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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTION 13 OR
15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED AUGUST 31, 2000
[ ] 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: 0-21308
JABIL CIRCUIT, INC.
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 38-1886260
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10560 NINTH STREET NORTH,
ST. PETERSBURG, FLORIDA 33716
(Address of Principal Executive (Zip Code)
Offices)
Registrant's telephone number, including area code: (727) 577-9749
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
COMMON STOCK, $0.001 PAR VALUE PER SHARE NEW YORK STOCK EXCHANGE
Securities registered pursuant to Section 12(g) of the Act:
NONE
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 periods that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K. [ ]
The aggregate market value of the voting common stock held by
non-affiliates of the Registrant (based on the closing sale price of the Common
Stock as reported on the New York Stock Exchange on October 12, 2000) was
approximately $6.5 billion. For purposes of this determination, shares of Common
Stock held by each officer and director and by each person who owns 5% or more
of the outstanding Common Stock have been excluded in that such persons may be
deemed to be affiliates. This determination of affiliate status is not
necessarily a conclusive determination for other purposes. The number of
outstanding shares of the Registrant's Common Stock as of the close of business
on October 12, 2000, was 190,457,939. The Registrant does not have any
non-voting stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
The Registrant's definitive Proxy Statement for the 2000 Annual Meeting of
Stockholders to be held on January 18, 2001 is incorporated by reference in Part
III of this Annual Report on Form 10-K to the extent stated herein.
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PART I
ITEM 1. BUSINESS
We make "forward-looking statements" within the "safe harbor" provision of
the Private Securities Litigation Reform Act of 1995 throughout this document
and in the documents we incorporate by reference into this Annual Report on Form
10-K. You can identify these statements by forward-looking words such as "may,"
"will," "expect," "anticipate," "believe," "estimate," "plan" and "continue" or
similar words. We have based these statements on our current expectations about
future events. Although we believe that our expectations reflected in or
suggested by our forward-looking statements are reasonable, we cannot assure you
that these expectations will be achieved. Our actual results may differ
materially from what we currently expect. Important factors which could cause
our actual results to differ materially from the forward-looking statements in
this document are set forth in the "Factors Affecting Future Results" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" sections and elsewhere in this document.
You should read this Annual Report on Form 10-K completely and with the
understanding that our actual future results may be materially different from
what we expect. We may not update these forward-looking statements, even in the
event that our situation changes in the future. All forward-looking statements
attributable to us are expressly qualified by these cautionary statements.
THE COMPANY
We are one of the leading worldwide independent providers of electronic
manufacturing services ("EMS"). We design and manufacture electronic circuit
board assemblies and systems for major original equipment manufacturers ("OEMs")
in the communications, computer peripherals, and personal computer, automotive
and consumer products industries. We serve our OEM customers with dedicated work
cell business units that combine high volume, highly automated continuous flow
manufacturing with advanced electronic design and design for manufacturability
technologies. Our customers currently include industry leaders such as Cisco
Systems, Inc., Dell Computer Corporation, Hewlett-Packard Company, Johnson
Controls, Inc. and Lucent Technologies. For the fiscal year ended August 31,
2000, we achieved net revenues of approximately $3.6 billion and net income of
$145.6 million.
The EMS industry has experienced rapid growth over the past several years
as an increasing number of OEMs have outsourced their manufacturing
requirements. OEMs are turning to outsourcing in order to reduce product cost,
achieve accelerated time-to-market and time-to-volume production, access
advanced design and manufacturing technologies, improve inventory management and
purchasing power, reduce their capital investment in manufacturing facilities,
and achieve parallel manufacturing of the same product throughout the world. We
believe further growth opportunities exist for EMS providers to penetrate the
worldwide electronics markets.
We offer our customers complete turnkey EMS solutions that are responsive
to their outsourcing needs. Our work cell business units are capable of
providing:
- integrated design and engineering services
- component selection, sourcing and procurement
- automated assembly
- design and implementation of product testing
- parallel global production
- systems assembly and direct order fulfillment services
- repair and warranty services
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We currently conduct our operations in facilities that are located in the
United States, Brazil, China, Hungary, Ireland, Italy, Malaysia, Mexico and
Scotland. Our parallel global production strategy provides our customers with
the benefits of improved supply-chain management, reduced inventory
obsolescence, lowered transportation costs and reduced product fulfillment time.
Our principal executive offices are located at 10560 Ninth Street North,
St. Petersburg, Florida 33716, and our telephone number is (727) 577-9749. Our
website is located at www.jabil.com. Information contained in our website is not
a part of this document or the documents incorporated by reference in this
document.
EMS INDUSTRY BACKGROUND
The EMS industry is composed of companies that provide a range of
manufacturing services for OEMs in the electronics industry. The EMS industry
has experienced rapid growth over the past several years as an increasing number
of OEMs have chosen an external manufacturing strategy. This growth has been
impacted by OEMs divesting of internal manufacturing capacity. Factors driving
OEMs to favor outsourcing to EMS providers include:
- Reduced Product Cost. EMS providers are able to manufacture products at
a reduced total cost to OEMs. These cost advantages result from higher
utilization of capacity because of diversified product demand and,
typically, a higher sensitivity to elements of cost.
- Accelerated Product Time-to-Market and Time-to-Volume. EMS providers are
able to deliver accelerated production start-ups and achieve high
efficiencies in transferring new products into production. EMS providers
are also able to 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 Technologies. Customers of EMS providers gain access
to advanced technologies in manufacturing processes, as well as product
and production design. Product and production design services may offer
customers significant improvements in the performance, cost,
time-to-market and manufacturability of their products.
- Improved Inventory Management and Purchasing Power. EMS providers are
able to manage both procurement and inventory, and have demonstrated
proficiency in purchasing components at improved pricing due to the scale
of the operations and continuous interaction with the materials
marketplace.
- Reduced Capital Investment in Manufacturing. OEMs are increasingly
seeking to lower their investment in inventory, facilities and equipment
used in manufacturing in order to allocate capital to other activities
such as sales and marketing, and research and development. This shift in
capital deployment has placed a greater emphasis on outsourcing to
external manufacturing specialists.
OUR STRATEGY
We are focused on expanding our position as one of the leading global
providers of electronic manufacturing services to major OEMs. To achieve this
objective, we will continue implementing the following strategies:
- Establish and Maintain Long-Term Customer Relationships. Our core
strategy is to establish and maintain long-term relationships with
leading electronics companies in expanding industries with the size and
growth characteristics that can benefit from highly automated, continuous
flow and global manufacturing. Historically, we have derived a majority
of our growth from existing customers. We focus on maintaining long-term
relationships with our customers and seek to expand such relationships to
include additional product lines and services. In addition, we have a
focused effort to identify and develop relationships with new customers
who meet our profile.
- Utilize Work Cell Business Units. Each of our work cell business units
is dedicated to one customer and operates with a high level of autonomy,
utilizing dedicated production equipment, production
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workers, supervisors, buyers, planners and engineers. We believe our work
cell business units promote increased responsiveness to our customers'
needs, particularly as a customer relationship grows to multiple
production locations.
- Expand Parallel Global Production. Our ability to produce the same
product on a global scale is a significant requirement of our customers.
We believe that parallel global production is a key strategy to reduce
obsolescence risk and secure the lowest landed costs while simultaneously
supplying products of equivalent or comparable quality throughout the
world. Consistent with this strategy, we have constructed facilities in
Chihuahua, Mexico and Tiszaujvaros, Hungary, and acquired facilities in
Brazil, China and Mexico.
- Offer Systems Assembly and Direct Order Fulfillment. Our systems
assembly and direct order fulfillment services allow our customers to
reduce product cost and risk of product obsolescence by reducing total
work-in-process and finished goods inventory. We offer these services at
all of our manufacturing locations.
- Pursue Selective Acquisition Opportunities. An increasing number of OEMs
are divesting internal manufacturing operations to EMS providers. In many
of these situations, the OEM enters into a customer relationship with the
EMS provider. Our acquisition strategy is focused on obtaining OEM
manufacturing operations with consistent growth, experienced management
teams, and opportunities for long-term outsourcing relationships.
OUR APPROACH TO MANUFACTURING
In order to achieve high levels of manufacturing performance, we have
adopted the following approach:
- Work Cell Business Units. Each of our work cell business units is
dedicated to one customer and is empowered to formulate strategies
tailored to its customer's needs. Each work cell business unit has
dedicated production lines consisting of equipment, production workers,
supervisors and engineers. Work cell business units have direct
responsibility for manufacturing results and time-to-volume production,
promoting a sense of individual commitment and ownership. The work cell
business unit approach enables us to grow incrementally without
disrupting the operations of other work cell business units.
- Business Unit Management. Our Business Unit Managers coordinate all
financial, manufacturing and engineering commitments for each of our
customers at a particular manufacturing facility. Our Business Unit
Directors oversee local Business Unit Managers and coordinate on a
worldwide basis all financial, manufacturing and engineering commitments
for each of our customers that have both domestic and global production
requirements. Jabil's Business Unit Management has the authority to
develop customer relationships, make design strategy decisions and
production commitments, establish pricing and implement production and
electronic design changes. Business Unit Managers and Directors are also
responsible for assisting customers with strategic planning for future
products, including developing cost and technology goals. These Managers
and Directors operate autonomously, with responsibility for the
development of customer relationships and direct profit and loss
accountability for work cell business unit performance.
- Continuous Flow. We use a highly automated, "continuous flow" approach
where different pieces of equipment are joined directly or by conveyor to
create an in-line assembly process. This process is in contrast to a
"batch" approach, where 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. Continuous flow manufacturing provides
significant cost reduction and quality improvement when applied to volume
manufacturing.
- Computer Integration. We support all aspects of our manufacturing
activities with advanced computerized control and monitoring systems.
Component inspection and vendor qualities are monitored electronically in
real-time. Materials planning, purchasing, stockroom and shop floor
control
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systems are supported through a computerized Manufacturing Resource
Planning system, providing customers with a continuous ability to monitor
material availability and track work-in-process on a real-time basis.
Manufacturing processes are supported by a real-time, 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. See "-- Technology."
- Supply Chain Management. We utilize an electronic commerce
system/electronic data interchange ("EDI") and web based tools with our
customers and suppliers to implement a variety of supply chain management
programs. Our customers utilize these tools to share demand and product
forecasts and deliver purchase orders. We use these tools with our
suppliers for just-in-time delivery, supplier-managed inventory and
consigned supplier-managed inventory.
OUR DESIGN SERVICES
We offer a full spectrum of value-added design services for products that
we manufacture for our customers. We provide these services to enhance our
relationships with current customers and to help develop relationships with new
customers. During fiscal year 2000, approximately one-half of our customers
shipped product incorporating Jabil design. We offer the following design
services:
Electronic Design. Our electronic design team provides electronic
circuit design services including application specific integrated circuit
design and firmware development. These services have been used to develop a
variety of circuit designs for cellular telephone accessories, notebook and
personal computers, radio frequency products, video set-top boxes, and
automotive and consumer appliance controls.
Production Design. Our production design team provides printed
circuit board ("PCB") design and other related services. These services
include PCB design services using advanced CAD/CAE tools, PCB design
testing and verification services, and other consulting services, which
include generation of a bill of materials, approved vendor list and
assembly equipment configuration for a particular PCB design. We believe
that our production design services result in PCB designs that are
optimized for manufacturability and cost and accelerate product
time-to-market and time-to-volume production.
Industrial/Mechanical and Other Design Services. Our industrial and
mechanical design team often work with our customers to assist in designing
the "look and feel" of the plastic and metal enclosures that house printed
circuit board assemblies. In addition, from time to time we will procure
additional design services from third parties to meet our customers' needs.
OUR SYSTEMS ASSEMBLY, TEST AND DIRECT ORDER FULFILLMENT SERVICES
We offer systems assembly, test and direct order fulfillment services to
our customers. Our systems assembly services extend our range of assembly
activities to include assembly of higher level sub-systems and systems
incorporating multiple printed circuit boards. We maintain significant systems
assembly capacity to meet the increasing demands of our customers. In addition,
we provide testing services, based on quality assurance programs developed with
our customers, of the printed circuit boards, sub-systems and systems products
that we manufacture. Our quality assurance programs include circuit testing
under various environmental conditions to ensure that our products meet or
exceed required customer specifications. We also offer direct order fulfillment
services for delivery of final products we assemble for our customers.
OUR REPAIR AND WARRANTY SERVICES
As an extension of our manufacturing model and an enhancement to our total
global solution, we offer repair and warranty services to our customers from
strategic logistics hub locations. We have the ability to service our OEM
partners product following completion of the traditional manufacturing and
fulfillment process.
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TECHNOLOGY
We believe that our manufacturing and testing technologies are among the
most advanced in the industry. Through our research and development efforts, we
intend to continue to offer our customers among the most advanced high volume,
continuous flow manufacturing process technologies. These technologies include
surface mount technology, tape automated bonding, ball grid array, chip scale
packages, flip chip/direct chip attach, thin substrate processes, reflow solder
of mixed technology circuit boards and other testing and emerging interconnect
technologies. In addition to our research and development activities, we are
continuously making refinements to our existing manufacturing processes in
connection with providing manufacturing services to our customers.
RESEARCH AND DEVELOPMENT
To meet our customers' increasingly sophisticated needs, we continually
engage in research and development activities. The development and refinement of
new manufacturing processes are performed primarily at our advanced engineering
facility in San Jose, California. From time to time, we perform research and
development related to new products on a project-by-project basis. Our research
and development consists of design of the circuit board assembly, mechanical
design and the related production design necessary to manufacture the circuit
board assembly in the most cost-effective and reliable manner.
For fiscal years 2000, 1999 and 1998, we expended $4.8 million, $5.9
million and $5.4 million, respectively, on research and development activities.
To date, substantially all of our research and development expenditures have
related to internal research and development activities.
In conjunction with the acquisition of the operations of the LaserJet
Formatter Manufacturing Organization from Hewlett-Packard Company in August
1998, (the "HP Acquisition"), we recorded a charge of $6.5 million related to
the write-off of in-process research and development. See Note 10 to the
Consolidated Financial Statements.
CUSTOMERS AND MARKETING
Our core strategy is to establish and maintain long-term relationships with
leading electronics companies in expanding industries with the size and growth
characteristics that benefit from highly automated continuous flow and global
manufacturing. A small number of customers and significant industries have
historically comprised a major portion of our net revenue. The table below sets
forth the respective portion of net revenue for the applicable period
attributable to our customers who individually accounted for approximately 10%
or more of our net revenue in any respective period:
YEAR ENDED AUGUST 31,
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2000 1999 1998
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Cisco Systems, Inc.......................................... 20% 18% 18%
Dell Computer Corporation................................... 16 * *
Hewlett-Packard Company..................................... 14 22 *
Lucent Technologies......................................... 10 * *
3Com Corporation............................................ * * 16
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* less than 10% of net revenues
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Jabil's revenue was distributed over the following significant industries
for the periods indicated:
YEAR ENDED AUGUST 31,
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2000 1999 1998
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Communications.............................................. 44% 39% 48%
Computer Peripherals........................................ 21 37 19
Personal Computers.......................................... 21 10 12
Automotive and other........................................ 14 14 21
--- --- ---
100% 100% 100%
=== === ===
In fiscal year 2000, 30 customers accounted for more than 95% of our net
revenue. We expect to continue to depend upon a relatively small number of
customers for a significant percentage of our net revenue. As illustrated in the
two tables above, the historic percentages of net revenue we have received from
specific customers or significant industries have varied substantially from year
to year. Accordingly, these historic percentages are not necessarily indicative
of the percentage of net revenue that we may receive from any customer or
industry in the future. In the past, some of our customers have terminated their
manufacturing arrangements with us or have significantly reduced or delayed the
volume of manufacturing services ordered from us. We cannot assure you that
present or future customers will not terminate their manufacturing arrangements
with us or significantly change, reduce or delay the amount of manufacturing
services ordered from us. If they do, it could have a material adverse effect on
our results of operations. See "Factors Affecting Future Results -- We Depend on
a Limited Number of Customers" and Note 7 to the Consolidated Financial
Statements.
Our principal source of new business is the expansion of existing customer
relationships to include additional product lines and services, referrals and
direct sales through our Business Unit Managers and Directors and executive
staff. Our Business Unit Managers and Directors, supported by the executive
staff, identify and attempt to develop relationships with new customers who meet
our profile. This profile includes financial stability, need for
technology-driven turnkey manufacturing, anticipated unit volume and long-term
relationship stability. Unlike traditional sales managers, our Business Unit
Managers and Directors are responsible for ongoing management of production for
their customers.
INTERNATIONAL OPERATIONS
A key element in our strategy is to provide localized production of global
products produced for OEMs in the major consuming regions of North America,
Europe and Asia. Consistent with this strategy, we have established or acquired
manufacturing facilities in Brazil, China, Hungary, Ireland, Italy, Malaysia,
Mexico and Scotland.
Our European facilities target existing European customers, North American
customers having significant sales in Europe and potential European customers
who meet our customer profile.
Our Asian facilities, located in China and Malaysia, enable us to provide
local manufacturing services to the Asian market in order to reduce costs,
freight and duties, to provide a more competitive cost structure for these
markets and to serve as a low cost manufacturing source for new and existing
customers.
See "Factors Affecting Future Results -- Our International Operations May
Be Subject to Certain Risks" and "Management's Discussion and Analysis of
Financial Analysis of Financial Condition and Results of Operations."
COMPETITION
The EMS industry is highly competitive. We compete against numerous
domestic and foreign manufacturers, including SCI Systems, Inc., Solectron
Corporation, Celestica, Inc., and Flextronics International. In addition, we may
in the future encounter competition from other large electronic manufacturers
that are selling, or may begin to sell, electronic manufacturing services. Most
of our competitors have international operations and some have substantially
greater manufacturing, financial, research and development and
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marketing resources than Jabil. We also face potential competition from the
manufacturing operations of our current and potential customers, who are
continually evaluating the merits of manufacturing products internally versus
the advantages of outsourcing to us.
