UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark one)

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

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

Commission File Number: 001-14063

 

JABIL CIRCUIT, INC.

(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization)		38-1886260 (I.R.S. Employer Identification No.)

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o       No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer þ		Accelerated filer o		Non-accelerated filer o (Do not check if a smaller reporting company)		Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o       No þ

As of December 22, 2009, there were 216,955,048 shares of the registrant’s Common Stock outstanding.

 

 

JABIL CIRCUIT, INC. AND SUBSIDIARIES
INDEX

PART I. FINANCIAL INFORMATION
Item 1.		Financial Statements
		Condensed Consolidated Balance Sheets at November 30, 2009 and August 31, 2009			3
		Condensed Consolidated Statements of Operations for the three months ended November 30, 2009 and 2008			4
		Condensed Consolidated Statements of Comprehensive Income (Loss) for the three months ended November 30, 2009 and 2008			5
		Condensed Consolidated Statements of Cash Flows for the three months ended November 30, 2009 and 2008			6
		Notes to Condensed Consolidated Financial Statements			7
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations			31
Item 3.		Quantitative and Qualitative Disclosures About Market Risk			46
Item 4.		Controls and Procedures			46
PART II. OTHER INFORMATION
Item 1.		Legal Proceedings			47
Item 1A.		Risk Factors			48
Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds			63
Item 3.		Defaults Upon Senior Securities			64
Item 4.		Submission of Matters to a Vote of Security Holders			64
Item 5.		Other Information			64
Item 6.		Exhibits			65
		Signatures			66
EX-31.1
EX-31.2
EX-32.1
EX-32.2

PART I. FINANCIAL INFORMATION

Item 1: FINANCIAL STATEMENTS

JABIL CIRCUIT, INC. AND SUBSIDIARIES

		November 30,				August 31,
		2009				2009
ASSETS
Current assets:
Cash and cash equivalents		$	852,067			$	876,272
Trade accounts receivable, net of allowance for doubtful accounts of $15,218 at November 30, 2009 and $15,510 at August 31, 2009			1,392,344				1,260,962
Inventories			1,416,881				1,226,656
Prepaid expenses and other current assets			282,647				247,795
Income taxes receivable			44,988				37,448
Deferred income taxes			25,909				27,693
Total current assets			4,014,836				3,676,826
Property, plant and equipment, net of accumulated depreciation of $1,132,406 at November 30, 2009 and $1,131,765 at August 31, 2009			1,338,682				1,377,729
Goodwill			25,301				25,120
Intangible assets, net of accumulated amortization of $99,272 at November 30, 2009 and $98,772 at August 31, 2009			126,188				131,168
Deferred income taxes			56,331				49,673
Other assets			58,913				57,342
Total assets		$	5,620,251			$	5,317,858
LIABILITIES AND EQUITY
Current liabilities:
Current installments of notes payable, long-term debt and long-term lease obligations		$	147,111			$	197,575
Accounts payable			2,210,740				1,938,009
Accrued expenses			572,025				537,851
Income taxes payable			17,137				11,831
Deferred income taxes			358				660
Total current liabilities			2,947,371				2,685,926
Notes payable, long-term debt and long-term lease obligations, less current installments			1,037,408				1,036,873
Other liabilities			67,910				70,124
Income tax liability			84,086				78,348
Deferred income taxes			6,479				4,178
Total liabilities			4,143,254				3,875,449
Commitments and contingencies
Equity:
Jabil Circuit, Inc. stockholders’ equity:
Common stock, $.001 par value, authorized 500,000,000 shares; issued and outstanding 208,774,956 at November 30, 2009 and 208,022,841 at August 31, 2009			217				217
Additional paid-in capital			1,440,020				1,455,214
Retained earnings (accumulated deficit)			28,791				(13,700	)
Accumulated other comprehensive income			206,966				196,972
Treasury stock at cost, 8,902,034 shares at November 30, 2009 and 8,683,917 shares at August 31, 2009			(206,829	)			(203,541	)
Total Jabil Circuit, Inc. stockholders’ equity			1,469,165				1,435,162
Noncontrolling interests			7,832				7,247
Total equity			1,476,997				1,442,409
Total liabilities and equity		$	5,620,251			$	5,317,858

See accompanying notes to Condensed Consolidated Financial Statements.

JABIL CIRCUIT, INC. AND SUBSIDIARIES

		Three months ended
		November 30,				November 30,
		2009				2008
Net revenue		$	3,088,256			$	3,382,509
Cost of revenue			2,856,480				3,158,796
Gross profit			231,776				223,713
Operating expenses:
Selling, general and administrative			131,553				131,662
Research and development			7,697				5,655
Amortization of intangibles			7,105				8,035
Restructuring and impairment charges			3,435				621
Goodwill impairment charges			—				317,700
Loss on disposal of subsidiary			15,722				—
Operating income (loss)			66,264				(239,960	)
Other expense			1,038				2,364
Interest income			(907	)			(2,307	)
Interest expense			20,116				23,734
Income (loss) before income taxes			46,017				(263,751	)
Income tax expense			17,136				12,363
Net income (loss)			28,881				(276,114	)
Net income (loss) attributable to noncontrolling interests, net of income tax expense			593				(257	)
Net income (loss) attributable to Jabil Circuit, Inc.		$	28,288			$	(275,857	)
Earnings (Loss) Per Share:
Income/(loss) attributable to the stockholders of Jabil Circuit, Inc.:
Basic		$	0.13			$	(1.34	)
Diluted		$	0.13			$	(1.34	)
Weighted average shares outstanding:
Basic			213,665				206,411
Diluted			215,059				206,411
Cash dividends declared per common share		$	0.07			$	0.07

See accompanying notes to Condensed Consolidated Financial Statements.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in thousands)
(Unaudited)

		Three months ended
		November 30,				November 30,
		2009				2008
Net income (loss)		$	28,881			$	(276,114	)
Other comprehensive income (loss):
Foreign currency translation adjustment			7,722				(149,028	)
Change in fair market value of derivative instruments, net of tax			1,284				—
Amortization of loss on hedge arrangements, net of tax			988				600
Comprehensive income (loss)		$	38,875			$	(424,542	)
Comprehensive income (loss) attributable to noncontrolling interests			593				(257	)
Comprehensive income (loss) attributable to Jabil Circuit, Inc.		$	38,282			$	(424,285	)

     Accumulated foreign currency translation gains were $246.4 million at November 30, 2009 and $238.7 million at August 31, 2009. Foreign currency translation adjustments primarily consist of adjustments to consolidate subsidiaries that use a local currency as their functional currency.

See accompanying notes to Condensed Consolidated Financial Statements.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)

		Three months ended
		November 30,				November 30,
		2009				2008
Cash flows from operating activities:
Net income (loss)		$	28,881			$	(276,114	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization			73,058				71,556
Recognition of deferred grant proceeds			(489	)			(528	)
Amortization of loss on hedge arrangement			988				600
Amortization of bond issuance costs and discount			923				355
Recognition of stock-based compensation expense			13,981				14,818
Deferred income taxes			(199	)			(8,272	)
Restructuring and impairment charges			3,435				621
Non-cash goodwill impairment charges			—				317,700
Provision of allowance for doubtful accounts and notes receivable			234				439
Excess tax (benefit) shortage from options exercised			(85	)			43
Loss (gain) on sale of property			2,823				(459	)
Loss on disposal of subsidiary			12,756				—
Change in operating assets and liabilities, exclusive of net assets acquired:
Trade accounts receivable			(156,935	)			(259,929	)
Inventories			(186,429	)			(128,468	)
Prepaid expenses and other current assets			(32,411	)			(87,256	)
Other assets			672				(1,321	)
Accounts payable and accrued expenses			310,213				315,203
Income taxes payable			2,847				7,684
Net cash provided by (used in) operating activities			74,263				(33,328	)
Cash flows from investing activities:
Cash paid for business and intangible asset acquisitions, net of cash acquired			—				(400	)
Acquisition of property, plant and equipment			(37,964	)			(115,125	)
Proceeds from sale of property, plant and equipment			2,827				1,404
Net cash used in investing activities			(35,137	)			(114,121	)
Cash flows from financing activities:
Borrowings under debt agreements			942,889				1,075,131
Payments toward debt agreements and capital lease obligations			(995,293	)			(1,096,536	)
Dividends paid to stockholders			(14,992	)			(14,739	)
Net proceeds from issuance of common stock under option and employee purchase plans			193				65
Treasury stock minimum tax withholding			(3,288	)			(231	)
Excess tax benefit (shortage) of options exercised			85				(43	)
Net cash used in financing activities			(70,406	)			(36,353	)
Effect of exchange rate changes on cash and cash equivalents			7,075				(9,239	)
Net decrease in cash and cash equivalents			(24,205	)			(193,041	)
Cash and cash equivalents at beginning of period			876,272				772,923
Cash and cash equivalents at end of period		$	852,067			$	579,882

See accompanying notes to Condensed Consolidated Financial Statements.

JABIL CIRCUIT, INC. AND SUBSIDIARIES

Note 1. Basis of Presentation

     The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) necessary to present fairly the information set forth therein have been included. The accompanying unaudited Condensed Consolidated Financial Statements should be read in conjunction with the consolidated financial statements and footnotes included in the Annual Report on Form 10-K of Jabil Circuit, Inc. (the “Company”) for the fiscal year ended August 31, 2009. Results for the three-month period ended November 30, 2009 are not necessarily an indication of the results that may be expected for the full fiscal year ending August 31, 2010.

     Certain amounts in the prior periods’ financial statements have been reclassified to conform to the current period’s presentation.

