UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 
FORM 10-Q
(Mark One)
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended November 30, 20192020
or
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                     to                     
Commission File Number: 001-14063
jbl-20201130_g1.jpg
JABIL INC.INC.
(Exact name of registrant as specified in its charter)
Delaware
38-1886260
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 classTrading symbol(s)Name of each exchange on which registered
Common Stock, $0.001 par value per shareJBLNew 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 Regulation S-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, a non-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 Rule 12b-2 of the Exchange Act.
Large accelerated filer☒Accelerated filer☐
Non-accelerated filer
☐  
Smaller reporting company☐
Emerging growth company☐

1

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 Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒
As of January 1,December 31, 2020, there were 152,089,713150,175,999 shares of the registrant’s Common Stock outstanding.

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Table of Contents
JABIL INC. AND SUBSIDIARIES INDEX
Item 1.
1
32
43
54
65
76
Item 2.
2420
Item 3.
3630
Item 4.
3630
Item 1.
3731
Item 1A.
3731
Item 2.
3731
Item 3.
3731
Item 4.
3731
Item 5.
3731
Item 6.
3832
4033



Table of Contents
PART I—FINANCIAL INFORMATION
Item 1.Financial Statements
JABIL INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except for share data)

November 30,
2019
(Unaudited)		 August 31,
2019		November 30, 2020
(Unaudited)		August 31, 2020
ASSETS   ASSETS
Current assets:   Current assets:
Cash and cash equivalents$719,842
 $1,163,343
Cash and cash equivalents$1,107,573 $1,393,557 
Accounts receivable, net of allowance for doubtful accounts of $30,343 as of November 30, 2019 and $17,221 as of August 31, 20193,596,145
 2,745,226
Accounts receivable, net of allowance for doubtful accounts of $24,479 as of November 30, 2020 and $25,827 as of August 31, 2020Accounts receivable, net of allowance for doubtful accounts of $24,479 as of November 30, 2020 and $25,827 as of August 31, 20203,651,869 2,847,743 
Contract assets1,060,580
 911,940
Contract assets1,088,059 1,104,700 
Inventories, net3,342,198
 3,023,003
Inventories, net3,271,842 3,131,783 
Prepaid expenses and other current assets533,466
 501,573
Prepaid expenses and other current assets727,849 657,102 
Total current assets9,252,231
 8,345,085
Total current assets9,847,192 9,134,885 
Property, plant and equipment, net of accumulated depreciation of $4,221,124 as of November 30, 2019 and $4,110,496 as of August 31, 20193,450,211
 3,333,750
Property, plant and equipment, net of accumulated depreciation of $4,676,152 as of November 30, 2020 and $4,525,758 as of August 31, 2020Property, plant and equipment, net of accumulated depreciation of $4,676,152 as of November 30, 2020 and $4,525,758 as of August 31, 20203,792,091 3,665,312 
Operating lease right-of-use asset405,895
 —
Operating lease right-of-use asset391,004 362,847 
Goodwill678,391
 622,255
Goodwill706,625 696,853 
Intangible assets, net of accumulated amortization of $353,988 as of November 30, 2019 and $337,841 as of August 31, 2019240,849
 256,853
Intangible assets, net of accumulated amortization of $406,694 as of November 30, 2020 and $395,074 as of August 31, 2020Intangible assets, net of accumulated amortization of $406,694 as of November 30, 2020 and $395,074 as of August 31, 2020198,801 209,870 
Deferred income taxes203,945
 198,827
Deferred income taxes165,264 165,407 
Other assets213,441
 213,705
Other assets168,501 162,242 
Total assets$14,444,963

$12,970,475
Total assets$15,269,478 $14,397,416 
LIABILITIES AND EQUITY   LIABILITIES AND EQUITY
Current liabilities:   Current liabilities:
Current installments of notes payable and long-term debt$375,180
 $375,181
Current installments of notes payable and long-term debt$50,195 $50,194 
Accounts payable5,920,277
 5,166,780
Accounts payable6,431,567 5,687,038 
Accrued expenses3,167,951
 2,990,144
Accrued expenses3,061,092 3,211,528 
Current operating lease liabilities98,640
 —
Current operating lease liabilities119,150 110,723 
Total current liabilities9,562,048

8,532,105
Total current liabilities9,662,004 9,059,483 
Notes payable and long-term debt, less current installments2,115,715
 2,121,284
Notes payable and long-term debt, less current installments2,679,005 2,678,288 
Other liabilities319,369
 163,821
Other liabilities331,093 268,925 
Non-current operating lease liabilities337,981
 —
Non-current operating lease liabilities324,379 302,035 
Income tax liabilities143,187
 136,689
Income tax liabilities163,459 148,629 
Deferred income taxes117,370
 115,818
Deferred income taxes115,587 114,657 
Total liabilities12,595,670

11,069,717
Total liabilities13,275,527 12,572,017 
Commitments and contingencies

 

Commitments and contingencies00
Equity:   Equity:
Jabil Inc. stockholders’ 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; 262,337,466 and 260,406,796 shares issued and 152,300,356 and 153,520,380 shares outstanding as of November 30, 2019 and August 31, 2019, respectively262
 260
Preferred stock, $0.001 par value, authorized 10,000,000 shares; 0 shares issued and 0 shares outstandingPreferred stock, $0.001 par value, authorized 10,000,000 shares; 0 shares issued and 0 shares outstanding0 0 
Common stock, $0.001 par value, authorized 500,000,000 shares; 266,047,352 and 263,830,270 shares issued and 150,471,570 and 150,330,358 shares outstanding as of November 30, 2020 and August 31, 2020, respectivelyCommon stock, $0.001 par value, authorized 500,000,000 shares; 266,047,352 and 263,830,270 shares issued and 150,471,570 and 150,330,358 shares outstanding as of November 30, 2020 and August 31, 2020, respectively266 264 
Additional paid-in capital2,332,307
 2,304,552
Additional paid-in capital2,445,582 2,413,616 
Retained earnings2,064,758
 2,037,037
Retained earnings2,228,729 2,040,922 
Accumulated other comprehensive loss(74,322) (82,794)Accumulated other comprehensive loss(14,346)(34,168)
Treasury stock at cost, 110,037,110 and 106,886,416 shares as of November 30, 2019 and August 31, 2019, respectively(2,487,319) (2,371,612)
Treasury stock at cost, 115,575,782 and 113,499,912 shares as of November 30, 2020 and August 31, 2020, respectivelyTreasury stock at cost, 115,575,782 and 113,499,912 shares as of November 30, 2020 and August 31, 2020, respectively(2,680,860)(2,609,250)
Total Jabil Inc. stockholders’ equity1,835,686

1,887,443
Total Jabil Inc. stockholders’ equity1,979,371 1,811,384 
Noncontrolling interests13,607
 13,315
Noncontrolling interests14,580 14,015 
Total equity1,849,293
 1,900,758
Total equity1,993,951 1,825,399 
Total liabilities and equity$14,444,963
 $12,970,475
Total liabilities and equity$15,269,478 $14,397,416 
See accompanying notes to Condensed Consolidated Financial Statements.

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Table of Contents
JABIL INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except for per share data)
(Unaudited)
Three months ended Three months ended
November 30,
2019		 November 30,
2018		 November 30, 2020November 30, 2019
Net revenue$7,505,698
 $6,506,275
Net revenue$7,832,529 $7,505,698 
Cost of revenue6,951,859
 5,986,625
Cost of revenue7,197,969 6,951,859 
Gross profit553,839
 519,650
Gross profit634,560 553,839 
Operating expenses:   Operating expenses:
Selling, general and administrative328,899
 278,126
Selling, general and administrative302,752 328,899 
Research and development10,770
 11,143
Research and development8,118 10,770 
Amortization of intangibles16,140
 7,646
Amortization of intangibles11,455 16,140 
Restructuring and related charges45,251
 6,025
Restructuring, severance and related chargesRestructuring, severance and related charges(1,715)45,251 
Operating income152,779
 216,710
Operating income313,950 152,779 
Other expense11,172
 13,550
Other (income) expenseOther (income) expense(1,922)11,172 
Interest income(5,944) (4,379)Interest income(1,881)(5,944)
Interest expense44,911
 42,652
Interest expense32,346 44,911 
Income before income tax102,640
 164,887
Income before income tax285,407 102,640 
Income tax expense61,926
 40,813
Income tax expense84,400 61,926 
Net income40,714
 124,074
Net income201,007 40,714 
Net income attributable to noncontrolling interests, net of tax292
 474
Net income attributable to noncontrolling interests, net of tax565 292 
Net income attributable to Jabil Inc.$40,422
 $123,600
Net income attributable to Jabil Inc.$200,442 $40,422 
Earnings per share attributable to the stockholders of Jabil Inc.:   Earnings per share attributable to the stockholders of Jabil Inc.:
Basic$0.26
 $0.77
Basic$1.33 $0.26 
Diluted$0.26
 $0.76
Diluted$1.31 $0.26 
Weighted average shares outstanding:   Weighted average shares outstanding:
Basic153,100
 161,557
Basic150,157 153,100 
Diluted156,462
 163,670
Diluted152,918 156,462 
See accompanying notes to Condensed Consolidated Financial Statements.

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Table of Contents
JABIL INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
(Unaudited)
Three months ended Three months ended
November 30,
2019		 November 30,
2018		 November 30, 2020November 30, 2019
Net income$40,714
 $124,074
Net income$201,007 $40,714 
Other comprehensive (loss) income:   
Other comprehensive income (loss):Other comprehensive income (loss):
Change in foreign currency translation(529) 377
Change in foreign currency translation10,718 (529)
Change in derivative instruments:   Change in derivative instruments:
Change in fair value of derivatives10,945
 (18,469)Change in fair value of derivatives24,911 10,945 
Adjustment for net losses realized and included in net income6,883
 14,185
Adjustment for net (gains) losses realized and included in net incomeAdjustment for net (gains) losses realized and included in net income(15,551)6,883 
Total change in derivative instruments17,828
 (4,284)Total change in derivative instruments9,360 17,828 
Unrealized loss on available for sale securities(8,827) (8,745)Unrealized loss on available for sale securities0 (8,827)
Actuarial gain—
 103
Total other comprehensive income (loss)8,472
 (12,549)
Actuarial lossActuarial loss(256)0 
Total other comprehensive incomeTotal other comprehensive income19,822 8,472 
Comprehensive income$49,186
 $111,525
Comprehensive income$220,829 $49,186 
Comprehensive income attributable to noncontrolling interests292
 474
Comprehensive income attributable to noncontrolling interests565 292 
Comprehensive income attributable to Jabil Inc.$48,894
 $111,051
Comprehensive income attributable to Jabil Inc.$220,264 $48,894 
See accompanying notes to Condensed Consolidated Financial Statements.

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Table of Contents
JABIL INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands)
(Unaudited)
Three months ended
November 30, 2020November 30, 2019
Total stockholders' equity, beginning balances$1,825,399 $1,900,758 
Common stock:
Beginning balances264 260 
Vesting of restricted stock2 2 
Ending balances266 262 
Additional paid-in capital:
Beginning balances2,413,616 2,304,552 
Vesting of restricted stock(2)(2)
Recognition of stock-based compensation31,968 27,757 
Ending balances2,445,582 2,332,307 
Retained earnings:
Beginning balances2,040,922 2,037,037 
Declared dividends(12,635)(12,701)
Net income attributable to Jabil Inc.200,442 40,422 
Ending balances2,228,729 2,064,758 
Accumulated other comprehensive loss:
Beginning balances(34,168)(82,794)
Other comprehensive income19,822 8,472 
Ending balances(14,346)(74,322)
Treasury stock:
Beginning balances(2,609,250)(2,371,612)
Purchases of treasury stock under employee stock plans(21,581)(19,317)
Treasury shares purchased(50,029)(96,390)
Ending balances(2,680,860)(2,487,319)
Noncontrolling interests:
Beginning balances14,015 13,315 
Net income attributable to noncontrolling interests565 292 
Ending balances14,580 13,607 
Total stockholders' equity, ending balances$1,993,951 $1,849,293 
 Three months ended
 November 30,
2019		 November 30,
2018
Total stockholders' equity, beginning balances$1,900,758
 $1,963,380
Common stock:   
Beginning balances260
 257
Vesting of restricted stock2
 2
Ending balances262
 259
Additional paid-in capital:   
Beginning balances2,304,552
 2,218,673
Shares issued under employee stock purchase plan—
 8
Vesting of restricted stock(2) (2)
Recognition of stock-based compensation27,757
 17,148
Ending balances2,332,307
 2,235,827
Retained earnings:   
Beginning balances2,037,037
 1,760,097
Declared dividends(12,701) (13,101)
Cumulative effect adjustment for adoption of new accounting standards—
 40,855
Net income attributable to Jabil Inc.40,422
 123,600
Ending balances2,064,758
 1,911,451
Accumulated other comprehensive loss:   
Beginning balances(82,794) (19,399)
Other comprehensive income (loss)8,472
 (12,549)
Ending balances(74,322) (31,948)
Treasury stock:   
Beginning balances(2,371,612) (2,009,371)
Purchases of treasury stock under employee stock plans(19,317) (9,715)
Treasury shares purchased(96,390) (204,587)
Ending balances(2,487,319) (2,223,673)
Noncontrolling interests:   
Beginning balances13,315
 13,123
Net income attributable to noncontrolling interests292
 474
Ending balances13,607
 13,597
Total stockholders' equity, ending balances$1,849,293
 $1,905,513

See accompanying notes to Condensed Consolidated Financial Statements.

