UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
For the quarterly period ended May 31, 2022
or
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
For the transition period from to
Commission File Number: 001-14063
JABIL INC.
(Exact name of registrant as specified in its charter)
| Delaware | 38-1886260 | |||||||
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |||||||
10800 Roosevelt Boulevard North, St. Petersburg, Florida 33716
(Address of principal executive offices) (Zip Code)
(727) 577-9749
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading symbol(s) | Name of each exchange on which registered | ||||||
| Common Stock, $0.001 par value per share | JBL | New York Stock Exchange | ||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☒ | Accelerated filer | ☐ | ||||||||
| Non-accelerated filer | ☐ |
Smaller reporting company | ☐ | ||||||||
| Emerging growth company | ☐ | ||||||||||
1
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of June 21, 2022, there were 137,554,586 shares of the registrant’s Common Stock outstanding.
2
JABIL INC. AND SUBSIDIARIES INDEX
| Item 1. | ||||||||
Condensed Consolidated Balance Sheets as of May 31, 2022 and August 31, 2021 |
||||||||
Condensed Consolidated Statements of Operations for the three months and nine months ended May 31, 2022 and 2021 |
||||||||
Condensed Consolidated Statements of Cash Flows for the nine months ended May 31, 2022 and 2021 |
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| Item 2. | ||||||||
| Item 3. | ||||||||
| Item 4. | ||||||||
| Item 1. | ||||||||
| Item 1A. | ||||||||
| Item 2. | ||||||||
| Item 3. | ||||||||
| Item 4. | ||||||||
| Item 5. | ||||||||
| Item 6. | ||||||||
PART I—FINANCIAL INFORMATION
| Item 1. | Financial Statements | ||||
JABIL INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions, except for share data)
| May 31, 2022 (Unaudited) |
August 31, 2021 | ||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 1,070 | $ | 1,567 | |||||||
| Accounts receivable, net of allowance for doubtful accounts | 3,193 | 3,141 | |||||||||
| Contract assets | 1,276 | 998 | |||||||||
| Inventories, net | 5,981 | 4,414 | |||||||||
| Prepaid expenses and other current assets | 952 | 757 | |||||||||
| Total current assets | 12,472 | 10,877 | |||||||||
Property, plant and equipment, net of accumulated depreciation of $5,482 as of May 31, 2022 and $5,033 as of August 31, 2021 |
3,894 | 4,075 | |||||||||
| Operating lease right-of-use asset | 481 | 390 | |||||||||
| Goodwill | 711 | 715 | |||||||||
Intangible assets, net of accumulated amortization of $464 as of May 31, 2022 and $442 as of August 31, 2021 |
167 | 182 | |||||||||
| Deferred income taxes | 174 | 176 | |||||||||
| Other assets | 272 | 239 | |||||||||
| Total assets | $ | 18,171 | $ | 16,654 | |||||||
| LIABILITIES AND EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Current installments of notes payable and long-term debt | $ | 1 | $ | — | |||||||
| Accounts payable | 7,082 | 6,841 | |||||||||
| Accrued expenses | 4,744 | 3,734 | |||||||||
| Current operating lease liabilities | 115 | 108 | |||||||||
| Total current liabilities | 11,942 | 10,683 | |||||||||
| Notes payable and long-term debt, less current installments | 2,874 | 2,878 | |||||||||
| Other liabilities | 289 | 334 | |||||||||
| Non-current operating lease liabilities | 405 | 333 | |||||||||
| Income tax liabilities | 190 | 178 | |||||||||
| Deferred income taxes | 114 | 111 | |||||||||
| Total liabilities | 15,814 | 14,517 | |||||||||
| Commitments and contingencies | |||||||||||
| Equity: | |||||||||||
| Jabil Inc. stockholders’ equity: | |||||||||||
Preferred stock, $0.001 par value, authorized 10,000,000 shares; no shares issued and no shares outstanding |
— | — | |||||||||
Common stock, $0.001 par value, authorized 500,000,000 shares; 270,407,585 and 267,418,092 shares issued and 138,851,189 and 144,496,077 shares outstanding as of May 31, 2022 and August 31, 2021, respectively |
— | — | |||||||||
| Additional paid-in capital | 2,622 | 2,533 | |||||||||
| Retained earnings | 3,333 | 2,688 | |||||||||
| Accumulated other comprehensive loss | (20) | (25) | |||||||||
Treasury stock at cost, 131,556,396 and 122,922,015 shares as of May 31, 2022 and August 31, 2021, respectively |
(3,579) | (3,060) | |||||||||
| Total Jabil Inc. stockholders’ equity | 2,356 | 2,136 | |||||||||
| Noncontrolling interests | 1 | 1 | |||||||||
| Total equity | 2,357 | 2,137 | |||||||||
| Total liabilities and equity | $ | 18,171 | $ | 16,654 | |||||||
See accompanying notes to Condensed Consolidated Financial Statements.
1
JABIL INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except for per share data)
(Unaudited)
| Three months ended | Nine months ended | ||||||||||||||||||||||
| May 31, 2022 | May 31, 2021 | May 31, 2022 | May 31, 2021 | ||||||||||||||||||||
| Net revenue | $ | 8,328 | $ | 7,215 | $ | 24,448 | $ | 21,876 | |||||||||||||||
| Cost of revenue | 7,709 | 6,647 | 22,545 | 20,104 | |||||||||||||||||||
| Gross profit | 619 | 568 | 1,903 | 1,772 | |||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Selling, general and administrative | 282 | 305 | 870 | 914 | |||||||||||||||||||
| Research and development | 8 | 10 | 25 | 27 | |||||||||||||||||||
| Amortization of intangibles | 8 | 12 | 24 | 35 | |||||||||||||||||||
| Restructuring, severance and related charges | — | 1 | — | 6 | |||||||||||||||||||
| Operating income | 321 | 240 | 984 | 790 | |||||||||||||||||||
| Loss on debt extinguishment | 4 | — | 4 | — | |||||||||||||||||||
| Gain on securities | — | (2) | — | (2) | |||||||||||||||||||
| Other expense (income) | 1 | (4) | (2) | (7) | |||||||||||||||||||
| Interest income | (1) | (1) | (2) | (5) | |||||||||||||||||||
| Interest expense | 39 | 34 | 105 | 97 | |||||||||||||||||||
| Income before income tax | 278 | 213 | 879 | 707 | |||||||||||||||||||
| Income tax expense | 60 | 43 | 198 | 184 | |||||||||||||||||||
| Net income | 218 | 170 | 681 | 523 | |||||||||||||||||||
| Net income attributable to noncontrolling interests, net of tax | — | 1 | — | 2 | |||||||||||||||||||
| Net income attributable to Jabil Inc. | $ | 218 | $ | 169 | $ | 681 | $ | 521 | |||||||||||||||
| Earnings per share attributable to the stockholders of Jabil Inc.: | |||||||||||||||||||||||
| Basic | $ | 1.55 | $ | 1.14 | $ | 4.77 | $ | 3.49 | |||||||||||||||
| Diluted | $ | 1.52 | $ | 1.12 | $ | 4.67 | $ | 3.41 | |||||||||||||||
| Weighted average shares outstanding: | |||||||||||||||||||||||
| Basic | 140.4 | 148.1 | 142.6 | 149.5 | |||||||||||||||||||
| Diluted | 143.3 | 152.0 | 145.8 | 152.8 | |||||||||||||||||||
See accompanying notes to Condensed Consolidated Financial Statements.
2
JABIL INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions)
(Unaudited)
| Three months ended | Nine months ended | ||||||||||||||||||||||
| May 31, 2022 | May 31, 2021 | May 31, 2022 | May 31, 2021 | ||||||||||||||||||||
| Net income | $ | 218 | $ | 170 | $ | 681 | $ | 523 | |||||||||||||||
| Other comprehensive income: | |||||||||||||||||||||||
| Change in foreign currency translation | (9) | 15 | (20) | 26 | |||||||||||||||||||
| Change in derivative instruments: | |||||||||||||||||||||||
| Change in fair value of derivatives | 6 | 8 | 31 | 64 | |||||||||||||||||||
| Adjustment for net losses (gains) realized and included in net income | 9 | (4) | 6 | (41) | |||||||||||||||||||
| Total change in derivative instruments | 15 | 4 | 37 | 23 | |||||||||||||||||||
| Actuarial loss | (5) | — | (15) | — | |||||||||||||||||||
| Prior service credit | 1 | — | 3 | — | |||||||||||||||||||
| Total other comprehensive income | 2 | 19 | 5 | 49 | |||||||||||||||||||
| Comprehensive income | $ | 220 | $ | 189 | $ | 686 | $ | 572 | |||||||||||||||
| Comprehensive income attributable to noncontrolling interests | — | 1 | — | 2 | |||||||||||||||||||
| Comprehensive income attributable to Jabil Inc. | $ | 220 | $ | 188 | $ | 686 | $ | 570 | |||||||||||||||
See accompanying notes to Condensed Consolidated Financial Statements.
3
JABIL INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in millions)
(Unaudited)
| Three months ended | Nine months ended | ||||||||||||||||||||||
| May 31, 2022 | May 31, 2021 | May 31, 2022 | May 31, 2021 | ||||||||||||||||||||
Total stockholders' equity, beginning balances |
$ | 2,338 | $ | 2,102 | $ | 2,137 | $ | 1,825 | |||||||||||||||
Common stock: |
— | — | — | — | |||||||||||||||||||
Additional paid-in capital: |
|||||||||||||||||||||||
Beginning balances |
2,608 | 2,488 | 2,533 | 2,414 | |||||||||||||||||||
Shares issued under employee stock purchase plan |
— | — | 26 | 20 | |||||||||||||||||||
| Purchase of noncontrolling interest | — | (14) | — | (14) | |||||||||||||||||||
Recognition of stock-based compensation |
14 | 17 | 63 | 71 | |||||||||||||||||||
Ending balances |
2,622 | 2,491 | 2,622 | 2,491 | |||||||||||||||||||
Retained earnings: |
|||||||||||||||||||||||
Beginning balances |
3,127 | 2,368 | 2,688 | 2,041 | |||||||||||||||||||
Declared dividends |
(12) | (12) | (36) | (37) | |||||||||||||||||||
| Net income attributable to Jabil Inc. | 218 | 169 | 681 | 521 | |||||||||||||||||||
Ending balances |
3,333 | 2,525 | 3,333 | 2,525 | |||||||||||||||||||
| Accumulated other comprehensive (loss) income: | |||||||||||||||||||||||
Beginning balances |
(22) | (4) | (25) | (34) | |||||||||||||||||||
| Other comprehensive income | 2 | 19 | 5 | 49 | |||||||||||||||||||
Ending balances |
(20) | 15 | (20) | 15 | |||||||||||||||||||
Treasury stock: |
|||||||||||||||||||||||
Beginning balances |
(3,376) | (2,763) | (3,060) | (2,610) | |||||||||||||||||||
Purchases of treasury stock under employee stock plans |
— | — | (44) | (21) | |||||||||||||||||||
Treasury shares purchased |
(203) | (130) | (475) | (262) | |||||||||||||||||||
Ending balances |
(3,579) | (2,893) | (3,579) | (2,893) | |||||||||||||||||||
Noncontrolling interests: |
|||||||||||||||||||||||
Beginning balances |
1 | 13 | 1 | 14 | |||||||||||||||||||
Net income attributable to noncontrolling interests |
— | 1 | — | 2 | |||||||||||||||||||
| Purchase of noncontrolling interest | — | (13) | — | (13) | |||||||||||||||||||
Declared dividends to noncontrolling interests |
— | — | — | (2) | |||||||||||||||||||
Ending balances |
1 | 1 | 1 | 1 | |||||||||||||||||||
Total stockholders' equity, ending balances |
$ | 2,357 | $ | 2,139 | $ | 2,357 | $ | 2,139 | |||||||||||||||
See accompanying notes to Condensed Consolidated Financial Statements.