     The Company has evaluated the subsequent events that occurred through January 7, 2010, the date of the filing of the Company’s first quarter Form 10-Q. No significant events occurred subsequent to the balance sheet date and prior to the filing of this report that would have a material impact on the Condensed Consolidated Financial Statements.

Note 2. Inventories

     The components of inventories consist of the following (in thousands):

		November 30,				August 31,
		2009				2009
Raw materials		$	1,011,476			$	878,739
Work in process			249,606				208,266
Finished goods			155,799				139,651
Total inventories		$	1,416,881			$	1,226,656

Note 3. Earnings (Loss) Per Share and Dividends

a. Earnings (Loss) Per Share

     On September 1, 2009, the Company adopted accounting guidance on earnings per share which provides that unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents, whether paid or unpaid, be considered participating securities and therefore are included in the computation of earnings per share pursuant to the two-class method. For the Company, participating securities consist of unvested restricted stock awards. All prior-period earnings per share data has been retrospectively adjusted as required.

     The Company calculates its basic earnings (loss) per share by dividing net income (loss) attributable to Jabil Circuit, Inc. by the weighted average number of common shares and participating securities outstanding during the period. In periods of a net loss, participating securities are not included in the basic loss per share calculation as such participating securities are not contractually obligated to fund losses. The Company’s diluted earnings (loss) per share is calculated in a similar manner, but includes the effect of dilutive securities. To the extent these securities are anti-dilutive, they are excluded from the calculation of diluted earnings (loss) per share. The following table sets forth the calculations of basic and diluted earnings (loss) per share attributable to the stockholders of Jabil Circuit, Inc. (in thousands, except per share data):

		Three months ended
		November 30,				November 30,
		2009				2008
Numerator:
Net income (loss) attributable to Jabil Circuit, Inc.		$	28,288			$	(275,857	)
Denominator for basic and diluted earnings (loss) per share:
Weighted-average common shares outstanding			208,360				206,411
Share-based payment awards classified as participating securities			5,305				—	(2)
Denominator for basic earnings (loss) per share			213,665				206,411

		Three months ended
		November 30,				November 30,
		2009				2008
Dilutive common shares issuable under the employee stock purchase plan and upon exercise of stock options and stock appreciation rights			301				—
Dilutive unvested non-participating restricted stock awards			1,093				—
Weighted-average common shares outstanding — diluted			215,059	(1)			206,411	(3)
Earnings (Loss) Per Share:
Income/(loss) attributable to the stockholders of Jabil Circuit, Inc.:
Basic		$	0.13			$	(1.34	)
Diluted		$	0.13			$	(1.34	)

b. Dividends

     The following table sets forth certain information relating to the Company’s cash dividends declared to common stockholders of the Company during the three months ended November 30, 2009 and 2008:

Total cash

Dividend

Dividend

dividends

Date of record for

Dividend cash

declaration date

per share

declared

dividend payment

payment date

(in thousands, except for per share data)

Fiscal year 2009:

October 24, 2008

$

0.07

$

14,916

November 17, 2008

December 1, 2008

Fiscal year 2010:

October 22, 2009

$

0.07

$

15,186

(1)

November 16, 2009

December 1, 2009

Note 4. Stock-Based Compensation

     The Company recognizes stock-based compensation expense, reduced for estimated forfeitures, on a straight-line basis over the requisite service period of the award, which is generally the vesting period for outstanding stock awards. The Company recorded $14.0 million and $14.8 million of gross stock-based compensation expense, which is included in selling, general and administrative expenses in the Condensed Consolidated Statements of Operations for the three months ended November 30, 2009 and 2008, respectively. The Company recorded tax effects related to the stock-based compensation expense of $0.3 million and $4.2 million which is included in income tax expense in the Condensed Consolidated Statements of Operations for the three months ended November 30, 2009 and 2008, respectively. Included in the stock-based compensation expense recognized by the Company is $1.0 million and $0.9 million related to the Company’s employee stock purchase plan (“ESPP”) during the three months ended November 30, 2009 and 2008, respectively. The Company capitalizes stock-based compensation costs related to awards granted to employees whose compensation costs are directly attributable to the cost of inventory. At November 30, 2009 and 2008, $0.3 million of stock-based compensation expense was classified as inventory costs on the Condensed Consolidated Balance Sheets.

     Cash received from exercises under all share-based payment arrangements, including the Company’s ESPP, for the three months ended November 30, 2009 and 2008 was $0.2 million and $0.1 million, respectively. The proceeds for the three months ended November 30, 2009 and 2008 were offset by $3.3 million and $0.2 million, respectively, of restricted shares withheld by the Company to satisfy the minimum amount of its income tax withholding requirements. The market value of the restricted shares withheld was determined on the date that the restricted shares vested and resulted in the withholding of 218,102 shares and 23,988 shares during the three months ended November 30, 2009 and 2008, respectively, of the Company’s common stock. The amounts have been classified as treasury stock on the Condensed Consolidated Balance Sheets. The Company currently expects to satisfy share-based awards with registered shares available to be issued.

     As described in Note 6 — “Commitments and Contingencies,” the Company is involved in a putative shareholder class action lawsuit and has received a subpoena from the U.S. Attorney’s office for the Southern District of New York in connection with certain historical stock option grants. The Company has cooperated and intends to continue to cooperate with the U.S. Attorney’s office. The Company cannot, however, predict the outcome of the litigation or that investigation.

a. Stock Option and Stock Appreciation Right Plans

     The Company’s 1992 Stock Option Plan (the “1992 Plan”) provided 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. A total of 23,440,000 shares of common stock were reserved for issuance under the 1992 Plan. The 1992 Plan was adopted by the Board of Directors in November of 1992 and was terminated in October 2001 with the remaining shares transferred into a new plan created in fiscal year 2002.

     In October 2001, the Company established a new Stock Option Plan (the “2002 Incentive Plan”). The 2002 Incentive Plan was adopted by the Board of Directors in October 2001 and approved by the stockholders in January 2002. The 2002 Incentive Plan provides for the granting of incentive stock options within the meaning of Section 422 Internal Revenue Code and non-statutory stock options, as well as restricted stock, stock appreciation rights and other stock-based awards. The 2002 Incentive Plan has a total of 33,608,726 shares reserved for grant, including 2,608,726 shares that were transferred from the 1992 Plan when it was terminated in October 2001, 7,000,000 shares authorized in January 2002, 10,000,000 shares authorized in January 2004, 7,000,000 shares authorized in January 2006, 3,000,000 shares authorized in August 2007, 2,500,000 shares authorized in January 2008 and 1,500,000 shares authorized in January 2009. The Company also adopted sub-plans under the 2002 Incentive Plan for its United Kingdom employees (the “CSOP Plan”) and for its French employees (the “FSOP Plan”). The CSOP Plan and FSOP Plan are tax advantaged plans for the Company’s United Kingdom and French employees, respectively. Shares are issued under the CSOP Plan and FSOP Plan from the authorized shares under the 2002 Incentive Plan.

     The 2002 Incentive Plan provides that the exercise price of all stock options and stock appreciation rights (collectively known as “Options”) generally shall be no less than the fair market value of shares of common stock on the date of grant. Exceptions to this general rule apply to grants of stock appreciation rights, grants of Options intended to preserve the economic value of stock option and other equity-based interests held by employees of acquired entities, and grants of Options intended to provide a material inducement for a new employee to commence employment with the Company. It is and has been the Company’s intention for the exercise price of Options granted under the 2002 Incentive Plan to be at least equal to the fair market value of shares of common stock on the date of grant. However, as we previously discussed in Note 2 — “Stock Option Litigation and Restatements” to the Consolidated Financial Statements in the Annual Report on Form 10-K for the fiscal year ending August 31, 2006, a certain number of Options were identified that had a measurement date based on the date that the Compensation Committee or management (as appropriate) decided to grant the Options, instead of the date that the terms of such grants became final, and, therefore, the relating Options had an exercise price less than the fair market value of shares of common stock on the final date of measurement. As a result, the holders of the Options with an exercise price less than the fair market value of shares of common stock on the final date of measurement may incur adverse tax consequences. Such adverse tax consequences relate to the portions of such Options that vest after December 31, 2004 (“Section 409A Affected Options”) and subject the option holder to accelerated income taxation and a penalty tax under Internal Revenue Code Section 409A (“Section 409A”).

     In October 2007, the Board of Directors approved comprehensive procedures governing the manner in which Options are granted to, among other things, substantially reduce the likelihood that future grants of Options will be made with an exercise price that is less than the fair market value of shares of common stock on the Option measurement date for financial accounting and reporting purposes.

     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 incentive 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 2002 Incentive Plan may not exceed ten years. Beginning in fiscal year 2006, Options will generally vest at a rate of one-twelfth 15 months after the grant date with an additional one-twelfth vesting at the end of each three-month period thereafter, becoming fully vested after a 48-month period. Prior to this change, Options generally vested at a rate of 12% after the first six months and 2% per month thereafter, becoming fully vested after a 50-month period.

     The Company applies a lattice valuation model for Options granted subsequent to August 31, 2005, excluding those granted under the ESPP. The lattice valuation model is a more flexible analysis to value employee Options because of its ability to incorporate inputs that change over time, such as volatility and interest rates, and to allow for actual exercise behavior of Option holders. Prior to this change, the Company used the Black-Scholes model for valuing Options. The Company uses historical data to estimate the Option exercise and employee departure behavior used in the lattice valuation model. The expected term of Options granted is derived from the output of the option pricing model and represents the period of time that Options granted are expected to be outstanding. The risk-free rate for periods within the contractual term of the Options is based on the U.S. Treasury yield curve in effect at the time of grant. The volatility used for the lattice model is a constant volatility for all periods within the contractual term of the Option. The constant volatility is a weighted average of implied volatilities from traded Options and historical volatility corresponding to the contractual term of the Option. The expected dividend yield of Options granted is derived based on the expected annual dividend yield over the expected life of the Option expressed as a percentage of the stock price on the date of grant.