We believe that the primary basis of competition in our targeted markets
are capability, price, manufacturing quality, advanced manufacturing technology,
design expertise, time-to-volume production, reliable delivery and regionally
dispersed manufacturing. Management believes we currently compete favorably with
respect to these factors. See "Factors Affecting Future Results -- We are in a
Highly Competitive Industry."
BACKLOG
Our order backlog at August 31, 2000 was approximately $1.2 billion,
compared to backlog of $688 million at August 31, 1999. Although our backlog
consists of firm purchase orders, the level of backlog at any particular time is
not necessarily indicative of future sales. Given the nature of our
relationships with our customers, we frequently allow our customers to cancel or
reschedule deliveries, and therefore, backlog is not a meaningful indicator of
future financial results. Although we may seek to negotiate fees to cover the
costs of such cancellations or rescheduling, we may not be successful in doing
so. See "Factors Affecting Future Results -- The Volume and Timing of Customer
Sales May Vary."
COMPONENTS PROCUREMENT
We procure components from a broad group of suppliers, determined on an
assembly-by-assembly basis. Almost all of the products we manufacture require
one or more components that are ordered from only one source, and most
assemblies require components that are available from only a single source. Some
of these components are allocated in response to supply shortages. We attempt to
ensure continuity of supply of these components. In cases where unanticipated
customer demand or supply shortages occur, we attempt to arrange for alternative
sources of supply, where available, or defer planned production to meet the
anticipated availability of the critical component. In some cases, supply
shortages will substantially curtail production of all assemblies using a
particular component. In addition, at various times there have been industry
wide shortages of electronic components, particularly of memory and logic
devices. We cannot assure you that such shortfalls will not have a material
adverse effect on our results of operations in the future. See "Factors
Affecting Future Results -- The Availability of the Manufacturing Components We
Need May be Limited."
PROPRIETARY RIGHTS
We regard our manufacturing processes and electronic designs as proprietary
trade secrets and confidential information. To protect our proprietary rights,
we rely largely upon a combination of trade secret laws; non-disclosure
agreements with our customers, employees, and suppliers; our internal security
systems; confidentiality procedures and employee confidentiality agreements.
Although we take steps to protect our trade secrets, misappropriation may still
occur.
We currently have various patents. However, we believe that the rapid pace
of technological change makes patent protection less significant than such
factors as the knowledge and experience of management and personnel and our
ability to develop, enhance and market manufacturing services.
We license some technology from third parties that we use in providing
manufacturing services to our customers. We believe that such licenses are
generally available on commercial terms from a number of licensors. Generally,
the agreements governing such technology grant us non-exclusive, worldwide
licenses with respect to the subject technology and terminate upon a material
breach by us.
We believe that our electronic designs and manufacturing processes do not
infringe on the proprietary rights of third parties. However, if third parties
assert valid infringement claims against us with respect to past, current or
future designs or processes, we could be required to enter into an expensive
royalty arrangement, develop non-infringing designs or processes, or engage in
costly litigation.
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EMPLOYEES
As of August 31, 2000, we had 19,115 full-time employees, compared to
11,694 full-time employees at August 31, 1999 (including employees of GET
Manufacturing, Inc.). In total, approximately 6,700 employees have joined us as
a result of acquisitions or mergers completed in fiscal year 2000. We believe
our employee relations are good.
GEOGRAPHIC INFORMATION
The information regarding revenue, operating profit, identifiable assets
and export sales set forth in Note 7 to the Consolidated Financial Statements,
set forth elsewhere herein, is hereby incorporated by reference into this Part
I, Item 1.
ENVIRONMENTAL
We are subject to a variety of federal, state, local and foreign
environmental regulations relating to the use, storage, discharge and disposal
of hazardous chemicals used during our manufacturing process. Although we
believe that we are currently in substantial compliance with all material
environmental regulations, any failure to comply with present and future
regulations could subject us to future liabilities or the suspension of
production. In addition, such regulations could restrict our ability to expand
our facilities or could require us to acquire costly equipment or to incur other
significant expense to comply with environmental regulations.
ITEM 2. PROPERTIES
We have manufacturing and support facilities located in the United States,
Brazil, China, Hungary, Ireland, Italy, Malaysia, Mexico and Scotland. A summary
of building locations is as follows:
CURRENT FACILITIES
YEAR APPROXIMATE
LOCATION COMMENCED OWNED / LEASED SQUARE FOOTAGE DESCRIPTION(1)
-------- --------- -------------- -------------- -----------------------
St. Petersburg, 1984 Owned 110,000 High volume mfg.
Florida..............
St. Petersburg, 1997 Owned 125,000 High volume mfg.
Florida..............
St. Petersburg, 1997 Leased 91,000 Systems assembly
Florida..............
St. Petersburg, 1997 Leased 27,000 Operations
Florida..............
St. Petersburg, 1998 Leased 27,000 Office
Florida..............
St. Petersburg, 1999 Owned 64,000 Corporate office
Florida..............
St. Petersburg, 1999 Leased 129,800 High volume mfg.
Florida..............
St. Petersburg, 2000 Leased 44,000 High volume mfg.
Florida..............
St. Petersburg, 2000 Owned 167,000 High volume mfg.
Florida..............
Auburn Hills, 1997 Leased 54,000 High volume mfg.
Michigan.............
Auburn Hills, 1993 Owned 125,000 High volume mfg.
Michigan.............
Auburn Hills, 1993 Leased 30,000 Warehouse
Michigan.............
Auburn Hills, 1999 Leased 18,000 Design/warehouse
Michigan.............
San Jose, California... 1998 Leased 181,000 Volume & prototype
mfg., design
San Jose, California... 2000 Leased 100,000 High volume mfg.
Boise, Idaho........... 2000 Owned 170,000 Office/high volume mfg.
Boise, Idaho........... 2000 Leased 25,000 High volume mfg.
Billerica, 1999 Leased 244,000 High volume mfg.
Massachusetts........
Penang, Malaysia....... 1997 Owned 150,000 High volume mfg.
Guadalajara, Mexico.... 1997 Owned 247,000 High volume mfg.
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YEAR APPROXIMATE
LOCATION COMMENCED OWNED / LEASED SQUARE FOOTAGE DESCRIPTION(1)
-------- --------- -------------- -------------- -----------------------
Livingston, Scotland... 1997 Owned 130,000 High volume mfg.
Livingston, Scotland... 1999 Leased 100,000 Systems assembly
Bergamo, Italy......... 1998 Leased 102,000 High volume mfg.
Panyu, China........... 1999 Owned 210,000 High volume mfg.
Shenzhen, China(2)..... 1999 Leased 435,000 High volume mfg.
Dan Shui, China(2)..... 1999 Leased 129,000 High volume mfg.
Tijuana, Mexico........ 1999 Leased 63,000 High volume mfg.
Sheung Shui, Hong
Kong................. 1999 Owned 95,000 Office, warehouse
Oldsmar, Florida....... 1999 Leased 45,000 Repair services
Louisville, Kentucky... 1999 Leased 40,000 Repair services
Memphis, Tennessee..... 1999 Leased 80,000 Repair services
Memphis, Tennessee..... 1999 Leased 75,000 Repair services
Dublin, Ireland........ 2000 Leased 42,000 Repair services
Chihuahua, Mexico...... 2000 Leased 82,000 High volume mfg.
Tiszaujvaros,
Hungary.............. 2000 Owned 243,000 High volume mfg.
Contagem, Brazil....... 2000 Leased 74,000 High volume mfg.
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(1) Our manufacturing facilities in Brazil, California, China, Florida, Idaho,
Italy, Malaysia, Guadalajara, Scotland and Tijuana are ISO-9002 certified.
Our manufacturing facilities in Michigan and Scotland are QS-9000 while
Michigan and Florida are ISO-9001 certified. Michigan and Malaysia are also
ISO-14001 certified.
(2) Our manufacturing facilities in China are leased from joint venture
partners.
We are currently constructing high volume manufacturing facilities in
Penang, Malaysia, Chihuahua, Mexico and Auburn Hills, Michigan.
ITEM 3. LEGAL PROCEEDINGS
We are party to certain lawsuits in the ordinary course of business. We do
not believe that these proceedings, individually or in the aggregate, will have
a material adverse effect on our financial position, results of operations and
cash flows.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of our stockholders during the fourth
quarter covered by this report.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Our common stock trades on the New York Stock Exchange under the symbol
"JBL." The following table sets forth the high and low closing sales prices per
share for our common stock as reported on the New York Stock Exchange for the
fiscal periods indicated. The table has been adjusted to reflect two two-for-one
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stock splits in the form of a 100% stock dividend to stockholders that were paid
on February 17, 1999 and March 30, 2000.
HIGH LOW
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YEAR ENDED AUGUST 31, 2000
First Quarter (September 1, 1999 -- November 30, 1999)...... $35.75 $22.00
Second Quarter (December 1, 1999 -- February 29, 2000)...... 38.59 31.22
Third Quarter (March 1, 2000 -- May 31, 2000)............... 44.63 31.81
Fourth Quarter (June 1, 2000 -- August 31, 2000)............ 62.34 36.50
YEAR ENDED AUGUST 31, 1999
First Quarter (September 1, 1998 -- November 30, 1998)...... 14.63 6.30
Second Quarter (December 1, 1998 -- February 28, 1999)...... 19.35 14.88
Third Quarter (March 1, 1999 -- May 31, 1999)............... 24.13 15.97
Fourth Quarter (June 1, 1999 -- August 31, 1999)............ 26.78 18.32
As of October 12, 2000, there were approximately 2,511 holders of record of
our common stock.
We have never paid cash dividends on our capital stock and do not
anticipate paying cash dividends in the foreseeable future.
ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA
The information set forth below is not necessarily indicative of the
results of future operations and should be read in conjunction with the
consolidated financial statements and notes thereto incorporated into Item 8 of
this report. The historical information set forth below has been restated to
reflect the September 1999 merger with GET which was accounted for as a pooling
of interests.
YEARS ENDED AUGUST 31,
-----------------------------------------------------------------
2000 1999 1998 1997 1996
---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)
CONSOLIDATED STATEMENT OF EARNINGS
DATA:
Net revenue......................... $3,558,321 $2,238,391 $1,484,245 $1,178,644 $1,050,624
Cost of revenue................... 3,199,972 1,992,803 1,307,692 1,040,214 959,495
---------- ---------- ---------- ---------- ----------
Gross profit........................ 358,349 245,588 176,553 138,430 91,129
Selling, general and
administrative.................. 132,717 92,015 60,116 45,086 34,404
Research and development.......... 4,839 5,863 5,355 4,593 4,205
Amortization of intangibles....... 2,724 1,225 -- -- --
Acquisition and merger-related
charge.......................... 5,153(1) 7,030(2) 20,825(3) -- --
Goodwill write-off................ -- 3,578(2) 3,578(3) -- --
---------- ---------- ---------- ---------- ----------
Operating income.................... 212,916(1) 135,877(2) 86,679(3) 88,751 52,520
Income from joint ventures........ -- -- -- (1,287) (316)
Interest income................... (7,385) (4,536) (238) (3,697) (1,369)
Interest expense.................. 7,605 7,110 3,876 5,811 9,510
---------- ---------- ---------- ---------- ----------
Income before income taxes.......... 212,696 133,303 83,041 87,924 44,695
Income taxes...................... 67,048 48,484 25,572 28,611 14,311
---------- ---------- ---------- ---------- ----------
Net income................. $ 145,648(1) $ 84,819(2) $ 57,469(3) $ 59,313 $ 30,384
========== ========== ========== ========== ==========
Earnings per share(4):
Basic............................. $ 0.81 $ 0.51 $ 0.36 $ 0.38 $ 0.21
Diluted........................... $ 0.78(1) $ 0.49(2) $ 0.35(3) $ 0.36 $ 0.20
Common shares used in the
calculations of earnings per
share(4):
Basic............................. 179,032 166,754 158,589 155,181 147,815
Diluted........................... 187,448 174,334 164,934 163,890 155,558
10
12
AUGUST 31,
--------------------------------------------------------
2000 1999 1998 1997 1996
---------- ---------- -------- -------- --------
(IN THOUSANDS)
CONSOLIDATED BALANCE SHEET DATA:
Working capital.......................... $ 695,295 $ 248,833 $102,394 $103,253 $119,321
Total assets............................. 2,018,192 1,035,421 625,173 484,133 370,025
Current installments of long-term
obligations and other short-term
debt................................... 8,333 32,490 28,302 9,173 9,342
Notes payable and long-term obligations,
excluding current installments......... 25,000 33,333 83,582 53,540 63,499
Net stockholders' equity................. 1,270,183 577,811 285,118 216,913 152,864
- ---------------
(1) During 2000, we recorded additional merger-related charges of $5.2 million
($4.7 million after-tax) in connection with the merger with GET
Manufacturing ("GET Merger"). Operating income excluding this charge was
$218.1 million. Net income excluding this charge was $150.3 million and
diluted earnings per share was $0.80.
(2) During 1999, we recorded a merger-related charge of $7.0 million ($6.5
million after-tax) in connection with the GET Merger. During March 1999, we
also recorded the write-off of impaired goodwill of a GET subsidiary of $3.6
million ($3.3 million after-tax). As a result of the overlapping period
created when GET's fiscal year was conformed to an August 31 year end, the
write-off falls into the results of operations for both years ended August
31, 1999 and 1998. Stockholders' equity was adjusted so that the duplicate
amount is reflected only once in retained earnings. Operating income
excluding these charges was $146.5 million for the year ended August 31,
1999. Net income excluding these charges was $94.6 million and diluted
earnings per share was $0.54.
(3) In connection with the acquisition of certain assets of the LaserJet
Formatter Manufacturing Organization of the Hewlett-Packard Company, (the
"HP Acquisition"), we recorded an acquisition-related charge of $20.8
million ($12.9 million after-tax). During March 1999, we also recorded the
write-off of impaired goodwill of a GET subsidiary of $3.6 million ($3.3
million after-tax). As a result of the overlapping period created when GET
Manufacturing's fiscal year was conformed to an August 31 year end, this
charge is included in the operating results of the year ended August 31,
1998. Operating income excluding these charges was $111.1 million. Net
income excluding this charge was $73.7 million and diluted earnings per
share was $0.45.
(4) Gives effect to two-for-one stock splits in the form of 100% stock dividends
to stockholders of record on March 23, 2000 and on February 5, 1999.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
We make "forward-looking statements" within the "safe harbor" provision of
the Private Securities Litigation Reform Act of 1995 throughout this Annual
Report on Form 10-K and in the documents we incorporate by reference herein. You
can identify these statements by forward-looking words such as "may," "will,"
"expect," "anticipate," "believe," "estimate," "plan" and "continue" or similar
words. We have based these statements on our current expectations about future
events. Although we believe that our expectations reflected in or suggested by
our forward-looking statements are reasonable, we cannot assure you that these
expectations will be achieved. Our actual results may differ materially from
what we currently expect. Important factors which could cause our actual results
to differ materially from the forward-looking statements in this document are
set forth in the following "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Factors Affecting Future Results"
sections and elsewhere in this document.
You should read this document and the documents that we incorporate by
reference into this Annual Report on Form 10-K completely and with the
understanding that our actual future results may be materially different from
what we expect. We may not update these forward-looking statements, even though
our
11
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situation will change in the future. All forward-looking statements attributable
to us are expressly qualified by these cautionary statements.
Jabil is one of the leading worldwide independent providers of turnkey
manufacturing services to electronics OEMs in the communications, computer
peripherals, personal computer, automotive and consumer products industries.
During the past several years, Jabil has experienced substantial growth in net
revenue, operating income and net income. This growth, as well as the growth of
the overall EMS industry, has been driven by the increasing number of
electronics OEMs who are outsourcing their manufacturing requirements. We
anticipate that this industry trend will continue during the next several years.
We derive most of our net revenue under purchase orders from OEM customers.
We recognize revenue, net of product return and warranty costs, typically at the
time of product shipment. The volume and timing of orders placed by our
customers vary due to several factors, including: variation in demand for our
customers' products; our customers' inventory management; new product
introductions and manufacturing strategy changes; and consolidations among our
customers. Demand for our customers' products depends on, among other things,
product life cycles, competitive conditions and general economic conditions.
Our cost of revenue includes the cost of electronic components and other
materials that comprise the products we manufacture, the cost of labor and
manufacturing overhead, and provisions for excess and obsolete inventory
adjustments. As a provider of turnkey manufacturing services, we are responsible
for procuring components and other materials. This requires us to commit
significant working capital to our operations and to manage the purchasing,
receiving, inspection and stocking of materials. Although we bear the risk of
fluctuations in the cost of materials, excess scrap and inventory obsolescence,
we periodically negotiate cost of materials adjustments with our customers.
Net revenue from each product that we manufacture consists of a component
based on the costs of materials in that product and a component based on the
labor and manufacturing overhead allocation to that product. We refer to the
portion of the sales price of a product that is based on labor and manufacturing
overhead costs as "manufacturing-based revenue," and to the portion of the sales
price of a product that is based on materials costs as "material-based revenue."
Our gross margin for any product depends on the mix between the cost of
materials in the product and the cost of labor and manufacturing overhead
allocated to the product. We typically realize higher gross margins on
manufacturing-based revenue than we do on materials-based revenue. As we gain
experience in manufacturing a product, we usually achieve increased
efficiencies, which result in lower labor costs and manufacturing overhead for
that product.