4
JABIL INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(Unaudited)
| Nine months ended | |||||||||||
| May 31, 2022 | May 31, 2021 | ||||||||||
| Cash flows provided by operating activities: | |||||||||||
| Net income | $ | 681 | $ | 523 | |||||||
| Depreciation, amortization, and other, net | 768 | 730 | |||||||||
| Change in operating assets and liabilities, exclusive of net assets acquired | (704) | (582) | |||||||||
| Net cash provided by operating activities | 745 | 671 | |||||||||
| Cash flows used in investing activities: | |||||||||||
| Acquisition of property, plant and equipment | (1,068) | (878) | |||||||||
| Proceeds and advances from sale of property, plant and equipment | 470 | 287 | |||||||||
| Cash paid for business and intangible asset acquisitions, net of cash | (18) | (50) | |||||||||
| Other, net | — | (3) | |||||||||
| Net cash used in investing activities | (616) | (644) | |||||||||
| Cash flows used in financing activities: | |||||||||||
| Borrowings under debt agreements | 2,621 | 1,081 | |||||||||
| Payments toward debt agreements | (2,707) | (908) | |||||||||
| Payments to acquire treasury stock | (475) | (262) | |||||||||
| Dividends paid to stockholders | (37) | (38) | |||||||||
| Net proceeds from exercise of stock options and issuance of common stock under employee stock purchase plan | 26 | 20 | |||||||||
| Treasury stock minimum tax withholding related to vesting of restricted stock | (44) | (21) | |||||||||
| Other, net | (23) | (49) | |||||||||
| Net cash used in financing activities | (639) | (177) | |||||||||
| Effect of exchange rate changes on cash and cash equivalents | 13 | (3) | |||||||||
| Net decrease in cash and cash equivalents | (497) | (153) | |||||||||
| Cash and cash equivalents at beginning of period | 1,567 | 1,394 | |||||||||
| Cash and cash equivalents at end of period | $ | 1,070 | $ | 1,241 | |||||||
See accompanying notes to Condensed Consolidated Financial Statements.
5
JABIL INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) necessary to present fairly the information set forth therein have been included. Jabil Inc. (the “Company”) has made certain reclassification adjustments to conform prior periods’ Condensed Consolidated Financial Statements to the current presentation. The accompanying unaudited Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and footnotes included in the Annual Report on Form 10-K of Jabil Inc. (the “Company”) for the fiscal year ended August 31, 2021. Results for the nine months ended May 31, 2022 are not necessarily an indication of the results that may be expected for the full fiscal year ending August 31, 2022.
2. Trade Accounts Receivable Sale Programs
The Company regularly sells designated pools of high credit quality trade accounts receivable, at a discount, under uncommitted trade accounts receivable sale programs to unaffiliated financial institutions without recourse. As these accounts receivable are sold without recourse, the Company does not retain the associated risks following the transfer of such accounts receivable to the respective financial institutions.
As of May 31, 2022, the Company may elect to sell receivables and the unaffiliated financial institution may elect to purchase specific accounts receivable at any one time up to a: (i) maximum aggregate amount available of $2.0 billion under nine trade accounts receivable sale programs, (ii) maximum amount available of 400 million CNY under one trade accounts receivable sale program and (iii) maximum amount available of 100 million CHF under one trade accounts receivable sale program. The trade accounts receivable sale programs expire on various dates through 2025.
The Company continues servicing the receivables sold and in exchange receives a servicing fee under each of the trade accounts receivable sale programs. Servicing fees related to the trade accounts receivable sale programs recognized during the three months and nine months ended May 31, 2022 and 2021 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.
In connection with the trade accounts receivable sale programs, the Company recognized the following (in millions):
| Three months ended | Nine months ended | ||||||||||||||||||||||
| May 31, 2022 | May 31, 2021 | May 31, 2022 | May 31, 2021 | ||||||||||||||||||||
Trade accounts receivable sold(1) |
$ | 2,575 | $ | 1,016 | $ | 6,509 | $ | 3,567 | |||||||||||||||
| Cash proceeds received | $ | 2,572 | $ | 1,015 | $ | 6,504 | $ | 3,565 | |||||||||||||||
Pre-tax losses on sale of receivables(2) |
$ | 3 | $ | 1 | $ | 5 | $ | 2 | |||||||||||||||
(1)Receivables sold are excluded from accounts receivable on the Condensed Consolidated Balance Sheets and are reflected as cash provided by operating activities on the Condensed Consolidated Statements of Cash Flows.
(2)Recorded to other expense within the Condensed Consolidated Statement of Operations.
3. Inventories
Inventories consist of the following (in millions):
| May 31, 2022 | August 31, 2021 | ||||||||||
| Raw materials | $ | 4,722 | $ | 3,142 | |||||||
| Work in process | 699 | 677 | |||||||||
| Finished goods | 646 | 680 | |||||||||
| Reserve for excess and obsolete inventory | (86) | (85) | |||||||||
| Inventories, net | $ | 5,981 | $ | 4,414 | |||||||
6
4. Leases
During fiscal year 2022, the Company entered into new operating and finance leases. The future minimum lease payments under these new leases as of May 31, 2022 were as follows (in millions):
| Payments due by period | |||||||||||||||||||||||||||||
| Total | Less than 1 year |
1-3 years | 3-5 years | After 5 years | |||||||||||||||||||||||||
Operating lease obligations(1) |
$ | 180 | $ | 31 | $ | 56 | $ | 44 | $ | 49 | |||||||||||||||||||
Finance lease obligations(1) |
$ | 74 | $ | 37 | $ | 36 | $ | 1 | $ | — | |||||||||||||||||||
(1)Excludes $33 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.
5. Notes Payable and Long-Term Debt
Notes payable and long-term debt outstanding as of May 31, 2022 and August 31, 2021 are summarized below (in millions):
(1)On May 4, 2022, the Company issued $500 million of registered 4.250% Senior Notes due 2027 (the “Green Bonds” or the “4.250% Senior Notes”). On May 31, 2022, the net proceeds from the offering were used to redeem the Company’s 4.700% Senior Notes due in 2022 and pay the applicable “make-whole” premium and accrued interest. In addition, the Company intends to allocate an amount equal to the net proceeds from this offering to finance or refinance eligible expenditures under the Company’s new green financing framework.
(2)As of May 31, 2022, the Company has $3.8 billion in available unused borrowing capacity under its revolving credit facilities. The senior unsecured credit agreement dated as of January 22, 2020 and amended on April 28, 2021 (the “Credit Facility”) acts as the back-up facility for commercial paper outstanding, if any. The Company has a borrowing capacity of up to $3.2 billion under its commercial paper program, which was increased from $1.8 billion on February 18, 2022.
Debt Covenants
Borrowings under the Company’s debt agreements are subject to various covenants that limit the Company’s ability to: incur additional indebtedness, sell assets, effect mergers and certain transactions, and effect certain transactions with subsidiaries and affiliates. In addition, the revolving credit facilities and the 4.900% Senior Notes contain debt leverage and interest coverage covenants. The Company is also subject to certain covenants requiring the Company to offer to repurchase the 4.900%, 3.950%, 3.600%, 3.000%, 1.700% or 4.250% Senior Notes upon a change of control. As of May 31, 2022 and August 31, 2021, the Company was in compliance with its debt covenants.
Fair Value
Refer to Note 15 – “Fair Value Measurements” for the estimated fair values of the Company’s notes payable and long-term debt.
7
6. Asset-Backed Securitization Program
Certain Jabil entities participating in the global asset-backed securitization program continuously sell designated pools of trade accounts receivable to a special purpose entity, which in turn sells certain of the receivables at a discount to conduits administered by an unaffiliated financial institution on a monthly basis. In addition, a foreign entity participating in the global asset-backed securitization program sells certain receivables at a discount to conduits administered by an unaffiliated financial institution on a daily basis. The Company terminated the foreign asset-backed securitization program on June 28, 2021.
The Company continues servicing the receivables sold and in exchange receives a servicing fee under the global asset-backed securitization program. Servicing fees related to the asset-backed securitization programs recognized during the three months and nine months ended May 31, 2022 and 2021 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.
The special purpose entity in the global asset-backed securitization program is a wholly-owned subsidiary of the Company and is included in the Company’s Condensed Consolidated Financial Statements. Certain unsold receivables covering up to the maximum amount of net cash proceeds available under the domestic, or U.S., portion of the global asset-backed securitization program are pledged as collateral to the unaffiliated financial institution as of May 31, 2022.
The global asset-backed securitization program expires on November 25, 2024 and the maximum amount of net cash proceeds available at any one time is $600 million. As of May 31, 2022, the Company had no available liquidity under its global asset-backed securitization program.
In connection with the asset-backed securitization programs, the Company recognized the following (in millions):
| Three months ended | Nine months ended | ||||||||||||||||||||||
| May 31, 2022 | May 31, 2021(4) |
May 31, 2022 | May 31, 2021(4) | ||||||||||||||||||||
Trade accounts receivable sold(1) |
$ | 947 | $ | 1,074 | $ | 2,979 | $ | 3,388 | |||||||||||||||
Cash proceeds received(2) |
$ | 942 | $ | 1,072 | $ | 2,971 | $ | 3,381 | |||||||||||||||
Pre-tax losses on sale of receivables(3) |
$ | 5 | $ | 2 | $ | 8 | $ | 7 | |||||||||||||||
(1)Receivables sold are excluded from accounts receivable on the Condensed Consolidated Balance Sheets and are reflected as cash provided by operating activities on the Condensed Consolidated Statements of Cash Flows.