     The weighted-average grant-date fair value per share of Options granted during the three months ended November 30, 2009 and 2008 was $6.36 and $3.60, respectively. The total intrinsic value of Options exercised during the three months ended November 30, 2009 and 2008 was $5.1 thousand and $3.6 thousand, respectively. As of November 30, 2009, there was $18.0 million of unrecognized compensation costs related to non-vested Options that is expected to be recognized over a weighted-average period of 1.3 years. The total fair value of Options vested during the three months ended November 30, 2009 and 2008 was $6.3 million and $5.4 million, respectively.

     Following are the weighted-average grant-date and range assumptions, where applicable, used for each respective period:

		Three months ended
		November 30,				November 30,
		2009				2008
Expected dividend yield			1.9	%			4.3	%
Risk-free interest rate		0.6% to 3.4%				0.0% to 2.9%
Weighted-average expected volatility			60.2	%			68.2	%
Weighted-average expected life		5.6 years				6.4 years

     The fair-value method is also applied to non-employee awards. The measurement date for equity awards granted to non-employees is the earlier of the performance commitment date or the date the services required under the arrangement have been completed. Non-employee awards are classified as liabilities on the Condensed Consolidated Balance Sheets and are therefore remeasured at each interim reporting period until the Options are exercised, cancelled or expire unexercised. At November 30, 2009 and August 31, 2009, $58.0 thousand and $47.0 thousand, respectively, related to non-employee stock-based awards were classified as a liability on the Company’s Condensed Consolidated Balance Sheets and a loss of $11.0 thousand and a gain of $141.0 thousand were recorded in the Condensed Consolidated Statements of Operations for the three months ended November 30, 2009 and 2008, respectively, resulting from re-measurement of the awards.

     At November 30, 2009, the Company had 111,414 Options outstanding that will be settled by the Company with cash. The Company classifies cash-settled awards as liabilities on the Condensed Consolidated Balance Sheets and measures these awards at fair value at each reporting date until the award is ultimately settled (i.e. until the Option is exercised or canceled). All changes in fair value are recorded to the Condensed Consolidated Statements of Operations at each reporting date. At November 30, 2009 and August 31, 2009, $0.2 million and $0.1 million, respectively, related to cash settled awards were recorded as a liability on the Condensed Consolidated Balance Sheets. The Company recognized a loss in the Condensed Consolidated Statements of Operations of $25.0 thousand for the three months ended November 30, 2009, and a gain of $53.0 thousand for the three months ended November 30, 2008 to record the awards at fair value.

     The following table summarizes Option activity from September 1, 2009 through November 30, 2009:

																		Weighted-
														Weighted-				Average
		Shares								Aggregate				Average				Remaining
		Available				Options				Intrinsic Value				Exercise				Contractual
		for Grant				Outstanding				(in thousands)				Price				Life (years)
Balance at September 1, 2009			5,128,096				15,021,674			$	154			$	24.04				4.9
Options authorized			—				—
Options expired			(914,596	)			—							$	22.99
Options granted(1)			—				28,570							$	14.88
Options cancelled			1,074,886				(1,074,886	)						$	25.45
Restricted stock awards(2)			(4,153,453	)			—
Options exercised			—				(14,616	)						$	13.21
Balance at November 30, 2009			1,134,933				13,960,742			$	735			$	24.09				4.9
Exercisable at November 30, 2009							11,872,231			$	466			$	24.13				4.4

b. Restricted Stock Awards

     Beginning in fiscal year 2005, the Company granted restricted stock awards to certain key employees pursuant to the 2002 Stock Incentive Plan. The awards granted in fiscal year 2005 vested during the first quarter of fiscal year 2010, which is five years from the date of grant. In fiscal year 2006, the Company began granting certain restricted stock awards that have performance conditions that will be measured at the end of the employee’s requisite service period, which provide a range of vesting possibilities from 0% to 200%. The performance-based restricted awards generally vest on a cliff vesting schedule over a three year period. The stock-based compensation expense for these restricted stock awards (including restricted stock and restricted stock units) is measured at fair value on the date of grant based on the number of shares expected to vest and the quoted market price of the Company’s common stock. For restricted stock awards with performance conditions, stock-based compensation expense is originally based on the number of shares that would vest if the Company achieved 100% of the performance goal, which was the probable outcome at the grant date. Throughout the requisite service period, management monitors the probability of achievement of the performance condition. If it becomes probable, based on the Company’s performance, that more or less than the current estimate of the awarded shares will vest, an adjustment to stock-based compensation expense will be recognized as a change in accounting estimate.

     During the third quarter of fiscal year 2008, it was determined that 50% of the restricted stock awards that were granted in fiscal year 2007 with performance conditions would vest. This change in estimate resulted in a reversal of $6.9 million in stock-based compensation expense from the Condensed Consolidated Statements of Operations in the third quarter of fiscal year 2008. It was further determined in the fourth quarter of fiscal year 2008 that for restricted stock awards granted in fiscal year 2007, it was probable that none of the awards would vest, which resulted in an additional reversal of $7.6 million in stock-based compensation expense from the Condensed Consolidated Statements of Operations in the fourth quarter of fiscal year 2008. During the second quarter of fiscal year 2009, it was determined that none of the restricted stock awards that were granted in fiscal year 2008 with performance conditions would vest. This change in estimate resulted in a reversal of $10.2 million in stock-based compensation expense from the Condensed Consolidated Statements of Operations in the second quarter of fiscal year 2009. The restricted stock awards that were granted in fiscal years 2009 and 2010 continue to be recognized based on an estimated 100% performance goal, the probable outcome.

     The Company began granting time-based restricted stock to employees in fiscal year 2007. The time-based restricted shares granted generally vest on a graded vesting schedule over three years. The stock-based compensation expense for these restricted stock awards (including restricted stock and restricted stock units) is measured at fair value on the date of grant based upon the quoted market price of the Company’s common stock.

     In fiscal year 2008, the Company began granting certain restricted stock awards with a vesting condition that is tied to the Standard and Poor’s 500 Composite Index. Such a market condition must be considered in the grant date fair value of the award with such fair value determination made using a lattice model, which utilizes multiple input variables to determine the probability of the Company achieving the specified market conditions. Stock-based compensation expense related to an award with a market condition will be recognized over the requisite service period regardless of whether the market condition is satisfied, provided that the requisite service period has been completed.

     At November 30, 2009, there was $71.7 million of total unrecognized stock-based compensation expense related to restricted stock awards granted under the 2002 Stock Incentive Plan. This expense is expected to be recognized over a weighted-average period of 1.8 years.

     The following table summarizes restricted stock activity from September 1, 2009 through November 30, 2009:

						Weighted -
						Average
						Grant-Date
		Shares				Fair Value
Nonvested balance at September 1, 2009			10,201,552			$	15.50
Changes during the period
Shares granted(1)			5,712,671			$	14.25
Shares vested			(955,601	)		$	15.13
Shares forfeited			(1,559,218	)		$	28.46
Nonvested balance at November 30, 2009			13,399,404			$	13.49

c. Employee Stock Purchase and Award Plans

     The ESPP was adopted by the Company’s Board of Directors in October 2001 and approved by the shareholders in January 2002. Initially there were 2,000,000 shares reserved under the ESPP. An additional 2,000,000 shares and 3,000,000 shares were authorized for issuance under the ESPP and approved by stockholders in January 2006 and January 2009, respectively. The Company also adopted a sub-plan under the ESPP for its Indian employees. The Indian sub-plan is a tax advantaged plan for the Company’s Indian employees. Shares are issued under the Indian sub-plan from the authorized shares under the ESPP.

     Employees are eligible to participate in the ESPP after 90 days of employment with the Company. The ESPP permits eligible employees to purchase common stock through payroll deductions, which may not exceed 10% of an employee’s compensation, as defined in the ESPP, 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. The ESPP is intended to qualify under section 423 of the Internal Revenue Code. Unless terminated sooner, the ESPP will terminate on October 17, 2011.

     The maximum number of shares that a participant may purchase in an offering period is determined in June and December. As such, there were no stock purchases under the ESPP for the three months ended November 30, 2009 and 2008, respectively. At November 30, 2009, a total of 4,664,702 shares had been issued under the ESPP.

Note 5. Concentration of Risk and Segment Data

a. Concentration of Risk

     The Company operates in 24 countries worldwide. Sales to unaffiliated customers are based on the Company’s location that provides the electronics design, production, product management or aftermarket services. The following table sets forth external net revenue, net of intercompany eliminations, and long-lived asset information where individual countries represent a material portion of the total (in thousands):

		Three months ended
		November 30,				November 30,
		2009				2008
External net revenue:
Mexico		$	843,129			$	591,566
China			617,603				835,672
United States			428,882				543,538
Hungary			240,042				203,040
Malaysia			219,570				235,457
Brazil			134,732				161,503
Other			604,298				811,733
		$	3,088,256			$	3,382,509

		November 30,				August 31,
		2009				2009
Long-lived assets:
China		$	409,416			$	413,064
United States			252,697				252,574
Mexico			231,719				247,605
Taiwan			124,956				133,395
Malaysia			100,415				101,246
Poland			97,010				91,188
Hungary			79,243				80,618
India			74,751				76,443
Other			119,964				137,884
		$	1,490,171			$	1,534,017

     Total foreign source net revenue represented 86.1% of net revenue for the three months ended November 30, 2009 compared to 83.9% for the three months ended November 30, 2008.

