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8-K - 8-K - JABIL INCd783053d8k.htm

Exhibit 99.1

 

LOGO

Jabil Posts Fourth Quarter & Fiscal Year 2014 Results

Results Exceed Expectations

St. Petersburg, FL – September 24, 2014...Today Jabil Circuit, Inc. (NYSE: JBL), announced preliminary, unaudited financial results for its fourth quarter and full fiscal year, ended August 31, 2014.

“We saw strength from a variety of our end-markets in our fiscal fourth quarter and are pleased with the momentum of the business as we head into Fiscal 2015,” said Jabil’s Chief Executive Officer, Mark Mondello.

The company reported fourth quarter revenue of $4.1 billion and fiscal year revenue of $15.8 billion.

Jabil’s reporting segments delivered the following revenue results for the company’s fourth fiscal quarter:

 

    Diversified Manufacturing Services: $1.8 billion.

 

    Enterprise & Infrastructure: $1.4 billion.

 

    High Velocity Systems: $0.9 billion.

Generally accepted accounting principles (GAAP) operating income for the fourth quarter of fiscal year 2014 was $46.6 million and GAAP net diluted loss per share was ($0.13) for the fourth quarter. The company indicated that $19.7 million in restructuring activity impacted the fourth quarter GAAP operating income.

GAAP operating income for the full fiscal year, ended August 31, 2014, was $204.1 million. GAAP net diluted earnings per share was $1.19 for the fiscal year. The company indicated that $85.4 million in restructuring costs during the year negatively impacted GAAP operating income and that $223.3 million in gain on sale of discontinued operations, net of tax positively impacted the fiscal year GAAP net income.

Core operating income (as defined below) for the full fiscal year was $345.4 million and core diluted earnings per share (as defined below) was $0.53.

(Definitions used: “GAAP” means U.S. generally accepted accounting principles. Jabil defines core operating income as GAAP operating income before amortization of intangibles, stock-based compensation expense and related charges, restructuring and related charges, distressed customer charges, acquisition costs and certain purchase accounting adjustments, loss on disposal of subsidiaries, settlement of receivables and related charges, impairment of notes receivable and related charges and goodwill impairment charges. Jabil defines core earnings as GAAP net (loss) income before amortization of intangibles, stock-based compensation expense and related charges, restructuring and related charges, distressed customer charges, acquisition costs and certain purchase accounting adjustments, loss on disposal of subsidiaries, settlement of receivables and related charges, impairment of notes receivable and related charges, goodwill impairment charges, income (loss) from discontinued operations, gain on sale of discontinued operations and certain other expenses, net of tax and certain deferred tax valuation allowance charges. Jabil defines core diluted earnings per share as core earnings divided by the weighted average number of outstanding diluted shares as determined under GAAP. Jabil calculates its core return on invested capital by annualizing its after-tax core operating income for its most recently ended quarter and dividing that by a two quarter average net invested capital base. Jabil reports core operating income, core earnings, core diluted and basic earnings per share and core return on invested capital to provide investors an additional method for assessing operating income, earnings, diluted earnings per share and return on invested capital from what it believes are its core manufacturing operations. See the accompanying reconciliation of Jabil’s core operating income to its GAAP operating income, its calculation of core earnings and core diluted earnings per share to its GAAP net (loss) income and GAAP (loss) earnings per share, its calculation of core return on invested capital and additional information in the supplemental information.)


Quarterly Results:    Q4 2014    Q4 2013

Net revenue

   $4.1 billion    $4.5 billion

GAAP operating income

   $46.6 million    $72.6 million

GAAP net (loss) income

   ($26.2) million    $127.0 million

GAAP net diluted (loss) earnings per share

   ($0.13)    $0.61

GAAP return on invested capital

   1.5%    20.6%

Core operating income

   $79.5 million    $159.2 million

Core earnings

   $10.2 million    $95.2 million

Core diluted earnings per share

   $0.05    $0.46

Core return on invested capital

   5.8%    17.7%

Fiscal Year Results

   Fiscal 2014    Fiscal 2013

Net revenue

   $15.8 billion    $17.2 billion

GAAP operating income

   $204.1 million    $452.4 million

GAAP net income

   $241.3 million    $371.5 million

GAAP net diluted earnings per share

   $1.19    $1.79

GAAP return on invested capital

   4.1%    15.3%

Core operating income

   $345.4 million    $642.1 million

Core earnings

   $108.1 million    $397.8 million

Core diluted earnings per share

   $0.53    $1.91

Core return on invested capital

   7.8%    18.0%

Business Update

“Fiscal 2014 was a challenging year in which we made several tough, but thoughtful, decisions and investments. We believe these investments will support future growth opportunities for Jabil,” said Mark Mondello, Chief Executive Officer. “We remain confident in our ability to deliver core earnings per share in the range of $1.65 to $1.95 in fiscal 2015,” Mondello added.

