SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

	~~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)

(Registrant’s telephone number, including area code)

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



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

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of 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	☐

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 ~~March 24,~~December 31, 2020, there were ~~150,717,416~~150,175,999 shares of the registrant’s Common Stock outstanding.

JABIL INC. AND SUBSIDIARIES INDEX



Item 1.			Financial Statements

JABIL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except for share data)

See accompanying notes to Condensed Consolidated Financial Statements.

JABIL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except for per share data)

See accompanying notes to Condensed Consolidated Financial Statements.

JABIL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

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


	Three months ended
	November 30, 2020		November 30, 2019
Net income	$	201,007	$	40,714
Other comprehensive income (loss):
Change in foreign currency translation	10,718		(529)
Change in derivative instruments:
Change in fair value of derivatives	24,911		10,945
Adjustment for net (gains) losses realized and included in net income	(15,551)		6,883
Total change in derivative instruments	9,360		17,828

Unrealized loss on available for sale securities	0		(8,827)
Actuarial loss	(256)		0


Total other comprehensive income	19,822		8,472
Comprehensive income	$	220,829	$	49,186
Comprehensive income attributable to noncontrolling interests	565		292
Comprehensive income attributable to Jabil Inc.	$	220,264	$	48,894

See accompanying notes to Condensed Consolidated Financial Statements.

JABIL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

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

See accompanying notes to Condensed Consolidated Financial Statements.

JABIL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

See accompanying notes to Condensed Consolidated Financial Statements.

JABIL INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) necessary to present fairly the information set forth therein have been included. The accompanying unaudited Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and footnotes included in the Annual Report on Form 10-K of ~~the Company~~Jabil Inc. (the “Company”) for the fiscal year ended August 31, ~~2019.~~2020. Results for the ~~six~~three months ended ~~February 29,~~November 30, 2020 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 Sale Programs

The Company regularly sells designated pools of high credit quality trade accounts receivable under uncommitted trade accounts receivable sale programs to unaffiliated financial institutions without recourse. As these accounts receivable are sold without recourse, the Company does not retain the associated risks following the transfer of such accounts receivable to the respective financial institutions. The Company continues servicing the receivables sold and in exchange receives a servicing fee under each of the trade accounts receivable sale programs. Servicing fees related to each of the trade accounts receivable sale programs recognized during the three months ~~and six months~~ ended ~~February 29,~~November 30, 2020 and ~~February 28,~~ 2019 were not material. The Company does not record a servicing asset or liability on the Condensed Consolidated Balance Sheets as the Company estimates that the fee it receives to service these receivables approximates the fair market compensation to provide the servicing activities.

Transfers of the receivables under the 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:

Maximum
Amount
(in millions)⁽¹⁾

December 5, 2020⁽²⁾

November 30, 2020⁽³⁾

May 4, 2023⁽⁴⁾

January 25, 2021⁽⁵⁾

February 23, 2023⁽⁶⁾

August 10, 2020⁽⁷⁾

July 21, 2020⁽⁸⁾

December 4, 2020⁽⁹⁾

April 11, 2020⁽¹⁰⁾

December 5, 2020⁽²⁾

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

February 23, 2023(5)


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

⁽³⁾

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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.

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


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


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


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


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


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


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


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

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

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


	Three months ended
	November 30, 2020		November 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. ⁽¹⁾	~~Recorded to other expense within the Condensed Consolidated Statement of Operations.~~

3. Inventories

Inventories consist of the following (in thousands):


	November 30, 2020		August 31, 2020
Raw materials	$	2,428,713	$	2,389,719
Work in process	480,968		450,781
Finished goods	444,170		376,542
Reserve for excess and obsolete inventory	(82,009)		(85,259)
Inventories, net	$	3,271,842	$	3,131,783

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

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4. ~~Leases~~

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

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

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

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

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

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

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


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


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

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

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

$ 32,164
$ 64,753


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

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



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

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

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


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


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

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

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


⁽¹⁾	Excludes $28.2 million of payments related to leases signed but not yet commenced. Additionally, certain leases signed but not yet commenced contain residual value guarantees and purchase options not deemed probable.

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

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

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

5. Notes Payable and Long-Term Debt

Notes payable and long-term debt outstanding as of ~~February 29,~~November 30, 2020 and August 31, ~~2019~~2020 are summarized below (in thousands):

Maturity
Date
February 29,
2020 August 31,
2019
5.625% Senior Notes Dec 15, 2020 $ 399,332
$ 398,886
4.700% Senior Notes Sep 15, 2022 498,332
498,004
4.900% Senior Notes Jul 14, 2023 299,178
299,057
3.950% Senior Notes Jan 12, 2028 495,132
494,825
3.600% Senior Notes⁽¹⁾
Jan 15, 2030 494,470
—
Borrowings under credit facilities⁽²⁾⁽³⁾
Jan 22, 2023 and Jan 22, 2025 —
—
Borrowings under commercial paper program⁽⁴⁾

⁽⁴⁾
237,661
—
Borrowings under loans⁽²⁾
Jan 22, 2025 300,095
805,693
Total notes payable and long-term debt 2,724,200
2,496,465
Less current installments of notes payable and long-term debt 637,841
375,181
Notes payable and long-term debt, less current installments $ 2,086,359
$ 2,121,284


	Maturity Date	November 30, 2020		August 31, 2020
4.700% Senior Notes	Sep 15, 2022	$	498,823	$	498,659
4.900% Senior Notes	Jul 14, 2023	299,361		299,300
3.950% Senior Notes	Jan 12, 2028	495,594		495,440
3.600% Senior Notes	Jan 15, 2030	494,896		494,756
3.000% Senior Notes	Jan 15, 2031	590,400		590,162
Borrowings under credit facilities(1)	Apr 23, 2021, Jan 22, 2023 and Jan 22, 2025	0		0
Borrowings under loans	Jan 22, 2025	350,126		350,165

Total notes payable and long-term debt		2,729,200		2,728,482
Less current installments of notes payable and long-term debt		50,195		50,194
Notes payable and long-term debt, less current installments		$	2,679,005	$	2,678,288


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

⁽²⁾

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

~~During the three months ended February 29,~~(1)As of November 30, 2020, the ~~interest rates on the~~Company has $3.8 billion in available unused borrowing capacity under its revolving credit facilities. The Revolving Credit Facility ~~ranged from 2.5%~~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 3.0% and the Term Loan Facility ranged from 2.9% to 3.2%. Interest is charged at a rate equal to (a) for the Revolving Credit Facility, either 0.000% to 0.450% above the base rate or 0.975% to 1.450% above the Eurocurrency rate and (b) for the Term Loan Facility, either 0.125% to 0.750% above the base rate or 1.125% to 1.750% above the Eurocurrency rate. The base rate represents the greatest of: (i) Citibank, N.A.’s prime rate, (ii) 0.50% above the federal funds rate, and (iii) 1.0% above one-month LIBOR, but not less than zero. The Eurocurrency rate represents adjusted LIBOR or adjusted CDOR, as applicable, for the applicable interest period, but not less than zero. Fees include a facility fee based on the revolving credit commitments of the lenders and a letter of credit fee based on the amount of outstanding letters of credit.


⁽³⁾$1.8 billion under its commercial paper program.	~~As of February 29, 2020, the Company has $3.1 billion in available unused borrowing capacity under its revolving credit facilities, net of outstanding commercial paper borrowings.~~


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

Debt Covenants

Borrowings under the Company’s debt agreements are subject to various covenants that limit the Company’s ability to: incur additional indebtedness, sell assets, effect mergers and certain transactions, and effect certain transactions with subsidiaries and affiliates. In addition, the revolving credit facilities and the 4.900% Senior Notes contain debt leverage and interest coverage covenants. The Company is also subject to certain covenants requiring the Company to offer to repurchase the ~~5.625%,~~ 4.700%, 4.900%, 3.950%, 3.600% or ~~3.600%~~3.000% Senior Notes upon a change of control. As of ~~February 29,~~November 30, 2020 and August 31, ~~2019,~~2020, the Company was in compliance with its debt covenants.