Our operating results are impacted by the level of capacity utilization of
manufacturing facilities, indirect labor and selling, general and administrative
expenses. Gross margins and operating income margins have generally improved
during periods of high volume and high capacity utilization. During periods of
low volume production, we generally have idle capacity and reduced operating
margins. As our capacity has grown during recent years, both through the
construction of new greenfield facilities and the expansion of existing
facilities, our selling, general and administrative expenses have increased to
support this growth.
We have consistently utilized advanced circuit design, production design
and manufacturing technologies to meet the needs of our customers. To support
this effort, our engineering staff focuses on developing and refining design and
manufacturing technologies to meet specific needs of specific customers. Most of
the expenses associated with these customer-specific efforts are reflected in
our cost of revenue. In addition, our engineers engage in research and
development of new technologies that apply generally to our operations. The
expense of these research and development activities are reflected in the
"Research and Development" line item in our Consolidated Financial Statements.
An important element of our strategy is the expansion of our global
production facilities. Substantially all of our revenue and materials costs
worldwide are denominated in U.S. dollars, while our labor and utility costs in
plants outside the United States are denominated in local currencies. We
typically hedge these local currency costs through the purchase of foreign
exchange contracts, the amount and cost of which have not been material.
12
14
We continue to depend upon a relatively small number of customers for a
significant percentage of our net revenue. Significant reductions in sales to
any of our large customers would have a material adverse effect on our results
of operations. In the past, some of our customers have terminated their
manufacturing arrangements with us, and other customers have significantly
reduced or delayed the volume of manufacturing services ordered from us. There
can be no assurance that present or future customers will not terminate their
manufacturing arrangements with us or significantly change, reduce or delay the
amount of manufacturing services ordered from us. Any such termination of a
manufacturing relationship or change, reduction or delay in orders could have an
adverse effect on our results of operations or financial condition. See Note 7
to the Consolidated Financial Statements.
ACQUISITIONS AND EXPANSION
On August 3, 1998, we acquired certain assets (primarily raw material
inventory and property, plant and equipment) relating to the LaserJet Formatter
Manufacturing Organization of Hewlett-Packard Company located in Bergamo, Italy
and Boise, Idaho. The HP Acquisition price was approximately $80.0 million and
was accounted for under the purchase method of accounting. The acquisition
resulted in goodwill and other intangible assets of approximately $11.2 million,
which are being amortized on a straight-line basis over ten years. The acquired
assets were used by the Hewlett-Packard Company to manufacture printed
circuit-board assemblies for the LaserJet printer division of Hewlett-Packard
Company. Simultaneously with the HP Acquisition, we entered into a manufacturing
agreement to continue to produce the printed circuit board assemblies being
produced by the Hewlett-Packard Company operations in Bergamo and Boise.
On September 1, 1999 we acquired, through our Jabil Global Services
subsidiary, the net assets of EFTC Services, Inc., an electronic product service
and repair business. Jabil Global Services, Inc. continues to offer repair and
warranty services for existing and future customers from its hub-based
operations in Memphis, Tennessee; Louisville, Kentucky; and Tampa, Florida. The
purchase price of approximately $28 million was paid in cash. The acquisition
was accounted for as a purchase and resulted in approximately $19 million of
goodwill, which is being amortized, on a straight-line basis over a period of 15
years. The consolidated financial statements include the operating results of
the acquired business from the date of acquisition.
On September 13, 1999 we issued approximately 10.2 million shares of our
common stock for all the outstanding common stock of GET Manufacturing, Inc., a
China-based electronics manufacturing services provider. The business
combination was accounted for as a pooling-of-interests and, accordingly, our
historical consolidated financial statements presented herein have been restated
to include the accounts and results of operations of GET Manufacturing, Inc. In
connection with the merger, we recorded acquisition-related charges of $7.0
million ($6.5 million after-tax) and $5.2 million ($4.7 million after-tax) in
the fourth quarter of fiscal year 1999 and the first quarter of fiscal year
2000, respectively consisting of key employee severance and legal and
professional fees associated with the merger.
On February 1, 2000, we acquired the net assets of Bull Information
Technology, an electronic manufacturing service provider. The business operates
in the city of Contagem, State of Minas Gerais, in the Belo Horizonte region
Brazil. The purchase price of approximately $6 million was paid in cash. The
acquisition was accounted for as a purchase and resulted in approximately $5
million of goodwill, which is being amortized, on a straight-line basis over a
period of 10 years. The consolidated financial statements include the operating
results of the acquired business from the date of the acquisition. Pro forma
results of operations have not been presented because the effect of the
acquisition was not material.
On July 20, 2000 we acquired the share capital of Telenor Technology
Services Limited, a repair and logistics services division of Telenor Mobile
Communications AS, a Norwegian provider of telecommunication, data and media
communication services. The purchase price of approximately $4 million was paid
in cash. The acquisition was accounted for as a purchase and resulted in
approximately $2 million of goodwill, which is being amortized, on a
straight-line basis over a period of 15 years. The acquired operations allow
Jabil Global Services to offer circuit board repair and warranty services for
European customers from Dublin, Ireland. The consolidated financial statements
include the operating results of the acquired business from the
13
15
date of acquisition. Pro forma results of operations have not been presented
because the effect of the acquisition was not material.
During this fiscal year, we announced greenfield expansions in
Tiszaujvaros, Hungary and Chihuahua, Mexico. The Hungarian facility is
approximately 250,000 square feet and is scheduled to begin production in the
fall of 2000. In Chihuahua, two 250,000 square-foot facilities will be
constructed to add capacity in Mexico. We have also announced expansions of
existing sites in North America.
The EMS industry has experienced rapid growth over the past several years
as an increasing number of OEMs have outsourced their manufacturing
requirements. OEMs are turning to outsourcing in order to reduce product cost,
achieve accelerated time-to-market and time-to-volume production, access
advanced design and manufacturing technologies, improve inventory management and
purchasing power, reduce their capital investment in manufacturing facilities,
and achieve parallel manufacturing of the same product throughout the world. We
believe that further growth opportunities exist for EMS providers to penetrate
the worldwide electronics markets.
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, certain
operating data as a percentage of net revenue:
YEARS ENDED AUGUST 31,
-----------------------
2000 1999 1998
----- ----- -----
Net revenue............................................... 100.0% 100.0% 100.0%
Cost of revenue........................................... 89.9 89.0 88.1
----- ----- -----
Gross margin.............................................. 10.1 11.0 11.9
Selling, general and administrative....................... 3.7 4.1 4.1
Research and development.................................. 0.1 0.3 0.4
Amortization of intangibles............................... 0.1 -- --
Acquisition and merger-related charge..................... 0.2 0.3 1.4
Goodwill write-off........................................ -- 0.2 0.2
----- ----- -----
Operating income.......................................... 6.0 6.1 5.8
Interest income........................................... (0.2) (0.2) --
Interest expense.......................................... 0.2 0.3 0.2
----- ----- -----
Income before income taxes................................ 6.0 6.0 5.6
Income taxes.............................................. 1.9 2.2 1.7
----- ----- -----
Net income................................................ 4.1% 3.8% 3.9%
===== ===== =====
Fiscal Year Ended August 31, 2000 Compared to Fiscal Year Ended August 31,
1999
Net Revenue. Our net revenue increased 59.0% to $3.6 billion for fiscal
year 2000, up from $2.2 billion in fiscal year 1999. The increase was primarily
due to increased production of communications products. Foreign source revenue
represented 43.5% of our net revenue for fiscal year 2000 and 40.5% of net
revenue for fiscal year 1999. The increase in foreign source revenue was
attributable to increased production in our international locations.
Gross Profit. Gross margin decreased to 10.1% in fiscal year 2000 from
11.0% in fiscal year 1999, reflecting a higher content of material-based revenue
and under-utilization of assets in certain international factories.
Selling, General and Administrative. Selling, general and administrative
expenses increased to $132.7 million (3.7% of net revenue) in fiscal year 2000
from $92.0 million (4.1% of net revenue) in fiscal year 1999. This increase was
primarily due to continued increases in staffing and related departmental
expenses at all of our locations along with increases in information systems
staff to support the expansion of our business.
14
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Research and Development. Research and development expenses in fiscal year
2000 decreased to $4.8 million (0.1% of net revenue) from $5.9 million (0.3% of
net revenue) in fiscal year 1999 as a result of an increase in the rate of
recovery of these costs from our customers.
Amortization of Intangibles. We recorded $2.7 million of amortization of
intangibles in fiscal year 2000 as compared to $1.2 million in fiscal year 1999.
This increase is attributable to the amortization of the goodwill arising from
the EFTC Services, Inc. and Bull Technology, Inc. acquisitions.
Acquisition and Merger-Related Charge. During the first quarter of fiscal
year 2000, we incurred $5.2 million in merger-related charges consisting of key
employee severance and legal and professional fees associated with the GET
merger. See Note 10 to the Consolidated Financial Statements.
Interest Income. Interest income increased to $7.4 million in fiscal year
2000 from $4.5 million in fiscal year 1999 reflecting increased income on
greater cash balances resulting from an equity offering completed in the fourth
quarter. See Note 6 to the Consolidated Financial Statements of fiscal year
2000.
Interest Expense. Interest expense increased to $7.6 million in fiscal
year 2000, from $7.1 million in fiscal year 1999, primarily reflecting slightly
increased short-term borrowings to support plant expansions and working capital
needs.
Income Taxes. In fiscal year 2000, our effective tax rate decreased to
31.5% from 36.4% in fiscal year 1999. The effective tax rate is predominantly a
function of the mix of domestic versus international income from operations. See
Note 5 to the Consolidated Financial Statements.
Fiscal Year Ended August 31, 1999 Compared to Fiscal Year Ended August 31,
1998
Net Revenue. Our net revenue increased 50.8% to $2.2 billion for fiscal
year 1999, up from $1.5 billion in fiscal year 1998. The increase was primarily
due to incremental revenue resulting from the HP Acquisition as well as
increased production of communication products. Foreign source revenue
represented 40.5% of our net revenue for fiscal year 1999 and 41.0% of net
revenue for fiscal year 1998.
Gross Profit. Gross margin decreased to 11.0% in fiscal year 1999 from
11.9% in fiscal year 1998, reflecting a higher content of material-based revenue
from the HP Acquisition and under-utilization of assets in certain international
factories.
Selling, General and Administrative. Selling, general and administrative
expenses increased to $92.0 million (4.1% of net revenue) in fiscal year 1999
from $60.1 million (4.1% of net revenue) in fiscal year 1998. This increase was
primarily due to continued increases in staffing and related departmental
expenses at all of our locations, including the sites acquired in the HP
Acquisition, along with increases in information systems staff to support the
expansion of our business.
Research and Development. Research and development expenses in fiscal year
1999 increased to $5.9 million (0.3% of net revenue) from $5.4 million (0.4% of
net revenue) in fiscal year 1998 due to the expansion of electronic design
activities.
Amortization of Intangibles. Amortization of Intangibles of $1.2 million
was recorded in fiscal year 1999 as a result of the HP Acquisition. See Note 10
to the Consolidated Financial Statements.
Acquisition and Merger-Related Charges. During the fourth quarter of
fiscal year 1999, we incurred $7.0 million in merger-related charges consisting
of professional fees and other merger-related charges as part of the GET merger.
See Note 10 to the Consolidated Financial Statements.
Goodwill Write-Off. During March 1999, we recorded a write-off of impaired
goodwill related to a subsidiary of GET. As a result of the overlapping period
created when GET's fiscal year was conformed to an August 31 year end, the
write-off falls into the results of operations for both years ended August 31,
1999 and 1998. Stockholders' equity was adjusted to eliminate the duplicate
amount from retained earnings. See Note 1 to the Consolidated Financial
Statements.
15
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Interest Income. Interest income increased to $4.5 million in fiscal year
1999 from $238,000 in fiscal year 1998, as a result of increased income on cash
balances and short-term investments.
Interest Expense. Interest expense increased to $7.1 million in fiscal
year 1999, from $3.9 million in fiscal year 1998, primarily reflecting increased
borrowings to support the HP Acquisition and working capital needs.
Income Taxes. In fiscal year 1999, the effective tax rate increased to
36.4% from 30.8% in fiscal year 1998. The effective tax rate is predominantly a
function of the mix of domestic versus international income from operations. See
Note 5 to the Consolidated Financial Statements.
QUARTERLY RESULTS
The following table sets forth certain unaudited quarterly financial
information for the 2000 and 1999 fiscal years. In the opinion of management,
this information has been presented on the same basis as the audited
consolidated financial statements appearing elsewhere, and all necessary
adjustments (consisting of normal recurring adjustments and an acquisition and
merger-related charges which are discussed in Note 10 to the Consolidated
Financial Statements) have been included in the amounts stated below to present
fairly the unaudited quarterly results when read in conjunction with the audited
consolidated financial statements and related notes thereto. The operating
results for any quarter are not necessarily indicative of results for any future
period.
FISCAL 2000 FISCAL 1999
------------------------------------------- ---------------------------------------------
AUG. 31, MAY 31, FEB. 29, NOV. 30, AUG. 31, MAY 31, FEB. 28, NOV. 30,
2000 2000 2000 1999 1999 1999 1999 1998
---------- -------- -------- -------- -------- ---------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Net revenue.................. $1,065,088 $965,849 $837,562 $689,822 $602,335 $ 582,238 $558,703 $495,115
Cost of revenue............ 958,751 871,307 753,479 616,435 535,365 518,417 498,601 440,420
---------- -------- -------- -------- -------- ---------- -------- --------
Gross profit................. 106,337 94,542 84,083 73,387 66,970 63,821 60,102 54,695
Selling, general and
administrative............. 39,727 34,327 31,612 27,051 25,836 22,902 22,452 20,825
Research and development... 1,312 1,142 1,203 1,182 1,587 1,387 1,432 1,457
Amortization of
intangibles................ 765 716 644 599 287 287 294 357
Acquisition and
merger-related
charges(1)(2).............. -- -- -- 5,153(1) 7,030(2) -- -- --
Goodwill write-off(2)........ -- -- -- -- -- 3,578(2) -- --
---------- -------- -------- -------- -------- ---------- -------- --------
Operating income (loss)...... 64,533 58,357 50,624 39,402(1) 32,230(2) 35,667(2) 35,924 32,056
Interest income.............. (5,354) (827) (32) (1,180) (2,307) (1,507) (400) (322)
Interest expense............. 1,707 3,867 1,474 565 1,413 1,482 2,292 1,923
---------- -------- -------- -------- -------- ---------- -------- --------
Income (loss) before income
taxes...................... 68,180 55,317 49,182 40,017 33,124 35,692 34,032 30,455
Income tax expense
(benefit)................ 21,129 17,144 15,246 13,529 12,956 13,310 11,778 10,440
---------- -------- -------- -------- -------- ---------- -------- --------
Net income........... $ 47,051 $ 38,173 $ 33,936 $ 26,488(1) $ 20,168(2) $ 22,382(2) $ 22,254 $ 20,015
========== ======== ======== ======== ======== ========== ======== ========
Earnings per share:
Basic...................... $ 0.25 $ 0.22 $ 0.19 $ 0.15 $ 0.12 $ 0.13 $ 0.14 $ 0.13
========== ======== ======== ======== ======== ========== ======== ========
Diluted.................... $ 0.24 $ 0.21 $ 0.18 $ 0.15(1) $ 0.11(2) $ 0.12(2) $ 0.13 $ 0.12
========== ======== ======== ======== ======== ========== ======== ========
Common shares used in the
calculations of earnings
per share(3):
Basic...................... 188,918 176,674 175,715 174,820 174,562 173,130 159,944 159,378
========== ======== ======== ======== ======== ========== ======== ========
Diluted.................... 197,536 184,960 184,518 182,778 182,586 181,328 167,436 165,986
========== ======== ======== ======== ======== ========== ======== ========
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The following table sets forth, for the periods indicated, certain
financial information stated as a percentage of net revenue:
FISCAL 2000 FISCAL 1999
---------------------------------------- ------------------------------------------
AUG. 31, MAY 31, FEB. 29, NOV. 30, AUG. 31, MAY 31, FEB. 28, NOV. 30,
2000 2000 2000 1999 1999 1999 1999 1998
-------- ------- -------- -------- -------- ------- -------- --------
Net revenue............................... 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of revenue........................... 90.0 90.2 90.0 89.4 88.9 89.0 89.2 89.0
----- ----- ----- ----- ----- ----- ----- -----
Gross profit.............................. 10.0 9.8 10.0 10.6 11.1 11.0 10.8 11.0
Selling, general and administrative....... 3.7 3.6 3.8 3.9 4.3 3.9 4.0 4.2
Research and development.................. 0.1 0.1 0.1 0.2 0.2 0.2 0.3 0.3
Amortization of intangibles............... 0.1 0.1 0.1 0.1 -- 0.1 0.1 0.1
Acquisition and merger-related
charges(1)(2)........................... -- -- -- 0.7 1.2(2) -- -- --
Goodwill write-off(1)(2).................. -- -- -- -- -- 0.6(2) -- --
----- ----- ----- ----- ----- ----- ----- -----
Operating income (loss)................... 6.1 6.0 6.0 5.7 5.4(2) 6.2(2) 6.4 6.4
Interest income........................... (0.5) (0.1) -- (0.2) (0.3) (0.2) (0.1) (0.1)
Interest expense.......................... 0.2 0.4 0.1 0.1 0.2 0.3 0.4 0.4
----- ----- ----- ----- ----- ----- ----- -----
Income (loss) before income taxes......... 6.4 5.7 5.9 5.8 5.5 6.1 6.1 6.1
Income tax expense (benefit).............. 2.0 1.8 1.8 2.0 2.1 2.3 2.1 2.1
----- ----- ----- ----- ----- ----- ----- -----
Net income................................ 4.4% 3.9% 4.1% 3.8% 3.4%(2) 3.8%(2) 4.0% 4.0%
===== ===== ===== ===== ===== ===== ===== =====
- ---------------
(1) In connection with the GET Merger, we recorded merger-related charges of
$5.2 million ($4.7 million after-tax) in the quarter ended November 30,
1999. Operating income excluding these charges was $44.6 million (6.5% of
net revenue). Net income excluding this charge was $31.1 million (4.5% of
net revenue), and diluted earnings per share was $0.17.
