JABIL INC - Annual Report: 2020 (Form 10-K)

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Efficient Manufacturing. Manufacturing service providers are often able to manufacture products at a reduced total cost to companies. These cost advantages result from higher utilization of capacity and efficiencies of scale because of diversified product demand and, generally, a greater focus on the components of manufacturing cost. Companies are increasingly seeking to reduce their investment in inventory, facilities and equipment used in manufacturing and prioritizing capital investments in other activities such as sales and marketing and research and development (“R&D”). This strategic shift in capital deployment has contributed to increased demand for and interest in outsourcing to external manufacturing service providers.

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Accelerated Product Time-to-Market and Time-to-Volume. Manufacturing service providers are often able to deliver accelerated production start-ups and achieve high efficiencies in bringing new products to production. Providers are also able to more rapidly scale production for changing markets and to position themselves in global locations that serve the leading world markets. With increasingly shorter product life cycles, these key services allow new products to be sold in the marketplace in an accelerated time frame.

•	Access to Advanced Design and Manufacturing Technologies. By utilizing manufacturing service providers, customers gain access to additional advanced technologies in manufacturing processes, as well as to product and production design, which can offer customers significant improvements in the performance, quality, cost, time-to-market and manufacturability of their products.

•	Improved Inventory Management and Purchasing Power. Manufacturing service providers are often able to more efficiently manage both procurement and inventory, and have demonstrated proficiency in purchasing components at improved pricing due to the scale of their operations and continuous interaction with the materials marketplace.

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Establish and Maintain Long-Term Customer Relationships. An important element of our strategy is to establish and maintain long-term relationships with leading companies in expanding industries with size and growth characteristics that can benefit from highly automated, continuous flow manufacturing on a global scale. We focus on maintaining long-term relationships with our customers and seek to expand these relationships to include additional product lines and services. In addition, we focus on identifying and developing relationships with new customers that meet our targeted profile, which includes financial stability, the need for technology-driven turnkey manufacturing, anticipated unit volume and long-term relationship stability.

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Product Diversification. We focus on balancing our portfolio of products and product families to those that align with higher return areas of our business, including manufacturing, supply chain management services, comprehensive electronics design, production and product management services. We have made concentrated efforts to diversify our industry sectors and customer base. Because of these efforts, we have experienced business growth from both existing and new customers as well as from acquisitions.

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Utilize Customer-Centric Business Units. Most of our business units are dedicated to serve one customer each and operate by primarily utilizing dedicated production equipment, production workers, supervisors, buyers, planners and engineers to provide comprehensive manufacturing solutions that are customized to each customer’s needs. We believe our customer-centric business units promote increased responsiveness to our customers’ needs, particularly for customer relationships that extend across multiple production locations.

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Leverage Global Production. We believe that global production is a key strategy to reduce obsolescence risk and secure the lowest possible landed costs while simultaneously supplying products of equivalent or comparable quality throughout the world. Consistent with this strategy, we have established or acquired operations in the Americas, Europe, Asia and Africa. Our extensive global footprint positions us well to implement safe and practical solutions in order to select production locations which best serve the needs of our customers.

•	Offer Systems Assembly, Direct-Order Fulfillment and Configure-to-Order Services. Our systems assembly, direct-order fulfillment and configure-to-order services allow our customers to reduce product cost and risk of product obsolescence by reducing total work-in-process and finished goods inventory. These services are available at all of our manufacturing locations.

•	Offer Design Services. We offer a wide spectrum of value-add design services to achieve improvements in performance, cost, time-to-market and manufacturability.

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Pursue Acquisition Opportunities Selectively. Traditionally, electronics manufacturing service companies have acquired manufacturing capacity from their customers to drive growth, expand their footprint and gain new customers. In recent years, our acquisition strategy has expanded to include opportunities to acquire competitors who are focused on our key growth areas, which include specialized manufacturing in key markets, materials technology and design operations, as well as other acquisition opportunities complementary to our services offerings. The primary goals of

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Decentralized Business Unit Model. Most of our business units are dedicated to serve one customer each and are empowered to formulate strategies tailored to individual customer’s needs. Our business units generally have dedicated production lines consisting of equipment, production workers, supervisors, buyers, planners and engineers. Under certain circumstances, a production line may serve more than one business unit to maximize resource utilization. Business units have direct responsibility for manufacturing results and time-to-volume production, thereby promoting a sense of individual commitment and ownership. The business unit approach is modular and enables us to grow incrementally without disrupting the operations of other business units. Business unit management reviews the customer financial information to assess whether the business units are meeting their designated responsibilities and to ensure that the daily execution of manufacturing activities is being effectively managed. The business units aggregate into operating segments based on the economic profiles of the services performed, including manufacturing capabilities, market share strategy, margins, return on capital and risk profiles.