Fair Value

Refer to Note 1716 – “Fair Value Measurements” for the estimated fair values of the Company’s notes payable and long-term debt.

6.5. 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 receivables~~program 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 receivables~~program to conduits administered by an unaffiliated financial institution on a monthly basis.

The Company continues servicing the receivables sold and in exchange receives a servicing fee under each of the asset-backed securitization programs. Servicing fees related to each of the asset-backed securitization programs recognized during the three months ~~and six months~~ ended ~~February 29,~~November 30, 2020 and ~~February 28,~~ 2019 were not material. The Company does not record a servicing asset or liability on the Condensed Consolidated Balance Sheets as the Company estimates that the fee it receives to service these receivables approximates the fair market compensation to provide the servicing activities.

Transfers of the receivables under the asset-backed securitization programs are accounted for as sales and, accordingly, net receivables sold under the asset-backed securitization programs are excluded from accounts receivable on the Condensed Consolidated Balance Sheets and are reflected as cash provided by operating activities on the Condensed Consolidated Statements of Cash Flows.

The special purpose entity in the foreign asset-backed securitization program is a separate bankruptcy-remote entity whose assets would be first available to satisfy the creditor claims of the unaffiliated financial institution. The Company is

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deemed the primary beneficiary of this special purpose entity as the Company has both the power to direct the activities of the entity that most significantly impact the entity’s economic performance and the obligation to absorb losses or the right to receive the benefits that could potentially be significant to the entity from the transfer of the trade accounts receivable into the special purpose entity. Accordingly, the special purpose entity associated with the foreign asset-backed securitization program is included in the Company’s Condensed Consolidated Financial Statements. As of ~~February 29,~~November 30, 2020, the special purpose entity has liabilities for which creditors do not have recourse to the general credit of the Company (primary beneficiary). The liabilities cannot exceed the maximum amount of net cash proceeds under the foreign asset-backed securitization program.

The foreign asset-backed securitization program contains a guarantee of payment by the special purpose entity, in an amount approximately equal to the net cash proceeds under the program. NaN liability has been recorded for obligations under the guarantee as of ~~February 29,~~November 30, 2020.

The special purpose entity in the North American asset-backed securitization program is a wholly-owned subsidiary of the Company and is included in the Company’s Condensed Consolidated Financial Statements. Certain unsold receivables covering the maximum amount of net cash proceeds available under the North American asset-backed securitization program are pledged as collateral to the unaffiliated financial institution as of ~~February 29,~~November 30, 2020.

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

Maximum Amount of
Net Cash Proceeds (in millions)⁽¹⁾⁽²⁾
Expiration
Date
North American $ 390.0
November 22, 2021
Foreign $ 400.0
September 30, 2021


	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.~~


⁽²⁾	~~As of February 29, 2020, the Company had up to $76.3 million in available liquidity under its asset-backed securitization programs.~~

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

Three months ended Six months ended
February 29, 2020 February 28, 2019 February 29, 2020
February 28, 2019⁽³⁾
Trade accounts receivable sold $ 1,095
$ 1,078
$ 2,257
$ 1,828
Cash proceeds received⁽¹⁾
$ 1,089
$ 1,072
$ 2,245
$ 1,816
Pre-tax losses on sale of receivables⁽²⁾
$ 6
$ 6
$ 12
$ 12


	Three months ended
	November 30, 2020		November 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 entered into on January 22, 2020 (the “Credit Facility”).~~Credit Facility. The foreign asset-backed securitization program covenants include limitations on certain corporate actions such as mergers and consolidations. As of ~~February 29,~~November 30, 2020 and August 31, ~~2019,~~2020, the Company was in compliance with all covenants under the asset-backed securitization programs.

7.6. Accrued Expenses

Accrued expenses consist of the following (in thousands):


	February 29, 2020		August 31, 2019			November 30, 2020		August 31, 2020
Contract liabilities⁽¹⁾	$	495,314	$	511,329	Contract liabilities(1)	$	441,151	$	496,219
Accrued compensation and employee benefits	532,312		600,907		Accrued compensation and employee benefits	740,959		703,250

Other accrued expenses	1,987,503		1,877,908		Other accrued expenses	1,878,982		2,012,059
Accrued expenses	$	3,015,129	$	2,990,144	Accrued expenses	$	3,061,092	$	3,211,528


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

8(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.

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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 ~~and six months~~ ended ~~February 29,~~November 30, 2020 and ~~February 28,~~ 2019 (in thousands):

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


	Three months ended
	November 30, 2020		November 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 $ 330,793
Unfunded status $ (73,504 )

~~Cash Flows~~

The Company expects to make cash contributions between $9.5 million and $11.7 million to its Switzerland pension plan during fiscal year 2020. The estimated future benefit payments, which reflect expected future service,(2)Components are ~~as follows (in thousands):~~

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

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 $ 330,793

9.8. 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 ~~$257.2 million~~$1.0 billion and ~~$334.1~~$355.2 million as of ~~February 29,~~November 30, 2020 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 ~~March~~December 1, 2020 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 ~~February 29,~~November 30, 2020 and August 31, ~~2019,~~2020, was ~~$2.4~~$3.5 billion and ~~$2.5~~$2.9 billion, respectively.

Refer to Note 1716 – “Fair Value Measurements” for the fair values and classification of the Company’s derivative instruments.

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

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

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Derivatives Not Designated as Hedging Instruments Under ASC 815 Location of Gain on Derivatives Recognized in Net Income Amount of Gain Recognized in Net Income on Derivatives
Three months ended Six months ended
February 29, 2020 February 28, 2019 February 29, 2020 February 28, 2019
Forward foreign exchange contracts⁽¹⁾
Cost of revenue $ 6,801
$ 49,794
$ 33,518
$ 42,808

Derivatives Not Designated as Hedging Instruments Under ASC 815

Location of Gain on Derivatives Recognized in Net Income

Amount of Gain Recognized in Net Income on Derivatives

Three months ended

November 30, 2020

November 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.

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

Interest Rate Risk Management

The Company periodically enters into interest rate swaps to manage interest rate risk associated with the Company’s borrowings.

Cash Flow Hedges

The following table presents the interest rate swaps outstanding as of ~~February 29,~~November 30, 2020, which have been designated as hedging instruments and accounted for as cash flow hedges:

Interest Rate Swap Summary Hedged Interest Rate Payments Aggregate Notional Amount (in millions) Effective Date
Expiration Date ⁽¹⁾

Forward Interest Rate Swap
Anticipated Debt Issuance Fixed $ 200.0
Oct 22, 2018 Dec 15, 2020
⁽²⁾
Interest Rate Swaps
Debt obligations Variable $ 550.0

Aug 24, 2018 and
Oct 11, 2018
Aug 24, 2020 and Aug 31, 2020
⁽³⁾

Interest Rate Swap Summary

Hedged Interest Rate Payments

Aggregate Notional Amount (in millions)

Effective Date

Expiration Date (1)

Forward Interest Rate Swap

Anticipated Debt Issuance

Fixed

250.0

November 2, 2020

July 31, 2024

(2)


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


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


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

(2)If the anticipated debt issuance occurs before July 31, 2024, the contracts will be terminated simultaneously with the debt issuance.

~~10.~~Contemporaneously with the issuance of our 3.000% Notes in July 2020, the Company amended interest rate swap agreements with a notional value of $200.0 million, with mandatory termination dates from August 15, 2020 to February 15, 2022 (the “2020 Extended Interest Rate Swaps”). In addition, the Company entered into interest rate swaps to offset future exposures of fluctuations in the fair value of the 2020 Extended Interest Rate Swaps (the “Offsetting Interest Rate Swaps”).