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Table of Contents
JABIL INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
 
Three months ended
Three months ended November 30, 2020November 30, 2019
November 30,
2019		 November 30,
2018
Cash flows provided by (used in) operating activities:   
Cash flows provided by operating activities:Cash flows provided by operating activities:
Net income$40,714
 $124,074
Net income$201,007 $40,714 
Adjustments to reconcile net income to net cash provided by (used in) operating activities:   
Adjustments to reconcile net income to net cash provided by operating activities:Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization202,859
 188,836
Depreciation and amortization205,766 202,859 
Restructuring and related charges18,347
 184
Restructuring and related charges(1,556)18,347 
Recognition of stock-based compensation expense and related charges30,223
 17,249
Recognition of stock-based compensation expense and related charges33,541 30,223 
Deferred income taxes(6,645) 4,371
Deferred income taxes(1,869)(6,645)
Provision for allowance for doubtful accounts10,413
 856
Provision for allowance for doubtful accounts2,426 10,413 
Other, net1,179
 43,426
Other, net11,247 1,179 
Change in operating assets and liabilities, exclusive of net assets acquired:   Change in operating assets and liabilities, exclusive of net assets acquired:
Accounts receivable(863,210) (600,630)Accounts receivable(791,492)(863,210)
Contract assets(68,322) (761,910)Contract assets27,971 (68,322)
Inventories(286,775) 242,506
Inventories(134,723)(286,775)
Prepaid expenses and other current assets(31,413) (103,040)Prepaid expenses and other current assets(54,243)(31,413)
Other assets(8,162) (2,528)Other assets(8,142)(8,162)
Accounts payable, accrued expenses and other liabilities981,736
 754,913
Accounts payable, accrued expenses and other liabilities575,527 981,736 
Net cash provided by (used in) operating activities20,944
 (91,693)
Net cash provided by operating activitiesNet cash provided by operating activities65,460 20,944 
Cash flows used in investing activities:   Cash flows used in investing activities:
Acquisition of property, plant and equipment(230,393) (231,513)Acquisition of property, plant and equipment(352,881)(230,393)
Proceeds and advances from sale of property, plant and equipment23,209
 10,227
Proceeds and advances from sale of property, plant and equipment110,792 23,209 
Cash paid for business and intangible asset acquisitions, net of cash(116,767) —
Cash paid for business and intangible asset acquisitions, net of cash(18,417)(116,767)
Cash receipts on sold receivables—
 96,846
Other, net(1,779) (6,812)Other, net(3,367)(1,779)
Net cash used in investing activities(325,730)
(131,252)Net cash used in investing activities(263,873)(325,730)
Cash flows used in financing activities:   Cash flows used in financing activities:
Borrowings under debt agreements1,779,801
 3,071,559
Borrowings under debt agreements200,000 1,779,801 
Payments toward debt agreements(1,787,243) (3,078,197)Payments toward debt agreements(201,969)(1,787,243)
Payments to acquire treasury stock(96,390) (204,587)Payments to acquire treasury stock(50,029)(96,390)
Dividends paid to stockholders(13,731) (14,528)Dividends paid to stockholders(13,814)(13,731)
Treasury stock minimum tax withholding related to vesting of restricted stock(19,317) (9,715)Treasury stock minimum tax withholding related to vesting of restricted stock(21,581)(19,317)
Other, net—
 8
Net cash used in financing activities(136,880) (235,460)Net cash used in financing activities(87,393)(136,880)
Effect of exchange rate changes on cash and cash equivalents(1,835) 4,865
Effect of exchange rate changes on cash and cash equivalents(178)(1,835)
Net decrease in cash and cash equivalents(443,501)
(453,540)Net decrease in cash and cash equivalents(285,984)(443,501)
Cash and cash equivalents at beginning of period1,163,343
 1,257,949
Cash and cash equivalents at beginning of period1,393,557 1,163,343 
Cash and cash equivalents at end of period$719,842
 $804,409
Cash and cash equivalents at end of period$1,107,573 $719,842 
See accompanying notes to Condensed Consolidated Financial Statements.

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JABIL INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) necessary to present fairly the information set forth therein have been included. 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 Form 10-K of the CompanyJabil Inc. (the “Company”) for the fiscal year ended August 31, 2019.2020. Results for the three months ended November 30, 20192020 are not necessarily an indication of the results that may be expected for the full fiscal year ending August 31, 2020.2021.
The full impact on the Company’s business and results of operations related to COVID-19 depends on future developments and cannot be fully predicted. The Company has considered all information available as of the date of these financial statements and is not aware of any circumstances that would result in an update to its estimates or judgments, or any adjustment to the carrying value of its assets or liabilities. Estimates are dependent on certain events and may change as future events occur or additional information becomes available and thus actual results could differ materially from these estimates and judgments.
2. Trade Accounts Receivable Securitization and Sale Programs
The Company regularly sells designated pools of high credit quality trade accounts receivable under a foreign asset-backed securitization program, a North American asset-backed securitization program and uncommitted trade accounts receivable sale programs (collectively referred to herein asunaffiliated financial institutions without recourse. As these accounts receivable are sold without recourse, the “programs”).Company does not retain the associated risks following the transfer of such accounts receivable to the respective financial institutions. The Company continues servicing the receivables sold and in exchange receives a servicing fee under each of the trade accounts receivable sale programs. Servicing fees related to each of the trade accounts receivable sale programs recognized during the three months ended November 30, 20192020 and 20182019 were not material. The Company does not record a servicing asset or liability on the Condensed Consolidated Balance Sheets as the Company estimates that the fee it receives to service these receivables approximates the fair market compensation to provide the servicing activities.
Transfers of the receivables under the trade accounts receivable sale programs are accounted for as sales and, accordingly, net receivables sold under the trade accounts receivable sale programs are excluded from accounts receivable on the Condensed Consolidated Balance Sheets and are reflected as cash provided by operating activities on the Condensed Consolidated Statements of Cash Flows.
The following is a summary of the trade accounts receivable sale programs with unaffiliated financial institutions where the Company may elect to sell receivables and the unaffiliated financial institution may elect to purchase, at a discount, on an ongoing basis:
Program
Maximum
Amount
(in millions)(1)
Type of
Facility		Expiration
Date
A$600.0 Uncommitted
December 5, 2021(2)
B$150.0 UncommittedNovember 30, 2021
C400.0 CNYUncommittedAugust 31, 2023
D$150.0 Uncommitted
May 4, 2023(3)
E$150.0 Uncommitted
January 25, 2021(4)
F$50.0 Uncommitted
February 23, 2023(5)
G$100.0 Uncommitted
August 10, 2021(6)
H$100.0 Uncommitted
July 21, 2021(7)
I$650.0 Uncommitted
December 4, 2021(8)
J$135.0 Uncommitted
April 11, 2021(9)
K100.0 CHFUncommitted
December 5, 2021(2)
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(1)Maximum amount of trade accounts receivable that may be sold under a facility at any one time.
(2)The program will be automatically extended through December 5, 2025 unless either party provides 30 days’ notice of termination.
(3)Any party may elect to terminate the agreement upon 30 days’ prior notice.
(4)The program will be automatically extended through January 25, 2023 unless either party provides 30 days’ notice of termination.
(5)Any party may elect to terminate the agreement upon 15 days’ prior notice.
(6)The program will be automatically extended through August 10, 2023 unless either party provides 30 days’ notice of termination.
(7)The program will be automatically extended through August 21, 2023 unless either party provides 30 days’ notice of termination.
(8)The program will be automatically extended through December 5, 2024 unless either party provides 30 days’ notice of termination.
(9)The program will be automatically extended through April 11, 2025 unless either party provides 30 days’ notice of termination.
In connection with the trade accounts receivable sale programs, the Company recognized the following (in millions):
 Three months ended
 November 30, 2020November 30, 2019
Trade accounts receivable sold$1,256 $1,962 
Cash proceeds received$1,255 $1,957 
Pre-tax losses on sale of receivables(1)
$1 $5 
(1)Recorded to other expense within the Condensed Consolidated Statement of Operations.
3. Inventories
    Inventories consist of the following (in thousands):
November 30, 2020August 31, 2020
Raw materials$2,428,713 $2,389,719 
Work in process480,968 450,781 
Finished goods444,170 376,542 
Reserve for excess and obsolete inventory(82,009)(85,259)
Inventories, net$3,271,842 $3,131,783 
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4. Notes Payable and Long-Term Debt
Notes payable and long-term debt outstanding as of November 30, 2020 and August 31, 2020 are summarized below (in thousands):
Maturity DateNovember 30, 2020August 31, 2020
4.700% Senior NotesSep 15, 2022$498,823 $498,659 
4.900% Senior NotesJul 14, 2023299,361 299,300 
3.950% Senior NotesJan 12, 2028495,594 495,440 
3.600% Senior NotesJan 15, 2030494,896 494,756 
3.000% Senior NotesJan 15, 2031590,400 590,162 
Borrowings under credit facilities(1)
Apr 23, 2021, Jan 22, 2023 and Jan 22, 20250 0 
Borrowings under loansJan 22, 2025350,126 350,165 
Total notes payable and long-term debt2,729,200 2,728,482 
Less current installments of notes payable and long-term debt50,195 50,194 
Notes payable and long-term debt, less current installments$2,679,005 $2,678,288 
(1)As of November 30, 2020, the Company has $3.8 billion in available unused borrowing capacity under its revolving credit facilities. The Revolving Credit Facility under the five-year unsecured credit facility entered into on January 22, 2020 (the “Credit Facility”) acts as the back-up facility for commercial paper outstanding, if any. The Company has a borrowing capacity of up to $1.8 billion under its commercial paper program.
Debt Covenants
Borrowings under the Company’s debt agreements are subject to various covenants that limit the Company’s ability to: incur additional indebtedness, sell assets, effect mergers and certain transactions, and effect certain transactions with subsidiaries and affiliates. In addition, the revolving credit facilities and the 4.900% Senior Notes contain debt leverage and interest coverage covenants. The Company is also subject to certain covenants requiring the Company to offer to repurchase the 4.700%, 4.900%, 3.950%, 3.600% or 3.000% Senior Notes upon a change of control. As of November 30, 2020 and August 31, 2020, the Company was in compliance with its debt covenants.
Fair Value
Refer to Note 16 – “Fair Value Measurements” for the estimated fair values of the Company’s notes payable and long-term debt.
5. Asset-Backed Securitization Programs
The Company continuously sells designated pools of trade accounts receivable, at a discount, under its foreign asset-backed securitization program and its North American asset-backed securitization program to special purpose entities, which in turn sell certain of the receivables under the foreign asset-backed receivablesprogram to an unaffiliated financial institution and a conduit administered by an unaffiliated financial institution and certain of the receivables under the North American asset-backed receivablesprogram 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 ended November 30, 2020 and 2019 were not material. The Company does not record a servicing asset or liability on the Condensed Consolidated Balance Sheets as the Company estimates that the fee it receives to service these receivables approximates the fair market compensation to provide the servicing activities.
Transfers of the receivables under the asset-backed securitization programs are accounted for as sales and, accordingly, net receivables sold under the asset-backed securitization programs are excluded from accounts receivable on the Condensed Consolidated Balance Sheets and are reflected as cash provided by operating activities on the Condensed Consolidated Statements of Cash Flows.
The special purpose entity in the foreign asset-backed securitization program is a separate bankruptcy-remote entity whose assets would be first available to satisfy the creditor claims of the unaffiliated financial institution. The Company is
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deemed the primary beneficiary of this special purpose entity as the Company has both the power to direct the activities of the entity that most significantly impact the entity’s economic performance and the obligation to absorb losses or the right to receive the benefits that could potentially be significant to the entity from the transfer of the trade accounts receivable into the special purpose entity. Accordingly, the special purpose entity associated with the foreign asset-backed securitization program is included in the Company’s Condensed Consolidated Financial Statements. As of November 30, 2019,2020, 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 November 30, 2019.2020.
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 November 30, 2019.2020.
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
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)
(1)Maximum amount available at any one time.
(2)As of November 30, 2020, the Company had up to $6.3 million in available liquidity under its asset-backed securitization programs.
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
 November 30, 2019 
November 30, 2018(3)
Trade accounts receivable sold$1,162
 $750
Cash proceeds received(1)
$1,156
 $744
Pre-tax losses on sale of receivables(2)
$6
 $6
Three months ended
November 30, 2020November 30, 2019
Trade accounts receivable sold$1,173 $1,162 
Cash proceeds received(1)
$1,171 $1,156 
Pre-tax losses on sale of receivables(2)
$2 $6 
(1)
(1)The amounts primarily represent proceeds from collections reinvested in revolving-period transfers.
(2)Recorded to other expense within the Condensed Consolidated Statements of Operations.
The 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 amended as of November 8, 2017 (the “2017 Credit Facility”).Facility. The foreign asset-backed securitization program covenants include limitations on certain corporate actions such as mergers and consolidations. As of November 30, 20192020 and August 31, 2019,2020, 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 (10)
Maximum
Amount
(in millions)(1)
  Type of
Facility		 Expiration
Date
A$800.0
  Uncommitted 
August 31, 2022(2)
B$150.0
  Uncommitted 
November 30, 2020(3)
C800.0
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, 2020(5)
G$50.0
  Uncommitted 
February 23, 2023(2)
H$100.0
  Uncommitted 
August 10, 2020(6)
I$100.0
  Uncommitted 
July 21, 2020(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)
As of the date of this filing, program J is no longer being utilized as it has been replaced with a new $500.0 million program (see footnote 10 below for details).
(9)
The program will be automatically extended each year through April 11, 2025 unless either party provides 30 days notice of termination.
(10)
The Company entered into two new trade accounts receivable sale programs on December 5, 2019 with maximum amounts of $500.0 million and CHF 100.0 million, respectively.
In connection with the trade accounts receivable sale programs, the Company recognized the following (in millions):
 Three months ended
 November 30, 2019 November 30, 2018
Trade accounts receivable sold$1,962
 $1,834
Cash proceeds received$1,957
 $1,826
Pre-tax losses on sale of receivables(1)
$5
 $8
(1)
Recorded to other expense within the Condensed Consolidated Statement of Operations.
3. Inventories
Inventories consist of the following (in thousands):
 November 30, 2019 August 31, 2019
Raw materials$2,566,716
 $2,310,081
Work in process418,750
 468,217
Finished goods447,983
 314,258
Reserve for excess and obsolete inventory(91,251) (69,553)
Inventories, net$3,342,198
 $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 November 30, 2019
Assets    
Operating lease assets (1)
 Operating lease right-of-use assets $405,895
Finance lease assets (2)
 Property, plant and equipment, net 152,846
Total lease assets   $558,741
Liabilities    
Current    
Operating lease liabilities Current operating lease liabilities $98,640
Finance lease liabilities Accrued expenses 6,635
Non-current    
Operating lease liabilities Non-current operating lease liabilities 337,981
Finance lease liabilities Other liabilities 154,801
Total lease liabilities   $598,057
(1)
Net of accumulated amortization of $24.6 million.
(2)
Net of accumulated amortization of $8.1 million.
The following table is a summary of expenses and income related to leases included on the Company's Condensed Consolidated Statements of Operations, for the period indicated (in thousands):
 November 30, 2019
Operating lease cost$27,735
Finance lease cost 
Amortization of leased assets1,136
Interest on lease liabilities1,189
Other2,691
Net lease cost(1)