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Automated Continuous Flow. We use a highly automated, continuous flow approach to manufacturing, whereby different pieces of equipment are joined directly or by conveyor to create an in-line assembly process. This process contrasts with a batch approach, whereby individual pieces of assembly equipment are operated as freestanding work-centers. The elimination of waiting time prior to sequential operations results in faster manufacturing, which improves production efficiencies and quality control, and reduces inventory work-in-process. We believe continuous flow manufacturing provides cost reductions and quality improvement when applied to high volumes of product.

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Computerized Control and Monitoring. We support all aspects of our manufacturing activities with advanced computerized control and monitoring systems. Component inspection and vendor quality are monitored electronically in real-time. Materials planning, purchasing, stockroom and shop floor control systems are supported through a computerized manufacturing resource planning system, which provides customers with the ability to continuously monitor material availability and track work-in-process on a real-time basis. In addition, manufacturing processes are supported by a computerized statistical process control system, whereby customers can remotely access our computer systems to monitor real-time yields, inventory positions, work-in-process status and vendor quality data.

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Electronic Supply Chain Management. We make available to our customers and suppliers an electronic commerce system/electronic data interchange and web-based tools to implement a variety of supply chain management programs. Our customers use these tools to share demand and product forecasts and deliver purchase orders, and we use these tools with our suppliers for just-in-time delivery, supplier-managed inventory and consigned supplier-managed inventory.

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Electronic Design. Our Electronic Design team provides electronic circuit design services, including application-specific integrated circuit design, firmware development and rapid prototyping services. These services have been used by our customers for a variety of products including smart phones and accessory products, notebook and personal computers, servers, radio frequency products, video set-top boxes, optical communications products, communication and broadband products, and automotive and consumer appliance controls.

•	Industrial Design. Our Industrial Design team designs the “look and feel” of the plastic and metal enclosures that house the products’ electro-mechanics, including the printed circuit board assemblies (“PCBA”).

•	Mechanical Design. Our Mechanical Design team specializes in three-dimensional mechanical design with the analysis of electronic, electro-mechanical and optical assemblies using state of the art modeling and analytical tools. This team has extended Jabil’s product design offering capabilities to include all aspects of industrial design, advance mechanism development and tooling management.

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Computer-Assisted Design. Our Computer-Assisted Design (“CAD”) team provides PCBA design services using advanced CAD engineering tools, PCBA design validation and verification services, and other consulting services, which include generating a bill of materials, approved vendor list and assembly equipment configuration for a particular PCBA design. We believe that our CAD services result in PCBA designs that are optimized for manufacturability and cost efficiencies and accelerate a product’s time-to-market and time-to-volume production.

•	Product Validation. Our Product Validation team provides complete product and process validation. This includes product system tests, product safety, regulatory compliance and reliability tests.

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Manufacturing Test Solution Development. Our Manufacturing Test Solution Development team provides integral support to the design teams to embed design with testability and to promote efficient capital and resource investment in the manufacturing process. The use of software driven instrumentation and test process design and management has enhanced our product quality and reduced our operating costs relative to human dependent test processes. The full electronic test data-log of customer products has allowed customer product test traceability and visibility throughout the manufacturing test process.