9. Accumulated Other Comprehensive Income

The following table sets forth the changes in accumulated other comprehensive income (loss) ~~income~~ (“AOCI”), net of tax, by component for the ~~six~~three months ended ~~February 29,~~November 30, 2020 (in thousands):


	Foreign Currency Translation Adjustment		Derivative Instruments		Actuarial Loss		Prior Service Cost		Total
Balance as of August 31, 2020	$	(36,595)	$	(30,996)	$	34,093	$	(670)	$	(34,168)
Other comprehensive income (loss) before reclassifications	10,718		24,911		(256)		0		35,373
Amounts reclassified from AOCI	0		(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 (10,875 ) 1,471
—
—
(14,080 ) (23,484 )
Amounts reclassified from AOCI —
3,335
—
—
—
3,335
Other comprehensive (loss) income⁽¹⁾
(10,875 ) 4,806
—
—
(14,080 ) (20,149 )
Balance as of February 29, 2020 $ (25,173 ) $ (34,592 ) $ (28,033 ) $ (608 ) $ (14,537 ) $ (102,943 )


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

The following table sets forth the amounts reclassified from AOCI into the Condensed Consolidated Statements of Operations, and the associated financial statement line item, net of tax, for the periods indicated (in thousands):

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Three months ended Six months ended
Comprehensive Income Components Financial Statement Line Item February 29,
2020 February 28,
2019 February 29,
2020 February 28,
2019
Realized losses (gains) on derivative instruments:⁽¹⁾

Foreign exchange contracts Cost of revenue $ (3,117 ) $ 3,931
$ 4,197
$ 18,546
Interest rate contracts Interest expense (431 ) (430 ) (862 ) (860 )
Total amounts reclassified from AOCI⁽²⁾
$ (3,548 ) $ 3,501
$ 3,335
$ 17,686


		Three months ended
Comprehensive Income Components	Financial Statement Line Item	November 30, 2020		November 30, 2019
Realized (gains) losses on derivative instruments:(1)
Foreign exchange contracts	Cost of revenue	$	(16,368)	$	7,314
Interest rate contracts	Interest expense	817		(431)

Total amounts reclassified from AOCI(2)		$	(15,551)	$	6,883


⁽¹⁾ (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.	~~The Company expects to reclassify $3.4 million into earnings during the next twelve months, which will primarily be classified as a component of cost of revenue.~~


⁽²⁾	~~Amounts are net of tax, which are immaterial for the three months and six months ended February 29, 2020 and February 28, 2019.~~

~~11.~~(2)Amounts are net of tax, which are immaterial for the three months ended November 30, 2020 and 2019.

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, 2020		November 30, 2019
Restricted stock units	$	31,273	$	28,183
Employee stock purchase plan	2,268		2,040

Total	$	33,541	$	30,223

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

~~As of February 29,~~On October 15, 2020, the ~~shares available to be issued under~~Company’s Board of Directors approved the proposed 2021 Equity Incentive Plan (the “2021 Plan”). The 2021 Plan will replace the Company’s 2011 Stock Award and Incentive Plan, ~~were 10,502,993.~~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 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 ~~six~~three months ended ~~February 29,~~November 30, 2020 and ~~February 28,~~ 2019, the Company awarded approximately 1.1 million ~~and 1.6 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 ~~for~~as of the period indicated (in thousands):

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



	November 30, 2020
Unrecognized stock-based compensation expense—restricted stock units	$	70,544
Remaining weighted-average period for restricted stock units expense	1.5 years

Common Stock Outstanding

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

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


	Three months ended
	November 30, 2020	November 30, 2019
Common stock outstanding:
Beginning balances	150,330,358	153,520,380
Shares issued upon exercise of stock options	0	13,930

Vesting of restricted stock	2,217,082	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 balances	150,471,570	152,300,356

⁽¹⁾

(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.

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

~~12.~~

11. Concentration of Risk and Segment Data

Concentration of Risk

Sales of the Company’s products are concentrated among specific customers. During the ~~six~~three months ended ~~February 29,~~November 30, 2020, the Company’s 5 largest customers accounted for approximately ~~47%~~50% of its net revenue and 7268 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, 2020						November 30, 2019
	EMS		DMS		Total		EMS		DMS		Total
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 time	2,536,028		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
February 29, 2020 February 28, 2019
EMS DMS Total EMS DMS Total
Timing of transfer
Point in time $ 986,570
$ 1,141,881
$ 2,128,451
$ 836,863
$ 1,464,832
$ 2,301,695
Over time 2,843,384
1,153,248
3,996,632
2,967,864
797,431
3,765,295
Total $ 3,829,954
$ 2,295,129
$ 6,125,083
$ 3,804,727
$ 2,262,263
$ 6,066,990

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

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

Business interruption and impairment charges, net⁽¹⁾


	Three months ended
	November 30, 2020		November 30, 2019




Segment income and reconciliation of income before income tax
EMS	$	121,978	$	89,354
DMS	242,959		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 charges	1,715		(45,251)

Distressed customer charge	0		(14,963)

Acquisition and integration charges	(2,113)		(16,134)

Other expense (net of periodic benefit cost)	(3,671)		(12,997)
Interest income	1,881		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 six months ended February 28, 2019, relate to business interruption and asset impairment costs associated with damage from Hurricane Maria, which impacted our operations in Cayey, Puerto Rico.


	November 30, 2020		August 31, 2020
Total assets
EMS	$	4,001,727	$	3,233,681
DMS	6,953,659		6,641,764
Other non-allocated assets	4,314,092		4,521,971
	$	15,269,478	$	14,397,416

As of ~~February 29,~~November 30, 2020, the Company operated in 31 countries worldwide. Sales to unaffiliated customers are based on the Company location that maintains the customer relationship and transacts the external sale.

The following ~~tables set~~table sets forth, ~~external~~for the periods indicated, foreign source revenue expressed as a percentage of net ~~revenue, net of intercompany eliminations, and long-lived asset information where individual countries represent a material portion of the total (in thousands):~~

revenue:


	Three months ended
	November 30, 2020		November 30, 2019
Foreign source revenue	83.6	%	81.8	%

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

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

~~13.~~12. Restructuring, Severance and Related Charges

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

February 29, 2020⁽²⁾

February 28, 2019⁽³⁾

February 29, 2020⁽²⁾

February 28, 2019⁽³⁾

Total restructuring and related charges⁽¹⁾


	Three months ended
	November 30, 2020		November 30, 2019
Employee severance and benefit costs	$	568	$	18,781
Lease costs	(2,873)		239
Asset write-off costs	(2)		16,316
Other costs	592		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 February 28, 2019, respectively. Includes $32.1 million and $4.7 million recorded in the EMS segment, $39.7 million and $2.1 million recorded in the DMS segment and $3.1 million and $0.0 million of non-allocated charges for

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

⁽²⁾

Table of Contents

2020 Restructuring Plan

On September 20, 2019, the Company’s Board of Directors formally approved a restructuring plan to realign the Company’s global capacity support infrastructure, particularly in the Company’s mobility footprint in China, in order to optimize organizational effectiveness. This action includes headcount reductions and capacity realignment (the “2020 Restructuring Plan”). The 2020 Restructuring Plan reflects the Company’s intention only and restructuring decisions, and the timing of such decisions, at certain locations are still subject to consultation with the Company’s employees and their representatives.

~~The~~Upon 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’s~~during fiscal year ~~2020. This information will be subject to~~2020 and anticipates incurring the ~~finalization of timetables~~remaining costs during fiscal year 2021 for ~~the transition of functions, consultation with employees~~employee 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

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

The Company’s liability associated with the worldwide workforce reduction is $27.5 million as of November 30, 2020.