(2) In connection with the GET Merger, we recorded merger-related charges of
$7.0 million ($6.5 million after-tax) in the quarter ended August 31, 1999.
During the quarter ended May 31, 1999, we recorded the write-off of impaired
goodwill of a GET subsidiary of $3.6 million ($3.3 million after-tax).
Operating income excluding these charges was $39.3 million (6.5% of net
revenue) and $39.2 million (6.7% of net revenue) for the quarters ended
August 31, 1999 and May 31, 1999, respectively. Net income excluding this
charge was $26.6 million (4.4% of net revenue) and $26.0 million (4.5% of
net revenue) and diluted earnings per share was $0.15 and $0.14 for the
quarters ended August 31, 1999 and May 31, 1999, respectively.
(3) Gives effect to a two-for-one stock split in the form of a 100% stock
dividend to stockholders of record on March 23, 2000 and on February 5,
1999.
LIQUIDITY AND CAPITAL RESOURCES
We have funded our operations from the proceeds of public equity offerings,
private placement debt, borrowings on a revolving credit facility and cash
generated from operations. In June 2000, we sold 13.0 million shares of our
common stock, which generated net proceeds to us of approximately $525.4
million. Also, in March 1999, we sold 13.8 million shares of our common stock,
which generated net proceeds of approximately $199 million to us.
At August 31, 2000 our principal source of liquidity consisted of cash and
short-term investments of $337.6 million and available borrowings under our
credit facility and asset securitization program. See Note 4 to the Consolidated
Financial Statements.
Net cash provided by operating activities for the year ended August 31,
2000 was $35.4 million. This consisted primarily of $145.6 million of net
income, $99.3 million of depreciation and amortization, $307.3 million of
increases in accounts payable and accrued expenses, offset by $257.8 million of
increases in accounts receivable and $255.6 million increases in inventories.
The increases in inventory, accounts receivable and accounts payable were due to
commensurate increases in levels of business.
Net cash used in investing activities of $336.3 million for the year ended
August 31, 2000 consisted of our capital expenditures of $333.1 million for
construction and equipment worldwide in order to support increased activities
and cash paid of $36.7 million in the acquisition of EFTC Services, Inc., Bull
Information
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Technology and Telenor Technology Services Limited, net of $27.2 million of
proceeds from the sale of short-term investments.
Net cash provided by financing activities of $512.6 million for the year
ended August 31, 2000 resulted primarily from $525.4 million in proceeds from
our common stock offering, offset in part by the repayment of borrowings on our
revolving credit facility and an installment of principal on our private
placement debt. See Notes 4 and 6 to the Consolidated Financial Statements.
Over the past several years, we have experienced significant growth. As a
result, we have used cash to finance increases in our inventory and accounts
receivable. In the event that we experience similar growth in the future, we may
need to finance such growth and any corresponding working capital needs with
additional borrowings under our revolving credit facility, as well as additional
public and private offerings of our debt and equity. During the quarter ended
November 30, 1999, we filed a "shelf" registration statement registering the
potential sale of debt and equity securities in the future from time-to-time to
augment our liquidity and capital resources. Our June 2000 offering of 13
million shares of our common stock was made pursuant to that registration
statement. In August 2000, we effectively increased the amount of unissued
securities under our shelf registration statement to $1.5 billion. In August
2000, we established a $225 million account receivables securitization program
with a syndicate of banks which expires in August 2001. To date, we have not
accessed any funds through that program. Should we do so, we would effectively
pay interest on such funds at designated commercial paper rates plus agreed-upon
margins.
We believe that during fiscal year 2001, our capital expenditures will
exceed $400 million, principally for machinery, equipment, facilities and
related expenses. We believe that our level of resources, which include cash on
hand, available borrowings, and funds provided by operations, will be more than
adequate to fund these capital expenditure and working capital requirements for
fiscal 2001.
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FACTORS AFFECTING FUTURE RESULTS
OUR OPERATING RESULTS MAY FLUCTUATE
Our annual and quarterly operating results are affected by a number of
factors, including:
- the level and timing of customer orders
- the composition of the costs of sales between materials and labor and
manufacturing overhead
- price competition
- our level of experience in manufacturing a particular product
- the degree of automation used in our assembly process
- the efficiencies achieved by us in managing inventories and fixed assets
- fluctuations in materials costs and availability of materials
- the timing of expenditures in anticipation of increased sales, customer
product delivery requirements and shortages of components or labor.
The volume and timing of orders placed by our customers vary due to variation in
demand for our customers' products, our customers' inventory management, new
product introductions and manufacturing strategy changes, and consolidations
among our customers. In the past, changes in customer orders have had a
significant effect on our results of operations due to corresponding changes in
the level of overhead absorption. Any one or a combination of these factors
could adversely affect our annual and quarterly results of operations in the
future. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Quarterly Results."
WE DEPEND ON A LIMITED NUMBER OF CUSTOMERS
For the fiscal year ended August 31, 2000, our four largest customers
accounted for approximately 60% of our net revenue and approximately 30
customers accounted for over 95% of our net revenue. For the fiscal year ended
August 31, 2000, Cisco Systems, Inc., Dell Computer Corporation, Hewlett-Packard
Company and Lucent Technologies accounted for approximately 20%, 16%, 14% and
10% of our net revenue, respectively. We are dependent upon the continued
growth, viability and financial stability of our customers whose industries have
experienced rapid technological change, short product life cycles,
consolidation, and pricing and margin pressures. We expect to continue to depend
upon a relatively small number of customers for a significant percentage of our
net revenue. A significant reduction in sales to any of our customers or a
customer exerting significant pricing and margin pressures on us, would have a
material adverse effect on our results of operations. In the past, some of our
customers have terminated their manufacturing arrangements with us or have
significantly reduced or delayed the volume of manufacturing services ordered
from us. We cannot assure you that present or future customers will not
terminate their manufacturing arrangements with us or significantly change,
reduce or delay the amount of manufacturing services ordered from us. If they
do, it could have a material adverse effect on our results of operations. In
addition, we generate significant account receivables in connection with
providing manufacturing services to our customers. If one or more of our
customers were to become insolvent or otherwise were unable to pay for the
manufacturing services provided by us, our operating results and financial
condition would be adversely affected. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and "Business -- Customers and
Marketing."
THE VOLUME AND TIMING OF CUSTOMER SALES MAY VARY
The volume and timing of sales to our customers may vary due to:
- variation in demand for our customers' products
- our customers' attempts to manage their inventory
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- electronic design changes
- changes in our customers' manufacturing strategy
- acquisitions of or consolidations among customers
Due in part to these factors, most of our customers do not commit to firm
production schedules for more than one quarter in advance. Our inability to
forecast the level of customer orders with certainty makes it difficult to
schedule production and maximize utilization of manufacturing capacity. In the
past, we have been required to increase staffing and other expenses in order to
meet the anticipated demand of our customers. Anticipated orders from many of
our customers have, in the past, failed to materialize or delivery schedules
have been deferred as a result of changes in our customers' business needs,
thereby adversely affecting our results of operations. On other occasions, our
customers have required rapid increases in production, which have placed an
excessive burden on our resources. Such customer order fluctuations and
deferrals have had a material adverse effect on us in the past, and we may
experience such effects in the future. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and "Business -- Backlog."
WE ARE IN A HIGHLY COMPETITIVE INDUSTRY
The electronic manufacturing services business is highly competitive. We
compete against numerous domestic and foreign manufacturers, including SCI
Systems, Inc., Solectron Corporation, Celestica, Inc. and Flextronics
International. In addition, we may in the future encounter competition from
other large electronic manufacturers that are selling, or may begin to sell,
electronic manufacturing services. Most of our competitors have international
operations and some have substantially greater manufacturing, financial,
research and development, and marketing resources than us. We also face
potential competition from the manufacturing operations of our current and
potential customers, who are continually evaluating the merits of manufacturing
products internally versus the advantages of outsourcing. See
"Business -- Competition."
OUR RAPID GROWTH MAY BE DIFFICULT TO MANAGE
We have grown rapidly. Our ability to manage growth effectively will
require us to continue to implement and improve our operational, financial and
management information systems; continue to develop the management skills of our
managers and supervisors; and continue to train, motivate and manage our
employees. Our failure to effectively manage growth could have a material
adverse effect on our results of operations. See "Selected Consolidated
Financial Data" and "Management's Discussion and Analysis of Financial Condition
and Results of Operations."
WE MAY EXPERIENCE RISKS RELATING TO OUR COMPUTER INTEGRATION
We have completed the installation of an Enterprise Resource Planning
system in six of our locations. We are in the process of installing this system
in our remaining plants which will replace the current Manufacturing Resource
Planning system and financial information systems. Any delay in the
implementation of these new information systems could result in material adverse
consequences, including disruption of operations, loss of information and
unanticipated increases in cost.
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WE MAY ENCOUNTER DIFFICULTIES WITH ACQUISITIONS
We cannot assure you that we will be able to successfully integrate the
operations and management of our recent acquisitions. Similarly, we cannot
assure you that we will be able to consummate or, if consummated, successfully
integrate the operations and management of future acquisitions. Acquisitions
involve significant risks, which could have a material adverse effect on us,
including:
- Financial risks, such as (1) potential liabilities of the acquired
businesses; (2) the dilutive effect of the issuance of additional equity
securities; (3) the incurrence of additional debt; (4) the financial
impact of amortizing goodwill and other intangible assets involved in any
acquisitions that are accounted for using the purchase method of
accounting; and (5) possible adverse tax and accounting effects.
- Operating risks, such as (1) the diversion of management's attention to
the assimilation of the businesses to be acquired; (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 risk that key employees of
the acquired businesses will leave after the acquisition; and (5)
unforeseen difficulties in the acquired operations.
THE AVAILABILITY OF THE MANUFACTURING COMPONENTS WE NEED MAY BE LIMITED
Substantially all of our net revenue is derived from turnkey manufacturing
in which we provide materials procurement. While most of our significant
long-term customer contracts permit quarterly or other periodic adjustments to
pricing based on decreases and increases in component prices and other factors,
we typically bear the risk of component price increases that occur between any
such re-pricings or, if such re-pricing is not permitted, during the balance of
the term of the particular customer contract. Accordingly, certain component
price increases could adversely affect our gross profit margins. Almost all of
the products we manufacture require one or more components that are available
from only a single source. Some of these components are allocated from time to
time in response to supply shortages. In some cases, supply shortages will
substantially curtail production of all assemblies using a particular component.
In addition, at various times industry wide shortages of electronic components
have occurred, particularly of memory and logic devices. Such circumstances have
produced significant levels of short-term interruption of our operations, and
may have a material adverse effect on our results of operations in the future.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business -- Components Procurement."
OUR INTERNATIONAL OPERATIONS MAY BE SUBJECT TO CERTAIN RISKS
We derived 43% of our revenues from international operations in fiscal year
2000. We currently operate outside the United States in Contagem, Brazil; Dan
Shui, Panyu, and Shenzhen, China; Sheung Shui, Hong Kong; Tiszaujvaros, Hungary;
Dublin, Ireland; Bergamo, Italy; Penang, Malaysia; Chihuahua, Guadalajara and
Tijuana, Mexico; and Livingston, Scotland. We continually consider additional
opportunities to make foreign acquisitions and construct new foreign facilities.
Our international operations may be subject to a number of risks, including:
- difficulties in staffing and managing foreign operations
- political and economic instability
- unexpected changes in regulatory requirements and laws
- longer customer payment cycles and difficulty collecting accounts
receivable export duties, import controls and trade barriers (including
quotas)
- governmental restrictions on the transfer of funds to us from our
operations outside the United States
- burdens of complying with a wide variety of foreign laws and labor
practices
- fluctuations in currency exchange rates, which could affect local
payroll, utility and other expenses
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- inability to utilize net operating losses incurred by our foreign
operations to reduce our U.S. income taxes
In our experience, entry into new international markets requires
considerable management time as well as start-up expenses for market
development, hiring and establishing office facilities before any significant
revenues are generated. As a result, initial operations in a new market may
operate at low margins or may be unprofitable. See "Management's Discussion and
Analysis of Financial Condition and Result of Operations -- Liquidity and
Capital Resources."
WE DEPEND ON KEY PERSONNEL
Our continued success depends largely on the efforts and skills of our key
managerial and technical employees. The loss of the services of certain of these
key employees or an inability to attract or retain qualified employees could
have a material adverse effect on us. We do not have employment agreements or
non-competition agreements with our key employees.
WE MUST MAINTAIN OUR TECHNOLOGICAL AND MANUFACTURING PROCESS EXPERTISE
The market for our manufacturing services is characterized by rapidly
changing technology and continuing process development. We are continually
evaluating the advantages and feasibility of new manufacturing processes. We
believe that our future success will depend upon our ability to develop and
provide manufacturing services which meet our customers' changing needs,
maintain technological leadership, and successfully anticipate or respond to
technological changes in manufacturing processes on a cost-effective and timely
basis. We cannot assure you that our process development efforts will be
successful. See "Business -- Technology" and "-- Research and Development."
WE ARE SUBJECT TO A VARIETY OF ENVIRONMENTAL LAW COMPLIANCE RESPONSIBILITIES
We are subject to a variety of federal, state, local and foreign
environmental regulations relating to the use, storage, discharge and disposal
of hazardous chemicals used during our manufacturing process. If we fail to
comply with any present and future regulations, we could be subject to future
liabilities or the suspension of production. In addition, such regulations could
restrict our ability to expand our facilities or could require us to acquire
costly equipment, or to incur other significant expenses to comply with
environmental regulations.
CERTAIN EXISTING STOCKHOLDERS HAVE SIGNIFICANT CONTROL
Our executive officers, directors and principal stockholders and their
affiliates collectively beneficially own 22.4% of our outstanding common stock,
of which William D. Morean beneficially owns 18.6%. As a result, our executive
officers, directors, principal stockholders and their affiliates have
significant influence over (1) the election of our Board of Directors, (2) the
approval or disapproval of any other matters requiring stockholder approval, and
(3) the affairs and policies of Jabil.
OUR STOCK PRICE MAY BE VOLATILE
Our common stock is traded on the New York Stock Exchange. The market price
of our common stock has fluctuated substantially in the past and could fluctuate
substantially in the future, based on a variety of factors, including future
announcements covering us or our key customers or competitors, government
regulations, litigation, changes in earnings estimates by analysts, fluctuations
in quarterly operating results, or general conditions in the contract
manufacturing, communications, computer peripherals, personal computer,
automotive or consumer products industries. Furthermore, stock prices for many
companies, and high technology companies in particular, fluctuate widely for
reasons that may be unrelated to their operating results. Those fluctuations and
general economic, political and market conditions, such as recessions or
international currency fluctuations and demand for our services, may adversely
affect the market price of our common stock.
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OUR CERTIFICATE OF INCORPORATION, BYLAWS AND DELAWARE LAW MAY HAVE CERTAIN
ANTI-TAKEOVER EFFECTS
The Corporation Law of the State of Delaware and our certificate of
incorporation and bylaws each contain certain provisions that may, in effect,
discourage, delay or prevent a change of control of Jabil or unsolicited
acquisition proposals from taking place.
WE ARE SENSITIVE TO CHANGES IN INTEREST RATES
We pay interest on outstanding borrowings under our $500 million revolving
credit facility at interest rates that fluctuate based upon changes in various
base interest rates. As of August 31, 2000, we did not have outstanding
borrowings under our revolving credit facility. We also have funding costs
associated with the asset backed securitization. Costs are in part based on
commercial paper rates. As of August 31, 2000, we did not have any outstanding
borrowings under the asset backed securitization. An adverse change in the base
rates upon which our interest rate is determined could have a material adverse
effect on our financial position, results of operations and cash flows.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's market risk sensitive financial instruments are entered into
for purposes other than trading. Financial instruments include cash equivalents
which are available for immediate withdrawal. Long-term debt instruments are
subject to a fixed interest rate and maturity schedule. Short-term interest rate
changes can impact interest expense on our variable rate credit facility and
asset-backed securitization, however, no amounts were outstanding on either of
the facilities as August 31, 2000.
See "Management's Discussion and Analysis of Financial Condition and
Results of Operations: Factors Affecting Future Results -- The Availability of
the Manufacturing Components We Need May be Limited," "-- Our International
Operations May be Subject to Certain Risks", and "-- We Are Sensitive to Changes
in Interest Rates." See Notes 1, 4 and 8 to the Consolidated Financial
Statements.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Certain information required by this item is included in Item 7 of Part II
of this Report under the heading "Quarterly Results" and is incorporated into
this item by reference. All other information required by this item is included
in Item 14 of Part IV of this Report and is incorporated into this item by
reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information regarding our directors is incorporated by reference to the
information set forth under the caption "Proposal No. 1: Election of Directors"
in our Proxy Statement for the Annual Meeting of Stockholders to be filed with
the Securities and Exchange Commission (the "Commission") within 120 days after
the end of our fiscal year ended August 31, 2000.
Information regarding compliance with Section 16(a) of the Securities
Exchange Act of 1934, as amended, is hereby incorporated herein by reference
from the section entitled "Other Information -- Section 16(a) Beneficial
Ownership Reporting Compliance" in the Proxy Statement for the Annual Meeting of
Stockholders to be filed with the Commission within 120 days after the end of
our fiscal year ended August 31, 2000.
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OUR EXECUTIVE OFFICERS
Officers are appointed by the Board of Directors and serve at the
discretion of the Board. Each executive officer is a full-time employee of
Jabil. There are no family relationships among our officers and directors.