(2)The amounts primarily represent proceeds from collections reinvested in revolving-period transfers.
(3)Recorded to other expense within the Condensed Consolidated Statements of Operations.
(4)Activity includes the foreign asset-backed securitization program which terminated on June 28, 2021.
The global asset-backed securitization program requires compliance with several covenants including compliance with the interest ratio and debt to EBITDA ratio of the Credit Facility. As of May 31, 2022 and August 31, 2021, the Company was in compliance with all covenants under the global asset-backed securitization program.
7. Accrued Expenses
Accrued expenses consist of the following (in millions):
| May 31, 2022 | August 31, 2021 | ||||||||||
| Inventory deposits | $ | 1,254 | $ | 711 | |||||||
Contract liabilities(1) |
733 | 559 | |||||||||
| Accrued compensation and employee benefits | 729 | 827 | |||||||||
| Other accrued expenses | 2,028 | 1,637 | |||||||||
| Accrued expenses | $ | 4,744 | $ | 3,734 | |||||||
(1)Revenue recognized during the nine months ended May 31, 2022 and 2021 that was included in the contract liability balance as of August 31, 2021 and 2020 was $269 million and $306 million, respectively.
8. Postretirement and Other Employee Benefits
Net Periodic Benefit Cost
8
The following table provides information about the net periodic benefit cost (credit) for all plans for the three months and nine months ended May 31, 2022 and 2021 (in millions):
| Three months ended | Nine months ended | ||||||||||||||||||||||
| May 31, 2022 | May 31, 2021 | May 31, 2022 | May 31, 2021 | ||||||||||||||||||||
Service cost(1) |
$ | 7 | $ | 6 | $ | 19 | $ | 19 | |||||||||||||||
Interest cost(2) |
1 | 2 | 3 | 4 | |||||||||||||||||||
Expected long-term return on plan assets(2) |
(5) | (4) | (13) | (12) | |||||||||||||||||||
Recognized actuarial gain(2) |
(2) | (1) | (8) | (4) | |||||||||||||||||||
Amortization of actuarial gain(2)(3) |
(2) | (2) | (6) | (5) | |||||||||||||||||||
Amortization of prior service cost(2) |
1 | — | 3 | — | |||||||||||||||||||
| Net periodic benefit cost (credit) | $ | — | $ | 1 | $ | (2) | $ | 2 | |||||||||||||||
(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.
(3)Actuarial gains and losses are amortized using a corridor approach. The gain/loss corridor is equal to 10 percent of the greater of the projected benefit obligation and the fair value of plan assets. Gains and losses in excess of the corridor are generally amortized over the average future working lifetime of the plan participants.
9. Derivative Financial Instruments and Hedging Activities
The Company is directly and indirectly affected by changes in certain market conditions. These changes in market conditions may adversely impact the Company’s financial performance and are referred to as market risks. The Company, where deemed appropriate, uses derivatives as risk management tools to mitigate the potential impact of certain market risks. The primary market risks managed by the Company through the use of derivative instruments are foreign currency risk and interest rate risk.
Foreign Currency Risk Management
Forward contracts are put in place to manage the foreign currency risk associated with the anticipated foreign currency denominated revenues and expenses. A hedging relationship existed with an aggregate notional amount outstanding of $1.3 billion and $1.5 billion as of May 31, 2022 and August 31, 2021, respectively. The related forward foreign exchange contracts have been designated as hedging instruments and are accounted for as cash flow hedges. The forward foreign exchange contract transactions will effectively lock in the value of anticipated foreign currency denominated revenues and expenses against foreign currency fluctuations. The anticipated foreign currency denominated revenues and expenses being hedged are expected to occur between June 1, 2022 and May 31, 2023.
In addition to derivatives that are designated as hedging instruments and qualify for hedge accounting, the Company also enters into forward contracts to economically hedge transactional exposure associated with commitments arising from trade accounts receivable, trade accounts payable, fixed purchase obligations and intercompany transactions denominated in a currency other than the functional currency of the respective operating entity. The aggregate notional amount of these outstanding contracts as of May 31, 2022 and August 31, 2021, was $3.1 billion and $3.6 billion, respectively.
Refer to Note 15 – “Fair Value Measurements” for the fair values and classification of the Company’s derivative instruments.
The gains and losses recognized in earnings due to amounts 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 net (losses) gains from forward contracts recorded in the Condensed Consolidated Statements of Operations for the periods indicated (in millions):
| Derivatives Not Designated as Hedging Instruments Under ASC 815 | Location of (Loss) Gain on Derivatives Recognized in Net Income | Amount of (Loss) Gain Recognized in Net Income on Derivatives | ||||||||||||||||||||||||||||||
| Three months ended | Nine months ended | |||||||||||||||||||||||||||||||
| May 31, 2022 | May 31, 2021 | May 31, 2022 | May 31, 2021 | |||||||||||||||||||||||||||||
Forward foreign exchange contracts(1) |
Cost of revenue | $ | (66) | $ | 27 | $ | (6) | $ | 148 | |||||||||||||||||||||||
9
(1)For the three months and nine months ended May 31, 2022, the Company recognized $64 million and $27 million, respectively, of foreign currency gains in cost of revenue, which are offset by the losses from the forward foreign exchange contracts. For the three months and nine months ended May 31, 2021, the Company recognized $22 million and $121 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 or anticipated debt issuances.
Cash Flow Hedges
The following table presents the interest rate swaps outstanding as of May 31, 2022, which have been designated as hedging instruments and are accounted for as cash flow hedges:
| Interest Rate Swap Summary | Hedged Interest Rate Payments | Aggregate Notional Amount (in millions) | Effective Date | Expiration Date | ||||||||||||||||||||||
| Forward Interest Rate Swap | ||||||||||||||||||||||||||
| Anticipated Debt Issuance | Fixed | $ | 150 | May 24, 2021 | July 31, 2024 | (1)(2) | ||||||||||||||||||||
(1)The contracts will be settled with the respective counterparties on a net basis at the expiration date for the forward interest rate swap.
(2)If the anticipated debt issuance occurs before July 31, 2024, the contracts will be terminated simultaneously with the debt issuance.
Contemporaneously with the issuance of the 4.250% Senior Notes, in April 2022 the Company settled cash flow hedges with an aggregate notional amount of $250 million and $170 million, with effective dates of November 2020 and March 2022, respectively. The cash received for the cash flow hedges at settlement was $46 million. The settled cash flow hedges are recorded in the Condensed Consolidated Balance Sheets as a component of accumulated other comprehensive income (“AOCI”) and are amortized to interest expense in the Condensed Consolidated Statements of Operations.
Contemporaneously with the issuance of the 3.000% Senior Notes in July 2020, the Company amended interest rate swap agreements with a notional amount of $200 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”). The change in fair value of the 2020 Extended Interest Rate Swaps and Offsetting Interest Rate Swaps was recorded in the Condensed Consolidated Statements of Operations through the maturity date of February 15, 2022, as an adjustment to interest expense.
10. Accumulated Other Comprehensive Income
The following table sets forth the changes in AOCI, net of tax, by component for the nine months ended May 31, 2022 (in millions):
| Foreign Currency Translation Adjustment |
Derivative Instruments |
Actuarial Gain (Loss) |
Prior Service (Cost) Credit |
Total | |||||||||||||||||||||||||
Balance as of August 31, 2021 |
$ | (20) | $ | (36) | $ | 51 | $ | (20) | $ | (25) | |||||||||||||||||||
| Other comprehensive (loss) income before reclassifications | (20) | 31 | (1) | — | 10 | ||||||||||||||||||||||||
| Amounts reclassified from AOCI | — | 6 | (14) | 3 | (5) | ||||||||||||||||||||||||
Other comprehensive (loss) income(1) |
(20) | 37 | (15) | 3 | 5 | ||||||||||||||||||||||||
Balance as of May 31, 2022 |
$ | (40) | $ | 1 | $ | 36 | $ | (17) | $ | (20) | |||||||||||||||||||
(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 millions):
10
| Three months ended | Nine months ended | |||||||||||||||||||||||||||||||
| Comprehensive Income Components | Financial Statement Line Item | May 31, 2022 | May 31, 2021 | May 31, 2022 | May 31, 2021 | |||||||||||||||||||||||||||
Realized losses (gains) on derivative instruments:(1) |
||||||||||||||||||||||||||||||||
| Foreign exchange contracts | Cost of revenue | $ | 9 | $ | (4) | $ | 4 | $ | (43) | |||||||||||||||||||||||
| Interest rate contracts | Interest expense | — | — | 2 | 2 | |||||||||||||||||||||||||||
| Actuarial gain | (2) |
(4) | — | (14) | — | |||||||||||||||||||||||||||
| Prior service cost | (2) |
1 | — | 3 | — | |||||||||||||||||||||||||||
Total amounts reclassified from AOCI(3) |
$ | 6 | $ | (4) | $ | (5) | $ | (41) | ||||||||||||||||||||||||
(1)The Company expects to reclassify $20 million into earnings during the next twelve months, which will primarily be classified as a component of cost of revenue.
(2)Amounts are included in the computation of net periodic benefit cost (credit). Refer to Note 8 – “Postretirement and Other Employee Benefits” for additional information.
(3)Amounts are net of tax, which are immaterial for the three months and nine months ended May 31, 2022 and 2021.
11. Stockholders’ Equity
The Company recognized stock-based compensation expense within selling, general and administrative expense as follows (in millions):
| Three months ended | Nine months ended | ||||||||||||||||||||||
| May 31, 2022 | May 31, 2021 | May 31, 2022 | May 31, 2021 | ||||||||||||||||||||
Restricted stock units |
$ | 13 | $ | 16 | $ | 57 | $ | 68 | |||||||||||||||
| Employee stock purchase plan | 3 | 3 | 10 | 8 | |||||||||||||||||||
| Total | $ | 16 | $ | 19 | $ | 67 | $ | 76 | |||||||||||||||
As of May 31, 2022, the shares available to be issued under the 2021 Equity Incentive Plan were 9,940,536.
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 the nine months ended May 31, 2022 and 2021, the Company awarded approximately 0.7 million and 1.2 million time-based restricted stock units, respectively, 0.2 million and 0.4 million performance-based restricted stock units, respectively, and 0.2 million and 0.3 million market-based restricted stock units, respectively.