~~14.~~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 Six months ended
February 29,
2020 February 28,
2019 February 29,
2020 February 28,
2019
U.S. federal statutory income tax rate 21.0 % 21.0 % 21.0 % 21.0 %
Effective income tax rate 108.9 % 33.0 % 71.0 % 27.9 %


	Three months ended
	November 30, 2020		November 30, 2019
U.S. federal statutory income tax rate	21.0	%	21.0	%







Effective income tax rate	29.6	%	60.3	%

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

The effective income tax rate differed from the U.S. federal statutory income tax rate of 21.0% during the three months ~~and six months~~ ended ~~February 29,~~November 30, 2020 and ~~February 28,~~ 2019, 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 and six months ended February 28, 2019.~~Vietnam.

~~15.~~14. Earnings Per Share and Dividends

The Company calculates its basic earnings per share by dividing net income attributable to the Company by the weighted average number of common shares outstanding during the period. The Company’s diluted earnings per share is calculated in a similar manner, but includes the effect of dilutive securities. The difference between the weighted average number of basic shares outstanding and the weighted average number of diluted shares outstanding is primarily due to dilutive unvested restricted stock units and dilutive stock appreciation rights.

Potential shares of common stock are excluded from the computation of diluted earnings per share when their effect would be antidilutive. Performance-based restricted stock units are considered dilutive when the related performance criteria

have been met assuming the end of the reporting period represents the end of the performance period. All potential shares of common stock are antidilutive in periods of net loss. Potential shares of common stock not included in the computation of earnings per share because their effect would have been antidilutive or because the performance criterion was not met were as follows (in thousands):

Three months ended Six months ended
February 29, 2020 February 28, 2019 February 29, 2020 February 28, 2019
Restricted stock units 4,499
1,348
1,035
1,348
Employee stock purchase plan 164
—
—
—
Stock appreciation rights 28
—
—
—

The following table sets forth cash dividends declared by the Company to common stockholders during the ~~six~~three months ended ~~February 29,~~November 30, 2020 and ~~February 28,~~ 2019 (in thousands, except for per share data):

Dividend
Declaration Date

Dividend
per Share

Total of Cash
Dividends
Declared

Date of Record for
Dividend Payment

Dividend Cash
Payment Date
Fiscal Year 2020: October 17, 2019 $ 0.08
$ 12,647
November 15, 2019 December 2, 2019
January 23, 2020 $ 0.08
$ 12,517
February 14, 2020 March 4, 2020
Fiscal Year 2019: October 18, 2018 $ 0.08
$ 13,226
November 15, 2018 December 3, 2018
January 24, 2019 $ 0.08
$ 12,706
February 15, 2019 March 1, 2019

~~16.~~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 $166.2 million in cash. For the initial and second closings, total assets acquired of $172.3 million and total liabilities assumed of $6.1 million were recorded at their estimated fair values as of the acquisition dates.

~~On September 30, 2019, under the terms of the Framework Agreement, the Company completed the third~~fourth closing of its acquisition of certain assets of JJMD. The preliminary aggregate purchase price paid for the ~~third~~fourth closing was approximately ~~$111.8~~$18.4 million in cash, which remains subject to certain post-closing adjustments based on conditions within the Framework Agreement. ~~For the third closing, total~~Total assets acquired of ~~$199.7~~$30.6 million ~~including $83.2 million in contract assets, $35.1 million in inventory and $70.4 million in goodwill,~~ and total liabilities assumed of ~~$87.9~~$12.2 million ~~including $73.5 million of pension obligations,~~ were recorded at their estimated fair values as of the acquisition date. There were no intangible assets identified in this acquisition and the goodwill is primarily attributable to the assembled workforce. The majority of the goodwill is currently not expected to be deductible for income tax purposes.

were included in the Company’s condensed consolidated financial results beginning on ~~February 25, 2019~~October 26, 2020 for the ~~initial closing, April 29, 2019 for the second closing and September 30, 2019 for the third~~fourth closing. The Company believes it is impracticable to provide pro forma information for the acquisition of the JJMD assets.

~~17.~~16. Fair Value Measurements

Fair Value Measurements on a Recurring Basis

The following table presents the fair value of the Company's financial assets and liabilities measured at fair value by hierarchy level on a recurring basis as of the periods indicated:


(in thousands)	Fair Value Hierarchy		November 30, 2020		August 31, 2020
Assets:
Cash and cash equivalents:
Cash equivalents	Level 1	(1)	$	24,894	$	33,869
Prepaid expenses and other current assets:
Short-term investments	Level 1		17,220		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⁾

(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):

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


	November 30, 2020		August 31, 2020
(in thousands)	Carrying Amount		Carrying Amount
Assets held for sale (1)	$	66,180	$	67,380

⁽¹⁾

(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.

Fair Value of Financial Instruments

The carrying amounts of cash and cash equivalents, trade accounts receivable, prepaid expenses and other current assets, accounts payable and accrued expenses approximate fair value because of the short-term nature of these financial instruments. The carrying amounts of borrowings under credit facilities and under loans approximates fair value as interest rates on these instruments approximates current market rates.

Notes payable and long-term debt is carried at amortized cost; however, the Company estimates the fair values of notes payable and long-term debt for disclosure purposes. The following table presents the carrying amounts and fair values of the Company's notes payable and long-term debt, by hierarchy level as of the periods indicated:

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



			November 30, 2020				August 31, 2020
(in thousands)	Fair Value Hierarchy		Carrying Amount		Fair Value		Carrying Amount		Fair Value
Notes payable and long-term debt: (Note 5)
4.700% Senior Notes	Level 2	(1)	$	498,823	$	535,080	$	498,659	$	537,180
4.900% Senior Notes	Level 3	(2)	299,361		328,810		299,300		329,435
3.950% Senior Notes	Level 2	(1)	495,594		561,005		495,440		551,930
3.600% Senior Notes	Level 2	(1)	494,896		553,710		494,756		536,110
3.000% Senior Notes	Level 2	(1)	590,400		629,262		590,162		611,616

~~Refer to Note 8 - “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.

~~18.~~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.

~~19.~~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 ~~methodology~~model with ~~a methodology that reflects~~an expected credit ~~losses~~loss model and requires ~~consideration of~~ a ~~broader range of reasonable and supportable information~~financial asset measured at amortized cost to ~~inform credit loss estimates. This~~be presented at the net amount expected to be collected. The Company adopted the guidance ~~is effective for the Company beginning in~~during the first quarter of fiscal year 2021. ~~This guidance must be applied using~~The adoption of this standard did not have a ~~modified retrospective or prospective transition method, depending~~material impact on the ~~area covered by this accounting standard. The Company is currently assessing the impact this new standard may have on its~~Company’s Consolidated Financial Statements.

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

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

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 27A~~the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties. Many of the ~~Securities Act~~forward-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 21E~~similar terms. Forward-looking statements are not guarantees of future performance and the Company’s actual results may differ significantly from the results discussed in the forward-looking statements. Achievement of anticipated results is subject to substantial risks, uncertainties and inaccurate assumptions. Should known or unknown risks or uncertainties materialize, or should underlying assumptions prove inaccurate, actual results could vary materially from past results and those anticipated, estimated or projected. You should bear this in mind as you consider forward-looking statements, and you are cautioned not to put undue reliance on forward-looking statements. We undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law or by the rules and regulations of the ~~Securities Exchange Act~~SEC. You are advised, however, to consult any further disclosures we make on related subjects. Factors that might cause such differences include, but are not limited to, those discussed in Part I, Item 1A of ~~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, and other similar statements).We make certain assumptions when making forward-looking statements, any of which could prove inaccurate, including assumptions about our future operating results and business plans. Therefore, we can give no assurance that the results implied by these forward-looking statements will be realized. Furthermore, the inclusion of forward-looking information should not be regarded as a representation by the Company or any other person that future events, plans or expectations contemplated by the Company will be achieved. The following important factors, among others, could affect future results and events, causing those results and events to differ materially from those expressed or implied in our forward-looking statements: the scope and duration of the COVID-19 outbreak and its impact on ~~global economic systems,~~ our ~~employees,~~operations, sites, ~~operations,~~ customers and supply ~~chain,~~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 occurrence~~our 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; ~~performance~~issues involving our information systems, including security issues; regulatory risks (including the expense of complying, or failing to comply, with applicable regulations; risk arising from design or manufacturing defects; and intellectual property risk); financial risks (including customers or suppliers who become financially troubled; turmoil in ~~the markets in which we operate;~~financial markets; tax risks; credit rating risks; risks of exposure to debt; currency fluctuations; energy prices; and ~~adverse~~asset 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 description~~risk of ~~various risks, factors and uncertainties that could cause future results~~natural 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 included~~global events. References in this ~~Quarterly Report on Form 10-Q are made only as~~report to “the Company,” “Jabil,” “we,” “our,” or “us” mean Jabil Inc. together with its subsidiaries, except where the context otherwise requires.

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 six months ended February 29, 2020, our largest customers include Amazon.com, Inc., Apple, Inc., Cisco Systems, Inc., Hewlett-Packard Company, Ingenico Group, Johnson and Johnson, LM Ericsson Telephone Company, NetApp, Inc., SolarEdge Technologies Inc., and Valeo S.A.

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, ~~82.6% and 82.2%,~~83.6% of net revenue from our international operations for the three months ~~and six months~~ ended ~~February 29,~~November 30, 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 ~~automotive~~5G, 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 home~~semi-cap, and ~~appliances~~networking 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 ~~edge~~automotive 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.

~~Beginning~~COVID-19

The COVID-19 pandemic, which began to impact us in January 2020, has continued to affect our business and the businesses of ~~2020, concerns related to the novel strain of coronavirus, that originated in Wuhan, China, (“COVID-19”) caused a disruption to~~ our ~~business. While customer demand for our services remained strong, our operations~~customers and ~~our ability to satisfy customer orders were negatively impacted due to both workforce~~suppliers. Travel and ~~supply chain constraints as a result of~~business operation restrictions arising from virus containment efforts ~~that were undertaken~~of governments around the world have continued to impact our operations in ~~China. During~~Asia, Europe and the ~~three months ended February 29, 2020, we incurred approximately $53.0 million~~Americas. Essential activity exceptions from these restrictions have allowed us to continue to operate. Nevertheless, virus containment efforts have resulted in additional direct costs ~~associated with the COVID-19 outbreak, primarily due to incremental~~ and ~~idle labor costs leading to~~ a reduction in ~~factory utilization as a result of the travel disruptions and governmental restrictions.~~ revenue in certain end markets.

Additionally, certain of the Company’s suppliers ~~in China~~ were similarly impacted by the COVID-19 pandemic, leading to supply chain constraints. As COVID-19 has spread to other jurisdictions and been declared a global pandemic, the full extent of this outbreak, the related governmental, business and travel restrictions in order to contain this virus are continuing to evolve globally. Accordingly, there is significant uncertainty related to the ultimate impact that this global pandemic will have on the results of our operations. For example, virus containment efforts (as a result of governmental actions or policies or other initiatives) could lead to reductions in capacity utilization levels and or facility closures under which we would expect to incur additional direct costs and lost revenue. If our suppliers experience similar impacts, we may haveconstraints, 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 ~~significantly~~ impacted by COVID-19 ~~have had a negative impact on our results of operations during the second quarter of fiscal year 2020~~ and will continue to have ~~a negative~~an impact on our operations over the ~~next~~ fiscal ~~quarter~~year and likely beyond.

Table of Contents

See ~~Risk Factors,~~“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 ~~will~~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 and six months ended February 29, 2020 and February 28, 2019,~~periods indicated, certain key operating results and other financial information (in thousands, except per share data):


	Three months ended					Six months ended					Three months ended
	February 29, 2020			February 28, 2019		February 29, 2020		February 28, 2019			November 30, 2020		November 30, 2019
Net revenue	$	6,125,083		$	6,066,990	$	13,630,781	$	12,573,265	Net revenue	$	7,832,529	$	7,505,698
Gross profit	$	430,125		$	454,874	$	983,964	$	974,524	Gross profit	$	634,560	$	553,839
Operating income	$	90,630		$	153,983	$	243,409	$	370,693	Operating income	$	313,950	$	152,779
Net (loss) income attributable to Jabil Inc.	$	(3,283	)	$	67,354	$	37,139	$	190,954
(Loss) earnings per share—basic	$	(0.02	)	$	0.44	$	0.24	$	1.21
(Loss) earnings per share—diluted	$	(0.02	)	$	0.43	$	0.24	$	1.19
Net income attributable to Jabil Inc.										Net income attributable to Jabil Inc.	$	200,442	$	40,422
Earnings per share—basic										Earnings per share—basic	$	1.33	$	0.26
Earnings per share—diluted										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:

Inventory turns (annualized)⁽²⁾

Days in accounts receivable⁽³⁾

Days in inventory⁽⁴⁾

Days in accounts payable⁽⁵⁾

⁽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.

(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

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 1918 – “New Accounting Guidance” to the Condensed Consolidated Financial Statements for a discussion of recent accounting guidance.

Results of Operations

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


	Three months ended
(dollars in millions)	November 30, 2020		November 30, 2019		Change



Net revenue	$	7,832.5	$	7,505.7	4.4	%

Net revenue increased during the three months ended ~~February 29,~~November 30, 2020, compared to the three months ended ~~February 28,~~November 30, 2019. Specifically, the ~~EMS~~DMS segment revenues increased ~~1% primarily~~13% due to (i) a 6%7% increase in revenues from existing customers within our ~~cloud~~mobility business, (ii) a 3% increase in revenues from existing customers within our ~~capital equipment~~connected devices business, ~~and~~ (iii) a 2% increase in revenues spread across various industries within the EMS segment. The increase is partially offset by (i) an 8% decrease from existing customers within our networking and telecommunications business and (ii) a 2% decrease in revenues spread across various industries within the EMS segment. DMS segment revenues increased 1% due to a 17% increase in revenues from new and existing customers in our healthcare and packaging ~~businesses. The increase is partially offset by (i) a 15% decrease in revenue from customers within our mobility~~businesses, and ~~edge devices and accessories businesses as our ability to meet customer demand was greatly diminished as COVID-19 containment efforts were implemented in China and (ii)~~(iv) a 1% ~~decrease~~increase in revenues ~~spread across various industries within the DMS segment.~~

~~Net revenue increased during the six months ended February 29, 2020, compared to the six months ended February 28, 2019. Specifically, the~~from other business. The EMS segment revenues ~~increased 13%~~decreased 4% primarily due to ~~(i)~~ a ~~16% increase~~decrease in revenues from existing customers within our cloud business, (ii) a 2% increase in revenues from existing customers within our capital equipment business and (iii) a 3% increase in revenues spread across various industries within the EMS segment. The increase is partially offset by (i) a 7% decrease from existing customers within our networking and telecommunications business and (ii) a 1% decrease from existing customers within our computing and storage business. DMS segment revenues increased 2% duewhich began transitioning to a ~~14% increase~~consignment model in revenues from new and existing customers in our healthcare and packaging businesses. The increase is partially offset by a 12% decrease in revenue from customers within our mobility and edge devices and accessories businesses due to: (i) our ability to meet customer demand, which was greatly diminished as COVID-19 containment efforts were implemented in China during the second quarter of fiscal year ~~2020 and (ii) decreased end user product demand and end market dynamics in the first quarter of fiscal year 2020.~~2021.

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

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


	Three months ended
	November 30, 2020		November 30, 2019
Foreign source revenue	83.6	%	81.8	%

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

Gross Profit


	Three months ended
(dollars in millions)	November 30, 2020			November 30, 2019
Gross profit	$	634.6		$	553.8
Percent of net revenue	8.1		%	7.4		%

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

~~Gross~~For the three months ended November 30, 2020, gross profit as a percentage of net revenue ~~decreased for~~increased as compared to the three months ended ~~February 29,~~November 30, 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, 2020		November 30, 2019		Change
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 February 28, 2019, primarily due to an increase of $46.7 million in incremental and idle labor costs associated with travel disruptions and governmental restrictions, largely related to the COVID-19 outbreak.

Gross profit as a percentage of net revenue decreased for the six months ended February 29, 2020, compared to the six months ended February 28, 2019, primarily due to an increase of $46.7 million in incremental and idle labor costs associated with travel disruptions and governmental restrictions, largely related to the COVID-19 outbreak. Additionally, gross profit as a percent of revenue decreased for the EMS segment largely due to product mix and weakness in the capital equipment business during the first quarter.November 30, 2019. The decrease ~~was partially offset by an increase in the DMS segment in the first quarter due to improved profitability across the various businesses.~~

~~Selling, General and Administrative~~

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

~~Selling, general and administrative expenses increased during the three months ended February 29, 2020, compared to the three months ended February 28, 2019. The increase~~ is predominantly due toto: (i) ~~$6.3~~a $24.4 million ~~in costs related to the COVID-19 outbreak, including personal protection equipment and (ii) a $2.2 million increase~~decrease in salary and salary related expenses due to the fiscal year 2020 worldwide workforce reduction and ~~other costs primarily~~lower travel expenses related to ~~support new business growth~~a decrease in travel due to the COVID-19 pandemic and ~~development and our strategic collaboration with~~(ii) a ~~healthcare company. The increase is partially offset by (i) a $5.0~~$14.0 million decrease in acquisition and integration charges related to our strategic collaboration with a healthcare ~~company and (ii) a $0.6 million~~company. The decrease ~~in stock-based compensation expense.~~

~~Selling, general and administrative expenses increased during the six months ended February 29, 2020, compared to the six months ended February 28, 2019. The increase~~ is ~~predominantly due to~~partially offset by (i) a ~~$32.7~~$9.0 million increase in salary and salary related expenses and other costs primarily to support new business growth and development and our strategic collaboration with a healthcare company, (ii) a $12.4 million increase in stock-based compensation expense, (iii) $6.3 million in costs related to the COVID-19 ~~outbreak,~~pandemic, including personal protection equipment for our employees globally and ~~(iv)~~(ii) a ~~$2.2~~$3.3 million increase in ~~acquisition and integration charges related to our strategic collaboration with a healthcare company.~~stock-based compensation expense.

Research and Development

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


	Three months ended
(dollars in millions)	November 30, 2020			November 30, 2019
Research and development	$	8.1		$	10.8
Percent of net revenue	0.1		%	0.1		%

Research and development expenses remained consistent as a percentage of net revenue during the three months ~~and six months~~ ended ~~February 29,~~November 30, 2020, compared to the three months ~~and six months~~ ended ~~February 28,~~November 30, 2019.

Amortization of Intangibles

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


	Three months ended
(dollars in millions)	November 30, 2020		November 30, 2019		Change
Amortization of intangibles	$	11.5	$	16.1	$	(4.6)

Amortization of intangibles ~~increased~~decreased during the three months ~~and six months~~ ended ~~February 29,~~November 30, 2020, compared to the three months ~~and six months~~ ended ~~February 28,~~November 30, 2019, primarily ~~driven by amortization related~~due to ~~the Nypro trade name, which was reclassified to a definite-lived~~certain intangible ~~asset~~assets 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 Six months ended

February 29, 2020⁽²⁾

February 28, 2019⁽³⁾

February 29, 2020⁽²⁾

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


	Three months ended
	November 30, 2020		November 30, 2019
Employee severance and benefit costs	$	0.6	$	18.8
Lease costs	(2.9)		0.3
Asset write-off costs	—		16.3
Other costs	0.6		9.9
Total restructuring, severance and related charges(1)	$	(1.7)	$	45.3

~~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 expenditures~~and includes $(3.0) million and $17.4 million recorded in the ~~range~~EMS 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 over~~non-allocated charges for the ~~course of our fiscal years~~three months ended November 30, 2020 and ~~2021. The exact timing~~2019, respectively. Except for asset write-off costs, all restructuring, severance and related charges are cash costs.

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 1312 – “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.

~~Impairment on Securities~~

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

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


	Three months ended
(dollars in millions)	November 30, 2020		November 30, 2019		Change
Other (income) expense	$	(1.9)	$	11.2	$	(13.1)

Other ~~Expense~~

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

~~Other~~(income) expense decreased for the three months ended ~~February 29,~~November 30, 2020, compared to the three months ended ~~February 28,~~November 30, 2019, primarily due to: (i) ~~$2.3~~$7.6 million related to a decrease in fees associated with ~~the~~lower utilization of the trade accounts receivable sales programs, ~~and~~ (ii) ~~$2.6~~$3.9 million related to lower net periodic benefit ~~costs. The decrease was partially offset by~~costs and (iii) $1.6 million ofarising from a reduction in other expense.

Other expense decreased for the six months ended February 29, 2020, compared to the six months ended February 28, 2019, primarily due to: (i) $4.6 million related to a decrease in fees associated with the 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) $4.3 million related to lower net periodic benefit costs. The decrease was partially offset by $3.3 million of other expense.

Interest Income

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


	Three months ended
(dollars in millions)	November 30, 2020		November 30, 2019		Change
Interest income	$	1.9	$	5.9	$	(4.0)

Interest income ~~remained relatively consistent~~decreased during the three months ended ~~February 29,~~November 30, 2020, compared to the three months ended ~~February 28, 2019.~~

~~Interest income increased during the six months ended February 29, 2020, compared to the six months ended February 28,~~November 30, 2019, primarily due to ~~increased~~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 Six months ended
(dollars in millions) February 29, 2020 February 28, 2019 Change February 29, 2020 February 28, 2019 Change
Interest expense $ 46.2
$ 46.2
$ —
$ 91.1
$ 88.8
$ 2.3


	Three months ended
(dollars in millions)	November 30, 2020		November 30, 2019		Change
Interest expense	$	32.3	$	44.9	$	(12.6)

Interest expense ~~remained consistent~~decreased during the three months ended ~~February 29,~~November 30, 2020, compared to the three months ended ~~February 28, 2019.~~

~~Interest expense increased during the six months ended February 29, 2020, compared to the six months ended February 28,~~November 30, 2019 due to ~~additional~~lower 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 Six months ended
February 29, 2020 February 28, 2019 Change February 29, 2020 February 28, 2019 Change
Effective income tax rate 108.9 % 33.0 % 75.9 % 71.0 % 27.9 % 43.1 %


	Three months ended
	November 30, 2020		November 30, 2019		Change
Effective income tax rate	29.6	%	60.3	%	(30.7)	%

~~adjustments related to the Tax Cuts and Jobs Act of 2017 (the “Tax Act”) for the six months ended February 28, 2019, including a $13.3 million income tax benefit recorded during~~ the three months ended November 30, ~~2018.~~2020, driven in part by decreased restructuring charges in tax jurisdictions with minimal related income tax 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 indication 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, ~~impairment~~loss 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.

Table of Contents

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


	Three months ended
(in thousands, except for per share data)	November 30, 2020		November 30, 2019
Operating income (U.S. GAAP)	$	313,950	$	152,779
Amortization of intangibles	11,455		16,140
Stock-based compensation expense and related charges	33,541		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 income	50,987		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 income	50,987		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”).

Table of Contents

⁽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 six months ended February 28, 2019, 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 six months ended February 28, 2019 includes a $13.3 million income tax benefit for the effects of the Tax Act recorded during the three months ended November 30, 2018.~~

Adjusted Free Cash Flow


	Three months ended
(in thousands)	November 30, 2020		November 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 equipment	110,792		23,209
Adjusted free cash flow (Non-GAAP)	$	(176,629)	$	(186,240)

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

⁽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 $166.2 million in cash. For the initial and second closings, total assets acquired of $172.3 million and total liabilities assumed of $6.1 million were recorded at their estimated fair values as of the acquisition dates.

~~On September 30, 2019, under the terms of the Framework Agreement, we completed the third~~fourth closing of our acquisition of certain assets of JJMD. The preliminary aggregate purchase price paid for the ~~third~~fourth closing was approximately ~~$111.8~~$18.4 million in cash, which remains subject to certain post-closing adjustments based on conditions within the Framework Agreement. ~~For the third closing, total~~Total assets acquired of ~~$199.7~~$30.6 million ~~including $83.2 million in contract assets, $35.1 million in inventory and $70.4 million in goodwill,~~ and total liabilities assumed of ~~$87.9~~$12.2 million ~~including $73.5 million of pension obligations,~~ were recorded at their estimated fair values as of the acquisition date. There were no intangible assets identified in this acquisition and the goodwill is primarily attributable to the assembled workforce. The majority of the goodwill is currently not expected to be deductible for income tax purposes.

The acquisition of the JJMD assets ~~have been~~was accounted for as ~~separate~~a business ~~combinations for each closing~~combination using the acquisition method of accounting. ~~We are~~The Company is currently evaluating the fair values of the assets and liabilities related to the ~~second and third closings of these business combinations.~~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, 2019~~October 26, 2020 for the ~~initial closing, April 29, 2019 for the second closing and September 30, 2019 for the third~~fourth 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. Despite the impacts of the COVID-19 pandemic on our ability to estimate capital expenditures for fiscal year 2020, we have historically been successful in balancing capital expenditures commensurate with customer demand and would expect to be able to do so in the future. We continue to assess our capital structure and evaluate the merits of redeploying available cash.

Certain of our trade accounts receivable sale programs expire or are subject to termination provisions within the 2020 calendar year. In addition, our 5.625% Senior Notes mature on December 15, 2020. While we expect to renew such trade accounts receivable sale programs and refinance our Senior Notes, market conditions, including the implications of the COVID-19 pandemic, at the time our current programs expire and debt matures, respectively, may create challenges in doing so, such as incurring a higher cost of capital.

Cash and Cash Equivalents

As of ~~February 29,~~November 30, 2020, we had approximately ~~$696.7 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 ~~February 29,~~November 30, 2020 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:

3.600% Senior Notes⁽¹⁾

facilities⁽²⁾⁽³⁾

commercial paper program⁽⁴⁾

Jan 22, 2023 and Jan 22, 2025⁽²⁾⁽³⁾

Jan 22, 2025⁽²⁾

$3.3 billion⁽²⁾⁽³⁾

$301.7 million⁽²⁾


(in thousands)	4.700% Senior Notes		4.900% Senior Notes		3.950% Senior Notes		3.600% Senior Notes		3.000% 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)
Other	164		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 Date	Sep 15, 2022		Jul 14, 2023		Jan 12, 2028		Jan 15, 2030		Jan 15, 2031		Apr 23, 2021, Jan 22, 2023 and Jan 22, 2025		Jan 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



Part I – Financial Information
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets as of ~~February 29,~~November 30, 2020 and August 31, ~~2019~~2020	1
	Condensed Consolidated Statements of Operations for the three months ~~and six months~~ ended ~~February 29,~~November 30, 2020 and ~~February 28,~~ 2019	32
	Condensed Consolidated Statements of Comprehensive Income for the three months ~~and six months~~ ended ~~February 29,~~November 30, 2020 and ~~February 28,~~ 2019	43
	Condensed Consolidated Statements of Stockholders’ Equity for the three months ~~and six months~~ ended ~~February 29,~~November 30, 2020 and ~~February 28,~~ 2019	54
	Condensed Consolidated Statements of Cash Flows for the ~~six~~three months ended ~~February 29,~~November 30, 2020 and ~~February 28,~~ 2019	65
	Notes to Condensed Consolidated Financial Statements	76
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2620
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3930
Item 4.	Controls and Procedures	3930

Part II – Other Information
Item 1.	Legal Proceedings	4031
Item 1A.	Risk Factors	4031
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4031
Item 3.	Defaults Upon Senior Securities	4131
Item 4.	Mine Safety Disclosures	4131
Item 5.	Other Information	4131
Item 6.	Exhibits	4232
	Signatures	4433


	February 29, 2020 (Unaudited)			August 31, 2019				November 30, 2020 (Unaudited)		August 31, 2020
ASSETS							ASSETS
Current assets:							Current assets:
Cash and cash equivalents	$	696,745		$	1,163,343		Cash and cash equivalents	$	1,107,573	$	1,393,557
Accounts receivable, net of allowance for doubtful accounts of $30,191 as of February 29, 2020 and $17,221 as of August 31, 2019	2,314,055			2,745,226
Accounts receivable, net of allowance for doubtful accounts of $24,479 as of November 30, 2020 and $25,827 as of August 31, 2020							Accounts receivable, net of allowance for doubtful accounts of $24,479 as of November 30, 2020 and $25,827 as of August 31, 2020	3,651,869		2,847,743
Contract assets	1,057,656			911,940			Contract assets	1,088,059		1,104,700
Inventories, net	3,339,890			3,023,003			Inventories, net	3,271,842		3,131,783

Prepaid expenses and other current assets	569,493			501,573			Prepaid expenses and other current assets	727,849		657,102
Total current assets	7,977,839			8,345,085			Total current assets	9,847,192		9,134,885
Property, plant and equipment, net of accumulated depreciation of $4,344,338 as of February 29, 2020 and $4,110,496 as of August 31, 2019	3,462,038			3,333,750
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, 2020							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, 2020	3,792,091		3,665,312
Operating lease right-of-use asset	373,413			—			Operating lease right-of-use asset	391,004		362,847
Goodwill	700,597			622,255			Goodwill	706,625		696,853
Intangible assets, net of accumulated amortization of $367,299 as of February 29, 2020 and $337,841 as of August 31, 2019	234,977			256,853
Intangible assets, net of accumulated amortization of $406,694 as of November 30, 2020 and $395,074 as of August 31, 2020							Intangible assets, net of accumulated amortization of $406,694 as of November 30, 2020 and $395,074 as of August 31, 2020	198,801		209,870
Deferred income taxes	194,468			198,827			Deferred income taxes	165,264		165,407
Other assets	196,346			213,705			Other assets	168,501		162,242
Total assets	$	13,139,678		$	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	$	637,841		$	375,181		Current installments of notes payable and long-term debt	$	50,195	$	50,194
Accounts payable	4,652,138			5,166,780			Accounts payable	6,431,567		5,687,038

Accrued expenses	3,015,129			2,990,144			Accrued expenses	3,061,092		3,211,528
Current operating lease liabilities	100,033			—			Current operating lease liabilities	119,150		110,723
Total current liabilities	8,405,141			8,532,105			Total current liabilities	9,662,004		9,059,483
Notes payable and long-term debt, less current installments	2,086,359			2,121,284			Notes payable and long-term debt, less current installments	2,679,005		2,678,288
Other liabilities	315,875			163,821			Other liabilities	331,093		268,925
Non-current operating lease liabilities	311,879			—			Non-current operating lease liabilities	324,379		302,035
Income tax liabilities	143,161			136,689			Income tax liabilities	163,459		148,629
Deferred income taxes	118,123			115,818			Deferred income taxes	115,587		114,657
Total liabilities	11,380,538			11,069,717			Total liabilities	13,275,527		12,572,017
Commitments and contingencies							Commitments and contingencies	0		0
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; 263,299,124 and 260,406,796 shares issued and 151,407,526 and 153,520,380 shares outstanding as of February 29, 2020 and August 31, 2019, respectively	263			260
Preferred stock, $0.001 par value, authorized 10,000,000 shares; 0 shares issued and 0 shares outstanding							Preferred stock, $0.001 par value, authorized 10,000,000 shares; 0 shares issued and 0 shares outstanding	0		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, respectively							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, respectively	266		264
Additional paid-in capital	2,363,839			2,304,552			Additional paid-in capital	2,445,582		2,413,616
Retained earnings	2,048,954			2,037,037			Retained earnings	2,228,729		2,040,922
Accumulated other comprehensive loss	(102,943		)	(82,794		)	Accumulated other comprehensive loss	(14,346)		(34,168)
Treasury stock at cost, 111,891,598 and 106,886,416 shares as of February 29, 2020 and August 31, 2019, respectively	(2,563,282		)	(2,371,612		)
Treasury stock at cost, 115,575,782 and 113,499,912 shares as of November 30, 2020 and August 31, 2020, respectively							Treasury 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’ equity	1,746,831			1,887,443			Total Jabil Inc. stockholders’ equity	1,979,371		1,811,384
Noncontrolling interests	12,309			13,315			Noncontrolling interests	14,580		14,015
Total equity	1,759,140			1,900,758			Total equity	1,993,951		1,825,399
Total liabilities and equity	$	13,139,678		$	12,970,475		Total liabilities and equity	$	15,269,478	$	14,397,416


	Six months ended							Three months ended
	February 29, 2020			February 28, 2019				November 30, 2020		November 30, 2019
Cash flows provided by operating activities:							Cash flows provided by operating activities:
Net income	$	38,133		$	191,681		Net income	$	201,007	$	40,714
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 amortization	402,347			381,510			Depreciation and amortization	205,766		202,859
Restructuring and related charges	33,061			(3,212		)	Restructuring and related charges	(1,556)		18,347
Recognition of stock-based compensation expense and related charges	45,332			32,946			Recognition of stock-based compensation expense and related charges	33,541		30,223
Deferred income taxes	3,087			23,921			Deferred income taxes	(1,869)		(6,645)
Provision for allowance for doubtful accounts	10,185			5,598			Provision for allowance for doubtful accounts	2,426		10,413

Other, net	13,838			38,559			Other, net	11,247		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	424,971			(365,192		)	Accounts receivable	(791,492)		(863,210)
Contract assets	(63,302		)	(815,144		)	Contract assets	27,971		(68,322)
Inventories	(279,664		)	225,036			Inventories	(134,723)		(286,775)
Prepaid expenses and other current assets	(62,881		)	(4,895		)	Prepaid expenses and other current assets	(54,243)		(31,413)
Other assets	(8,438		)	(10,170		)	Other assets	(8,142)		(8,162)
Accounts payable, accrued expenses and other liabilities	(472,503		)	407,127			Accounts payable, accrued expenses and other liabilities	575,527		981,736
Net cash provided by operating activities	84,166			107,765			Net cash provided by operating activities	65,460		20,944
Cash flows used in investing activities:							Cash flows used in investing activities:
Acquisition of property, plant and equipment	(448,765		)	(537,140		)	Acquisition of property, plant and equipment	(352,881)		(230,393)
Proceeds and advances from sale of property, plant and equipment	36,624			144,968			Proceeds and advances from sale of property, plant and equipment	110,792		23,209
Cash paid for business and intangible asset acquisitions, net of cash	(141,195		)	(80,778		)	Cash paid for business and intangible asset acquisitions, net of cash	(18,417)		(116,767)
Cash receipts on sold receivables	—			96,846

Other, net	(2,013		)	(13,504		)	Other, net	(3,367)		(1,779)
Net cash used in investing activities	(555,349		)	(389,608		)	Net cash used in investing activities	(263,873)		(325,730)
Cash flows provided by (used in) financing activities:
Cash flows used in financing activities:							Cash flows used in financing activities:
Borrowings under debt agreements	5,063,358			6,182,931			Borrowings under debt agreements	200,000		1,779,801
Payments toward debt agreements	(4,835,697		)	(6,046,181		)	Payments toward debt agreements	(201,969)		(1,787,243)
Payments to acquire treasury stock	(168,660		)	(350,323		)	Payments to acquire treasury stock	(50,029)		(96,390)
Dividends paid to stockholders	(26,280		)	(27,422		)	Dividends paid to stockholders	(13,814)		(13,731)
Net proceeds from exercise of stock options and issuance of common stock under employee stock purchase plan	16,179			14,587

Treasury stock minimum tax withholding related to vesting of restricted stock	(23,010		)	(11,204		)	Treasury stock minimum tax withholding related to vesting of restricted stock	(21,581)		(19,317)
Other, net	(11,617		)	(1,500		)
Net cash provided by (used in) financing activities	14,273			(239,112		)

Net cash used in financing activities							Net cash used in financing activities	(87,393)		(136,880)
Effect of exchange rate changes on cash and cash equivalents	(9,688		)	12,063			Effect of exchange rate changes on cash and cash equivalents	(178)		(1,835)
Net decrease in cash and cash equivalents	(466,598		)	(508,892		)	Net decrease in cash and cash equivalents	(285,984)		(443,501)
Cash and cash equivalents at beginning of period	1,163,343			1,257,949			Cash and cash equivalents at beginning of period	1,393,557		1,163,343
Cash and cash equivalents at end of period	$	696,745		$	749,057		Cash and cash equivalents at end of period	$	1,107,573	$	719,842



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



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



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



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



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



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



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



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



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



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



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



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



~~Delaware~~


⁽²⁾ 14 Table of Contents	~~Primarily relates to the 2020 Restructuring Plan.~~


⁽³⁾	~~Primarily relates to the 2017 Restructuring Plan.~~



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


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



	Dividend Declaration Date	Dividend per Share		Total of Cash Dividends Declared		Date of Record for Dividend Payment	Dividend Cash Payment Date
Fiscal Year 2020:	October 17, 2019	$	0.08	$	12,647	November 15, 2019	December 2, 2019
	January 23, 2020	$	0.08	$	12,517	February 14, 2020	March 4, 2020
Fiscal Year 2019:	October 18, 2018	$	0.08	$	13,226	November 15, 2018	December 3, 2018
	January 24, 2019	$	0.08	$	12,706	February 15, 2019	March 1, 2019


⁽²⁾	~~The Company’s forward foreign exchange contracts are measured on a recurring basis at fair value, based on foreign currency spot rates and forward rates quoted by banks or foreign currency dealers.~~


⁽³⁾	The Senior Non-Convertible Preferred Stock is valued each reporting period using unobservable inputs based on a discounted cash flow model and is classified as an available for sale debt security with any unrealized loss recorded to AOCI. As of February 29, 2020 and August 31, 2019, the unobservable inputs have an immaterial impact on the fair value calculation.


⁽⁴⁾	Fair value measurements are based on the contractual terms of the derivatives and use observable market-based inputs. The interest rate swaps are valued using a discounted cash flow analysis on the expected cash flows of each derivative using observable inputs including interest rate curves and credit spreads.


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


(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.~~


⁽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 (annualized) are calculated as 360 days divided by days in inventory.~~


⁽⁵⁾	~~Days in accounts payable is calculated as accounts payable divided by cost of revenue multiplied by 90 days.~~


⁽²⁾	Primarily relates ~~to the 2020 Restructuring Plan.~~



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


⁽¹⁾	~~On January 15, 2020, we issued $500.0 million of publicly registered 3.600% Senior Notes due 2030 (the “3.600% Senior Notes”).~~ (1)As of November 30, 2020, we had $3.8 billion in available unused borrowing capacity under our revolving credit facilities. The ~~net proceeds from the offering were used for the repayment of term loan indebtedness.~~


⁽³⁾$1.8 billion under our commercial paper program.	~~As of February 29, 2020, we had $3.1 billion in available unused borrowing capacity under our revolving credit facilities, net of outstanding commercial paper borrowings.~~


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



	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