Management maintains its fiscal year 2015 outlook of $1.65 to $1.95 core earnings per share. Jabil will be reporting its business in two segments: Electronics Manufacturing Services and Diversified Manufacturing Services. Electronics Manufacturing includes business formerly reported in High Velocity, Enterprise & Infrastructure and Industrial & Energy. Diversified Manufacturing will include Jabil’s Nypro businesses of healthcare & packaging, as well as its Green Point business, including mobility, consumer lifestyles and wearables.

Year over Year First Quarter Segment Revenue Guidance:

 

    Diversified Manufacturing Services to increase 6 percent.

 

    Electronics Manufacturing Services to decline 5 percent.

Fiscal Q1 2015 Guidance:

 

Net revenue    $4.2 billion to $4.4 billion

GAAP operating income

   $99 million to $139 million

GAAP net diluted earnings per share

   $0.24 to $0.40 per diluted share

Core operating income

   $135 million to $165 million

Core earnings per share

   $0.41 to $0.53 per diluted share

GAAP net diluted earnings per share for the first quarter of fiscal year 2015 are currently estimated to include $0.03 per share for amortization of intangibles, $0.07 per share for stock-based compensation expense and related charges and $0.03 to $0.07 per share for restructuring and related charges.


FORWARD LOOKING STATEMENT: This news release contains forward-looking statements, including those regarding our anticipated financial results for our fourth quarter of fiscal year 2014 and full fiscal year 2014; the momentum of the business as we head into fiscal 2015; our belief that the investments we made in fiscal 2014 will support future growth opportunities for Jabil; our goal of delivering certain core earnings per share performance in fiscal 2015; and our currently expected first quarter of fiscal year 2015 net revenue (including that of our segments), core and GAAP operating income, core and GAAP earnings per share results and the components thereof. The statements in this news release are based on current expectations, forecasts and assumptions involving risks and uncertainties that could cause actual outcomes and results to differ materially. These risks and uncertainties include, but are not limited to: our determination as we finalize our financial results for our fourth quarter of fiscal year 2014 and our full fiscal year 2014 that our financial results and conditions differ from our current preliminary unaudited numbers set forth herein; fluctuations in our stock’s market price; fluctuations in operating results and cash flows; unexpected, adverse seasonal impacts on demand; changes in macroeconomic conditions, both in the U.S. and internationally; the occurrence of, success and expected financial results from, the expected multiple product ramps; our financial performance during and after the current economic conditions; our ability to maintain and improve costs, quality and delivery for our customers; risks and costs inherent in litigation; whether our realignment of our capacity will adversely affect our cost structure, ability to service customers and labor relations; our ability to take advantage of perceived benefits of offering customers vertically integrated services; changes in technology; competition; anticipated growth for us and our industry that may not occur; managing rapid growth; managing rapid declines in customer demand and other related customer challenges that may occur; our ability to successfully consummate acquisitions and divestitures; managing the integration of businesses we acquire; risks associated with international sales and operations; retaining key personnel; our dependence on a limited number of large customers; business and competitive factors generally affecting the electronic manufacturing services industry, our customers and our business; other factors that we may not have currently identified or quantified; and other risks, relevant factors and uncertainties identified in our Annual Report on Form 10-K for the fiscal year ended August 31, 2013, subsequent Reports on Forms 10-Q and 8-K and our other securities filings. Jabil disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Supplemental Information: The financial results disclosed in this release include certain measures calculated and presented in accordance with GAAP. In addition to the GAAP financial measures, Jabil provides supplemental, non-GAAP financial measures to facilitate evaluation of Jabil’s core operating performance. The non-GAAP financial measures disclosed in this release exclude certain amounts that are included in the most directly comparable GAAP measures. The non-GAAP or core financial measures disclosed in this release do not have standard meanings and may vary from the non-GAAP financial measures used by other companies. Management believes core financial measures (which exclude the effects of the amortization of intangibles, stock-based compensation expense and related charges, restructuring and related charges, distressed customer charges, acquisition costs and certain purchase accounting adjustments, loss on disposal of subsidiaries, settlement of receivables and related charges, impairment of notes receivable and related charges, goodwill impairment charges, income (loss) from discontinued operations, gain on sale of discontinued operations and certain other expenses, net of tax and certain deferred tax valuation allowance charges) are a useful measure that facilitates evaluating the past and future performance of Jabil’s ongoing operations on a comparable basis. Jabil reports core operating income, core return on invested capital, core earnings and core diluted and basic earnings per share to provide investors an additional method for assessing operating income, earnings and earnings per share from what it believes are its core manufacturing operations. Included in this release are Condensed Consolidated Statements of Operations as well as a reconciliation of the disclosed core financial measures to the most directly comparable GAAP financial measures.