     Sales of the Company’s products are concentrated among specific customers. For the three months ended November 30, 2009, the Company’s five largest customers accounted for approximately 45% of its net revenue and 48 customers accounted for approximately 90% of its net revenue. Sales to the above customers were reported in the Consumer, Electronic Manufacturing Services (“EMS”) and Aftermarket Services (“AMS”) operating segments.

b. Segment Data

     Operating segments are defined as components of an enterprise that engage in business activities from which it may earn revenues and incur expenses; for which separate financial information is available; and whose operating results are regularly reviewed by the chief operating decision maker to assess the performance of the individual segment and make decisions about resources to be allocated to the segment.

     The Company derives its revenue from providing comprehensive electronics design, production, product management and aftermarket services. Management, including the Chief Executive Officer, evaluates performance and allocates resources on a divisional basis for manufacturing and service operating segments. The Company’s operating segments consist of three segments — Consumer, EMS and AMS.

     Net revenue for the operating segments is attributed to the division in which the product is manufactured or service is performed. An operating segment’s performance is evaluated on its pre-tax operating contribution, or segment income. Segment income is defined as net revenue less cost of revenue, segment selling, general and administrative expenses, segment research and development expenses and an allocation of corporate manufacturing expenses and selling, general and administrative expenses, and does not include amortization of intangibles, stock-based compensation expense, restructuring and impairment charges, goodwill impairment charges, loss on disposal of subsidiary, other expense, interest income, interest expense, income tax expense or adjustment for net income (loss) attributable to noncontrolling interests. Total segment assets are defined as trade accounts receivable, inventories, customer related machinery and equipment, intangible assets and goodwill. All other non-segment assets are reviewed on a global basis by management. Transactions between operating segments are generally recorded at amounts that approximate arm’s length.

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

		Three months ended
		November 30,				November 30,
		2009				2008
Net revenue
Consumer		$	1,221,539			$	1,228,283
EMS			1,667,194				1,992,492
AMS			199,523				161,734
		$	3,088,256			$	3,382,509

Segment income and reconciliation of net
income (loss) before income taxes

		Three months ended
		November 30,				November 30,
		2009				2008
Consumer		$	33,044			$	44,468
EMS			57,008				46,409
AMS			16,455				10,337
Total segment income			106,507				101,214
Reconciling items:
Stock-based compensation expense			13,981				14,818
Amortization of intangibles			7,105				8,035
Restructuring and impairment charges			3,435				621
Goodwill impairment charges			—				317,700
Loss on disposal of subsidiary			15,722				—
Other expense			1,038				2,364
Interest income			(907	)			(2,307	)
Interest expense			20,116				23,734
Income (loss) before income taxes		$	46,017			$	(263,751	)

		November 30,				August 31,
		2009				2009
Total assets
Consumer		$	1,790,018			$	1,723,934
EMS			2,100,555				2,017,575
AMS			257,485				280,126
Other non-allocated assets			1,472,193				1,296,223
		$	5,620,251			$	5,317,858

          See Note 7 — “Restructuring and Impairment Charges” for a discussion of the Company’s restructuring plans initiated in fiscal years 2009 and 2006.

Note 6. Commitments and Contingencies

a. Legal Proceedings

     i. Private Litigation Related to Certain Historical Stock Option Grant Practices

          In April and May of 2006, shareholder derivative lawsuits were filed in State Circuit Court in Pinellas County, Florida on behalf of a purported shareholder of the Company naming the Company as a nominal defendant, and naming certain of the Company’s officers and directors as defendants. Those lawsuits were subsequently consolidated (the “Consolidated State Derivative Action”). The Consolidated State Derivative Action alleged breaches of certain fiduciary duties to the Company by backdating certain stock option grants between August 1998 and October 2004 to make it appear that they were granted on a prior date when the Company’s stock price was lower. Subsequently, two similar federal derivative suits were filed and consolidated in January 2007 into one action (the “Consolidated Federal Derivative Action”).

          On May 3, 2006, the Company’s Board of Directors appointed a Special Committee that reviewed the allegations asserted in all of the above derivative actions and concluded that the evidence did not support a finding of intentional manipulation of stock option grant pricing by any member of management. In addition, the Special Committee concluded that it was not in the Company’s best interests to pursue the derivative actions and stated that it would assert that position on the Company’s behalf in each of the pending derivative lawsuits. The Special Committee identified certain factors related to the controls surrounding the process of accounting for option grants that contributed to the accounting errors that led to a restatement of certain of the Company’s historical consolidated financial statements.

          In September 2007, the Company reached an agreement to resolve the Consolidated State Derivative Action and the Consolidated Federal Derivative Action that did not involve the Company paying any monetary damages, but it did adopt several new policies and procedures to improve the process through which equity awards are determined, approved and accounted for. In April 2008, the State Court entered an order dismissing the Consolidated State Action and finding that the proposed settlement was fair, adequate and reasonable, and that awarded the plaintiffs’ counsel $700.0 thousand in attorney fees and costs ($575.0 thousand of

which was paid by the Company’s Directors and Officers insurance carriers and $125.0 thousand of which was paid by the Company). On April 25, 2008, the Federal Court approved the proposed settlement agreement and dismissed the Consolidated Federal Action.

          In addition to the derivative actions, on September 18, 2006, a putative shareholder class action was filed in the U.S. District Court for the Middle District of Florida, Tampa Division against the Company and various present and former officers and directors, including Forbes I.J. Alexander, Scott D. Brown, Laurence S. Grafstein, Mel S. Lavitt, Chris Lewis, Timothy Main, Mark T. Mondello, William D. Morean, Lawrence J. Murphy, Frank A. Newman, Steven A. Raymund, Thomas A. Sansone and Kathleen A. Walters on behalf of a proposed class of plaintiffs comprised of persons that purchased the Company’s shares between September 19, 2001 and June 21, 2006. A second putative class action, containing virtually identical legal claims and allegations of fact was filed on October 12, 2006. The two actions were consolidated into a single proceeding (the “Consolidated Class Action”) and on January 18, 2007, the Court appointed The Laborers Pension Trust Fund for Northern California and Pension Trust Fund for Operating Engineers as lead plaintiffs in the action. On March 5, 2007, the lead plaintiffs filed a consolidated class action complaint (the “Consolidated Class Action Complaint”). The Consolidated Class Action Complaint is purported to be brought on behalf of all persons who purchased the Company’s publicly traded securities between September 19, 2001 and December 21, 2006, and names the Company and certain of its current and former officers, including Forbes I.J. Alexander, Scott D. Brown, Wesley B. Edwards, Chris A. Lewis, Mark T. Mondello, Robert L. Paver and Ronald J. Rapp, as well as certain of the Company’s directors, Mel S. Lavitt, William D. Morean, Frank A. Newman, Laurence S. Grafstein, Steven A. Raymund, Lawrence J. Murphy, Kathleen A. Walters and Thomas A. Sansone, as defendants. The Consolidated Class Action Complaint alleged violations of Sections 10(b), 20(a), and 14(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules promulgated thereunder. The Consolidated Class Action Complaint alleged that the defendants engaged in a scheme to fraudulently backdate the grant dates of options for various senior officers and directors, causing the Company’s consolidated financial statements to understate management compensation and overstate net earnings, thereby inflating the Company’s stock price. In addition, the complaint alleged that the Company’s proxy statements falsely stated that it had adhered to its option grant policy of granting options at the closing price of its shares on the trading date immediately prior to the date of the grant. Also, the complaint alleged that the defendants failed to timely disclose the facts and circumstances that led the Company, on June 12, 2006, to announce that it was lowering its prior guidance for net earnings for the third quarter of fiscal year 2006. On April 30, 2007, the plaintiffs filed a First Amended Consolidated Class Action Complaint asserting claims substantially similar to the Consolidated Class Action Complaint it replaced but adding additional allegations relating to the restatement of earnings previously announced in connection with the correction of errors in the calculation of compensation expense for certain stock option grants. The Company filed a motion to dismiss the First Amended Consolidated Class Action Complaint on June 29, 2007. The plaintiffs filed an opposition to the Company’s motion to dismiss, and the Company then filed a reply memorandum in further support of its motion to dismiss on September 28, 2007. On April 9, 2008, the Court dismissed the First Amended Consolidated Class Action Complaint without prejudice and with leave to amend such complaint on or befor e May 12, 2008.

          On May 12, 2008, plaintiffs filed a Second Amended Class Action Complaint. The Second Amended Class Action Complaint asserts substantially the same causes of action against the same defendants, predicated largely on the same allegations of fact as in the First Amended Consolidated Class Action Complaint except insofar as the plaintiffs added KPMG LLP, the Company’s independent registered public accounting firm, as a defendant and added additional allegations with respect to (a) pre-class period option grants, (b) the professional background of certain defendants, (c) option grants to non-executive employees, (d) the restatement of the Company’s financial results for certain periods between 1996 and 2005 and (e) trading by the named plaintiffs and certain of the defendants during the class period. The Second Amended Class Action Complaint also includes an additional claim for insider trading against certain defendants pursuant to Rules 10b-5 and 10b5-1 promulgated pursuant to the Exchange Act. The Company filed a motion to dismiss the Second Amended Class Action Complaint.