•	Automation, including automated tooling

•	Electronic interconnection

•	Advanced polymer and metal material science

•	Single/multi-shot injection molding, stamping and in-mold labeling

•	Multi-axis computer numerical control

•	Vacuum metallization

•	Physical vapor deposition

•	Digital printing

•	Anodization

•	Thermal-plastic composite formation

•	Plastic with embedded electronics

•	Metal and plastic covers with insert-molded or dies-casting features for assembly

•	Display cover with integrated touch sensor

•	Material processing research (including plastics, metal, glass and ceramic)

•	Additive manufacturing

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•	recessionary periods in our customers’ markets;

•	the inability of our customers to adapt to rapidly changing technology and evolving industry standards, which may contribute to short product life cycles or shifts in our customers’ strategies;

•	the inability of our customers to develop, market or gain commercial acceptance of their products, some of which are new and untested;

•	the potential that our customers’ products become commoditized or obsolete;

•	loss of business or a reduction in pricing power experienced by our customers;

•	the emergence of new business models or more popular products and shifting patterns of demand; and

•	a highly-competitive consumer products industry, which is often subject to shorter product lifecycles, shifting end-user preferences and higher revenue volatility.

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•	respond more quickly to new or emerging technologies or changes in customer requirements;

•	have technological expertise, engineering capabilities and/or manufacturing resources that are greater than ours;

•	have greater name recognition, critical mass and geographic market presence;

•	be better able to take advantage of acquisition opportunities;

•	devote greater resources to the development, promotion and sale of their services and execution of their strategy;

•	be better positioned to compete on price for their services;

•	have excess capacity, and be better able to utilize such excess capacity;

•	have greater direct buying power from component suppliers, distributors and raw material suppliers;

•	have lower cost structures as a result of their geographic location or the services they provide;

•	be willing or able to make sales or provide services at lower margins than we do;

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•	have increased vertical capabilities providing them greater cost savings.

•	hire, retain and expand our pool of qualified engineering and technical personnel;

•	maintain and continually improve our technological expertise;

•	develop and market manufacturing services that meet changing customer needs; and

•	anticipate and respond to technological changes in manufacturing processes on a cost-effective and timely basis.

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•	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;

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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;

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•	political and economic instability and unsafe working conditions;

•	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;

•	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 may be subject to greater currency volatility, negative growth, high inflation, limited availability of foreign exchange and other risks; and

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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.

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Financial risks, such as: (1) overpayment; (2) an increase in our expenses and working capital requirements; (3) exposure to liabilities of the acquired businesses, with contractually-based time and monetary limitations on a seller’s obligation to indemnify us; (4) integration costs or failure to achieve synergy targets; (5) incurrence of additional debt; (6) valuation of goodwill and other intangible assets; (7) possible adverse tax and accounting effects; (8) the risk that we acquire manufacturing facilities and assume significant contractual and other obligations with no guaranteed levels of revenue; (9) the risk that, in the future, we may have to close or sell acquired facilities at our cost, which may include substantial employee severance costs and asset write-offs, which have resulted, and may result, in our incurring significant losses; and (10) costs associated with environmental risks including fines, remediation and clean-up.

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Operating risks, such as: (1) the diversion of management’s attention and resources to the integration of the acquired businesses and their employees and to the management of expanding operations; (2) the risk that the acquired businesses will fail to maintain the quality of services that we have historically provided; (3) the need to implement financial and other systems and add management resources; (4) the need to maintain customer, supplier or other favorable business relationships of acquired operations and restructure or terminate unfavorable relationships; (5) the potential for deficiencies in internal controls of the acquired operations; (6) the inability to attract and retain the employees necessary to support the acquired businesses; (7) potential inexperience in a line of business that is either new to us or that has become materially more significant to us as a result of the transaction; (8) unforeseen difficulties (including any unanticipated liabilities) in the acquired operations; (9) the impact on us of any unionized work force we may acquire or any labor disruptions that might occur; (10) the possibility that the acquired business’s past transactions or practices before our acquisition may lead to future commercial or regulatory risks; (11) the difficulty of presenting a unified corporate image; (12) the possibility that we will have unutilized capacity due to our acquisition activity; (13) when acquiring an operation from a customer and continuing or entering into a supply arrangement, our inability to meet the expectations of the customer as to volume, product quality, timeliness and cost reductions.

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•	make it difficult for us to obtain any necessary financing in the future for other acquisitions, working capital, capital expenditures, debt service requirements or other purposes;

•	limit our flexibility in planning for, or reacting to changes in, our business;

•	make us more vulnerable in the event of a downturn in our business; and

•	impact certain financial covenants that we are subject to in connection with our debt and asset-backed securitization programs.