Company Conference Call Information: Jabil will hold a conference call to discuss the earnings for the fourth quarter and full fiscal year, ended August 31, 2014, today at 4:30 p.m. ET live on the Internet at http://www.jabil.com. The call will be recorded and archived on the web at http://www.jabil.com. A taped replay of the conference call will also be available September 24, 2014 at approximately 7:30 p.m. ET through midnight on October 1, 2014. To access the replay, call (855) 859-2056 from within the United States, or (404) 537-3406 outside the United States. The pass code is: 2929222. An archived webcast of the conference call will be available at http://www.jabil.com/investors/.

About Jabil

Jabil is an electronic product solutions company providing comprehensive electronics design and manufacturing product management services to global electronics and technology companies. Offering complete product supply chain management from facilities in 24 countries, Jabil provides comprehensive, individualized-focused solutions to customers in a broad range of industries. Jabil common stock is traded on the New York Stock Exchange under the symbol, “JBL”. Further information is available on Jabil’s website: jabil.com.

Investor & Media Contact:

Beth Walters

Senior Vice President, Investor Relations & Communications

Jabil Circuit, Inc.

(727) 803-3511

beth_walters@jabil.com


JABIL CIRCUIT, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

 

     August 31,
2014
(Unaudited)
    August 31,
2013
 
ASSETS     

Current assets:

    

Cash and cash equivalents

   $ 1,000,249      $ 1,011,373   

Accounts receivable, net

     1,208,516        1,168,954   

Inventories

     2,008,077        2,118,716   

Prepaid expenses and other current assets

     1,035,162        1,141,919   

Income taxes receivable

     22,400        12,269   

Deferred income taxes

     64,944        45,650   

Assets of discontinued operations

     19,669        321,364   
  

 

 

   

 

 

 

Total current assets

     5,359,017        5,820,245   

Property, plant and equipment, net

     2,271,705        2,309,320   

Goodwill and intangible assets, net

     627,700        609,445   

Deferred income taxes

     92,702        91,383   

Other assets

     128,622        100,801   

Non-current assets of discontinued operations

     —          222,587   
  

 

 

   

 

 

 

Total assets

   $ 8,479,746      $ 9,153,781   
  

 

 

   

 

 

 
LIABILITIES AND EQUITY     

Current liabilities:

    

Current installments of notes payable, long-term debt and capital lease obligations

   $ 12,960      $ 215,448   

Accounts payable

     3,060,814        3,191,328   

Accrued expenses

     1,207,483        1,217,088   

Income taxes payable

     27,623        38,323   

Deferred income taxes

     5,094        6,004   

Liabilities of discontinued operations

     7,123        196,243   
  

 

 

   

 

 

 

Total current liabilities

     4,321,097        4,864,434   

Notes payable, long-term debt and capital lease obligations, less current installments

     1,669,585        1,690,418   

Other liabilities

     79,471        77,145   

Income tax liabilities

     87,555        76,315   

Deferred income taxes

     61,670        58,047   

Non-current liabilities of discontinued operations

     —          31,855   
  

 

 

   

 

 

 

Total liabilities

     6,219,378        6,798,214   
  

 

 

   

 

 

 

Commitments and contingencies

Equity:

    

Jabil Circuit, Inc. stockholders’ equity:

    

Preferred stock

     —          —     

Common stock

     244        238   

Additional paid-in capital

     1,874,219        1,853,409   

Retained earnings

     1,245,772        1,071,175   

Accumulated other comprehensive income

     86,962        81,248   

Treasury stock, at cost

     (965,369     (670,783
  

 

 

   

 

 

 

Total Jabil Circuit, Inc. stockholders’ equity

     2,241,828        2,335,287   
  

 

 

   

 

 

 

Noncontrolling interests

     18,540        20,280   
  

 

 

   

 

 

 

Total equity

     2,260,368        2,355,567   
  

 

 

   

 

 

 