$32,751
(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:
November 30, 2019
Weighted-average remaining lease termWeighted-average discount rate
Operating leases5.7 years3.25%
Finance leases6.5 years4.35%

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

 November 30, 2019
Cash paid for amounts included in the measurement of lease liabilities: 
Operating cash flows from operating leases(1)
$26,864
Operating cash flows from finance leases(1)
1,189
Financing activities from finance leases(2)
1,120
Non-cash right-of-use assets obtained in exchange for new lease liabilities: 
Operating leases17,901
Finance leases111,591
(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 November 30, 2019 were as follows (in thousands):
Twelve months ended November 30,
Operating Leases(1)
 Finance Leases Total
2020$110,223
 $11,635
 $121,858
202193,597
 11,676
 105,273
202275,609
 12,140
 87,749
202356,764
 11,694
 68,458
202446,447
 11,829
 58,276
Thereafter103,899
 132,235
 236,134
Total minimum lease payments$486,539
 $191,209
 $677,748
Less: Interest(49,918) (29,773) (79,691)
Present value of lease liabilities$436,621
 $161,436
 $598,057
(1)
Excludes $18.4 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
2021102,915
202284,729
202363,206
202451,091
Thereafter182,932
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 November 30, 2019 and August 31, 2019 are summarized below (in thousands):
  
Maturity
Date
 November 30,
2019		 August 31,
2019
5.625% Senior Notes Dec 15, 2020 399,109
 398,886
4.700% Senior Notes Sep 15, 2022 498,169
 498,004
4.900% Senior Notes Jul 14, 2023 299,118
 299,057
3.950% Senior Notes Jan 12, 2028 494,978
 494,825
Borrowings under credit facilities(1)
 Nov 8, 2022 and Aug 24, 2020 —
 —
Borrowings under loans Nov 8, 2022 and Aug 24, 2020 799,521
 805,693
Total notes payable and long-term debt   2,490,895
 2,496,465
Less current installments of notes payable and long-term debt   375,180
 375,181
Notes payable and long-term debt, less current installments   $2,115,715
 $2,121,284
(1)
As of November 30, 2019, the Company has $2.6 billion in available unused borrowing capacity under its revolving credit facilities. The revolving credit facility supports commercial paper outstanding, if any. The Company has a borrowing capacity of up to $1.8 billion under its commercial paper program.
Debt Covenants
Borrowings under the Company’s debt agreements are subject to various covenants that limit the Company’s ability to: incur additional indebtedness, sell assets, effect mergers and certain transactions, and effect certain transactions with subsidiaries and affiliates. In addition, the revolving credit facilities and the 4.900% Senior Notes contain debt leverage and interest coverage covenants. The Company is also subject to certain covenants requiring the Company to offer to repurchase the 5.625%, 4.700%, 4.900% or 3.950% Senior Notes upon a change of control. As of November 30, 2019 and August 31, 2019, the Company was in compliance with its debt covenants.
Fair Value
Refer to Note 16 – “Fair Value Measurements” for the estimated fair values of the Company’s notes payable and long-term debt.

6. Accrued Expenses
Accrued expenses consist of the following (in thousands):
November 30, 2019 August 31, 2019November 30, 2020August 31, 2020
Contract liabilities(1)
$488,337
 $511,329
Contract liabilities(1)
$441,151 $496,219 
Accrued compensation and employee benefits650,820
 600,907
Accrued compensation and employee benefits740,959 703,250 
Other accrued expenses2,028,794
 1,877,908
Other accrued expenses1,878,982 2,012,059 
Accrued expenses$3,167,951
 $2,990,144
Accrued expenses$3,061,092 $3,211,528 
(1)
(1)Revenue recognized during the three months ended November 30, 2020 and 2019 that was included in the contract liability balance as of August 31, 2020 and 2019 was $170.3 million and $101.4 million, respectively.
9
Revenue recognized during the three months ended November 30, 2019 that was included in the contract liability balance as of September 1, 2019 was $101.4 million.


7. Postretirement and 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 ended November 30, 20192020 and 20182019 (in thousands):
 Three months ended
 November 30, 2019 November 30, 2018
Service cost (1)
$4,463
 $295
Interest cost (2)
763
 885
Expected long-term return on plan assets (2)
(2,786) (1,352)
Recognized actuarial loss (2)
223
 208
Amortization of prior service credit (2)
(11) (12)
Net periodic benefit cost$2,652
 $24
 Three months ended
 November 30, 2020November 30, 2019
Service cost (1)
$6,078 $4,463 
Interest cost (2)
1,121 763 
Expected long-term return on plan assets (2)
(3,870)(2,786)
Recognized actuarial (gain) loss (2)
(1,243)223 
Amortization of actuarial gain (2)
(1,724)0 
Amortization of prior service credit (2)
(13)(11)
Net periodic benefit cost$349 $2,652 
(1)(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$345,473
Unfunded status$(58,824)

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,(2)Components are as follows (in thousands):
Fiscal Year Ended August 31,Amount
2020$24,698
202121,698
202220,098
202318,398
202417,298
2025 through 202982,992

recognized in other expense in the Condensed Consolidated Statement of Operations.
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$345,473


8. Derivative Financial Instruments and Hedging Activities
The Company is directly and indirectly affected by changes in certain market conditions. These changes in market conditions may adversely impact the Company’s financial performance and are referred to as market risks. The Company, where deemed appropriate, uses derivatives as risk management tools to mitigate the potential impact of certain market risks. The primary market risks managed by the Company through the use of derivative instruments are foreign currency risk and interest rate risk.
Foreign Currency Risk Management
Forward contracts are put in place to manage the foreign currency risk associated with the anticipated foreign currency denominated revenues and expenses. A hedging relationship existed with an aggregate notional amount outstanding of $284.2 million$1.0 billion and $334.1$355.2 million as of November 30, 20192020 and August 31, 2019,2020, respectively. The related forward foreign exchange contracts have been designated as hedging instruments and are accounted for as cash flow hedges. The forward foreign exchange contract transactions will effectively lock in the value of anticipated foreign currency denominated revenues and expenses against foreign currency fluctuations. The anticipated foreign currency denominated revenues and expenses being hedged are expected to occur between December 1, 20192020 and November 30, 2020.

2021.
In addition to derivatives that are designated as hedging instruments and qualify for hedge accounting, the Company also enters into forward contracts to economically hedge transactional exposure associated with commitments arising from trade accounts receivable, trade accounts payable, fixed purchase obligations and intercompany transactions denominated in a currency other than the functional currency of the respective operating entity. The aggregate notional amount of these outstanding contracts as of November 30, 20192020 and August 31, 2019,2020, was $3.1$3.5 billion and $2.5$2.9 billion, respectively.


Refer to Note 16 – “Fair Value Measurements” for the fair values and classification of the Company’s derivative instruments.
The gains and losses recognized in earnings due to hedge ineffectiveness and the amount excluded from effectiveness testing were not material for all periods presented and are included as components of net revenue, cost of revenue and selling, general and administrative expense, which are the same line items in which the hedged items are recorded.

The following table presents the gains and losses from forward contracts recorded in the Condensed Consolidated Statements of Operations for the periods indicated (in thousands):
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Derivatives Not Designated as Hedging Instruments Under ASC 815 Location of Gain (Loss) on Derivatives Recognized in Net Income Amount of Gain (Loss) Recognized in Net Income on Derivatives
    Three months ended
    November 30, 2019 November 30, 2018
Forward foreign exchange contracts(1)
 Cost of revenue $26,718
 $(6,986)
Derivatives Not Designated as Hedging Instruments Under ASC 815Location of Gain on Derivatives Recognized in Net IncomeAmount of Gain Recognized in Net Income on Derivatives
Three months ended
November 30, 2020November 30, 2019
Forward foreign exchange contracts(1)
Cost of revenue$84,006 $26,718 
(1)
(1)During the three months ended November 30, 2020 and 2019, the Company recognized $72.9 million and $28.9 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 ended November 30, 2019, the Company recognized $28.9 million of foreign currency losses in cost of revenue, which are offset by the gains from the forward foreign exchange contracts. During the three months ended November 30, 2018, the Company recognized $4.5 million of foreign currency gains in cost of revenue, which are offset by the losses 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 November 30, 2019,2020, which have been designated as hedging instruments and accounted for as cash flow hedges:
Interest Rate Swap SummaryHedged Interest Rate Payments Aggregate Notional Amount (in millions) Effective Date 
Expiration Date (1)
 
Forward Interest Rate Swap        
Anticipated Debt IssuanceFixed $200.0
 October 22, 2018 December 15, 2020
(2) 
Interest Rate Swaps(3)
        
2017 Term Loan FacilityVariable $200.0
 October 11, 2018 August 31, 2020 
2018 Term Loan FacilityVariable $350.0
 August 24, 2018 August 24, 2020 
Interest Rate Swap SummaryHedged Interest Rate PaymentsAggregate Notional Amount (in millions)Effective Date
Expiration Date (1)
Forward Interest Rate Swap
Anticipated Debt IssuanceFixed$250.0 November 2, 2020July 31, 2024(2)
(1)The contracts will be settled with the respective counterparties on a net basis at the expiration date for the forward interest rate swap.
(2)If the anticipated debt issuance occurs before July 31, 2024, the contracts will be terminated simultaneously with the debt issuance.
Contemporaneously with the issuance of our 3.000% Notes in July 2020, the Company amended interest rate swap agreements with a notional value of $200.0 million, with mandatory termination dates from August 15, 2020 to February 15, 2022 (the “2020 Extended Interest Rate Swaps”). In addition, the Company entered into interest rate swaps to offset future exposures of fluctuations in the fair value of the 2020 Extended Interest Rate Swaps (the “Offsetting Interest Rate Swaps”).
(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 LIBOR for the $500.0 million Term Loan Facility, expiring on November 8, 2022 (the “2017 Term Loan Facility”), for which $200.0 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”).
9. Accumulated Other Comprehensive Income

The following table sets forth the changes in accumulated other comprehensive income (loss) income (“AOCI”), net of tax, by component for the three months ended November 30, 20192020 (in thousands):
Foreign
Currency
Translation
Adjustment		Derivative
Instruments		Actuarial
Loss		Prior
Service Cost		Total
Balance as of August 31, 2020$(36,595)$(30,996)$34,093 $(670)$(34,168)
Other comprehensive income (loss) before reclassifications10,718 24,911 (256)0 35,373 
Amounts reclassified from AOCI0 (15,551)0 0 (15,551)
Other comprehensive income (loss)(1)
10,718 9,360 (256)0 19,822 
Balance as of November 30, 2020$(25,877)$(21,636)$33,837 $(670)$(14,346)
(1)Amounts are net of tax, which are immaterial.
 