William D. Morean (age 45) has served as Chairman of the Board since 1988
and as a director since 1978. Morean joined us in 1977 and assumed management of
day-to-day operations the following year. He served as Chief Executive Officer
until September 2000, and has previously served as President and Vice President
and held various operating positions. Morean attended Western Michigan
University, where he studied aviation.
Thomas A. Sansone (age 51) was elected Vice Chairman in January 1999. He
has served as a director since 1983. Sansone joined us in 1983 as Vice President
was promoted to President in 1988. Prior to joining Jabil, Sansone was a
practicing attorney. He holds a B.A. in Business Administration from Hillsdale
College, a J.D. from Detroit College of Law and an LL.M. in taxation from New
York University.
Timothy L. Main (age 43) has served as Chief Executive Officer of Jabil
since September 2000, as President since January 1999 and as a director since
October 1999. He joined Jabil in April 1987 as a Production Control Manager, was
promoted to Operations Manager in September 1987, to Project Manager in July
1989, to Vice President Business Development in May 1991, and to Senior Vice
President, Business Development in August 1996. Prior to joining us, Main was a
commercial lending officer, international division for the National Bank of
Detroit. Main has earned a B.S. from Michigan State University and an MIM from
the American Graduate School of International Management (Thunderbird).
Ronald J. Rapp (age 47) was named Chief Operating Officer in November 2000.
He served as Senior Vice President, Operational Development from January 1999 to
November 2000 and as a director from September 1988 to October 1999. Rapp joined
us in 1983 as Controller, was promoted in 1984 to Treasurer, to CFO in 1988 and
to Executive Vice President, Operations in 1996. Prior to joining Jabil, Rapp
was the Corporate Controller for Van Pelt Corporation, a wholesale distributor
of steel tubing products. Before joining Van Pelt, Rapp was a certified public
accountant with the accounting firm of Ernst & Ernst. Rapp holds a B.A. in
accounting from Ferris State University.
Chris Lewis (age 40) joined Jabil as Treasurer in June 1995 and was
promoted to Chief Financial Officer in August 1996. From July 1989 to May 1995,
Lewis was U.S. Controller of Peek PLC, a high technology manufacturing group.
Prior to July 1989, Lewis was a CPA with the accounting firm of KPMG Peat
Marwick. Lewis holds a B.A. in Business Administration from Wittenberg
University in Springfield, Ohio.
Robert L. Paver (age 44) joined Jabil Circuit as General Counsel and
Corporate Secretary in 1997. Prior to working for Jabil, Paver was a practicing
attorney with the law firm of Holland & Knight in St. Petersburg, Fla. He has
served as an adjunct professor of law at Stetson University College of Law since
1985. Paver holds a B.A. from the University of Florida and a J.D. from Stetson
University College of Law.
Mark Mondello (age 36) was promoted to Senior Vice President, Business
Development in January 1999. He joined Jabil Circuit in 1992 as Production Line
Supervisor, was promoted to Project Manager in 1993 and to Vice President,
Business Development in 1997. Prior to Jabil, Mondello served as project manager
on commercial and defense-related aerospace programs for Moog, Inc. Mondello
holds a B.S. in Mechanical Engineering from the University of South Florida.
Wesley "Butch" Edwards (age 48) was named Senior Vice President,
Operational Development in November 2000. He was promoted to Senior Vice
President, Operations in August 1996 after serving as Vice President, Operations
since May 1994. Edwards joined us as Manufacturing Manager of its Michigan
facility in July 1988 and was promoted to Operations Manager of the Florida
facility in July 1989. He holds an M.B.A. from the University of Florida.
Paul Bittner (age 55) has been Vice President, Advanced Engineering since
January 1992. Bittner joined us in 1986 as Manufacturing Engineering Manager,
was promoted to Director of Manufacturing Engineering in April 1987, and was
promoted to Vice President, Manufacturing Engineering, in June 1988. Prior to
joining Jabil, Bittner held various positions with United Technologies
Automotive Electronics Group.
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Randon Haight (age 50) has served as Vice President, Business Development
since May 1992. Haight joined us as a Project Manager in July 1989. Prior to
joining Jabil, Haight was the President of Cardinal Automotive, an automobile
customizer from 1987 to July 1989. Before joining Cardinal Automotive, Haight
was a Group Manager at Terry Barr Sales, Inc., a manufacturers' representative
to the automotive industry. He holds a B.A. in Liberal Arts from Hillsdale
College and an M.A. from Eastern Michigan University.
Beth A. Walters (age 40) was named Vice President, Communications in
November 1998. She joined Jabil in 1992 as Marketing Communications Manager and
was promoted to Director of Communications in 1994. Prior to joining Jabil,
Walters owned a marketing communications firm and served in a variety of public
relations positions with advertising and public relations agencies. She holds a
B.S. in Political Science from American University in Washington, DC and an M.A.
in Political Science from the University of Hawaii.
Scott D. Brown (age 38) was named Senior Vice President Strategic Planning
in November 2000. He joined Jabil as a Project Manager in November 1988 and was
promoted to Vice President, Corporate Development in September 1997. Prior to
joining Jabil, Brown was a financial consultant with Merrill Lynch & Co., Inc.
in Bloomfield Hills, Michigan. Brown holds a B.S. in Economics from the
University of Michigan.
Jeffrey J. Lumetta (age 37) was named Vice President of Jabil Technology
Services in November 2000. He served as Vice President, Design Services from
November 1996 to November 2000. Lumetta joined us in 1986 as a Design Engineer,
and was promoted to Manager, Design Engineering at the Florida facility in 1994.
Lumetta holds a B.S. in Electrical Engineering from Michigan Technological
University.
John P. Lovato (age 40) was promoted from General Manager of the company's
California facility to Vice President, Global Business Units in 1999. Lovato
began his career at Jabil in 1990 as a Business Unit Manager in the Michigan
facility. In 1994, he was promoted Business Unit Director and became General
Manager of the California facility in 1998. Before joining Jabil, Lovato held
several positions at Texas Instruments. He holds a Bachelor's degree in
Electronics Engineering from McMaster University in Ontario, Canada.
Michael F. Ward (age 49) joined Jabil Circuit in 1993 as plant operations
manager and helped establish Jabil's first international greenfield site in
Livingston, Scotland. Ward was named Vice President, Supply Chain and
Information in October 2000 after serving as Vice President, Information
Technology since May 1998. Prior to Jabil, Ward held various positions at
Seagate Technology, Honeywell and Burroughs Machines. Ward earned degrees in
Electronic and Electrical Engineering and Mechanical Engineering from Bell
College of Technology Hamilton, Scotland.
William E. Peters (age 37) was named Senior Vice President, Operations in
November 2000. He served as Vice President, Operations from January 1999 to
November 2000. Peters was hired by Jabil in 1990 as a buyer and was promoted to
Purchasing Manager soon after. In 1993, he was promoted to Operations Manager
for the Michigan facility. Prior to joining Jabil, Peters was a Financial
Analyst for Electronic Data Systems. Peters earned a B.A. in Economics from
Michigan State University.
Frank Krajcirovic (age 52) has been Vice President, Quality Control since
June 1988. Krajcirovic joined us in 1982 as a Quality Engineer. He was promoted
to Manager of Quality in 1983 and to Director of Quality in September 1987.
Prior to joining Jabil, Krajcirovic held various reliability engineering
positions with Massey Ferguson, Inc., a farm equipment manufacturer and
Fundimensions, Inc., Lionel Division, a toy manufacturer. He holds a B.S. in
Electrical Engineering from the City of Brno College, Czechoslovakia.
Roddy A. MacPhee (age 40) was named Vice President/European Business
Development in October 2000. MacPhee joined Jabil in February 1993 as Quality
Engineering Manager. He played a key role in establishing Jabil's first overseas
operation in Livingston, Scotland. MacPhee moved into Business Management in
1995 and has held positions as Business Unit Manager, Business Unit Director,
Director of Business Development for Europe and most recently Senior Director of
Business Development for Europe. Prior to joining Jabil, MacPhee held a variety
of technical, commercial and senior managerial positions in Compaq Computer
Inc., Polaroid Inc., Pilikington Defence Electronics and JB Gas Turbines.
MacPhee holds Higher National Certificates in both Mechanical and Production
Engineering and has an MBA from the University of Strathclyde.
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Joseph McGee (age 38) was named Vice President, Global Business Units in
October 2000. He joined Jabil in 1993 as a Business Unit Manager at Jabil
Scotland and has held several positions during his tenure, including Director of
Business Development, Jabil Malaysia. Most recently, McGee was General Manager,
Jabil California. Prior to joining Jabil, he held positions with Sun
Microsystems and Philips. McGee earned a PhD in Thermodynamics and Fluid
Mechanics and a Bachelor of Science degree in Mechanical Engineering from the
University of Strathclyde and holds an MBA from the University of Glasgow.
Brian Althaver (age 44) was named Vice President, Jabil Automotive Group in
October 2000. This newly created position is charged with the expansion and
globalization of Jabil's automotive business unit. Althaver joined us in
September 1999 as Director of Corporate Development and brings with him more
than 15 years of international management experience in both automotive and
electronics manufacturing. He holds a Bachelor of Science Degree in Labor and
Industrial Relations from Michigan State University and a Master's Degree in
International Management from the American Graduate School of International
Management.
David S. Emerson (age 43) was named Vice President, Sales and Marketing for
the Americas in October 2000. Emerson previously has run various Business Units
for Jabil and has most recently lead sales efforts throughout the United States.
Prior to joining Jabil, Emerson held positions with SCI Systems, General Signal
and Schlumberger. He holds a B.A. in Business from Pacific University.
Forbes I.J. Alexander (age 40) was named Treasurer in November 1996.
Alexander joined us in 1993 as Controller of our Scottish operation and was
promoted to Assistant Treasurer in April 1996. Prior to joining Jabil, Alexander
was Financial Controller of Tandy Electronics European Manufacturing Operations
in Scotland and has held various financial positions with Hewlett Packard and
Apollo Computer. Alexander is a Chartered Management Accountant. He holds a B.A.
in Accounting from Dundee College, Scotland.
J. Patrick Redmond (age 40) was promoted to Controller of Jabil in July
1999. Redmond joined us in May 1995 as Plant Controller for the Florida campus
and later became Plant Controller for the Scotland facility. Prior to joining
Jabil, Redmond was Plant Controller for Loral Data Systems and has held a
variety of financial and business management positions at Loral and previously,
at Schlumberger. Redmond obtained a B.A. in Accounting from the University of
South Florida.
ITEM 11. EXECUTIVE COMPENSATION
Information regarding executive compensation is incorporated by reference
to the information set forth under the captions "Proposal No. 1: Election of
Directors -- Compensation of Directors" and "Executive Officer Compensation" in
our Proxy Statement for the 2000 Annual Meeting of Stockholders to be filed with
the Commission within 120 days after the end of our fiscal year ended August 31,
2000.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information regarding security ownership of certain beneficial owners and
management is incorporated by reference to the information set forth under the
caption "Other Information -- Share Ownership by Principal Stockholders and
Management" in our Proxy Statement for the 2000 Annual Meeting of Stockholders
to be filed with the Commission within 120 days after the end of our fiscal year
ended August 31, 2000.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information regarding certain relationships and related transactions is
incorporated by reference to the information set forth under the caption
"Certain Transactions" in our Proxy Statement for the 2000 Annual Meeting of
Stockholders to be filed with the Commission within 120 days after the end of
our fiscal year ended August 31, 2000.
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this Report:
1. Financial Statements. Our consolidated financial statements, and
related notes thereto, with independent auditors' report thereon are included in
Part IV of this report on the pages indicated by the Index to Consolidated
Financial Statements and Schedule as presented on page 28 of this report.
2. Financial Statement Schedule. Our financial statement schedule is
included in Part IV of this report on the page indicated by the Index to
Consolidated Financial Statements and Schedule as presented on page 28 of this
report. This financial statement schedule should be read in conjunction with our
consolidated financial statements, and related notes thereto.
Schedules not listed in the Index to Consolidated Financial Statements and
Schedule have been omitted because they are not applicable, not required, or the
information required to be set forth therein is included in the consolidated
financial statements or notes thereto.
3. Exhibits. See Item 14(c) below.
(b) Reports on Form 8-K. We filed the following Current Reports on Form 8-K
during the last quarter of the fiscal year ended August 31, 2000.
(1) On August 21, 2000 we filed a Current Report on Form 8-K regarding
greenfield construction in Chihuahua, Mexico.
(2) On July 5, 2000 we filed a Current Report on Form 8-K regarding the
acquisition of Telenor Technology Services Limited.
(3) On June 15, 2000 we filed a Current Report on Form 8-K reporting
financial results for the third quarter and the first nine months of fiscal 2000
and the expansion of our Boise, Idaho facility.
(4) On June 6, 2000 we filed a Current Report on Form 8-K reporting a
public stock offering of 13,000,000 shares of Common Stock.
(c) Exhibits. The exhibits listed on the Exhibits Index are filed as part of,
or incorporated by reference into, this Report.
(d) Financial Statement Schedules. See Item 14(a) above.
27
29
JABIL CIRCUIT, INC. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE
PAGE
----
Independent Auditors' Report................................ 29
Consolidated Financial Statements:
Consolidated Balance Sheets -- August 31, 2000 and 1999... 32
Consolidated Statements of Earnings -- Years ended August
31, 2000, 1999, and 1998............................... 33
Consolidated Statements of Stockholders' Equity -- Years
ended
August 31, 2000, 1999, and 1998........................ 34
Consolidated Statements of Cash Flows -- Years ended
August 31, 2000, 1999, and 1998........................ 35
Notes to Consolidated Financial Statements................ 36
Financial Statement Schedule:
Schedule II -- Valuation and Qualifying Accounts.......... 54
28
30
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Jabil Circuit, Inc:
We have audited the accompanying consolidated financial statements of Jabil
Circuit, Inc. and subsidiaries as listed in the accompanying index. In
connection with our audits of the consolidated financial statements, we also
have audited the accompanying financial statement schedule as listed in the
accompanying schedule. These consolidated financial statements and financial
statement schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements and financial statement schedule based on our audits. We did not
audit the consolidated balance sheet of GET Manufacturing, Inc. as of August 31,
1999 and the related consolidated statements of income, shareholders' equity,
and cash flows for the years ended August 31, 1999 and March 31, 1999, which
statements reflect total assets constituting 11.1% as of August 31, 1999, and
total revenues constituting 10.6% and 13.9% for the years ended August 31, 1999
and March 31, 1999, respectively, of the related consolidated totals. Those
statements were audited by other auditors whose reports have been furnished to
us, and our opinion, insofar as it relates to the amounts included for GET
Manufacturing, Inc., is based solely on the reports of the other auditors.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits and the reports of
the other auditors provide a reasonable basis for our opinion.
In our opinion, based on our audits and the reports of the other auditors,
the consolidated financial statements referred to above present fairly, in all
material respects, the financial position of Jabil Circuit, Inc. and
subsidiaries as of August 31, 2000 and 1999, and the results of their operations
and their cash flows for each of the years in the three-year period ended August
31, 2000, in conformity with accounting principles generally accepted in the
United States of America. Also in our opinion, which is based on our audits and
the reports of other auditors, the related financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as a
whole, presents fairly, in all material respects, the information set forth
therein.
KPMG LLP
St. Petersburg, Florida
September 19, 2000
29
31
REPORT OF INDEPENDENT AUDITORS
To the Shareholders and Board of Directors
of GET Manufacturing, Inc.
We have audited the consolidated balance sheet of GET Manufacturing, Inc.
and subsidiaries as of August 31, 1999 (not presented separately herein), and
the related consolidated statements of income, shareholders' equity, and cash
flows for the twelve months ended August 31, 1999 (not presented separately
herein). These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
GET Manufacturing, Inc. and subsidiaries as of August 31, 1999, and the
consolidated results of their operations and their cash flows for the twelve
months ended August 31, 1999 in conformity with accounting principles generally
accepted in the United States of America.
Ernst & Young
Hong Kong
November 3, 1999
30
32
REPORT OF INDEPENDENT AUDITORS
To the Shareholders and Board of Directors
of GET Manufacturing, Inc.
We have audited the consolidated balance sheet of GET Manufacturing, Inc.
and subsidiaries as of March 31, 1999 and 1998 (not presented separately
herein), and the related consolidated statements of income, shareholders'
equity, and cash flows for each of the three years in the period ended March 31,
1999 (not presented separately herein). These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
GET Manufacturing, Inc. and subsidiaries at March 31, 1999 and 1998, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended March 31, 1999 in conformity with accounting
principles generally accepted in the United States of America.
Ernst & Young
Hong Kong
6 August, 1999
31
33
JABIL CIRCUIT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)
AUGUST 31,
-----------------------
2000 1999
---------- ----------
ASSETS
Current assets:
Cash and cash equivalents................................. $ 337,602 $ 125,949
Short term investments (Note 1)........................... -- 27,176
Accounts receivable, less allowance for doubtful accounts
of $5,008 in 2000 and $4,639 in 1999 (Note 7).......... 523,096 261,078
Inventories (Note 2)...................................... 477,548 217,840
Prepaid expenses and other current assets................. 30,984 15,174
Deferred income taxes (Note 5)............................ 18,040 13,896
---------- ----------
Total current assets.............................. 1,387,270 661,113
Property, plant and equipment, net (Note 3)................. 587,494 353,522
Other assets................................................ 43,428 20,786
---------- ----------
$2,018,192 $1,035,421
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt (Note 4)........... $ 8,333 $ 10,989
Short-term debt........................................... -- 21,501
Accounts payable.......................................... 594,111 300,093
Accrued compensation and employee benefits................ 36,611 28,866
Other accrued expenses.................................... 35,650 30,320
Income taxes payable...................................... 17,270 20,511
---------- ----------
Total current liabilities......................... 691,975 412,280
Note payable and long-term debt, less current installments
(Note 4).................................................. 25,000 33,333
Deferred income taxes (Note 5).............................. 28,112 10,199
Deferred grant revenue...................................... 2,922 1,798
---------- ----------
Total liabilities................................. 748,009 457,610
---------- ----------
Stockholders' equity (Notes 1 and 6):
Preferred stock, $.001 par value, authorized 1,000,000
shares; no shares issued and outstanding............... -- --
Common stock, $.001 par value, authorized 250,000,000
shares; issued and outstanding, 190,250,685 shares in
2000, and 174,703,179 in 1999.......................... 190 175
Additional paid-in capital................................ 843,784 296,688
Retained earnings......................................... 426,814 281,166
Accumulated other comprehensive income.................... (605) (218)
---------- ----------
Total stockholders' equity........................ 1,270,183 577,811
---------- ----------
Commitments and contingencies (Note 9)
$2,018,192 $1,035,421
========== ==========
See accompanying notes to consolidated financial statements.