Total liabilities and equity

   $ 8,479,746      $ 9,153,781   
  

 

 

   

 

 

 


JABIL CIRCUIT, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except for per share data)

(Unaudited)

 

     Three months ended     Twelve months ended  
     August 31,
2014
    August 31,
2013
    August 31,
2014
    August 31,
2013
 

Net revenue

   $ 4,056,245      $ 4,513,694      $ 15,762,146      $ 17,249,493   

Cost of revenue

     3,793,993        4,199,852        14,736,543        16,037,303   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     262,252        313,842        1,025,603        1,212,190   

Operating expenses:

        

Selling, general and administrative

     177,934        172,513        675,730        614,295   

Research and development

     7,224        7,075        28,611        28,412   

Amortization of intangibles

     5,677        4,363        23,857        10,954   

Restructuring and related charges

     19,717        57,331        85,369        80,513   

Loss on disposal of subsidiaries

     5,057        —          7,962        —     

Impairment of notes receivable and related charges

     —          —          —          25,597   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     46,643        72,560        204,074        452,419   

Interest and other, net

     32,243        32,558        131,951        125,305   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income from continuing operations before tax

     14,400        40,002        72,123        327,114   

Income tax expense (benefit)

     32,788        (73,685     73,711        7,631   
  

 

 

   

 

 

   

 

 

   

 

 

 

(Loss) income from continuing operations, net of tax

     (18,388     113,687        (1,588     319,483   
  

 

 

   

 

 

   

 

 

   

 

 

 

Discontinued operations:

        

(Loss) income from discontinued operations, net of tax

     (961     13,103        20,554        50,608   

(Loss) gain on sale of discontinued operations, net of tax

     (6,243     —          223,299        —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Discontinued operations, net of tax

     (7,204     13,103        243,853        50,608   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net (loss) income

     (25,592     126,790        242,265        370,091   

Net income (loss) attributable to noncontrolling interests, net of tax

     605        (229     952        (1,391
  

 

 

   

 

 

   

 

 

   

 

 

 

Net (loss) income attributable to Jabil Circuit, Inc.

   $ (26,197   $ 127,019      $ 241,313      $ 371,482   
  

 

 

   

 

 

   

 

 

   

 

 

 

(Loss) earnings per share attributable to the stockholders of Jabil Circuit, Inc.:

        

Basic:

        

(Loss) income from continuing operations, net of tax

   $ (0.10   $ 0.56      $ (0.01   $ 1.58   
  

 

 

   

 

 

   

 

 

   

 

 

 

Discontinued operations, net of tax

   $ (0.04   $ 0.06      $ 1.20      $ 0.25   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net (loss) income

   $ (0.13   $ 0.63      $ 1.19      $ 1.83   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted:

        

(Loss) income from continuing operations, net of tax

   $ (0.10   $ 0.55      $ (0.01   $ 1.54   
  

 

 

   

 

 

   

 

 

   

 

 

 

Discontinued operations, net of tax

   $ (0.04   $ 0.06      $ 1.20      $ 0.24   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net (loss) income

   $ (0.13   $ 0.61      $ 1.19      $ 1.79   
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average shares outstanding:

        

Basic

     198,053        202,959        202,497        203,096   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     198,053        208,502        202,497        207,815   
  

 

 

   

 

 

   

 

 

   

 

 

 


JABIL CIRCUIT, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

     Twelve months ended  
     August 31,
2014
    August 31,
2013
 

Cash flows from operating activities:

    

Net income

   $ 242,265      $ 370,091   

Adjustments to reconcile net income to net cash provided by operating activities:

    

Depreciation and amortization

     487,278        418,117   

Gain on sale of discontinued operations

     (230,878     —     

Restructuring and related charges

     42,534        2,058   

Provision for allowance for doubtful accounts

     16,268        —     

Recognition of stock-based compensation expense and related charges

     10,624        68,383   

Deferred income taxes

     (38,971     (123,165

Impairment of notes receivable and related charges

     —          25,597   

Excess tax benefits related to stock awards

     (782     (14,605

Loss on disposal of subsidiaries

     7,962        —     

Other, net

     6,916        10,558   

Changes in operating assets and liabilities, exclusive of net assets acquired:

    

Accounts receivable

     (116,458     750   

Inventories

     160,790        50,229   

Prepaid expenses and other current assets

     83,128        (82,756

Other assets

     (5,038     (5,025

Accounts payable and accrued expenses

     (177,586     485,972   

Income taxes

     10,805        7,685   
  

 

 

   