          On January 26, 2009, the Court dismissed the Second Amended Class Action Complaint with prejudice. The plaintiffs appealed this dismissal on February 20, 2009, and oral arguments occurred in December 2009. The Company believes that the Second Amended Class Action Complaint is without merit and it will continue to vigorously defend the action, although no assurance can be given as to the ultimate outcome of any such further proceedings.

     ii. Securities Exchange Commission Informal Inquiry and U.S. Attorney Subpoena Related to Certain Historical Stock Option Grant Practices

          In addition to the private litigation described above, the Company was notified on May 2, 2006 by the Staff of the Securities and Exchange Commission (the “SEC”) of an informal inquiry concerning the Company’s stock option grant practices. In May 2006, the Company received a subpoena from the U.S. Attorney’s office for the Southern District of New York requesting certain stock option related material. Such information was subsequently provided and the Company did not hear further from such U.S. Attorney’s office. In addition, the Company’s review of its historical stock option practices led it to review certain transactions proposed or effected between fiscal years 1999 and 2002 to determine if it properly recognized revenue associated with those transactions. The

Audit Committee of the Company’s Board of Directors engaged independent legal counsel to assist it in reviewing certain proposed or effected transactions with certain customers that occurred during this period. The review determined that there was inadequate documentation to support the Company’s recognition of certain revenues received during the period. The Company’s Audit Committee concluded that there was no direct evidence that any of the Company’s employees intentionally made or caused false accounting entries to be made in connection with these transactions, and the Company concluded that the impact was immaterial. The Company provided the SEC with the report that this independent counsel produced regarding these revenue recognition issues, the Special Committee’s report regarding the Company’s stock option grant practices, and the other information requested and cooperated fully with the Special Committee, the SEC and the U.S. Attorney’s office.

     The Company received a letter from the SEC Division of Enforcement on November 24, 2008, advising the Company that the Division had completed its investigation and did not intend to recommend that the SEC take any enforcement action.

iii. Other Litigation

     The Company is party to certain other lawsuits in the ordinary course of business. The Company does not believe that these proceedings, individually or in the aggregate, will have a material adverse effect on the Company’s financial position, results of operations or cash flows.

b. Warranty Provision

     The Company maintains a provision for limited warranty repair of shipped products, which is established under the terms of specific manufacturing contract agreements. The warranty liability is included in accrued expenses on the Condensed Consolidated Balance Sheets. The warranty period varies by product and customer industry sector. The provision represents management’s estimate of probable liabilities, calculated as a function of sales volume and historical repair experience, for each product under warranty. The estimate is re-evaluated periodically for accuracy. A rollforward of the warranty liability for the three months ended November 30, 2009 and 2008 is as follows (in thousands):

		Amount
Balance at August 31, 2009		$	14,280
Accruals for warranties			3,099
Settlements made			(1,982	)
Balance at November 30, 2009		$	15,397

		Amount
Balance at August 31, 2008		$	9,877
Accruals for warranties			2,664
Settlements made			(2,828	)
Balance at November 30, 2008		$	9,713

Note 7. Restructuring and Impairment Charges

a. 2009 Restructuring Plan

     On January 22, 2009 (the second quarter of fiscal year 2009), the Company’s Board of Directors approved a restructuring plan to better align the Company’s manufacturing capacity in certain geographies and to reduce its worldwide workforce in order to reduce operating expenses (the “2009 Restructuring Plan”). These restructuring activities are intended to address the current market conditions and properly size the Company’s manufacturing facilities to increase the efficiencies of the Company’s operations. In conjunction with the 2009 Restructuring Plan, the Company currently expects to recognize approximately $64.0 million in total restructuring and impairment costs, excluding valuation allowances of $13.1 million on certain net deferred tax assets, primarily over the course of fiscal years 2009 and 2010. Of this expected total, the Company charged $3.5 million of restructuring and impairment costs during the three months ended November 30, 2009 to the Condensed Consolidated Statements of Operations. These charges related to the 2009 Restructuring Plan include approximately $3.2 million related to lease commitment costs and approximately $0.5 million related to fixed asset impairments, offset by a reversal of approximately $0.2 million related to previously recognized employee severance and termination benefit costs.

     These restructuring and impairment charges related to the 2009 Restructuring Plan incurred through November 30, 2009 of approximately $57.2 million include cash costs totaling approximately $50.3 million. The cash costs of approximately $50.3 million consist of employee severance and termination benefit costs of approximately $46.9 million, lease commitment costs of approximately $3.3 million and other restructuring costs of approximately $0.1 million. Non-cash costs of approximately $6.9 million primarily represent fixed asset impairment charges related to the Company’s restructuring activities.

     At November 30, 2009, accrued liabilities of approximately $24.2 million related to the 2009 Restructuring Plan are expected to be paid over the next twelve months. The remaining liability of approximately $3.6 million is expected to be paid primarily through fiscal year 2011.

     Employee severance and termination benefit cost reversals of approximately $0.2 million recorded during the three months ended November 30, 2009 are primarily related to the true-up of the outstanding employee severance and termination benefit liability, which was recorded during fiscal year 2009. To date, approximately 4,000 employees have been included in the 2009 Restructuring Plan. The lease commitment costs of approximately $3.2 million recorded during the three months ended November 30, 2009 primarily relates to a facility in the Americas that was substantially vacated during the quarter. The Company identified certain fixed assets that have ceased being used by the Company and, accordingly, recorded a fixed asset impairment charge of $0.5 million for the three months ended November 30, 2009.

     In addition, as part of the 2009 Restructuring Plan, management determined that it was more likely than not that certain deferred tax assets would not be realized as a result of the contemplated restructuring activities. Therefore, the Company recorded a valuation allowance of $13.1 million on net deferred tax assets for fiscal year 2009. The valuation allowances are excluded from the table below as they were recorded to income tax expense in the Condensed Consolidated Statements of Operations.

     The tables below set forth the significant components and activity in the 2009 Restructuring Plan during the three months ended November 30, 2009 (in thousands):

										Asset
										Impairment
										Charges and
		Liability Balance at				Restructuring				Other Non-Cash				Cash				Liability Balance at
		August 31, 2009				Related Charges				Activity				Payments				November 30, 2009
Employee severance and termination benefits		$	30,845			$	(185	)		$	1,144			$	(6,774	)		$	25,030
Lease commitment costs			—				3,191				—				(424	)			2,767
Fixed asset impairment			—				499				(499	)			—				—
Other			—				36				—				(36	)			—
Total		$	30,845			$	3,541			$	645			$	(7,234	)		$	27,797

										Asset
										Impairment
										Charges and
		Liability Balance at				Restructuring				Other Non-Cash				Cash				Liability Balance at
		August 31, 2009				Related Charges				Activity				Payments				November 30, 2009
Consumer		$	709			$	(23	)		$	24			$	(56	)		$	654
EMS			26,298				3,591				505				(4,643	)			25,751
AMS			3,838				(27	)			116				(2,535	)			1,392
Total		$	30,845			$	3,541			$	645			$	(7,234	)		$	27,797

b. 2006 Restructuring Plan

     In conjunction with the restructuring plan that was approved by the Company’s Board of Directors in the fourth quarter of fiscal year 2006 (the “2006 Restructuring Plan”), the Company reversed $0.1 million of previously recognized restructuring and impairment costs during the three months ended November 30, 2009 compared to a charge of $0.6 million of restructuring and impairment costs during the three months ended November 30, 2008. The restructuring and impairment cost reversal for the three months ended November 30, 2009 consists of $0.2 million related to lease commitment costs, offset by additional employee severance and termination benefit costs of $0.1 million. The restructuring and impairment costs for the three months ended November 30, 2008 include $0.4 million related to employee severance and termination benefit costs and $0.2 million related to lease commitment costs.

     These restructuring and impairment charges related to the 2006 Restructuring Plan incurred through November 30, 2009 of $207.3 million include cash costs totaling $158.4 million, of which $1.5 million was paid in the fourth quarter of fiscal year 2006, $64.8 million was paid in fiscal year 2007, $57.2 million was paid in fiscal year 2008, $27.1 million was paid in fiscal year 2009, $1.8 million was paid in the first quarter of fiscal year 2010 and $6.0 million is expected to be paid primarily through fiscal year 2011. The cash costs consist of employee severance and termination benefit costs of approximately $144.0 million, costs related to lease commitments of approximately $20.6 million and other restructuring costs of approximately $2.1 million. These cash costs were off-set by approximately $8.3 million of cash proceeds received in connection with facility closure costs. Non-cash costs of approximately $48.9 million primarily represent fixed asset impairment charges related to the Company’s restructuring activities.

     At November 30, 2009, accrued liabilities of approximately $2.8 million related to the 2006 Restructuring Plan are expected to be paid over the next twelve months. The additional remaining accrued liabilities of $3.8 million relate primarily to the charges for certain lease commitment costs and employee severance and termination benefits payments that are expected to be paid primarily through fiscal year 2011.

     Employee severance and termination benefits of $0.1 million and $0.4 million recorded in the three months ended November 30, 2009 and 2008, respectively, are related to the reduction of employees across all functions of the business in manufacturing facilities in Europe, Asia and the Americas. Approximately 10,500 employees have been included in the 2006 Restructuring Plan to date. Lease commitment cost reversals of $0.2 million recorded in the three months ended November 30, 2009 and additional lease commitment costs of $0.2 million recorded in the three months ended November 30, 2008 primarily relate to future lease payments for facilities that were vacated in the Americas and Europe.

     The Company has substantially completed restructuring activities under the 2006 Restructuring Plan. Approximately $1.1 million of remaining contract termination costs are expected to be incurred over the remainder of fiscal year 2010 and fiscal year 2011.