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(1)	Approximately 14% of our total square footage is not currently used in business operations.

(2)	Consists of 18.2 million square feet in facilities that we own with the remaining 35.7 million square feet in leased facilities.

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(1)	The purchases include amounts that are attributable to 1,319 shares surrendered to us by employees to satisfy, in connection with the vesting of restricted stock units and the exercise of stock options and stock appreciation rights, their tax withholding obligations.

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

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(1)	Working capital is defined as current assets minus current liabilities.

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

(2)	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, 2020 and November 30, 2019, the increase in days in accounts receivable from the prior sequential quarter was primarily due to an increase in accounts receivable, primarily driven by higher sales and timing of collections. During the three months ended February 29, 2020, the decrease in days in accounts receivable from the prior sequential quarter is primarily driven by lower sales and the timing of collections in the second quarter.

(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 August 31, 2020, May 31, 2020 and August 31, 2019, the decrease in days in inventory from the prior sequential quarter was primarily due to increased sales activity during the quarter. During the three months ended February 29, 2020, the increase in days in inventory from the prior sequential quarter is primarily driven by idle capacity and supply chain constraints, largely in China due to COVID-19. During the three months ended February 28, 2019, days in inventory increased from the prior sequential quarter to support anticipated ramps and expected sales levels in the second half of fiscal year 2019 and due to the acquisition of certain assets of Johnson & Johnson Medical Devices Companies (“JJMD”) facilities at the end of February.

(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, 2019, the decrease in days in accounts payable from the prior sequential quarter was primarily due to timing of purchases and cash payments for purchases during the quarter. During the three months ended February 28, 2019, the decrease in days in accounts payable from the prior sequential quarter was primarily due

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(1)

Includes $61.9 million, $21.5 million and $16.3 million recorded in the EMS segment, $75.6 million, $2.6 million and $16.6 million recorded in the DMS segment and $19.1 million, $1.8 million and $4.0 million of non-allocated charges for the fiscal years ended August 31, 2020, 2019 and 2018, respectively. Except for asset write-off costs, all restructuring, severance and related charges are cash settled.

(2)	As the Company continues to optimize its cost structure and improve operational efficiencies, $56.6 million of employee severance and benefit costs was incurred in connection with a reduction in the worldwide workforce during the fiscal year ended August 31, 2020. The remaining amount primarily relates to the 2020 Restructuring Plan.

(3)	Primarily relates to the 2017 Restructuring Plan, which was complete as of August 31, 2019.

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(1)	As the Company continues to optimize its cost structure and improve operational efficiencies, $56.6 million of employee severance and benefit costs was incurred in connection with a reduction in the worldwide workforce during fiscal year 2020. The remaining amount primarily relates to the 2020 Restructuring Plan.

(2)	Relates to accounts receivable and inventory charges for certain distressed customers in the: (i) renewable energy sector during fiscal year 2020 and (ii) networking and consumer wearables sectors during fiscal years 2019 and 2018.

(3)

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

(4)	Charges for the fiscal year ended August 31, 2020, relate to a flood that impacted our facility in Huangpu, China. Charges, net of insurance proceeds of $2.9 million and $24.9 million, for the fiscal years ended August 31, 2019 and 2018, respectively, relate to costs associated with damage from Hurricane Maria, which impacted our operations in Cayey, Puerto Rico.

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

(6)	Relates to: (i) an impairment of an investment with iQor and the sale of an investment in the optical networking segment during fiscal year 2020 and (ii) a restructuring of securities loss on the exchange of an investment with iQor during fiscal year 2019.

(7)	The fiscal year ended August 31, 2019 includes a $13.3 million income tax benefit for the effects of the Tax Act recorded during the three months ended November 30, 2018. The fiscal year ended August 31, 2018 includes a $142.3 million provisional estimate to account for the effects of the Tax Act.

(1)

In fiscal year 2019, the adoption of Accounting Standards Update ("ASU") 2016-15, "Classification of Certain Cash Receipts and Cash Payments" resulted in a reclassification of cash flows from operating activities to investing activities for cash receipts for the deferred purchase price receivable on asset-backed securitization transactions. The adoption of this standard does not reflect a change in the underlying business or activities. The effects of this change are applied retrospectively to all prior periods.