 

 

 

Net cash provided by operating activities

     498,857        1,213,889   
  

 

 

   

 

 

 

Cash flows from investing activities:

    

Proceeds from sale of discontinued operations and subsidiaries, net of cash

     531,189        —     

Acquisition of property, plant and equipment

     (624,060     (736,858

Cash paid for business and intangible asset acquisitions, net of cash acquired

     —          (650,054

Proceeds from sale of property, plant and equipment

     161,138        15,792   

Issuance of notes receivable

     (4,000     —     

Investments in non-marketable equity securities

     (3,600     (3,342
  

 

 

   

 

 

 

Net cash provided by (used in) investing activities

     60,667        (1,374,462
  

 

 

   

 

 

 

Cash flows from financing activities:

    

Borrowings under debt agreements

     6,175,953        5,764,400   

Payments towards debt agreements

     (6,400,089     (5,586,738

Payments to acquire treasury stock

     (260,274     (129,262

Dividends paid to stockholders

     (68,211     (67,181

Net proceeds from exercise of stock options and issuance of common stock under employee stock purchase plan

     15,771        18,285   

Debt issuance costs

     (2,936     —     

Treasury stock minimum tax withholding related to vesting of restricted stock

     (34,312     (20,290

Sale of noncontrolling interest, net of cash

     (1,783     —     

Cash paid to purchase noncontrolling interest

     (1,720     (17,500

Excess tax benefit related to stock awards

     782        14,605   

Capital contribution to noncontrolling interest

     —          316   

Bank overdraft

     —          372   
  

 

 

   

 

 

 

Net cash used in financing activities

     (576,819     (22,993
  

 

 

   

 

 

 

Effect of exchange rate changes on cash and cash equivalents

     6,171        (22,317
  

 

 

   

 

 

 

Net decrease in cash and cash equivalents

     (11,124     (205,883

Cash and cash equivalents at beginning of period

     1,011,373        1,217,256   
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 1,000,249      $ 1,011,373   
  

 

 

   

 

 

 


JABIL CIRCUIT, INC. AND SUBSIDIARIES

SUPPLEMENTAL DATA

RECONCILIATION OF GAAP FINANCIAL RESULTS TO NON-GAAP MEASURES

(in thousands, except for per share data)

(Unaudited)

 

     Three months ended     Twelve months ended  
     August 31,
2014
    August 31,
2013
    August 31,
2014
    August 31,
2013
 

Operating income (GAAP)

   $ 46,643      $ 72,560      $ 204,074      $ 452,419   

Amortization of intangibles

     5,677        4,363        23,857        10,954   

Stock-based compensation expense and related charges

     2,367        14,954        8,994        62,574   

Restructuring and related charges

     19,717        57,331        85,369        80,513   

Distressed customer charges

     —          —          15,113        —     

Acquisition costs and certain purchase accounting adjustments

     —          10,037        —          10,037   

Loss on disposal of subsidiaries

     5,057        —          7,962        —     

Impairment of notes receivable and related charges

     —          —          —          25,597   
  

 

 

   

 

 

   

 

 

   

 

 

 

Core operating income (Non-GAAP)

   $ 79,461      $ 159,245      $ 345,369      $ 642,094   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net (loss) income attributable to Jabil Circuit, Inc. (GAAP)

   $ (26,197   $ 127,019      $ 241,313      $ 371,482   

Amortization of intangibles, net of tax

     5,644        (19,634     20,728        (13,286

Stock-based compensation expense and related charges, net of tax

     2,019        15,151        7,903        62,737   

Restructuring and related charges, net of tax

     17,449        56,161        72,892        78,138   

Distressed customer charges, net of tax

     (991     —          10,243        —     

Acquisition costs and certain purchase accounting adjustments, net of tax

     —          (70,358     (9,064     (70,358

Loss on disposal of subsidiaries, net of tax

     5,057        —          7,962        —     

Impairment of notes receivable and related charges, net of tax

     —          —          —          19,742   

Loss (income) from discontinued operations, net of tax

     961        (13,103     (20,554     (50,608

Loss (gain) on sale of discontinued operations, net of tax

     6,243        —          (223,299     —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Core earnings (Non-GAAP)

   $ 10,185      $ 95,236      $ 108,124      $ 397,847   
  

 

 

   

 

 

   

 

 

   

 

 

 

(Loss) earnings per share: (GAAP)

        

Basic

   $ (0.13   $ 0.63      $ 1.19      $ 1.83   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ (0.13   $ 0.61      $ 1.19      $ 1.79   
  