     In addition, as part of the 2006 Restructuring Plan, management determined that it was more likely than not that certain entities within foreign jurisdictions would not be able to utilize their deferred tax assets as a result of the contemplated restructuring activities. Therefore, the Company recorded valuation allowances of $38.8 million on net deferred tax assets as part of the 2006 Restructuring Plan prior to September 1, 2009. The valuation allowances are excluded from the table below as they were recorded to income tax expense in the Condensed Consolidated Statements of Operations. See Note 4 — “Income Taxes” to the Consolidated Financial Statements in the Annual Report on Form 10-K for the fiscal year ended August 31, 2009 for further discussion of the Company’s net deferred tax assets and provision for income taxes.

     The tables below set forth the significant components and activity in the 2006 Restructuring Plan during the three months ended November 30, 2009 (in thousands):

		Liability Balance at				Restructuring				Other Non-Cash				Cash				Liability Balance at
		August 31, 2009				Related Charges				Activity				Payments				November 30, 2009
Employee severance and termination benefits		$	5,736			$	123			$	239			$	(1,369	)		$	4,729
Lease commitment costs			2,057				(229	)			2				(412	)			1,418
Other			419				—				19				—				438
Total		$	8,212			$	(106	)		$	260			$	(1,781	)		$	6,585

										Asset
										Impairment
										Charges and				Cash
		Liability Balance at				Restructuring				Other Non-Cash				(Payments)				Liability Balance at
		August 31, 2009				Related Charges				Activity				Proceeds				November 30, 2009
Consumer		$	3,606			$	75			$	158			$	(273	)		$	3,566
EMS			4,190				(181	)			84				(1,508	)			2,585
AMS			416				—				18				—				434
Total		$	8,212			$	(106	)		$	260			$	(1,781	)		$	6,585

Note 8. Goodwill and Other Intangible Assets

     The Company performs a goodwill impairment analysis using the two-step method on an annual basis and whenever events or changes in circumstances indicate that the carrying value may not be recoverable. The recoverability of goodwill is measured at the reporting unit level, which the Company has determined to be consistent with its operating segments, by comparing the reporting unit’s carrying amount, including goodwill, to the fair market value of the reporting unit. The Company consistently determines the fair market value of its reporting units based on an average weighting of both projected discounted future results and the use of comparative market multiples. If the carrying amount of the reporting unit exceeds its fair value, goodwill is considered impaired and a second test is performed to measure the amount of loss, if any.

     The Company completed its annual impairment test for goodwill during the fourth quarter of fiscal year 2009 and determined that no impairment existed as of the date of the impairment test.

     The following table presents the changes in goodwill allocated to the Company’s reportable segments during the three months ended November 30, 2009 (in thousands):

		Balance at								Foreign				Balance at
		August 31,								Currency				November 30,
Reportable Segment		2009				Adjustments				Impact				2009
AMS		$	25,120			$	—			$	181			$	25,301
Total		$	25,120			$	—			$	181			$	25,301

     Intangible assets consist primarily of contractual agreements and customer relationships, which are being amortized on a straight-line basis over periods of up to ten years, intellectual property which is being amortized on a straight-line basis over a period of up to five years and a trade name which has an indefinite life. The Company completed its annual impairment test for its indefinite-lived intangible asset during the fourth quarter of fiscal year 2009 and determined that no impairment existed as of the date of the impairment test. No significant residual value is estimated for the amortizable intangible assets. The value of the Company’s intangible assets purchased through business acquisitions is principally determined based on valuations of the net assets acquired. The following tables present the Company’s total purchased intangible assets at November 30, 2009 and August 31, 2009 (in thousands):

		Gross								Net
		carrying				Accumulated				carrying
November 30, 2009		amount				amortization				amount
Contractual agreements and customer relationships		$	94,127			$	(43,136	)		$	50,991
Intellectual property			83,635				(56,136	)			27,499
Trade name			47,698				—				47,698
Total		$	225,460			$	(99,272	)		$	126,188

		Gross								Net
		carrying				Accumulated				carrying
August 31, 2009		amount				amortization				amount
Contractual agreements and customer relationships		$	99,583			$	(46,313	)		$	53,270
Intellectual property			83,729				(52,459	)			31,270
Trade names			46,628				—				46,628
Total		$	229,940			$	(98,772	)		$	131,168

     The weighted-average amortization period for aggregate net intangible assets at November 30, 2009 is 6.9 years, which includes a weighted-average amortization period of 9.1 years for net contractual agreements and customer relationships and a weighted-average amortization period of 4.5 years for net intellectual property.

     The estimated future amortization expense is as follows (in thousands):

Fiscal year ending August 31,		Amount
2010 (remaining nine months)		$	19,006
2011			22,255
2012			14,157
2013			9,000
2014			7,686
Thereafter			6,386
Total		$	78,490

Note 9. Accounts Receivable Securitizations

a. North American Asset-Backed Securitization Program

     In February 2004, the Company entered into an asset-backed securitization program with a bank, which originally provided for net cash proceeds at any one time of an amount up to $100.0 million on the sale of eligible trade accounts receivable of certain domestic operations. Subsequent to fiscal year 2004, several amendments increased the net cash proceeds available at any one time under the securitization program up to an amount of $250.0 million. The securitization program is accounted for as a sale. Under the agreement, the Company continuously sells a designated pool of trade accounts receivable to a wholly-owned subsidiary, which in turn sells an ownership interest in the receivables to a conduit, administered by an unaffiliated financial institution. This wholly-owned subsidiary is a separate bankruptcy-remote entity and its assets would be available first to satisfy the creditor claims of the conduit. As the receivables sold are collected, the Company is able to sell additional receivables up to the maximum permitted amount under the program. The securitization program requires compliance with several financial covenants including an interest coverage ratio and debt to EBITDA ratio, as defined in the securitization agreement, as amended. The securitization agreement, as amended on March 18, 2009 expires on March 17, 2010.

     For each pool of eligible receivables sold to the conduit, the Company retains a percentage interest in the face value of the receivables, which is calculated based on the terms of the agreement. Net receivables sold under this program are excluded from trade accounts receivable on the Condensed Consolidated Balance Sheets and are reflected as cash provided by operating activities on the Condensed Consolidated Statements of Cash Flows. The Company is assessed a fee on the unused portion of the facility ranging between 0.875% and 0.925% per annum based on the average daily unused aggregate capital during the period. Further, a usage fee on the utilized portion of the facility is equal to 1.75% per annum on the average daily outstanding aggregate capital during the immediately preceding calendar month. The investors and the securitization conduit have no recourse to the Company’s assets for failure of debtors to pay when due.

     The Company continues servicing the receivables sold. No servicing asset is recorded at the time of sale because the Company does not receive any servicing fees from third parties or other income related to servicing the receivables. The Company does not record any servicing liability at the time of sale as the receivable collection period is relatively short and the costs of servicing the receivables sold over the servicing period are not significant. Servicing costs are recognized as incurred over the servicing period.

     At November 30, 2009, the Company had sold $418.8 million of eligible trade accounts receivable, which represents the face amount of total outstanding receivables at that date. In exchange, the Company received cash proceeds of $164.5 million and retained an interest in the receivables of approximately $254.3 million. In connection with the securitization program, the Company recognized pretax losses on the sale of receivables of approximately $1.0 million during the three months ended November 30, 2009 compared to approximately $2.3 million during the three months ended November 30, 2008, which are recorded in other expense in the Condensed Consolidated Statements of Operations.

b. Foreign Asset-Backed Securitization Program

     On April 7, 2008, the Company entered into an asset-backed securitization program with a bank conduit. In connection with the securitization program certain of its foreign subsidiaries sell, on an ongoing basis, an undivided interest in designated pools of trade accounts receivable to a special purpose entity, which in turn borrows up to $200.0 million from the bank conduit to purchase those receivables and in which it grants security interests as collateral for the borrowings. The securitization program is accounted for as a borrowing. The loan balance is calculated based on the terms of the securitization program agreements. The securitization program requires compliance with several covenants including a limitation on certain corporate actions such as mergers, consolidations and sale of substantially all assets. The Company pays interest at designated commercial paper rates plus a spread. The securitization program, as amended on March 19, 2009, expires on March 18, 2010.

     At November 30, 2009, the Company had $81.9 million of debt outstanding under the program. In addition, the Company incurred interest expense of $0.7 million and $2.0 million recorded in the Condensed Consolidated Statements of Operations during the three months ended November 30, 2009 and 2008, respectively.

c. Accounts Receivable Factoring Agreements

     In October 2004, the Company entered into an agreement with an unrelated third-party for the factoring of specific trade accounts receivable of a foreign subsidiary. The factoring of trade accounts receivable under this agreement is accounted for as a sale. Under the terms of the factoring agreement, the Company transfers ownership of eligible trade accounts receivable without recourse to the third-party purchaser in exchange for cash. Proceeds on the transfer reflect the face value of the account less a discount. The discount is recorded as a loss in the Condensed Consolidated Statements of Operations in the period of the sale. The factoring agreement was extended in September 2009 and currently expires on March 31, 2010.

     The receivables sold pursuant to this factoring agreement are excluded from trade accounts receivable on the Condensed Consolidated Balance Sheets and are reflected as cash provided by operating activities on the Condensed Consolidated Statements of Cash Flows. The Company continues to service, administer and collect the receivables sold under this program. The third-party purchaser has no recourse to the Company’s assets for failure of debtors to pay when due.

     At November 30, 2009, the Company had sold $19.7 million of trade accounts receivable, which represents the face amount of total outstanding receivables at that date. In exchange, the Company received cash proceeds of $19.7 million. The resulting loss on the sale of trade accounts receivable sold under this factoring agreement was $22.1 thousand for the three months ended November 30, 2009 and $61.0 thousand for the three months ended November 30, 2008 which was recorded to other expense in the Condensed Consolidated Statements of Operations.