32
34
JABIL CIRCUIT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
YEARS ENDED AUGUST 31,
------------------------------------
2000 1999 1998
---------- ---------- ----------
Net revenue (Note 7)....................................... $3,558,321 $2,238,391 $1,484,245
Cost of revenue............................................ 3,199,972 1,992,803 1,307,692
---------- ---------- ----------
Gross profit............................................... 358,349 245,588 176,553
Operating expenses:
Selling, general and administrative...................... 132,717 92,015 60,116
Research and development................................. 4,839 5,863 5,355
Amortization of intangibles.............................. 2,724 1,225 --
Acquisition-related charge (Note 10)..................... 5,153 7,030 20,825
Goodwill write-off (Note 1 (p)).......................... -- 3,578 3,578
---------- ---------- ----------
Operating income........................................... 212,916 135,877 86,679
Interest income............................................ (7,385) (4,536) (238)
Interest expense........................................... 7,605 7,110 3,876
---------- ---------- ----------
Income before income taxes................................. 212,696 133,303 83,041
Income taxes (Note 5)...................................... 67,048 48,484 25,572
---------- ---------- ----------
Net income....................................... $ 145,648 $ 84,819 $ 57,469
========== ========== ==========
Earnings per share:
Basic.................................................... $ 0.81 $ 0.51 $ 0.36
========== ========== ==========
Diluted.................................................. $ 0.78 $ 0.49 $ 0.35
========== ========== ==========
Common shares used in the calculations of earnings per
share:
Basic.................................................... 179,032 166,754 158,589
========== ========== ==========
Diluted.................................................. 187,448 174,334 164,934
========== ========== ==========
See accompanying notes to consolidated financial statements.
33
35
JABIL CIRCUIT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT FOR SHARE DATA)
ACCUMULATED
COMMON STOCK OTHER
------------------- ADDITIONAL COMPREHENSIVE NET
SHARES PAR PAID-IN RETAINED INCOME STOCKHOLDERS'
OUTSTANDING VALUE CAPITAL EARNINGS (LOSS) EQUITY
----------- ----- ---------- -------- ------------- -------------
Balance at August 31, 1997..... 157,983,364 $158 $ 79,536 $137,762 $(539) $ 216,917
Exercise of stock options...... 878,004 1 976 -- -- 977
Shares issued under Employee
Stock Purchase Plan.......... 303,772 -- 2,320 -- -- 2,320
Tax benefit of options
exercised.................... -- -- 7,114 -- -- 7,114
Comprehensive income........... -- -- -- 57,469 321 57,790
----------- ---- -------- -------- ----- ----------
Balance at August 31, 1998..... 159,165,140 159 89,946 195,231 (218) 285,118
Exercise of stock options...... 1,263,531 1 2,882 -- -- 2,883
Shares issued under Employee
Stock Purchase Plan.......... 474,508 1 4,610 -- -- 4,611
Tax benefit of options
exercised.................... -- -- 657 -- -- 657
Secondary Public Offering, net
of expenses.................. 13,800,000 14 198,593 -- -- 198,607
Elimination of duplicate equity
resulting from non-conforming
fiscal years (Note 1)........ -- -- -- 1,116 -- 1,116
Comprehensive income........... -- -- -- 84,819 -- 84,819
----------- ---- -------- -------- ----- ----------
Balance at August 31, 1999..... 174,703,179 175 296,688 281,166 (218) 577,811
Exercise of stock options...... 2,268,203 2 10,192 -- -- 10,194
Shares issued under employee
stock purchase plan.......... 279,303 -- 6,812 -- -- 6,812
Tax benefit of options
exercised.................... -- -- 4,294 -- -- 4,294
Public offering, net of
expenses..................... 13,000,000 13 525,798 -- -- 525,811
Comprehensive income........... -- -- -- 145,648 (387) 145,261
----------- ---- -------- -------- ----- ----------
Balance at August 31, 2000..... 190,250,685 $190 $843,784 $426,814 $(605) $1,270,183
=========== ==== ======== ======== ===== ==========
See accompanying notes to consolidated financial statements.
34
36
JABIL CIRCUIT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
YEARS ENDED AUGUST 31,
---------------------------------
2000 1999 1998
--------- --------- ---------
Cash flows from operating activities:
Net income................................................ $ 145,648 $ 84,819 $ 57,469
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization.......................... 99,337 63,417 42,333
Goodwill write-off..................................... -- 3,578 3,578
Recognition of grant revenue........................... (1,127) (825) (827)
Deferred income taxes.................................. 13,769 4,641 (5,269)
Loss on sale of property............................... 2,467 2,749 121
Acquisition related in-process research and development
charge............................................... -- -- 6,500
Elimination of duplicate equity resulting from
nonconforming fiscal years........................... -- 1,116 --
Change in operating assets and liabilities, exclusive
of net assets acquired:
Accounts receivable.................................. (257,752) (111,324) (24,578)
Inventories.......................................... (255,615) (77,490) 8,956
Prepaid expenses and other current assets............ (15,648) (12,606) 2,109
Other assets......................................... 308 (8,050) (2,676)
Accounts payable and accrued expenses................ 307,316 145,779 14,805
Income taxes payable................................. (3,287) 14,661 (1,202)
--------- --------- ---------
Net cash provided by operating activities......... 35,416 110,465 101,319
--------- --------- ---------
Cash flows from investing activities:
Net cash paid for net assets acquired..................... (36,716) -- (64,990)
Proceeds from sale of short-term investments.............. 27,176 -- --
Purchases of investments.................................. -- (27,176) --
Acquisition of property, plant and equipment.............. (333,139) (168,674) (111,269)
Proceeds from sale of property and equipment.............. 6,339 3,135 2,767
Other investing activities................................ -- -- (1,706)
--------- --------- ---------
Net cash used in investing activities............. (336,340) (192,715) (175,198)
--------- --------- ---------
Cash flows from financing activities:
Increase in/repayment of note payable to bank............. -- 21,501 18,691
Payments of long-term debt................................ (32,490) (53,473) 30,387
Net proceeds from issuance of common stock................ 542,816 206,753 3,301
Proceeds from Scottish grant.............................. 2,251 395 949
--------- --------- ---------
Net cash provided by (used in) financing
activities...................................... 512,577 175,176 53,328
--------- --------- ---------
Net increase (decrease) in cash and cash equivalents........ 211,653 92,926 (20,551)
Cash and cash equivalents at beginning of period............ 125,949 33,023 53,754
--------- --------- ---------
Cash and cash equivalents at end of period.................. $ 337,602 $ 125,949 $ 33,023
========= ========= =========
Supplemental disclosure information:
Interest paid............................................. $ 8,004 $ 6,572 $ 5,909
========= ========= =========
Income taxes paid, net of refunds received................ $ 38,173 $ 29,930 $ 31,422
========= ========= =========
Tax benefit of options exercised.......................... $ 4,294 $ 657 $ 7,114
========= ========= =========
See accompanying notes to consolidated financial statements.
35
37
JABIL CIRCUIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Jabil Circuit, Inc. (together with its subsidiaries, herein referred to as
the "Company") is an independent supplier of custom manufacturing services for
circuit board assemblies, subsystems and systems to major original equipment
manufacturers ("OEMs") in the communications, personal computer, peripherals,
consumer and automotive industries. The Company's manufacturing services combine
a high volume, highly automated manufacturing approach with advanced design and
manufacturing technologies. The Company is headquartered in St. Petersburg,
Florida and has manufacturing operations in Asia, Europe, North America and
South America.
On September 13, 1999 the Company issued approximately 10.2 million shares
of its common stock for all the outstanding common stock of GET Manufacturing,
Inc. ("GET"), a China-based electronics manufacturing services provider to
original equipment manufacturers serving the consumer electronics,
telecommunications, medical and computer peripheral industries. The transaction
was accounted for as a pooling of interests and, accordingly, the Company's
historical consolidated financial statements for all periods presented have been
restated to reflect the merger with GET. Because Jabil and GET had differing
fiscal periods prior to the merger, GET's financial statements for the fiscal
year ended March 31, 1999 and March 31, 1998 were combined with Jabil's
financial statements for the years ended August 31, 1998 and August 31, 1997,
respectively. GET's 1999 financial statements were conformed to the twelve
months ending August 31 for purposes of consolidating with Jabil's financial
statements for its year ended August 31, 1999. As a result of the overlapping
period created when GET's fiscal year was conformed to an August 31 fiscal year,
$1,116 of net loss (for the period September 1998 through March 1999) was
included in consolidated net income for both fiscal years ended August 31, 1998
and 1999. Stockholders' equity was adjusted so that the duplicate amount is
eliminated from retained earnings. There were no material transactions between
Jabil and GET prior to the merger. The effects of conforming GET's accounting
policies to those of Jabil were not material.
Significant accounting policies followed by the Company are as follows:
a. Consolidation
The consolidated financial statements include the accounts and operations
of Jabil Circuit, Inc. and its subsidiaries, all of which are wholly-owned. All
significant inter-company balances and transactions have been eliminated in
preparing the consolidated financial statements.
As discussed in Note 10, in September, 1999 the Company completed a merger
with GET Manufacturing, Inc. which was accounted for as a pooling of interests
in fiscal 2000. The accompanying historical consolidated financial statements
have been restated to reflect the impact of this transaction.
b. Revenue Recognition
The Company typically recognizes revenue at the time of product shipment.
Such revenue is recorded net of estimated product return and warranty costs.
In connection with the August 1998 acquisition of the net assets of
Hewlett-Packard Company ("HP") laser printer operations, the Company entered
into an agreement with HP to produce laser printer component products. During
the first year of the agreement, the Company received compensation for available
capacity, as well as compensation for the raw material content of actual units
produced. The available capacity compensation was recorded on a units produced
basis. The agreement for compensation for available capacity expired in August
1999 and has been replaced with a unit pricing agreement similar to the
Company's other contracts.
36
38
JABIL CIRCUIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
c. Accounting Estimates
Management is required to make estimates and assumptions during the
preparation of the consolidated financial statements in conformity with
generally accepted accounting principles. These estimates and assumptions affect
the reported amounts of assets and liabilities and the disclosure of contingent
assets and liabilities at the dates of the consolidated financial statements.
They also affect the reported amounts of net income. Actual results could differ
materially from these estimates and assumptions.
d. Inventories
Inventories are stated at the lower of cost (first in, first out (FIFO)
method) or market.
e. Property, Plant and Equipment
Property, plant and equipment is stated at cost and depreciated and
amortized on the straight-line method over the estimated useful lives of the
respective assets, primarily thirty-five years for buildings and three to five
years for other assets. Maintenance and repairs are charged to expense as
incurred.
f. Cash, Cash Equivalents and Other Financial Instruments
The Company considers all highly liquid instruments with original
maturities of 90 days or less to be cash equivalents for consolidated financial
statement purposes. Cash equivalents consist of investments in money market
funds and commercial paper with original maturities of 90 days or less. At
August 31, 2000 and 1999 cash equivalents totaled approximately $178.2 and $67.2
million, respectively. Management considers the carrying value of cash and cash
equivalents to be a reasonable approximation of market value after the short-
term nature of these financial instruments. Short term investments include
corporate and governmental debt securities which are classified as
available-for-sale and are reported at fair market value in accordance with
Statement of Financial Accounting Standards No. 115, Accounting for Certain
Investments in Debt and Equity Securities. As of August 31, 2000, the Company
held no short-term investments.
g. Grant Revenue
The Company has been awarded grants related to the development of its
Scottish operations. Grant funds are earned as certain milestones are met, and
are being amortized over two to five-year periods.
h. Income Taxes
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in the tax rate is recognized in income in
the period that includes the enactment date of the rate change.
i. Profit Sharing and 401(k) Plan
The Company contributes to a profit sharing plan for all employees who have
completed a 12-month period of service in which the employee has worked at least
1,000 hours. In addition, the Company provides retirement benefits to its
domestic employees who have completed a 90 day period of service, through a
401(k) plan that provides a Company matching contribution. The Company also has
defined contribution benefit plans for certain of its international employees
primarily dictated by the custom of the region in which it operates. Company
contributions are at the discretion of the Company's Board of Directors. The
Company
37
39
JABIL CIRCUIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
contributed approximately $14.9 million, $11.2 million and $6.3 million for the
years ended August 31, 2000, 1999 and 1998, respectively.
j. Foreign Currency Transactions
For the Company's foreign subsidiaries which use the local currency as
their functional currency, assets and liabilities are translated at exchange
rates in effect at the balance sheet date, and revenues and expenses are
translated at the weighted average exchange rate for the period. The effects of
these translation adjustments are reported in comprehensive income. Gains and
losses arising from foreign currency transactions denominated in a currency
other than the functional currency of the entity involved and remeasurement
adjustments for foreign operations where the U.S. dollar is the functional
currency are included in income. To date, the effect of such amounts on net
income has not been material.
k. Net Income Per Share
The Company presents two earnings per share (EPS) amounts. Basic EPS is
calculated based on net earnings available to common shareholders and the
weighted-average number of shares outstanding during the reported period.
Diluted EPS includes additional dilution from potential common stock, such as
stock issuable pursuant to the exercise of stock options outstanding.
FISCAL YEAR ENDED
------------------------------------
AUGUST 31, AUGUST 31, AUGUST 31,
2000 1999 1998
---------- ---------- ----------
(IN THOUSANDS EXCEPT PER SHARE DATA)
Numerator:
Net income................................................ $145,648 $ 84,819 $ 57,469
======== ======== ========
Denominator:
Weighted average shares outstanding -- Basic.............. 179,032 166,754 158,589
Employee stock options.................................... 8,416 7,580 6,345
-------- -------- --------
Weighted average shares outstanding -- Diluted............ 187,448 174,334 164,934
======== ======== ========
Earnings per common share:
Basic..................................................... $ 0.81 $ 0.51 $ 0.36
======== ======== ========
Diluted................................................... $ 0.78 $ 0.49 $ 0.35
======== ======== ========
For the years ended August 31, 2000, 1999 and 1998, options to purchase
138,732, 6,218 and 160,000 shares of common stock were outstanding during the
period but were not included in the computation of diluted earnings per share
because the options' exercise prices were greater than the average market price
of the common shares, and therefore, the effect would be anti-dilutive.
l. Comprehensive Income
The Company has adopted Statement of Financial Accounting Standards No.
130, Reporting Comprehensive Income. Statement 130 establishes standards for
reporting comprehensive income. The Statement defines comprehensive income as
the changes in equity of an enterprise except those resulting from shareholder
transactions. The Company's balance of other comprehensive income is composed
exclusively of the cumulative foreign currency translation adjustment. For the
years ended August 31, 2000, 1999 and 1998, the Company recorded cumulative
foreign currency translation adjustments of approximately $(387,000), $0, and
$321,000 respectively.
38
40
JABIL CIRCUIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
m. Stock Based Compensation
Prior to September 1, 1996, the Company accounted for its stock option plan
in accordance with the provisions of Accounting Principles Board (APB) Opinion
No. 25, Accounting for Stock Issued to Employees, and related interpretations.
As such, compensation expense would be recorded on the date of granting of stock
options only if the current market price of the underlying stock exceeded the
exercise price. Effective September 1, 1996, the Company adopted Statement of
Financial Accounting Standards No. 123, Accounting for Stock Based Compensation
(Statement 123), which permits entities to recognize as expense over the vesting
period the fair value of all stock based awards on the date of the grant.
Alternatively, Statement 123 allows entities to continue to apply the provisions
of APB Opinion No. 25 and provide pro forma net income and pro forma net income
per share disclosures for employee stock options granted in fiscal 1996 and
subsequent years as if the fair value based method defined in Statement 123 had
been applied. The Company has elected to continue to apply the provisions of APB
Opinion No. 25 and provide the pro forma disclosure required by Statement 123.
n. Stock Split
On March 23, 2000 and January 28, 1999, the Company's Board of Directors
approved a two-for-one stock split of the Company's common stock. Per share
information in the accompanying consolidated financial statements and notes has
been adjusted to reflect the impact of the common stock splits for all periods
presented.
o. Intangible Assets
Intangible assets are composed of goodwill and other intellectual property.
Intangible assets, aggregating approximately $34.4 million and $10.0 million,
net of $2.7 million and $1.2 million of amortization, as of August 31, 2000 and
August 31, 1999, respectively, are classified as a component of other assets in
the accompanying consolidated balance sheets. Such amounts are amortized on a
straight-line basis over 10 to 15 years.
p. Impairment of Long-Lived Assets
The Company reviews property and equipment for impairment whenever events
or changes in circumstances indicate that the carrying amount of an asset may
not be recoverable. Recoverability of property and equipment is measured by
comparison of its carrying amount, including the unamortized portion of goodwill
allocated to the property and equipment, to future net cash flows the property
and equipment are expected to generate. If such assets are considered to be
impaired, the impairment to be recognized is measured by the amount by which the
carrying amount of the property and equipment, including the allocated goodwill,
if any, exceeds its fair market value. The Company assesses the recoverability
of goodwill by determining whether the unamortized goodwill balance can be
recovered through undiscounted future cash flows of the acquired operation. The
amount of goodwill impairment, if any, is measured based on projected discounted
future cash flows using a discount rate reflecting the Company's average cost of
funds. During 1999, the Company determined that the portion of goodwill related
to GET's 1997 acquisition of Able Electronics Corporation ("Able") was impaired.