 

 

   

 

 

   

 

 

   

 

 

 

Core earnings per share: (Non-GAAP)

        

Basic

   $ 0.05      $ 0.47      $ 0.53      $ 1.96   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ 0.05      $ 0.46      $ 0.53      $ 1.91   
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average shares outstanding used in the calculations of earnings per share (GAAP):

        

Basic

     198,053        202,959        202,497        203,096   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     198,053        208,502        202,497        207,815   
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average shares outstanding used in the calculations of earnings per share (Non-GAAP):

        

Basic

     198,053        202,959        202,497        203,096   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     199,967        208,502        204,269        207,815   
  

 

 

   

 

 

   

 

 

   

 

 

 


JABIL CIRCUIT, INC. AND SUBSIDIARIES

SUPPLEMENTAL DATA

RECONCILIATION OF GAAP FINANCIAL RESULTS TO NON-GAAP MEASURES

(in thousands)

(Unaudited)

CALCULATION OF RETURN ON INVESTED CAPITAL AND

CORE RETURN ON INVESTED CAPITAL

The Company calculates: (1) its “Return on Invested Capital” by annualizing its “after-tax GAAP operating income” for its most recently-ended quarter and dividing that by a two quarter average of its “net invested capital asset base” and (2) its “Core Return on Invested Capital” by annualizing its “after-tax non-GAAP core operating income” for its most recently-ended quarter and dividing that by a two quarter “average net invested capital asset base.”

The Company calculates: (1) its “after-tax GAAP operating income” by subtracting a certain tax effect (the calculation of which is explained below) from its GAAP operating income and (2) its “after-tax non-GAAP core operating income” as its non-GAAP core operating income less a certain tax effect (the calculation of which is explained below). See elsewhere in this earnings release for a reconciliation of the Company’s non-GAAP core operating income to its GAAP operating income.

The Company calculates its “average net invested capital asset base” as the sum of the averages (the calculations of which are explained below) of its stockholders’ equity, current and non-current portions of its notes payable, long-term debt and capital lease obligations less the average (the calculation of which is explained below) of its cash and cash equivalents.

The following table reconciles (1) “Return on Invested Capital,” as calculated using “after-tax GAAP operating income” to (2) “Core Return on Invested Capital,” as calculated using “after-tax non-GAAP core operating income”:

 

     Three months
ended
    Twelve months
ended
 
     August 31, 2014     August 31, 2014  

Numerator:

    

Operating income (GAAP)

   $ 46,643      $ 204,074   

Tax effect (1)

     (36,108     (77,693
  

 

 

   

 

 

 

After-tax operating income

     10,535        126,381   
     x4        x1   
  

 

 

   

 

 

 

Annualized after-tax operating (loss) income

   $ 42,140      $ 126,381   
  

 

 

   

 

 

 

Core operating income (Non-GAAP)

   $ 79,461      $ 345,369   

Tax effect (2)

     (37,553     (106,247
  

 

 

   

 

 

 

After-tax core operating income

     41,908        239,122   
     x4        x1   
  

 

 

   

 

 

 

Annualized after-tax core operating income

   $ 167,632      $ 239,122   
  

 

 

   

 

 

 

Denominator:

    

Average total Jabil Circuit, Inc. stockholders’ equity (3)

   $ 2,325,519      $ 2,288,558   

Average notes payable, long-term debt and capital lease obligations, less current installments (3)

     1,671,053        1,680,002   

Average current installments of notes payable, long-term debt and capital lease obligations (3)

     41,423        114,204   

Average cash and cash equivalents (3)

     (1,161,258     (1,005,811
  

 

 

   

 

 

 

Net invested capital asset base

   $ 2,876,737      $ 3,076,953   
  

 

 

   

 

 

 

Return on Invested Capital (GAAP)

     1.5     4.1

Adjustments noted above

     4.3     3.7

Core Return on Invested Capital (Non-GAAP)

     5.8     7.8

 

(1) This amount is calculated by adding the amount of income taxes attributable to its operating income (GAAP) and its interest expense.
(2) This amount is calculated by adding the amount of income taxes attributable to its core operating income (Non-GAAP) and its interest expense.
(3) The average is based on the addition of the account balance at the end of the most recently-ended quarter to the account balance at the end of the prior quarter for the three months ended August 31, 2014 and dividing by two. The average is based on the addition of the account balance at the end of the most recently-ended fiscal year to the account balance at the end of the prior fiscal year for the twelve months ended August 31, 2014 and dividing by two.