What changed in this filing

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Item 1A. Risk Factors

2024-10-28 compared with 2023-10-20 · 45 added, 70 removed, 378 unchanged (23% of the section changed)

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Our inability to forecast the level of customer orders with certainty makes it difficult to schedule production and maximize utilization of our manufacturing capacity and supply chain capabilities.

Many factors outside of our control impact our customers and their ordering behavior, including global pandemics, recession in end markets, changing technology and industry standards, commercial acceptance for products and shifting market demand, product obsolescence, and loss of business.

Many factors outside of our control impact our customers and their ordering behavior, including recession in end markets, changing technology and industry standards, commercial acceptance for products and shifting market demand, product obsolescence, global pandemics, and loss of business.

Customers have canceled their orders, changed production quantities or designs, delayed production, changed their sourcing strategy, and terminated their relationships with us.

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Such changes, delays, and cancellations have led to, and may lead in the future to, a decline in our production and our possession of excess or obsolete inventory that we may not be able to sell to customers or third parties.

This may result in write downs of inventories, reduction in the number of products that we sell, delays in payment for inventory that we purchased, and reductions in the use of our manufacturing facilities.

This has, and may again, result in write downs of inventories, reduction in the number of products that we sell, delays in payment for inventory that we purchased, and reductions in the use of our manufacturing facilities.

As many of our costs and operating expenses are relatively fixed, a reduction in customer demand, particularly a reduction in demand for a product that represents a significant amount of revenue, can harm our gross profit margins and results of operations.

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The necessary process to begin manufacturing can be lengthy.

Because we make capital expenditures during this ramping-up process and do not receive payment until after we produce and ship the customer’s products, any delays or unanticipated costs in the ramping-up process may have a significant adverse effect on our cash flows and our results of operations.

Because we make capital expenditures during this ramping-up process and do not receive payment until after we produce and ship the customer’s products, any delays or unanticipated costs in the ramping-up process have, and may again have, a significant adverse effect on our cash flows and our results of operations.

Servicing our largest customers may also require us to increase our capital expenditures.

The effect of COVID-19 on our operations and the operations of our customers, suppliers and logistics providers has had, and may in the future again have, a material and adverse impact on our financial condition and results of operations.

Our global operations expose us to COVID-19 and its variants, which have had and may in the future again have an adverse impact on our employees, operations, supply chain and distribution system.

Public and private sector policies and initiatives to reduce the transmission of COVID-19, including travel restrictions and quarantines, have and may have again in the future impact our operations, including affecting the ability of our employees to get to our facilities, reducing capacity utilization levels, causing certain facility or intermittent business suspensions, and interrupting the movement or increasing the cost of moving components and products through our supply chain.

If factory suspensions are required or reductions in capacity utilization levels occur in the future, we would expect to incur additional direct costs and lost revenue.

Our suppliers have experienced facility closures or reductions in their capacity utilization levels and may experience closures or reductions again in the future.

When this occurs, we have and may in the future again have difficulty sourcing materials necessary to fulfill production requirements which could lead to higher material and freight costs.

Our ability to continue to manufacture products is highly dependent on our ability to maintain the safety and health of our factory employees.

The ability of our employees to work has been, and may again be significantly impacted by individuals contracting or being exposed to COVID-19.

We believe COVID-19 has had, and may in the future again have, a material and adverse impact on our consolidated financial position, results of operations and cash flows.

Because we depend on a limited number of customers, a reduction in sales to any one of those customers has and could again cause a significant decline in our revenue.

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If a component shortage is threatened or anticipated, we have and may in the future purchase such components early to avoid a delay or interruption in our operations.

Purchasing components early may cause us to incur additional inventory carrying costs and may cause us to experience inventory obsolescence, both of which may not be recoverable from our customers and could adversely affect our gross profit margins and results of operations.

Purchasing components early has, and may again cause us to incur additional inventory carrying costs and experience inventory obsolescence, both of which may not be recoverable from our customers and could adversely affect our gross profit margins and results of operations.

A component shortage will require us to look to second tier vendors or to procure components through brokers.

Component availability may be impacted by a supplier’s decision to change part design, performance specifications, manufacturing process, manufacturing locations, and/or use of subcontractors, or by both planned and unforeseen product discontinuation.

Although the impact of the Russia/Ukraine conflict on our supply chain has not been significant, some sub-tier suppliers providing raw materials such as palladium, neon gas, and high-grade aluminum are partially dependent on supply from the regions that may be impacted by the conflict.

We will continue to closely monitor the supply availability and price fluctuations of these raw materials.

In addition, we source some parts from certain suppliers located in Israel.

Although the impact of the Russia/Ukraine conflict and conflicts in the Middle East on our supply chain has not been significant to date, we cannot assure you that this will continue to be the case.

Price increases resulting from such shortages and/or other factors which we cannot recover from our customers may adversely impact our results of operations.

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business – Components Procurement.”

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The success of our business is dependent on our ability to keep pace with technological changes and competitive conditions in our industry and our ability to effectively adapt our services as our customers react to technological changes and competitive conditions in their respective industries.

If we are unable to offer technologically advanced, cost effective, quick response manufacturing services that are differentiated from our competition and adapt those services as our customers’ requirements change, demand for our services will decline.

If we are unable to offer technologically advanced, cost effective, quick response manufacturing services that are differentiated from our competition (including utilization of machine learning and artificial intelligence) and adapt those services as our customers’ requirements change, demand for our services will decline.

Introducing new business models or programs requiring implementation of new competencies, such as new process technologies and our development of new products or services, has and could affect our operations and financial results.

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however, we do not always succeed at doing so.

The addition of new customers has also introduced different demand cycles.

For example, cloud-based service providers are cyclically different from our traditional customers, creating changes to our historical revenue patterns and increasing the complexity of the management of our working capital requirements.

We compete with numerous other diversified manufacturing service providers, electronic manufacturing services, design providers, and others.

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• geopolitical unrest, including the invasion of Ukraine, the possibility of military activity in countries near or adjacent to Ukraine, and the sanctions and other actions taken by the European Union, the United States, and other governments around the world in response;

• the attacks on Israel, the possibility of military activity in countries near or adjacent to Israel, and the sanctions and other actions that have or may be taken by other governments around the world in response could impact the Company although we have limited business in Israel;

• the Israel-Hamas war, attacks on shipping vessels in the Red Sea, the possibility of military activity in countries near or adjacent to Israel, and the sanctions and other actions that have or may be taken by other governments around the world in response could impact the Company although we have limited business in Israel;

• risk of governmental expropriation of our property;

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International trade disputes or political differences with China have and could result in tariffs and other measures that could adversely affect the Company’s business.

The Chinese economy differs from the economies of most developed countries in many respects, including the level of government involvement and control over

economic growth.

In addition, our operations in China are governed by Chinese laws, rules and regulations, some of which are relatively new.

The Chinese economy differs from the economies of most developed countries in many respects, including the level of government involvement and control over economic growth.

In addition, our operations in China are governed by Chinese laws, rule, and regulations, some of which are relatively new.

The Chinese legal system continues to rapidly evolve, which may result in uncertainties with respect to the interpretation and enforcement of Chinese laws, rules, and regulations that could have a material adverse effect on our business.

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We have on occasion not achieved, and may not in the future achieve, expected profitability from our acquisitions;

and divestitures may adversely affect our business, reputation, financial condition, results of operations or cash flows.

divestitures may adversely affect our business, reputation, financial condition, results of operations, or cash flows.

We have in the past and will continue to seek and complete acquisitions and divestitures.

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(10) the possibility that the acquired business’s past transactions or practices before our acquisition may lead to future commercial or regulatory risks;

(11) the difficulty of

presenting a unified corporate image;

(11) the difficulty of presenting a unified corporate image;

(12) the possibility that we will have unutilized capacity due to our acquisition activity;

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These and other factors could harm our ability to achieve anticipated levels of profitability or realize other anticipated benefits of an acquisition or divestiture and could adversely affect our business and operating results.

We may experience difficulties with consummating the sale of our Mobility business to BYD Electronic (International) Co.

Through our indirect subsidiary, Jabil Circuit (Singapore) Pte.

Ltd., we have agreed to sell our Mobility business to BYDE as announced on September 26, 2023.

The transaction has not yet closed, and a number of risks and challenges may arise in consummating the divestiture, including:

• The occurrence of any event, change or other circumstance that could give rise to the termination of the definitive agreement;

• The failure to satisfy closing conditions and consummate the potential transaction;

• Jabil’s or BYDE’s ability to obtain required regulatory approvals for the potential transaction and the timing and conditions for such approvals;

• The ability to obtain any approval required from the stockholders of BYDE or required consents of other third parties.

In addition, we might experience disruption from the potential transaction, including potential adverse changes to relationships with customers, employees, suppliers or other parties resulting from the failure to consummate the potential transaction;

potential proceedings relating to the potential transaction that could be instituted against Jabil;

unexpected costs or unexpected liabilities that may arise from the potential transaction, whether or not consummated;

the inability to retain key personnel;

the impact of changes in economic, market, political or social conditions;

and future regulatory or legislative actions that could adversely affect us.

We face risks arising from the restructuring of our operations.

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We have and may be required to take additional charges in the future to align our operations and cost structures with global economic conditions, market demands, cost competitiveness, and our geographic footprint as it relates to our customers' production requirements or following divestitures.

We may consolidate or divest certain manufacturing facilities or transfer certain of our operations to other geographies.

We have and may consolidate or divest certain manufacturing facilities or transfer certain of our operations to other geographies.

If we are required to take additional restructuring charges in the future, our operating results, financial condition, and cash flows could be adversely impacted.

Any delay in the implementation of our information systems could disrupt our operations and cause unanticipated increases in our costs.

We are currently in the process of completing the installation of an enterprise resource planning system in certain of our manufacturing facilities, which will replace the existing planning and financial information systems.

Any delay in the implementation of these information systems could result in material adverse consequences, including disruption of operations, loss of information and unanticipated increases in costs.

Disruptions to our information systems, including security breaches, losses of data or outages, and other security issues, have and could in the future adversely affect our operations.

We rely on information systems, some of which are managed by third parties, to store, process, and transmit confidential information, including financial reporting, inventory management, procurement, invoicing, and electronic communications, belonging to our customers, our suppliers, our employees, and/or us.

Any delay in the implementation of these information systems could result in material adverse consequences, including disruption of operations, loss of information, and unanticipated increases in costs.

We monitor and mitigate our exposure to cybersecurity issues and modify our systems when warranted, and we have implemented certain business continuity items including data backups at alternative sites.

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There can be no assurance that the security measures and systems configurations we choose to implement will be sufficient to protect the data we manage.

Any theft or misuse of information resulting from a security breach could result in, among other things, loss of significant and/or sensitive information, litigation by affected parties, financial obligations resulting from such theft or misuse, higher insurance premiums, governmental investigations, negative reactions from current and potential future customers (including potential negative financial ramifications under certain customer contract provisions) and poor publicity and any of these could adversely affect our financial results.

Any of these could adversely affect our financial results.

In addition, we must comply with increasingly complex regulations intended to protect business and personal data in the U.S.

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a failure to comply with current and future regulations and standards, or the terms of our contractual arrangements, could have an adverse effect on our business, customer relationships, reputation, and profitability.

We are subject to extensive government regulation and industry standards relating to the products we design and manufacture as well as how we conduct our business, including regulations and standards relating to labor and employment practices, workplace health and safety, the environment, sourcing and import/export practices, the market sectors we support, privacy and data protection, the regulations that apply to government contracts, and many other facets of our operations.

The regulatory climate in the U.S.

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In addition, we regularly enter into a large number of complex contractual arrangements as well as operate pursuant to the terms of a significant number of ongoing intricate contractual arrangements.

Our failure or our customers’ failure to comply with the terms of such arrangements could expose us to claims or

other demands and could have an adverse effect on our reputation, customer relationships, profitability and results of operations.

Our failure or our customers’ failure to comply with the terms of such arrangements could expose us to claims or other demands and could have an adverse effect on our reputation, customer relationships, profitability, and results of operations.

If we manufacture products containing design or manufacturing defects, demand for our services may decline, our reputation may be damaged, and we may be subject to liability claims.

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The failure of the products that we manufacture or of our manufacturing processes or facilities may subject us to regulatory enforcement, fines, or penalties and, in some cases, require us to shut down, temporarily halt operations or incur considerable expense to correct a manufacturing process or facility.

In addition, these defects have, and may in the future result in liability claims against us, expose us to liability to pay for the recall or remanufacture of a product or adversely affect product sales or our reputation.

In addition, these defects have resulted in, and may in the future result in, liability claims against us, expose us to liability to pay for the recall or remanufacture of a product, or adversely affect product sales or our reputation.

Even if our customers are responsible for the defects or defective specifications, they may not, or may not have resources to, assume responsibility for any costs or liabilities arising from these defects, which could expose us to additional liability claims.

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In China, the National Medical Products Administration controls and regulates the manufacture and commerce of healthcare products.

We must comply with the regulatory laws applicable to medical device manufactures or our ability to manufacture products in China could be impacted.

We must comply with the regulatory laws applicable to medical device manufacturers, or our ability to manufacture products in China could be impacted.

In Japan, the Pharmaceutical Affairs Laws regulate the manufacture and commerce of healthcare products.

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We have limited insurance coverage for potential environmental liabilities associated with current operations, and we do not anticipate increasing such coverage in the future.

We are subject to litigation and proceedings, which may result in substantial expenses, settlement costs, or judgments;

require the time and attention of key management resources;

and result in adverse publicity, any of which may negatively impact our financial performance.

We are party to various legal actions incidental to our business, as plaintiff or defendant, as well as various other claims, suits, investigations, and legal or governmental proceedings.

Regardless of the merits of the claims, litigation or governmental proceedings may be both time-consuming and disruptive to our business.

The defense and ultimate outcome of any lawsuits or other legal proceedings may result in higher expenses, which could have a material adverse effect on our business, financial condition, or results of operations.

We cannot predict the final outcome of such lawsuits or proceedings or the likelihood that other proceedings will be initiated against us.

Accordingly, the cost of defending against such lawsuits or proceedings, or any future lawsuits or proceedings, may be high and, in any event, these legal proceedings may result in the diversion of our management's time and attention away from our business.

In the event that there is an adverse ruling in any legal proceeding,

we may be required to make payments to third parties that could be in excess of any amounts accrued and could have a material adverse effect on our reputation, financial condition, and/or results of operations.

Our operations result in exposure to intellectual property claims.

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Credit market turmoil could also negatively impact certain of our customers and certain of their respective customers, which could cause them to reduce or cancel their orders and have a negative effect on our results of operations.

We can offer no assurance under the uncommitted trade accounts receivable sales programs that if we attempt to sell receivables through such programs in the future that we will receive funding from the associated banks, which would require us to utilize other available sources of liquidity, including our revolving credit facilities.

We are subject to the risk of increased taxes.

We base our tax position upon the anticipated nature and conduct of our business and upon our understanding of the tax laws of the various countries in which we have assets or conduct activities.

Our tax position, however, is subject to review and possible challenge by taxing authorities and to possible changes in law (including adverse changes to the manner in which the U.S.

and other countries tax multinational companies or interpret their tax laws).

Our tax position, however, is subject to review and possible challenge by taxing authorities (including application of transfer pricing rules to our intercompany transactions) and to possible changes in law.

We cannot determine in advance the extent to which some jurisdictions may assess additional tax or interest and penalties on such additional taxes.

In addition, our effective tax rate has been and may be increased by changes in the mix of earnings between jurisdictions, changes in the valuation of deferred tax assets and liabilities, changes in our cash management strategies, changes in local tax rates or countries adopting more aggressive interpretations of tax laws, or other legislative changes.

In addition, our effective tax rate has been and may be increased by changes in the mix of earnings between jurisdictions, changes in the valuation of deferred tax assets and liabilities, changes in our cash management strategies, changes in local tax rates, or taxing authorities adopting more aggressive interpretations of tax laws.

In addition, acquisitions and/or divestitures may cause our effective tax rate to increase, depending on the jurisdictions in which the operations are located.

The Organization for Economic Co-operation and Development (“OECD”) and participating countries continue to work toward the enactment of a 15% global minimum corporate tax rate.

Many countries, including countries in which we have tax incentives, have enacted or are in the process of enacting laws based on the OECD’s proposals.

Our effective tax rate and cash tax liability could be adversely impacted by these rules beginning in fiscal year 2025, with the full impact occurring in subsequent years.

Several countries in which we are located allow for tax incentives to attract and retain business.

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Our taxes could increase if certain tax incentives are retracted, which could occur if we are unable to satisfy the conditions on which such incentives are based, if they are not renewed upon expiration, or if tax rates applicable to us in such jurisdictions otherwise increase.

Due to the possibility of changes in existing tax law and our operations, we are unable to predict how any expirations will impact us in the future.

In addition, acquisitions may cause our effective tax rate to increase, depending on the jurisdictions in which the acquired operations are located.

Certain of our subsidiaries provide financing, products and services to, and undertake certain significant transactions with, other subsidiaries in different jurisdictions.

Several jurisdictions in which we operate have tax laws with detailed transfer pricing rules that require that all transactions with non-resident related parties be priced using arm’s length pricing principles, and that contemporaneous documentation must exist to support such pricing.

There is a risk that the taxing authorities may not deem our transfer pricing methodology or documentation acceptable.

In August 2022, the U.S.

government enacted the Inflation Reduction Act (the “IRA”) which includes a 15% book income alternative minimum tax on certain corporations and a 1% excise tax on share repurchases.

Based on our current analysis of the provisions, we do not expect these tax law changes to have a material impact on our financial statements;

however, we will continue to evaluate their impact as further information becomes available.

The European Union (EU) and other countries have committed to enacting substantial changes that would reshape international tax rules, including the introduction of a global minimum tax.

In December 2022, the EU approved a directive requiring member states to incorporate a 15% global minimum tax applied on a country-by-country basis into their respective laws effective for fiscal years beginning on or after December 31, 2023.

In addition, several non-EU countries have recently proposed and/or adopted legislation consistent with the global minimum tax framework.

Although the timing and ultimate impacts of any such changes are uncertain, our effective tax rate and cash tax liability could be adversely impacted by the enactment of these rules.

Further, the global minimum tax is expected to reduce the benefits achieved from tax incentives.

Our credit rating may be downgraded.

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We believe that our hedging activities enable us to largely protect ourselves from future exchange rate fluctuations.

If, however, these hedging activities are not successful, if the counterparties to these

hedging activities default on their obligations to us or if we change or reduce these hedging activities in the future, we may experience significant unexpected expenses from fluctuations in exchange rates.

If, however, these hedging activities are not successful, if the counterparties to these hedging activities default on their obligations to us or if we change or reduce these hedging activities in the future, we may experience significant unexpected expenses from fluctuations in exchange rates.

In addition, certain countries in which we operate have adopted, or may adopt, currency controls requiring that local transactions be settled only in local currency.

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Refer t o Note 6 – “Goodwill and Other Intangible Assets” to the Consolidated Financial Statements f or further discussion of the impairment testing of goodwill and identifiable intangible assets.

A decline in general economic conditions or global equity valuations could impact the judgments and assumptions about the fair value of our businesses and we could be required to record impairment charges on our goodwill or other identifiable intangible assets in the future, which could impact our consolidated balance sheet, as well as our consolidated statement of operations.

A decline in general economic conditions or global equity valuations could impact the judgments and assumptions about the fair value of our businesses, and we could be required to record impairment charges on our goodwill or other identifiable intangible assets in the future, which could impact our consolidated balance sheet, as well as our consolidated statements of operations.

General Risk Factors

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Changes to those rules or questions as to how we interpret or implement them may have a material adverse effect on our reported financial results or on the way we conduct business.

For example, significant changes to revenue recognition rules have been adopted and first applied to us in fiscal year 2019.

We are subject to risks associated with natural disasters, climate change, and global events.

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We cannot guarantee that we will achieve our goals and initiatives.

Any failure, or perceived failure, to achieve our goals, further our initiatives, adhere to our public statements, comply with federal, state or

international environmental, social and governance laws and regulations, or meet evolving and varied stakeholder expectations and standards could result in legal and regulatory proceedings against us and materially adversely affect our business, reputation, results of operations, financial condition and stock price.

Unresolved Staff Comments

There are no unresolved written comments from the SEC staff regarding our periodic or current reports.

Any failure, or perceived failure, to achieve our goals, further our initiatives, adhere to our public statements, comply with federal, state, or international environmental, social, and governance laws and regulations, or meet evolving and varied shareholder expectations and standards could result in legal and regulatory proceedings against us and materially adversely affect our business, reputation, results of operations, financial condition, and stock price.

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-K

Item 1A. Risk Factors