     In July 2007 and August 2009, the Company entered into separate agreements with unrelated third parties (the “Purchasers”) for the factoring of specific trade accounts receivable of another foreign subsidiary. The factoring of trade accounts receivable under these agreements does not meet the criteria for recognition as a sale. Under the terms of the agreements, the Company transfers ownership of eligible trade accounts receivable to the Purchasers in exchange for cash; however, as the transaction does not qualify as a sale, the relating trade accounts receivable are included in the Company’s Condensed Consolidated Balance Sheets until the cash is received by the Purchasers from the Company’s customer for the trade accounts receivable. The Company had an outstanding liability of approximately $1.7 million and $1.5 million on the Condensed Consolidated Balance Sheets at November 30, 2009 and August 31, 2009, respectively, related to these agreements.

Note 10. Retirement Benefits

     The Company sponsors defined benefit pension plans in several countries in which it operates. The pension obligations relate primarily to the following: (a) a funded retirement plan in the United Kingdom, which provides benefits based on average employee earnings over a three-year service period preceding retirement and (b) primarily unfunded retirement plans mainly in Taiwan, France, Germany, Japan, The Netherlands, Poland and Austria, which provide benefits based upon years of service and compensation at retirement.

     There are no domestic pension or postretirement benefit plans maintained by the Company.

     The components of net periodic benefit cost for the Company’s pension plans are as follows (in thousands):

		Three months ended
		November 30,				November 30,
		2009				2008
Service cost		$	399			$	520
Interest cost			1,510				1,674
Expected long-term return on plan assets			(1,119	)			(1,193	)
Amortization of prior service cost			(31	)			(9	)
Recognized actuarial loss			323				328
Net periodic benefit cost		$	1,082			$	1,320

     For the three months ended November 30, 2009, the Company has made contributions of approximately $0.9 million to its defined benefit pension plans. The Company presently anticipates total fiscal year 2010 contributions to approximate $3.6 million to $4.3 million.

Note 11. Notes Payable, Long-Term Debt and Long-Term Lease Obligations

     Notes payable, long-term debt and long-term lease obligations outstanding at November 30, 2009 and August 31, 2009 are summarized below (in thousands).

		November 30,				August 31,
		2009				2009
5.875% Senior Notes due 2010 (a)		$	5,064			$	5,064
7.750% Senior Notes due 2016 (b)			300,493				300,063
8.250% Senior Notes due 2018			396,854				396,758
Short-term factoring debt			1,657				1,468
Borrowings under credit facilities			17,080				21,313
Borrowings under loans			381,449				384,485
Securitization program obligations			81,886				125,291
Miscellaneous borrowings			36				6
Total notes payable, long-term debt and long-term lease obligations			1,184,519				1,234,448
Less current installments of notes payable, long-term debt and long-term lease obligations			147,111				197,575
Notes payable, long-term debt and long-term lease obligations, less current installments		$	1,037,408			$	1,036,873

     The $5.1 million of 5.875% senior unsecured notes (the “5.875% Senior Notes”), $312.0 million of 7.750% senior unsecured notes (the “7.750% Senior Notes”) and $400.0 million of 8.250% senior unsecured notes (the “8.250% Senior Notes”) outstanding are carried at cost. The estimated fair value of these senior notes was approximately $5.1 million, $319.8 million and $422.0 million, respectively, at November 30, 2009. The fair value estimates are based upon non-binding market quotes that are corroborated by observable market data (level 2 criteria).

a. 5.875% Senior Notes Tender Offer

     During the fourth quarter of fiscal year 2003, the Company issued a total of $300.0 million, seven-year, publicly-registered 5.875% Senior Notes at 99.803% of par, resulting in net proceeds of approximately $297.2 million. The 5.875% Senior Notes mature on July 15, 2010 and pay interest semiannually on January 15 and July 15. The Company is subject to covenants such as: limitation upon its consolidation, merger or sale; limitation upon its liens; limitation upon its sales and leasebacks; limitation upon its subsidiaries’ funded debt; limitation on guarantees given by its subsidiaries for its indebtedness; its corporate existence; reports; and compliance and notice requirements. During the fourth quarter of fiscal year 2009, the Company repurchased $294.9 million in aggregate principal amount of the 5.875% Senior Notes, pursuant to a public cash tender offer, in which it also paid an early tender premium, accrued interest and associated fees and expenses. The extinguishment of the validly tendered 5.875% Senior Notes resulted in a charge of $10.5 million, which was recorded to other expense in the Condensed Consolidated Statements of Operations for the fiscal year ended August 31, 2009.

b. 7.750% Senior Notes Offering

     During the fourth quarter of fiscal year 2009, the Company completed its offering of $312.0 million in aggregate principal amount of publicly-registered 7.750% Senior Notes that mature on July 15, 2016 resulting in net proceeds of approximately $300.0 million. Interest on the 7.750% Senior Notes is payable on January 15 and July 15 of each year, beginning on January 15, 2010. The 7.750% Senior Notes are the Company’s senior unsecured obligations and rank equally with all other existing and future senior unsecured debt obligations. The Company is subject to covenants such as limitations on the Company’s and/or its subsidiaries’ ability to: create certain liens; enter into sale and leaseback transactions; create, incur, issue, assume or guarantee funded debt (which only applies to the Company’s “restricted subsidiaries”); guarantee any of its indebtedness (which only applies to its subsidiaries); and consolidate or merge with, or convey, transfer or lease all or substantially all of the Company’s assets to, another person. The Company is also subject to a covenant regarding its repurchase of the 7.750% Senior Notes upon a “change of control repurchase event.”

Note 12. Derivative Financial Instruments and Hedging Activities

     The Company is directly and indirectly affected by changes in certain market conditions. These changes in market conditions may adversely impact the Company’s financial performance and are referred to as market risks. The Company, where deemed appropriate,

uses derivatives as a risk management tool to mitigate the potential impact of certain market risks. The primary market risks managed by the Company through the use of derivatives instruments are foreign currency fluctuation risk and interest rate risk.

     All derivative instruments are recorded on the Condensed Consolidated Balance Sheets at their respective fair values. The accounting for changes in the fair value of a derivative instrument depends on the intended use and designation of the derivative instrument. For derivative instruments that are designated and qualify as a fair value hedge, the gain or loss on the derivative and the offsetting gain or loss on the hedged item attributable to the hedged risk are recognized in current earnings. For derivative instruments that are designated and qualify as a cash flow hedge, the effective portion of the gain or loss on the derivative instrument is initially reported as a component of accumulated other comprehensive income (“AOCI”), net of tax, and is subsequently reclassified into the line item in the Condensed Consolidated Statements of Operations in which the hedged items are recorded in the same period in which the hedged item affects earnings. The ineffective portion of the gain or loss is recognized immediately in current earnings. For derivative instruments that are not designated as hedging instruments, gains and losses from changes in fair values are recognized currently in earnings.

     For derivatives accounted for as hedging instruments, the Company formally designates and documents, at inception, the financial instruments as a hedge of a specific underlying exposure, the risk management objective and the strategy for undertaking the hedge transaction. In addition, the Company formally assesses, both at inception and at least quarterly thereafter, whether the financial instruments used in hedging transactions are effective at offsetting changes in the cash flows on the related underlying exposures.

a. Foreign Currency Risk Management

     Forward contracts are put in place to manage the foreign currency risk associated with various commitments arising from trade accounts receivable, trade accounts payable and fixed purchase obligations. At November 30, 2009, a hedging relationship existed that related to certain anticipated foreign currency denominated expenses, with an aggregate notional amount outstanding at November 30, 2009 of $49.4 million. The related forward foreign exchange contracts have been designated as hedging instruments and are accounted for as cash flow hedges. The forward foreign exchange contract transactions will effectively lock in the value of anticipated foreign currency denominated expenses against foreign currency fluctuations. The anticipated foreign currency denominated expenses being hedged are expected to occur between December 1, 2009 and September 30, 2010.

     In addition to derivatives that are designated and qualify for hedge accounting, the Company also enters into forward contracts to economically hedge transactional exposure associated with commitments arising from trade accounts receivable, trade accounts payable and fixed purchase obligations denominated in a currency other than the functional currency of the respective operating entity. The aggregate notional amount of these outstanding contracts at November 30, 2009 and 2008 was $700.9 million and $1.7 billion, respectively.

     The following table presents the Company’s assets and liabilities related to foreign forward exchange contracts measured at fair value on a recurring basis as of November 30, 2009, aggregated by the level in the fair-value hierarchy within which those measurements fall (in thousands):

		Level 1				Level 2				Level 3				Total
Assets:
Forward foreign exchange contracts		$	—			$	15,894			$	—			$	15,894
Liabilities:
Forward foreign exchange contracts			—				(9,086	)			—				(9,086	)
Total		$	—			$	6,808			$	—			$	6,808

     The Company’s forward foreign exchange contracts are measured on a recurring basis based on foreign currency spot rates and forward rates quoted by banks or foreign currency dealers.

