate swap not designated as a hedging instrument (Note 8)

Forward interest rate swaps:

Forward interest rate swap:

Derivatives designated as hedging instruments (Note 9)

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The following table presents the assets held for sale:

November 30, 2021

August 31, 2021

(in thousands)

(in millions)

Carrying Amount

9 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:

November 30, 2021

August 31, 2021

(in thousands)

(in millions)

Fair Value Hierarchy

11 unchanged sentences

Commitments and Contingencies

During fiscal year 2021, the Company entered into new operating and finance leases.

The future minimum lease payments under these new leases as of May 31, 2021 are summarized below.

Payments due by period (in thousands)

After 5 years

Operating lease obligations

Finance lease obligations (1)

(1) As of May 31, 2021 , the future minimum lease payments exclude $ 154.9 million of residual value guarantees that could potentially come due in future periods.

The Company does not believe it is probable that any amounts will be owed under these guarantees.

Therefore, no amounts related to the residual value guarantees are included in the lease payments used to measure the right-of-use assets and lease liabilities .

Legal Proceedings

2 unchanged sentences

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 was effective for the Company beginning 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

New accounting guidance adopted during the period did not have a material impact to the Company.

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

40 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