As a result of the overlapping period created when GET's fiscal year was
conformed to an August 31 fiscal year, the write off of the unamortized goodwill
of $3,578,000 is included in the results of operations for both fiscal years
ended August 31, 1998 and 1999. Stockholders' equity was adjusted to eliminate
the duplicate effect on retained earnings. See Note 1 to the Consolidated
Financial Statements.
39
41
JABIL CIRCUIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
2. INVENTORIES
Inventories consist of the following (in thousands):
AUGUST 31,
-------------------
2000 1999
-------- --------
Raw materials............................................... $368,783 $159,203
Work in process............................................. 54,288 29,622
Finished goods.............................................. 54,477 29,015
-------- --------
$477,548 $217,840
======== ========
3. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consists of the following (in thousands):
AUGUST 31,
-------------------
2000 1999
-------- --------
Land and improvements....................................... $ 40,911 $ 19,459
Buildings................................................... 117,398 91,032
Leasehold improvements...................................... 36,728 11,300
Machinery and equipment..................................... 536,140 311,396
Furniture, fixtures and office equipment.................... 23,613 17,246
Computer equipment.......................................... 67,615 58,625
Transportation equipment.................................... 4,209 4,823
Construction in progress.................................... 17,536 19,126
-------- --------
844,150 533,007
Less accumulated depreciation and amortization.............. 256,656 179,485
-------- --------
$587,494 $353,522
======== ========
During the year ended August 31, 2000, the Company began construction of
manufacturing facilities in Tiszaujvaros, Hungary and Chihuahua, Mexico. During
the years ended August 31, 2000, 1999 and 1998, the Company capitalized
approximately $1,046,000, $0 and $83,000, respectively, in interest related to
the constructed facilities.
Maintenance and repairs expense was approximately $13.4 million $10.6
million and $10.1 million for the years ended August 31, 2000, 1999 and 1998,
respectively.
40
42
JABIL CIRCUIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
4. NOTES PAYABLE AND LONG-TERM DEBT
Notes Payable and Long-term debt consists of the following (in thousands):
AUGUST 31,
-----------------
2000 1999
------- -------
Short-term debt(a).......................................... $ -- $21,501
Term loans(b)............................................... 33,333 41,666
Borrowings under revolving credit facility(c)............... -- --
Bank loans(d)............................................... -- 2,656
------- -------
Total notes payable and long-term debt...................... 33,333 65,823
Less current installments of long-term debt................. 8,333 10,989
Less short-term debt........................................ -- 21,501
------- -------
Notes payable and long-term debt, less current
installments.............................................. $25,000 $33,333
======= =======
- ---------------
(a) At August 31, 1999, the Company had banking facilities of approximately $29
million available for trade finance, letters of credit, bank overdrafts,
trust receipts and short-term bank loans. The weighted average interest
rates on the various short-term debts as of August 31, 1999 were 7.46%.
These debts are collateralized by corporate guarantees from the Company and
certain subsidiaries of the Company. The facilities were terminated in
fiscal year 2000.
(b) In May 1996, the Company completed a private placement of $50,000,000 Senior
Notes due 2004. The Notes have a fixed interest rate of 6.89%, with interest
payable on a semi-annual basis. Principal is payable in six equal annual
installments which began May 30, 1999.
(c) On April 7, 2000, the Company renegotiated its unsecured line of credit
facility and established a $500 million unsecured revolving credit facility
with a syndicate of banks ("Revolver"). Under the terms of the Revolver,
borrowings can be made under either floating rate loans or Eurodollar rate
loans. The Company pays interest on outstanding floating rate loans at the
banks' prime rate. The Company pays interest on outstanding Eurodollar loans
at the London Interbank Offered Rate (LIBOR) in effect at the loan inception
plus a factor of 1.125% to 1.875% depending on the Company's funded debt to
total capitalization ratios. The Company pays a commitment fee on the unused
portion of the Revolver at 0.25% to 0.375% depending on the Company's funded
debt to total capitalization ratios. The renegotiated Revolver expires on
April 6, 2003 and outstanding borrowings are then due and payable. As of
August 31, 2000, there were no borrowings outstanding under the Revolver and
$500 million of the facility was available. As of August 31, 1999, there
were no borrowings outstanding under the Revolver and $250 million of the
facility was available.
(d) As of August 31, 1999, a subsidiary of the Company had $2,656,000,
outstanding under long-term loan agreements with a bank, which bear interest
at a variable rate from 1 to 3 months at the Hong Kong Interbank Offering
Rate (6.44% at August 31, 1999) plus 1.25% to 1.5%. The weighted average
interest rate on the long-term bank loans was 7.0% as of August 31, 1999.
The loans are collateralized by the Company's building in Hong Kong and
guarantees from the Company and certain other of its subsidiaries. The loan
was extinguished in fiscal year 2000.
The agreements related to the obligations described above contain a number
of restrictive financial and/or other covenants. The Company was in compliance
with the respective covenants as of August 31, 2000.
Aggregate annual maturities for notes payable and long-term debt are
$8,333,333 per year until 2004.
In July, 2000 Jabil Circuit entered into an asset backed securitization
program with Bank One, which provides for the sale of up to $225 million of
eligible accounts receivables of certain U.S. plants. We account for the sale of
receivables under this securitization program in accordance with Statement of
Financial Accounting Standards No. 125, Accounting for Transfers and Servicing
of Financial Assets and Extinguish-
41
43
JABIL CIRCUIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
ments of Liabilities, as replaced by Statement of Financial Accounting Standards
No. 140, Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities. Receivables sold under this program will be
excluded from accounts receivable in the Consolidated Balance Sheets. The asset
backed securitization will be used as a financing tool to fund working capital.
As of August 31, 2000, we had not yet sold any receivables.
5. INCOME TAXES
Income tax expense amounted to $67.0 million, $48.5 million and $25.6
million for the years ended August 31, 2000, 1999 and 1998, respectively (an
effective rate of 31.5%, 36.4% and 30.8%, respectively). The actual expense
differs from the "expected" tax expense (computed by applying the U.S. federal
corporate tax rate of 35% to earnings before income taxes) as follows (in
thousands):
YEARS ENDED AUGUST 31,
----------------------------
2000 1999 1998
-------- ------- -------
Computed "expected" tax expense.......................... $ 74,444 $46,656 $29,064
State taxes, net of Federal benefit...................... 3,752 3,830 859
-------- ------- -------
Income of rate favorable jurisdictions................... (12,615) (4,683) (5,957)
Other, net............................................... 1,467 2,681 1,606
-------- ------- -------
Provision for income taxes............................... $ 67,048 $48,484 $25,572
======== ======= =======
Effective tax rate....................................... 31.5% 36.4% 30.8%
======== ======= =======
The domestic and foreign components of income before income taxes were
comprised of the following for the years ended August 31 (in thousands):
YEARS ENDED AUGUST 31, 2000 1999 1998
- ---------------------- -------- -------- -------
U.S..................................................... $141,114 $112,378 $57,334
Foreign................................................. 71,582 20,925 25,707
-------- -------- -------
$212,696 $133,303 $83,041
======== ======== =======
The components of income taxes for the fiscal years ended August 31, 2000,
1999 and 1998, were as follows:
YEARS ENDED AUGUST 31, CURRENT DEFERRED TOTAL
- ---------------------- ------- -------- -------
2000:
U.S..................................................... $38,034 $14,227 $52,261
State................................................... 5,411 361 5,772
Foreign................................................. 9,834 (819) 9,015
------- ------- -------
$53,279 $13,769 $67,048
======= ======= =======
1999:
U.S..................................................... $30,311 $ 5,705 $36,016
State................................................... 5,397 495 5,892
Foreign................................................. 8,135 (1,559) 6,576
------- ------- -------
$43,843 $ 4,641 $48,484
======= ======= =======
42
44
JABIL CIRCUIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED AUGUST 31, CURRENT DEFERRED TOTAL
- ---------------------- ------- -------- -------
1998:
U.S..................................................... $26,682 $(4,001) $22,681
State................................................... 1,770 (449) 1,321
Foreign................................................. 2,389 (819) 1,570
------- ------- -------
$30,841 $(5,269) $25,572
======= ======= =======
Jabil has been granted tax incentives, including tax holidays, for its
Hungarian, Chinese and Malaysian subsidiaries. These tax incentives expire
between 2000 and 2010, and are subject to certain conditions with which the
Company expects to comply. The subsidiaries generated income during the years
ended August 31, 2000, 1999 and 1998, resulting in a tax holiday of
approximately $12.6 million ($0.07 per share), $4.7 million ($0.03 per share)
and $5.9 million ($0.04 per share), respectively. The Company has filed an
application for a Malaysian income tax holiday.
The Company intends to indefinitely re-invest income from all of its
foreign subsidiaries. The aggregate undistributed earnings of the Company's
foreign subsidiaries for which no deferred tax liability has been recorded is
approximately $136.7 million as of August 31, 2000. Determination of the amount
of unrecognized deferred tax liability on these undistributed earning is not
practicable.
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities are as follows
(in thousands):
YEARS ENDED AUGUST 31, 2000 1999
---------------------- ------- -------
Deferred tax assets:
Net operating loss carryforward........................... $ 1,507 $ 1,507
Accounts receivable, principally due to allowance for
doubtful accounts...................................... 1,262 1,319
Grant receivable.......................................... 950 146
Inventories, principally due to reserves and additional
costs inventoried for tax purposes pursuant to the Tax
Reform Act of 1986..................................... 7,363 4,608
Compensated absences, principally due to accrual for
financial reporting purposes........................... 2,697 1,672
Accrued expenses, principally due to accrual for financial
reporting purposes..................................... 14 1,071
Other..................................................... 4,760 4,086
------- -------
Total gross deferred tax assets........................... 18,553 14,409
Less valuation allowance.................................. (513) (513)
------- -------
Net deferred tax assets........................... $18,040 $13,896
======= =======
Deferred tax liabilities:
Intangible assets......................................... $ 1,904 $ 3,534
Property, plant and equipment, principally due to
differences in depreciation and amortization........... 26,208 6,665
------- -------
Deferred tax liabilities.......................... $28,112 $10,199
======= =======
Based on the Company's historical operating income, management believes
that it is more likely than not that the Company will realize the benefit of its
net deferred tax assets.
43
45
JABIL CIRCUIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
6. STOCKHOLDERS' EQUITY
a. Public Offering
On June 6, 2000, the Company completed an equity offering of 13 million
shares of its Common Stock. The shares were offered at a price of $41.75 per
share for total gross proceeds of $542.8 million. Net proceeds to the Company
were approximately $525.8 million after underwriter's discount and fees and
expenses.
b. Stock Option Plans
As of August 31, 2000, options to purchase a total of 5,356,600 shares were
outstanding under the 1983 and 1989 stock option plans. The Board of Directors
terminated these plans in November 1992, and no additional options may be issued
thereunder. The exercise price of the outstanding options under these plans was
equal to fair market value, as determined by the Company, on the date of grant.
The Company's 1992 Stock Option Plan (the "1992 Plan") provides for the
granting to employees of incentive stock options within the meaning of Section
422 of the Internal Revenue Code and for the granting of non-statutory stock
options to employees and consultants of the Company. The 1992 Plan was adopted
by the Board of Directors in November 1992 and approved by the stockholders in
December 1992. A total of 23,440,000 shares of common stock have been reserved
for issuance under the 1992 Plan. As of August 31, 2000, options to purchase
7,626,027 shares are outstanding under the 1992 Plan.
The exercise price of all incentive stock options granted under the 1992
Plan is to be at least equal to the fair market value of shares of common stock
on the date of grant. With respect to any participant who owns stock
representing more than 10% of the voting power of all classes of stock of the
Company, the exercise price of any stock option granted is to equal at least
110% of the fair market value on the grant date and the maximum term of the
option may not exceed five years. The term of all other options under the 1992
Plan may not exceed ten years.
In connection with the merger with GET, the Company has assumed all options
outstanding under the GET Stock Option Plan (the "GET Plan"). Options under the
GET Plan have been converted into the Company's options and adjusted to effect
the appropriate conversion ratio as specified by the applicable merger
agreement. The options generally vest over three to four years and expire ten
years after the date of grant. Due to the merger between the Company and GET,
the GET Plan was terminated. As a result, no further options may be granted
under the GET Plan.
44
46
JABIL CIRCUIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following table summarizes option activity from September 1, 1997
through August 31, 2000:
OPTIONS WEIGHTED
AVAILABLE OUTSTANDING AVERAGE
FOR GRANT OPTIONS OPTION PRICE
---------- ----------- ------------
Balance at August 31, 1997................................. 939,131 10,589,188 $0.90
Options authorized....................................... 4,967,555 -- --
Options granted.......................................... (1,912,000) 1,912,000 4.73
Options cancelled........................................ 661,516 (661,516) 1.63
Options exercised........................................ -- (878,005) 0.77
---------- ----------
Balance at August 31, 1998................................. 4,656,202 10,961,667 1.53
Options authorized....................................... 6,000,000 -- --
Options granted.......................................... (3,389,200) 3,389,200 7.98
Options cancelled........................................ 394,470 (394,470) 2.18
Options exercised........................................ -- (1,263,531) 1.83
---------- ----------
Balance at August 31, 1999................................. 7,661,472 12,692,866 3.20
Options authorized....................................... 5,234,540 -- --
Options granted.......................................... (3,975,476) 2,752,398 7.70
Options cancelled........................................ 110,991 (110,991) 4.51
Options exercised........................................ -- (2,351,646) 3.02
---------- ----------
Balance at August 31, 2000................................. 9,031,527 12,982,627 7.60
========== ==========
At August 31, 2000, options for 8,391,811 shares were exercisable.
The range of exercise prices, shares, weighted average remaining
contractual life and exercise price for the options outstanding as of August 31,
2000 are presented below:
WEIGHTED-AVERAGE WEIGHTED-
REMAINING AVERAGE
RANGE OF EXERCISE PRICES SHARES CONTRACTUAL LIFE EXERCISE PRICE
- ------------------------ ---------- ---------------- --------------
$ 0.22 - 1.86................................ 6,271,118 1.52 $ 0.32
4.24 - 16.55................................ 4,020,538 7.86 8.08
20.50 - 25.00................................ 2,514,686 9.13 23.08
31.63 - 53.75................................ 176,285 9.44 35.06
---------- ---- ------
$ 0.22 - 24.75................................ 12,982,627 5.07 $ 7.60
========== ==== ======
The range of exercise prices, shares and weighted average exercise price of
the options exercisable at August 31, 2000 are presented below:
WEIGHTED-
SHARES AVERAGE
RANGE OF EXERCISE PRICES EXERCISABLE EXERCISE PRICE
- ------------------------ ----------- --------------
$ .22 - 1.86.............................................. 6,260,398 $ 0.32
4.24 - 16.55.............................................. 1,626,453 8.08
20.50 - 25.00.............................................. 486,479 23.08
31.63 - 53.75.............................................. 18,481 32.67
--------- ------
$ 0.22 - 24.75.............................................. 8,391,811 $ 3.21
========= ======
The per-share weighted-average fair value of stock options granted during
2000, 1999 and 1998 was $16.61, $12.57 and $11.23, respectively, on the date of
the grant using the Black-Scholes option-pricing model with the following
weighted-average assumptions: 2000 -- expected dividend yield of 0%, risk-free
interest rate of 5.75%, expected volatility of 91%, and an expected life of 4
years; 1999 -- expected dividend yield of
45
47
JABIL CIRCUIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
0%, risk-free interest rate of 6.0%, expected volatility of 96%, and an expected
life of 5 years; 1998 -- expected dividend yield of 0%, risk-free interest rate
of 5.6%, expected volatility of 78% and an expected life of 5 years.
c. Stock Purchase Plan
The Company's 1992 Employee Stock Purchase Plan (the "Purchase Plan") was
adopted by the Board of Directors in November 1992 and approved by the
stockholders in December 1992. A total of 5,820,000 shares of common stock have
been reserved for issuance under the Purchase Plan. The Purchase Plan is
intended to qualify under Section 423 of the Internal Revenue Code.
Employees are eligible to participate after 90 days of employment with the
Company. The Purchase Plan permits eligible employees to purchase common stock
through payroll deductions, which may not exceed 10% of an employee's
compensation, as defined, at a price equal to 85% of the fair market value of
the common stock at the beginning or end of the offering period, whichever is
lower. Unless terminated sooner, the Purchase Plan will terminate ten years from
its effective date. As of August 31, 2000, a total of 4,159,943 shares had been
issued under the Purchase Plan.
The per-share weighted-average fair value of stock issued to employees in
2000, 1999 and 1998, respectively, under the Company's 1992 Employee Stock
Purchase Plan was $38.18, $16.32 and $13.76, respectively, using the
Black-Scholes option-pricing model with the identical assumptions as those
listed for stock options granted during those years.
d. Pro Forma Results
The Company applies APB Opinion No. 25 in accounting for its stock options
and, accordingly, no compensation cost has been recognized for its stock options
in the consolidated financial statements. Additionally, no compensation costs
are reflected for the discount related to shares granted to employees under the
1992 Employee Stock Purchase Plan. Had the Company determined compensation cost
based on Statement 123, the Company's net income would have been as follows:
2000 1999 1998
------------------ ----------------- -----------------
NET DILUTED NET DILUTED NET DILUTED
INCOME EPS INCOME EPS INCOME EPS
-------- ------- ------- ------- ------- -------
As reported........................ $145,648 $0.78 $84,819 $ 0.49 $57,469 $ 0.35
Statement 123 Compensation (net of
tax)............................. (27,575) (0.15) (5,635) (0.03) (2,232) (0.01)
Pro forma disclosure............... 118,073 0.63 79,184 0.46 55,237 0.34
As discussed in Note 1(m) the disclosure presented above represents only
the estimated fair value of stock options granted in fiscal 1996 and subsequent
years. Such disclosure is not necessarily indicative of the fair value of stock
options that could be granted by the Company in future fiscal years or of all
options currently outstanding.