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(1)	Includes a distressed customer charge of $15.0 million and $6.2 million during the three months ended November 30, 2019 and August 31, 2019, respectively.

(2)	Includes direct costs related to the COVID-19 pandemic of $21.5 million, $67.4 million and $53.0 million for the three months ended August 31, 2020, May 31, 2020, and February 29, 2020, respectively.

(3)	Includes employee severance and benefit costs incurred in connection with a reduction in the worldwide workforce of $4.3 million and $52.3 million for the three months ended August 31, 2020 and May 31, 2020, respectively.

(5)	Relates to: (i) an impairment of an investment with iQor during the three months ended August 31, 2020 and the sale of an investment in the optical networking segment during the three months ended February 29, 2020 and (ii) a restructuring of securities loss on the exchange of an investment with iQor during the three months ended August 31, 2019.

(6)	Includes $13.3 million of income tax benefit for the three months ended November 30, 2018 related to the Tax Act.

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

(2)	On July 13, 2020, the Company issued $600.0 million of publicly registered 3.000% Senior Notes due 2031 (the “3.000% Senior Notes”). The net proceeds from the offering were used for general corporate purposes, including to redeem the $400.0 million aggregate principal amount of our 5.625% Senior Notes due 2020 and pay the applicable “make-whole” premium.

(3)

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

(4)	On April 24, 2020, we entered into an unsecured 364-day revolving credit agreement up to an initial aggregate amount of $375.0 million, which was increased to $425.0 million on May 29, 2020 (the “364-Day Revolving Credit Agreement”). The 364-Day Revolving Credit Agreement expires on April 23, 2021. Interest and fees on the 364-Day

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(5)	As of August 31, 2020, we had $3.7 billion in available unused borrowing capacity under our revolving credit facilities. The Revolving Credit Facility under the Credit Facility acts as the back-up facility for commercial paper outstanding, if any. We have a borrowing capacity of up to $1.8 billion under our commercial paper program.

(1)	Maximum amount available at any one time.

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(1)	Maximum amount of trade accounts receivable that may be sold under a facility at any one time.

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

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

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

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

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

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

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

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

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

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(1)	The difference between dividends declared and dividends paid is due to dividend equivalents for unvested restricted stock units that are paid at the time the awards vest.

(2)	Excludes commissions.

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(1)	Consists of interest on notes payable and long-term debt outstanding as of August 31, 2020. Certain of our notes payable and long-term debt pay interest at variable rates. We have applied estimated interest rates to determine the value of these expected future interest payments.

(2)	Excludes $137.8 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.

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

(4)	Consists of purchase commitments entered into as of August 31, 2020 primarily for property, plant and equipment and software pursuant to legally enforceable and binding agreements.

(5)	Includes the estimated company contributions to funded pension plans during fiscal year 2021 and the expected benefit payments for unfunded pension and postretirement plans from fiscal years 2021 through 2030. These future payments are not recorded on the Consolidated Balance Sheets but will be recorded as incurred.

(6)	Includes (i) a $27.0 million capital commitment, (ii) a $12.5 million obligation related to a new human resource system and (iii) $33.0 million related to the one-time transition tax as a result of the Tax Act that will be paid in annual installments through fiscal year 2026.

(7)	As of August 31, 2020, we have $0.4 million and $118.8 million recorded as a current and a long-term liability, respectively, for uncertain tax positions. We are not able to reasonably estimate the timing of payments, or the amount by which our liability for these uncertain tax positions will increase or decrease over time, and accordingly, this liability has been excluded from the above table.

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(a)	The following documents are filed as part of this Report:

(b)	Exhibits. The following exhibits are included as part of, or incorporated by reference into, this Report.

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(c)	Financial Statement Schedules. See Item 15(a) above.

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(1)	Actuarial (loss) gain is net of tax of $(12.0) million. Amounts for other components of AOCI are net of tax, which are immaterial.

(1)	The Company expects to reclassify $4.7 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 pension cost. Refer to Note 10 – “Postretirement and Other Employee Benefits” for additional information.

(3)	Amounts are net of tax, which are immaterial for the fiscal years ended August 31, 2020 and 2019. The amount for the fiscal year ended August 31, 2018 includes a reduction to income tax expense related to derivative instruments of $14.8 million.