     The following table presents the fair value of the Company’s derivative instruments located on the Condensed Consolidated Balance Sheets utilized for foreign currency risk management purposes at November 30, 2009 (in thousands):

Fair Values of Derivative Instruments

Asset Derivatives

Liability Derivatives

Balance Sheet

Fair

Balance Sheet

Fair

Location

Value

Location

Value

Derivatives designated as hedging instruments

Forward foreign exchange contracts

Prepaid expenses and

other current assets

$

2,586

Accrued expense

$

—

Derivatives not designated as hedging instruments

Forward foreign exchange contracts

Prepaid expenses and

other current assets

$

13,308

Accrued expense

$

9,086

     The following table presents the impact that changes in fair value of derivatives utilized for foreign currency risk management purposes and designated as hedging instruments had on AOCI and earnings during the three months ended November 30, 2009 (in thousands):

Amount of Gain

Amount of Gain

Amount of Gain

Location of Gain (Loss)

(Loss)

(Loss) Recognized in

(Loss) Recognized

Reclassified from

Reclassified from

Location of Gain

Income on Derivative

in OCI on

AOCI

AOCI

(Loss) Recognized in

(Ineffective Portion

Derivative

into Income

into Income

Income on Derivative

and Amount Excluded

(Effective Portion)

(Effective Portion)

(Effective Portion)

(Ineffective Portion

from Effectiveness

Derivatives in Cash

for the Three months

for the Three months

for the Three months

and Amount Excluded

Testing) for the

Flow Hedging

ended November 30,

ended November 30,

ended November 30,

from Effectiveness

Three months ended

Relationship

2009

2009

2009

Testing)

November 30, 2009

Forward foreign exchange contracts

$

1,773

Cost of revenue

$

636

Cost of revenue

$

627

     As of November 30, 2009, the Company estimates that it will reclassify into earnings during the next twelve months income of approximately $1.5 million from the amounts recorded in AOCI as the anticipated cash flows occur.

     The following table presents the impact that changes in fair value of derivatives utilized for foreign currency risk management purposes and not designated as hedging instruments had on earnings during the three months ended November 30, 2009 (in thousands):

				Amount of Gain (Loss) Recognized in
		Location of Gain (Loss) Recognized in		Income on Derivative for the Three Months
Derivatives not designated as hedging instruments		Income on Derivative		ended November 30, 2009
Forward foreign exchange contracts		Cost of revenue		$	(3,900	)

     At November 30, 2009, the Company recognized a net unrealized gain of approximately $4.2 million on forward foreign exchange contracts not designated as hedging instruments which was recorded to the cost of revenue line in the Condensed Consolidated Statements of Operations and offset by the change in the fair value of the underlying hedged assets or liabilities.

b. Interest Rate Risk Management

     The Company enters into interest rate swaps to manage interest rate risk associated with the Company’s variable rate borrowings. At November 30, 2009, a hedging relationship existed that related to $100.0 million of the Company’s variable rate debt. The swap is accounted for as a cash flow hedge. This interest rate swap transaction effectively locks in a fixed interest rate for variable rate interest payments. Under the terms of the swap, the Company will pay a fixed rate and will receive a variable rate based on the one month USD LIBOR rate plus a credit spread.

     The following table presents the Company’s assets and liabilities related to the interest rate swap measured at fair value on a recurring basis as of November 30, 2009, aggregated by the level in the fair value hierarchy within which those measurements fall (in thousands):

		Level 1				Level 2				Level 3				Total
Assets:
Interest rate swap		$	—			$	—			$	—			$	—
Liabilities:
Interest rate swap			—				(109	)			—				(109	)
Total		$	—			$	(109	)		$	—			$	(109	)

     The Company’s interest rate swap is measured on a recurring basis based on the LIBOR forward rate as quoted by certain financial institutions.

     The following table presents the fair value of the derivative instruments located on the Condensed Consolidated Balance Sheets utilized for interest rate risk management purposes at November 30, 2009 (in thousands):

Fair Values of Derivative Instruments

Asset Derivatives

Liability Derivatives

Balance Sheet

Fair

Balance Sheet

Fair

Location

Value

Location

Value

Derivatives designated as hedging instruments

Interest rate swap

Not applicable

$

—

Accrued expense

$

(109

)

     The following table presents the impact that changes in the fair value of the derivative utilized for interest rate risk management and designated as a hedging instrument had on AOCI and earnings for the three months ended November 30, 2009 (in thousands):

Amount of Gain

(Loss) Recognized in

Amount of Gain

Income on Derivative

Amount of Gain

Location of Gain (Loss)

(Loss)

(Ineffective Portion

(Loss) Recognized

Reclassified from

Reclassified from

Location of Gain

and Amount Excluded

in OCI on

AOCI

AOCI

(Loss) Recognized in

from Effectiveness

Derivative

into Income

into Income

Income on Derivative

Testing)

(Effective Portion)

(Effective Portion)

(Effective Portion)

(Ineffective Portion

for the Three

Derivatives in Cash Flow

for the Three months

for the Three months

for the Three months

and Amount Excluded

months

Hedging

ended November 30,

ended November 30,

ended November 30,

from Effectiveness

ended November 30,

Relationship

2009

2009

2009

Testing)

2009

Interest rate swap

$

(13

)

Interest expense

$

(160

)

Interest expense

$

—

     As of November 30, 2009, the Company estimates that it will reclassify into earnings during the next twelve months income of approximately $0.1 million from the amount recorded in AOCI as the anticipated cash flows occur for the above noted interest rate swap.

     The changes related to cash flow hedges included in AOCI are as follows (in thousands):

		Three months ended
		November 30, 2009
Balance, August 31, 2009		$	143
Net gain for the period			1,760
Net gain transferred to earnings			(476	)
Balance, November 30, 2009		$	1,427

Note 13. Loss on Disposal of Subsidiary

     On October 27, 2009, the Company sold its subsidiary, Jabil Circuit Automotive, SAS, an automotive electronics manufacturing subsidiary located in Western Europe to JCA Acquisition Company Limited, an unrelated third-party. As a result of this sale, the Company recorded a loss on disposition of $15.7 million in the first quarter of 2010, which included transaction-related costs of approximately $4.2 million. These costs are recorded to loss on disposal of subsidiary on the Condensed Consolidated Statements of Operations, which is a component of operating income. Jabil Circuit Automotive had net revenue and an operating loss of $15.5 million and $1.4 million, respectively from the beginning of the 2010 fiscal year through the date of closing.

Note 14. New Accounting Guidance

a. Recently Adopted Accounting Guidance

     Effective July 2009, the Financial Accounting Standards Board (“FASB”) codified accounting literature into a single source of authoritative accounting principles, except for certain authoritative rules and interpretive releases issued by the SEC. Since the codification did not alter existing U.S. GAAP, it did not have an impact on the Company’s consolidated financial statements. All references to pre-codified U.S. GAAP have been removed from this Form 10-Q.

     In December 2007, the FASB issued new accounting and disclosure guidance related to noncontrolling interests in subsidiaries (previously referred to as minority interests), which resulted in a change in the Company’s accounting policy effective September 1, 2009. Among other things, the new guidance requires that a noncontrolling interest in a subsidiary be accounted for as a component of equity separate from the parent’s equity, rather than as a liability. It also requires that consolidated net income be reported at amounts that include the amounts attributable to both the parent and the noncontrolling interests. The new guidance is being applied prospectively, except for the presentation and disclosure requirements, which have been applied retrospectively. The adoption of this guidance did not have a significant impact on the Company’s consolidated financial statements.

     In December 2007, the FASB amended its guidance on accounting for business combinations. The new accounting guidance resulted in a change in the Company’s accounting policy effective September 1, 2009, and is being applied prospectively to all business combinations subsequent to the effective date. Among other things, the new guidance amends the principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, any noncontrolling interest in the acquiree and the goodwill acquired. It also establishes new disclosure requirements to enable the evaluation of the nature and financial effects of the business combination. The adoption of this accounting guidance did not have a significant impact on the Company’s consolidated financial statements, and the impact it will have on the Company’s consolidated financial statements in future periods will depend on the nature and size of business combinations completed subsequent to the date of adoption.

     In June 2008, the FASB issued accounting guidance on earnings per share which provides that unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents, whether paid or unpaid, be considered participating securities and therefore included in the computation of earnings per share pursuant to the two-class method. The two-class method of computing earnings per share is an earnings allocation formula that determines earnings per share for each class of common stock and any participating securities as if all earnings for the period had been distributed. The Company’s participating securities consist of unvested restricted stock awards. The new accounting guidance resulted in a change in the Company’s accounting policy effective September 1, 2009 and requires that all prior-period earnings per share data that is presented be adjusted retrospectively. The adoption of this accounting guidance did not have a significant impact on the Company’s consolidated financial statements. Refer to Note 3 — “Earnings (Loss) Per Share and Dividends” for further discussion on adoption of this accounting guidance.

     In September 2006, the FASB issued accounting guidance that provided a common definition of fair value and established a framework to make the measurement of fair value under U.S. GAAP more consistent and comparable. It also required expanded disclosures to provide information about the extent to which fair value is used to measure assets and liabilities, the methods and assumptions used to measure fair value, and the effect of fair value measures on earnings. In February 2008, the FASB issued accounting guidance which permitted a one-year deferral of the application of such fair value accounting guidance for all non-financial assets and non-financial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). The Company adopted the non-deferred portion of this accounting guidance as of September 1, 2008 and the deferred portion as of September 1, 2009. The adoption did not have a significant impact on the Company’s consolidated financial statements.

b. Recently Issued Accounting Guidance

     In June 2009, the FASB amended its guidance on accounting for variable interest entities (“VIE”). The new accounting guidance will result in a change in the Company’s accounting policy effective September 1, 2010. Among other things, the new guidance requires a qualitative rather than a quantitative analysis to determine the primary beneficiary of a VIE; requires continuous

assessments of whether an enterprise is the primary beneficiary of a VIE; enhances disclosures about an enterprise’s involvement with a VIE; and amends certain guidance for determining whether an entity is a VIE. