UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM10-Q

(Mark One)



☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~May 31, 2019~~

February 29, 2020



☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period fromto

Commission File Number:001-14063

JABIL ~~INC.~~

INC.

(Exact name of registrant as specified in its charter)



Delaware		38-1886260
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

10560 Dr. Martin Luther King, Jr. Street North, St. Petersburg, Florida33716

(Address of principal executive offices) (Zip Code)

~~(727)~~

(727) 577-9749

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, $0.001 par value per share	JBL	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of RegulationS-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule12b-2 of the Exchange Act.



Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule12b-2 of the Exchange Act). Yes ☐ No ☒

~~Securities registered pursuant to Section 12(b) of the Act:~~

~~Title of each class~~

~~Trading~~

~~symbol(s)~~

~~Name of each exchange~~

~~on which registered~~

~~Common Stock, $0.001 par value per share~~

~~JBL~~

~~New York Stock Exchange~~

As of ~~June 21, 2019,~~March 24, 2020, there were ~~152,927,423~~150,717,416 shares of the registrant’s Common Stock outstanding.

JABIL INC. AND SUBSIDIARIES INDEX



Part I – Financial Information
Item 1.	Financial Statements
		~~Item 1.~~		~~Financial Statements~~
				Condensed Consolidated Balance Sheets as of ~~May 31, 2019~~February 29, 2020 and August 31, ~~2018~~2019	1
		1
				Condensed Consolidated Statements of Operations for the three months and ~~nine~~six months ended ~~May 31,~~February 29, 2020 and February 28, 2019 ~~and 2018~~	3
		2
				Condensed Consolidated Statements of Comprehensive Income for the three months and ~~nine~~six months ended ~~May 31,~~February 29, 2020 and February 28, 2019 ~~and 2018~~	4
		3
				Condensed Consolidated Statements of Stockholders’ Equity for the three months and ~~nine~~six months ended ~~May 31,~~February 29, 2020 and February 28, 2019 ~~and 2018~~	5
		4
				Condensed Consolidated Statements of Cash Flows for the ~~nine~~six months ended ~~May 31,~~February 29, 2020 and February 28, 2019 ~~and 2018~~	6
		5
				Notes to Condensed Consolidated Financial Statements			6	7
		Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations			25	26
		Item 3.		Quantitative and Qualitative Disclosures About Market Risk	39
Item 4.	Controls and Procedures	37 39

			~~Item 4.~~		~~Controls and Procedures~~			37

Part II – Other Information
		~~Item 1.~~		~~Legal Proceedings~~			38
Item 1.	Legal Proceedings	40
Item 1A.		Risk Factors			38	40
		Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds			38	40
		Item 3.		Defaults Upon Senior Securities			38	41
		Item 4.		Mine Safety Disclosures			38	41
		Item 5.		Other Information			38	41
		Item 6.	Exhibits	~~Exhibits~~42
	Signatures	39
				~~Signatures~~44			40

PART I—FINANCIAL INFORMATION



Item 1.	Financial Statements

JABIL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except for share data)

   May 31,
2019
(Unaudited) August 31,
2018
ASSETS
Current assets:

Cash and cash equivalents
   $ 694,086 $ 1,257,949
Accounts receivable, net of allowance for doubtful accounts of $16,951 as of May 31, 2019 and $15,181 as of August 31, 2018
   2,696,599 1,693,268
Contract assets
   899,482 —
Inventories, net
   3,159,369 3,457,706
Prepaid expenses and other current assets
   524,833 1,141,000


Total current assets
   7,974,369 7,549,923
Property, plant and equipment, net of accumulated depreciation of $3,993,635 as of May 31, 2019 and $3,646,945 as of August 31, 2018
   3,335,837 3,198,016
Goodwill
   624,474 627,745
Intangible assets, net of accumulated amortization of $329,189 as of May 31, 2019 and $307,178 as of August 31, 2018
   266,205 279,131
Deferred income taxes
   202,556 218,252
Other assets
   205,336 172,574


Total assets
   $ 12,608,777 $ 12,045,641


LIABILITIES AND EQUITY
Current liabilities:

Current installments of notes payable and long-term debt
   $ 454,830 $ 25,197
Accounts payable
   4,826,333 4,942,932
Accrued expenses
   2,586,052 2,262,744


Total current liabilities
   7,867,215 7,230,873
Notes payable and long-term debt, less current installments
   2,476,842 2,493,502
Other liabilities
   145,750 94,617
Income tax liabilities
   136,400 148,884
Deferred income taxes
   115,370 114,385


Total liabilities
   10,741,577 10,082,261


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; 259,812,625 and 257,130,145 shares issued and 152,926,887 and 164,588,172 shares outstanding as of May 31, 2019 and August 31, 2018, respectively
   260 257
Additionalpaid-in capital
   2,279,409 2,218,673
Retained earnings
   1,996,901 1,760,097
Accumulated other comprehensive loss
   (50,005 ) (19,399 )
Treasury stock at cost, 106,885,738 and 92,541,973 shares as of May 31, 2019 and August 31, 2018, respectively
   (2,371,592 ) (2,009,371 )


Total Jabil Inc. stockholders’ equity
   1,854,973 1,950,257
Noncontrolling interests
   12,227 13,123


Total equity
   1,867,200 1,963,380


Total liabilities and equity
   $ 12,608,777 $ 12,045,641



	February 29, 2020 (Unaudited)			August 31, 2019
ASSETS
Current assets:
Cash and cash equivalents	$	696,745		$	1,163,343
Accounts receivable, net of allowance for doubtful accounts of $30,191 as of February 29, 2020 and $17,221 as of August 31, 2019	2,314,055			2,745,226
Contract assets	1,057,656			911,940
Inventories, net	3,339,890			3,023,003
Prepaid expenses and other current assets	569,493			501,573
Total current assets	7,977,839			8,345,085
Property, plant and equipment, net of accumulated depreciation of $4,344,338 as of February 29, 2020 and $4,110,496 as of August 31, 2019	3,462,038			3,333,750
Operating lease right-of-use asset	373,413			—
Goodwill	700,597			622,255
Intangible assets, net of accumulated amortization of $367,299 as of February 29, 2020 and $337,841 as of August 31, 2019	234,977			256,853
Deferred income taxes	194,468			198,827
Other assets	196,346			213,705
Total assets	$	13,139,678		$	12,970,475
LIABILITIES AND EQUITY
Current liabilities:
Current installments of notes payable and long-term debt	$	637,841		$	375,181
Accounts payable	4,652,138			5,166,780
Accrued expenses	3,015,129			2,990,144
Current operating lease liabilities	100,033			—
Total current liabilities	8,405,141			8,532,105
Notes payable and long-term debt, less current installments	2,086,359			2,121,284
Other liabilities	315,875			163,821
Non-current operating lease liabilities	311,879			—
Income tax liabilities	143,161			136,689
Deferred income taxes	118,123			115,818
Total liabilities	11,380,538			11,069,717
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; 263,299,124 and 260,406,796 shares issued and 151,407,526 and 153,520,380 shares outstanding as of February 29, 2020 and August 31, 2019, respectively	263			260
Additional paid-in capital	2,363,839			2,304,552
Retained earnings	2,048,954			2,037,037
Accumulated other comprehensive loss	(102,943		)	(82,794		)
Treasury stock at cost, 111,891,598 and 106,886,416 shares as of February 29, 2020 and August 31, 2019, respectively	(2,563,282		)	(2,371,612		)
Total Jabil Inc. stockholders’ equity	1,746,831			1,887,443
Noncontrolling interests	12,309			13,315
Total equity	1,759,140			1,900,758
Total liabilities and equity	$	13,139,678		$	12,970,475

See accompanying notes to Condensed Consolidated Financial Statements.

JABIL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except for per share data)

(Unaudited)

   Three months ended Nine months ended
   May 31,
2019 May 31,
2018 May 31,
2019 May 31,
2018
Net revenue
   $ 6,135,602 $ 5,436,952 $ 18,708,867 $ 16,323,585
Cost of revenue
   5,691,803 5,038,725 17,290,544 15,058,940


Gross profit
   443,799 398,227 1,418,323 1,264,645
Operating expenses:

Selling, general and administrative
   274,482 252,487 834,750 789,482
Research and development
   11,449 10,082 32,747 27,535
Amortization of intangibles
   7,610 10,040 23,033 29,909
Restructuring and related charges
   9,340 12,647 16,182 29,462


Operating income
   140,918 112,971 511,611 388,257
Other expense
   14,084 10,139 39,391 26,506
Interest income
   (6,758 ) (4,499 ) (15,897 ) (13,323 )
Interest expense
   50,514 36,178 139,326 110,220


Income before income tax
   83,078 71,153 348,791 264,854
Income tax expense
   39,046 28,451 113,078 120,705


Net income
   44,032 42,702 235,713 144,149
Net income attributable to noncontrolling interests, net of tax
   550 161 1,277 505


Net income attributable to Jabil Inc.
   $ 43,482 $ 42,541 $ 234,436 $ 143,644


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

Basic
   $ 0.28 $ 0.25 $ 1.50 $ 0.83


Diluted
   $ 0.28 $ 0.25 $ 1.47 $ 0.81


Weighted average shares outstanding:

Basic
   152,889 170,514 156,384 174,013


Diluted
   155,678 173,279 159,036 176,997



	Three months ended						Six months ended
	February 29, 2020			February 28, 2019			February 29, 2020			February 28, 2019
Net revenue	$	6,125,083		$	6,066,990		$	13,630,781		$	12,573,265
Cost of revenue	5,694,958			5,612,116			12,646,817			11,598,741
Gross profit	430,125			454,874			983,964			974,524
Operating expenses:
Selling, general and administrative	285,024			282,142			613,923			560,268
Research and development	11,290			10,155			22,060			21,298
Amortization of intangibles	13,577			7,777			29,717			15,423
Restructuring and related charges	29,604			817			74,855			6,842
Operating income	90,630			153,983			243,409			370,693
Impairment on securities	12,205			—			12,205			—
Other expense	8,501			11,757			19,673			25,307
Interest income	(5,336		)	(4,760		)	(11,280		)	(9,139		)
Interest expense	46,183			46,160			91,094			88,812
Income before income tax	29,077			100,826			131,717			265,713
Income tax expense	31,658			33,219			93,584			74,032
Net (loss) income	(2,581		)	67,607			38,133			191,681
Net income attributable to noncontrolling interests, net of tax	702			253			994			727
Net (loss) income attributable to Jabil Inc.	$	(3,283	)	$	67,354		$	37,139		$	190,954
(Loss) earnings per share attributable to the stockholders of Jabil Inc.:
Basic	$	(0.02	)	$	0.44		$	0.24		$	1.21
Diluted	$	(0.02	)	$	0.43		$	0.24		$	1.19
Weighted average shares outstanding:
Basic	152,058			154,725			152,579			158,160
Diluted	152,058			156,737			156,171			160,413

See accompanying notes to Condensed Consolidated Financial Statements.

JABIL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

(Unaudited)

   Three months ended Nine months ended
   May 31,
2019 May 31,
2018 May 31,
2019 May 31,
2018
Net income
   $ 44,032 $ 42,702 $ 235,713 $ 144,149
Other comprehensive loss:

Change in foreign currency translation
   (18,548 ) (40,640 ) (5,636 ) (19,720 )
Change in derivative instruments:

Change in fair value of derivatives
   (20,179 ) (5,944 ) (36,262 ) 22,453
Adjustment for net (gains) losses realized and included in net income
   (1,728 ) (13,890 ) 15,958 (28,974 )


Total change in derivative instruments
   (21,907 ) (19,834 ) (20,304 ) (6,521 )


Unrealized gain (loss) on available for sale securities
   3,703 (202 ) (4,769 ) (2,016 )
Actuarial gain (loss)
   —   —   103 (431 )


Total other comprehensive loss
   (36,752 ) (60,676 ) (30,606 ) (28,688 )


Comprehensive income (loss)
   $ 7,280 $ (17,974 ) $ 205,107 $ 115,461
Comprehensive income attributable to noncontrolling interests
   550 161 1,277 505


Comprehensive income (loss) attributable to Jabil Inc.
   $ 6,730 $ (18,135 ) $ 203,830 $ 114,956



	Three months ended					Six months ended
	February 29, 2020			February 28, 2019		February 29, 2020			February 28, 2019
Net (loss) income	$	(2,581	)	$	67,607	$	38,133		$	191,681
Other comprehensive (loss) income:
Change in foreign currency translation	(10,346		)	12,535		(10,875		)	12,912
Change in derivative instruments:
Change in fair value of derivatives	(9,474		)	2,386		1,471			(16,083		)
Adjustment for net (gains) losses realized and included in net income	(3,548		)	3,501		3,335			17,686
Total change in derivative instruments	(13,022		)	5,887		4,806			1,603
Unrealized (loss) gain on available for sale securities	(5,253		)	273		(14,080		)	(8,472		)
Actuarial gain	—			—		—			103
Total other comprehensive (loss) income	(28,621		)	18,695		(20,149		)	6,146
Comprehensive (loss) income	$	(31,202	)	$	86,302	$	17,984		$	197,827
Comprehensive income attributable to noncontrolling interests	702			253		994			727
Comprehensive (loss) income attributable to Jabil Inc.	$	(31,904	)	$	86,049	$	16,990		$	197,100

See accompanying notes to Condensed Consolidated Financial Statements.

JABIL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands)

(Unaudited)

   Three months ended Nine months ended
   May 31,
2019 May 31,
2018 May 31,
2019 May 31,
2018
Total stockholders’ equity, beginning balances
   $ 1,858,852 $ 2,294,346 $ 1,963,380 $ 2,368,344


Common stock:

Beginning balances
   260 257 257 253
Shares issued under employee stock purchase plan
   —   —   1 1
Vesting of restricted stock
   —   —   2 3


Ending balances
   260 257 260 257


Additionalpaid-in capital:

Beginning balances
   2,264,966 2,176,764 2,218,673 2,104,203
Shares issued under employee stock purchase plan
   (5 ) 6 14,582 12,844
Vesting of restricted stock
   —   —   (2 ) (3 )
Recognition of stock-based compensation
   14,448 14,636 46,156 74,362


Ending balances
   2,279,409 2,191,406 2,279,409 2,191,406


Retained earnings:

Beginning balances
   1,966,100 1,802,372 1,760,097 1,730,893
Declared dividends
   (12,681 ) (13,992 ) (38,487 ) (43,616 )
Cumulative effect adjustment for adoption of new accounting standards
   —   —   40,855 —
Net income attributable to Jabil Inc.
   43,482 42,541 234,436 143,644


Ending balances
   1,996,901 1,830,921 1,996,901 1,830,921


Accumulated other comprehensive (loss) income:

Beginning balances
   (13,253 ) 86,608 (19,399 ) 54,620
Other comprehensive loss
   (36,752 ) (60,676 ) (30,606 ) (28,688 )


Ending balances
   (50,005 ) 25,932 (50,005 ) 25,932


Treasury stock:

Beginning balances
   (2,370,898 ) (1,783,906 ) (2,009,371 ) (1,536,455 )
Purchases of treasury stock under employee stock plans
   (694 ) (183 ) (11,898 ) (22,526 )
Treasury shares purchased
   —   (91,286 ) (350,323 ) (316,394 )


Ending balances
   (2,371,592 ) (1,875,375 ) (2,371,592 ) (1,875,375 )


Noncontrolling interests:

Beginning balances
   11,677 12,251 13,123 14,830
Net income attributable to noncontrolling interests
   550 161 1,277 505
Acquisition of noncontrolling interests
   —   —   1,112 —
Disposition of noncontrolling interests
   —   —   (1,785 ) —
Declared dividends to noncontrolling interests
   —   —   (1,500 ) (2,920 )
Foreign currency adjustments attributable to noncontrolling interests
   —   5 —   2


Ending balances
   12,227 12,417 12,227 12,417


Total stockholders’ equity, ending balances
   $ 1,867,200 $ 2,185,558 $ 1,867,200 $ 2,185,558



	Three months ended						Six months ended
	February 29, 2020			February 28, 2019			February 29, 2020			February 28, 2019
Total stockholders' equity, beginning balances	$	1,849,293		$	1,905,513		$	1,900,758		$	1,963,380
Common stock:
Beginning balances	262			259			260			257
Shares issued under employee stock purchase plan	1			1			1			1
Vesting of restricted stock	—			—			2			2
Ending balances	263			260			263			260
Additional paid-in capital:
Beginning balances	2,332,307			2,235,827			2,304,552			2,218,673
Shares issued under employee stock purchase plan	16,179			14,579			16,179			14,587
Vesting of restricted stock	—			—			(2		)	(2		)
Recognition of stock-based compensation	15,353			14,560			43,110			31,708
Ending balances	2,363,839			2,264,966			2,363,839			2,264,966
Retained earnings:
Beginning balances	2,064,758			1,911,451			2,037,037			1,760,097
Declared dividends	(12,521		)	(12,705		)	(25,222		)	(25,806		)
Cumulative effect adjustment for adoption of new accounting standards	—			—			—			40,855
Net (loss) income attributable to Jabil Inc.	(3,283		)	67,354			37,139			190,954
Ending balances	2,048,954			1,966,100			2,048,954			1,966,100
Accumulated other comprehensive loss:
Beginning balances	(74,322		)	(31,948		)	(82,794		)	(19,399		)
Other comprehensive (loss) income	(28,621		)	18,695			(20,149		)	6,146
Ending balances	(102,943		)	(13,253		)	(102,943		)	(13,253		)
Treasury stock:
Beginning balances	(2,487,319		)	(2,223,673		)	(2,371,612		)	(2,009,371		)
Purchases of treasury stock under employee stock plans	(3,693		)	(1,489		)	(23,010		)	(11,204		)
Treasury shares purchased	(72,270		)	(145,736		)	(168,660		)	(350,323		)
Ending balances	(2,563,282		)	(2,370,898		)	(2,563,282		)	(2,370,898		)
Noncontrolling interests:
Beginning balances	13,607			13,597			13,315			13,123
Net income attributable to noncontrolling interests	702			253			994			727
Acquisition of noncontrolling interests	—			1,112			—			1,112
Disposition of noncontrolling interests	—			(1,785		)	—			(1,785		)
Declared dividends to noncontrolling interests	(2,000		)	(1,500		)	(2,000		)	(1,500		)
Ending balances	12,309			11,677			12,309			11,677
Total stockholders' equity, ending balances	$	1,759,140		$	1,858,852		$	1,759,140		$	1,858,852

See accompanying notes to Condensed Consolidated Financial Statements.

JABIL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

   Nine months ended
   May 31,
2019 May 31,
2018
Cash flows provided by (used in) operating activities:

Net income
   $ 235,713 $ 144,149
Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Depreciation and amortization
   574,922 583,646
Restructuring and related charges
   (3,555 ) 14,838
Recognition of stock-based compensation expense and related charges
   47,452 74,977
Deferred income taxes
   14,008 (39,762 )
Provision for allowance for doubtful accounts
   10,734 20,577
Other, net
   34,204 (4,059 )
Change in operating assets and liabilities, exclusive of net assets acquired:

Accounts receivable
   (528,597 ) (1,692,208 )
Contract assets
   (865,408 ) —
Inventories
   349,252 (379,658 )
Prepaid expenses and other current assets
   6,910 (98,160 )
Other assets
   (16,700 ) (21,542 )
Accounts payable, accrued expenses and other liabilities
   253,721 20,897


Net cash provided by (used in) operating activities
   112,656 (1,376,305 )


Cash flows (used in) provided by investing activities:

Acquisition of property, plant and equipment
   (789,226 ) (819,167 )
Proceeds and advances from sale of property, plant and equipment
   167,653 246,370
Cash paid for business and intangible asset acquisitions, net of cash
   (153,239 ) (109,664 )
Cash receipts on sold receivables
   96,846 1,571,156
Other, net
   (26,129 ) (2,360 )


Net cash (used in) provided by investing activities
   (704,095 ) 886,335


Cash flows provided by (used in) financing activities:

Borrowings under debt agreements
   9,482,468 6,847,756
Payments toward debt agreements
   (9,073,684 ) (6,472,728 )
Payments to acquire treasury stock
   (350,323 ) (316,394 )
Dividends paid to stockholders
   (39,736 ) (44,274 )
Net proceeds from exercise of stock options and issuance of common stock under employee stock purchase plan
   14,582 12,844
Treasury stock minimum tax withholding related to vesting of restricted stock
   (11,898 ) (22,526 )
Other, net
   (1,500 ) (11,876 )


Net cash provided by (used in) financing activities
   19,909 (7,198 )


Effect of exchange rate changes on cash and cash equivalents
   7,667 (15,259 )


Net decrease in cash and cash equivalents
   (563,863 ) (512,427 )
Cash and cash equivalents at beginning of period
   1,257,949 1,189,919


Cash and cash equivalents at end of period
   $ 694,086 $ 677,492



	Six months ended
	February 29, 2020			February 28, 2019
Cash flows provided by operating activities:
Net income	$	38,133		$	191,681
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	402,347			381,510
Restructuring and related charges	33,061			(3,212		)
Recognition of stock-based compensation expense and related charges	45,332			32,946
Deferred income taxes	3,087			23,921
Provision for allowance for doubtful accounts	10,185			5,598
Other, net	13,838			38,559
Change in operating assets and liabilities, exclusive of net assets acquired:
Accounts receivable	424,971			(365,192		)
Contract assets	(63,302		)	(815,144		)
Inventories	(279,664		)	225,036
Prepaid expenses and other current assets	(62,881		)	(4,895		)
Other assets	(8,438		)	(10,170		)
Accounts payable, accrued expenses and other liabilities	(472,503		)	407,127
Net cash provided by operating activities	84,166			107,765
Cash flows used in investing activities:
Acquisition of property, plant and equipment	(448,765		)	(537,140		)
Proceeds and advances from sale of property, plant and equipment	36,624			144,968
Cash paid for business and intangible asset acquisitions, net of cash	(141,195		)	(80,778		)
Cash receipts on sold receivables	—			96,846
Other, net	(2,013		)	(13,504		)
Net cash used in investing activities	(555,349		)	(389,608		)
Cash flows provided by (used in) financing activities:
Borrowings under debt agreements	5,063,358			6,182,931
Payments toward debt agreements	(4,835,697		)	(6,046,181		)
Payments to acquire treasury stock	(168,660		)	(350,323		)
Dividends paid to stockholders	(26,280		)	(27,422		)
Net proceeds from exercise of stock options and issuance of common stock under employee stock purchase plan	16,179			14,587
Treasury stock minimum tax withholding related to vesting of restricted stock	(23,010		)	(11,204		)
Other, net	(11,617		)	(1,500		)
Net cash provided by (used in) financing activities	14,273			(239,112		)
Effect of exchange rate changes on cash and cash equivalents	(9,688		)	12,063
Net decrease in cash and cash equivalents	(466,598		)	(508,892		)
Cash and cash equivalents at beginning of period	1,163,343			1,257,949
Cash and cash equivalents at end of period	$	696,745		$	749,057

See accompanying notes to Condensed Consolidated Financial Statements.

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 Form10-Q and Article 10 of RegulationS-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. ~~Jabil Inc. (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 Form10-K of the Company for the fiscal year ended August 31, ~~2018.~~2019. Results for the ~~nine~~six months ended ~~May 31, 2019~~February 29, 2020 are not necessarily an indication of the results that may be expected for the full fiscal year ending August 31, ~~2019.~~

2020.

2. ~~Earnings Per Share and Dividends~~

~~Earnings Per Share~~

Trade Accounts Receivable Sale Programs

The Company ~~calculates its basic earnings per share by dividing net income attributable~~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 bycontinues servicing the ~~weighted average number~~receivables sold and in exchange receives a servicing fee under each of ~~common shares outstanding~~the trade accounts receivable sale programs. Servicing fees related to each of the trade accounts receivable sale programs recognized during the ~~period.~~three months and six months ended February 29, 2020 and February 28, 2019 were not material. The ~~Company’s diluted earnings per share is calculated in~~Company does not record a ~~similar manner, but includes~~servicing asset or liability on the ~~effect~~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 ~~dilutive securities. The difference between~~ the ~~weighted average number of basic shares outstanding~~receivables under the trade accounts receivable sale programs are accounted for as sales and, accordingly, net receivables sold under the ~~weighted average number of diluted shares outstanding is primarily due to dilutive unvested restricted stock unit awards (“restricted stock units”) and dilutive stock appreciation rights.~~

~~Potential shares of common stock~~trade accounts receivable sale programs are excluded from accounts receivable on the ~~computation~~Condensed Consolidated Balance Sheets and are reflected as cash provided by operating activities on the Condensed Consolidated Statements 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 endCash Flows.

The following is a summary 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    Nine months ended
   May 31, 2019    May 31, 2018    May 31, 2019    May 31, 2018
Restricted stock units
   1,345    2,129    1,338    2,136

~~Dividends~~

~~The following table sets forth cash dividends declared by~~trade accounts receivable sale programs with unaffiliated financial institutions where the Company may elect to ~~common stockholders during~~sell receivables and the ~~nine months ended May 31, 2019 and 2018~~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	$	500.0		Uncommitted	December 5, 2020⁽²⁾
B	$	150.0		Uncommitted	November 30, 2020⁽³⁾
C	800.0		CNY	Uncommitted	June 30, 2020
D	$	150.0		Uncommitted	May 4, 2023⁽⁴⁾
E	$	50.0		Uncommitted	August 25, 2020
F	$	150.0		Uncommitted	January 25, 2021⁽⁵⁾
G	$	50.0		Uncommitted	February 23, 2023⁽⁶⁾
H	$	100.0		Uncommitted	August 10, 2020⁽⁷⁾
I	$	100.0		Uncommitted	July 21, 2020⁽⁸⁾
J	$	650.0		Uncommitted	December 4, 2020⁽⁹⁾
K	$	110.0		Uncommitted	April 11, 2020⁽¹⁰⁾
L	100.0		CHF	Uncommitted	December 5, 2020⁽²⁾


⁽¹⁾	Maximum amount available at any one time.


⁽²⁾	The program will be automatically extended each year through December 5, 2025 unless either party provides 30 days notice of termination.


⁽³⁾	The program will automatically extend for one year at each expiration date unless either party provides 10 days notice of termination.


⁽⁴⁾	Any party may elect to terminate the agreement upon 30 days prior notice.


⁽⁵⁾	The program will be automatically extended through January 25, 2023 unless either party provides 30 days notice of termination.


⁽⁶⁾	Any party may elect to terminate the agreement upon 15 days prior notice.


⁽⁷⁾	The program will be automatically extended through August 10, 2023 unless either party provides 30 days notice of termination.


⁽⁸⁾	The program will be automatically extended through August 21, 2023 unless either party provides 30 days notice of termination.


⁽⁹⁾	The program will be automatically extended each year through December 5, 2024 unless either party provides 30 days notice of termination.


⁽¹⁰⁾	The program will be automatically extended each year 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 ~~thousands, except for per share data)~~millions):

   Dividend
Declaration Date    Dividend
per Share    Total of Cash
Dividends
Declared    Date of Record for
Dividend Payment    Dividend Cash
Payment Date
Fiscal Year 2019:
   October 18, 2018    $ 0.08    $ 13,226    November 15, 2018    December 3, 2018
   January 24, 2019    $ 0.08    $ 12,706    February 15, 2019    March 1, 2019
   April 18, 2019    $ 0.08    $ 12,681    May 15, 2019    June 3, 2019
Fiscal Year 2018:
   October 19, 2017    $ 0.08    $ 14,588    November 15, 2017    December 1, 2017
   January 25, 2018    $ 0.08    $ 14,272    February 15, 2018    March 1, 2018
   April 19, 2018    $ 0.08    $ 13,991    May 15, 2018    June 1, 2018



	Three months ended				Six months ended
	February 29, 2020		February 28, 2019		February 29, 2020		February 28, 2019
Trade accounts receivable sold	$	2,201	$	1,719	$	4,163	$	3,553
Cash proceeds received	$	2,196	$	1,712	$	4,153	$	3,538
Pre-tax losses on sale of receivables⁽¹⁾	$	5	$	7	$	10	$	15


⁽¹⁾	Recorded to other expense within the Condensed Consolidated Statement of Operations.

3. Inventories

Inventories consist of the following (in thousands):

   May 31, 2019 August 31, 2018
Raw materials
   $ 2,388,902 $ 2,070,569
Work in process
   501,168 788,742
Finished goods
   333,224 659,335
Reserve for excess and obsolete inventory
   (63,925 ) (60,940 )


Inventories, net
   $ 3,159,369 $ 3,457,706



	February 29, 2020			August 31, 2019
Raw materials	$	2,482,072		$	2,310,081
Work in process	462,549			468,217
Finished goods	455,295			314,258
Reserve for excess and obsolete inventory	(60,026		)	(69,553		)
Inventories, net	$	3,339,890		$	3,023,003

4. Leases

Effective September 1, 2019, the Company adopted Accounting Standards Update No. 2016-02 (“ASU 2016-02”), Leases (Topic 842) using the modified retrospective approach and also elected to apply the package of practical expedients, which among other things, allows entities to maintain the historical lease classification for existing leases. The Company has lease agreements that contain both lease and non-lease components. For lease agreements entered into or reassessed after the adoption of ASU 2016-02, the Company has elected the practical expedient to combine lease and non-lease components for building and real estate leases.

The Company primarily has leases for buildings and real estate with lease terms ranging from 1 year to 36 years. Leases for other classes of assets are not significant. For any leases with an initial term in excess of 12 months, the Company determines whether an arrangement is a lease at contract inception by evaluating if the contract conveys the right to use and control the specific property or equipment. Certain lease agreements contain purchase or renewal options. These options are included in the lease term when it is reasonably certain that the Company will exercise that option. Generally, the Company's lease agreements do not contain material residual value guarantees or material restrictive covenants.

Right-of-use assets represent the right to use an underlying asset for the lease term and lease liabilities represent an obligation to make lease payments arising from the lease. Right-of-use assets and lease liabilities are recognized based on the present value of future lease payments over the lease term at the lease commencement date. When determining the present value of future payment, the Company uses the incremental borrowing rate when the implicit rate is not readily determinable. Any payment deemed probable under residual value guarantees is included in lease payments. Any variable payments, other than those that depend on an index or rate, are excluded from right-of-use assets and lease liabilities.

Leases with an initial term of 12 months or less are not recorded as right-of-use assets and lease liabilities in the Consolidated Balance Sheet. Lease expense for these leases is recognized on a straight-line basis over the lease term.

Upon adoption of ASU 2016-02, the Company recorded $414.6 million and $437.5 million of right-of-use assets and lease liabilities, respectively, related to its existing operating lease portfolio. The accounting for the Company's finance leases remained substantially unchanged and balances were not significant on the adoption date. The adoption of this standard did not have a material impact on the Consolidated Statements of Operations or the Consolidated Statements of Cash Flows.

The following table sets forth the amount of lease assets and lease liabilities included on the Company's Condensed Consolidated Balance Sheets, as of the period indicated (in thousands):



	Financial Statement Line Item	February 29, 2020
Assets
Operating lease assets ⁽¹⁾	Operating lease right-of-use assets	$	373,413
Finance lease assets ⁽²⁾	Property, plant and equipment, net	151,401
Total lease assets		$	524,814
Liabilities
Current
Operating lease liabilities	Current operating lease liabilities	$	100,033
Finance lease liabilities	Accrued expenses	6,906
Non-current
Operating lease liabilities	Non-current operating lease liabilities	311,879
Finance lease liabilities	Other liabilities	156,798
Total lease liabilities		$	575,616


⁽¹⁾	Net of accumulated amortization of $49.2 million.


⁽²⁾	Net of accumulated amortization of $9.6 million.

The following table is a summary of expenses related to leases included on the Company's Condensed Consolidated Statements of Operations, for the periods indicated (in thousands):



	Three months ended		Six months ended
	February 29, 2020		February 29, 2020
Operating lease cost	$	27,810	$	55,546
Finance lease cost
Amortization of leased assets	1,445		2,581
Interest on lease liabilities	1,254		2,443
Other	1,655		4,183
Net lease cost⁽¹⁾	$	32,164	$	64,753


⁽¹⁾	Lease costs are primarily recognized in cost of revenue.

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



	February 29, 2020
	Weighted-average remaining lease term	Weighted-average discount rate
Operating leases	5.5 years	3.22	%
Finance leases	6.3 years	4.31	%

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



	Six months ended
	February 29, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases⁽¹⁾	$	55,592
Operating cash flows for finance leases⁽¹⁾	2,443
Financing activities for finance leases⁽²⁾	2,808
Non-cash right-of-use assets obtained in exchange for new lease liabilities:
Operating leases	34,213
Finance leases	111,591


⁽¹⁾	Included in accounts payable, accrued expenses and other liabilities in Operating Activities of the Company's Condensed Consolidated Statements of Cash Flows.


⁽²⁾	Included in payments toward debt agreements in Financing Activities of the Company's Condensed Consolidated Statements of Cash Flows.

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



Twelve months ended February 29,	Operating Leases⁽¹⁾			Finance Leases			Total
2020	$	110,692		$	11,849		$	122,541
2021	89,479			12,375			101,854
2022	69,928			11,744			81,672
2023	53,400			11,879			65,279
2024	41,472			15,644			57,116
Thereafter	92,529			128,763			221,292
Total minimum lease payments	$	457,500		$	192,254		$	649,754
Less: Interest	(45,588		)	(28,550		)	(74,138		)
Present value of lease liabilities	$	411,912		$	163,704		$	575,616


⁽¹⁾	Excludes $28.2 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.

As disclosed in the Company’s Form 10-K for the fiscal year ended August 31, 2019, the future minimum lease payments of non-cancelable operating leases prior to the adoption of ASU 2016-02 were as follows (in thousands):



Fiscal Year Ending August 31,	Amount
2020	$	118,312
2021	102,915
2022	84,729
2023	63,206
2024	51,091
Thereafter	182,932
Total minimum lease payments	$	603,185

Total operating lease expense prior to the adoption of ASU 2016-02 was approximately $125.4 million, $130.2 million and $117.2 million for fiscal years 2019, 2018 and 2017, respectively.

5. Notes Payable and Long-Term Debt

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



	Maturity Date	February 29, 2020		August 31, 2019
5.625% Senior Notes	Dec 15, 2020	$	399,332	$	398,886
4.700% Senior Notes	Sep 15, 2022	498,332		498,004
4.900% Senior Notes	Jul 14, 2023	299,178		299,057
3.950% Senior Notes	Jan 12, 2028	495,132		494,825
3.600% Senior Notes⁽¹⁾	Jan 15, 2030	494,470		—
Borrowings under credit facilities⁽²⁾⁽³⁾	Jan 22, 2023 and Jan 22, 2025	—		—
Borrowings under commercial paper program⁽⁴⁾	⁽⁴⁾	237,661		—
Borrowings under loans⁽²⁾	Jan 22, 2025	300,095		805,693
Total notes payable and long-term debt		2,724,200		2,496,465
Less current installments of notes payable and long-term debt		637,841		375,181
Notes payable and long-term debt, less current installments		$	2,086,359	$	2,121,284


⁽¹⁾	On January 15, 2020, the Company issued $500.0 million of publicly registered 3.600% Senior Notes due 2030 (the “3.600% Senior Notes”). The net proceeds from the offering were used for the repayment of term loan indebtedness.

⁽²⁾

On January 22, 2020, the Company entered into a senior unsecured credit agreement which provides for: (i) a Revolving Credit Facility in the initial amount of $2.7 billion, of which $700.0 million expires on January 22, 2023 and $2.0 billion expires on January 22, 2025 and (ii) a $300.0 million Term Loan Facility which expires on January 22, 2025, (collectively the “Credit Facility”). Interest and fees on the Credit Facility advances are based on the Company’s non-credit enhanced long-term senior unsecured debt rating as determined by Standard & Poor’s Ratings Service, Moody’s Investors Service and Fitch Ratings. In connection with the Company’s entry into the Credit Facility, the Company terminated the Company’s amended and restated five-year credit agreement dated November 8, 2017 and the credit agreement dated August 24, 2018.

During the three months ended February 29, 2020, the interest rates on the Revolving Credit Facility ranged from 2.5% to 3.0% and the Term Loan Facility ranged from 2.9% to 3.2%. Interest is charged at a rate equal to (a) for the Revolving Credit Facility, either 0.000% to 0.450% above the base rate or 0.975% to 1.450% above the Eurocurrency rate and (b) for the Term Loan Facility, either 0.125% to 0.750% above the base rate or 1.125% to 1.750% above the Eurocurrency rate. The base rate represents the greatest of: (i) Citibank, N.A.’s prime rate, (ii) 0.50% above the federal funds rate, and (iii) 1.0% above one-month LIBOR, but not less than zero. The Eurocurrency rate represents adjusted LIBOR or adjusted CDOR, as applicable, for the applicable interest period, but not less than zero. Fees include a facility fee based on the revolving credit commitments of the lenders and a letter of credit fee based on the amount of outstanding letters of credit.


⁽³⁾	As of February 29, 2020, the Company has $3.1 billion in available unused borrowing capacity under its revolving credit facilities, net of outstanding commercial paper borrowings.


⁽⁴⁾	The Company has a borrowing capacity of up to $1.8 billion under its commercial paper program. The revolving credit facility supports commercial paper outstanding, if any. As of February 29, 2020, the outstanding commercial paper has maturities of 90 days or less. During the three months ended February 29, 2020, the interest rates on the commercial paper program ranged from 2.0% to 2.6%.

Debt Covenants

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 5.625%, 4.700%, 4.900%, 3.950% or 3.600% Senior Notes upon a change of control. As of February 29, 2020 and August 31, 2019, the Company was in compliance with its debt covenants.

Fair Value

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

6. 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 foreign asset-backed receivables to an unaffiliated financial institution and a conduit administered by an unaffiliated financial institution and certain of the North American asset-backed receivables 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 29, 2020 and February 28, 2019 were not material. The Company does not record a servicing asset or liability on the Condensed Consolidated Balance Sheets as the Company estimates that the fee it receives to service these receivables approximates the fair market compensation to provide the servicing activities.

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 February 29, 2020, the special purpose entity has liabilities for which creditors do not have recourse to the general credit of the Company (primary beneficiary). 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. NaN liability has been recorded for obligations under the guarantee as of February 29, 2020.

The special purpose entity in the North American asset-backed securitization program is a wholly-owned subsidiary of the Company and is included in the Company’s Condensed Consolidated Financial Statements. Certain unsold receivables covering the maximum amount of net cash proceeds available under the North American asset-backed securitization program are pledged as collateral to the unaffiliated financial institution as of February 29, 2020.

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



	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 29, 2020, the Company had up to $76.3 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 29, 2020		February 28, 2019		February 29, 2020		February 28, 2019⁽³⁾
Trade accounts receivable sold	$	1,095	$	1,078	$	2,257	$	1,828
Cash proceeds received⁽¹⁾	$	1,089	$	1,072	$	2,245	$	1,816
Pre-tax losses on sale of receivables⁽²⁾	$	6	$	6	$	12	$	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.


⁽³⁾	Excludes $650.3 million of trade accounts receivable sold, $488.1 million of cash and $13.9 million of net cash received prior to the amendment of the foreign asset-backed securitization program and under the previous North American asset-backed securitization program which occurred during the first quarter of fiscal year 2019.

The asset-backed securitization programs require compliance with several covenants. The North American asset-backed securitization program covenants include compliance with the interest ratio and debt to EBITDA ratio of the five-year unsecured credit facility entered into on January 22, 2020 (the “Credit Facility”). The foreign asset-backed securitization program covenants include limitations on certain corporate actions such as mergers and consolidations. As of February 29, 2020 and August 31, 2019, the Company was in compliance with all covenants under the asset-backed securitization programs.

7. Accrued Expenses

Accrued expenses consist of the following (in thousands):

   May 31, 2019    August 31, 2018
Contract liabilities
   $ 544,831    $ —
Deferred income
   —      691,365
Accrued compensation and employee benefits
   549,598    570,400
Other accrued expenses
   1,491,623    1,000,979




Accrued expenses
   $ 2,586,052    $ 2,262,744

~~5. Stock-Based Compensation~~



	February 29, 2020		August 31, 2019
Contract liabilities⁽¹⁾	$	495,314	$	511,329
Accrued compensation and employee benefits	532,312		600,907
Other accrued expenses	1,987,503		1,877,908
Accrued expenses	$	3,015,129	$	2,990,144


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

8. Postretirement and ~~Share Repurchases~~

Other Employee Benefits

Postretirement 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 29, 2020 and February 28, 2019 (in thousands):



	Three months ended						Six months ended
	February 29, 2020			February 28, 2019			February 29, 2020			February 28, 2019
Service cost ⁽¹⁾	$	6,638		$	289		$	11,101		$	584
Interest cost ⁽²⁾	809			870			1,572			1,755
Expected long-term return on plan assets ⁽²⁾	(3,789		)	(1,330		)	(6,575		)	(2,682		)
Recognized actuarial loss ⁽²⁾	226			205			449			413
Amortization of prior service credit ⁽²⁾	(11		)	(11		)	(22		)	(23		)
Net periodic benefit cost	$	3,873		$	23		$	6,525		$	47


⁽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.

Acquired Plan

As a result of the third closing of the JJMD acquisition, the Company assumed a pension obligation for employees in Switzerland (the “Switzerland plan”). The Switzerland plan, which is a qualified defined benefit pension plan, provides benefits based on average employee earnings over an approximately 8 years service period preceding retirement and length of employee service. The Company’s policy is to contribute amounts sufficient to meet minimum funding requirements as set forth in Switzerland employee benefit and tax laws plus such additional amounts as are deemed appropriate by the Company.

The following tables provide information only related to the Switzerland plan as of the acquisition date, September 30, 2019, and are preliminary estimates.

Benefit Obligation and Plan Assets

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



	September 30, 2019
Ending projected benefit obligation	$	(404,297	)
Ending fair value of plan assets	$	330,793
Unfunded status	$	(73,504	)

Cash Flows

The Company expects to make cash contributions between $9.5 million and $11.7 million to its Switzerland pension plan during fiscal year 2020. The estimated future benefit payments, which reflect expected future service, are as follows (in thousands):



Fiscal Year Ended August 31,	Amount
2020	$	24,698
2021	21,698
2022	20,098
2023	18,398
2024	17,298
2025 through 2029	82,992

Accumulated Benefit Obligation

The following table provides information for the Switzerland plan with an accumulated benefit obligation as of September 30, 2019 (in thousands):



	September 30, 2019
Projected benefit obligation	$	(404,297	)
Accumulated benefit obligation	$	(394,427	)
Fair value of plan assets	$	330,793

9. 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 $257.2 million and $334.1 million as of February 29, 2020 and August 31, 2019, respectively. The related forward foreign exchange contracts have been designated as hedging instruments and are accounted for as cash flow hedges. The forward foreign exchange contract transactions will effectively lock in the value of anticipated foreign currency denominated revenues and expenses against foreign currency fluctuations. The anticipated foreign currency denominated revenues and expenses being hedged are expected to occur between March 1, 2020 and November 30, 2020.

In addition to derivatives that are designated as hedging instruments and qualify for hedge accounting, the Company also enters into forward contracts to economically hedge transactional exposure associated with commitments arising from trade accounts receivable, trade accounts payable, fixed purchase obligations and intercompany transactions denominated in a currency other than the functional currency of the respective operating entity. The aggregate notional amount of these outstanding contracts as of February 29, 2020 and August 31, 2019, was $2.4 billion and $2.5 billion, respectively.

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

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

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



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 29, 2020		February 28, 2019		February 29, 2020		February 28, 2019
Forward foreign exchange contracts⁽¹⁾	Cost of revenue	$	6,801	$	49,794	$	33,518	$	42,808

⁽¹⁾

For the three months and six months ended February 29, 2020, the Company recognized $7.6 million and $36.4 million, respectively, of foreign currency losses in cost of revenue, which are offset by the gains from the forward foreign exchange contracts. During the three months and six months ended February 28, 2019, the Company recognized $57.1 million and $52.6 million, respectively, of foreign currency losses in cost of revenue, which are offset by the gains from the forward foreign exchange contracts.

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 29, 2020, 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	$	200.0	Oct 22, 2018	Dec 15, 2020	⁽²⁾
Interest Rate Swaps
Debt obligations	Variable	$	550.0	Aug 24, 2018 and Oct 11, 2018	Aug 24, 2020 and Aug 31, 2020	⁽³⁾


⁽¹⁾	The contracts will be settled with the respective counterparties on a net basis at the expiration date for the forward interest rate swap and at each settlement date for the interest rate swaps.


⁽²⁾	If the anticipated debt issuance occurs before December 15, 2020, the contracts will be terminated simultaneously with the debt issuance.


⁽³⁾	The Company pays interest based upon a fixed rate as agreed upon with the respective counterparties and receives variable rate interest payments based on the one-month and three-month LIBOR for borrowings under the Credit Facility and certain other debt obligations. Of the amount hedged, $350.0 million expires on August 24, 2020 and $200.0 million expires on August 31, 2020.

10. Accumulated Other Comprehensive Income

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



	Foreign Currency Translation Adjustment			Derivative Instruments			Actuarial Loss			Prior Service Cost			Available for Sale Securities			Total
Balance as of August 31, 2019	$	(14,298	)	$	(39,398	)	$	(28,033	)	$	(608	)	$	(457	)	(82,794		)
Other comprehensive (loss) income before reclassifications	(10,875		)	1,471			—			—			(14,080		)	(23,484		)
Amounts reclassified from AOCI	—			3,335			—			—			—			3,335
Other comprehensive (loss) income⁽¹⁾	(10,875		)	4,806			—			—			(14,080		)	(20,149		)
Balance as of February 29, 2020	$	(25,173	)	$	(34,592	)	$	(28,033	)	$	(608	)	$	(14,537	)	$	(102,943	)


⁽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						Six months ended
Comprehensive Income Components	Financial Statement Line Item	February 29, 2020			February 28, 2019			February 29, 2020			February 28, 2019
Realized losses (gains) on derivative instruments:⁽¹⁾
Foreign exchange contracts	Cost of revenue	$	(3,117	)	$	3,931		$	4,197		$	18,546
Interest rate contracts	Interest expense	(431		)	(430		)	(862		)	(860		)
Total amounts reclassified from AOCI⁽²⁾		$	(3,548	)	$	3,501		$	3,335		$	17,686


⁽¹⁾	The Company expects to reclassify $3.4 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 29, 2020 and February 28, 2019.

11. Stockholders’ Equity

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

   Three months ended    Nine months ended
   May 31, 2019    May 31, 2018    May 31, 2019    May 31, 2018
Restricted stock units and stock appreciation rights
   $ 12,592    $ 13,457    $ 41,247    $ 69,916
Employee stock purchase plan
   1,914    1,581    6,205    5,368
Other⁽¹⁾
   —      —      —      7,538








Total
   $ 14,506    $ 15,038    $ 47,452    $ 82,822

⁽¹⁾	~~Represents aone-time~~ ~~cash-settled stock award that vested on November 30, 2017.~~



	Three months ended				Six months ended
	February 29, 2020		February 28, 2019		February 29, 2020		February 28, 2019
Restricted stock units	$	12,301	$	13,604	$	40,484	$	28,655
Employee stock purchase plan	2,808		2,093		4,848		4,291
Total	$	15,109	$	15,697	$	45,332	$	32,946

As of ~~May 31, 2019,~~February 29, 2020, the shares available to be issued under the 2011 Stock Award and Incentive Plan were ~~12,021,729.~~

10,502,993.

Restricted Stock Units

Certain key employees have been granted time-based, performance-based and market-based restricted stock ~~units.~~unit awards (“restricted stock units”). The time-based restricted stock units generally vest on a graded vesting schedule over three years. The 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 have a vesting condition that is tied to the Company’s total shareholder return based on the Company’s stock performance in relation to the companies in the Standard and Poor’s (S&P) Super Composite Technology Hardware and Equipment Index excluding the Company. During the ~~nine~~six months ended ~~May 31,~~February 29, 2020 and February 28, 2019, ~~and 2018,~~ the Company awarded approximately ~~1.6~~1.1 million and ~~1.4~~1.6 million time-based restricted stock units, respectively, ~~0.4~~0.3 million and 0.4 million performance-based restricted stock units, respectively and ~~0.4~~0.3 million and 0.4 million market-based restricted stock units, respectively.

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

   Nine months ended
   May 31, 2019
Unrecognized stock-based compensation expense—restricted stock units
   $ 53,987
Remaining weighted-average period for restricted stock units expense
   1.4 years

Six months ended
February 29, 2020
Unrecognized stock-based compensation expense—restricted stock units $ 67,606
Remaining weighted-average period for restricted stock units expense 1.5 years

Common Stock Outstanding

The following represents the common stock outstanding for the periods indicated:

   Three months ended Nine months ended
   May 31, 2019 May 31, 2018 May 31, 2019 May 31, 2018
Common stock outstanding:

Beginning balances
   152,878,329 172,063,230 164,588,172 177,727,653
Shares issued upon exercise of stock options
   —   —   11,348 29,688
Shares issued under employee stock purchase plan
   (215 ) 261 692,110 575,777
Vesting of restricted stock
   73,095 24,232 1,979,022 2,718,379
Purchases of treasury stock under employee stock plans
   (24,322 ) (6,567 ) (489,158 ) (790,598 )
Treasury shares purchased⁽¹⁾
   — (3,281,412 ) (13,854,607 ) (11,461,155 )


Ending balances
   152,926,887 168,799,744 152,926,887 168,799,744



	Three months ended				Six months ended
	February 29, 2020		February 28, 2019		February 29, 2020		February 28, 2019
Common stock outstanding:
Beginning balances	152,300,356		157,986,896		153,520,380		164,588,172
Shares issued upon exercise of stock options	43,069		11,348		56,999		11,348
Shares issued under employee stock purchase plan	595,717		691,971		595,717		692,325
Vesting of restricted stock	322,872		219,764		2,239,612		1,905,927
Purchases of treasury stock under employee stock plans	(86,706	)	(57,389	)	(617,123	)	(464,836	)
Treasury shares purchased⁽¹⁾	(1,767,782	)	(5,974,261	)	(4,388,059	)	(13,854,607	)
Ending balances	151,407,526		152,878,329		151,407,526		152,878,329

⁽¹⁾

In ~~June 2018,~~September 2019, the Company’s Board of Directors authorized the repurchase of up to ~~$350.0~~$600.0 million of the Company’s common stock as part of a two-year capital allocation framework (the ~~“2018~~“2020 Share Repurchase Program”). ~~The 2018~~As of February 29, 2020, 4.4 million shares had been repurchased for $168.7 million and $431.3 million remains available under the 2020 Share Repurchase ~~Program expires August 31, 2019. As of May 31, 2019, the total amount authorized by the Board of Directors had been repurchased.~~

Program.

12. Concentration of Risk and Segment Data

Concentration of Risk

Sales of the Company’s products are concentrated among specific customers. During the ~~nine~~six months ended ~~May 31, 2019,~~February 29, 2020, the Company’s ~~five~~5 largest customers accounted for approximately ~~43%~~47% of its net revenue and 8272 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 itspre-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 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.

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



	Three months ended
	February 29, 2020						February 28, 2019
	EMS		DMS		Total		EMS		DMS		Total
Timing of transfer
Point in time	$	986,570	$	1,141,881	$	2,128,451	$	836,863	$	1,464,832	$	2,301,695
Over time	2,843,384		1,153,248		3,996,632		2,967,864		797,431		3,765,295
Total	$	3,829,954	$	2,295,129	$	6,125,083	$	3,804,727	$	2,262,263	$	6,066,990



	Six months ended
	February 29, 2020						February 28, 2019
	EMS		DMS		Total		EMS		DMS		Total
Timing of transfer
Point in time	$	2,377,480	$	3,011,360	$	5,388,840	$	1,257,524	$	3,566,483	$	4,824,007
Over time	5,870,026		2,371,915		8,241,941		6,050,306		1,698,952		7,749,258
Total	$	8,247,506	$	5,383,275	$	13,630,781	$	7,307,830	$	5,265,435	$	12,573,265

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

   Three months ended Nine months ended
   May 31, 2019 May 31, 2018 May 31, 2019 May 31, 2018
Net revenue

EMS
   $ 3,988,489 $ 3,161,626 $ 11,296,319 $ 8,894,174
DMS
   2,147,113 2,275,326 7,412,548 7,429,411


   $ 6,135,602 $ 5,436,952 $ 18,708,867 $ 16,323,585


Segment income and reconciliation of income before income tax

EMS
   $ 130,869 $ 121,563 $ 303,618 $ 302,556
DMS
   54,896 28,499 326,866 253,322


Total segment income
   $ 185,765 $ 150,062 $ 630,484 $ 555,878
Reconciling items:

Amortization of intangibles
   (7,610 ) (10,040 ) (23,033 ) (29,909 )
Stock-based compensation expense and related charges
   (14,506 ) (15,038 ) (47,452 ) (82,822 )
Restructuring and related charges
   (9,340 ) (12,647 ) (16,182 ) (29,462 )
Distressed customer charge
   —     —   —   (14,706 )
Business interruption and impairment charges, net⁽¹⁾
   —     634 2,860 (10,722 )
Acquisition and integration charges
   (13,391 ) —   (35,066 ) —
Other expense
   (14,084 ) (10,139 ) (39,391 ) (26,506 )
Interest income
   6,758 4,499 15,897 13,323
Interest expense
   (50,514 ) (36,178 ) (139,326 ) (110,220 )


Income before income tax
   $ 83,078 $ 71,153 $ 348,791 $ 264,854



	Three months ended						Six months ended
	February 29, 2020			February 28, 2019			February 29, 2020			February 28, 2019
Segment income and reconciliation of income before income tax
EMS	$	84,829		$	88,654		$	189,529		$	172,749
DMS	74,619			102,405			247,234			271,970
Total segment income	$	159,448		$	191,059		$	436,763		$	444,719
Reconciling items:
Amortization of intangibles	(13,577		)	(7,777		)	(29,717		)	(15,423		)
Stock-based compensation expense and related charges	(15,109		)	(15,697		)	(45,332		)	(32,946		)
Restructuring and related charges	(29,604		)	(817		)	(74,855		)	(6,842		)
Distressed customer charge	—			—			(14,963		)	—
Business interruption and impairment charges, net⁽¹⁾	—			—			—			2,860
Acquisition and integration charges	(7,752		)	(12,785		)	(23,886		)	(21,675		)
Impairment on securities	(12,205		)	—			(12,205		)	—
Other expense (net of periodic benefit cost)	(11,277		)	(11,757		)	(24,274		)	(25,307		)
Interest income	5,336			4,760			11,280			9,139
Interest expense	(46,183		)	(46,160		)	(91,094		)	(88,812		)
Income before income tax	$	29,077		$	100,826		$	131,717		$	265,713

⁽¹⁾

Charges, net of insurance proceeds of $5.0 million for the three months ended May 31, 2018, and $2.9 million and $21.4 million for the nine months ended May 31, 2019 and 2018, respectively, relate to business interruption and asset impairment costs associated with damage from Hurricane Maria, which impacted our operations in Cayey, Puerto Rico.

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

As of ~~May 31, 2019,~~February 29, 2020, the Company operated in 2931 countries worldwide. Sales to unaffiliated customers are based on the ~~Company’s~~Company location that maintains the customer relationship and transacts the external sale.

The following tables set forth external net revenue, net of intercompany eliminations, and long-lived asset information where individual countries represent a material portion of the total (in thousands):



	Three months ended				Six months ended
	February 29, 2020		February 28, 2019		February 29, 2020		February 28, 2019
External net revenue:
Singapore	$	1,216,369	$	1,588,931	$	3,247,285	$	3,907,604
Mexico	1,153,619		1,052,781		2,344,957		2,048,202
China	968,386		1,199,016		2,123,321		2,517,454
Malaysia	505,424		414,433		996,230		793,961
Ireland	181,790		205,480		435,875		281,199
Other	1,035,235		891,648		2,050,948		1,837,335
Foreign source revenue	5,060,823		5,352,289		11,198,616		11,385,755
U.S.	1,064,260		714,701		2,432,165		1,187,510
Total	$	6,125,083	$	6,066,990	$	13,630,781	$	12,573,265



	February 29, 2020		August 31, 2019
Long-lived assets:
China	$	1,488,548	$	1,579,904
Mexico	404,896		418,641
Switzerland	217,065		158
Malaysia	208,576		154,386
Singapore	148,583		156,028
Taiwan	118,315		123,608
Hungary	99,435		85,809
Vietnam	93,495		85,728
Other	470,688		462,261
Long-lived assets related to foreign operations	3,249,601		3,066,523
U.S.	1,148,011		1,146,335
Total	$	4,397,612	$	4,212,858

13. Restructuring and Related Charges

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



	Three months ended					Six months ended
	February 29, 2020⁽²⁾		February 28, 2019⁽³⁾			February 29, 2020⁽²⁾		February 28, 2019⁽³⁾
Employee severance and benefit costs	$	8,012	$	3,768		$	26,793	$	8,947
Lease costs	6,229		—			6,468		9
Asset write-off costs	9,109		(3,396		)	25,425		(3,212		)
Other costs	6,254		445			16,169		1,098
Total restructuring and related charges⁽¹⁾	$	29,604	$	817		$	74,855	$	6,842

⁽¹⁾

Includes $14.7 million and $0.3 million recorded in the EMS segment, $14.5 million and $0.5 million recorded in the DMS segment and $0.4 million and $0.0 million of non-allocated charges for the three months ended February 29, 2020 and February 28, 2019, respectively. Includes $32.1 million and $4.7 million recorded in the EMS segment, $39.7 million and $2.1 million recorded in the DMS segment and $3.1 million and $0.0 million of non-allocated charges for

the six months ended February 29, 2020 and February 28, 2019, respectively. Except for asset write-off costs, all restructuring and related charges are cash costs.


⁽²⁾	Primarily relates to the 2020 Restructuring Plan.


⁽³⁾	Primarily relates to the 2017 Restructuring Plan.

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

The Company currently expects to recognize approximately $85.0 million in pre-tax restructuring and other related costs primarily over the course of the Company’s fiscal year 2020. This information will be subject to the finalization of timetables for the transition of functions, consultation with employees and their representatives as well as the statutory severance requirements of the particular jurisdictions impacted, and the amount and timing of the actual charges may vary due to a variety of factors. The Company’s estimates for the charges discussed above exclude any potential income tax effects.

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, 2019⁽¹⁾	$	3,162		$	1,980		$	—		$	789		$	5,931
Restructuring related charges	26,793			6,468			25,425			450			59,136
Asset write-off charge and other non-cash activity	(95		)	(5,637		)	(25,425		)	2			(31,155		)
Cash payments	(16,415		)	(278		)	—			(577		)	(17,270		)
Balance as of February 29, 2020	$	13,445		$	2,533		$	—		$	664		$	16,642


⁽¹⁾	Balance as of August 31, 2019 primarily relates to the 2017 Restructuring Plan.

14. 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:



	Three months ended				Six months ended
	February 29, 2020		February 28, 2019		February 29, 2020		February 28, 2019
U.S. federal statutory income tax rate	21.0	%	21.0	%	21.0	%	21.0	%
Effective income tax rate	108.9	%	33.0	%	71.0	%	27.9	%

The effective income tax rate increased for the three months and six months ended February 29, 2020, compared to the three months and six months ended February 28, 2019, primarily due to: (i) decreased income for the three months and six months ended February 29, 2020, driven in part by increased restructuring charges with minimal related tax benefit; and (ii) adjustments related to the Tax Cuts and Jobs Act of 2017 (the “Tax Act”) for the six months ended February 28, 2019, including a $13.3 million income tax benefit recorded during the three months ended November 30, 2018.

The effective tax rate differed from the U.S. federal statutory rate of 21.0% during the three months and six months ended February 29, 2020 and February 28, 2019, primarily due to: (i) losses in tax jurisdictions with existing valuation allowances; (ii) tax incentives granted to sites in Brazil, China, Malaysia, Singapore and Vietnam; and (iii) adjustments to amounts previously recorded for the Tax Act for the three months and six months ended February 28, 2019.

15. 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 29, 2020	February 28, 2019	February 29, 2020	February 28, 2019
Restricted stock units	4,499	1,348	1,035	1,348
Employee stock purchase plan	164	—	—	—
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 29, 2020 and February 28, 2019 (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 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
Fiscal Year 2019:	October 18, 2018	$	0.08	$	13,226	November 15, 2018	December 3, 2018
	January 24, 2019	$	0.08	$	12,706	February 15, 2019	March 1, 2019

16. 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 February 25, 2019 and April 29, 2019, under the terms of the Framework Agreement, the Company completed the initial and second closings, respectively, of its acquisition of certain assets of JJMD. The preliminary aggregate purchase price paid for the ~~periods indicated, foreign source revenue expressed as a percentage~~initial and second closings was approximately $166.2 million in cash. For the initial and second closings, total assets acquired of ~~net revenue:~~

   Three months ended Nine months ended
   May 31, 2019 May 31, 2018 May 31, 2019 May 31, 2018
Foreign source revenue
   86.5 % 91.2 % 89.2 % 91.8 %

~~7. Notes Payable~~$172.3 million and ~~Long-Term Debt~~

~~Notes payable and long-term debt outstanding~~total liabilities assumed of $6.1 million were recorded at their estimated fair values as of ~~May 31,~~the acquisition dates.

On September 30, 2019, ~~and August 31, 2018 are summarized below (in thousands):~~

   Maturity
Date    May 31,
2019    August 31,
2018
5.625% Senior Notes
   Dec 15, 2020    $ 398,663    $ 397,995
4.700% Senior Notes
   Sep 15, 2022    497,841    497,350
4.900% Senior Notes
   Jul 14, 2023    298,996    298,814
3.950% Senior Notes
   Jan 12, 2028    494,670    494,208
Borrowings under credit facilities⁽¹⁾
   Nov 8, 2022 and Aug 24, 2020    429,648    —
Borrowings under loans
   Nov 8, 2022 and Aug 24, 2020    811,854    830,332




Total notes payable and long-term debt
      2,931,672    2,518,699
Less current installments of notes payable and long-term debt
      454,830    25,197




Notes payable and long-term debt, less current installments
      $ 2,476,842    $ 2,493,502

⁽¹⁾	~~As of May 31, 2019, the Company has $2.0 billion in available unused borrowing capacity under its revolving credit facilities.~~

~~Debt Covenants~~

~~Borrowings~~ under the ~~Company’s debt agreements are~~terms of the Framework Agreement, the Company completed the third closing of its acquisition of certain assets of JJMD. The preliminary aggregate purchase price paid for the third closing was approximately $111.8 million in cash, which remains subject to ~~various covenants that limit~~certain post-closing adjustments based on conditions within the ~~Company’s ability to: incur additional indebtedness, sell~~Framework Agreement. For the third closing, total assets ~~effect mergers~~acquired of $199.7 million, including $83.2 million in contract assets, $35.1 million in inventory and ~~certain transactions,~~$70.4 million in goodwill, and ~~effect certain transactions with subsidiaries and affiliates. In addition,~~total liabilities assumed of $87.9 million, including $73.5 million of pension obligations, were recorded at their estimated fair values as of the ~~revolving credit facilities~~acquisition date. There were no intangible assets identified in this acquisition and the ~~4.900% Senior Notes contain debt leverage and interest coverage covenants.~~goodwill is primarily attributable to the assembled workforce. The majority of the goodwill is currently not expected to be deductible for income tax purposes.

The acquisition of the JJMD assets have been accounted for as separate business combinations for each closing using the acquisition method of accounting. The Company is ~~also subject to certain covenants requiring~~currently evaluating the Company to offer to repurchase the 5.625%, 4.700%, 4.900% or 3.950% Senior Notes upon a change of control. As of May 31, 2019 and August 31, 2018, the Company was in compliance with its debt covenants.

~~Fair Value~~

~~The estimated~~ fair values of the assets and liabilities related to the second and third closings of these business combinations. The preliminary estimates and measurements are, therefore, subject to change during the measurement period for assets acquired, liabilities assumed and tax adjustments. The results of operations

were included in the Company’s ~~publicly traded debt, including~~condensed consolidated financial results beginning on February 25, 2019 for the ~~5.625%, 4.700%~~initial closing, April 29, 2019 for the second closing and ~~3.950% Senior Notes, were approximately $416.5 million, $517.9 million and $480.1 million, respectively, as~~September 30, 2019 for the third closing. The Company believes it is impracticable to provide pro forma information for the acquisition of ~~May 31, 2019.~~ the JJMD assets.

17. Fair Value Measurements

Fair Value Measurements on a Recurring Basis

The ~~fair value estimates are based upon observable market data (Level 2 criteria). The estimated~~following table presents the fair value of the ~~Company’s private debt, the 4.900% Senior Notes, was approximately $311.2 million,~~Company's financial assets and liabilities measured at fair value by hierarchy level on a recurring basis as of ~~May 31, 2019. This~~the periods indicated:



(in thousands)	Fair Value Hierarchy		February 29, 2020		August 31, 2019
Assets:
Cash and cash equivalents:
Cash equivalents	Level 1	⁽¹⁾	$	35,925	$	27,804
Prepaid expenses and other current assets:
Short-term investments	Level 1		16,652		14,088
Forward foreign exchange contracts:
Derivatives designated as hedging instruments (Note 9)	Level 2	⁽²⁾	2,730		904
Derivatives not designated as hedging instruments (Note 9)	Level 2	⁽²⁾	13,726		6,878
Other assets:
Senior Non-Convertible Preferred Stock	Level 3	⁽³⁾	20,900		33,102
Liabilities:
Accrued expenses:
Forward foreign exchange contracts:
Derivatives designated as hedging instruments (Note 9)	Level 2	⁽²⁾	$	5,061	$	15,999
Derivatives not designated as hedging instruments (Note 9)	Level 2	⁽²⁾	15,474		55,391
Interest rate swaps:
Derivatives designated as hedging instruments (Note 9)	Level 2	⁽⁴⁾	4,020		5,918
Other liabilities:
Forward interest rate swaps:
Derivatives designated as hedging instruments (Note 9)	Level 2	⁽⁴⁾	41,304		35,045


⁽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⁾	The Senior Non-Convertible Preferred Stock is valued each reporting period using unobservable inputs based on a discounted cash flow model and is classified as an available for sale debt security with any unrealized loss recorded to AOCI. As of February 29, 2020 and August 31, 2019, the unobservable inputs have an immaterial impact on the fair value calculation.


⁽⁴⁾	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.

Assets Held for Sale

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



	February 29, 2020		August 31, 2019
(in thousands)	Carrying Amount		Carrying Amount
Assets held for sale⁽¹⁾	$	30,120	$	—


⁽¹⁾	The fair value of assets held for sale exceeds the carrying value. As a result, 0 impairment has been recorded for assets held for sale as of February 29, 2020.

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 ~~estimate is based on~~because of the ~~Company’s indicative borrowing cost derived from discounted cash flows (Level 3 criteria).~~short-term nature of these financial instruments. The carrying amounts of borrowings under credit facilities and under loans ~~approximate~~approximates fair value as interest rates on these instruments ~~approximate~~approximates current market rates.

~~8. Trade Accounts Receivable Securitization~~

Notes payable and ~~Sale Programs~~

The Company regularly sells designated pools of trade accounts receivable under a foreign asset-backed securitization program, a North American asset-back securitization program and uncommitted trade accounts receivable sale programs (collectively referred to herein as the “programs”). The Company continues servicing the receivables sold and in exchange receives a servicing fee under each of the programs. Servicing fees related to each of the programs recognized during the three months and nine months ended May 31, 2019 and 2018 were not material. The Company does not record a servicing asset or liability on the Condensed Consolidated Balance Sheets aslong-term debt is carried at amortized cost; however, the Company estimates ~~that the fee it receives to service these receivables approximates~~ the fair ~~market compensation to provide~~values of notes payable and long-term debt for disclosure purposes. The following table presents the ~~servicing activities.~~

~~Transfers~~carrying amounts and fair values of the ~~receivables under the programs are accounted for~~Company's notes payable and long-term debt, by hierarchy level as sales and, accordingly, net receivables sold under the 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 adoption of Accounting Standards Update~~No. 2016-15~~ ~~(“ASU2016-15”)~~ described in Note 14, New Accounting Guidance, resulted in a reclassification of cash flows from operating activities to investing activities in the Company’s Condensed Consolidated Statement of Cash Flows for cash receipts related to collections on the deferred purchase price receivable (i.e. beneficial interest) on asset-backed securitization transactions. In addition, the beneficial interest of $162.2 million and $1.5 billion for the nine months ended May 31, 2019 and 2018, respectively, obtained in exchange for securitized receivables are reported as~~non-cash~~ ~~investing activities.~~

~~Asset-Backed Securitization Programs~~

~~The Company continuously sells designated pools of trade accounts receivable under its foreign asset-backed securitization program to a special purpose entity, which in turn sells certain~~ of the receivables to an unaffiliated financial institution and a conduit administered by an unaffiliated financial institution on a monthly basis. Effective October 1, 2018, the foreign asset-backed securitization program terms were amended and the program was extended to September 30, 2021. In connection with this amendment, there is no longer a deferred purchase price receivable for the foreign asset-backed securitization program as the entire purchase price is paid in cash when the receivables are sold.

As of October 1, 2018, approximately $734.2 million of accounts receivable sold under the foreign asset-backed securitization program was exchanged for the outstanding deferred purchase price receivable of $335.5 million. The remaining amount due to the financial institution of $398.7 million was subsequently settled for $25.2 million of cash and $373.5 million of trade accounts receivable sold to the financial institution. The previously sold trade accounts receivable were recorded at fair market value. Prior to the amendment, any portion of the purchase price for the receivables not paid in cash upon the sale occurring was recorded as a deferred purchase price receivable, which was paid from available cash as payments on the receivables were collected. The foreign asset-backed securitization program contains a guarantee of payment by the special purpose entity, in an amount equal to approximately the net cash proceeds under the program. No liability has been recorded for obligations under the guarantee as of May 31, 2019.

The North American asset-backed securitization program was terminated on October 9, 2018 and as of this date approximately $500.0 million of accounts receivable sold under the program was exchanged for the outstanding deferred purchase price receivable of $300.0 million and $200.0 million of cash. The previously sold trade accounts receivable were recorded at fair market value.

On November 27, 2018, the Company entered into a new North American asset-backed securitization program. The Company continuously sells designated pools of trade accounts receivable under its new North American asset-backed securitization program to a special purpose entity, which in turn sells certain of the receivables to conduits administered by unaffiliated financial institutions on a monthly basis. 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. There is no longer a deferred purchase price receivable for the North American asset-backed securitization program as the entire purchase price is paid in cash when the receivables are sold. Additionally, $204.4 million in receivables are pledged as collateral to the unaffiliated financial institution as of May 31, 2019.

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

   Maximum Amount of
Net Cash Proceeds (in millions)⁽¹⁾    Expiration
Date
North American
   $ 390.0    November 22, 2021
Foreign
   $ 400.0    September 30, 2021

periods indicated:



			February 29, 2020				August 31, 2019
(in thousands)	Fair Value Hierarchy		Carrying Amount		Fair Value		Carrying Amount		Fair Value
Notes payable and long-term debt: (Note 5)
5.625% Senior Notes	Level 2	⁽¹⁾	$	399,332	$	409,692	$	398,886	$	416,000
4.700% Senior Notes	Level 2	⁽¹⁾	498,332		535,370		498,004		525,890
4.900% Senior Notes	Level 3	⁽²⁾	299,178		326,619		299,057		318,704
3.950% Senior Notes	Level 2	⁽¹⁾	495,132		539,835		494,825		509,845
3.600% Senior Notes	Level 2	⁽¹⁾	494,470		510,905		—		—


⁽¹⁾	~~Maximum amount available at any one time.~~

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

   Three months ended    Nine months ended
   May 31, 2019    May 31, 2018    May 31, 2019⁽⁴⁾    May 31, 2018
Trade accounts receivable sold
   $ 1,036    $ 1,913    $ 2,864    $ 6,362
Cash proceeds received⁽¹⁾
   $ 1,029    $ 1,379    $ 2,845    $ 5,821
Pre-tax losses on sale of receivables⁽²⁾
   $ 7    $ 4    $ 19    $ 11
Deferred purchase price receivables as of May 31⁽³⁾
   $ —      $ 530    $ —      $ 530

⁽¹⁾	~~For the three months and nine months ended May 31, 2019 and 2018, the amount primarily represented proceeds from collections reinvested in revolving-period transfers.~~ The fair value estimates are based upon observable market data.


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

⁽³⁾

~~Recorded initially at~~This fair value ~~as prepaid expenses and other current assets~~estimate is based on the ~~Condensed Consolidated Balance Sheets and are valued using unobservable inputs (Level 3 inputs), primarily~~Company’s indicative borrowing cost derived from discounted cash flows, and due to their credit quality and short-term maturity the fair values approximated book values. The unobservable inputs consist of estimated credit losses and estimated discount rates, which both have an immaterial impact onflows.

Refer to Note 8 - “Postretirement and Other Employee Benefits” for disclosure surrounding the fair value ~~calculations.~~

⁽⁴⁾	Excludes $650.3 million of trade accounts receivable sold, $488.1 million of cash and $13.9 million of net cash received prior to the amendment of the foreign asset-backed securitization program and under the previous North American asset-backed securitization program.

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, 2019 and August 31, 2018, the Company was in compliance with all covenants under the asset-backed securitization programs.

~~Trade Accounts Receivable Sale Programs~~

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
   $ 800.0       Uncommitted    August 31, 2022⁽²⁾
B
   $ 150.0       Uncommitted    November 30, 2019⁽³⁾
C
   800.0    CNY    Uncommitted    June 30, 2020
D
   $ 100.0       Uncommitted    May 4, 2023⁽⁴⁾
E
   $ 50.0       Uncommitted    August 25, 2019
F
   $ 150.0       Uncommitted    January 25, 2020⁽⁵⁾
G
   $ 50.0       Uncommitted    February 23, 2023⁽²⁾
H
   $ 100.0       Uncommitted    August 10, 2019⁽⁶⁾
I
   $ 100.0       Uncommitted    July 21, 2019⁽⁷⁾
J
   $ 740.0       Uncommitted    February 28, 2020⁽⁸⁾
K
   $ 110.0       Uncommitted    April 11, 2020⁽⁹⁾

⁽¹⁾	~~Maximum amount available at any one time.~~

⁽²⁾	~~Any party may elect to terminate the agreement upon 15 days prior notice.~~

⁽³⁾	~~The program will automatically extend for one year at each expiration date unless either party provides 10 days notice of termination.~~

⁽⁴⁾	~~Any party may elect to terminate the agreement upon 30 days prior notice.~~

⁽⁵⁾	~~The program will be automatically extended through January 25, 2023 unless either party provides 30 days notice of termination.~~

⁽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 each year through February 28, 2024 unless either party provides 90 days notice of termination.~~

⁽⁹⁾	~~The program will be automatically extended each year through April 11, 2025 unless either party provides 30 days notice of termination.~~

Company’s pension plan assets.

~~In connection with the trade accounts receivable sale programs, the Company recognized the following (in millions):~~

   Three months ended    Nine months ended
   May 31, 2019    May 31, 2018    May 31, 2019    May 31, 2018
Trade accounts receivable sold
   $ 1,548    $ 1,301    $ 5,101    $ 4,035
Cash proceeds received
   $ 1,541    $ 1,296    $ 5,079    $ 4,025
Pre-tax losses on sale of receivables⁽¹⁾
   $ 7    $ 5    $ 22    $ 10

⁽¹⁾	~~Recorded to other expense within the Condensed Consolidated Statement of Operations.~~

~~9. Accumulated Other Comprehensive Income~~

~~The following table sets forth the changes in accumulated other comprehensive income (“AOCI”), net of tax, by component for the nine months ended May 31, 2019 (in thousands):~~

   Foreign
Currency
Translation
Adjustment Derivative
Instruments Actuarial
(Loss) Gain Prior
Service Cost Available for
Sale Securities Total
Balance as of August 31, 2018
   $ 7,431 $ 8,116 $ (25,021 ) $ (643 ) $ (9,282 ) (19,399 )
Other comprehensive (loss) income before reclassifications
   (5,636 ) (36,262 ) 103 —   (4,769 ) (46,564 )
Amounts reclassified from AOCI
   —   15,958 —   —   —   15,958


Other comprehensive (loss) income⁽¹⁾
   (5,636 ) (20,304 ) 103 —   (4,769 ) (30,606 )


Balance as of May 31, 2019
   $ 1,795 $ (12,188 ) $ (24,918 ) $ (643 ) $ (14,051 ) $ (50,005 )

⁽¹⁾	~~Amounts are net of tax, which are immaterial.~~

      Three months ended Nine months ended
Comprehensive Income Components
   Financial Statement
Line Item    May 31,
2019 May 31,
2018 May 31,
2019 May 31,
2018
Unrealized losses (gains) on derivative instruments:

Foreign exchange contracts
   Cost of revenue    $ (1,298 ) $ (10,459 ) $ 17,248 $ (20,519 )
Interest rate contracts
   Interest expense    (430 ) (3,431 ) (1,290 ) (8,455 )


Total amounts reclassified from AOCI⁽¹⁾⁽²⁾
      $ (1,728 ) $ (13,890 ) $ 15,958 $ (28,974 )

⁽¹⁾	~~The Company expects to reclassify $0.5 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, 2019. The amounts for the three months and nine months ended May 31, 2018, include a reduction to income tax expense related to derivative instruments of $3.0 million and $10.0 million, respectively.

~~10.~~

18. Commitments and Contingencies

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.

The Internal Revenue Service (“IRS”) completed its field examination of the Company’s tax returns for fiscal years 2009 through 2011 and issued a Revenue Agent’s Report (“RAR”) on May 27, 2015, which was updated on June 22, 2016. The IRS completed its field examination of the Company’s tax returns for fiscal years 2012 through 2014 and issued an RAR on April 19, 2017. The proposed adjustments in the RAR from both examination periods relate primarily to U.S. taxation of

~~certain intercompany transactions. On May 8, 2019, the tax return audits for fiscal years 2009 through 2014 were effectively settled when the Company agreed to the IRS Office of Appeals’ Form870-AD~~ (Offer to Waive Restrictions on Assessment and Collection of Tax Deficiency and to Accept Overassessment) adjustments, which were substantially lower than the initial RAR proposed adjustments. The settlement did not have a material effect on the Company’s financial position, results of operations, or cash flows and no additional tax liabilities were recorded.

~~11. Derivative Financial Instruments and Hedging Activities~~

~~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 $135.9 million and $293.4 million as of May 31, 2019 and August 31, 2018, 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, 2019 and February 29, 2020.

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, 2019 and August 31, 2018, was $2.1 billion and $2.3 billion, respectively.

The following table presents the fair values of the Company’s derivative instruments recorded in the Condensed Consolidated Balance Sheets utilized for foreign currency risk management purposes as of May 31, 2019 and August 31, 2018 (in thousands):

Fair Values of Derivative Instruments


Asset Derivatives

Liability Derivatives


Balance Sheet
Location
   Fair Value as of
May 31,
2019(1)    Fair Value as of
August 31,
2018(1)
Balance Sheet
Location
   Fair Value as of
May 31,
2019(1)    Fair Value as of
August 31,
2018(1)
Derivatives designated as hedging instruments:

Forward foreign exchange contracts
   Prepaid expenses and other current assets    $ 644    $ 225
Accrued
expenses
   $ 3,853    $ 13,364
Derivatives not designated as hedging instruments:

Forward foreign exchange contracts
   Prepaid expenses and other current assets    $ 5,216    $ 10,125
Accrued
expenses
   $ 26,851    $ 46,171

⁽¹⁾	~~Classified as Level 2 in the fair-value hierarchy.~~

~~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.~~

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

Derivatives Not Designated as Hedging
Instruments Under ASC 815

Location of (Loss) Gain
on Derivatives
Recognized in Net
Income
   Amount of (Loss) Gain Recognized in Net Income on Derivatives
      Three months ended Nine months ended
      May 31, 2019 May 31, 2018 May 31, 2019    May 31, 2018
Forward foreign exchange contracts⁽¹⁾
   Cost of revenue    $ (33,476 ) $ (19,785 ) $ 9,332    $ 25,959

⁽¹⁾

During the three months ended May 31, 2019 and 2018, the Company recognized $28.3 million and $23.1 million, respectively, of foreign currency gains in cost of revenue, which are offset by the losses from the forward foreign exchange contracts. During the nine months ended May 31, 2019 and 2018, the Company recognized $24.3 million and $12.5 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~~

~~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 May 31, 2019, 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    $ 200.0    October 22, 2018    December 15, 2020 ⁽²⁾
Interest Rate Swaps⁽³⁾

2017 Term Loan Facility
   Variable    $ 200.0    September 30, 2016    June 30, 2019
2017 Term Loan Facility
   Variable    $ 200.0    October 11, 2018    August 31, 2020
2018 Term Loan Facility
   Variable    $ 350.0    August 24, 2018    August 24, 2020

⁽¹⁾	~~The contracts will be settled with the respective counterparties on a net basis at the expiration date for the forward interest rate swap and at each settlement date for the interest rate swaps.~~

⁽²⁾	~~If the anticipated debt issuance occurs before December 15, 2020, the contracts will be terminated simultaneously with the debt issuance.~~

⁽³⁾

~~The Company pays interest based upon a fixed rate as agreed upon with the respective counterparties and receives variable rate interest payments based on theone-month~~ LIBOR for the $500.0 million Term Loan Facility, expiring on November 8, 2022 (the “2017 Term Loan Facility”), for which $400.0 million is hedged, and based on the three-month LIBOR for the $350.0 million Term Loan Facility, which expires on August 24, 2020 (the “2018 Term Loan Facility”).

~~12. Restructuring and Related Charges~~

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

   Three months ended    Nine months ended
   May 31, 2019 May 31, 2018    May 31, 2019 May 31, 2018
Employee severance and benefit costs
   $ 6,513 $ 5,058    $ 15,460 $ 11,048
Lease costs
   (50 ) 1,589    (41 ) 1,596
Assetwrite-off costs
   (343 ) 5,575    (3,555 ) 14,838
Other costs
   3,220 425    4,318 1,980




Total restructuring and related charges⁽¹⁾
   $ 9,340 $ 12,647    $ 16,182 $ 29,462

⁽¹⁾

~~Includes $7.6 million and $4.6 million recorded in the EMS segment, $0.0 million and $5.8 million recorded in the DMS segment and $1.7 million and $2.2 million ofnon-allocated~~ charges for the three months ended May 31, 2019 and 2018, respectively. Includes $12.3 million and $12.6 million recorded in the EMS segment, $2.1 million and $13.8 million recorded to the DMS segment and $1.8 million and $3.1 million of~~non-allocated~~ ~~charges for the nine months ended May 31, 2019 and 2018, respectively. Except for assetwrite-off~~ ~~costs, all restructuring and related charges are cash costs.~~

~~2017 Restructuring Plan~~

On September 15, 2016, the Company’s Board of Directors formally approved a restructuring plan to better align the Company’s global capacity and administrative support infrastructure to further optimize organizational effectiveness. This action includes headcount reductions across the Company’s selling, general and administrative cost base and capacity realignment in higher cost locations (the “2017 Restructuring Plan”).

~~The 2017 Restructuring Plan, totaling $195.0 million in restructuring and other related costs, is substantially complete as of May 31, 2019.~~

~~The table below summarizes the Company’s liability activity, primarily associated with the 2017 Restructuring Plan~~

~~(in thousands):~~

   Employee Severance
and Benefit Costs Lease Costs Asset Write-off
Costs Other
Related Costs Total
Balance as of August 31, 2018
   $ 18,131 $ 2,684 $ —   $ 522 $ 21,337
Restructuring related charges
   15,460 (41 ) (3,555 ) 1,469 13,333
Assetwrite-off charge and othernon-cash activity
   (331 ) —   3,555 (14 ) 3,210
Cash payments
   (23,811 ) (450 ) —   (1,275 ) (25,536 )


Balance as of May 31, 2019
   $ 9,449 $ 2,193 $ —   $ 702 $ 12,344

~~13. Business Acquisitions~~

~~Fiscal year 2019~~

On February 25, 2019 and April 29, 2019, under the terms of the Framework Agreement, the Company completed the initial closing and second closing, respectively, of its acquisition of certain assets of JJMD. The preliminary aggregate purchase price paid for both the initial closing and second closing was approximately $153.2 million in cash, which remains subject to certain post-closing adjustments. The acquisition of the JJMD assets has been accounted for as a business combination using the acquisition method of accounting. Total assets acquired of $163.6 million and total liabilities assumed of $10.4 million were recorded at their estimated fair values as of the acquisition dates. The final closings, which are subject to customary closing conditions, are expected to occur during fiscal year 2020.

The Company is currently evaluating the fair values of the assets and liabilities related to this business combination. The preliminary estimates and measurements are, therefore, subject to change during the measurement period for assets acquired, liabilities assumed and tax adjustments. The results of operations were included in the Company’s condensed consolidated financial results beginning on February 25, 2019 for the initial closing and April 29, 2019 for the second closing. The Company believes it is impracticable to provide pro forma information for the acquisition of the JJMD assets.

~~Fiscal year 2018~~

~~Acquisition~~

On September 1, 2017, the Company completed the acquisition of True-Tech Corporation (“True-Tech”) for approximately $95.9 million in cash. True-Tech is a manufacturer specializing in aerospace, semiconductor and medical machined components.

The acquisition of True-Tech assets was accounted for as a business combination using the acquisition method of accounting. Assets acquired of $114.7 million, including $25.9 million in intangible assets and $22.6 million in goodwill, and liabilities assumed of $18.8 million were recorded at their estimated fair values as of the acquisition date. The excess of the

purchase price over the fair value of the acquired assets and assumed liabilities was recorded to goodwill and was fully allocated to the EMS segment. The majority of the goodwill is currently expected to be deductible for income tax purposes. The results of operations were included in the Company’s condensed consolidated financial results beginning on September 1, 2017. Pro forma information has not been provided as the acquisition of True-Tech is not deemed to be significant.

~~14.~~19. New Accounting Guidance

Recently Adopted Accounting Guidance

During fiscal year ~~2014,~~2016, the ~~Financial Accounting Standards Board (“FASB”)~~FASB issued ana new accounting standard revising lease accounting, which ~~is a comprehensive new revenue recognition model that~~ requires ~~a company~~the Company to recognize ~~revenue to depict~~right-of-use assets and lease liabilities on the ~~transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services.~~Consolidated Balance Sheet and disclose key information regarding leasing arrangements. The accounting standard became effective for the Company in the first quarter of fiscal year ~~2019. The Company implemented changes to its processes, policies and internal controls to meet the impact of the new standard and disclosure requirements.~~2020. Refer to Note ~~16 – “Revenue”~~4 - “Leases” to the Condensed Consolidated Financial Statements for further details.

During fiscal year ~~2016,~~2017, the FASB issued a new accounting standard to ~~address certain aspects~~improve the financial reporting of ~~recognition, measurement, presentation~~hedging relationships to better portray the economic results of an entity’s risk management activities by simplifying the application of hedge accounting and ~~disclosure of~~improving the related disclosures in its financial ~~instruments.~~statements. This guidance became effective for the Company beginning in the first quarter of fiscal year ~~2019, and~~2020. The guidance was applied ~~prospectively by means of~~using a ~~cumulative-effect adjustment to the Consolidated Balance Sheet as of September 1, 2018 to equity investments that existed as of the date of adoption of the standard.~~modified retrospective approach. The adoption of this standard did not have a material impact on the Company’s Consolidated Financial Statements; however, the impact on future periods will depend on the facts and circumstances of future transactions.

During fiscal year 2016, the FASB issued a new accounting standard to address the presentation of certain transactions within the statement of cash flows with the objective of reducing the existing diversity in practice. This standard was adopted on September 1, 2018 on a retrospective basis and resulted in a reclassification of cash flows from operating activities to investing activities in the Company’s Consolidated Statement of Cash Flows for cash receipts related to collections on the deferred purchase price receivable on asset-backed securitization transactions. The increase in cash flow from investing activities and the corresponding decrease to cash flow from operating activities upon adoption of the standard was $96.8 million and $1.6 billion for the nine months ended May 31, 2019 and 2018, respectively.

During fiscal year 2017, the FASB issued a new accounting standard to improve the accounting for the income tax consequences of intra-entity transfers of assets other than inventory. The new standard eliminates the exception for an intra-entity transfer of an asset other than inventory and requires an entity to recognize the income tax consequences when the transfer occurs. This guidance became effective for the Company beginning in the first quarter of fiscal year 2019. This guidance was adopted on a modified retrospective basis and an immaterial cumulative-effect adjustment was recorded, which reduced retained earnings as of September 1, 2018.

During fiscal year 2017, the FASB issued a new accounting standard which clarifies the scope of accounting for asset derecognition and adds further guidance for recognizing gains and losses from the transfer~~of non-financial assets~~ ~~in contracts withnon-customers.~~ This guidance became effective for the Company beginning in the first quarter of fiscal year 2019 coincident with the new revenue recognition guidance. The adoption of this standard did not have a material impact on the Company’s Consolidated Financial Statements; however, the impact on future periods will depend on the facts and circumstances of future transactions.

During fiscal year 2017, the FASB issued a new accounting standard to improve the presentation of net periodic pension benefit cost. The Company adopted the standard on September 1, 2018 on a retrospective basis which results in reclassifications for the service cost component of net periodic benefit cost from selling, general and administrative expense to cost of revenue and for the other components from selling, general and administrative expense to other expense. Prior periods have not been reclassified due to immateriality.

~~During the second quarter of fiscal year 2018, the Securities and Exchange Commission (“SEC”) staff issued Staff Accounting Bulletin No. 118,~~~~Income Tax Accounting Implications of the Tax Cut and Jobs Act~~ (“SAB 118”), which provides guidance on accounting for the tax effects of the Tax Cuts and Jobs Act of 2017 (“Tax Act”). SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting under ASC 740. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Tax Act for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete, but it is able to determine a reasonable estimate, it must record a provisional estimate in its financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before the enactment of the Tax Act. The Company applied SAB 118 and provided required disclosures in Note 15—“Income Taxes.”

Recently Issued Accounting Guidance

During fiscal year 2016, the FASB issued a new accounting standard revising lease accounting. The new guidance requires organizations to recognize lease assets and lease liabilities on the Consolidated Balance Sheet and disclose key information regarding leasing arrangements. This guidance is effective for the Company beginning in the first quarter of fiscal year 2020. Early application of the new standard is permitted and the standard must be adopted using a modified retrospective approach. The Company intends to elect the package of practical expedients offered, which allows entities to not reassess: i) whether any contracts prior to the adoption date are or contain leases, ii) lease classification, and iii) whether capitalized initial direct costs continue to meet the definition of initial direct costs under the new guidance. In preparation for the adoption, the Company is implementing a new lease accounting system. While the Company is currently evaluating accounting policy elections and assessing overall impacts this new standard will have on its Consolidated Financial Statements, the new guidance is expected to have a material impact on the consolidated balance sheets upon adoption, primarily due to the recognition of~~right-of-use~~ ~~assets and operating lease liabilities.~~

During fiscal year 2016, the FASB issued an accounting standard, which replaces the existing incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. This guidance is effective for the Company beginning in the first quarter of fiscal year ~~2021 and early adoption is permitted beginning in the first quarter of fiscal year 2020.~~2021. This guidance must be applied using a modified retrospective or prospective transition method, depending on the area covered by this accounting standard. The Company is currently assessing the impact this new standard may have on its Consolidated Financial Statements.

During fiscal year 2017, the FASB issued a new accounting standard to improve the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities by simplifying the application of hedge accounting and improving the related disclosures in its financial statements. This guidance is effective for the Company beginning in the first quarter of fiscal year 2020, with early adoption permitted. The guidance must be applied using a modified retrospective approach. The adoption of this standard is not expected to have a material impact on the Company’s Consolidated Financial Statements; however, the impact on future periods will depend on the facts and circumstances of future transactions.

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 obtaininternal-use software. This guidance is effective for the Company beginning in the first quarter of fiscal year ~~2021, with early adoption permitted.~~2021. The Company is currently assessing the impact this new standard may have on its Consolidated Financial Statements.

In March 2020, the FASB issued a new accounting standard which provides guidance in accounting for contracts, hedging relationships, and other transactions that reference U.S. dollar LIBOR or another reference rate expected to be discontinued because of reference rate reform. This guidance is effective for the Company beginning in the third quarter of fiscal year 2020. The Company is currently assessing the impact this new standard may have on its Consolidated Financial Statements.

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

~~15. Income Taxes~~

~~Tax Act~~

On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Act. The Tax Act reduced the corporate tax rate, limited or eliminated certain tax deductions, and changed the taxation of foreign earnings of U.S. multinational companies. The enacted changes include a mandatory income inclusion of the historically untaxed foreign earnings of a U.S. company’s foreign subsidiaries and will effectively tax such income at reduced tax rates (“transition tax”). As a result of the~~one-time~~ transition tax, the Company will have a substantial amount of previously taxed earnings that can be distributed to the U.S. without additional U.S. taxation. Additionally, the Tax Act provides for a 100% dividends received deduction for dividends received by U.S. corporations from~~10-percent~~ or more owned foreign corporations. During the fiscal year ended August 31, 2018, the Company made reasonable estimates related to certain impacts of the Tax Act and, in accordance with SAB 118, recorded a net provisional income tax expense (benefit). In the second quarter of fiscal year 2019, the Company completed its accounting for the effects of the Tax Act under SAB 118 based on the analysis, interpretations and guidance available at that time. There may be future adjustments based on changes in interpretations, legislative updates or final regulations under the Tax Act, changes in accounting standards for income taxes, or changes in estimates the Company utilized to calculate the transitional impact. During the first quarter of fiscal year 2019, the Company elected to record the Global Intangible~~Low-Taxed~~ ~~Income effects as a period cost.~~

~~The following table summarizes the tax expense (benefit) related to the Tax Act recognized during the SAB 118 measurement period (in millions):~~

   One-time
transition tax,
inclusive of
unrecognized tax
benefits⁽¹⁾ Re-measurement
of the Company’s
U.S. deferred tax
attributes Change in
indefinite
reinvestment
assertion⁽²⁾    Other    Income tax
expense (benefit)
Provisional income tax expense (benefit)—recognized in fiscal year 2018
   $ 65.9 $ (10.5 ) $ 85.0    $ 1.9    $ 142.3
Income tax expense (benefit) adjustment—recognized in fiscal year 2019
   $ (14.9 ) $ 1.6 $ —      $ —      $ (13.3 )






Income tax expense (benefit) related to the Tax Act through November 30, 2018
   $ 51.0 $ (8.9 ) $ 85.0    $ 1.9    $ 129.0

⁽¹⁾

~~The calculation of theone-time~~ transition tax is based upon estimates of post-1986 earnings and profits, applicable foreign tax credits and relevant limitations, utilization of U.S. federal net operating losses and tax credits and the amount of foreign earnings held in cash and~~non-cash~~ assets. The adjustment during the first quarter of fiscal year 2019 was primarily related to further analysis of the Company’s utilization of foreign tax credits and applicable limitations. No other material adjustments were made to the net provisional income tax expense recognized in fiscal year 2018 related to the Tax Act under SAB 118.

⁽²⁾

The liability recorded for a change in the indefinite reinvestment assertion on certain earnings from the Company’s foreign subsidiaries is primarily associated with foreign withholding taxes that would be incurred upon such future remittances of cash. The Company intends to indefinitely reinvest the remaining earnings from the Company’s foreign subsidiaries for which a deferred tax liability has not already been recorded. The accumulated earnings are the most significant component of the basis differences which are indefinitely reinvested.

~~Effective Income Tax Rate~~

~~The U.S. federal statutory income tax rate and the Company’s effective income tax rate are as follows:~~

   Three months ended Nine months ended
   May 31,
2019 May 31,
2018 May 31,
2019 May 31,
2018
U.S. federal statutory income tax rate
   21.0 % 25.7 % 21.0 % 25.7 %
Effective income tax rate
   47.0 % 40.0 % 32.4 % 45.6 %

The effective tax rate during the three months and nine months ended May 31, 2019, differed from the U.S. federal statutory rate 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. In addition, the nine months ended May 31, 2019 included adjustments to amounts previously recorded for the Tax Act.

~~The effective tax rate differed from the blended U.S. federal statutory rate during the nine months ended May 31, 2018 primarily due to the Tax Act, including theone-time~~ ~~mandatory deemed repatriation tax and there-measurement~~ ~~of the Company’s U.S. deferred tax attributes of $30.9 million, partially offset by a reduction in unrecognized tax benefits of $16.1 million for the lapse of statute in anon-U.S.~~ jurisdiction. Other primary drivers for the difference between the effective tax rate and the blended U.S. federal statutory rate during the three months and nine months ended May 31, 2018 are: (i) tax incentives granted to sites in Brazil, China, Malaysia, Singapore and Vietnam; and (ii) losses in tax jurisdictions with existing valuation allowances, including losses from stock-based compensation for the nine months ended May 31, 2018.

~~16. Revenue~~

~~Effective September 1, 2018, the Company adopted ASU2014-09,~~ Revenue Recognition (Topic 606). The new standard is a comprehensive new revenue recognition model that requires the Company to recognize revenue in a manner which depicts the transfer of goods or services to its customers at an amount that reflects the consideration the Company expects to receive in exchange for those goods or services.

Prior to the adoption of the new standard, the Company recognized substantially all of its revenue from contracts with customers at a point in time, which was generally when the goods were shipped to or received by the customer, title and risk of ownership had passed, the price to the buyer was fixed or determinable and collectability was reasonably assured (net of estimated returns). Under the new standard, the Company will recognize revenue over time for the majority of its contracts with customers which will result in revenue for those customers being recognized earlier than under the previous guidance. Revenue for all other contracts with customers will continue to be recognized at a point in time, similar to recognition prior to the adoption of the standard.

Additionally, the new standard impacts the Company’s accounting for certain fulfillment costs, which include upfront costs to prepare for manufacturing activities that are expected to be recovered. Under the new standard, such upfront costs will be recognized as an asset and amortized on a systematic basis consistent with the pattern of the transfer of control of the products or services to which to the asset relates.

~~The Company adopted ASU2014-09~~ using the modified retrospective method by applying the guidance to all open contracts upon adoption and recorded a cumulative effect adjustment as of September 1, 2018, net of tax, of $42.6 million. No adjustments have been made to prior periods. Following is a summary of the cumulative effect adjustment (in thousands):

   Balance as of
August 31, 2018    Adjustments due to
adoption of ASU 2014-09 Balance as of
September 1, 2018
Assets

Contract assets⁽¹⁾
   $ —      $ 591,616 $ 591,616
Inventories, net⁽¹⁾
   $ 3,457,706    $ (461,271 ) $ 2,996,435
Prepaid expenses and other current assets⁽¹⁾⁽²⁾
   $ 1,141,000    $ (37,271 ) $ 1,103,729
Deferred income taxes⁽¹⁾⁽²⁾
   $ 218,252    $ (8,325 ) $ 209,927
Liabilities

Contract liabilities⁽²⁾⁽³⁾
   $ —      $ 690,142 $ 690,142
Deferred income^(2)(3)(4)
   $ 691,365    $ (691,365 ) $ —
Other accrued expenses⁽³⁾⁽⁴⁾
   $ 1,000,979    $ 40,392 $ 1,041,371
Deferred income taxes⁽¹⁾
   $ 114,385    $ 2,977 $ 117,362
Equity

Retained earnings⁽¹⁾⁽²⁾
   $ 1,760,097    $ 42,602 $ 1,802,699

⁽¹⁾	~~Differences primarily relate to the timing of revenue recognition for over time customers and certain balance sheet reclassifications.~~

⁽²⁾	~~Differences primarily relate to the timing of recognition and recovery of fulfillment costs and certain balance sheet reclassifications.~~

⁽³⁾	~~Included within accrued expenses on the Condensed Consolidated Balance Sheets.~~

⁽⁴⁾	~~Differences included in contract liabilities as of September 1, 2018.~~

~~Significant Judgments~~

The Company is one of the leading providers of worldwide manufacturing services and solutions. The Company provides comprehensive electronics design, production and product management services to companies in various industries and end markets. The Company derives substantially all of its revenue from production and product management services (collectively referred to as “manufacturing services”), which encompasses the act of producing tangible products that are built to customer specifications, which are then provided to the customer.

The Company generally enters into manufacturing service contracts with its customers that provide the framework under which business will be conducted and customer purchase orders will be received for specific quantities and with predominantly fixed pricing. As a result, the Company considers its contract with a customer to be the combination of the manufacturing service contract and the purchase order, or any agreements or other similar documents.

The majority of our manufacturing service contracts relate to manufactured products which have no alternative use and for which the Company has an enforceable right to payment for the work completed to date. As a result, revenue is recognized over time when or as the Company transfers control of the promised products or services (known as performance obligations) to its customers. For certain other contracts with customers that do not meet the over time revenue recognition criteria, transfer of control occurs at a point in time which generally occurs upon delivery and transfer of risk and title to the customer.

Most of our contracts have a single performance obligation as the promise to transfer the individual manufactured product or service is capable of being distinct and is distinct within the context of the contract. For the majority of customers, performance obligations are satisfied over time based on the continuous transfer of control as manufacturing services are performed and are generally completed in less than one year.

The Company also derives revenue to a lesser extent from electronic design services to certain customers. Revenue from electronic design services is generally recognized over time as the services are performed.

For the Company’s over time customers, it believes the measure of progress which best depicts the transfer of control is based on costs incurred to date, relative to total estimated cost at completion (i.e., an input method). This method is a faithful depiction of the transfer of goods or services because it results in the recognition of revenue on the basis of our~~to-date~~ efforts in the satisfaction of a performance obligation relative to the total expected efforts in the satisfaction of the performance obligation. The Company believes that the use of an input method best depicts the transfer of control to the customer, which occurs as we incur costs on our contracts. The transaction price of each performance obligation is generally based upon the contractual stand-alone selling price of the product or service.

Certain contracts with customers include variable consideration, such as rebates, discounts, or returns. The Company recognizes estimates of this variable consideration that are not expected to result in a significant revenue reversal in the future, primarily based on the most likely level of consideration to be paid to the customer under the specific terms of the underlying programs.

Taxes collected from the Company’s customers and remitted to governmental authorities are presented within the Company’s Consolidated Statement of Operations on a net basis and are excluded from the transaction price. The Company has elected to account for shipping and handling activities related to contracts with customers as costs to fulfill the promise to transfer the goods. Accordingly, the Company records customer payments of shipping and handling costs as a component of net revenue, and classifies such costs as a component of cost of revenue.

~~The following table presents the effect of the adoption of the new revenue guidance on the Condensed Consolidated Balance Sheets as of May 31, 2019 (in thousands):~~

   May 31, 2019
   As reported    Balance
without the
adoption of
ASU2014-09
Assets

Contract assets⁽¹⁾
   $ 899,482    $ —
Inventories, net⁽¹⁾
   $ 3,159,369    $ 3,901,192
Prepaid expenses and other current assets⁽¹⁾⁽²⁾
   $ 524,833    $ 523,866
Deferred income taxes⁽¹⁾
   $ 202,556    $ 207,752
Liabilities

Contract liabilities⁽²⁾⁽³⁾
   $ 544,831    $ —
Deferred income^(2)(3)(4)
   $ —      $ 544,012
Other accrued expenses⁽³⁾⁽⁴⁾
   $ 1,491,623    $ 1,486,706
Deferred income taxes⁽¹⁾
   $ 115,370    $ 110,984
Equity

Retained earnings⁽¹⁾⁽²⁾
   $ 1,996,901    $ 1,853,592

⁽¹⁾	~~Differences primarily relate to the timing of revenue recognition for over time customers and certain balance sheet reclassifications.~~

⁽²⁾	~~Differences primarily relate to the timing of recognition and recovery of fulfillment costs and certain balance sheet reclassifications.~~

⁽³⁾	~~Included within accrued expenses on the Condensed Consolidated Balance Sheets.~~

⁽⁴⁾	~~Differences included in contract liabilities as of September 1, 2018.~~

~~The following table presents the effect of the adoption of the new revenue guidance on the Consolidated Statement of Operations for the three months and nine months ended May 31, 2019 (in thousands):~~

   Three months ended    Nine months ended
   May 31, 2019    May 31, 2019
   As reported    Balance without
the adoption of
ASU2014-09    As reported    Balance without
the adoption of
ASU2014-09
Net revenue⁽¹⁾
   $ 6,135,602    $ 6,072,984    $ 18,708,867    $ 18,302,187
Cost of revenue⁽²⁾
   $ 5,691,803    $ 5,665,654    $ 17,290,544    $ 16,982,850
Operating income
   $ 140,918    $ 104,449    $ 511,611    $ 412,625
Income tax expense
   $ 39,046    $ 38,015    $ 113,078    $ 114,798
Net income
   $ 44,032    $ 8,594    $ 235,713    $ 135,007

⁽¹⁾	~~Differences primarily relate to the timing of revenue recognition for over-time customers and to the recovery of fulfillment costs.~~

⁽²⁾	~~Differences primarily relate to the timing of cost recognition for over-time customers and the recognition of fulfillment costs.~~

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

   Three months ended    Nine months ended
   May 31, 2019    May 31, 2019
   EMS    DMS    Total    EMS    DMS    Total
Timing of transfer

Point in time
   $ 699,825    $ 1,156,213    $ 1,856,038    $ 1,957,349    $ 4,722,696    $ 6,680,045
Over time
   $ 3,288,664    $ 990,900    $ 4,279,564    $ 9,338,970    $ 2,689,852    $ 12,028,822












Total
   $ 3,988,489    $ 2,147,113    $ 6,135,602    $ 11,296,319    $ 7,412,548    $ 18,708,867

~~Contract Balances~~

Timing of revenue recognition may differ from the timing of invoicing to customers. The Company records an asset when revenue is recognized prior to invoicing a customer (“contract assets”) while a liability is recognized when a customer pays an invoice prior to the Company transferring control of the goods or services (“contract liabilities”). Amounts recognized as contract assets are generally transferred to receivables in the succeeding quarter due to the short-term nature of the manufacturing cycle. Contract assets are classified separately on the Condensed Consolidated Balance Sheets and transferred to receivables when right to payment becomes unconditional.

The Company reviews contract assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable after considering factors such as the age of the balances and the financial stability of the customer. No impairment costs related to contract assets were recognized during the three months and nine months ended May 31, 2019.

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

~~Fulfillment Costs~~

The Company capitalizes costs incurred to fulfill its contracts that i) relate directly to the contract or anticipated contracts, ii) are expected to generate or enhance the Company’s resources that will be used to satisfy the performance obligation under the contract, and iii) are expected to be recovered through revenue generated from the contract. Prior to the adoption of the new guidance, unless explicit reimbursement contracts existed, these costs were expensed as incurred. Capitalized fulfillment costs are amortized to cost of revenue as the Company satisfies the related performance obligations under the contract with approximate lives ranging from~~1-3~~ years. These costs, which are included in prepaid expenses and other current assets and other assets on the Consolidated Balance Sheets, generally represent upfront costs incurred to prepare for manufacturing activities.

The Company assesses the capitalized fulfillment costs for impairment at the end of each reporting period. The Company will recognize an impairment loss to the extent the carrying amount of the capitalized costs exceeds the recoverable amount. Recoverability is assessed by considering the capitalized fulfillment costs in relation to the forecasted profitability of the related manufacturing performance obligations. As of May 31, 2019, capitalized costs to fulfill are $74.4 million. Amortization of fulfillment costs was $9.8 million and $29.7 million, respectively, for the three months and nine months ended May 31, 2019. No impairments related to fulfillments costs were recognized during the three months and nine months ended May 31, 2019.

~~Remaining Performance Obligations~~

~~The Company applied the practical expedient and did not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less.~~

JABIL INC. AND SUBSIDIARIES

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. This Quarterly Report onForm 10-Q contains certain statements that are, or may be deemed to be, forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements (such as when we describe what “will,” “may,” or “should” occur, what we “plan,” “intend,” “estimate,” “believe,” “expect” or “anticipate” will occur, and other similar statements) include, but are not limited to, statements regarding future sales and operating results, potential risks pertaining to these future sales and operating results, future prospects, anticipated benefits of proposed (or future) acquisitions, dispositions and new facilities, growth, the capabilities and capacities of business operations, any financial or other guidance, expected capital expenditures and dividends, expected restructuring charges and related savings and all statements that are not based on historical fact, but rather reflect our current expectations concerning future results and events. We.We make certain assumptions when making forward-looking statements, any of which could prove inaccurate, including assumptions about our future operating results and business plans. Therefore, we can give no assurance that the results implied by these forward-looking statements will be realized. Furthermore, the inclusion of forward-looking information should not be regarded as a representation by the Company or any other person that future events, plans or expectations contemplated by the Company will be achieved. The following important factors, among others, could affect future results and events, causing those results and events to differ materially from those expressed or implied in our forward-looking statements:

•

~~fluctuation in our operating results;~~

•

~~our dependence on a limited number of customers;~~

•

~~our ability to manage growth effectively;~~

•

~~competitive factors affecting our customers’ businesses and ours;~~

•

~~the susceptibility of our production levels to the variability of customer requirements;~~

•

~~our ability to keep pace with technological changes and competitive conditions;~~

•

~~our reliance on a limited number of suppliers for critical components;~~

•

~~exposure to financially troubled customers and suppliers;~~

•

~~our exposure to the risks of a substantial international operation; and~~

•

~~our ability to achieve the expected profitability from our acquisitions.~~

the scope and duration of the COVID-19 outbreak and its impact on global economic systems, our employees, sites, operations, customers, and supply chain, managing growth effectively; our dependence on a limited number of customers; competitive challenges affecting our customers; managing rapid declines in customer demand and other related customer challenges that may occur; changes in technology; the occurrence of, success and expected financial results from, product ramps; competition; our ability to maintain and improve costs, quality and delivery for our customers; 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; performance in the markets in which we operate; and adverse changes in political conditions, in the U.S. and internationally, including, among others, adverse changes in tax laws and rates and our ability to estimate and manage their impact. For a further list and description of various risks, factors and uncertainties that could cause future results or events to differ materially from those expressed or implied in our forward-looking statements, see the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections contained in our Annual Report on Form10-K for the fiscal year ended August 31, ~~2018,~~2019, any subsequent reports on Form10-Q and Form8-K, and other filings we make with the Securities and Exchange Commission (“SEC”). Given these risks and uncertainties, the reader should not place undue reliance on these forward-looking statements.

All forward-looking statements included in this Quarterly Report onForm 10-Q are made only as of the date of this Quarterly Report onForm 10-Q, and we do not undertake any obligation to publicly update or correct any forward-looking statements to reflect events or circumstances that subsequently occur, or of which we hereafter become aware. You should read this document completely and with the understanding that our actual future results or events may be materially different from what we expect. All forward-looking statements attributable to us are expressly qualified by these cautionary statements.



Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

We are one of the leading providers of worldwide manufacturing services and solutions. We provide comprehensive electronics design, production and product management services to companies in various industries and end markets. Our services enable our customers to reduce manufacturing costs, improve supply-chain management, reduce inventory obsolescence, lower transportation costs and reduce product fulfillment time. Our manufacturing and supply chain management services and solutions include innovation, design, planning, fabrication and assembly, delivery and managing the flow of resources and products. We derive substantially all of our revenue from production and product management services (collectively referred to as “manufacturing services”), which ~~encompasses~~encompass the act of producing tangible ~~products~~components that are built to customer specifications ~~which~~and are then provided to the customer.

We serve our customers primarily through dedicated business units that combine highly automated, continuous flow manufacturing with advanced electronic design and design for manufacturability. We depend, and expect to continue to depend, upon a relatively small number of customers for a significant percentage of our net revenue, which in turn depends upon their growth, viability and financial stability. Based on net revenue, for the ~~nine~~six months ended ~~May 31, 2019,~~February 29, 2020, our largest customers include Amazon.com, Inc., Apple, Inc., Cisco Systems, Inc., ~~GoPro, Inc.,~~ Hewlett-Packard Company, Ingenico Group, ~~Keysight Technologies,~~Johnson and Johnson, LM Ericsson Telephone Company, NetApp, Inc., SolarEdge Technologies Inc., and ~~Nokia Networks.~~

Valeo S.A.

We conduct our operations in facilities that are located worldwide, including but not limited to, China, ~~Hungary,~~Ireland, Malaysia, Mexico, Singapore and the United States. We derived a substantial majority, ~~86.5%~~82.6% and ~~89.2%~~82.2%, of net revenue from our international operations for the three months and ~~nine~~six months ended ~~May 31, 2019.~~February 29, 2020. Our global manufacturing production sites allow customers to manufacture products simultaneously in the optimal locations for their products. Our global presence is key to assessing and executing on our business opportunities.

We have two reporting segments: Electronics Manufacturing Services (“EMS”) and Diversified Manufacturing Services (“DMS”), which are organized based on the economic profiles of the services performed, including manufacturing capabilities, market strategy, margins, return on capital and risk profiles. Our EMS segment is focused around leveraging IT, supply chain design and engineering, technologies largely centered on core electronics, utilizing our large scale manufacturing infrastructure and our ability to serve a broad range of end markets. Our EMS segment is ~~typically~~ a ~~lower-margin but~~ high volume business that produces product at a quicker rate (i.e. cycle time) and in larger quantities and includes customers primarily in the automotive and transportation, capital equipment, cloud, computing and storage, defense and aerospace, industrial and energy, networking and telecommunications, print and retail, and smart home and appliances industries. Our DMS segment is focused on providing engineering solutions, with an emphasis on material sciences, technologies and ~~technologies.~~healthcare. Our DMS ~~segment is typically a higher-margin business and~~ includes customers primarily in the edge devices and accessories, healthcare, mobility and packaging industries.

We monitor the current economic environment and its potential impact on both the customers we serve as well as ourend-markets and closely manage our costs and capital resources so that we can respond appropriately as circumstances change.

Beginning in January of 2020, concerns related to the novel strain of coronavirus, that originated in Wuhan, China, (“COVID-19”) caused a disruption to our business. While customer demand for our services remained strong, our operations and our ability to satisfy customer orders were negatively impacted due to both workforce and supply chain constraints as a result of virus containment efforts that were undertaken in China. During the three months ended February 29, 2020, we incurred approximately $53.0 million in direct costs associated with the COVID-19 outbreak, primarily due to incremental and idle labor costs leading to a reduction in factory utilization as a result of the travel disruptions and governmental restrictions. Additionally, certain of the Company’s suppliers in China were similarly impacted leading to supply chain constraints. As COVID-19 has spread to other jurisdictions and been declared a global pandemic, the full extent of this outbreak, the related governmental, business and travel restrictions in order to contain this virus are continuing to evolve globally. Accordingly, there is significant uncertainty related to the ultimate impact that this global pandemic will have on the results of our operations. For example, virus containment efforts (as a result of governmental actions or policies or other initiatives) could lead to reductions in capacity utilization levels and or facility closures under which we would expect to incur additional direct costs and lost revenue. If our suppliers experience similar impacts, we may have difficulty sourcing materials necessary to fulfill customer production requirements and transporting completed products to our end customers.

Our performance is subject to global economic conditions, as well as their impacts on levels of consumer spending and the production of goods. These current conditions are significantly impacted by COVID-19, have had a negative impact on our results of operations during the second quarter of fiscal year 2020 and will continue to have a negative impact on our operations over the next fiscal quarter and likely beyond. See Risk Factors, “The effect of COVID-19 on our operations and the operations

of our customers, suppliers and logistics providers will have a material, adverse impact on our financial condition and results of operations.”

Summary of Results

The following table sets forth, for the three months and ~~nine~~six months ended ~~May 31,~~February 29, 2020 and February 28, 2019, ~~and 2018,~~ certain key operating results and other financial information (in thousands, except per share data):

   Three months ended    Nine months ended
   May 31,
2019    May 31,
2018    May 31,
2019    May 31,
2018
Net revenue
   $ 6,135,602    $ 5,436,952    $ 18,708,867    $ 16,323,585
Gross profit
   $ 443,799    $ 398,227    $ 1,418,323    $ 1,264,645
Operating income
   $ 140,918    $ 112,971    $ 511,611    $ 388,257
Net income attributable to Jabil Inc.
   $ 43,482    $ 42,541    $ 234,436    $ 143,644
Earnings per share—basic
   $ 0.28    $ 0.25    $ 1.50    $ 0.83
Earnings per share—diluted
   $ 0.28    $ 0.25    $ 1.47    $ 0.81

Three months ended Six months ended
February 29, 2020 February 28, 2019 February 29, 2020 February 28, 2019
Net revenue $ 6,125,083
$ 6,066,990
$ 13,630,781
$ 12,573,265
Gross profit $ 430,125
$ 454,874
$ 983,964
$ 974,524
Operating income $ 90,630
$ 153,983
$ 243,409
$ 370,693
Net (loss) income attributable to Jabil Inc. $ (3,283 ) $ 67,354
$ 37,139
$ 190,954
(Loss) earnings per share—basic $ (0.02 ) $ 0.44
$ 0.24
$ 1.21
(Loss) earnings per share—diluted $ (0.02 ) $ 0.43
$ 0.24
$ 1.19

Key Performance Indicators

Management regularly reviews financial andnon-financial performance indicators to assess the Company’s operating results. Changes in our operating assets and liabilities are largely affected by our working capital requirements, which are dependent on the effective management of our sales cycle as well as timing of payments. Our sales cycle measures how quickly we can convert our manufacturing services into cash through sales. We believe the metrics set forth below are useful to investors in measuring our liquidity as future liquidity needs will depend on fluctuations in levels of inventory, accounts receivable and accounts payable.

The following table sets forth, for the quarterly periods indicated, certain of management’s key financial performance indicators:

Three months ended

February 29, 2020

November 30, 2019

August 31, 2019

May 31, 2019

~~February 28, 2019~~

~~November 30, 2018~~

~~August 31, 2018~~

Sales cycle⁽¹⁾

30 days

23 days

19 days

27 days

~~25 days~~

~~16 days~~

~~1 day~~

Inventory turns (annualized)⁽²⁾

5 turns

6 turns

~~6 turns~~

Days in accounts receivable⁽³⁾

3934 days

43 days

38 days

3839 days

~~26 days~~

Days in inventory⁽⁴⁾

6470 days

6557 days

~~60 days~~

58 days

64 days

Days in accounts payable⁽⁵⁾

74 days

77 days

76 days


~~78 days~~	~~82 days~~	~~83 days~~


⁽¹⁾	The sales cycle is calculated as the sum of days in accounts receivable and days in inventory, less the days in accounts payable; accordingly, the variance in the sales cycle quarter over quarter is a direct result of changes in these indicators.


⁽²⁾	~~In connection with the adoption of Accounting Standards UpdateNo. 2014-09~~ ~~(“ASU2014-09”),~~ ~~Revenue Recognition (Topic 606), inventory~~Inventory turns (annualized) are calculated ~~based on inventory and contract asset balances for~~as 360 days divided by days in inventory.


⁽³⁾	Days in accounts receivable is calculated as accounts receivable, net, divided by net revenue multiplied by 90 days. During the three months ended ~~May 31, 2019,~~ February ~~28, 2019~~29, 2020, the decrease is primarily driven by lower sales and ~~November 30, 2018.~~

⁽³⁾

the timing of collections in the second quarter. During the three months ended November 30, ~~2018,~~2019, the increase in days in accounts receivable from the prior sequential quarter was primarily due to an increase in accounts receivable, primarily driven by ~~the amended and new securitization programs and~~ higher sales and timing of collections.

⁽⁴⁾

~~In connection with the adoption of ASU2014-09,~~ ~~days~~Days in inventory ~~are~~is calculated ~~based on~~as inventory and contract ~~asset balances for the three months ended May 31, 2019, February 28, 2019 and November 30, 2018.~~assets divided by cost of revenue multiplied by 90 days. During the three months ended February ~~28, 2019, days~~29, 2020, the increase is primarily driven by idle capacity and supply chain constraints, largely in ~~inventory increased from the prior sequential quarter to support anticipated ramps and expected sales levels in the second half of fiscal year 2019 and~~China due to ~~the acquisition of Johnson & Johnson Medical Devices Companies (“JJMD”) facilities at the end of February.~~COVID-19. During the three months ended ~~November 30, 2018, days in inventory increased from the prior sequential quarter to support expected sales levels in the second quarter of fiscal year 2019.~~

⁽⁵⁾

~~During the three months ended May~~August 31, 2019, the decrease in days in ~~accounts payable~~inventory from the prior sequential quarter was primarily due to ~~timing of purchases and cash payments for purchases~~increased sales activity during the quarter. ~~During the three months ended February 28, 2019, the decrease in days~~


⁽⁵⁾	Days in accounts payable ~~from the prior sequential quarter was primarily due to lower materials purchases during the quarter and timing~~is calculated as accounts payable divided by cost of ~~purchases and cash payments for purchases during the quarter.~~ revenue multiplied by 90 days.

Critical Accounting Policies and Estimates

The preparation of our Condensed Consolidated Financial Statements and related disclosures in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) requires management to make estimates and judgments that affect our reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. On anon-going basis, we evaluate our estimates and assumptions based upon historical experience and various other factors and circumstances. Management believes that our estimates and assumptions are reasonable under the circumstances; however, actual results may vary from these estimates and assumptions under different future circumstances. For further discussion of our significant accounting policies, refer to Note 1 — “Description of Business and Summary of Significant Accounting Policies” to the Consolidated Financial Statements and “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Estimates” in our Annual Report on Form10-K for the fiscal year ended August 31, ~~2018.~~

~~Revenue Recognition~~

Effective September 1, 2018, our revenue recognition accounting policies changed in conjunction with the adoption of the new revenue recognition standard. Upon adoption, we recognize revenue over time as manufacturing services are completed for the majority of our contracts with customers, which results in revenue being recognized earlier than under the previous guidance. Revenue for all other contracts with customers will be recognized at a point in time, upon transfer of control of the product to the customer, which is effectively no change to our historical accounting. For further discussion of the new revenue recognition standard, refer to Note 16 — “Revenue” to the Condensed Consolidated Financial Statements.

2019.

Recent Accounting Pronouncements

See Note 1419 – “New Accounting Guidance” to the Condensed Consolidated Financial Statements for a discussion of recent accounting guidance.

Results of Operations

Net Revenue

Generally, we assess revenue on a global customer basis regardless of whether the growth is associated with organic growth or as a result of an acquisition. Accordingly, we do not differentiate or separately report revenue increases generated by acquisitions as opposed to existing business. In addition, the added cost structures associated with our acquisitions have historically been relatively insignificant when compared to our overall cost structure.

The distribution of revenue across our segments has fluctuated, and will continue to fluctuate, as a result of numerous factors, including the following: fluctuations in customer demand; efforts to diversify certain portions of our business; ~~seasonality in our business;~~ business growth from new and existing customers; specific product performance; and any potential termination, or substantial winding down, of significant customer relationships.

   Three months ended    Nine months ended
(dollars in millions)    May 31,
2019    May 31,
2018    Change May 31,
2019    May 31,
2018    Change
Net revenue
   $ 6,135.6    $ 5,437.0    12.9 % $ 18,708.9    $ 16,323.6    14.6 %



	Three months ended						Six months ended
(dollars in millions)	February 29, 2020		February 28, 2019		Change		February 29, 2020		February 28, 2019		Change
Net revenue	$	6,125.1	$	6,067.0	1.0	%	$	13,630.8	$	12,573.3	8.4	%

Net revenue increased during the three months ended ~~May 31, 2019,~~February 29, 2020, compared to the three months ended ~~May 31, 2018.~~February 28, 2019. Specifically, the EMS segment revenues increased ~~26%~~1% primarily due to (i) a 9% increase in revenues from new customers within our cloud business, (ii) a 9% increase in revenues from existing customers within our industrial and energy business, (iii) an 8% increase in revenues from customers within our networking and telecommunications business and (iv) a 6% increase in revenues from existing customers within our ~~print~~cloud business, (ii) a 3% increase in revenues from existing customers within our capital equipment business and ~~retail business.~~(iii) a 2% increase in revenues spread across various industries within the EMS segment. The increase is partially offset by (i) an 8% decrease from existing customers within our networking and telecommunications business and (ii) a 6%2% decrease in revenues spread across various industries within the EMS segment. DMS segment revenues increased 1% due to a 17% increase in revenues from new and existing customers in our healthcare and packaging businesses. The increase is partially offset by (i) a 15% decrease in revenue from customers within our mobility and edge devices and accessories businesses as our ability to meet customer demand was greatly diminished as COVID-19 containment efforts were implemented in China and (ii) a 1% decrease in revenues spread across various industries within the DMS segment.

Net revenue increased during the six months ended February 29, 2020, compared to the six months ended February 28, 2019. Specifically, the EMS segment revenues increased 13% primarily due to (i) a 16% increase in revenues from existing customers within our cloud business, (ii) a 2% increase in revenues from existing customers within our capital equipment business and (iii) a 3% increase in revenues spread across various industries within the EMS segment. The increase is partially offset by (i) a 7% decrease from existing customers within our networking and telecommunications business and (ii) a 1% decrease from existing customers within our computing and storage ~~business and capital equipment business, which we expect to remain weak into the second half of calendar year 2020.~~business. DMS segment revenues ~~decreased 6%~~increased 2% due to a ~~15% decrease~~14% increase in revenues from customers within our mobility business as a result of decreased end user product demand, which we expect to remain weak for the balance of the fiscal year. The decrease was partially offset by a 9% increase in revenues fromnew and existing customers in our healthcare ~~business.~~

Net revenue increased during the nine months ended May 31, 2019, compared to the nine months ended May 31, 2018. Specifically, the EMS segment revenues increased 27% primarily due to (i) a 9% increase in revenues from customers within our networking and telecommunications business, (ii) a 9% increase in revenues from new customers within our cloud business, (iii) a 9% increase in revenues from existing customers within our industrial and energy business and (iv) a 5% increase in revenues from existing customers within our print and retail business.packaging businesses. The increase is partially offset by a 5% decrease from existing customers within our computing and storage business and capital equipment business. DMS segment revenues remained consistent due to a 6% increase in revenues from existing customers in our healthcare business. The increase is offset by a 6%12% decrease in revenue from customers within our mobility ~~business~~and edge devices and accessories businesses due to: (i) our ability to meet customer demand, which was greatly diminished as ~~a result~~COVID-19 containment efforts were implemented in China during the second quarter of fiscal year 2020 and (ii) decreased end user product ~~demand.~~

~~Effective September 1, 2018, our revenue recognition accounting policies changed~~demand and end market dynamics in ~~conjunction with~~ the ~~adoption~~first quarter of the new revenue recognition standard. Upon adoption, we recognize revenue over time as manufacturing services are completed for the majority of our contracts with customers, which results in revenue being recognized earlier than under the previous guidance. Revenue for all other contracts with customers will be recognized at a point in time, upon transfer of control of the product to the customer, which is effectively no change to our historical accounting. For further discussion of the new revenue recognition standard, refer to Note 16 — “Revenue” to the Condensed Consolidated Financial Statements.

fiscal year 2020.

The following table sets forth, for the periods indicated, revenue by segment expressed as a percentage of net revenue:

   Three months ended Nine months ended
   May 31, 2019 May 31, 2018 May 31, 2019 May 31, 2018
EMS
   65 % 58 % 60 % 54 %
DMS
   35 % 42 % 40 % 46 %


Total
   100 % 100 % 100 % 100 %



	Three months ended				Six months ended
	February 29, 2020		February 28, 2019		February 29, 2020		February 28, 2019
EMS	63	%	63	%	61	%	58	%
DMS	37	%	37	%	39	%	42	%
Total	100	%	100	%	100	%	100	%

The following table sets forth, for the periods indicated, foreign source revenue expressed as a percentage of net revenue:

   Three months ended Nine months ended
   May 31, 2019 May 31, 2018 May 31, 2019 May 31, 2018
Foreign source revenue
   86.5 % 91.2 % 89.2 % 91.8 %

Three months ended Six months ended
February 29, 2020 February 28, 2019 February 29, 2020 February 28, 2019
Foreign source revenue 82.6 % 88.2 % 82.2 % 90.6 %

Gross Profit

   Three months ended Nine months ended
(dollars in millions)    May 31, 2019 May 31, 2018 May 31, 2019 May 31, 2018
Gross profit
   $ 443.8 $ 398.2 $ 1,418.3 $ 1,264.6
Percent of net revenue
   7.2 % 7.3 % 7.6 % 7.7 %

~~For the three months and nine months ended May 31, 2019, gross~~



	Three months ended						Six months ended
(dollars in millions)	February 29, 2020			February 28, 2019			February 29, 2020			February 28, 2019
Gross profit	$	430.1		$	454.9		$	984.0		$	974.5
Percent of net revenue	7.0		%	7.5		%	7.2		%	7.8		%

Gross profit ~~for our DMS segment increased~~ as a percentage of net revenue decreased for the three months ended February 29, 2020, compared to the three months ended February 28, 2019, primarily due to an increase of $46.7 million in incremental and idle labor costs associated with travel disruptions and governmental restrictions, largely related to the COVID-19 outbreak.

Gross profit as a percentage of net revenue decreased for the six months ended February 29, 2020, compared to the six months ended February 28, 2019, primarily due to an increase of $46.7 million in incremental and idle labor costs associated with travel disruptions and governmental restrictions, largely related to the COVID-19 outbreak. Additionally, gross profit as a percent of revenue decreased for the EMS segment largely due to product mix and weakness in the capital equipment business during the first quarter. The decrease was partially offset by an increase in the DMS segment in the first quarter due to improved profitability across the various businesses. This increase was offset by a decrease in gross profit as a percentage of net revenue in our EMS segment due to continued weakness in the capital equipment business and ramp costs associated with new business awards. As a result, gross profit remained relatively consistent as a percentage of net revenue during the three months and nine months ended May 31, 2019, compared to the three months and nine months ended May 31, 2018.

Selling, General and Administrative

   Three months ended       Nine months ended
(dollars in millions)    May 31,
2019    May 31,
2018    Change    May 31,
2019    May 31,
2018    Change
Selling, general and administrative
   $ 274.5    $ 252.5    $ 22.0    $ 834.8    $ 789.5    $ 45.3



	Three months ended						Six months ended
(dollars in millions)	February 29, 2020		February 28, 2019		Change		February 29, 2020		February 28, 2019		Change
Selling, general and administrative	$	285.0	$	282.1	$	2.9	$	613.9	$	560.3	$	53.6

Selling, general and administrative expenses increased during the three months ended ~~May 31, 2019,~~February 29, 2020, compared to the three months ended ~~May 31, 2018.~~February 28, 2019. The increase is predominantly due to (i) ~~$13.4~~$6.3 million in ~~acquisition and integration charges~~costs related to ~~our strategic collaboration with a healthcare company~~the COVID-19 outbreak, including personal protection equipment and (ii) ~~an $8.6 million increase in salary and salary related expenses and other costs primarily to support new business growth and development.~~

~~Selling, general and administrative expenses increased during the nine months ended May 31, 2019, compared to the nine months ended May 31, 2018. The increase is predominantly due to (i)~~ a ~~$42.6~~$2.2 million increase in salary and salary related expenses and other costs primarily to support new business growth and development and ~~(ii) $35.1~~our strategic collaboration with a healthcare company. The increase is partially offset by (i) a $5.0 million decrease in acquisition and integration charges related to our strategic collaboration with a healthcare ~~company.~~company and (ii) a $0.6 million decrease in stock-based compensation expense.

Selling, general and administrative expenses increased during the six months ended February 29, 2020, compared to the six months ended February 28, 2019. The increase is ~~partially offset by an additional $32.4~~predominantly due to (i) a $32.7 million ofincrease in salary and salary related expenses and other costs primarily to support new business growth and development and our strategic collaboration with a healthcare company, (ii) a $12.4 million increase in stock-based compensation expense, ~~recognized during~~(iii) $6.3 million in costs related to the ~~nine months ended May 31, 2018 as~~COVID-19 outbreak, including personal protection equipment and (iv) a ~~result of theone-time~~ ~~modification of certain performance-based restricted stock unit awards~~$2.2 million increase in acquisition and integration charges related to our strategic collaboration with a~~one-time~~ ~~cash-settled award.~~

healthcare company.

Research and Development

   Three months ended Nine months ended
(dollars in millions)    May 31, 2019 May 31, 2018 May 31, 2019 May 31, 2018
Research and development
   $ 11.4 $ 10.1 $ 32.7 $ 27.5
Percent of net revenue
   0.2 % 0.2 % 0.2 % 0.2 %



	Three months ended						Six months ended
(dollars in millions)	February 29, 2020			February 28, 2019			February 29, 2020			February 28, 2019
Research and development	$	11.3		$	10.2		$	22.1		$	21.3
Percent of net revenue	0.2		%	0.2		%	0.2		%	0.2		%

Research and development expenses remained consistent as a percentage of net revenue during the three months and ~~nine~~six months ended ~~May 31, 2019,~~February 29, 2020, compared to the three months and ~~nine~~six months ended ~~May 31, 2018.~~

February 28, 2019.

Amortization of Intangibles

   Three months ended    Nine months ended
(dollars in millions)    May 31,
2019    May 31,
2018    Change May 31,
2019    May 31,
2018    Change
Amortization of intangibles
   $ 7.6    $ 10.0    $ (2.4 ) $ 23.0    $ 29.9    $ (6.9 )



	Three months ended						Six months ended
(dollars in millions)	February 29, 2020		February 28, 2019		Change		February 29, 2020		February 28, 2019		Change
Amortization of intangibles	$	13.6	$	7.8	$	5.8	$	29.7	$	15.4	$	14.3

Amortization of intangibles ~~decreased~~increased during the three months and ~~nine~~six months ended ~~May 31, 2019,~~February 29, 2020, compared to the three months and ~~nine~~six months ended ~~May 31, 2018,~~February 28, 2019, primarily ~~due to intangible assets~~driven by amortization related to the Nypro ~~acquisition,~~trade name, which ~~were fully amortized~~was reclassified to a definite-lived intangible asset during the fourth quarter of fiscal year ~~2018.~~

2019 as a result of our decision to rebrand. As such, this trade name was assigned a four-year estimated useful life and is being amortized on an accelerated basis.

Restructuring and Related Charges

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

   Three months ended    Nine months ended
   May 31, 2019 May 31, 2018    May 31, 2019 May 31, 2018
Employee severance and benefit costs
   $ 6.5 $ 5.0    $ 15.5 $ 11.1
Lease costs
   (0.1 ) 1.6    (0.1 ) 1.6
Assetwrite-off costs
   (0.3 ) 5.6    (3.5 ) 14.8
Other costs
   3.2 0.4    4.3 2.0




Total restructuring and related charges⁽¹⁾
   $ 9.3 $ 12.6    $ 16.2 $ 29.5



	Three months ended					Six months ended
	February 29, 2020⁽²⁾		February 28, 2019⁽³⁾			February 29, 2020⁽²⁾		February 28, 2019⁽³⁾
Employee severance and benefit costs	$	8.0	$	3.8		$	26.8	$	8.9
Lease costs	6.2		—			6.5		—
Asset write-off costs	9.1		(3.4		)	25.4		(3.2		)
Other costs	6.3		0.4			16.2		1.1
Total restructuring and related charges⁽¹⁾	$	29.6	$	0.8		$	74.9	$	6.8

⁽¹⁾

Includes ~~$7.6~~$14.7 million and ~~$4.6~~$0.3 million recorded in the EMS segment, ~~$0.0~~$14.5 million and ~~$5.8~~$0.5 million recorded in the DMS segment and ~~$1.7~~$0.4 million and ~~$2.2~~$0.0 million ofnon-allocated charges for the three months ended ~~May 31,~~February 29, 2020 and February 28, 2019, ~~and 2018,~~ respectively. Includes ~~$12.3~~$32.1 million and ~~$12.6~~$4.7 million recorded in the EMS segment, ~~$2.1~~$39.7 million and ~~$13.8~~$2.1 million recorded in the DMS segment and ~~$1.8~~$3.1 million and ~~$3.1~~$0.0 million ofnon-allocated charges for the ~~nine~~six months ended ~~May 31,~~February 29, 2020 and February 28, 2019, ~~and 2018,~~ respectively. Except for assetwrite-off costs, all restructuring and related charges are cash costs.

⁽²⁾
Primarily relates to the 2020 Restructuring Plan.
⁽³⁾
Primarily relates to the 2017 Restructuring Plan.

2020 Restructuring Plan

On September ~~15, 2016,~~20, 2019, our Board of Directors formally approved a restructuring plan to ~~better align~~realign our global capacity ~~and administrative~~ support infrastructure, particularly in our mobility footprint in China, in order to ~~further~~ optimize organizational effectiveness. This action includes headcount reductions ~~across our selling, general and administrative cost base~~ and capacity realignment ~~in higher cost locations~~ (the ~~“2017~~“2020 Restructuring Plan”).

The ~~2017~~2020 Restructuring Plan ~~totaling $195.0~~reflects our intention only and restructuring decisions, and the timing of such decisions, at certain locations are still subject to consultation with our employees and their representatives.

We currently expect to recognize approximately $85.0 million in pre-tax restructuring and other related costs primarily over the course of our fiscal year 2020. The charges relating to the 2020 Restructuring Plan are currently expected to result in cash expenditures in the range of approximately $30.0 million to $40.0 million that will be payable over the course of our fiscal years 2020 and 2021. The exact timing of these charges and cash outflows, as well as the estimated cost ranges by category type, have not been finalized. This information will be subject to the finalization of timetables for the transition of functions, consultation with employees and their representatives as well as the statutory severance requirements of the particular jurisdictions impacted, and the amount and timing of the actual charges may vary due to a variety of factors. Our estimates for the charges discussed above exclude any potential income tax effects.

The 2020 Restructuring Plan, once complete, is ~~substantially complete as~~expected to yield annualized cost savings beginning in fiscal year 2021 of ~~May 31, 2019.~~

approximately $40.0 million. We expect cost savings of $25.0 million during fiscal year 2020.

See Note 1213 – “Restructuring and Related Charges” to the Condensed Consolidated Financial Statements for further discussion of restructuring and related charges for the ~~2017~~2020 Restructuring Plan.

Impairment on Securities

Three months ended Six months ended
(dollars in millions) February 29, 2020 February 28, 2019 Change February 29, 2020 February 28, 2019 Change
Impairment on securities $ 12.2
$ —
$ 12.2
$ 12.2
$ —
$ 12.2

The increase in impairment on securities for the three months and six months ended February 29, 2020, compared to the three months and six months ended February 28, 2019 is due to a non-cash impairment charge in connection with the sale of an investment in the optical networking segment.

Other Expense

   Three months ended       Nine months ended
(dollars in millions)    May 31,
2019    May 31,
2018    Change    May 31,
2019    May 31,
2018    Change
Other expense
   $ 14.1    $ 10.1    $ 4.0    $ 39.4    $ 26.5    $ 12.9



	Three months ended							Six months ended
(dollars in millions)	February 29, 2020		February 28, 2019		Change			February 29, 2020		February 28, 2019		Change
Other expense	$	8.5	$	11.8	$	(3.3	)	$	19.7	$	25.3	$	(5.6	)

Other expense ~~increased~~decreased for the three months ended ~~May 31, 2019,~~February 29, 2020, compared to the three months ended ~~May 31, 2018,~~February 28, 2019, primarily due to: (i) $2.3 million related to ~~$6.1 million of additional~~a decrease in fees associated with the utilization of the ~~foreign and North American asset-backed securitization programs and~~ trade accounts receivable sales ~~programs. This increase~~programs and (ii) $2.6 million related to lower net periodic benefit costs. The decrease was partially offset by ~~$2.1~~$1.6 million of other expense.

Other expense ~~increased~~decreased for the ~~nine~~six months ended ~~May 31, 2019,~~February 29, 2020, compared to the ~~nine~~six months ended ~~May 31, 2018,~~February 28, 2019, primarily due to: (i) ~~$20.6~~$4.6 million related to a decrease in fees associated with the utilization of ~~additional~~the trade accounts receivable sales programs and fees incurred for the amendment of the foreign asset-backed securitization program and the new North American asset-backed securitization program in fiscal year 2019 and ~~an increase in fees associated with the utilization of the asset-backed securitization programs and trade accounts receivable sales programs.~~(ii) $4.3 million related to lower net periodic benefit costs. The ~~increase~~decrease was partially offset by ~~(i) $5.1~~$3.3 million of other ~~expense and (ii) $2.6 million of costs incurred~~expense.

Interest Income



	Three months ended						Six months ended
(dollars in millions)	February 29, 2020		February 28, 2019		Change		February 29, 2020		February 28, 2019		Change
Interest income	$	5.3	$	4.8	$	0.5	$	11.3	$	9.1	$	2.2

Interest income remained relatively consistent during the ~~nine~~three months ended ~~May 31, 2018, as a result of~~February 29, 2020, compared to the ~~early redemption of the 8.250% Senior Notes due 2018.~~

three months ended February 28, 2019.

~~Interest Income~~

   Three months ended       Nine months ended
(dollars in millions)    May 31,
2019    May 31,
2018    Change    May 31,
2019    May 31,
2018    Change
Interest income
   $ 6.8    $ 4.5    $ 2.3    $ 15.9    $ 13.3    $ 2.6

Interest income increased during the ~~three months and nine~~six months ended ~~May 31, 2019,~~February 29, 2020, compared to the ~~three months and nine~~six months ended ~~May 31, 2018,~~February 28, 2019, due to increased cash equivalents (investments that are readily convertible to cash with maturity dates of 90 days or less).

Interest Expense

   Three months ended       Nine months ended
(dollars in millions)    May 31,
2019    May 31,
2018    Change    May 31,
2019    May 31,
2018    Change
Interest expense
   $ 50.5    $ 36.2    $ 14.3    $ 139.3    $ 110.2    $ 29.1



	Three months ended						Six months ended
(dollars in millions)	February 29, 2020		February 28, 2019		Change		February 29, 2020		February 28, 2019		Change
Interest expense	$	46.2	$	46.2	$	—	$	91.1	$	88.8	$	2.3

Interest expense remained consistent during the three months ended February 29, 2020, compared to the three months ended February 28, 2019.

Interest expense increased during the ~~three months and nine~~six months ended ~~May 31, 2019,~~February 29, 2020, compared to the ~~three months and nine~~six months ended ~~May 31, 2018,~~February 28, 2019, due to additional borrowings on our credit facilities and ~~higher~~commercial paper program, partially offset by lower interest rates. For the three months and nine months ended May 31, 2019, additional borrowings were driven by the timing and scale of our ongoing new business ramps. Additionally, the nine months ended May 31, 2019 was also impacted by the completion of the share repurchase program.

Income Tax Expense

   Three months ended Nine months ended
   May 31,
2019 May 31,
2018 Change May 31,
2019 May 31,
2018 Change
Effective tax rate
   47.0 % 40.0 % 7.0 % 32.4 % 45.6 % (13.2 )%



	Three months ended						Six months ended
	February 29, 2020		February 28, 2019		Change		February 29, 2020		February 28, 2019		Change
Effective income tax rate	108.9	%	33.0	%	75.9	%	71.0	%	27.9	%	43.1	%

The effective income tax rate increased for the three months and six months ended ~~May 31, 2019~~February 29, 2020, compared to the three months and six months ended ~~May 31, 2018,~~February 28, 2019, primarily due toto: (i) decreased income ~~in jurisdictions with low tax rates or existing valuation allowances.~~

~~The effective tax rate decreased~~ for the ~~nine~~three months and six months ended ~~May 31, 2019, compared~~February 29, 2020, driven in part by increased restructuring charges with minimal related tax benefit; and (ii)

adjustments related to ~~the nine months ended May 31, 2018, primarily due to $30.9 million of tax expense from~~ the Tax Cuts and Jobs Act of 2017 ~~(“Tax~~(the “Tax Act”) for the ~~nine~~six months ended ~~May 31,~~February 28, 2019, including a $13.3 million income tax benefit recorded during the three months ended November 30, 2018. ~~Refer to Note 15 – “Income Taxes” to the Condensed Consolidated Financial Statements for further information on the Tax Act.~~

Non-GAAP (Core) Financial Measures

The following discussion and analysis of our financial condition and results of operations include certainnon-GAAP financial measures as identified in the reconciliations below. Thenon-GAAP financial measures disclosed herein do not have standard meaning and may vary from thenon-GAAP financial measures used by other companies or how we may calculate those measures in other instances from time to time.Non-GAAP financial measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with U.S. GAAP. Also, our “core” financial measures should not be construed as an ~~inference~~indication by us that our future results will be unaffected by those items that are excluded from our “core” financial measures.

Management believes that thenon-GAAP “core” financial measures set forth below are useful to facilitate evaluating the past and future performance of our ongoing manufacturing operations over multiple periods on a comparable basis by excluding the effects of the amortization of intangibles, stock-based compensation expense and related charges, restructuring and related charges, distressed customer charges, acquisition and integration charges, loss on disposal of subsidiaries, settlement of receivables and related charges, impairment of notes receivable and related charges, goodwill impairment charges, business interruption and impairment charges, net, ~~other than temporary~~ impairment on securities, restructuring of securities loss, income (loss) from discontinued operations, gain (loss) on sale of discontinued operations and certain other expenses, net of tax and certain deferred tax valuation allowance charges. Among other uses, management usesnon-GAAP “core” financial measures to make operating decisions, assess business performance and as a factor in determining certain employee performance when evaluating incentive compensation.

We determine the tax effect of the items excluded from “core” earnings and “core” diluted earnings per share based upon evaluation of the statutory tax treatment and the applicable tax rate of the jurisdiction in which thepre-tax items were incurred, and for which realization of the resulting tax benefit, if any, is expected. In certain jurisdictions where we do not expect to realize a tax benefit (due to existing tax incentives or a history of operating losses or other factors resulting in a valuation allowance related to deferred tax assets), a reduced or 0% tax rate is applied.

We are reporting “core” operating income, “core” earnings and ~~“core” return on invested capital~~adjusted free cash flow to provide investors with an additional method for assessing operating income and earnings, by presenting what we believe are our “core” manufacturing operations. A significant portion (based on the respective values) of the items that are excluded for purposes of calculating “core” operating income and “core” earnings also impacted certain balance sheet assets, resulting in a portion of an asset being written off without a corresponding recovery of cash we may have previously spent with respect to the asset. In the case of restructuring and related charges, we may make associated cash payments in the future. In addition, although, for purposes of calculating “core” operating income and “core” earnings, we exclude stock-based compensation expense (which we anticipate continuing to incur in the future) because it is anon-cash expense, the associated stock issued may result in an increase in our outstanding shares of stock, which may result in the dilution of our stockholders’ ownership interest. We encourage you to consider these matters when evaluating the utility of thesenon-GAAP financial measures.

Adjusted free cash flow is defined as net cash provided by (used in) operating activities plus cash receipts on sold receivables less net capital expenditures (acquisition of property, plant and equipment less proceeds and advances from the sale of property, plant and equipment). We report adjusted free cash flow as we believe this non-GAAP financial measure is useful to investors in measuring our ability to generate cash internally and fund future growth and to provide a return to shareholders.

Included in the tables below ~~is a reconciliation~~are reconciliations of thenon-GAAP financial measures to the most directly comparable U.S. GAAP financial measures as provided in our Condensed Consolidated Financial Statements:

   Three months ended Nine months ended
(in thousands, except for per share data)    May 31, 2019    May 31, 2018 May 31, 2019 May 31, 2018
Operating income (U.S. GAAP)
   $ 140,918    $ 112,971 $ 511,611 $ 388,257




Amortization of intangibles
   7,610    10,040 23,033 29,909
Stock-based compensation expense and related charges
   14,506    15,038 47,452 82,822
Restructuring and related charges
   9,340    12,647 16,182 29,462
Distressed customer charge⁽¹⁾
   —      —   —   14,706
Business interruption and impairment charges, net⁽²⁾
   —      (634 ) (2,860 ) 10,722
Acquisition and integration charges⁽³⁾
   13,391    —   35,066 —




Adjustments to operating income
   44,847    37,091 118,873 167,621




Core operating income(Non-GAAP)
   $ 185,765    $ 150,062 $ 630,484 $ 555,878




Net income attributable to Jabil Inc. (U.S. GAAP)
   $ 43,482    $ 42,541 $ 234,436 $ 143,644
Adjustments to operating income
   44,847    37,091 118,873 167,621
Adjustments for taxes⁽⁴⁾
   125    (16 ) (17,837 ) 29,037




Core earnings(Non-GAAP)
   $ 88,454    $ 79,616 $ 335,472 $ 340,302




Diluted earnings per share (U.S. GAAP)
   $ 0.28    $ 0.25 $ 1.47 $ 0.81




Diluted core earnings per share(Non-GAAP)
   $ 0.57    $ 0.46 $ 2.11 $ 1.92




Diluted weighted average shares outstanding used in the calculation of earnings per share (U.S. GAAP andNon-GAAP)
   155,678    173,279 159,036 176,997

Reconciliation of U.S. GAAP Financial Results to Non-GAAP Measures



	Three months ended						Six months ended
(in thousands, except for per share data)	February 29, 2020			February 28, 2019			February 29, 2020			February 28, 2019
Operating income (U.S. GAAP)	$	90,630		$	153,983		$	243,409		$	370,693
Amortization of intangibles	13,577			7,777			29,717			15,423
Stock-based compensation expense and related charges	15,109			15,697			45,332			32,946
Restructuring and related charges	29,604			817			74,855			6,842
Distressed customer charge ⁽¹⁾	—			—			14,963			—
Net periodic benefit cost⁽²⁾	2,776			—			4,601			—
Business interruption and impairment charges, net⁽³⁾	—			—			—			(2,860		)
Acquisition and integration charges⁽⁴⁾	7,752			12,785			23,886			21,675
Adjustments to operating income	68,818			37,076			193,354			74,026
Core operating income (Non-GAAP)	$	159,448		$	191,059		$	436,763		$	444,719
Net (loss) income attributable to Jabil Inc. (U.S. GAAP)	$	(3,283	)	$	67,354		$	37,139		$	190,954
Adjustments to operating income	68,818			37,076			193,354			74,026
Impairment on securities	12,205			—			12,205			—
Net periodic benefit cost⁽²⁾	(2,776		)	—			(4,601		)	—
Adjustments for taxes⁽⁵⁾	3,091			(4,219		)	3,588			(17,962		)
Core earnings (Non-GAAP)	$	78,055		$	100,211		$	241,685		$	247,018
Diluted (loss) earnings per share (U.S. GAAP)	$	(0.02	)	$	0.43		$	0.24		$	1.19
Diluted core earnings per share (Non-GAAP)	$	0.50		$	0.64		$	1.55		$	1.54
Diluted weighted average shares outstanding (U.S. GAAP)	152,058			156,737			156,171			160,413
Diluted weighted average shares outstanding (Non-GAAP)	155,714			156,737			156,171			160,413


⁽¹⁾	Charges relate to ~~inventory~~accounts receivable and ~~other assets~~inventory charges for acertain distressed ~~customer.~~ customers primarily in the renewable energy sector.

⁽²⁾

Following the adoption of Accounting Standards Update 2017-07, Compensation - Retirement Benefits (Topic 715) (“ASU 2017-07”), pension service cost is recognized in cost of revenue and all other components of net periodic benefit cost, including return on plan assets, are presented in other expense. We are reclassifying the pension components in other expense to core operating income as we assess operating performance, inclusive of all components of net periodic benefit cost, with the related revenue. There is no impact to core earnings or diluted core earnings per share for this adjustment.


⁽³⁾	Charges, net of insurance proceeds of ~~$5.0~~$2.9 million for the ~~three~~six months ended ~~May 31, 2018, and $2.9 million and $21.4 million for the nine months ended May 31,~~February 28, 2019, ~~and 2018, respectively,~~ relate to business interruptions and asset impairment costs associated with damage from Hurricane Maria, which impacted our operations in Cayey, Puerto Rico.

⁽³⁾
⁽⁴⁾	Charges related to our strategic collaboration with Johnson & Johnson Medical Devices Companies (“JJMD”).

⁽⁴⁾

⁽⁵⁾

The ~~nine~~six months ended ~~May 31,~~February 28, 2019 includes a $13.3 million income tax benefit for the effects of the Tax Act recorded during the three months ended November 30, 2018. ~~The nine months ended May 31, 2018 includes $30.9 million, which is comprised of the provisionalone-time~~ ~~transition tax as required by the Tax Act and the provisional impact of the Tax Act to there-measurement~~ ~~of U.S. deferred tax attributes.~~

Adjusted Free Cash Flow



	Six months ended
(in thousands)	February 29, 2020			February 28, 2019⁽¹⁾
Net cash provided by operating activities (U.S. GAAP)	$	84,166		$	107,765
Cash receipts on sold receivables	—			96,846
Acquisition of property, plant and equipment	(448,765		)	(537,140		)
Proceeds and advances from sale of property, plant and equipment	36,624			144,968
Adjusted free cash flow (Non-GAAP)	$	(327,975	)	$	(187,561	)

   Three months ended
(in thousands)    May 31, 2019 May 31, 2018
Numerator:

Operating income (U.S. GAAP)
   $ 140,918 $ 112,971
Tax effect⁽¹⁾
   (42,490 ) (30,717 )


After-tax operating income
   98,428 82,254
   x4 x4


Annualizedafter-tax operating income
   $ 393,712 $ 329,016


Core operating income(Non-GAAP)
   $ 185,765 $ 150,062
Tax effect⁽²⁾
   (41,150 ) (29,951 )


After-tax core operating income
   144,615 120,111
   x4 x4


Annualizedafter-tax core operating income
   $ 578,460 $ 480,444


Denominator:

Average total Jabil Inc. stockholders’ equity⁽³⁾
   $ 1,851,074 $ 2,227,618
Average notes payable and long-term debt, less current installments⁽³⁾
   2,479,615 2,152,478
Average current installments of notes payable and long-term debt⁽³⁾
   315,008 149,024
Average cash and cash equivalents⁽³⁾
   (721,572 ) (809,144 )


Net invested capital base
   $ 3,924,125 $ 3,719,976


Return on Invested Capital (U.S. GAAP)
   10.0 % 8.8 %
Adjustments noted above
   4.7 % 4.1 %
Core Return on Invested Capital(Non-GAAP)
   14.7 % 12.9 %

⁽¹⁾

~~The tax effect is calculated by applying~~In fiscal year 2019, the ~~U.S. GAAP effective tax rate~~adoption of Accounting Standards Update ("ASU") 2016-15, "Classification of Certain Cash Receipts and Cash Payments" resulted in a reclassification of cash flows from operating activities to investing activities for cash receipts for the ~~three months ended May 31, 2019 and 2018~~deferred purchase price receivable on asset-backed securitization transactions. The adoption of this standard does not reflect a change in the underlying business or activities. The effects of this change are applied retrospectively to ~~U.S. GAAP operating income less interest expense.~~

all prior periods.

⁽²⁾	~~The tax effect is calculated by applying the core effective tax rate for the three months ended May 31, 2019 and 2018 to core operating income less interest expense.~~

⁽³⁾	~~The average is based on the addition of the account balance at the end of the most recently-ended quarter to the account balance at the end of the prior quarter and dividing by two.~~

Acquisitions and Expansion

During fiscal year ~~2019,~~2018, the Company and ~~JJMD~~Johnson & Johnson Medical Devices Companies (“JJMD”) entered into a Framework Agreement to form a strategic collaboration and expand our existing relationship. The strategic collaboration expands our medical device manufacturing portfolio, diversification and capabilities.

On February 25, 2019 and April 29, 2019, under the terms of the Framework Agreement, we completed the initial ~~closing~~ and second ~~closing,~~closings, respectively, of our acquisition of certain assets of JJMD. The preliminary aggregate purchase price paid for ~~both~~ the initial ~~closing~~ and second ~~closing~~closings was approximately ~~$153.2~~$166.2 million in ~~cash, which remains subject to certain post-closing adjustments. The acquisition of~~cash. For the ~~JJMD assets has been accounted for as a business combination using the acquisition method of accounting. Total~~initial and second closings, total assets acquired of ~~$163.6~~$172.3 million and total liabilities assumed of ~~$10.4~~$6.1 million were recorded at their estimated fair values as of the acquisition dates.

On September 30, 2019, under the terms of the Framework Agreement, we completed the third closing of our acquisition of certain assets of JJMD. The ~~final closings,~~preliminary aggregate purchase price paid for the third closing was approximately $111.8 million in cash, which ~~are~~remains subject to ~~customary~~certain post-closing adjustments based on conditions within the Framework Agreement. For the third closing, ~~conditions, are~~total assets acquired of $199.7 million, including $83.2 million in contract assets, $35.1 million in inventory and $70.4 million in goodwill, and total liabilities assumed of $87.9 million, including $73.5 million of pension obligations, were recorded at their estimated fair values as of the acquisition date. There were no intangible assets identified in this acquisition and the goodwill is primarily attributable to the assembled workforce. The majority of the goodwill is currently not expected to ~~occur during fiscal year 2020.~~

be deductible for income tax purposes.

The acquisition of the JJMD assets have been accounted for as separate business combinations for each closing using the acquisition method of accounting. We are currently evaluating the fair values of the assets and liabilities related to ~~this~~the second and third closings of these business ~~combination.~~combinations. The preliminary estimates and measurements are, therefore, subject to change during the measurement period for assets acquired, liabilities assumed and tax adjustments. The results of operations were included in our ~~condensed~~ consolidated financial results beginning on February 25, 2019 for the initial closing, ~~and~~ April 29, 2019 for the second closing and September 30, 2019 for the third closing. We believe it is impracticable to provide pro forma information for the acquisition of the JJMD assets.

Liquidity and Capital Resources

We believe that our level of liquidity sources, which includes available borrowings under our revolving credit facilities and commercial paper program, additional proceeds available under our asset-backed securitization programs and under our uncommitted trade accounts receivable sale programs, cash on hand, funds provided by operations and the access to the capital markets, will be adequate to fund our capital expenditures, the payment of any declared quarterly dividends, approved share repurchase programs, any potential acquisitions and our working capital requirements for the next 12 months. Despite the impacts of the COVID-19 pandemic on our ability to estimate capital expenditures for fiscal year 2020, we have historically been successful in balancing capital expenditures commensurate with customer demand and would expect to be able to do so in the future. We continue to assess our capital structure and evaluate the merits of redeploying available ~~cash~~cash.

Certain of our trade accounts receivable sale programs expire or are subject to ~~reduce existing~~termination provisions within the 2020 calendar year. In addition, our 5.625% Senior Notes mature on December 15, 2020. While we expect to renew such trade accounts receivable sale programs and refinance our Senior Notes, market conditions, including the implications of the COVID-19 pandemic, at the time our current programs expire and debt ~~or repurchase common stock.~~

matures, respectively, may create challenges in doing so, such as incurring a higher cost of capital.

Cash and Cash Equivalents

As of ~~May 31, 2019,~~February 29, 2020, we had approximately ~~$694.1~~$696.7 million in cash and cash equivalents. As our growth remains predominantly outside of the United States, a significant portion of such cash and cash equivalents are held by our foreign subsidiaries.

~~As a result of the Tax Act and after theone-time~~ transition tax on our historically untaxed foreign earnings, the cash and cash equivalents held by our foreign subsidiaries will no longer be subject to U.S. federal income tax consequences upon subsequent repatriation to the United States. As a result, most Most of our cash and cash equivalents as of ~~May 31, 2019~~February 29, 2020 could be repatriated to the United States without potential tax consequences.

Notes Payable and Credit Facilities

Following is a summary of principal debt payments and debt issuance for our notes payable and credit facilities:

(in thousands) 5.625%
Senior
Notes 4.700%
Senior
Notes 4.900%
Senior
Notes 3.950%
Senior
Notes Borrowings
under
revolving
credit
facilities⁽¹⁾ Borrowings
under
loans Total notes
payable
and
credit
facilities
Balance as of August 31, 2018
$ 397,995 $ 497,350 $ 298,814 $ 494,208 $ —   $ 830,332 $ 2,518,699
Borrowings
—   —   —   —   9,482,468 —   9,482,468
Payments
—   —   —   —   (9,052,402 ) (18,885 ) (9,071,287 )
Other
668 491 182 462 (418 ) 407 1,792

Balance as of May 31, 2019
$ 398,663 $ 497,841 $ 298,996 $ 494,670 $ 429,648 $ 811,854 $ 2,931,672

Maturity Date
Dec 15, 2020 Sep 15, 2022 Jul 14, 2023 Jan 12, 2028

Nov 8, 2022
and Aug 24,
2020

⁽¹⁾

Nov 8, 2022
and Aug 24,
2020

Original Facility/Maximum Capacity
$ 400.0 million $ 500.0 million $ 300.0 million $ 500.0 million $ 2.4 billion ⁽¹⁾ $ 851.7 million



(in thousands)	5.625% Senior Notes		4.700% Senior Notes		4.900% Senior Notes		3.950% Senior Notes		3.600% Senior Notes⁽¹⁾			Borrowings under revolving credit facilities⁽²⁾⁽³⁾			Borrowings under commercial paper program⁽⁴⁾		Borrowings under loans⁽²⁾			Total notes payable and credit facilities
Balance as of August 31, 2019	$	398,886	$	498,004	$	299,057	$	494,825	$	—		$	—		$	—	$	805,693		$	2,496,465
Borrowings	—		—		—		—		499,165			4,026,532			237,661		300,000			5,063,358
Payments	—		—		—		—		—			(4,026,532		)	—		(806,356		)	(4,832,888		)
Other	446		328		121		307		(4,695		)	—			—		758			(2,735		)
Balance as of February 29, 2020	$	399,332	$	498,332	$	299,178	$	495,132	$	494,470		$	—		$	237,661	$	300,095		$	2,724,200
Maturity Date	Dec 15, 2020		Sep 15, 2022		Jul 14, 2023		Jan 12, 2028		Jan 15, 2030			Jan 22, 2023 and Jan 22, 2025⁽²⁾⁽³⁾			⁽⁴⁾		Jan 22, 2025⁽²⁾
Original Facility/ Maximum Capacity	$400.0 million		$500.0 million		$300.0 million		$500.0 million		$500.0 million			$3.3 billion⁽²⁾⁽³⁾			⁽⁴⁾		$301.7 million⁽²⁾


⁽¹⁾	On January 15, 2020, we issued $500.0 million of publicly registered 3.600% Senior Notes due 2030 (the “3.600% Senior Notes”). The net proceeds from the offering were used for the repayment of term loan indebtedness.

⁽²⁾

On January 22, 2020, we entered into a senior unsecured credit agreement which provides for: (i) a Revolving Credit Facility in the initial amount of $2.7 billion, of which $700.0 million expires on January 22, 2023 and $2.0 billion expires on January 22, 2025 and (ii) a $300.0 million Term Loan Facility which expires on January 22, 2025, (collectively the “Credit Facility”). Interest and fees on the Credit Facility advances are based on our non-credit enhanced long-term senior unsecured debt rating as determined by Standard & Poor’s Ratings Service, Moody’s Investors Service and Fitch Ratings. In connection with our entry into the Credit Facility, we terminated our amended and restated five-year credit agreement dated November 8, 2017 and the credit agreement dated August 24, 2018.


⁽³⁾	As of ~~May 31, 2019,~~February 29, 2020, we had ~~$2.0~~$3.1 billion in available unused borrowing capacity under our revolving credit ~~facilities.~~ facilities, net of outstanding commercial paper borrowings.

⁽⁴⁾
We have a borrowing capacity of up to $1.8 billion under our commercial paper program. The revolving credit facility supports commercial paper outstanding, if any. As of February 29, 2020, the outstanding commercial paper has maturities of 90 days or less. During the three months ended February 29, 2020, the interest rates on the commercial paper program ranged from 2.0% to 2.6%.

We have a shelf registration statement with the SEC registering the potential sale of an indeterminate amount of debt and equity securities in the future to augment our liquidity and capital resources.

Our Senior Notes and our credit facilities contain various financial and nonfinancial covenants. A violation of these covenants could negatively impact our liquidity by restricting our ability to borrow under the notes payable and credit facilities and potentially causing acceleration of amounts due under these notes payable and credit facilities. As of ~~May 31, 2019,~~February 29, 2020, we were in compliance with our debt covenants. Refer to Note 75 – “Notes Payable and Long-Term Debt” to the Condensed Consolidated Financial Statements for further details.

~~Asset-Backed Securitization and Trade Accounts Receivable Sale Programs~~

Asset-Backed Securitization Programs

We continuously sell designated pools of trade accounts receivable, at a discount, under our foreign asset-backed securitization program and our North American asset-backed securitization program to a special purpose ~~entity,~~entities, which in turn ~~sells~~

sell certain of the foreign asset-backed receivables to an unaffiliated financial institution and a conduit administered by an unaffiliated financial institution and certain of the North American asset-backed receivables to conduits administered by an unaffiliated financial institution on a monthly basis. Effective October 1, 2018, the foreign asset-backed securitization program terms were amended and the program was extended to September 30, 2021. In connection with this amendment, there is no longer a deferred purchase price receivable for the foreign asset-backed securitization program as the entire purchase price is paid in cash when the receivables are sold.

As of October 1, 2018, approximately $734.2 million of accounts receivable sold under the foreign asset-backed securitization program was exchanged for the outstanding deferred purchase price receivable of $335.5 million. The remaining amount due to the financial institution of $398.7 million was subsequently settled for $25.2 million of cash and $373.5 million of trade accounts receivable sold to the financial institution. Prior to the amendment, any portion of the purchase price for the receivables not paid in cash upon the sale occurring was recorded as a deferred purchase price receivable, which was paid from available cash as payments on the receivables were collected. The foreign asset-backed securitization program contains a guarantee of payment by the special purpose entity, in an amount approximately equal to ~~approximately~~ the net cash proceeds under the program. No liability has been recorded for obligations under the guarantee as of ~~May 31, 2019.~~

~~The North American asset-backed securitization program was terminated on October 9, 2018 and as~~February 29, 2020.

Certain unsold receivables covering the maximum amount of ~~this date approximately $500.0 million of accounts receivable sold~~net cash proceeds available under the program was exchanged for the outstanding deferred purchase price receivable of $300.0 million and $200.0 million of cash. The previously sold trade accounts receivable were recorded at fair market value.

On November 27, 2018, we entered into a new North American asset-backed securitization program. We continuously sell designated pools of trade accounts receivable under our new North American asset-backed securitization program to a special purpose entity, which in turn sells certain of the receivables to conduits administered by unaffiliated financial institutions on a monthly basis. There is no longer a deferred purchase price receivable for the North American asset-backed securitization program ~~as the entire purchase price is paid in cash when the receivables are sold. Additionally, $204.4 million of receivables~~ are pledged as collateral to the unaffiliated financial institution as of ~~May 31, 2019.~~

February 29, 2020.

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

   Maximum Amount of
Net Cash Proceeds (in millions)⁽¹⁾    Expiration
Date
North American
   $ 390.0    November 22, 2021
Foreign
   $ 400.0    September 30, 2021



	Maximum Amount of Net Cash Proceeds (in millions)⁽¹⁾		Expiration Date
North American	$	390.0	November 22, 2021
Foreign	$	400.0	September 30, 2021


⁽¹⁾	Maximum amount available at any one time.

In connection with our asset-backed securitization programs, during the three months and ~~nine~~six months ended ~~May 31, 2019,~~February 29, 2020, we sold ~~$1.0~~$1.1 billion and ~~$2.9~~$2.3 billion, respectively, of trade accounts receivable and we received cash proceeds of ~~$1.0~~$1.1 billion and ~~$2.8~~$2.2 billion, respectively. As of ~~May 31, 2019,~~February 29, 2020, we had up to ~~$55.1~~$76.3 million in available liquidity under our asset-backed securitization programs.

Our asset-backed securitization programs contain various financial and nonfinancial covenants. As of ~~May 31, 2019~~February 29, 2020 and August 31, ~~2018,~~2019, we were in compliance with all covenants under our asset-backed securitization programs. Refer to Note 86 – ~~“Trade Accounts Receivable~~“Asset-Backed Securitization ~~and Sale~~ Programs” to the Condensed Consolidated Financial Statements for further details on the programs.

Trade Accounts Receivable Sale Programs

Following is a summary of the trade accounts receivable sale programs with unaffiliated financial institutions. Under the programs we may elect to sell receivables and the unaffiliated financial institutions may elect to purchase, at a discount, on an ongoing basis:



Program	Maximum Amount (in millions)⁽¹⁾			Type of Facility	Expiration Date
A	$	500.0		Uncommitted	December 5, 2020⁽²⁾
B	$	150.0		Uncommitted	November 30, 2020⁽³⁾
C	800.0		CNY	Uncommitted	June 30, 2020
D	$	150.0		Uncommitted	May 4, 2023⁽⁴⁾
E	$	50.0		Uncommitted	August 25, 2020
F	$	150.0		Uncommitted	January 25, 2021⁽⁵⁾
G	$	50.0		Uncommitted	February 23, 2023⁽⁶⁾
H	$	100.0		Uncommitted	August 10, 2020⁽⁷⁾
I	$	100.0		Uncommitted	July 21, 2020⁽⁸⁾
J	$	650.0		Uncommitted	December 4, 2020⁽⁹⁾
K	$	110.0		Uncommitted	April 11, 2020⁽¹⁰⁾
L	100.0		CHF	Uncommitted	December 5, 2020⁽²⁾


⁽¹⁾	Maximum amount available at any one time.


⁽²⁾	~~Any~~The program will be automatically extended each year through December 5, 2025 unless either party ~~may elect to terminate the agreement upon 15~~provides 30 days ~~prior notice.~~ notice of termination.


⁽³⁾	The program will automatically extend for one year at each expiration date unless either party provides 10 days notice of termination.


⁽⁴⁾	Any party may elect to terminate the agreement upon 30 days prior notice.


⁽⁵⁾	The program will be automatically extended through January 25, 2023 unless either party provides 30 days notice of termination.


⁽⁶⁾	Any party may elect to terminate the agreement upon 15 days prior notice.


⁽⁷⁾	The program will be automatically extended through August 10, 2023 unless either party provides 30 days notice of termination.

⁽⁷⁾
⁽⁸⁾	The program will be automatically extended through August 21, 2023 unless either party provides 30 days notice of termination.

⁽⁸⁾
⁽⁹⁾	The program will be automatically extended each year through ~~February 28,~~December 5, 2024 unless either party provides 9030 days notice of termination.

⁽⁹⁾
⁽¹⁰⁾	The program will be automatically extended each year through April 11, 2025 unless either party provides 30 days notice of termination.

During the three months and ~~nine~~six months ended ~~May 31, 2019,~~February 29, 2020, we sold ~~$1.5~~$2.2 billion and ~~$5.1~~$4.2 billion, respectively, of trade accounts receivable under these programs and we received cash proceeds of ~~$1.5~~$2.2 billion and ~~$5.1~~$4.2 billion, respectively. As of ~~May 31, 2019,~~February 29, 2020, we had up to ~~$1.3~~$1.2 billion in available liquidity under our trade accounts receivable sale programs.

Capital Expenditures

~~For fiscal year 2019, we anticipate~~

At this time, due to the implications of the impact of COVID-19, our net capital expenditures ~~will be approximately $800.0 million. Our capital~~are not estimable for fiscal year 2020. In general, our capital expenditures ~~will~~ support ~~investments in new markets and~~ ongoing maintenance in our DMS and EMS ~~segments.~~segments and investments in new markets. The amount of actual capital expenditures may be affected by general economic, financial, competitive, legislative and regulatory factors, among other things.

Cash Flows

The following table sets forth selected consolidated cash flow information (in thousands):

   Nine months ended
   May 31, 2019 May 31, 2018
Net cash provided by (used in) operating activities
   $ 112,656 $ (1,376,305 )
Net cash (used in) provided by investing activities
   (704,095 ) 886,335
Net cash provided by (used in) financing activities
   19,909 (7,198 )
Effect of exchange rate changes on cash and cash equivalents
   7,667 (15,259 )


Net decrease in cash and cash equivalents
   $ (563,863 ) $ (512,427 )

Six months ended
February 29, 2020 February 28, 2019
Net cash provided by operating activities $ 84,166
$ 107,765
Net cash used in investing activities (555,349 ) (389,608 )
Net cash provided by (used in) financing activities 14,273
(239,112 )
Effect of exchange rate changes on cash and cash equivalents (9,688 ) 12,063
Net decrease in cash and cash equivalents $ (466,598 ) $ (508,892 )

Operating Activities

Net cash provided by operating activities during the ~~nine~~six months ended ~~May 31, 2019~~February 29, 2020 was primarily due to non-cash expenses and decreased ~~inventories, increased~~accounts receivable, partially offset by decreased accounts payable, accrued expenses and other liabilities and~~non-cash~~ ~~expenses, partially offset by~~ increased inventories, contract assets and ~~accounts receivable.~~prepaid expenses and other current assets. The decrease in ~~inventories~~accounts receivable is primarily ~~due to the adoption of ASU2014-09~~driven by lower sales and the ~~reclassification to contract assets for revenue recognized for over time customers, partially offset by an increase in inventories to support expected sales levels in the fourth quarter~~timing of ~~fiscal year 2019.~~collections. The ~~increase~~decrease in accounts payable, accrued expenses and other liabilities is primarily due to ~~the timing of collections on accounts receivable sold under the securitization programs~~a decrease in materials purchases due to a decrease in customer demand and the timing of purchases and cash payments. The increase in inventories is primarily driven by idle capacity and supply chain constraints due to COVID-19. The increase in contract assets is primarily due to ~~the adoption of ASU2014-09~~ ~~and~~ the timing of revenue recognition for over time customers. The increase in ~~accounts receivable~~prepaid expenses and other current assets is primarily ~~driven by the amended and new securitization programs and higher sales and timing of collections.~~

due to an increase in value added tax receivables.

Investing Activities

Net cash used in investing activities during the ~~nine~~six months ended ~~May 31, 2019~~February 29, 2020 consisted primarily of capital expenditures principally to support ongoing business in the DMS and EMS segments and expenditures for assets acquired in connection with the ~~initial and second closings~~third closing of the acquisition of certain assets of JJMD, partially offset by proceeds and advances from the sale of property, plant and ~~equipment and cash receipts on sold receivables under the asset-backed securitization programs.~~

equipment.

Financing Activities

Net cash provided by financing activities during the ~~nine~~six months ended ~~May 31, 2019~~February 29, 2020 was primarily due ~~to:~~to (i) borrowings under debt agreements and (ii) net proceeds from the exercise of stock options and issuance of common stock under the employee stock purchase plan. Net cash provided by financing activities was ~~largely~~partially offset ~~by:~~by (i) payments for debt agreements, (ii) the repurchase of our common stock, (iii) dividend payments and (iv) treasury stock minimum tax withholding related to vesting of restricted stock.

Contractual Obligations

As of the date of this report, other than the borrowings on the 3.600% Senior Notes and the Credit Facility (see Note 5 - “Notes Payable and Long-Term Debt” to the Condensed Consolidated Financial Statements) and the items disclosed below, there were no material changes outside the ordinary course of business since August 31, ~~2018~~2019 to our contractual obligations and commitments.

In connection with the third closing of the acquisition of certain assets of JJMD, we assumed additional contractual obligations related to postretirement benefit plans and executed certain financing leases. The following table provides details of these assumed obligations:

Payments due by period (in thousands)
Total Less than 1
year 1-3 years 3-5 years After 5 years
Pension and postretirement contributions and payments⁽¹⁾
$ 10,599
$ 10,599
$ —
$ —
$ —
Finance lease obligations⁽²⁾
$ 114,275
$ 5,904
$ 12,972
$ 13,102
$ 82,297


⁽¹⁾	Represents the estimated company contributions to the funded Switzerland plan during fiscal year 2020. These future payments are not recorded on the Condensed Consolidated Balance Sheets but will be recorded as incurred. Refer to Note 8 - Postretirement and other Employee Benefits for further discussion of the assumed postretirement benefit obligation.


⁽²⁾	The amount payable after five years includes $75.1 million in purchase requirements at the end of the respective leases.

Dividends and Share Repurchases

We currently expect to continue to declare and pay regular quarterly dividends of an amount similar to our past declarations. However, the declaration and payment of future dividends are discretionary and will be subject to determination by our Board of Directors each quarter following its review of our financial ~~performance.~~

performance and global economic conditions.

In ~~June 2018,~~September 2019, the Board of Directors authorized the repurchase of up to ~~$350.0~~$600.0 million of our common stock as a part of a two-year capital allocation framework (the ~~“2018~~“2020 Share Repurchase Program”). ~~This authorization expires on August 31, 2019.~~ As of ~~May 31, 2019, the total amount authorized by the Board of Directors~~February 29, 2020, 4.4 million shares had been ~~repurchased.~~

repurchased for $168.7 million and $431.3 million remains available under the 2020 Share Repurchase Program.



Item 3.	Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes in our primary risk exposures or management of market risks from those disclosed in our Annual Report onForm 10-K for the fiscal year ended August 31, ~~2018.~~

2019.



Item 4.	Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We carried out an evaluation required byRules 13a-15 and15d-15 under the Exchange Act (the “Evaluation”), under the supervision and with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of our disclosure controls and procedures as defined inRules 13a-15 and15d-15 under the Exchange Act as of ~~May 31, 2019.~~February 29, 2020. Based on the Evaluation, our CEO and CFO concluded that the design and operation of our disclosure controls were effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) accumulated and communicated to our senior management, including our CEO and CFO, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

For our fiscal quarter ended ~~May 31, 2019,~~February 29, 2020, we did not identify any modifications to our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION



Item 1.	Legal Proceedings

We are party to certain lawsuits in the ordinary course of business. We do not believe that these proceedings, individually or in the aggregate, will have a material adverse effect on our financial position, results of operations or cash flows.



Item 1A.	Risk Factors

For information regarding risk factors that could affect our business, results of operations, financial condition or future results, see Part I, “Item 1A. Risk Factors” of our Annual Report on Form10-K for the fiscal year ended August 31, ~~2018.~~2019. In addition to the risk factors disclosed therein, we identified an additional risk factor, as described below. For further information on our forward-looking statements see Part I of this Quarterly Report on Form10-Q.

The effect of COVID-19 on our operations and the operations of our customers, suppliers and logistics providers will have a material, adverse impact on our financial condition and results of operations.

Our global operations expose us to the COVID-19 pandemic, which has had and will continue to have an adverse impact on our employees, operations, supply chain and distribution system. To date, COVID-19 has increased our expenses, primarily related to additional labor costs, and has caused a reduction in factory utilization, particularly in China, due to travel disruptions and restrictions. A significant portion of our manufacturing, design, support and storage operations are conducted in our facilities in China. COVID-19 has now spread across the globe and is impacting worldwide economic activity, including our global manufacturing production sites. Public and private sector policies and initiatives to reduce the transmission of COVID-19, including travel restrictions and quarantines, are impacting our operations, including affecting the ability of our employees to get to our facilities, reducing capacity utilization levels, causing the closure of facilities, and interrupting the movement of components and products through our supply chain. If additional factory closures are required or reductions in capacity utilization levels occur, we expect to incur additional direct costs and lost revenue. If our suppliers experience additional closures or reductions in their capacity utilization levels in the future, we may have difficulty sourcing materials necessary to fulfill production requirements. COVID-19 has also impacted our customers and may create unpredictable reductions or increases in demand for our manufacturing services. While we are staying in close communication with our sites, employees, customers, suppliers and logistics partners and acting to mitigate the impact of this dynamic and evolving situation, the duration and extent of the effect of COVID-19 on Jabil is not determinable. We believe COVID-19 will have a material, adverse impact on our consolidated financial position, results of operations and cash flows in the near term.



Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds

The following table provides information relating to our repurchase of common stock during the three months ended ~~May 31, 2019:~~

Period
   Total Number
of Shares
Purchased⁽¹⁾    Average Price
Paid per Share    Total Number of
Shares Purchased
as Part of Publicly
Announced Program    Approximate
Dollar Value of
Shares that May
Yet Be Purchased
Under the Program
(in thousands)
March 1, 2019 - March 31, 2019
   —      $ —      —      $ —
April 1, 2019 - April 30, 2019
   5,126    $ 31.14    —      $ —
May 1, 2019 - May 31, 2019
   19,196    $ 27.83    —      $ —





Total
   24,322    $ 28.53    —

February 29, 2020:



Period	Total Number of Shares Purchased⁽¹⁾	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Program⁽²⁾	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (in thousands)
December 1, 2019 - December 31, 2019	262,232	$	40.76	259,169	$	493,047
January 1, 2020 - January 31, 2020	818,272	$	41.97	734,757	$	462,272
February 1, 2020 - February 29, 2020	773,984	$	39.97	773,856	$	431,341
Total	1,854,488	$	40.96	1,767,782


⁽¹⁾	The purchases include amounts that are attributable to shares surrendered to us by employees to satisfy, in connection with the vesting of restricted stock unit awards and the exercise of stock appreciation rights, their tax withholding obligations.


⁽²⁾	In September 2019, our Board of Directors authorized the repurchase of up to $600.0 million of our common stock as publicly announced in a press release on September 24, 2019 (the “2020 Share Repurchase Program”).



Item 3.	Defaults Upon Senior Securities

None.



Item 4.	Mine Safety Disclosures

Not applicable.



Item 5.	Other Information

None.



Item 6.	Exhibits

Index to Exhibits

      Incorporated by Reference
Herein
Exhibit No.
Description
   Form    Exhibit    Filing
Date/Period
End Date
    1.1    Underwriting Agreement, dated as of January 9, 2018, between the Company and BNP Paribas Securities Corp., Citigroup Global Markets Inc., J.P. Morgan Securities LLC and Mizuho Securities USA LLC, as representatives of the several underwriters listed therein.    8-K    1.1    1/17/2018
    3.1    Registrant’s Certificate of Incorporation, as amended.    10-Q    3.1    5/31/2017
    3.2    Registrant’s Bylaws, as amended.    10-Q    3.2    5/31/2017
    4.1    Form of Certificate for Shares of the Registrant’s Common Stock. (P)    S-1       3/17/1993
    4.2    Indenture, dated January 16, 2008, with respect to Senior Debt Securities of the Registrant, between the Registrant and The Bank of New York Mellon Trust Company, N.A. (formerly known as The Bank of New York Trust Company, N.A.), as trustee.    8-K    4.2    1/17/2008
    4.3    Form of 7.750% Registered Senior Notes issued on August 11, 2009.    8-K    4.1    8/12/2009
    4.4    Form of 5.625% Registered Senior Notes issued on November 2, 2010.    8-K    4.1    11/2/2010
    4.5    Form of 4.700% Registered Senior Notes issued on August 3, 2012.    8-K    4.1    8/6/2012
    4.6    Form of 3.950% Senior Notes due 2028 (included in the Officers’ Certificate filed as Exhibit 4.10).    8-K    4.1    1/17/2018
    4.7    Officers’ Certificate of the Registrant pursuant to the Indenture, dated August 11, 2009.    8-K    4.3    8/12/2009
    4.8    Officers’ Certificate of the Registrant pursuant to the Indenture, dated November 2, 2010.    8-K    4.3    11/2/2010
    4.9    Officers’ Certificate of the Registrant pursuant to the Indenture, dated August 3, 2012.    8-K    4.3    8/6/2012
    4.10    Officers’ Certificate, dated as of January 17, 2018, establishing the 3.950% Senior Notes due 2028.    8-K    4.1    1/17/2018
  31.1*    Rule13a-14(a)/15d-14(a) Certification by the Chief Executive Officer.
  31.2*    Rule13a-14(a)/15d-14(a) Certification by the Chief Financial Officer.
  32.1*    Section 1350 Certification by the Chief Executive Officer.
  32.2*    Section 1350 Certification by the Chief Financial Officer.
101.INS**    XBRL Instance Document.
101.SCH**    XBRL Taxonomy Extension Schema Document.
101.CAL**    XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF**    XBRL Taxonomy Extension Definitions Linkbase Document.
101.LAB**    XBRL Taxonomy Extension Label Linkbase Document.
101.PRE**    XBRL Taxonomy Extension Presentation Linkbase Document.

Incorporated by Reference Herein

Exhibit No.

Description

Form

Exhibit

Filing Date/Period End Date

3.1

Registrant’s Certificate of Incorporation, as amended.

10-Q

3.1

5/31/2017

3.2

Registrant’s Bylaws, as amended.

10-Q

3.2

5/31/2017

4.1

Form of Certificate for Shares of the Registrant’s Common Stock. (P)

S-1

3/17/1993

4.2

Indenture, dated January 16, 2008, with respect to Senior Debt Securities of the Registrant, between the Registrant and The Bank of New York Mellon Trust Company, N.A. (formerly known as The Bank of New York Trust Company, N.A.), as trustee.

8-K

4.2

1/17/2008

4.3

Form of 7.750% Registered Senior Notes issued on August 11, 2009.

8-K

4.1

8/12/2009

4.4

Form of 5.625% Registered Senior Notes issued on November 2, 2010.

8-K

4.1

11/2/2010

4.5

Form of 4.700% Registered Senior Notes issued on August 3, 2012.

8-K

4.1

8/6/2012

4.6

Form of 3.950% Senior Notes due 2028 (included in the Officers’ Certificate filed as Exhibit 4.11).

8-K

4.1

1/17/2018

4.7

Form of 3.600% Senior Notes due 2030 (included as Exhibit A to the Officers’ Certificate filed herewith as Exhibit 4.12)

8-K

4.1

1/15/2020

4.8

Officers’ Certificate of the Registrant pursuant to the Indenture, dated August 11, 2009.

8-K

4.3

8/12/2009

4.9

Officers’ Certificate of the Registrant pursuant to the Indenture, dated November 2, 2010.

8-K

4.3

11/2/2010

4.10

Officers’ Certificate of the Registrant pursuant to the Indenture, dated August 3, 2012.

8-K

4.3

8/6/2012

4.11

Officers’ Certificate, dated as of January 17, 2018, establishing the 3.950% Senior Notes due 2028.

8-K

4.1

1/17/2018

4.12

Officers’ Certificate, dated as of January 15, 2020, establishing the 3.600% Senior Notes due 2030

8-K

4.1

1/15/2020

10.1

Credit Agreement dated as of January 22, 2020 among Jabil Inc.; the initial lenders named in the Agreement; Citibank, N.A., as administrative agent; JPMorgan Chase Bank, N.A. and Bank of America, N.A., as co-syndication agents; BNP Paribas, Mizuho Bank, Ltd., MUFG Bank, Ltd. and Sumitomo Mitsui Banking Corporation, as documentation agents; and Citibank, N.A., JPMorgan Chase Bank, N.A., BofA Securities, Inc., BNP Paribas Securities Corp., Mizuho Bank, Ltd., MUFG Bank, Ltd., and Sumitomo Mitsui Banking Corporation, as joint lead arrangers and joint bookrunners.

8-K

10.1

1/28/2020

31.1*

Rule 13a-14(a)/15d-14(a) Certification by the Chief Executive Officer.

31.2*

Rule 13a-14(a)/15d-14(a) Certification by the Chief Financial Officer.

32.1*

Section 1350 Certification by the Chief Executive Officer.

32.2*

Section 1350 Certification by the Chief Financial Officer.

†

~~Indicates management compensatory plan, contract or arrangement~~

101

The following financial information from Jabil’s Quarterly Report on Form 10-Q for the quarterly period ended February 29, 2020, formatted in Inline XBRL: (i) Condensed Consolidated Balance Sheets as of February 29, 2020 and August 31, 2019, (ii) Condensed Consolidated Statements of Operations for the three months and six months ended February 29, 2020 and February 28, 2019, (iii) Condensed Consolidated Statements of Comprehensive Income for the three months and six months ended February 29, 2020 and February 28, 2019, (iv) Condensed Consolidated Statements of Stockholders’ Equity for the three months and six months ended February 29, 2020 and February 28, 2019, (v) Condensed Consolidated Statements of Cash Flows for the six months ended February 29, 2020 and February 28, 2019 and (vi) the Notes to Condensed Consolidated Financial Statements.

104

Cover Page Interactive Data File - Embedded within the inline XBRL Document

Filed or furnished herewith

**	~~XBRL (Extensible Business Reporting Language) Filed Electronically with this report.~~

Certain instruments with respect to long-term debt of the Registrant and its consolidated subsidiaries are not filed herewith pursuant to Item 601(b)(4)(iii) of RegulationS-K since the total amount of securities authorized under each such instrument does not exceed 10% of the total assets of the Registrant and its subsidiaries on a consolidated basis. The Registrant agrees to furnish a copy of any such instrument to the Securities and Exchange Commission upon request.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



	JABIL INC. Registrant
			~~JABIL INC.~~ ~~Registrant~~

Date: ~~June 28, 2019~~April 1, 2020	By:	/s/ MARK T. MONDELLO
		Mark T. Mondello Chief Executive Officer
		~~By:~~	/S~~/ MARK~~ ~~T. MONDELLO~~
				~~Mark T. Mondello~~ ~~Chief Executive Officer~~

Date: ~~June 28, 2019~~April 1, 2020	By:	/s/ MICHAEL DASTOOR
			~~By:~~	/S~~/ MICHAEL~~ D~~ASTOOR~~
				Michael Dastoor Chief Financial Officer


	May 31, 2019 (Unaudited)			August 31, 2018
ASSETS
Current assets:
Cash and cash equivalents	$	694,086		$	1,257,949
Accounts receivable, net of allowance for doubtful accounts of $16,951 as of May 31, 2019 and $15,181 as of August 31, 2018		2,696,599			1,693,268
Contract assets		899,482			—
Inventories, net		3,159,369			3,457,706
Prepaid expenses and other current assets		524,833			1,141,000

Total current assets		7,974,369			7,549,923
Property, plant and equipment, net of accumulated depreciation of $3,993,635 as of May 31, 2019 and $3,646,945 as of August 31, 2018		3,335,837			3,198,016
Goodwill		624,474			627,745
Intangible assets, net of accumulated amortization of $329,189 as of May 31, 2019 and $307,178 as of August 31, 2018		266,205			279,131
Deferred income taxes		202,556			218,252
Other assets		205,336			172,574

Total assets	$	12,608,777		$	12,045,641

LIABILITIES AND EQUITY
Current liabilities:
Current installments of notes payable and long-term debt	$	454,830		$	25,197
Accounts payable		4,826,333			4,942,932
Accrued expenses		2,586,052			2,262,744

Total current liabilities		7,867,215			7,230,873
Notes payable and long-term debt, less current installments		2,476,842			2,493,502
Other liabilities		145,750			94,617
Income tax liabilities		136,400			148,884
Deferred income taxes		115,370			114,385

Total liabilities		10,741,577			10,082,261

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; 259,812,625 and 257,130,145 shares issued and 152,926,887 and 164,588,172 shares outstanding as of May 31, 2019 and August 31, 2018, respectively		260			257
Additionalpaid-in capital		2,279,409			2,218,673
Retained earnings		1,996,901			1,760,097
Accumulated other comprehensive loss		(50,005	)		(19,399	)
Treasury stock at cost, 106,885,738 and 92,541,973 shares as of May 31, 2019 and August 31, 2018, respectively		(2,371,592	)		(2,009,371	)

Total Jabil Inc. stockholders’ equity		1,854,973			1,950,257
Noncontrolling interests		12,227			13,123

Total equity		1,867,200			1,963,380

Total liabilities and equity	$	12,608,777		$	12,045,641


	Three months ended						Nine months ended
	May 31, 2019			May 31, 2018			May 31, 2019			May 31, 2018
Net revenue	$	6,135,602		$	5,436,952		$	18,708,867		$	16,323,585
Cost of revenue		5,691,803			5,038,725			17,290,544			15,058,940

Gross profit		443,799			398,227			1,418,323			1,264,645
Operating expenses:
Selling, general and administrative		274,482			252,487			834,750			789,482
Research and development		11,449			10,082			32,747			27,535
Amortization of intangibles		7,610			10,040			23,033			29,909
Restructuring and related charges		9,340			12,647			16,182			29,462

Operating income		140,918			112,971			511,611			388,257
Other expense		14,084			10,139			39,391			26,506
Interest income		(6,758	)		(4,499	)		(15,897	)		(13,323	)
Interest expense		50,514			36,178			139,326			110,220

Income before income tax		83,078			71,153			348,791			264,854
Income tax expense		39,046			28,451			113,078			120,705

Net income		44,032			42,702			235,713			144,149
Net income attributable to noncontrolling interests, net of tax		550			161			1,277			505

Net income attributable to Jabil Inc.	$	43,482		$	42,541		$	234,436		$	143,644

Earnings per share attributable to the stockholders of Jabil Inc.:
Basic	$	0.28		$	0.25		$	1.50		$	0.83

Diluted	$	0.28		$	0.25		$	1.47		$	0.81

Weighted average shares outstanding:
Basic		152,889			170,514			156,384			174,013

Diluted		155,678			173,279			159,036			176,997


	Dividend Declaration Date		Dividend per Share		Total of Cash Dividends Declared		Date of Record for Dividend Payment		Dividend Cash Payment Date
Fiscal Year 2019:		October 18, 2018	$	0.08	$	13,226		November 15, 2018		December 3, 2018
		January 24, 2019	$	0.08	$	12,706		February 15, 2019		March 1, 2019
		April 18, 2019	$	0.08	$	12,681		May 15, 2019		June 3, 2019
Fiscal Year 2018:		October 19, 2017	$	0.08	$	14,588		November 15, 2017		December 1, 2017
		January 25, 2018	$	0.08	$	14,272		February 15, 2018		March 1, 2018
		April 19, 2018	$	0.08	$	13,991		May 15, 2018		June 1, 2018


	May 31, 2019			August 31, 2018
Raw materials	$	2,388,902		$	2,070,569
Work in process		501,168			788,742
Finished goods		333,224			659,335
Reserve for excess and obsolete inventory		(63,925	)		(60,940	)

Inventories, net	$	3,159,369		$	3,457,706


	May 31, 2019		August 31, 2018
Contract liabilities	$	544,831	$	—
Deferred income		—		691,365
Accrued compensation and employee benefits		549,598		570,400
Other accrued expenses		1,491,623		1,000,979

Accrued expenses	$	2,586,052	$	2,262,744


	Nine months ended
	May 31, 2019
Unrecognized stock-based compensation expense—restricted stock units	$	53,987
Remaining weighted-average period for restricted stock units expense		1.4 years


	Maturity Date		May 31, 2019		August 31, 2018
5.625% Senior Notes		Dec 15, 2020	$	398,663	$	397,995
4.700% Senior Notes		Sep 15, 2022		497,841		497,350
4.900% Senior Notes		Jul 14, 2023		298,996		298,814
3.950% Senior Notes		Jan 12, 2028		494,670		494,208
Borrowings under credit facilities⁽¹⁾		Nov 8, 2022 and Aug 24, 2020		429,648		—
Borrowings under loans		Nov 8, 2022 and Aug 24, 2020		811,854		830,332

Total notes payable and long-term debt				2,931,672		2,518,699
Less current installments of notes payable and long-term debt				454,830		25,197

Notes payable and long-term debt, less current installments			$	2,476,842	$	2,493,502


	Maximum Amount of Net Cash Proceeds (in millions)⁽¹⁾		Expiration Date
North American	$	390.0		November 22, 2021
Foreign	$	400.0		September 30, 2021


	Foreign Currency Translation Adjustment			Derivative Instruments			Actuarial (Loss) Gain			Prior Service Cost			Available for Sale Securities			Total
Balance as of August 31, 2018	$	7,431		$	8,116		$	(25,021	)	$	(643	)	$	(9,282	)		(19,399	)
Other comprehensive (loss) income before reclassifications		(5,636	)		(36,262	)		103			—			(4,769	)		(46,564	)
Amounts reclassified from AOCI		—			15,958			—			—			—			15,958

Other comprehensive (loss) income⁽¹⁾		(5,636	)		(20,304	)		103			—			(4,769	)		(30,606	)

Balance as of May 31, 2019	$	1,795		$	(12,188	)	$	(24,918	)	$	(643	)	$	(14,051	)	$	(50,005	)


	Fair Values of Derivative Instruments
	Asset Derivatives					Liability Derivatives
	Balance Sheet Location	Fair Value as of May 31, 2019(1)		Fair Value as of August 31, 2018(1)		Balance Sheet Location	Fair Value as of May 31, 2019(1)		Fair Value as of August 31, 2018(1)
Derivatives designated as hedging instruments:
Forward foreign exchange contracts	Prepaid expenses and other current assets	$	644	$	225	Accrued expenses	$	3,853	$	13,364
Derivatives not designated as hedging instruments:
Forward foreign exchange contracts	Prepaid expenses and other current assets	$	5,216	$	10,125	Accrued expenses	$	26,851	$	46,171


Derivatives Not Designated as Hedging Instruments Under ASC 815	Location of (Loss) Gain on Derivatives Recognized in Net Income	Amount of (Loss) Gain Recognized in Net Income on Derivatives
		Three months ended						Nine months ended
		May 31, 2019			May 31, 2018			May 31, 2019		May 31, 2018
Forward foreign exchange contracts⁽¹⁾	Cost of revenue	$	(33,476	)	$	(19,785	)	$	9,332	$	25,959


	Employee Severance and Benefit Costs			Lease Costs			Asset Write-off Costs			Other Related Costs			Total
Balance as of August 31, 2018	$	18,131		$	2,684		$	—		$	522		$	21,337
Restructuring related charges		15,460			(41	)		(3,555	)		1,469			13,333
Assetwrite-off charge and othernon-cash activity		(331	)		—			3,555			(14	)		3,210
Cash payments		(23,811	)		(450	)		—			(1,275	)		(25,536	)

Balance as of May 31, 2019	$	9,449		$	2,193		$	—		$	702		$	12,344


	One-time transition tax, inclusive of unrecognized tax benefits⁽¹⁾			Re-measurement of the Company’s U.S. deferred tax attributes			Change in indefinite reinvestment assertion⁽²⁾		Other		Income tax expense (benefit)
Provisional income tax expense (benefit)—recognized in fiscal year 2018	$	65.9		$	(10.5	)	$	85.0	$	1.9	$	142.3
Income tax expense (benefit) adjustment—recognized in fiscal year 2019	$	(14.9	)	$	1.6		$	—	$	—	$	(13.3	)

Income tax expense (benefit) related to the Tax Act through November 30, 2018	$	51.0		$	(8.9	)	$	85.0	$	1.9	$	129.0


	Balance as of August 31, 2018		Adjustments due to adoption of ASU 2014-09			Balance as of September 1, 2018
Assets
Contract assets⁽¹⁾	$	—	$	591,616		$	591,616
Inventories, net⁽¹⁾	$	3,457,706	$	(461,271	)	$	2,996,435
Prepaid expenses and other current assets⁽¹⁾⁽²⁾	$	1,141,000	$	(37,271	)	$	1,103,729
Deferred income taxes⁽¹⁾⁽²⁾	$	218,252	$	(8,325	)	$	209,927
Liabilities
Contract liabilities⁽²⁾⁽³⁾	$	—	$	690,142		$	690,142
Deferred income^(2)(3)(4)	$	691,365	$	(691,365	)	$	—
Other accrued expenses⁽³⁾⁽⁴⁾	$	1,000,979	$	40,392		$	1,041,371
Deferred income taxes⁽¹⁾	$	114,385	$	2,977		$	117,362
Equity
Retained earnings⁽¹⁾⁽²⁾	$	1,760,097	$	42,602		$	1,802,699


	May 31, 2019
	As reported		Balance without the adoption of ASU2014-09
Assets
Contract assets⁽¹⁾	$	899,482	$	—
Inventories, net⁽¹⁾	$	3,159,369	$	3,901,192
Prepaid expenses and other current assets⁽¹⁾⁽²⁾	$	524,833	$	523,866
Deferred income taxes⁽¹⁾	$	202,556	$	207,752
Liabilities
Contract liabilities⁽²⁾⁽³⁾	$	544,831	$	—
Deferred income^(2)(3)(4)	$	—	$	544,012
Other accrued expenses⁽³⁾⁽⁴⁾	$	1,491,623	$	1,486,706
Deferred income taxes⁽¹⁾	$	115,370	$	110,984
Equity
Retained earnings⁽¹⁾⁽²⁾	$	1,996,901	$	1,853,592


	Three months ended				Nine months ended
	May 31, 2019		May 31, 2018		May 31, 2019		May 31, 2018
Net revenue	$	6,135,602	$	5,436,952	$	18,708,867	$	16,323,585
Gross profit	$	443,799	$	398,227	$	1,418,323	$	1,264,645
Operating income	$	140,918	$	112,971	$	511,611	$	388,257
Net income attributable to Jabil Inc.	$	43,482	$	42,541	$	234,436	$	143,644
Earnings per share—basic	$	0.28	$	0.25	$	1.50	$	0.83
Earnings per share—diluted	$	0.28	$	0.25	$	1.47	$	0.81


(in thousands)	5.625% Senior Notes		4.700% Senior Notes		4.900% Senior Notes		3.950% Senior Notes		Borrowings under revolving credit facilities⁽¹⁾			Borrowings under loans			Total notes payable and credit facilities
Balance as of August 31, 2018	$	397,995	$	497,350	$	298,814	$	494,208	$	—		$	830,332		$	2,518,699
Borrowings		—		—		—		—		9,482,468			—			9,482,468
Payments		—		—		—		—		(9,052,402	)		(18,885	)		(9,071,287	)
Other		668		491		182		462		(418	)		407			1,792

Balance as of May 31, 2019	$	398,663	$	497,841	$	298,996	$	494,670	$	429,648		$	811,854		$	2,931,672

Maturity Date		Dec 15, 2020		Sep 15, 2022		Jul 14, 2023		Jan 12, 2028		Nov 8, 2022 and Aug 24, 2020	⁽¹⁾		Nov 8, 2022 and Aug 24, 2020
Original Facility/Maximum Capacity	$	400.0 million	$	500.0 million	$	300.0 million	$	500.0 million	$	2.4 billion	⁽¹⁾	$	851.7 million


⁽⁴⁾	We have a borrowing capacity of up to $1.8 billion under our commercial paper program. The revolving credit facility supports commercial paper outstanding, if any. As of February 29, 2020, the outstanding commercial paper has maturities of 90 days or less. During the three months ended February 29, 2020, the interest rates on the commercial paper program ranged from 2.0% to 2.6%.



	Payments due by period (in thousands)
	Total		Less than 1 year		1-3 years		3-5 years		After 5 years
Pension and postretirement contributions and payments⁽¹⁾	$	10,599	$	10,599	$	—	$	—	$	—
Finance lease obligations⁽²⁾	$	114,275	$	5,904	$	12,972	$	13,102	$	82,297


Period	Total Number of Shares Purchased⁽¹⁾		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Program		Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (in thousands)
March 1, 2019 - March 31, 2019		—	$	—		—	$	—
April 1, 2019 - April 30, 2019		5,126	$	31.14		—	$	—
May 1, 2019 - May 31, 2019		19,196	$	27.83		—	$	—

Total		24,322	$	28.53		—