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(1)	Maximum amount of trade accounts receivable that may be sold under a facility at any one time.

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

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

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

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

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

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

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

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

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

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

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(1)	Net of accumulated amortization of $96.2 million.

(2)	Net of accumulated amortization of $12.8 million.

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

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

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

(1)	Excludes $137.8 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.

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(1)	The notes are carried at the principal amount of each note, less any unamortized discount and unamortized debt issuance costs.

(2)	The Senior Notes are the Company’s senior unsecured obligations and rank equally with all other existing and future senior unsecured debt obligations.

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

(4)	On July 13, 2020, the Company issued $600.0 million of publicly registered 3.000% Senior Notes due 2031 (the “3.000% Senior Notes”). The net proceeds from the offering were used for general corporate purposes, including to redeem the $400.0 million aggregate principal amount of the Company’s 5.625% Senior Notes due 2020 and pay the applicable “make-whole” premium.

(5)

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

(6)

On April 24, 2020, the Company entered into an unsecured 364-day revolving credit agreement up to an initial aggregate amount of $375.0 million, which was increased to $425.0 million on May 29, 2020 (the “364-Day Revolving Credit Agreement”). The 364-Day Revolving Credit Agreement expires on April 23, 2021. Interest and fees on the 364-Day Revolving Credit Agreement advances are based on the Company’s non-credit enhanced long-term senior unsecured debt rating as determined by Standard & Poor’s Ratings Service, Moody’s Investors Service and Fitch Ratings.

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(7)	As of August 31, 2020, the Company has $3.7 billion in available unused borrowing capacity under its revolving credit facilities. The Revolving Credit Facility under the Credit Facility acts as the back-up facility for commercial paper outstanding, if any. The Company has a borrowing capacity of up to $1.8 billion under its commercial paper program.

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(1)	Maximum amount available at any one time.

(2)	As of August 31, 2020, the Company had up to $49.0 million in available liquidity under its asset-backed securitization programs.

(1)	The amounts primarily represent proceeds from collections reinvested in revolving-period transfers.

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

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

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(1)	Revenue recognized during the fiscal years ended August 31, 2020 and 2019 that was included in the contract liability balance as of August 31, 2019 and September 1, 2018 was $308.1 million and $404.0 million, respectively.

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(1)	The settlements recognized during fiscal year 2020 relate primarily to the Switzerland plan.

(2)	The Company anticipates amortizing $5.1 million and $0.0 million, before tax, of net actuarial gain and prior service costs balances, respectively, to net periodic cost in fiscal year 2021.

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(1)	The expected return on plan assets assumption used in calculating net periodic benefit cost is based on historical return experience and estimates of future long-term performance with consideration to the expected investment mix of the plan.

(2)	The discount rate is used to state expected cash flows relating to future benefits at a present value on the measurement date. This rate represents the market rate for high-quality fixed income investments whose timing would match the cash outflow of retirement benefits. Other assumptions include demographic factors such as retirement, mortality and turnover.

(1)	Carrying value approximates fair value.

(2)	Investments in equity securities by companies incorporated, listed or domiciled in developed and/or emerging market countries.

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(3)	Investments in global equity securities, corporate bonds, government securities and government bonds are valued using the quoted prices of securities with similar characteristics.

(4)

Consist of an insurance contract that guarantees the payment of the funded pension entitlements, as well as provides a profit share to the Company. The profit share in this contract is not based on actual investments, but, instead on a notional investment portfolio that is expected to return a pre-defined rate. Insurance contract assets are recorded at fair value and is determined based on the cash surrender value of the insured benefits which is the present value of the guaranteed funded benefits. Insurance contracts are valued using unobservable inputs (Level 3 inputs), primarily by discounting expected future cash flows relating to benefits paid from a notional investment portfolio in order to determine the cash surrender value of the policy. The unobservable inputs consist of estimated future benefits to be paid throughout the duration of the policy and estimated discount rates, which both have an immaterial impact on the fair value estimate of the contract.

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(1)

For the fiscal year ended August 31, 2020, the Company recognized $47.4 million of foreign currency losses in cost of revenue, which are offset by the gains from the forward foreign exchange contracts. For the fiscal years ended August 31, 2019 and 2018, the Company recognized $14.9 million and $36.7 million, respectively, of foreign currency gains in cost of revenue, which are offset by the losses from the forward foreign exchange contracts.

(1)	As a result of a modification, 0.8 million awards vested during fiscal year 2018, which resulted in approximately $24.9 million of stock-based compensation expense recognized during the fiscal year ended August 31, 2018.

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(2)	For the fiscal year ended August 31, 2018, represents a one-time cash-settled stock award that vested on November 30, 2017.

(1)	Represents the maximum number of shares that can be issued based on the achievement of certain performance criteria.

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(1)

For those shares granted that are based on the achievement of certain performance criteria, the amount represents the maximum number of shares that can vest. During the fiscal year ended August 31, 2020, the Company awarded approximately 1.2 million time-based restricted stock units, 0.3 million performance-based restricted stock units and 0.3 million market-based restricted stock units based on target performance criteria.

(1)	Classified as income tax expense within the Consolidated Statements of Operations.

(1)	The expected volatility was estimated using the historical volatility derived from the Company’s common stock.

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(1)	During fiscal years 2018 and 2017, the Company’s Board of Directors (“the Board”) authorized the repurchase of $350.0 million and $450.0 million, respectively, of the Company’s common stock under share repurchase programs, which were repurchased during fiscal years 2019 and 2018, respectively.

(2)	In September 2019, the Board authorized the repurchase of up to $600.0 million of the Company’s common stock as part of a two-year capital allocation framework (“the 2020 Share Repurchase Program”). As of August 31, 2020, 6.0 million shares had been repurchased for $213.9 million and $386.1 million remains available under the 2020 Share Repurchase Program.

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(1)	Sales to this customer were reported in the DMS operating segment.

(2)	Sales to this customer were reported primarily in the EMS operating segment.

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(1)	Effective September 1, 2018, the Company adopted ASU 2014-09, Revenue Recognition (Topic 606) using the modified retrospective method by applying the guidance to all open contracts upon adoption and recording a cumulative effect adjustment as of September 1, 2018, net of tax, of $42.6 million. No adjustments were made to prior periods.

(1)

Charges for the fiscal year ended August 31, 2020, relate to a flood that impacted the Company’s facility in Huangpu, China. Charges, net of insurance proceeds of $2.9 million and $24.9 million, for the fiscal years ended August 31, 2019 and 2018, respectively, relate to business interruption and asset impairment costs associated with damage from Hurricane Maria, which impacted operations in Cayey, Puerto Rico. These charges are classified as a component of cost of revenue and selling, general and administrative expenses in the Consolidated Statements of Operations.

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(1)

Includes $61.9 million, $21.5 million and $16.3 million recorded in the EMS segment, $75.6 million, $2.6 million and $16.6 million recorded in the DMS segment and $19.1 million, $1.8 million and $4.0 million of non-allocated charges for the fiscal years ended August 31, 2020, 2019 and 2018, respectively. Except for asset write-off costs, all restructuring, severance and related charges are cash settled.

(2)

As the Company continues to optimize its cost structure and improve operational efficiencies, $56.6 million of employee severance and benefit costs was incurred in connection with a reduction in the worldwide workforce during the fiscal year ended August 31, 2020. The remaining amount primarily relates to the 2020 Restructuring Plan. The Company’s liability associated with the worldwide workforce reduction is $35.8 million as of August 31, 2020.

(3)	Primarily relates to the 2017 Restructuring Plan, which was complete as of August 31, 2019.

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

(2)	Balance as of August 31, 2020 primarily relates to the 2020 Restructuring Plan.

(1)	Includes the elimination of intercompany foreign dividends paid to the U.S.

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(1)

The Company has been granted tax incentives for various subsidiaries in Brazil, China, Malaysia, Singapore and Vietnam, which expire at various dates through fiscal year 2031 and are subject to certain conditions with which the Company expects to comply. These tax incentives resulted in a tax benefit of approximately $42.6 million ($0.28 per basic share), $67.3 million ($0.43 per basic share) and $52.1 million ($0.30 per basic share) during the fiscal years ended August 31, 2020, 2019 and 2018, respectively.