7. CONCENTRATION OF RISK AND SEGMENT DATA
a. Concentration of Risk
Financial instruments that potentially subject the Company to
concentrations of credit risk consist principally of trade receivables. The
Company performs ongoing credit evaluations of its customers and generally does
not require collateral. The Company maintains reserves for potential credit
losses.
46
48
JABIL CIRCUIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Sales of the Company's products are concentrated among specific customers.
Sales to the following customers, expressed as a percentage of consolidated net
revenue, and the percentage of accounts receivable for each customer, were as
follows:
PERCENTAGE OF
PERCENTAGE OF ACCOUNTS
NET REVENUE RECEIVABLE
YEAR ENDED AUGUST 31, AUGUST 31,
----------------------- --------------
2000 1999 1998 2000 1999
----- ----- ----- ----- -----
Cisco Systems, Inc.................................. 20% 18% 18% 12% *
Dell Computer Corporation........................... 16 * * 25 *
Hewlett-Packard Company............................. 14 22 * * 16%
Lucent Technologies................................. 10 * * * *
3Com Corporation.................................... * * 16 * *
- ---------------
* Amount was less than 10% of total
b. Segment Data
The Company adopted the Financial Accounting Standards Board Statement No.
131, Disclosures about Segments of an Enterprise and Related Information in
fiscal year 1999. Statement No. 131 establishes standards for reporting
information about segments in financial statements. Operating segments are
defined as components of an enterprise about which separate financial
information is available and that is evaluated regularly by the chief operating
decision maker in deciding how to allocate resources and in assessing
performance.
The Company derives its revenues from providing manufacturing services to
major electronic OEM's on a contract basis. Operating segments consist of the
Company's manufacturing locations. The services provided, the manufacturing
processes, class of customers and the order fulfillment process is similar and
generally interchangeable across manufacturing locations. The Company has
aggregated its operating segments into the Electronic Manufacturing Services
segment.
The following table sets forth segment information (in thousands):
YEAR ENDED AUGUST 31,
------------------------------------
2000 1999 1998
---------- ---------- ----------
Net revenue........................................ $3,558,321 $2,238,391 $1,484,245
Depreciation and amortization...................... 99,337 63,417 42,333
Interest (income).................................. (7,385) (4,536) (238)
Interest expense................................... 7,605 7,110 3,876
Segment income before income tax................... 222,908 152,348 116,437
Corporate and non-recurring charges................ (10,212) (19,045) (33,396)
---------- ---------- ----------
Income before income taxes......................... $ 212,696 $ 133,303 $ 83,041
========== ========== ==========
Long-lived assets.................................. $ 630,922 $ 374,308 $ 273,726
Total assets....................................... 2,018,192 1,035,421 625,173
Capital expenditure................................ 333,139 168,674 111,269
47
49
JABIL CIRCUIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The Company operates in the following geographic areas: the United States,
China, Mexico, Malaysia, Scotland and Other. Sales to unaffiliated customers are
based on the Company's manufacturing location providing services. The following
table sets forth information concerning these geographic areas (in thousands):
YEAR ENDED AUGUST 31,
------------------------------------
2000 1999 1998
---------- ---------- ----------
Revenue:
United States.................................... $2,014,669 $1,341,927 $ 869,849
China............................................ 234,571 238,045 206,871
Mexico........................................... 561,834 197,039 41,570
Malaysia......................................... 272,999 138,715 143,431
Scotland......................................... 266,088 140,452 211,907
Other............................................ 208,160 182,213 10,617
---------- ---------- ----------
$3,558,321 $2,238,391 $1,484,245
========== ========== ==========
Long-lived assets:
United States.................................... $ 334,665 $ 189,172 $ 136,796
China............................................ 40,201 41,557 37,402
Mexico........................................... 116,551 63,344 30,499
Malaysia......................................... 49,003 27,272 27,235
Scotland......................................... 40,093 34,170 27,821
Other............................................ 50,409 18,793 13,973
---------- ---------- ----------
$ 630,922 $ 374,308 $ 273,726
========== ========== ==========
8. FOREIGN CURRENCY EXCHANGE CONTRACTS
The purpose of the Company's foreign currency hedging activity is to
protect the Company from the risk that the eventual dollar net cash flows
resulting from the sale and purchase of products in foreign currencies will be
adversely affected by changes in the exchange rates. It is the Company's policy
to utilize derivative financial instruments to reduce foreign exchange risks
where internal netting strategies cannot be effectively employed. The Company
does not hold or issue financial instruments for trading purposes. Fluctuations
in the value of hedging instruments are offset by fluctuations in the underlying
exposures being hedged, and deferred gains and losses on these contracts are
recognized when the future purchases and sales being hedged are realized.
The Company had no foreign currency exchange contracts outstanding at
August 31, 2000 or August 31, 1999.
48
50
JABIL CIRCUIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
9. COMMITMENTS AND CONTINGENCIES
a. Lease Agreements
The Company leases certain facilities and computer services under
non-cancelable operating leases. The future minimum lease payments under
non-cancelable operating leases outstanding August 31, 2000 are as follows (in
thousands):
FISCAL YEAR ENDING AUGUST 31,
- -----------------------------
2001................................................... $ 25,959
2002................................................... 25,301
2003................................................... 20,339
2004................................................... 17,951
2005................................................... 12,636
Thereafter............................................. 46,490
--------
Total minimum lease payments...................... $148,676
========
Total rent expense for operating leases was approximately $24.6 million,
$14.7 million, and $7.7 million for the years ended August 31, 2000, 1999 and
1998, respectively.
b. Litigation
The Company is party to certain lawsuits in the ordinary course of
business. Management 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.
10. ACQUISITIONS
On August 3, 1998 the Company acquired certain assets (primarily raw
material inventory and property, plant and equipment) relating to the LaserJet
Formatter Manufacturing Organization business unit of Hewlett-Packard Company
located in Boise, Idaho, and Bergamo, Italy. The acquisition price was
approximately $80 million and was accounted for under the purchase method of
accounting. The acquisition resulted in goodwill and other intangible assets of
approximately $11.2 million, which is being amortized on a straight-line basis
over ten years.
Simultaneously, the Company entered into a manufacturing arrangement to
continue to produce the LaserJet circuit board assemblies being produced by the
Hewlett-Packard operations in Boise and Bergamo.
In conjunction with the HP Acquisition, the Company recorded an
acquisition-related charge of $20.8 million consisting of an in-process
technology write-off of $6.5 million, work force related expenses of $10.0
million, and $4.3 million of other expenses.
On September 1, 1999 the Company acquired, through our Jabil Global
Services subsidiary, the net assets of EFTC Services, Inc., an electronic
product service and repair business. Jabil Global Services continues to offer
repair and warranty services for existing and future customers from its
hub-based operations in Memphis, Tennessee; Louisville, Kentucky; and Tampa,
Florida. The purchase price of approximately $27 million was paid in cash. The
acquisition was accounted for as a purchase and resulted in approximately $18
million of goodwill, which is being amortized on a straight-line basis over a
period of 15 years. The consolidated financial statements include the operating
results of the acquired business from the date of acquisition.
On September 13, 1999 the Company issued approximately 10.2 million shares
of our common stock for all of the outstanding common stock of GET
Manufacturing, Inc., a China-based electronics manufacturing
49
51
JABIL CIRCUIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
services provider. The business combination was accounted for as a
pooling-of-interests and, accordingly, our historical consolidated financial
statements presented herein have been restated to include the accounts and
results of operations of GET Manufacturing, Inc.
In connection with the merger, the Company recorded a merger-related charge
of $7.0 million consisting of professional fees and other expenses in the fourth
quarter of fiscal year 1999. In the first quarter of fiscal year 2000, we
incurred a merger-related charge of $5.2 million ($4.7 million after-tax)
consisting of key employee severance and legal and professional fees.
On February 1, 2000, the Company acquired the net assets of Bull
Information Technology, an electronic manufacturing service provider. The
business operates in the city of Contagem, State of Minas Gerais, in the Belo
Horizonte region Brazil. The purchase price of approximately $6 million was paid
in cash. The acquisition was accounted for as a purchase and resulted in
approximately $5 million of goodwill, which is being amortized, on a
straight-line basis over a period of 10 years. The consolidated financial
statements include the operating results of the acquired business from the date
of the acquisition. Pro forma results of operations have not been presented
because the effect of the acquisition was not material.
On July 20, 2000 the Company acquired the share capital of Telenor
Technology Services Limited, a repair and logistics services division of Telenor
Mobile Communications AS, a Norwegian provider of telecommunication, data and
media communication services. The purchase price of approximately $4 million was
paid in cash. The acquisition was accounted for as a purchase and resulted in
approximately $2 million of goodwill, which is being amortized on a
straight-line basis over a period of 15 years. The acquired operations allow
Jabil Global Services to offer circuit board repair and warranty services for
European customers from Dublin, Ireland. The consolidated financial statements
include the operating results of the acquired business from the date of
acquisition. Pro forma results of operations have not been presented because the
effect of the acquisition was not material.
11. NEW ACCOUNTING PRONOUNCEMENTS
Statement of Financial Accounting Standards No. 133 -- Accounting for
Derivative Instruments and Hedging Activities. As amended by Statements 137 and
138, Statement 133 establishes methods of accounting for derivative financial
instruments and hedging activities related to those instruments as well as other
hedging activities. The Company anticipates that the adoption of Statement 133
will not have a material impact on its financial position, results of operations
or cash flows. The Company will implement Statement 133 beginning in the first
quarter of its fiscal year ending August 31, 2001.
SEC Staff Accounting Bulletin Number 101 -- Revenue Recognition in
Financial Statements. We will be required to implement this bulletin in the
fourth fiscal quarter of our fiscal year ending August 31, 2001. As we have
historically made a practice of recognizing revenue in accordance with the
provisions of this bulletin as currently interpreted, we do not anticipate that
the adoption of the bulletin will have a material impact on our consolidated
financial statements.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 on this 27th day of
November 2000.
JABIL CIRCUIT, INC.
By: /s/ TIMOTHY L. MAIN
------------------------------------
Timothy L. Main
Date: November 27, 2000
POWER OF ATTORNEY
KNOW ALL THESE PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Timothy L. Main and Chris A. Lewis and
each of them, jointly and severally, his attorneys-in-fact, each with full power
of substitution, for him in any and all capacities, to sign any and all
amendments to this Report on Form 10-K, and to file the same, with exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, hereby ratifying and confirming all that each said
attorneys-in-fact or his substitute or substitutes, may do or cause to be done
by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report on Form 10-K has been signed below by the following persons on behalf of
the Registrant and in the capacities and on the dates indicated:
SIGNATURE TITLE DATE
--------- ----- ----
/s/ WILLIAM D. MOREAN Chairman of the Board of November 27, 2000
- ----------------------------------------------------- Directors
William D. Morean
/s/ THOMAS A. SANSONE Vice Chairman of the Board November 27, 2000
- ----------------------------------------------------- of Directors
Thomas A. Sansone
/s/ TIMOTHY L. MAIN President and Chief November 27, 2000
- ----------------------------------------------------- Executive Officer
Timothy L. Main (Principal Executive
Officer)
/s/ CHRIS A. LEWIS Chief Financial Officer November 27, 2000
- ----------------------------------------------------- (Principal Financial and
Chris A. Lewis Accounting Officer)
/s/ LAWRENCE J. MURPHY Director November 27, 2000
- -----------------------------------------------------
Lawrence J. Murphy
/s/ MEL S. LAVITT Director November 27, 2000
- -----------------------------------------------------
Mel S. Lavitt
/s/ STEVEN A. RAYMUND Director November 27, 2000
- -----------------------------------------------------
Steven A. Raymund
/s/ FRANK NEWMAN Director November 27, 2000
- -----------------------------------------------------
Frank Newman
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EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION
- ----------- -----------
3.1(9) -- Registrant's Certificate of Incorporation, as amended.
3.2(9) -- Registrant's Bylaws, as amended.
4.1(2) -- Form of Certificate for Shares of Registrant's Common Stock.
10.1(1)(7) -- 1983 Stock Option Plan and forms of agreement used
thereunder.
10.2(1)(7) -- 1989 Non-Qualified Stock Option Plan and forms of agreement
used thereunder.
10.3(7)(10) -- 1992 Stock Option Plan and forms of agreement used
thereunder, as amended.
10.4(7)(11) -- 1992 Employee Stock Purchase Plan and forms of agreement
used thereunder, as amended.
10.5(1)(7) -- Restated cash or deferred profit sharing plan under section
401(k).
10.6(1)(7) -- Form of Indemnification Agreement between Registrant and its
officers and Directors.
10.7(1) -- Letter Agreement dated November 27, 1992 between Registrant
and Scottish Office Industry Department relating to grant to
establish Scottish facility.
10.8(3)(7) -- Amendment to 1989 Non-Qualified Stock Option Plan.
10.9(4) -- Lease Agreement dated October 1, 1997 between registrant and
Charrington Estates.
10.10(4) -- Lease Agreement dated October 30, 1997 between registrant
and Teachers Insurance and Annuity Association.
10.11(5) -- Lease Agreement dated May 12, 1998 between registrant and
Lincoln-RECP Great Oaks OPCO. LLC.
10.12(6) -- Agreement and Plan of Merger among Jabil Circuit, Inc., JG
Acquisition, Inc., GET Manufacturing, Inc. and Mr. Shin Fang
dated August 11, 1999 and amended September 13, 1999.
10.13(8) -- Lease Agreement dated May 16, 2000 for 6835 Via Del Oro, San
Jose, California between Registrant and The Realty
Associates Fund IV.
10.14(9) -- Amended and Restated Loan Agreement dated as of April 7,
2000 between Registrant and certain banks and Bank One and
Suntrust Bank as agents for banks.
10.15 -- Receivables Sale Agreement dated as of August 10, 2000 among
Jabil Circuit, Inc. and Jabil Circuit of Texas, L.P. as
originators and Jabil Circuit Financial, Inc. as buyer.
10.16 -- Receivables Purchase Agreement dated as of August 10, 2000
among Jabil Circuit Financial, Inc. as seller and servicer
and Jabil Circuit, Inc. as sub-servicer and Falcon Asset
Securitization Corporation and Bank One as agent for Falcon.
21.1 -- List of Subsidiaries.
23.1 -- Independent Auditors' Consent.
23.2 -- Independent Auditors' Consent.
24.1 -- Power of Attorney (See Signature page).
27.1 -- Financial Data Schedule (for SEC use only).
- ---------------
(1) Incorporated by reference to the Registration Statement on Form S-1 filed
by the Registrant on March 3, 1993 (File No. 33-58974).
(2) Incorporated by reference to exhibit Amendment No. 1 to the Registration
Statement on Form S-1 filed by the Registrant on March 17, 1993 (File No.
33-58974).
(3) Incorporated by reference to exhibit the Registrant's Quarterly Report on
Form 10-Q for the quarter ended February 28, 1994.
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(4) Incorporated by reference to exhibit to the Registrant's Annual Report on
Form 10-K for the fiscal year ended August 31, 1997.
(5) Incorporated by reference to exhibit to the Registrant's Annual Report on
Form 10-K for the fiscal year ended August 31, 1998.
(6) Incorporated by reference to exhibit to the Registrant's Current Report on
Form 8-K filed by the Registrant on September 28, 1999.
(7) Indicates management compensatory plan, contract or arrangement.
(8) Incorporated by reference to exhibit to the Registrant's Quarterly Report
on Form 10-Q for the quarter ended May 31, 2000.
(9) Incorporated by reference to exhibit to the Registrant's Quarterly Report
on Form 10-Q for the quarter ended February 29, 2000.
(10) Incorporated by reference to the Registration Statement on Form S-8 filed
by the Registrant on August 31, 1999.
(11) Incorporated by reference to the Registration Statement on Form S-8 filed
by the Registrant on October 10, 1997.
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SCHEDULE II
JABIL CIRCUIT, INC. AND SUBSIDIARIES
SCHEDULE OF VALUATION AND QUALIFYING ACCOUNTS
ADDITIONS
BALANCE AT CHARGED TO BALANCE AT
BEGINNING COSTS AND WRITE- END OF
OF PERIOD EXPENSES OFFS PERIOD
---------- ---------- ------ ----------
(IN THOUSANDS)
YEAR ENDED AUGUST 31, 2000:
Allowance for uncollectible accounts receivable......... $ 4,639 $ 648 $ 279 $ 5,008
Reserve for excess and obsolete inventory............... $12,869 $7,562 $6,423 $14,008
======= ====== ====== =======
YEAR ENDED AUGUST 31, 1999:
Allowance for uncollectible accounts receivable......... $ 3,948 $1,246 $ 555 $ 4,639
Reserve for excess and obsolete inventory............... $12,193 $6,233 $5,557 $12,869
======= ====== ====== =======
YEAR ENDED AUGUST 31, 1998:
Allowance for uncollectible accounts receivable......... $ 3,696 $1,677 $1,425 $ 3,948
Reserve for excess and obsolete inventory............... $11,560 $6,133 $5,500 $12,193
======= ====== ====== =======
See accompanying independent auditors' report.
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