The following represents the stock-based compensation information as of the period indicated (in millions):
| May 31, 2022 | |||||
| Unrecognized stock-based compensation expense—restricted stock units | $ | 44 | |||
| Remaining weighted-average period for restricted stock units expense | 1.5 years | ||||
Common Stock Outstanding
11
The following represents the common stock outstanding for the periods indicated:
| Three months ended | Nine months ended | ||||||||||||||||||||||
| May 31, 2022 | May 31, 2021 | May 31, 2022 | May 31, 2021 | ||||||||||||||||||||
Common stock outstanding: |
|||||||||||||||||||||||
Beginning balances |
142,392,135 | 149,366,501 | 144,496,077 | 150,330,358 | |||||||||||||||||||
Shares issued upon exercise of stock options |
— | 9,321 | — | 9,321 | |||||||||||||||||||
Shares issued under employee stock purchase plan |
1,686 | — | 522,169 | 771,548 | |||||||||||||||||||
Vesting of restricted stock |
13,609 | 12,787 | 2,467,324 | 2,253,923 | |||||||||||||||||||
Purchases of treasury stock under employee stock plans |
(3,766) | (3,436) | (704,040) | (613,715) | |||||||||||||||||||
Treasury shares purchased(1) |
(3,552,475) | (2,547,707) | (7,930,341) | (5,913,969) | |||||||||||||||||||
Ending balances |
138,851,189 | 146,837,466 | 138,851,189 | 146,837,466 | |||||||||||||||||||
(1)In July 2021, the Board of Directors approved an authorization for the repurchase of up to $1.0 billion of the Company’s common stock (the “2022 Share Repurchase Program”). As of May 31, 2022, 8.6 million shares had been repurchased for $517 million and $483 million remains available under the 2022 Share Repurchase Program.
12. Concentration of Risk and Segment Data
Concentration of Risk
Sales of the Company’s products are concentrated among specific customers. During the nine months ended May 31, 2022, the Company’s five largest customers accounted for approximately 45% of its net revenue and 79 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. Certain items are excluded from the calculation of segment income. Transactions between operating segments are generally recorded at amounts that approximate those at which we would transact with third parties.
The following table sets forth operating segment information (in millions):
12
| Three months ended | Nine months ended | ||||||||||||||||||||||
| May 31, 2022 | May 31, 2021 | May 31, 2022 | May 31, 2021 | ||||||||||||||||||||
| Segment income and reconciliation of income before income tax | |||||||||||||||||||||||
| EMS | $ | 208 | $ | 137 | $ | 507 | $ | 357 | |||||||||||||||
| DMS | 144 | 140 | 589 | 570 | |||||||||||||||||||
| Total segment income | $ | 352 | $ | 277 | $ | 1,096 | $ | 927 | |||||||||||||||
| Reconciling items: | |||||||||||||||||||||||
| Amortization of intangibles | (8) | (12) | (24) | (35) | |||||||||||||||||||
| Stock-based compensation expense and related charges | (16) | (19) | (67) | (76) | |||||||||||||||||||
| Restructuring, severance and related charges | — | (1) | — | (6) | |||||||||||||||||||
| Business interruption and impairment charges, net | — | — | — | 1 | |||||||||||||||||||
| Acquisition and integration charges | — | — | — | (4) | |||||||||||||||||||
| Loss on debt extinguishment | (4) | — | (4) | — | |||||||||||||||||||
| Gain on securities | — | 2 | — | 2 | |||||||||||||||||||
| Other expense (net of periodic benefit cost) | (8) | (1) | (19) | (10) | |||||||||||||||||||
| Interest income | 1 | 1 | 2 | 5 | |||||||||||||||||||
| Interest expense | (39) | (34) | (105) | (97) | |||||||||||||||||||
| Income before income tax | $ | 278 | $ | 213 | $ | 879 | $ | 707 | |||||||||||||||
The following table presents the Company’s revenues disaggregated by segment (in millions):
| Three months ended | |||||||||||||||||||||||||||||||||||
| May 31, 2022 | May 31, 2021 | ||||||||||||||||||||||||||||||||||
| EMS | DMS | Total | EMS | DMS | Total | ||||||||||||||||||||||||||||||
| Timing of transfer | |||||||||||||||||||||||||||||||||||
| Point in time | $ | 1,755 | $ | 1,395 | $ | 3,150 | $ | 1,346 | $ | 1,441 | $ | 2,787 | |||||||||||||||||||||||
| Over time | 2,736 | 2,442 | 5,178 | 2,297 | 2,131 | 4,428 | |||||||||||||||||||||||||||||
| Total | $ | 4,491 | $ | 3,837 | $ | 8,328 | $ | 3,643 | $ | 3,572 | $ | 7,215 | |||||||||||||||||||||||
| Nine months ended | |||||||||||||||||||||||||||||||||||
| May 31, 2022 | May 31, 2021 | ||||||||||||||||||||||||||||||||||
| EMS | DMS | Total | EMS | DMS | Total | ||||||||||||||||||||||||||||||
| Timing of transfer | |||||||||||||||||||||||||||||||||||
| Point in time | $ | 4,489 | $ | 5,183 | $ | 9,672 | $ | 3,222 | $ | 5,463 | $ | 8,685 | |||||||||||||||||||||||
| Over time | 7,634 | 7,142 | 14,776 | 7,193 | 5,998 | 13,191 | |||||||||||||||||||||||||||||
| Total | $ | 12,123 | $ | 12,325 | $ | 24,448 | $ | 10,415 | $ | 11,461 | $ | 21,876 | |||||||||||||||||||||||
The Company operates in more than 30 countries worldwide. Sales to unaffiliated customers are based on the Company location that maintains the customer relationship and transacts the external sale. The following table sets forth, for the periods indicated, foreign source revenue expressed as a percentage of net revenue:
| Three months ended | Nine months ended | ||||||||||||||||||||||
| May 31, 2022 | May 31, 2021 | May 31, 2022 | May 31, 2021 | ||||||||||||||||||||
| Foreign source revenue | 82.6 | % | 82.7 | % | 83.7 | % | 83.6 | % | |||||||||||||||
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:
13
| Three months ended | Nine months ended | ||||||||||||||||||||||
| May 31, 2022 | May 31, 2021 | May 31, 2022 | May 31, 2021 | ||||||||||||||||||||
| U.S. federal statutory income tax rate | 21.0 | % | 21.0 | % | 21.0 | % | 21.0 | % | |||||||||||||||
| Effective income tax rate | 21.8 | % | 20.3 | % | 22.5 | % | 26.0 | % | |||||||||||||||
The effective income tax rate differed for the three months and nine months ended May 31, 2022, compared to the three months and nine months ended May 31, 2021, primarily due to: (i) decreased losses in tax jurisdictions with existing valuation allowances for the three months and nine months ended May 31, 2022 and (ii) a $17 million income tax expense during the three months ended May 31, 2022 for an unrecognized tax benefit related to the taxation of certain prior year intercompany transactions.
The effective income tax rate differed from the U.S. federal statutory income tax rate of 21.0% during the three months and nine months ended May 31, 2022 and 2021, primarily due to: (i) losses in tax jurisdictions with existing valuation allowances, (ii) tax incentives granted to sites in China, Malaysia, Singapore and Vietnam, and (iii) a $17 million income tax expense during the three months ended May 31, 2022 for an unrecognized tax benefit related to the taxation of certain prior year intercompany transactions.
14. Earnings Per Share and Dividends
Earnings Per Share
The Company calculates its basic earnings per share by dividing net income attributable to the Company by the weighted average number of common shares outstanding during the period. The Company’s diluted earnings per share is calculated in a similar manner, but includes the effect of dilutive securities. The difference between the weighted average number of basic shares outstanding and the weighted average number of diluted shares outstanding is primarily due to dilutive unvested restricted stock units.
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 | Nine months ended | ||||||||||||||||||||||
| May 31, 2022 | May 31, 2021 | May 31, 2022 | May 31, 2021 | ||||||||||||||||||||
| Restricted stock units | 430.9 | 665.0 | 431.7 | 665.0 | |||||||||||||||||||
Dividends
The following table sets forth cash dividends declared by the Company to common stockholders during the nine months ended May 31, 2022 and 2021 (in millions, 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 2022: | October 21, 2021 | $ | 0.08 | $ | 12 | November 15, 2021 | December 1, 2021 | ||||||||||||||||||||||
| January 20, 2022 | $ | 0.08 | $ | 12 | February 15, 2022 | March 2, 2022 | |||||||||||||||||||||||
| April 21, 2022 | $ | 0.08 | $ | 12 | May 16, 2022 | June 2, 2022 | |||||||||||||||||||||||
| Fiscal Year 2021: | October 15, 2020 | $ | 0.08 | $ | 12 | November 16, 2020 | December 2, 2020 | ||||||||||||||||||||||
| January 21, 2021 | $ | 0.08 | $ | 12 | February 15, 2021 | March 2, 2021 | |||||||||||||||||||||||
| April 22, 2021 | $ | 0.08 | $ | 12 | May 14, 2021 | June 2, 2021 | |||||||||||||||||||||||
15. 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 millions):
14
| Fair Value Hierarchy | May 31, 2022 | August 31, 2021 | |||||||||||||||
| Assets: | |||||||||||||||||
| Cash and cash equivalents: | |||||||||||||||||
| Cash equivalents | Level 1 | (1) |
$ | 10 | $ | 36 | |||||||||||
| Prepaid expenses and other current assets: | |||||||||||||||||
| Short-term investments | Level 1 | 17 | 18 | ||||||||||||||
| Forward foreign exchange contracts: | |||||||||||||||||
Derivatives designated as hedging instruments (Note 9) |
Level 2 | (2) |
8 | 9 | |||||||||||||
Derivatives not designated as hedging instruments (Note 9) |
Level 2 | (2) |
18 | 20 | |||||||||||||
| Other assets: | |||||||||||||||||
| Forward interest rate swap: | |||||||||||||||||
Derivatives designated as hedging instruments (Note 9) |
Level 2 | (3) |
9 | 9 | |||||||||||||
| Liabilities: | |||||||||||||||||
| Accrued expenses: | |||||||||||||||||
| Forward foreign exchange contracts: | |||||||||||||||||
Derivatives designated as hedging instruments (Note 9) |
Level 2 | (2) |
$ | 25 | $ | 6 | |||||||||||
Derivatives not designated as hedging instruments (Note 9) |
Level 2 | (2) |
56 | 9 | |||||||||||||
| Interest rate swaps: | |||||||||||||||||
Derivatives not designated as hedging instruments (Note 9) |
Level 2 | (3) |
— | 3 | |||||||||||||
Extended interest rate swap not designated as a hedging instrument (Note 9) |
Level 2 | (4) |
— | 10 | |||||||||||||
| Other liabilities: | |||||||||||||||||
| Forward interest rate swap: | |||||||||||||||||
Derivatives designated as hedging instruments (Note 9) |
Level 2 | (3) |
— | 7 | |||||||||||||
(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 were considered a hybrid instrument and the Company elected the fair value option for reporting. Fair value measurements were based on the contractual terms of the contract and used observable market-based inputs. The interest rate swaps were 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 millions):
| May 31, 2022 | August 31, 2021 | ||||||||||
| Carrying Amount | Carrying Amount | ||||||||||
Assets held for sale(1) |
$ | — | $ | 61 | |||||||
(1)During the nine months ended May 31, 2022, the Company sold assets held for sale with a carrying value of $61 million.