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) $(457) (82,794)
Other comprehensive (loss) income before reclassifications(529) 10,945
 —
 —
 (8,827) 1,589
Amounts reclassified from AOCI—
 6,883
 —
 —
 —
 6,883
Other comprehensive (loss) income(1)
(529) 17,828
 —
 —
 (8,827) 8,472
Balance as of November 30, 2019$(14,827) $(21,570) $(28,033) $(608) $(9,284) $(74,322)


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

The following table sets forth the amounts reclassified from AOCI into the Condensed Consolidated Statements of Operations, and the associated financial statement line item, net of tax, for the periods indicated (in thousands):
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    Three months ended
Comprehensive Income Components Financial Statement Line Item November 30,
2019		 November 30,
2018
Realized losses (gains) on derivative instruments:(1)
      
Foreign exchange contracts Cost of revenue $7,314
 $14,615
Interest rate contracts Interest expense (431) (430)
Total amounts reclassified from AOCI(2)
   $6,883
 $14,185
 Three months ended
Comprehensive Income ComponentsFinancial Statement Line ItemNovember 30, 2020November 30, 2019
Realized (gains) losses on derivative instruments:(1)
Foreign exchange contractsCost of revenue$(16,368)$7,314 
Interest rate contractsInterest expense817 (431)
Total amounts reclassified from AOCI(2)
$(15,551)$6,883 
(1)The Company expects to reclassify $14.5 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 ended November 30, 2020 and 2019.
(1)
The Company expects to reclassify $5.0 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 ended November 30, 2019 and 2018.
10. Stockholders’ Equity
The Company recognized stock-based compensation expense within selling, general and administrative expense as follows (in thousands):
 Three months ended
 November 30, 2020November 30, 2019
Restricted stock units$31,273 $28,183 
Employee stock purchase plan2,268 2,040 
Total$33,541 $30,223 
 Three months ended
 November 30, 2019 November 30, 2018
Restricted stock units$28,183
 $15,051
Employee stock purchase plan2,040
 2,198
Total$30,223
 $17,249

AsOn October 15, 2020, the Company’s Board of November 30, 2019,Directors approved the shares available to be issued underproposed 2021 Equity Incentive Plan (the “2021 Plan”). The 2021 Plan will replace the Company’s 2011 Stock Award and Incentive Plan, were 10,494,288.which terminated on October 21, 2020. The proposed 2021 Plan will be voted on during the annual meeting of shareholders to be held on January 21, 2021.
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 both the three months ended November 30, 20192020 and 2018,2019, the Company awarded approximately 1.1 million and 1.5 million time-based restricted stock units, respectively, 0.3 million and 0.4 million performance-based restricted stock units respectively and 0.3 million and 0.4 million market-based restricted stock units, respectively.
The following represents the stock-based compensation information foras of the period indicated (in thousands):
 Three months ended
 November 30, 2019
Unrecognized stock-based compensation expense—restricted stock units$79,953
Remaining weighted-average period for restricted stock units expense1.5 years

November 30, 2020
Unrecognized stock-based compensation expense—restricted stock units$70,544 
Remaining weighted-average period for restricted stock units expense1.5 years
Common Stock Outstanding
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The following represents the common stock outstanding for the periods indicated:
 Three months ended
 November 30, 2019 November 30, 2018
Common stock outstanding:   
Beginning balances153,520,380
 164,588,172
Shares issued upon exercise of stock options13,930
 —
Shares issued under employee stock purchase plan—
 354
Vesting of restricted stock1,916,740
 1,686,163
Purchases of treasury stock under employee stock plans(530,417) (407,447)
Treasury shares purchased(1)
(2,620,277) (7,880,346)
Ending balances152,300,356
 157,986,896

Three months ended
November 30, 2020November 30, 2019
Common stock outstanding:
Beginning balances150,330,358 153,520,380 
Shares issued upon exercise of stock options0 13,930 
Vesting of restricted stock2,217,082 1,916,740 
Purchases of treasury stock under employee stock plans(601,406)(530,417)
Treasury shares purchased(1)
(1,474,464)(2,620,277)
Ending balances150,471,570 152,300,356 

(1)In September 2019, the Company’s Board of Directors authorized the repurchase of up to $600.0 million of the Company’s common stock as part of a two-year capital allocation framework (the “2020 Share Repurchase Program”). As of November 30, 2020, 7.5 million shares had been repurchased for $263.9 million and $336.1 million remains available under the 2020 Share Repurchase Program.
(1)
In September 2019, the Company’s Board of Directors authorized the repurchase of up to $600.0 million of the Company’s common stock as part of a two-year capital allocation framework (the “2020 Share Repurchase Program”). As of November 30, 2019, 2.6 million shares had been repurchased for $96.4 million and $503.6 million remains available under the 2020 Share Repurchase Program.

11. Concentration of Risk and Segment Data
Concentration of Risk
Sales of the Company’s products are concentrated among specific customers. During the three months ended November 30, 2019,2020, the Company’s 5 largest customers accounted for approximately 49%50% of its net revenue and 6568 customers accounted for approximately 90% of its net revenue. Sales to these customers were reported in the Electronics Manufacturing Services (“EMS”) and Diversified Manufacturing Services (“DMS”) operating segments.
The Company procures components from a broad group of suppliers. Some of the products manufactured by the Company require one or more components that are available from only a single source.
Segment Data
Net revenue for the operating segments is attributed to the segment in which the service is performed. An operating segment’s performance is evaluated based on its pre-tax operating contribution, or segment income. Segment income is defined as net revenue less cost of revenue, segment selling, general and administrative expenses, segment research and development expenses and an allocation of corporate manufacturing expenses and selling, general and administrative expenses. Segment income does not include amortization of intangibles, stock-based compensation expense and related charges, restructuring, severance and related charges, distressed customer charges, acquisition and integration charges, impairment on securities, loss on disposal of subsidiaries, settlement of receivables and related charges, impairment of notes receivable and related charges, restructuring of securities loss, goodwill impairment charges, business interruption and impairment charges, net, income (loss) from discontinued operations, gain (loss) on sale of discontinued operations, other expense (excluding certain components of net periodic benefit cost), interest income, interest expense, income tax expense or adjustment for net income (loss) attributable to noncontrolling interests. Transactions between operating segments are generally recorded at amounts that approximate those at which we would transact with third parties.
As of September 1, 2020, certain customers have been realigned within the Company’s operating segments. As there have been no changes to how the Company’s chief operating decision maker assesses operating performance and allocates resources, the Company’s operating segments which are the reporting segments continue to consist of the DMS and EMS segments. Customers within the automotive and transportation and smart home and appliances industries are now presented within the DMS segment. Prior period disclosures are restated to reflect the realignment.
The following table presents the Company’s revenues disaggregated by segment (in thousands):
Three months ended
November 30, 2020November 30, 2019
EMSDMSTotalEMSDMSTotal
Timing of transfer
Point in time$1,057,019 $2,239,828 $3,296,847 $1,383,752 $1,876,637 $3,260,389 
Over time2,536,028 1,999,654 4,535,682 2,375,186 1,870,123 4,245,309 
Total$3,593,047 $4,239,482 $7,832,529 $3,758,938 $3,746,760 $7,505,698 
 Three months ended
 November 30, 2019 November 30, 2018
 EMS DMS Total EMS DMS Total
Timing of transfer           
Point in time$1,390,910
 $1,869,479
 $3,260,389
 $420,661
 $2,101,651
 $2,522,312
Over time3,026,642
 1,218,667
 4,245,309
 3,082,442
 901,521
 3,983,963
Total$4,417,552
 $3,088,146
 $7,505,698
 $3,503,103
 $3,003,172
 $6,506,275
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The following table setstables set forth operating segment information (in thousands):


 Three months ended
 November 30, 2019 November 30, 2018
Segment income and reconciliation of income before income tax   
EMS$104,700
 $84,095
DMS172,615
 169,565
Total segment income$277,315
 $253,660
Reconciling items:   
Amortization of intangibles(16,140) (7,646)
Stock-based compensation expense and related charges(30,223) (17,249)
Restructuring and related charges(45,251) (6,025)
Distressed customer charge(14,963) —
Business interruption and impairment charges, net(1)
—
 2,860
Acquisition and integration charges(16,134) (8,890)
Other expense (net of periodic benefit cost)(12,997) (13,550)
Interest income5,944
 4,379
Interest expense(44,911) (42,652)
Income before income tax$102,640
 $164,887
 Three months ended
 November 30, 2020November 30, 2019
Segment income and reconciliation of income before income tax
EMS$121,978 $89,354 
DMS242,959 187,961 
Total segment income$364,937 $277,315 
Reconciling items:
Amortization of intangibles(11,455)(16,140)
Stock-based compensation expense and related charges(33,541)(30,223)
Restructuring, severance and related charges1,715 (45,251)
Distressed customer charge0 (14,963)
Acquisition and integration charges(2,113)(16,134)
Other expense (net of periodic benefit cost)(3,671)(12,997)
Interest income1,881 5,944 
Interest expense(32,346)(44,911)
Income before income tax$285,407 $102,640 
(1)Charges, net of insurance proceeds of $2.9 million for the three months ended November 30, 2018, relate to business interruption and asset impairment costs associated with damage from Hurricane Maria, which impacted our operations in Cayey, Puerto Rico.
 November 30, 2020August 31, 2020
Total assets
EMS$4,001,727 $3,233,681 
DMS6,953,659 6,641,764 
Other non-allocated assets4,314,092 4,521,971 
$15,269,478 $14,397,416 

As of November 30, 2019,2020, the Company operated in 3031 countries worldwide. Sales to unaffiliated customers are based on the Company’sCompany location that maintains the customer relationship and transacts the external sale.

The following table sets forth, for the periods indicated, foreign source revenue expressed as a percentage of net revenue:
 Three months ended
 November 30, 2019 November 30, 2018
Foreign source revenue81.8% 92.7%

Three months ended
 November 30, 2020November 30, 2019
Foreign source revenue83.6 %81.8 %
12. Restructuring, Severance and Related Charges
Following is a summary of the Company’s restructuring, severance and related charges (in thousands):
 Three months ended
 
November 30, 2019(2)
 
November 30, 2018(3)
Employee severance and benefit costs$18,781
 $5,179
Lease costs239
 9
Asset write-off costs16,316
 184
Other costs9,915
 653
Total restructuring and related charges(1)
$45,251
 $6,025
 Three months ended
 November 30, 2020November 30, 2019
Employee severance and benefit costs$568 $18,781 
Lease costs(2,873)239 
Asset write-off costs(2)16,316 
Other costs592 9,915 
Total restructuring, severance and related charges(1)
$(1,715)$45,251 
(1)Primarily relates to the 2020 Restructuring Plan, and includes $(3.0) million and $17.4 million recorded in the EMS segment, $1.0 million and $25.2 million recorded in the DMS segment and $0.3 million and $2.7 million of non-allocated charges for the three months ended November 30, 2020 and 2019, respectively. Except for asset write-off costs, all restructuring, severance and related charges are cash costs.
14
Includes $17.4 million and $4.4 million recorded in the EMS segment, $25.2 million and $1.6 million recorded in the DMS segment and $2.7 million and $0.0 million of non-allocated charges for the three months ended November 30, 2019 and 2018, 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.
TheUpon completion of the 2020 Restructuring Plan, the Company currently expects to recognize approximately $85.0 million in pre-tax restructuring and other related costs. The Company incurred $76.9 million of costs primarily over the course of the Company’sduring fiscal year 2020. This information will be subject to2020 and anticipates incurring the finalization of timetablesremaining costs during fiscal year 2021 for the transition of functions, consultation with employeesemployee severance and their representatives as well as the statutory severance requirements of the particular jurisdictions impacted,benefit costs, asset write-off costs, 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.other related costs.
The table below summarizes the Company’s liability activity, primarily associated with the 2020 Restructuring Plan
(in thousands):

Employee Severance
and Benefit Costs		Lease CostsAsset Write-off CostsOther Related CostsTotal
Balance as of August 31, 2020$8,143 $2,316 $0 $426 $10,885 
Restructuring related charges264 (2,873)(2)497 (2,114)
Asset write-off charge and other non-cash activity0 1,554 2 0 1,556 
Cash payments(4,525)(56)0 (171)(4,752)
Balance as of November 30, 2020$3,882 $941 $0 $752 $5,575 
 
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 charges18,781
 239
 16,316
 265
 35,601
Asset write-off charge and other non-cash activity(100) —
 (16,316) (1) (16,417)
Cash payments(7,624) (158) —
 (549) (8,331)
Balance as of November 30, 2019$14,219
 $2,061
 $—
 $504
 $16,784

The Company’s liability associated with the worldwide workforce reduction is $27.5 million as of November 30, 2020.
(1)
Balance as of August 31, 2019 primarily relates to the 2017 Restructuring Plan.
13. Income Taxes

Effective Income Tax Rate
The U.S. federal statutory income tax rate and the Company's effective income tax rate are as follows:
 Three months ended
 November 30,
2019		 November 30,
2018
U.S. federal statutory income tax rate21.0% 21.0%
Effective income tax rate60.3% 24.8%

Three months ended
November 30, 2020November 30, 2019
U.S. federal statutory income tax rate21.0 %21.0 %
Effective income tax rate29.6 %60.3 %
The effective income tax rate increaseddecreased for the three months ended November 30, 2019,2020, compared to the three months ended November 30, 2018,2019, primarily due to: (i) $13.3 million of tax benefitto increased income for the three months ended November 30, 2018 related to the Tax Cuts and Jobs Act of 2017 (the “Tax Act”) adjustments and (ii) increased2020, driven in part by decreased restructuring charges in tax jurisdictions with minimal related income tax benefit for the three months ended November 30, 2019.benefit.
The effective income tax rate differed from the U.S. federal statutory income tax rate of 21.0% during the three months ended November 30, 20192020 and 20182019, primarily due to: (i) losses in tax jurisdictions with existing valuation allowances;allowances and (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 ended November 30, 2018.Vietnam.

14. Earnings Per Share and Dividends
Earnings Per Share
The Company calculates its basic earnings per share by dividing net income attributable to the Company by the weighted average number of common shares outstanding during the period. The Company’s diluted earnings per share is calculated in a similar manner, but includes the effect of dilutive securities. The difference between the weighted average number of basic shares outstanding and the weighted average number of diluted shares outstanding is primarily due to dilutive unvested restricted stock unit awards (“restricted stock units”)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
15
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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
 November 30, 2019 November 30, 2018
Restricted stock units1,126
 2,157

 Three months ended
 November 30, 2020November 30, 2019
Restricted stock units1,074 1,126 
Dividends
The following table sets forth cash dividends declared by the Company to common stockholders during the three months ended November 30, 20192020 and 20182019 (in thousands, except for per share data):

Dividend
Declaration Date		Dividend
per Share		Total of Cash
Dividends
Declared		Date of Record for
Dividend Payment		Dividend Cash
Payment Date
Fiscal Year 2021:October 15, 2020$0.08 $12,417 November 16, 2020December 2, 2020
Fiscal Year 2020:October 17, 2019$0.08 $12,647 November 15, 2019December 2, 2019
 
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
Fiscal Year 2019:October 18, 2018 $0.08
 $13,226
 November 15, 2018 December 3, 2018

15. Business Acquisitions
During fiscal year 2018, the Company and Johnson & Johnson Medical Devices Companies (“JJMD”) entered into a Framework Agreement to form a strategic collaboration and expand its existing relationship. The strategic collaboration expands the Company’s medical device manufacturing portfolio, diversification and capabilities.
On February 25, 2019 and April 29, 2019,October 26, 2020, under the terms of the Framework Agreement, the Company completed the initial and second closings, respectively, of its acquisition of certain assets of JJMD. The preliminary aggregate purchase price paid for the initial and second closings was approximately $163.1 million in cash, which remains subject to certain post-closing adjustments. For the initial and second closings, total assets acquired of $169.4 million and total liabilities assumed of $6.3 million were recorded at their estimated fair values as of the acquisition dates.
On September 30, 2019, under the terms of the Framework Agreement, the Company completed the thirdfourth closing of its acquisition of certain assets of JJMD. The preliminary aggregate purchase price paid for the thirdfourth closing was approximately $106.9$18.4 million in cash, which remains subject to certain post-closing adjustments based on conditions within the Framework Agreement. For the third closing, totalTotal assets acquired of $185.0$30.6 million including $83.2 million in contract assets, $35.1 million in inventory and $55.7 million in goodwill, and total liabilities assumed of $78.1$12.2 million including $58.8 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 be deductible for income tax purposes.
The acquisition of the JJMD assets have beenwas accounted for as separatea business combinations for each closingcombination using the acquisition method of accounting. The Company is currently evaluating the fair valuesvalue of the assets and liabilities related to these business combinations.the fourth closing. The preliminary estimates and measurements are, therefore, subject to change during the measurement period for assets acquired, liabilities assumed and tax adjustments. The results of operations were included in the Company’s condensed consolidated financial results beginning on February 25, 2019October 26, 2020 for the initial closing, April 29, 2019 for the second closing and September 30, 2019 for the thirdfourth closing. The Company believes it is impracticable to provide pro forma information for the acquisition of the JJMD assets.
16. Fair Value Measurements
Fair Value Measurements on a Recurring Basis
The following table presents the fair value of the Company's financial assets and liabilities measured at fair value by hierarchy level on a recurring basis as of the periods indicated:

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(in thousands) Fair Value Hierarchy November 30, 2019 August 31, 2019
Assets:      
Cash and cash equivalents:      
Cash equivalents Level 1
(1) 
$47,257
 $27,804
Prepaid expenses and other current assets:      
Short-term investments Level 1 16,350
 14,088
Forward foreign exchange contracts:      
Derivatives designated as hedging instruments (Note 8) Level 2
(2) 
1,623
 904
Derivatives not designated as hedging instruments (Note 8) Level 2
(2) 
14,240
 6,878
Other assets:      
Senior Non-Convertible Preferred Stock Level 3
(3) 
25,200
 33,102
Liabilities:      
Accrued expenses:      
Forward foreign exchange contracts:      
Derivatives designated as hedging instruments (Note 8) Level 2
(2) 
$3,357
 $15,999
Derivatives not designated as hedging instruments (Note 8) Level 2
(2) 
13,154
 55,391
Interest rate swaps:      
Derivatives designated as hedging instruments (Note 8) Level 2
(4) 
4,319
 5,918
Other liabilities:      
Forward interest rate swaps:      
Derivatives designated as hedging instruments (Note 8) Level 2
(4) 
28,784
 35,045
(in thousands)Fair Value HierarchyNovember 30, 2020August 31, 2020
Assets:
Cash and cash equivalents:
Cash equivalentsLevel 1(1)$24,894 $33,869 
Prepaid expenses and other current assets:
Short-term investmentsLevel 117,220 16,556 
Forward foreign exchange contracts:
Derivatives designated as hedging instruments (Note 8)Level 2(2)24,094 11,201 
Derivatives not designated as hedging instruments (Note 8)Level 2(2)104,364 58,893 
Liabilities:
Accrued expenses:
Forward foreign exchange contracts:
Derivatives designated as hedging instruments (Note 8)Level 2(2)$722 $1,522 
Derivatives not designated as hedging instruments (Note 8)Level 2(2)6,540 9,100 
Interest rate swaps:
Derivatives not designated as hedging instruments (Note 8)Level 2(3)1,663 540 
Extended interest rate swap not designated as a hedging instrument (Note 8)Level 2(4)25,259 26,492 
Other liabilities:
Interest rate swaps:
Derivatives not designated as hedging instruments (Note 8)Level 2(3)947 329 
Extended interest rate swap not designated as a hedging instrument (Note 8)Level 2(4)12,425 13,111 
Forward interest rate swaps:
Derivatives designated as hedging instruments (Note 8)Level 2(3)1,241 0 
(1)Consist of investments that are readily convertible to cash with original maturities of 90 days or less.
(2)The Company’s forward foreign exchange contracts are measured on a recurring basis at fair value, based on foreign currency spot rates and forward rates quoted by banks or foreign currency dealers.
(3)Fair value measurements are based on the contractual terms of the derivatives and use observable market-based inputs. The interest rate swaps are valued using a discounted cash flow analysis on the expected cash flows of each derivative using observable inputs including interest rate curves and credit spreads.
(4)The 2020 Extended Interest Rate Swaps are considered a hybrid instrument and the Company elected the fair value option for reporting. Fair value measurements are based on the contractual terms of the contract and use observable market-based inputs. The interest rate swaps are valued using a discounted cash flow analysis of the expected cash flows using observable inputs including interest rate curves and credit spreads.
Assets Held for Sale
The following table presents the assets held for sale (in thousands):
November 30, 2020August 31, 2020
(in thousands)Carrying AmountCarrying Amount
Assets held for sale (1)
$66,180 $67,380 
(1)
Consist of investments that are readily convertible to cash with original maturities of 90 days or less.
(2)
(1)The fair value of assets held for sale exceeds the carrying value for $30.1 million of assets held for sale. For $36.1 million of assets held for sale, the carrying value approximates the fair value with the asset value measured using Level 2 inputs.
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 November 30, 2019 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.
Fair Value of Financial Instruments
The carrying amounts of cash and cash equivalents, trade accounts receivable, prepaid expenses and other current assets, accounts payable and accrued expenses approximate fair value because of the short-term nature of these financial instruments. The carrying amounts of borrowings under credit facilities and under loans approximates fair value as interest rates on these instruments approximates current market rates.
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Table of Contents
Notes payable and long-term debt is carried at amortized cost; however, the Company estimates the fair values of notes payable and long-term debt for disclosure purposes. The following table presents the carrying amounts and fair values of the Company's notes payable and long-term debt, by hierarchy level as of the periods indicated:
    November 30, 2019 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) 
$399,109
 $413,664
 $398,886
 $416,000
4.700% Senior Notes Level 2
(1) 
498,169
 529,660
 498,004
 525,890
4.900% Senior Notes Level 3
(2) 
299,118
 321,399
 299,057
 318,704
3.950% Senior Notes Level 2
(1) 
494,978
 517,275
 494,825
 509,845
November 30, 2020August 31, 2020
(in thousands)Fair Value HierarchyCarrying AmountFair ValueCarrying AmountFair Value
Notes payable and long-term debt: (Note 5)
4.700% Senior NotesLevel 2(1)$498,823 $535,080 $498,659 $537,180 
4.900% Senior NotesLevel 3(2)299,361 328,810 299,300 329,435 
3.950% Senior NotesLevel 2(1)495,594 561,005 495,440 551,930 
3.600% Senior NotesLevel 2(1)494,896 553,710 494,756 536,110 
3.000% Senior NotesLevel 2(1)590,400 629,262 590,162 611,616 
(1)(1)
The fair value estimates are based upon observable market data.

(2)
This fair value estimate is based on the Company’s indicative borrowing cost derived from discounted cash flows.
Refer to Note 7 - “Postretirement and Other Employee Benefits” for disclosure surrounding the fair value ofestimates are based upon observable market data.
(2)This fair value estimate is based on the Company’s pension plan assets.indicative borrowing cost derived from discounted cash flows.


17. 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.
18. New Accounting Guidance
Recently Adopted Accounting Guidance
During fiscal year 2016, the FASB issued a new accounting standard revising lease accounting, which requires the Company to recognize right-of-use assets and lease liabilities on the 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 2020. Refer to Note 4 - “Leases” to the Condensed Consolidated Financial Statements for further details.
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 became effective for the Company beginning in the first quarter of fiscal year 2020. The guidance was applied using a 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.
Recently Issued Accounting Guidance
During fiscal year 2016, the FASB issued an accounting standard, which replaces the existing incurred loss impairment methodologymodel with a methodology that reflectsan expected credit lossesloss model and requires consideration of a broader range of reasonable and supportable informationfinancial asset measured at amortized cost to inform credit loss estimates. Thisbe presented at the net amount expected to be collected. The Company adopted the guidance is effective for the Company beginning induring the first quarter of fiscal year 2021. This guidance must be applied usingThe adoption of this standard did not have a modified retrospective or prospective transition method, dependingmaterial impact on the area covered by this accounting standard. The Company is currently assessing the impact this new standard may have on itsCompany’s Consolidated Financial Statements.

During fiscal year 2018, the FASB issued a new accounting standard which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. This guidance is effective for the Company beginning in the first quarter of fiscal year 2021. The Company is currently assessingadoption of this standard did not have a material impact on the impact this new standard may have on itsCompany’s Consolidated Financial Statements.
Recently Issued Accounting Guidance
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.

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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 on Form 10-Q contains certain statements that are, or may be deemed to be, forward-looking statements, within the meaning of Section 27Athe Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties. Many of the Securities Actforward-looking statements are located in Item 2 of 1933,this Form 10-Q under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Forward-looking statements can also be identified by words such as amended (the “Securities Act”)“future,” “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “will,” “would,” “should,” “could,” “can,” “may,” and Section 21Esimilar terms. Forward-looking statements are not guarantees of future performance and the Company’s actual results may differ significantly from the results discussed in the forward-looking statements. Achievement of anticipated results is subject to substantial risks, uncertainties and inaccurate assumptions. Should known or unknown risks or uncertainties materialize, or should underlying assumptions prove inaccurate, actual results could vary materially from past results and those anticipated, estimated or projected. You should bear this in mind as you consider forward-looking statements, and you are cautioned not to put undue reliance on forward-looking statements. We undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law or by the rules and regulations of the Securities Exchange ActSEC. You are advised, however, to consult any further disclosures we make on related subjects. Factors that might cause such differences include, but are not limited to, those discussed in Part I, Item 1A of 1934,the Company’s Annual Report on Form 10-K for the year ended August 31, 2020 such 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,the scope and other similar statements).We make certain assumptions when making forward-looking statements, anyduration of which could prove inaccurate, including assumptions aboutthe COVID-19 outbreak and its impact on our future operating resultsoperations, sites, customers 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:supply chain; managing growth effectively; our dependence on a limited number of customers; competitive challenges affecting our customers; managing rapid declines or increases in customer demand and other related customer challenges that may occur; risks arising from relationships with emerging companies; changes in technology; the occurrenceour ability to introduce new business models or programs requiring implementation of success and expected financial results from, product ramps;new competencies; competition; transportation issues; our ability to maintain our engineering, technological and improve costs, quality and delivery for our customers;manufacturing expertise; retaining key personnel; our ability to purchase components efficiently and reliance on a limited number of suppliers for critical components; risks associated with international sales and operations; our ability to achieve expected profitability from acquisitions; risk arising from our restructuring activities; performanceissues involving our information systems, including security issues; regulatory risks (including the expense of complying, or failing to comply, with applicable regulations; risk arising from design or manufacturing defects; and intellectual property risk); financial risks (including customers or suppliers who become financially troubled; turmoil in the markets in which we operate;financial markets; tax risks; credit rating risks; risks of exposure to debt; currency fluctuations; energy prices; and adverseasset impairment); changes in political conditions, in the U.S.financial accounting standards or policies; 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 descriptionrisk of various risks, factors and uncertainties that could cause future resultsnatural disaster, climate change 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 Form 10-K for the fiscal year ended August 31, 2019, any subsequent reports on Form 10-Q and Form 8-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 includedglobal events. References in this Quarterly Report on Form 10-Q are made only asreport to “the Company,” “Jabil,” “we,” “our,” or “us” mean Jabil Inc. together with its subsidiaries, except where the context otherwise requires.
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Table of the date of this Quarterly Report on Form 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.


Contents
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 encompass the act of producing tangible components that are built to customer specifications 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 three months ended November 30, 2019, our largest customers include Amazon.com, Inc., Apple, Inc., Cisco Systems, Inc., GoPro, Inc., Hewlett-Packard Company, Ingenico Group, Johnson and Johnson, LM Ericsson Telephone Company, NetApp, Inc. and SolarEdge Technologies Inc..

We conduct our operations in facilities that are located worldwide, including but not limited to, China, Ireland, Malaysia, Mexico, Singapore, and the United States.States and Vietnam. We derived a substantial majority, 81.8%83.6% of net revenue from our international operations for the three months ended November 30, 2019.2020. 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 a high volume business that produces product at a quicker rate (i.e. cycle time) and in larger quantities and includes customers primarily in the automotive5G, wireless and transportation, capital equipment, cloud, computing and storage, defense and aerospace, industrial and energy, networking and telecommunications,digital print and retail, industrial and smart homesemi-cap, and appliancesnetworking and storage industries. Our DMS segment is focused on providing engineering solutions, with an emphasis on material sciences, technologies and healthcare. Our DMS includes customers primarily in the edgeautomotive and transportation, connected devices, and accessories, healthcare mobility and packaging, and mobility industries.

As of September 1, 2020, certain customers have been realigned within our operating segments. Our operating segments, which are the reporting segments, continue to consist of the DMS and EMS segments. Customers within the automotive and transportation and smart home and appliances industries are now presented within the DMS segment. Prior period disclosures are restated to reflect the realignment.

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

COVID-19

The COVID-19 pandemic, which began to impact us in January 2020, has continued to affect our business and the businesses of our customers and suppliers. Travel and business operation restrictions arising from virus containment efforts of governments around the world have continued to impact our operations in Asia, Europe and the Americas. Essential activity exceptions from these restrictions have allowed us to continue to operate. Nevertheless, virus containment efforts have resulted in additional direct costs and a reduction in revenue in certain end markets.

Additionally, certain of the Company’s suppliers were similarly impacted by the COVID-19 pandemic, leading to supply chain constraints, including difficulty sourcing materials necessary to fulfill customer production requirements and challenges in 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 impacted by COVID-19 and will continue to have an impact on our operations over the fiscal year and likely beyond.

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See “Risk Factors” contained in our Annual Report on Form 10-K for the fiscal year ended August 31, 2020, “The effect of COVID-19 on our operations and the operations of our customers, suppliers and logistics providers has, and is expected to continue to have, a material and adverse impact on our financial condition and results of operations.”
Summary of Results
The following table sets forth, for the three months ended November 30, 2019 and 2018,periods indicated, certain key operating results and other financial information (in thousands, except per share data):
Three months ended Three months ended
November 30, 2019 November 30, 2018 November 30, 2020November 30, 2019
Net revenue$7,505,698
 $6,506,275
Net revenue$7,832,529 $7,505,698 
Gross profit$553,839
 $519,650
Gross profit$634,560 $553,839 
Operating income$152,779
 $216,710
Operating income$313,950 $152,779 
Net income attributable to Jabil Inc.$40,422
 $123,600
Net income attributable to Jabil Inc.$200,442 $40,422 
Earnings per share—basic$0.26
 $0.77
Earnings per share—basic$1.33 $0.26 
Earnings per share—diluted$0.26
 $0.76
Earnings per share—diluted$1.31 $0.26 
Key Performance Indicators

Management regularly reviews financial and non-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
November 30, 2020August 31, 2020November 30, 2019August 31, 2019May 31, 2019February 28, 2019
Sales cycle(1)
16 days16 days23 days19 days27 days25 days
Inventory turns (annualized)(2)
7 turns6 turns6 turns6 turns6 turns
Days in accounts receivable(3)
42 days35 days43 days38 days39 days38 days
Days in inventory(2)(4)
55 days56 days57 days58 days64 days65 days
Days in accounts payable(5)
80 days75 days77 days77 days76 days78 days
(1)
(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 was a direct result of changes in these indicators.
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)
Inventory turns and days in inventory are calculated based on inventory and contract asset balances.
(3)
During the three months ended November 30, 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 higher sales and timing of collections.
(4)
During the three months ended August 31, 2019, the decrease in days in inventory from the prior sequential quarter was primarily due to increased sales activity during the quarter.
(5)
During the three months ended May 31, 2019, the decrease in days in accounts payable from the prior sequential quarter was primarily due to timing of purchases and cash payments for purchases during the quarter.

(2)Inventory turns (annualized) are calculated 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 November 30, 2020, the increase in days in accounts receivable from the prior sequential quarter was primarily due to an increase in accounts receivable, primarily driven by higher sales and timing of collections.
(4)Days in inventory is calculated as inventory and contract assets divided by cost of revenue multiplied by 90 days.
(5)Days in accounts payable is calculated as accounts payable divided by cost of revenue multiplied by 90 days. During the three months ended November 30, 2020, the increase in days in accounts payable from the prior sequential quarter was primarily due to an increase for material purchases during the quarter and the timing of payments.
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 an on-going basis, we evaluate our estimates and assumptions based upon historical experience and various other factors and
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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 Form 10-K for the fiscal year ended August 31, 2019.2020.
Recent Accounting Pronouncements
See Note 18 – “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; 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  
(dollars in millions)November 30, 2019 November 30, 2018 Change
Net revenue$7,505.7
 $6,506.3
 15.4%

Three months ended
(dollars in millions)November 30, 2020November 30, 2019Change
Net revenue$7,832.5 $7,505.7 4.4 %
Net revenue increased during the three months ended November 30, 2019,2020, compared to the three months ended November 30, 2018.2019. Specifically, the EMSDMS segment revenues increased 26% primarily13% due to (i) a 27%7% increase in revenues from existing customers within our cloudmobility business, (ii) a 3% increase in revenues from existing customers within our print and retailconnected devices business, (iii) a 2% increase in revenues from existing customers within our automotive and transportation business and (iv) a 2% increase in revenues spread across various industries within the EMS segment. The increase is partially offset by (i) a 6% decrease from existing customers within our networking and telecommunications business and (ii) a 2% decrease from existing customers within our computing and storage business and our capital equipment business, which we expect to remain weak into the second half of calendar year 2020. DMS segment revenues increased 3% due to a 12% increase in revenues from new and existing customers in our healthcare and packaging businesses.businesses, and (iv) a 1% increase in revenues from other business. The increase is partially offset byEMS segment revenues decreased 4% primarily due to a 9% decrease in revenuerevenues from existing customers within our mobility and edge devices and accessories businesses ascloud business, which began transitioning to a result of decreased end user product demand and end market dynamics.consignment model in fiscal year 2021.
The following table sets forth, for the periods indicated, revenue by segment expressed as a percentage of net revenue:
Three months ended Three months ended
November 30, 2019 November 30, 2018 November 30, 2020November 30, 2019
EMS59% 54%EMS46 %50 %
DMS41% 46%DMS54 %50 %
Total100% 100%Total100 %100 %
The following table sets forth, for the periods indicated, foreign source revenue expressed as a percentage of net revenue:
Three months ended
November 30, 2020November 30, 2019
Foreign source revenue83.6 %81.8 %
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 Three months ended
 November 30, 2019 November 30, 2018
Foreign source revenue81.8% 92.7%
Gross Profit
Three months ended
(dollars in millions)November 30, 2020November 30, 2019
Gross profit$634.6 $553.8 
Percent of net revenue8.1 %7.4 %
 Three months ended
(dollars in millions)November 30, 2019 November 30, 2018
Gross profit$553.8
 $519.7
Percent of net revenue7.4% 8.0%

For the three months ended November 30, 2019, gross profit for our EMS segment decreased as a percent of net revenue due to product mix and continued weakness in the capital equipment business. This decrease was partially offset by an increase in2020, gross profit as a percentpercentage of net revenue in our DMS segment due to improved profitability across the various businesses.
Selling, General and Administrative
 Three months ended  
(dollars in millions)November 30, 2019 November 30, 2018 Change
Selling, general and administrative$328.9
 $278.1
 $50.8
Selling, general and administrative expenses increased during the three months ended November 30, 2019,as compared to the three months ended November 30, 2018.2019. The increase is primarily due to product mix and improved profitability across the various businesses.
Selling, General and Administrative
Three months ended
(dollars in millions)November 30, 2020November 30, 2019Change
Selling, general and administrative$302.8 $328.9 $(26.1)
Selling, general and administrative expenses decreased during the three months ended November 30, 2020, compared to the three months ended November 30, 2019. The decrease is predominantly due toto: (i) a $30.6$24.4 million increasedecrease in salary and salary related expenses due to the fiscal year 2020 worldwide workforce reduction and other costs primarilylower travel expenses related to support new business growtha decrease in travel due to the COVID-19 pandemic and development and our strategic collaboration with a healthcare company, (ii) a $7.2$14.0 million increasedecrease in acquisition and integration charges related to our strategic collaboration with a healthcare companycompany. The decrease is partially offset by (i) a $9.0 million increase in costs related to the COVID-19 pandemic, including personal protection equipment for our employees globally and (iii)(ii) a $13.0$3.3 million increase in stock-based compensation expense primarily driven by an appreciation in our stock price during the three months ended November 30, 2019.expense.
Research and Development

 Three months ended
(dollars in millions)November 30, 2019 November 30, 2018
Research and development$10.8
 $11.1
Percent of net revenue0.1% 0.2%
Three months ended
(dollars in millions)November 30, 2020November 30, 2019
Research and development$8.1 $10.8 
Percent of net revenue0.1 %0.1 %
Research and development expenses remained relatively consistent as a percentage of net revenue during the three months ended November 30, 2019,2020, compared to the three months ended November 30, 2018.2019.
Amortization of Intangibles
 Three months ended  
(dollars in millions)November 30, 2019 November 30, 2018 Change
Amortization of intangibles$16.1
 $7.6
 $8.5
Three months ended
(dollars in millions)November 30, 2020November 30, 2019Change
Amortization of intangibles$11.5 $16.1 $(4.6)
Amortization of intangibles increaseddecreased during the three months ended November 30, 2019,2020, compared to the three months ended November 30, 2018,2019, primarily driven by amortization relateddue to the Nypro trade name, which was reclassified to a definite-livedcertain intangible assetassets that were fully amortized during the fourth quarter of fiscal year 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.2020.
Restructuring, Severance and Related Charges
Following is a summary of the Company’s restructuring, severance and related charges (in millions):
  Three months ended
  
November 30, 2019(2)
 
November 30, 2018(3)
Employee severance and benefit costs $18.8
 $5.2
Lease costs 0.3
 —
Asset write-off costs 16.3
 0.2
Other costs 9.9
 0.6
Total restructuring and related charges(1)
 $45.3
 $6.0
 Three months ended
 November 30, 2020November 30, 2019
Employee severance and benefit costs$0.6 $18.8 
Lease costs(2.9)0.3 
Asset write-off costs— 16.3 
Other costs0.6 9.9 
Total restructuring, severance and related charges(1)
$(1.7)$45.3 
(1)(1)
Includes $17.4 million and $4.4 million recorded in the EMS segment, $25.2 million and $1.6 million recorded in the DMS segment and $2.7 million and $0.0 million of non-allocated charges for the three months ended November 30, 2019 and 2018, 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, our Board of Directors formally approved a restructuring plan to realign our global capacity support infrastructure, particularly in our 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 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 expendituresand includes $(3.0) million and $17.4 million recorded in the rangeEMS segment, $1.0 million and $25.2 million recorded in the DMS segment and $0.3 million and $2.7 million of approximately $30.0 million to $40.0 million that will be payable overnon-allocated charges for the course of our fiscal yearsthree months ended November 30, 2020 and 2021. The exact timing2019, respectively. Except for asset write-off costs, all restructuring, severance and related charges are cash costs.
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Table 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.Contents
The 2020 Restructuring Plan, once complete, is expected to yield annualized cost savings beginning in fiscal year 2021 of approximately $40.0 million. We expect cost savings of $25.0 million during fiscal year 2020.

See Note 12 – “Restructuring, Severance and Related Charges” to the Condensed Consolidated Financial Statements for further discussion of restructuring, severance and related charges for the 2020 Restructuring Plan.
Other (Income) Expense
 Three months ended  
(dollars in millions)November 30, 2019 November 30, 2018 Change
Other expense$11.2
 $13.6
 $(2.4)
Three months ended
(dollars in millions)November 30, 2020November 30, 2019Change
Other (income) expense$(1.9)$11.2 $(13.1)
Other (income) expense decreased for the three months ended November 30, 2019,2020, compared to the three months ended November 30, 2018,2019, primarily due to: (i) $2.3$7.6 million related to a decrease in fees associated with thelower utilization of 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 (ii) $1.7$3.9 million related to lower net periodic benefit costs. The decrease was partially offset bycosts and (iii) $1.6 million ofarising from a reduction in other expense.
Interest Income
 Three months ended  
(dollars in millions)November 30, 2019 November 30, 2018 Change
Interest income$5.9
 $4.4
 $1.5
Three months ended
(dollars in millions)November 30, 2020November 30, 2019Change
Interest income$1.9 $5.9 $(4.0)
Interest income remained relatively consistentdecreased during the three months ended November 30, 2019,2020, compared to the three months ended November 30, 2018.2019, primarily due to lower interest rates on cash equivalents (investments that are readily convertible to cash with maturity dates of 90 days or less).
Interest Expense
 Three months ended  
(dollars in millions)November 30, 2019 November 30, 2018 Change
Interest expense$44.9
 $42.7
 $2.2
Three months ended
(dollars in millions)November 30, 2020November 30, 2019Change
Interest expense$32.3 $44.9 $(12.6)
Interest expense increaseddecreased during the three months ended November 30, 2019,2020, compared to the three months ended November 30, 2018,2019 due to additionallower interest rates and lower borrowings on our credit facilities and commercial paper program, partially offset by lower interest rates.program.
Income Tax Expense
 Three months ended  
 November 30, 2019 November 30, 2018 Change
Effective income tax rate60.3% 24.8% 35.5%
Three months ended
November 30, 2020November 30, 2019Change
Effective income tax rate29.6 %60.3 %(30.7)%
The effective income tax rate increaseddecreased for the three months ended November 30, 2019,2020, compared to the three months ended November 30, 2018,2019, primarily due to: (i) $13.3 million of tax benefitto increased income for the three months ended November 30, 2018 related to the Tax Cuts and Jobs Act of 2017 (the “Tax Act”) adjustments and (ii) increased2020, driven in part by decreased restructuring charges in tax jurisdictions with minimal related income tax benefit for the three months ended November 30, 2019.benefit.
Non-GAAP (Core) Financial Measures
The following discussion and analysis of our financial condition and results of operations include certain non-GAAP financial measures as identified in the reconciliations below. The non-GAAP financial measures disclosed herein do not have standard meaning and may vary from the non-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 inferenceindication by us that our future results will be unaffected by those items that are excluded from our “core” financial measures.

Management believes that the non-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, severance 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 impairmentloss 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 uses non-GAAP “core” financial measures to make operating decisions, assess business performance and as a factor in determining certain employee performance when evaluating incentive compensation.
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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 the pre-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 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, severance 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 a non-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 these non-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 are reconciliations of the non-GAAP financial measures to the most directly comparable U.S. GAAP financial measures as provided in our Condensed Consolidated Financial Statements:
Reconciliation of U.S. GAAP Financial Results to Non-GAAP Measures

 Three months ended
(in thousands, except for per share data)November 30, 2019 November 30, 2018
Operating income (U.S. GAAP)$152,779
 $216,710
Amortization of intangibles16,140
 7,646
Stock-based compensation expense and related charges30,223
 17,249
Restructuring and related charges45,251
 6,025
Distressed customer charge (1)
14,963
 —
Net periodic benefit cost (2)
1,825
 —
Business interruption and impairment charges, net(3)
—
 (2,860)
Acquisition and integration charges(4)
16,134
 8,890
Adjustments to operating income124,536
 36,950
Core operating income (Non-GAAP)$277,315
 $253,660
Net income attributable to Jabil Inc. (U.S. GAAP)$40,422
 $123,600
Adjustments to operating income124,536
 36,950
Net periodic benefit cost(2)
(1,825) —
Adjustments for taxes(5)
497
 (13,743)
Core earnings (Non-GAAP)$163,630
 $146,807
Diluted earnings per share (U.S. GAAP)$0.26
 $0.76
Diluted core earnings per share (Non-GAAP)$1.05
 $0.90
Diluted weighted average shares outstanding used in the calculation of earnings per share (U.S. GAAP and Non-GAAP)156,462
 163,670
 Three months ended
(in thousands, except for per share data)November 30, 2020November 30, 2019
Operating income (U.S. GAAP)$313,950 $152,779 
Amortization of intangibles11,455 16,140 
Stock-based compensation expense and related charges33,541 30,223 
Restructuring, severance and related charges(1,715)45,251 
Distressed customer charge (1)
— 14,963 
Net periodic benefit cost (2)
5,593 1,825 
Acquisition and integration charges (3)
2,113 16,134 
Adjustments to operating income50,987 124,536 
Core operating income (Non-GAAP)$364,937 $277,315 
Net income attributable to Jabil Inc. (U.S. GAAP)$200,442 $40,422 
Adjustments to operating income50,987 124,536 
Net periodic benefit cost (2)
(5,593)(1,825)
Adjustments for taxes(595)497 
Core earnings (Non-GAAP)$245,241 $163,630 
Diluted earnings per share (U.S. GAAP)$1.31 $0.26 
Diluted core earnings per share (Non-GAAP)$1.60 $1.05 
Diluted weighted average shares outstanding (U.S. GAAP and Non-GAAP)152,918 156,462 
(1)Relates to accounts receivable and inventory charges for certain distressed customers in the renewable energy sector during the three months ended November 30, 2019.
(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 related to our strategic collaboration with Johnson & Johnson Medical Devices Companies (“JJMD”).
25

(1)
Charges relate to accounts receivable and inventory charges for certain distressed 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 $2.9 million for the three months ended November 30, 2018, relate to business interruptions and asset impairment costs associated with damage from Hurricane Maria, which impacted our operations in Cayey, Puerto Rico.
(4)
Charges related to our strategic collaboration with Johnson & Johnson Medical Devices Companies (“JJMD”).
(5)
The three months ended November 30, 2018 includes a $13.3 million income tax benefit for the effects of the Tax Act.

Adjusted Free Cash Flow
 Three months ended
 (in thousands)November 30, 2020November 30, 2019
Net cash provided by operating activities (U.S. GAAP)$65,460 $20,944 
Acquisition of property, plant and equipment(352,881)(230,393)
Proceeds and advances from sale of property, plant and equipment110,792 23,209 
Adjusted free cash flow (Non-GAAP)$(176,629)$(186,240)
 Three months ended
 (in thousands)November 30, 2019 
November 30, 2018(1)
Net cash provided by (used in) operating activities (U.S. GAAP)$20,944
 $(91,693)
Cash receipts on sold receivables—
 96,846
Acquisition of property, plant and equipment(230,393) (231,513)
Proceeds and advances from sale of property, plant and equipment23,209
 10,227
Adjusted free cash flow (Non-GAAP)$(186,240) $(216,133)
(1)
In fiscal year 2019, the 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 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 all prior periods.


Acquisitions and Expansion
During fiscal year 2018, the Company and Johnson & Johnson Medical Devices Companies (“JJMD”)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,October 26, 2020, under the terms of the Framework Agreement, we completed the initial and second closings, respectively, of our acquisition of certain assets of JJMD. The preliminary aggregate purchase price paid for the initial and second closings was approximately $163.1 million in cash, which remains subject to certain post-closing adjustments. For the initial and second closings, total assets acquired of $169.4 million and total liabilities assumed of $6.3 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 thirdfourth closing of our acquisition of certain assets of JJMD. The preliminary aggregate purchase price paid for the thirdfourth closing was approximately $106.9$18.4 million in cash, which remains subject to certain post-closing adjustments based on conditions within the Framework Agreement. For the third closing, totalTotal assets acquired of $185.0$30.6 million including $83.2 million in contract assets, $35.1 million in inventory and $55.7 million in goodwill, and total liabilities assumed of $78.1$12.2 million including $58.8 million of pension obligations, were recorded at their estimated fair values as of the acquisition dates. 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 be deductible for income tax purposes.date.
The acquisition of the JJMD assets have beenwas accounted for as separatea business combinations for each closingcombination using the acquisition method of accounting. We areThe Company is currently evaluating the fair values of the assets and liabilities related to these business combinations.the fourth closing. The preliminary estimates and measurements are, therefore, subject to change during the measurement period for assets acquired, liabilities assumed and tax adjustments. The results of operations were included in our consolidated financial results beginning on February 25, 2019October 26, 2020 for the initial closing, April 29, 2019 for the second closing and September 30, 2019 for the thirdfourth 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, any share repurchases under the approved share repurchase programs,program, any potential acquisitions and our working capital requirements for the next 12 months. We continue to assess our capital structure and evaluate the merits of redeploying available cash to reduce existing debt or repurchase common stock.

cash.
Cash and Cash Equivalents
As of November 30, 2019,2020, we had approximately $719.8 million$1.1 billion 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. Most of our cash and cash equivalents as of November 30, 20192020 could be repatriated to the United States without potential tax consequences.expense.
Notes Payable and Credit Facilities
Following is a summary of principal debt payments and debt issuance for our notes payable and credit facilities:

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(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, 2019$398,886
 $498,004
 $299,057
 $494,825
 $—
 $805,693
 $2,496,465
Borrowings—
 —
 —
 —
 1,779,801
 —
 1,779,801
Payments—
 —
 —
 —
 (1,779,801) (6,321) (1,786,122)
Other223
 165
 61
 153
 —
 149
 751
Balance as of November 30, 2019$399,109
 $498,169
 $299,118
 $494,978
 $—
 $799,521
 $2,490,895
Maturity DateDec 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 
$2.6 billion(1)
 $851.7 million  
(in thousands)4.700%
Senior
Notes		4.900%
Senior
Notes		3.950%
Senior
Notes		3.600% Senior Notes3.000% Senior Notes
Borrowings
under
revolving
credit
facilities(1)
Borrowings
under
loans		Total notes
payable
and
credit
facilities
Balance as of August 31, 2020$498,659 $299,300 $495,440 $494,756 $590,162 $— $350,165 $2,728,482 
Borrowings— — — — — 200,000 200,000 
Payments— — — — — (200,000)(72)(200,072)
Other164 61 154 140 238 — 33 790 
Balance as of November 30, 2020$498,823 $299,361 $495,594 $494,896 $590,400 $— $350,126 $2,729,200 
Maturity DateSep 15, 2022Jul 14, 2023Jan 12, 2028Jan 15, 2030Jan 15, 2031Apr 23, 2021, Jan 22, 2023 and Jan 22, 2025Jan 22, 2025
Original Facility/ Maximum Capacity$500.0 million$300.0 million$500.0 million$500.0 million$600.0 million
$3.8 billion(1)
$351.9 million
(1)
(1)As of November 30, 2020, we had $3.8 billion in available unused borrowing capacity under our revolving credit facilities. The Revolving Credit Facility under the Credit Facility acts as the back-up facility for commercial paper outstanding, if any. We have a borrowing capacity of up to $1.8 billion under our commercial paper program.
As of November 30, 2019, we had $2.6 billion in available unused borrowing capacity under our revolving credit facilities. The revolving credit facility supports commercial paper outstanding, if any. We have a borrowing capacity of up to $1.8 billion under our commercial paper program.
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 November 30, 2019,2020 and August 31, 2020, we were in compliance with our debt covenants. Refer to Note 54 – “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 special purpose entities, which in turn sell certain of the receivables under the foreign asset-backed receivablesprogram to an unaffiliated financial institution and a conduit administered by an unaffiliated financial institution and certain of the receivables under the North American asset-backed receivablesprogram to conduits administered by an unaffiliated financial institution on a monthly basis.
The foreign asset-backed securitization program contains a guarantee of payment by the special purpose entity, in an amount approximately equal to the net cash proceeds under the program. No liability has been recorded for obligations under the guarantee as of November 30, 2019.2020.
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 November 30, 2019.2020.
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)
(1)Maximum amount available at any one time.
Maximum amount available at any one time.
In connection with our asset-backed securitization programs, during the three months ended November 30, 2019,2020, we sold $1.2 billion of trade accounts receivable of and we received cash proceeds of $1.2 billion. As of November 30, 2019,2020, we had up to $4.0$6.3 million in available liquidity under our asset-backed securitization programs.

Our asset-backed securitization programs contain various financial and nonfinancial covenants. As of November 30, 20192020 and August 31, 2019,2020, we were in compliance with all covenants under our asset-backed securitization programs. Refer to Note 2
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5 – “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 (10)
Maximum
Amount
(in millions)(1)
  Type of
Facility		 Expiration
Date
A$800.0
  Uncommitted 
August 31, 2022(2)
B$150.0
  Uncommitted 
November 30, 2020(3)
C800.0
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, 2020(5)
G$50.0
  Uncommitted 
February 23, 2023(2)
H$100.0
  Uncommitted 
August 10, 2020(6)
I$100.0
  Uncommitted 
July 21, 2020(7)
J$740.0
  Uncommitted 
February 28, 2020(8)
K$110.0
  Uncommitted 
April 11, 2020(9)
(1)Program
Maximum amount available at any one time.
Amount
(in millions)(1)
Type of
Facility		Expiration
Date
A$600.0 Uncommitted
December 5, 2021(2)
B$150.0 UncommittedNovember 30, 2021
C400.0 CNYUncommittedAugust 31, 2023
D$150.0 Uncommitted
May 4, 2023(3)
E$150.0 Uncommitted
January 25, 2021(4)
F$50.0 Uncommitted
February 23, 2023(5)
G$100.0 Uncommitted
August 10, 2021(6)
H$100.0 Uncommitted
July 21, 2021(7)
I$650.0 Uncommitted
December 4, 2021(8)
J$135.0 Uncommitted
April 11, 2021(9)
K100.0 CHFUncommitted
December 5, 2021(2)
(2)
Any party may elect to terminate the agreement upon 15 days prior notice.
(3)
(1)Maximum amount of trade accounts receivable that may be sold under a facility at any one time.
(2)The program will be automatically extended through December 5, 2025 unless either party provides 30 days notice of termination.
(3)Any party may elect to terminate the agreement upon 30 days prior notice.
(4)The program will be automatically extended through January 25, 2023 unless either party provides 30 days notice of termination.
(5)Any party may elect to terminate the agreement upon 15 days prior notice.
(6)The program will be automatically extended through August 10, 2023 unless either party provides 30 days notice of termination.
(7)The program will be automatically extended through August 21, 2023 unless either party provides 30 days notice of termination.
(8)The program will be automatically extended through December 5, 2024 unless either party provides 30 days notice of termination.
(9)The program will be automatically extended through April 11, 2025 unless either party provides 30 days notice of termination.
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)
As of the date of this filing, program J is no longer being utilized as it has been replaced with a new $500.0 million program (see footnote 10 below for details).
(9)
The program will be automatically extended each year through April 11, 2025 unless either party provides 30 days notice of termination.
(10)
We entered into two new trade accounts receivable sale programs on December 5, 2019 with maximum amounts of $500.0 million and CHF 100.0 million, respectively.
During the three months ended November 30, 2019,2020, we sold $2.0accounts receivable of and received cash proceeds of $1.3 billion of trade accounts receivable under these programs and we received cash proceeds of $2.0 billion.programs. As of November 30, 2019,2020, we had up to $1.4$1.8 billion in available liquidity under our trade accounts receivable sale programs.
Capital Expenditures
For fiscal year 2020,Fiscal Year 2021, we anticipate our net capital expenditures will be approximately $800.0 million. OurIn general, our capital expenditures will support ongoing maintenance in our DMS and EMS segments and investments in newcapabilities and targeted end 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):

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Three months ended
Three months endedNovember 30, 2020November 30, 2019
November 30, 2019 November 30, 2018
Net cash provided by (used in) operating activities$20,944
 $(91,693)
Net cash provided by operating activitiesNet cash provided by operating activities$65,460 $20,944 
Net cash used in investing activities(325,730) (131,252)Net cash used in investing activities(263,873)(325,730)
Net cash used in financing activities(136,880) (235,460)Net cash used in financing activities(87,393)(136,880)
Effect of exchange rate changes on cash and cash equivalents(1,835) 4,865
Effect of exchange rate changes on cash and cash equivalents(178)(1,835)
Net decrease in cash and cash equivalents$(443,501) $(453,540)Net decrease in cash and cash equivalents$(285,984)$(443,501)
Operating Activities
Net cash provided by operating activities during the three months ended November 30, 20192020 was primarily due to non-cash expenses and an increase in accounts payable, accrued expenses and other liabilities, partially offset by increased accounts receivable, inventories and contractprepaid expenses and other current assets. The increase in accounts payable, accrued expenses and other liabilities is primarily due to an increase in materialsmaterial purchases due to increased demand in the cloud business,and the timing of purchases and cash payments as well as an increase due to the timing of collections on accounts receivable sale programs.payments. The increase in accounts receivable is primarily driven by higher sales and the timing of collections. The increase in inventories supportsis primarily to support expected sales levels in the second quarter of fiscal year 2020 and also is due to increased demand.2021. The increase in contractprepaid expenses and other current assets is primarily due to the timing of revenue recognition for over time customers.an increase in forward contract assets driven by normal hedging activity.
Investing Activities
Net cash used in investing activities during the three months ended November 30, 20192020 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 third closing of the acquisition of certain assets of JJMD, partially offset by proceeds and advances from the sale of property, plant and equipment.
Financing Activities
Net cash used in financing activities during the three months ended November 30, 20192020 was primarily due to:to (i) payments for debt agreements, (ii) the repurchase of our common stock, (iii) treasury stock minimum tax withholding related to vesting of restricted stock and (iii)(iv) dividend payments. Net cash used in financing activities was partially offset by borrowings under debt agreements.
Contractual Obligations
During the three months ended November 30, 2020, we assumed $80.1 million in additional contractual obligations related to new finance leases entered into during the period that are due in fiscal year 2023. As of the date of this report, there were no other material changes other than those disclosed below, outside the ordinary course of business since August 31, 20192020 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 7 - 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 September 2019, the Board of Directors authorized the repurchase of up to $600.0 million of our common stock as a part of a two-year capital allocation framework (the “2020 Share Repurchase Program”). As of November 30, 2019, 2.62020, 7.5 million shares had been repurchased for $96.4$263.9 million and $503.6$336.1 million remains available under the 2020 Share Repurchase Program.

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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 on Form 10-K for the fiscal year ended August 31, 2019.2020.

Item 4.Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We carried out an evaluation required by Rules 13a-15 and 15d-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 in Rules 13a-15 and 15d-15 under the Exchange Act as of November 30, 2019.2020. 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
As part of the adoption of the new lease standard under ASC Topic 842, Leases, on September 1, 2019,For our fiscal quarter ended November 30, 2020, we modified our internal controls over financial reporting. We did not identify any other 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 for our fiscal quarter ended November 30, 2019.reporting.


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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 Form 10-K for the fiscal year ended August 31, 2019.2020. For further information on our forward-looking statements see Part I of this Quarterly Report on Form 10-Q.

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
November 30, 2019:2020:
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)
September 1, 2019 - September 30, 201991,457
 $35.37
 88,065
 $596,875
October 1, 2019 - October 31, 20192,128,985
 $35.94
 1,601,960
 $539,576
November 1, 2019 - November 30, 2019930,252
 $38.66
 930,252
 $503,610
Total3,150,694
 $36.72
 2,620,277
  
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)
September 1, 2020 - September 30, 2020698,048 $32.53 698,048 $363,368 
October 1, 2020 - October 31, 20201,359,277 $35.46 776,416 $336,076 
November 1, 2020 - November 30, 202018,545 $35.94 — $336,076 
Total2,075,870 $34.48 1,474,464 
(1)
(1)The purchases include amounts that are attributable to 601,406 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.
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”).

(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.

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Item 6.Exhibits
Index to Exhibits
    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 3.15/31/2017
        
3.2 
Registrant’s Bylaws, as amended.
 10-Q 3.25/31/2017
        
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 4.21/17/2008
        
4.3 
Form of 7.750% Registered Senior Notes issued on August 11, 2009.
 8-K 4.18/12/2009
        
4.4 
Form of 5.625% Registered Senior Notes issued on November 2, 2010.
 8-K 4.111/2/2010
        
4.5 
Form of 4.700% Registered Senior Notes issued on August 3, 2012.
 8-K 4.18/6/2012
        
4.6 
Form of 3.950% Senior Notes due 2028 (included in the Officers’ Certificate filed as Exhibit 4.10).
 8-K 4.11/17/2018
        
4.7 
Officers’ Certificate of the Registrant pursuant to the Indenture, dated August 11, 2009.
 8-K 4.38/12/2009
        
4.8 
Officers’ Certificate of the Registrant pursuant to the Indenture, dated November 2, 2010.
 8-K 4.311/2/2010
        
4.9 
Officers’ Certificate of the Registrant pursuant to the Indenture, dated August 3, 2012.
 8-K 4.38/6/2012
        
4.10 
Officers’ Certificate, dated as of January 17, 2018, establishing the 3.950% Senior Notes due 2028.
 8-K 4.11/17/2018
        
10.1†* 
Form of Jabil Inc. Restricted Stock Unit Award Agreement (PBRSU EPS - Executive-EU).
     
        
10.2†* 
Form of Jabil Inc. Restricted Stock Unit Award Agreement (PBRSU EPS - Executive - Non-EU).
     
        
10.3†* 
Form of Jabil Inc. Restricted Stock Unit Award Agreement (PBRSU TSR - ONEU).
     
        
10.4†* 
Form of Jabil Inc. Restricted Stock Unit Award Agreement (PBRSU TSR - OEU).
     
        
10.5†* 
Form of Jabil Inc. Restricted Stock Unit Award Agreement (TBRSU-ONEU)
     
        
10.6†* 
Form of Jabil Inc. Restricted Stock Unit Award Agreement (TBRSU-OEU).
     
        
10.7†* 
Form of Jabil Inc. Restricted Stock Unit Award Agreement (TBRSU-DIR).
     
        
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.
     
        

101Item 6.
The following financial information from Jabil’s Quarterly Report on Form 10-Q for the quarterly period ended November 30, 2019, formatted in Inline XBRL: (i) Condensed Consolidated Balance Sheets as of November 30, 2019 and August 31, 2019, (ii) Condensed Consolidated Statements of Operations for the three months ended November 30, 2019 and 2018, (iii) Condensed Consolidated Statements of Comprehensive Income for the three months ended November 30, 2019 and 2018, (iv) Condensed Consolidated Statements of Stockholders’ Equity for the three months ended November 30, 2019 and 2018, (v) Condensed Consolidated Statements of Cash Flows for the three months ended November 30, 2019 and 2018 and (vi) the Notes to Condensed Consolidated Financial Statements.

104Cover Page Interactive Data File - Embedded within the inline XBRL Document
†Indicates management compensatory plan, contract or arrangement
*Filed or furnished herewithExhibits
Index to Exhibits
Incorporated by Reference Herein
Exhibit No.DescriptionFormExhibitFiling Date/Period End Date
3.110-Q3.15/31/2017
3.210-Q3.25/31/2017
4.1Form of Certificate for Shares of the Registrant’s Common Stock. (P)S-13/17/1993
4.28-K4.21/17/2008
4.38-K4.18/6/2012
4.48-K4.38/6/2012
4.58-K4.11/17/2018
4.68-K4.11/15/2020
4.78-K4.17/13/2020
31.1*
31.2*
32.1*
32.2*
101The following financial information from Jabil’s Quarterly Report on Form 10-Q for the quarterly period ended November 30, 2020, formatted in Inline XBRL: (i) Condensed Consolidated Balance Sheets as of November 30, 2020 and August 31, 2020, (ii) Condensed Consolidated Statements of Operations for the three months ended November 30, 2020 and 2019, (iii) Condensed Consolidated Statements of Comprehensive Income for the three months ended November 30, 2020 and 2019, (iv) Condensed Consolidated Statements of Stockholders’ Equity for the three months ended November 30, 2020 and 2019, (v) Condensed Consolidated Statements of Cash Flows for the three months ended November 30, 2020 and 2019 and (vi) the Notes to Condensed Consolidated Financial Statements.
104Cover Page Interactive Data File - Embedded within the inline XBRL Document
*Filed or furnished herewith
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 Regulation S-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.


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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: January 3, 20208, 2021By:
/s/ MARK T. MONDELLO
Mark T. Mondello

Chief Executive Officer
Date: January 3, 20208, 2021By:
/s/ MICHAEL DASTOOR
Michael Dastoor

Chief Financial Officer


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