(2)	For the fiscal year ended August 31, 2020, the decrease in the impact of foreign tax rates was primarily related to decreased income in low tax rate jurisdictions. For the fiscal year ended August 31, 2019, the decrease in the impact of foreign tax rates was primarily due to a decrease in the U.S. federal statutory income tax rate due to the Tax Act.

(3)

For the fiscal year ended August 31, 2020, the increase in the changes in tax rates on deferred tax assets and liabilities was primarily due to the re-measurement of deferred tax assets related to an extension of a non-U.S. tax incentive of $21.2 million. For the fiscal year ended August 31, 2018, the changes in tax rates on deferred tax assets and liabilities included changes related to the Tax Act, excluding the impact of the enacted rate change on the U.S. valuation allowance.

(4)

The one-time transition tax impact for the fiscal year ended August 31, 2018 was due to the comprehensive tax legislation enacted on December 22, 2017, commonly referred to as the Tax Cuts and Jobs Act of 2017 (“Tax Act”). The enacted changes included a mandatory income inclusion of the historically untaxed foreign earnings of a U.S. company’s foreign subsidiaries and effectively taxed such income at reduced tax rates (“transition tax”). The calculation of the one-time transition tax is based upon post-1986 earnings and profits, applicable foreign tax credits

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(5)	As a result of the Tax Act, the Company made a change to the indefinite reinvestment assertion for the fiscal year ended August 31, 2018 resulting in foreign withholding taxes that would be incurred upon such future remittances of cash.

(6)

The valuation allowance change for the fiscal year ended August 31, 2020 was primarily due to the increase in deferred tax assets for sites with existing valuation allowances. The valuation allowance change for the fiscal years ended August 31, 2019 and 2018 was primarily due to utilization of domestic federal net operating losses and tax credits against the one-time transition tax and the change in enacted tax rate applied to U.S. deferred tax assets and liabilities for the fiscal year ended August 31, 2018. The increase for the fiscal year ended August 31, 2019 was partially offset by an income tax benefit of $17.5 million for the reversal of a U.S. valuation allowance due to an intangible asset reclassification from indefinite-life to finite-life.

(7)	GILTI, a newly defined category of foreign subsidiary income which is taxable to U.S. shareholders each year, applied beginning in the fiscal year ended August 31, 2019 and primarily results in the utilization of current year U.S. federal operating losses. The Company records the effects of GILTI as a period cost.

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(1)	Net of unrecognized tax benefits.

(2)	Calculated based on the deferral method and includes foreign investment tax credits.

(3)	The tax capital loss carryforwards were primarily from an impairment of an investment that was deemed worthless for tax purposes.

(1)	The reductions for tax positions of prior years for the fiscal year ended August 31, 2019 are primarily related to a non-U.S. taxing authority ruling related to certain non-U.S. net operating loss carryforwards, offset with a valuation allowance and the impacts of the Tax Act.

(2)	The additions for the fiscal years ended August 31, 2020 are primarily related to taxation of certain intercompany transactions. The additions for the fiscal years ended August 31, 2019 and 2018 are primarily related to the impacts of the Tax Act and taxation of certain intercompany transactions.

(3)	The reductions from settlements with taxing authorities for the fiscal year ended August 31, 2019 are primarily related to the settlement of a U.S. audit.

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(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)	During the fourth quarter of fiscal year 2020, the Company recognized an impairment on its investment in the Senior Non-Convertible Preferred Stock of iQor Holdings, Inc. (“iQor”) in connection with iQor’s bankruptcy filing. The Company does not expect to recover any of the investment value and recognized the entire remaining investment of $36.4 million as a loss on securities.

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

(5)

The 2020 Extended Interest Rate Swaps are considered a hybrid instrument and the Company elected the fair value option for reporting. Fair value measurements are based on the contractual terms of the contract and use observable market-based inputs. The interest rate swaps are valued using a discounted cash flow analysis on the expected cash flows using observable inputs including interest rate curves and credit spreads.

(1)	The fair value of assets held for sale exceeds the carrying value for $30.1 million of assets held for sale. For $37.3 million of assets held for sale, the carrying value approximates the fair value with the asset value measured using Level 2 inputs.

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(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.

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