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.
15
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 (in millions):
| May 31, 2022 | August 31, 2021 | |||||||||||||||||||||||||||||||
| 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) |
$ | — | $ | — | $ | 499 | $ | 521 | ||||||||||||||||||||||
4.900% Senior Notes |
Level 3 | (2) |
$ | 300 | $ | 305 | $ | 300 | $ | 322 | ||||||||||||||||||||||
3.950% Senior Notes |
Level 2 | (1) |
$ | 497 | $ | 492 | $ | 496 | $ | 555 | ||||||||||||||||||||||
3.600% Senior Notes |
Level 2 | (1) |
$ | 496 | $ | 459 | $ | 495 | $ | 541 | ||||||||||||||||||||||
3.000% Senior Notes |
Level 2 | (1) |
$ | 592 | $ | 522 | $ | 591 | $ | 618 | ||||||||||||||||||||||
1.700% Senior Notes |
Level 2 | (1) |
$ | 496 | $ | 455 | $ | 496 | $ | 504 | ||||||||||||||||||||||
4.250% Senior Notes |
Level 2 | (1) |
$ | 493 | $ | 497 | $ | — | $ | — | ||||||||||||||||||||||
(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.
16. Commitments and Contingencies
Legal Proceedings
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.
17. New Accounting Guidance
New accounting guidance adopted during the period did not have a material impact to the Company.
Recently issued accounting guidance is not applicable or did not have, or is not expected to have, a material impact to the Company.
16
JABIL INC. AND SUBSIDIARIES
This Quarterly Report on Form 10-Q contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties. Many of the forward-looking statements are located in Item 2 of 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 “future,” “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “will,” “would,” “should,” “could,” “can,” “may,” and 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 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 II, Item 1A to this Quarterly Report on Form 10-Q and in Part 1, Item 1A of the Company’s Annual Report on Form 10-K for the year ended August 31, 2021 such as, the scope and duration of the COVID-19 outbreak and its impact on our operations, sites, customers and supply chain; managing growth effectively; our dependence on a limited number of customers; competitive challenges affecting our customers; managing rapid declines or increases in customer demand and other related customer challenges that may occur; risks arising from relationships with emerging companies; changes in technology; our ability to introduce new business models or programs requiring implementation of new competencies; competition; transportation issues; our ability to maintain our engineering, technological and 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; 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 financial markets; tax risks; credit rating risks; risks of exposure to debt; currency fluctuations; energy prices; and asset impairment); changes in financial accounting standards or policies; and risk of natural disaster, climate change or other global events. 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.
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| 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 currently depend, and expect to continue to depend for the foreseeable future, 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.
We conduct our operations in facilities that are located worldwide, including but not limited to, China, Ireland, Malaysia, Mexico, Singapore and the United States. We derived a substantial majority, 82.6% and 83.7%, of net revenue from our international operations for the three months and nine months ended May 31, 2022, respectively. 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 5G, wireless and cloud, digital print and retail, industrial and semi-cap, and networking and storage industries. Our DMS segment is focused on providing engineering solutions, with an emphasis on material sciences, technologies and healthcare. Our DMS segment includes customers primarily in the automotive and transportation, connected devices, healthcare and packaging, and mobility industries.
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.
Refer to Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations" section contained in our Annual Report on Form 10-K for the fiscal year ended August 31, 2021 for further discussion of the items disclosed in Item 2. "Management's Discussion and Analysis of Financial Condition and Results of Operations" section as of May 31, 2022 contained herein.
COVID-19
The COVID-19 pandemic, which began to impact us in January 2020, has continued to affect our business and the businesses of our customers and suppliers. Travel and business operation restrictions arising from virus containment efforts of governments around the world have continued to impact our operations in Asia, Europe and the Americas. Essential activity exceptions from these restrictions have allowed us to continue to operate but virus containment efforts have resulted in additional direct costs.
The impact on our suppliers has led to supply chain constraints, including difficulty sourcing materials necessary to fulfill customer production requirements and challenges in transporting completed products to our end customers.
Summary of Results
The following table sets forth, for the periods indicated, certain key operating results and other financial information (in millions, except per share data):
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| Three months ended | Nine months ended | ||||||||||||||||||||||
| May 31, 2022 | May 31, 2021 | May 31, 2022 | May 31, 2021 | ||||||||||||||||||||
| Net revenue | $ | 8,328 | $ | 7,215 | $ | 24,448 | $ | 21,876 | |||||||||||||||
| Gross profit | $ | 619 | $ | 568 | $ | 1,903 | $ | 1,772 | |||||||||||||||
| Operating income | $ | 321 | $ | 240 | $ | 984 | $ | 790 | |||||||||||||||
| Net income attributable to Jabil Inc. | $ | 218 | $ | 169 | $ | 681 | $ | 521 | |||||||||||||||
| Earnings per share—basic | $ | 1.55 | $ | 1.14 | $ | 4.77 | $ | 3.49 | |||||||||||||||
| Earnings per share—diluted | $ | 1.52 | $ | 1.12 | $ | 4.67 | $ | 3.41 | |||||||||||||||
Key Performance Indicators
Management regularly reviews financial and non-financial performance indicators to assess the Company’s operating results. Changes in our operating assets and liabilities are largely affected by our working capital requirements, which are dependent on the effective management of our sales cycle as well as timing of payments. Our sales cycle measures how quickly we can convert our manufacturing services into cash through sales. We believe the metrics set forth below are useful to investors in measuring our liquidity as future liquidity needs will depend on fluctuations in levels of inventory, accounts receivable and accounts payable.
The following table sets forth, for the quarterly periods indicated, certain of management’s key financial performance indicators:
| Three months ended | |||||||||||||||||
| May 31, 2022 | February 28, 2022 | May 31, 2021 | |||||||||||||||
Sales cycle(1) |
37 days | 35 days | 25 days | ||||||||||||||
Inventory turns (annualized)(2) |
4 turns | 4 turns | 5 turns | ||||||||||||||
Days in accounts receivable(3) |
35 days | 38 days | 40 days | ||||||||||||||
Days in inventory(4) |
85 days | 86 days | 68 days | ||||||||||||||
Days in accounts payable(5) |
83 days | 89 days | 84 days | ||||||||||||||
(1)The sales cycle is calculated as the sum of days in accounts receivable and days in inventory, less the days in accounts payable; accordingly, the variance in the sales cycle quarter over quarter 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 May 31, 2022, the decrease in days in accounts receivable from the prior sequential quarter and the three months ended May 31, 2021, was primarily due to timing of collections.
(4)Days in inventory is calculated as inventory and contract assets divided by cost of revenue multiplied by 90 days. During the three months ended May 31, 2022, the increase in days in inventory from the three months ended May 31, 2021 was primarily due to higher raw material balances due to supply chain constraints.
(5)Days in accounts payable is calculated as accounts payable divided by cost of revenue multiplied by 90 days. During the three months ended May 31, 2022, the decrease in days in accounts payable from the prior sequential quarter was primarily due to timing of purchases and cash payments during the quarter.
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, 2021.
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Recent Accounting Pronouncements
See Note 17 – “New Accounting Guidance” to the Condensed Consolidated Financial Statements for a discussion of recent accounting guidance.
Results of Operations
Net Revenue
Generally, we assess revenue on a global customer basis regardless of whether the growth is associated with organic growth or as a result of an acquisition. Accordingly, we do not differentiate or separately report revenue increases generated by acquisitions as opposed to existing business. In addition, the added cost structures associated with our acquisitions have historically been relatively insignificant when compared to our overall cost structure.
The distribution of revenue across our segments has fluctuated, and will continue to fluctuate, as a result of numerous factors, including the following: fluctuations in customer demand; efforts to diversify certain portions of our business; business growth from new and existing customers; specific product performance; and any potential termination, or substantial winding down, of significant customer relationships.
| Three months ended | Nine months ended | ||||||||||||||||||||||||||||||||||
| (dollars in millions) | May 31, 2022 | May 31, 2021 | Change | May 31, 2022 | May 31, 2021 | Change | |||||||||||||||||||||||||||||
| Net revenue | $ | 8,328 | $ | 7,215 | 15.4 | % | $ | 24,448 | $ | 21,876 | 11.8 | % | |||||||||||||||||||||||
Net revenue increased during the three months ended May 31, 2022, compared to the three months ended May 31, 2021. Specifically, the EMS segment net revenue increased 23% due to: (i) a 10% increase in revenues from existing customers within our 5G, wireless and cloud business, (ii) a 5% increase in revenues from existing customers within our networking and storage business, (iii) a 4% increase in revenues from existing customers within our digital print and retail business, and (iv) a 4% increase in revenues from existing customers within our industrial and capital equipment business. The DMS segment net revenue increased 7% due to: (i) a 5% increase in revenues from existing customers within our automotive and transportation business, and (ii) a 2% increase in revenues from existing customers within our healthcare and packaging business.
Net revenue increased during the nine months ended May 31, 2022, compared to the nine months ended May 31, 2021. Specifically, the EMS segment net revenue increased 16% due to: (i) a 8% increase in revenues from existing customers within our 5G, wireless and cloud business, (ii) a 4% increase in revenues from existing customers within our industrial and capital equipment business, and (iii) a 4% increase in revenues from existing customers within our digital print and retail business. The DMS segment net revenue increased 8% due to: (i) a 5% increase in revenues from existing customers within our automotive and transportation business, and (ii) a 3% increase in revenues from existing customers within our healthcare and packaging business.
The following table sets forth, for the periods indicated, revenue by segment expressed as a percentage of net revenue:
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| May 31, 2022 | May 31, 2021 | May 31, 2022 | May 31, 2021 | ||||||||||||||||||||
| EMS | 54 | % | 50 | % | 50 | % | 48 | % | |||||||||||||||
| DMS | 46 | % | 50 | % | 50 | % | 52 | % | |||||||||||||||
| Total | 100 | % | 100 | % | 100 | % | 100 | % | |||||||||||||||
The following table sets forth, for the periods indicated, foreign source revenue expressed as a percentage of net revenue:
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| May 31, 2022 | May 31, 2021 | May 31, 2022 | May 31, 2021 | ||||||||||||||||||||
| Foreign source revenue | 82.6 | % | 82.7 | % | 83.7 | % | 83.6 | % | |||||||||||||||
Gross Profit
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| (dollars in millions) | May 31, 2022 | May 31, 2021 | May 31, 2022 | May 31, 2021 | |||||||||||||||||||
| Gross profit | $ | 619 | $ | 568 | $ | 1,903 | $ | 1,772 | |||||||||||||||
| Percent of net revenue | 7.4 | % | 7.9 | % | 7.8 | % | 8.1 | % | |||||||||||||||
Gross profit as a percentage of net revenue decreased for the three months and nine months ended May 31, 2022, compared to the three months and nine months ended May 31, 2021, primarily due to product mix.
Selling, General and Administrative
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| (dollars in millions) | May 31, 2022 | May 31, 2021 | Change | May 31, 2022 | May 31, 2021 | Change | |||||||||||||||||||||||||||||
| Selling, general and administrative | $ | 282 | $ | 305 | $ | (23) | $ | 870 | $ | 914 | $ | (44) | |||||||||||||||||||||||
Selling, general and administrative expenses decreased during the three months ended May 31, 2022, compared to the three months ended May 31, 2021. The decrease is primarily due to lower salary and salary related expenses.
Selling, general and administrative expenses decreased during the nine months ended May 31, 2022, compared to the nine months ended May 31, 2021. The decrease is primarily due to: (i) a $30 million decrease due to lower salary and salary related expenses, (ii) a $9 million decrease in stock-based compensation expense due to certain one-time awards granted during the second quarter of fiscal year 2021 and higher anticipated achievement levels during the nine months ended May 31, 2021 for certain performance-based stock awards, and (iii) a $4 million decrease in acquisition and integration charges related to our strategic collaboration with a healthcare company.
Research and Development
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| (dollars in millions) | May 31, 2022 | May 31, 2021 | May 31, 2022 | May 31, 2021 | |||||||||||||||||||
| Research and development | $ | 8 | $ | 10 | $ | 25 | $ | 27 | |||||||||||||||
| Percent of net revenue | 0.1 | % | 0.1 | % | 0.1 | % | 0.1 | % | |||||||||||||||
Research and development expenses remained consistent as a percentage of net revenue during the three months and nine months ended May 31, 2022, compared to the three months and nine months ended May 31, 2021.
Amortization of Intangibles
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| (dollars in millions) | May 31, 2022 | May 31, 2021 | Change | May 31, 2022 | May 31, 2021 | Change | |||||||||||||||||||||||||||||
| Amortization of intangibles | $ | 8 | $ | 12 | $ | (4) | $ | 24 | $ | 35 | $ | (11) | |||||||||||||||||||||||
Amortization of intangibles decreased during the three months and nine months ended May 31, 2022, compared to the three months and nine months ended May 31, 2021, primarily driven by reduced amortization related to the Nypro trade name.
Restructuring, Severance and Related Charges
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| (dollars in millions) | May 31, 2022 | May 31, 2021 | Change | May 31, 2022 | May 31, 2021 | Change | |||||||||||||||||||||||||||||
Restructuring, severance and related charges |
$ | — | $ | 1 | $ | (1) | $ | — | $ | 6 | $ | (6) | |||||||||||||||||||||||
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Restructuring, severance and related charges decreased during the three months and nine months ended May 31, 2022, compared to the three months and nine months ended May 31, 2021 as the 2020 Restructuring Plan was complete as of August 31, 2021.
Loss on Debt Extinguishment
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| (dollars in millions) | May 31, 2022 | May 31, 2021 | Change | May 31, 2022 | May 31, 2021 | Change | |||||||||||||||||||||||||||||
| Loss on debt extinguishment | $ | 4 | $ | — | $ | 4 | $ | 4 | $ | — | $ | 4 | |||||||||||||||||||||||
Loss on debt extinguishment is due to the “make-whole” premium incurred during the three months ended May 31, 2022, for the redemption of the 4.700% Senior Notes due 2022.
Gain on Securities
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| (dollars in millions) | May 31, 2022 | May 31, 2021 | Change | May 31, 2022 | May 31, 2021 | Change | |||||||||||||||||||||||||||||
| Gain on securities | $ | — | $ | 2 | $ | (2) | $ | — | $ | 2 | $ | (2) | |||||||||||||||||||||||
Gain on securities is due to cash proceeds received in connection with the sale of an investment during the three months ended May 31, 2021.
Other Expense (Income)
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| (dollars in millions) | May 31, 2022 | May 31, 2021 | Change | May 31, 2022 | May 31, 2021 | Change | |||||||||||||||||||||||||||||
| Other expense (income) | $ | 1 | $ | (4) | $ | 5 | $ | (2) | $ | (7) | $ | 5 | |||||||||||||||||||||||
The change in other expense (income) during the three months ended May 31, 2022, compared to the three months ended May 31, 2021, is primarily due to an increase in fees associated with higher utilization of the trade accounts receivable sales programs.
The change in other expense (income) during the nine months ended May 31, 2022, compared to the nine months ended May 31, 2021, is primarily due to: (i) $6 million arising from an increase in other expense and (ii) $3 million related to an increase in fees associated with higher utilization of the trade accounts receivable sales programs. The change is partially offset by $4 million related to lower net periodic benefit costs.
Interest Income
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| (dollars in millions) | May 31, 2022 | May 31, 2021 | Change | May 31, 2022 | May 31, 2021 | Change | |||||||||||||||||||||||||||||
| Interest income | $ | 1 | $ | 1 | $ | — | $ | 2 | $ | 5 | $ | (3) | |||||||||||||||||||||||
Interest income remained relatively consistent during the three months and nine months May 31, 2022, compared to the three months and nine months ended May 31, 2021.
Interest Expense
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| (dollars in millions) | May 31, 2022 | May 31, 2021 | Change | May 31, 2022 | May 31, 2021 | Change | |||||||||||||||||||||||||||||
| Interest expense | $ | 39 | $ | 34 | $ | 5 | $ | 105 | $ | 97 | $ | 8 | |||||||||||||||||||||||
Interest expense increased during the three months and nine months ended May 31, 2022, compared to the three months and nine months ended May 31, 2021, primarily due to higher interest rates and higher borrowings on our credit facilities and commercial paper program. Additionally, the increase is due to higher borrowings on our senior notes.
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Income Tax Expense
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| May 31, 2022 | May 31, 2021 | Change | May 31, 2022 | May 31, 2021 | Change | ||||||||||||||||||||||||||||||
| Effective income tax rate | 21.8 | % | 20.3 | % | 1.5 | % | 22.5 | % | 26.0 | % | (3.5) | % | |||||||||||||||||||||||
The effective income tax rate differed for the three months and nine months ended May 31, 2022, compared to the three months and nine months ended May 31, 2021, primarily due to: (i) decreased losses in tax jurisdictions with existing valuation allowances for the three months and nine months ended May 31, 2022 and (ii) a $17 million income tax expense during the three months ended May 31, 2022 for an unrecognized tax benefit related to the taxation of certain prior year intercompany transactions.
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. 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. 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, loss on debt extinguishment, (gain) loss on securities, 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.
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.
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:
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Reconciliation of U.S. GAAP Financial Results to Non-GAAP Measures
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| (in millions, except for per share data) | May 31, 2022 | May 31, 2021 | May 31, 2022 | May 31, 2021 | |||||||||||||||||||
| Operating income (U.S. GAAP) | $ | 321 | $ | 240 | $ | 984 | $ | 790 | |||||||||||||||
| Amortization of intangibles | 8 | 12 | 24 | 35 | |||||||||||||||||||
Stock-based compensation expense and related charges |
16 | 19 | 67 | 76 | |||||||||||||||||||
| Restructuring, severance and related charges | — | 1 | — | 6 | |||||||||||||||||||
Net periodic benefit cost(1) |
7 | 5 | 21 | 17 | |||||||||||||||||||
| Business interruption and impairment charges, net | — | — | — | (1) | |||||||||||||||||||
Acquisition and integration charges(2) |
— | — | — | 4 | |||||||||||||||||||
| Adjustments to operating income | 31 | 37 | 112 | 137 | |||||||||||||||||||
| Core operating income (Non-GAAP) | $ | 352 | $ | 277 | $ | 1,096 | $ | 927 | |||||||||||||||
| Net income attributable to Jabil Inc. (U.S. GAAP) | $ | 218 | $ | 169 | $ | 681 | $ | 521 | |||||||||||||||
| Adjustments to operating income | 31 | 37 | 112 | 137 | |||||||||||||||||||
Loss on debt extinguishment(3) |
4 | — | 4 | — | |||||||||||||||||||
| Gain on securities | — | (2) | — | (2) | |||||||||||||||||||
Net periodic benefit cost(1) |
(7) | (5) | (21) | (17) | |||||||||||||||||||
| Adjustments for taxes | — | (1) | — | (2) | |||||||||||||||||||
| Core earnings (Non-GAAP) | $ | 246 | $ | 198 | $ | 776 | $ | 637 | |||||||||||||||
| Diluted earnings per share (U.S. GAAP) | $ | 1.52 | $ | 1.12 | $ | 4.67 | $ | 3.41 | |||||||||||||||
| Diluted core earnings per share (Non-GAAP) | $ | 1.72 | $ | 1.30 | $ | 5.32 | $ | 4.17 | |||||||||||||||
| Diluted weighted average shares outstanding (U.S. GAAP and Non-GAAP) | 143.3 | 152.0 | 145.8 | 152.8 | |||||||||||||||||||
(1)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.
(2)Charges related to our strategic collaboration with Johnson & Johnson Medical Devices Companies (“JJMD”).
(3)Charges related to the redemption of our 4.700% Senior Notes due 2022.
Adjusted Free Cash Flow
| Nine months ended | |||||||||||
| (in millions) | May 31, 2022 | May 31, 2021 | |||||||||
| Net cash provided by operating activities (U.S. GAAP) | $ | 745 | $ | 671 | |||||||
Acquisition of property, plant and equipment |
(1,068) | (878) | |||||||||
| Proceeds and advances from sale of property, plant and equipment | 470 | 287 | |||||||||
| Adjusted free cash flow (Non-GAAP) | $ | 147 | $ | 80 | |||||||
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 global asset-backed securitization program and under our uncommitted trade accounts receivable sale programs, cash on hand, cash flows provided by operating activities and access to the capital markets, will be adequate to fund our cash requirements, including capital expenditures, the payment of any declared quarterly dividends, any share repurchases under the approved program, any potential acquisitions and our working capital requirements for the next 12 months and beyond. We continue to assess our capital structure and evaluate the merits of redeploying available cash.
Cash and Cash Equivalents
24
As of May 31, 2022, we had approximately $1.1 billion in cash and cash equivalents, of which a significant portion was held by our foreign subsidiaries. Most of our foreign cash and cash equivalents as of May 31, 2022 could be repatriated to the United States without potential tax expense.
Notes Payable and Credit Facilities
Following is a summary of principal debt payments and debt issuance for our notes payable and credit facilities:
| (in millions) | 4.700% Senior Notes(1) |
4.900% Senior Notes |
3.950% Senior Notes |
3.600% Senior Notes | 3.000% Senior Notes | 1.700% Senior Notes | 4.250% Senior Notes(1) |
Borrowings under revolving credit facilities(2) |
Borrowings under loans |
Total notes payable and credit facilities | |||||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of August 31, 2021 | $ | 499 | $ | 300 | $ | 496 | $ | 495 | $ | 591 | $ | 496 | $ | — | $ | — | $ | 1 | $ | 2,878 | |||||||||||||||||||||||||||||||||||||||
| Borrowings | — | — | — | — | — | — | 498 | 2,123 | — | 2,621 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Payments | (500) | — | — | — | — | — | — | (2,123) | — | (2,623) | |||||||||||||||||||||||||||||||||||||||||||||||||
| Other | 1 | — | 1 | 1 | 1 | — | (5) | — | — | (1) | |||||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of May 31, 2022 | $ | — | $ | 300 | $ | 497 | $ | 496 | $ | 592 | $ | 496 | $ | 493 | $ | — | $ | 1 | $ | 2,875 | |||||||||||||||||||||||||||||||||||||||
| Maturity Date | Sep 15, 2022 | Jul 14, 2023 | Jan 12, 2028 | Jan 15, 2030 | Jan 15, 2031 | Apr 15, 2026 | May 15, 2027 | Jan 22, 2024 and Jan 22, 2026 | Jul 31, 2026 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Original Facility/ Maximum Capacity | $500 million | $300 million | $500 million | $500 million | $600 million | $500 million | $500 million | $3.8 billion(2) |
$2 million | ||||||||||||||||||||||||||||||||||||||||||||||||||
(1)On May 4, 2022, we issued $500 million of registered 4.250% Senior Notes due 2027 (the “Green Bonds” or the “4.250% Senior Notes”). On May 31, 2022, the net proceeds from the offering were used to redeem our 4.700% Senior Notes due in 2022 and pay the applicable “make-whole” premium and accrued interest. In addition, we intend to allocate an amount equal to the net proceeds from this offering to finance or refinance eligible expenditures under our new green financing framework.
(2)As of May 31, 2022, we had $3.8 billion in available unused borrowing capacity under our revolving credit facilities. The senior unsecured credit agreement dated as of January 22, 2020 and amended on April 28, 2021 (the “Credit Facility”) acts as the back-up facility for commercial paper outstanding, if any. We have a borrowing capacity of up to $3.2 billion under our commercial paper program, which was increased from $1.8 billion on February 18, 2022. Borrowings with an original maturity of 90 days or less are recorded net within the Condensed Consolidated Statement of Cash Flows, and have been excluded from the table above.
We have a shelf registration statement with the SEC registering the potential sale of an indeterminate amount of debt and equity securities in the future to augment our liquidity and capital resources.
Our Senior Notes and our credit facilities contain various financial and nonfinancial covenants. A violation of these covenants could negatively impact our liquidity by restricting our ability to borrow under the notes payable and credit facilities and potentially causing acceleration of amounts due under these notes payable and credit facilities. As of May 31, 2022 and August 31, 2021, we were in compliance with our debt covenants. Refer to Note 5 – “Notes Payable and Long-Term Debt” to the Condensed Consolidated Financial Statements for further details.
Global Asset-Backed Securitization Program
Certain Jabil entities participating in the global asset-backed securitization program continuously sell designated pools of trade accounts receivable to a special purpose entity, which in turn sells certain of the receivables at a discount to conduits administered by an unaffiliated financial institution on a monthly basis. In addition, a foreign entity participating in the global asset-backed securitization program sells certain receivables at a discount to conduits administered by an unaffiliated financial institution on a daily basis.
We continue servicing the receivables sold and in exchange receive a servicing fee under the global asset-backed securitization program. Servicing fees related to the asset-backed securitization programs recognized during the three months and nine months ended May 31, 2022 and 2021 were not material. We do not record a servicing asset or liability on the Condensed Consolidated Balance Sheets as we estimate that the fee we receive to service these receivables approximates the fair market compensation to provide the servicing activities.
The special purpose entity in the global asset-backed securitization program is a wholly-owned subsidiary of the Company and is included in our Condensed Consolidated Financial Statements. Certain unsold receivables covering up to the maximum
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amount of net cash proceeds available under the domestic, or U.S., portion of the global asset-backed securitization program are pledged as collateral to the unaffiliated financial institution as of May 31, 2022.
The global asset-backed securitization program expires on November 25, 2024 and the maximum amount of net cash proceeds available at any one time is $600 million. During the three months and nine months ended May 31, 2022, we sold $1.0 billion and $3.0 billion, respectively, of trade accounts receivable and we received cash proceeds of $1.0 billion and $3.0 billion, respectively. As of May 31, 2022, we had no available liquidity under our global asset-backed securitization program.
The global asset-backed securitization program requires compliance with several covenants including compliance with the interest ratio and debt to EBITDA ratio of the Credit Facility. As of May 31, 2022 and August 31, 2021, we were in compliance with all covenants under our global asset-backed securitization program. Refer to Note 6 – “Asset-Backed Securitization Program” to the Condensed Consolidated Financial Statements for further details on the program.
Trade Accounts Receivable Sale Programs
As of May 31, 2022, we may elect to sell receivables and the unaffiliated financial institution may elect to purchase specific accounts receivable at any one time up to a: (i) maximum aggregate amount available of $2.0 billion under nine trade accounts receivable sale programs, (ii) maximum amount available of 400 million CNY under one trade accounts receivable sale program and (iii) maximum amount available of 100 million CHF under one trade accounts receivable sale program. The trade accounts receivable sale programs expire on various dates through 2025.
During the three months and nine months ended May 31, 2022, we sold $2.6 billion and $6.5 billion, respectively, of trade accounts receivable under these programs and we received cash proceeds of $2.6 billion and $6.5 billion, respectively. As of May 31, 2022, we had up to $905 million in available liquidity under our trade accounts receivable sale programs.
Capital Expenditures
For Fiscal Year 2022, we anticipate our net capital expenditures will be approximately $850 million. In general, our capital expenditures support ongoing maintenance in our DMS and EMS segments and investments in capabilities and targeted end markets. The amount of actual capital expenditures may be affected by general economic, financial, competitive, legislative and regulatory factors, among other things.
Cash Flows
The following table sets forth selected consolidated cash flow information (in millions):
| Nine months ended | |||||||||||
| May 31, 2022 | May 31, 2021 | ||||||||||
| Net cash provided by operating activities | $ | 745 | $ | 671 | |||||||
| Net cash used in investing activities | (616) | (644) | |||||||||
| Net cash used in financing activities | (639) | (177) | |||||||||
| Effect of exchange rate changes on cash and cash equivalents | 13 | (3) | |||||||||
| Net decrease in cash and cash equivalents | $ | (497) | $ | (153) | |||||||
Operating Activities
Net cash provided by operating activities during the nine months ended May 31, 2022, was primarily due to net income and non-cash expenses and an increase in accounts payable, accrued expenses and other liabilities; partially offset by: an increase in inventories, contract assets, prepaid expenses and other current assets and accounts receivable. The increase in accounts payable, accrued expenses and other liabilities is primarily due to the timing of purchases and cash payments. The increase in inventories is primarily due to higher raw material balances due to supply chain constraints. The increase in contract assets is primarily due to timing of revenue recognition for over time customers. The increase in prepaid expenses and other current assets is primarily due to the timing of payments. The increase in accounts receivable is primarily driven by higher sales and the timing of collections.
Investing Activities
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Net cash used in investing activities during the nine months ended May 31, 2022 consisted primarily of capital expenditures, principally to support ongoing business in the DMS and EMS segments, partially offset by proceeds and advances from the sale of property, plant and equipment.
Financing Activities
Net cash used in financing activities during the nine months ended May 31, 2022 was primarily due to (i) payments for debt agreements, (ii) the repurchase of our common stock under our share repurchase authorization, (iii) the purchase of treasury stock under employee stock plans, and (iv) dividend payments. Net cash used in financing activities was partially offset by borrowings under debt agreements.
Contractual Obligations
As of the date of this report, other than the borrowings on the 4.250% Senior Notes, (see Note 5 – “Notes Payable and Long-Term Debt” to the Condensed Consolidated Financial Statements) and the new operating and finance leases, (see Note 4 – “Leases” to the Condensed Consolidated Financial Statements), there were no material changes outside the ordinary course of business, since August 31, 2021 to our contractual obligations and commitments and the related cash requirements.
Dividends and Share Repurchases
We currently expect to continue to declare and pay regular quarterly dividends of an amount similar to our past declarations. However, the declaration and payment of future dividends are discretionary and will be subject to determination by our Board of Directors each quarter following its review of our financial performance and global economic conditions.
In July 2021, the Board of Directors approved an authorization for the repurchase of up to $1.0 billion of our common stock (the “2022 Share Repurchase Program”). As of May 31, 2022, 8.6 million shares had been repurchased for $517 million and $483 million remains available under the 2022 Share Repurchase Program.
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | ||||
There have been no material changes in our primary risk exposures or management of market risks from those disclosed in our Annual Report on Form 10-K for the fiscal year ended August 31, 2021.
| Item 4. | Controls and Procedures | ||||
Evaluation of Disclosure Controls and Procedures
We carried out an evaluation required by Rules 13a-15 and 15d-15 under the Exchange Act (the “Evaluation”), under the supervision and with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15 and 15d-15 under the Exchange Act as of May 31, 2022. Based on the Evaluation, our CEO and CFO concluded that the design and operation of our disclosure controls were effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) accumulated and communicated to our senior management, including our CEO and CFO, to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
For our fiscal quarter ended May 31, 2022, we did not identify any modifications to our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II—OTHER INFORMATION
| Item 1. | Legal Proceedings | ||||
See the discussion in Note 16 - “Commitments and Contingencies” to the Condensed Consolidated Financial Statements.
| Item 1A. | Risk Factors | ||||
We have amended the following Risk Factor that appeared in Item 1A of Part I of our Annual Report on Form 10-K for the fiscal year ended August 31, 2021.
We derive a substantial majority of our revenues from our international operations, which are subject to a number of different risks and often require more management time and expense than our domestic operations.
Our international operations are subject to a number of risks, including:
•difficulties in staffing and managing foreign operations and attempting to ensure compliance with our policies, procedures, and applicable local laws;
•less flexible employee relationships that can be difficult and expensive to terminate due to, among other things, labor laws and regulations;
•rising labor costs (including the introduction or expansion of certain social programs), in particular within the lower-cost regions in which we operate, due to, among other things, demographic changes and economic development in those regions;
•labor unrest and dissatisfaction, including potential labor strikes or claims;
•increased scrutiny by the media and other third parties of labor practices within our industry (including working conditions, compliance with employment and labor laws and compensation) which may result in allegations of violations, more stringent and burdensome labor laws and regulations, higher labor costs and/or loss of revenues if our customers become dissatisfied with our labor practices and diminish or terminate their relationship with us;
•burdens of complying with a wide variety of foreign laws, including those relating to export and import duties, domestic and foreign import and export controls, trade barriers (including tariffs and quotas), environmental policies and privacy issues, and local statutory corporate governance rules;
•risk of non-compliance with the U.S. Foreign Corrupt Practices Act (the “FCPA”) or similar regulations in other jurisdictions;
•less favorable, less predictable, or relatively undefined, intellectual property laws;
•lack of sufficient or available locations from which to operate or inability to renew leases on terms that are acceptable to us or at all;
•unexpected changes in regulatory requirements and laws or government or judicial interpretations of such regulatory requirements and laws and adverse trade policies, and adverse changes to any of the policies of either the U.S. or any of the foreign jurisdictions in which we operate;
•adverse changes in tax rates or accounting rules and the manner in which the U.S. and other countries tax multinational companies or interpret their tax laws or accounting rules or restrictions on the transfer of funds to us from our operations outside the U.S.;
•limitations on imports or exports of components or products, or other trade sanctions;
•political and economic instability and unsafe working conditions;
•geopolitical unrest, including the invasion of Ukraine, the possibility of military activity in countries near or adjacent to Ukraine, and the sanctions and other actions taken by the European Union, the United States and other governments around the world in response;
•risk of governmental expropriation of our property;
•inadequate infrastructure for our operations (e.g., lack of adequate power, water, transportation and raw materials);
•legal or political constraints on our ability to maintain or increase prices;
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•health concerns, epidemics and related government actions;
•increased travel costs and difficulty in coordinating our communications and logistics across geographic distances and multiple time zones;
•longer customer payment cycles and difficulty collecting trade accounts receivable;
•fluctuations in currency exchange rates;
•economies that are emerging or developing or that are subject to greater currency volatility, negative growth, high inflation, limited availability of foreign exchange and other risks;
•higher potential for theft, misappropriation or unauthorized access to or use of technology, data or intellectual property; and
•international trade disputes could result in tariffs and other protectionist measures that could adversely affect our business. Tariffs could increase the costs of the components and raw materials we use in the manufacturing process as well as import and export costs for finished products. Countries could adopt other protectionist measures that could limit our ability to manufacture products or provide services. Increased costs to our U.S. customers who use our non-U.S. manufacturing sites and components may adversely impact demand for our services and our results of operation and financial condition. Additionally, international trade disputes may cause our customers to decide to relocate the manufacturing of their products to another location, either within country, or into a new country. Relocations may require considerable management time as well as expenses related to market, personnel and facilities development before any significant revenue is generated, which may negatively affect our margin. Furthermore, there can be no assurance that all customer manufacturing needs can be met in available locations within the desired timeframe, or at all, which may cause us to lose business, which may negatively affect our financial condition and results of operation.
In particular, a significant portion of our manufacturing, design, support and storage operations are conducted in our facilities in China, and revenues associated with our China operations are important to our success. Therefore, our business, financial condition and results of operations may be materially adversely affected by economic, political, legal, regulatory, competitive, infrastructure and other factors in China. International trade disputes or political differences with China could result in tariffs and other measures that could adversely affect the Company’s business. The Chinese economy differs from the economies of most developed countries in many respects, including the level of government involvement and control over economic growth. In addition, our operations in China are governed by Chinese laws, rules and regulations, some of which are relatively new. The Chinese legal system continues to rapidly evolve, which may result in uncertainties with respect to the interpretation and enforcement of Chinese laws, rules and regulations that could have a material adverse effect on our business. China experiences high turnover of direct labor in the manufacturing sector due to the intensely competitive and fluid market for labor, and the retention of adequate labor is a challenge. If our labor turnover rates are higher than we expect, or we otherwise fail to adequately manage our labor needs, then our business and results of operations could be adversely affected. We are also subject to risks associated with our subsidiaries organized in China. For example, regulatory and registration requirements and government approvals affect the financing that we can provide to our subsidiaries. If we fail to receive required registrations and approvals to fund our subsidiaries organized in China, or if our ability to remit currency out of China is limited, then our business and liquidity could be adversely affected.
These factors may harm our results of operations. Also, any measures that we may implement to reduce risks of our international operations may not be effective, may increase our expenses and may require significant management time and effort. Entry into new international markets requires considerable management time as well as start-up expenses related to market, personnel and facilities development before any significant revenue is generated. As a result, initial operations in a new market may operate at low margins or may be unprofitable.
Although we have implemented policies and procedures designed to cause compliance with the FCPA and similar laws, there can be no assurance that all of our employees and agents, as well as those companies to which we outsource certain of our business operations, will not take actions in violation of our policies which could have a material adverse effect on our operations.
This amended Risk Factor should be considered along with the other Risk Factors that could affect our business, results of operations, financial condition or future results included in Part I, “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended August 31, 2021.
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | ||||
The following table provides information relating to our repurchase of common stock during the three months ended May 31, 2022:
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| Period | Total Number of Shares Purchased(1) |
Average Price Paid per Share |
Total Number of Shares Purchased as Part of Publicly Announced Program(2) |
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (in millions)(2) | |||||||||||||||||||
| March 1, 2022 - March 31, 2022 | 1,299,001 | $ | 56.25 | 1,299,001 | $ | 613 | |||||||||||||||||
| April 1, 2022 - April 30, 2022 | 1,233,818 | $ | 58.06 | 1,230,875 | $ | 542 | |||||||||||||||||
| May 1, 2022 - May 31, 2022 | 1,023,422 | $ | 57.60 | 1,022,599 | $ | 483 | |||||||||||||||||
| Total | 3,556,241 | $ | 57.27 | 3,552,475 | |||||||||||||||||||
(1)The purchases include amounts that are attributable to 3,766 shares surrendered to us by employees to satisfy, in connection with the vesting of restricted stock unit awards, their tax withholding obligations.
(2)In July 2021, our Board of Directors authorized the repurchase of up to $1.0 billion of our common stock as publicly announced in a press release on July 23, 2021 (the “2022 Share Repurchase Program”).
| Item 3. | Defaults Upon Senior Securities | ||||
None.
| Item 4. | Mine Safety Disclosures | ||||
Not applicable.
| Item 5. | Other Information | ||||
None.
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| Item 6. | Exhibits | ||||
Index to Exhibits
| Incorporated by Reference Herein | |||||||||||||||||||||||||||||||||||||||||
| Exhibit No. | Description | Form | Exhibit | Filing Date/Period End Date | |||||||||||||||||||||||||||||||||||||
| 1.1 | 8-K | 1.1 | 5/4/2022 | ||||||||||||||||||||||||||||||||||||||
| 3.1 | 10-Q | 3.1 | 5/31/2017 | ||||||||||||||||||||||||||||||||||||||
| 3.2 | 10-Q | 3.2 | 5/31/2017 | ||||||||||||||||||||||||||||||||||||||
| 4.1 | Form of Certificate for Shares of the Registrant’s Common Stock. (P) | S-1 | 3/17/1993 | ||||||||||||||||||||||||||||||||||||||
| 4.2 | 8-K | 4.2 | 1/17/2008 | ||||||||||||||||||||||||||||||||||||||
| 4.3 | 8-K | 4.1 | 5/4/2022 | ||||||||||||||||||||||||||||||||||||||
| 4.4 | 8-K | 4.1 | 1/17/2018 | ||||||||||||||||||||||||||||||||||||||
| 4.5 | 8-K | 4.1 | 1/15/2020 | ||||||||||||||||||||||||||||||||||||||
| 4.6 | 8-K | 4.1 | 7/13/2020 | ||||||||||||||||||||||||||||||||||||||
| 4.7 | 8-K | 4.1 | 4/14/2021 | ||||||||||||||||||||||||||||||||||||||
| 4.8 | 8-K | 4.1 | 5/4/2022 | ||||||||||||||||||||||||||||||||||||||
| 10.1†* | |||||||||||||||||||||||||||||||||||||||||
| 31.1* | |||||||||||||||||||||||||||||||||||||||||
| 31.2* | |||||||||||||||||||||||||||||||||||||||||
| 32.1* | |||||||||||||||||||||||||||||||||||||||||
| 32.2* | |||||||||||||||||||||||||||||||||||||||||
| 101 | The following financial information from Jabil’s Quarterly Report on Form 10-Q for the quarterly period ended May 31, 2022, formatted in Inline XBRL: (i) Condensed Consolidated Balance Sheets as of May 31, 2022 and August 31, 2021, (ii) Condensed Consolidated Statements of Operations for the three months and nine months ended May 31, 2022 and 2021, (iii) Condensed Consolidated Statements of Comprehensive Income for the three months and nine months ended May 31, 2022 and 2021, (iv) Condensed Consolidated Statements of Stockholders’ Equity for the three months and nine months ended May 31, 2022 and 2021, (v) Condensed Consolidated Statements of Cash Flows for the nine months ended May 31, 2022 and 2021, and (vi) the Notes to Condensed Consolidated Financial Statements. |
||||||||||||||||||||||||||||||||||||||||
| 104 | Cover Page Interactive Data File (Embedded within the inline XBRL Document in Exhibit 101). | ||||||||||||||||||||||||||||||||||||||||
| † | Indicates management compensatory plan, contract or arrangement | ||||||||||||||||||||||||||||||||||||||||
| * | Filed or furnished herewith | ||||||||||||||||||||||||||||||||||||||||
Certain instruments with respect to long-term debt of the Registrant and its consolidated subsidiaries are not filed herewith pursuant to Item 601(b)(4)(iii) of Regulation S-K since the total amount of securities authorized under each such instrument
31
does not exceed 10% of the total assets of the Registrant and its subsidiaries on a consolidated basis. The Registrant agrees to furnish a copy of any such instrument to the Securities and Exchange Commission upon request.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| JABIL INC. Registrant | ||||||||
| Date: July 1, 2022 | By: | /s/ MARK T. MONDELLO | ||||||
| Mark T. Mondello Chief Executive Officer | ||||||||
| Date: July 1, 2022 | By: | /s/ MICHAEL DASTOOR | ||||||
| Michael Dastoor Chief Financial Officer | ||||||||
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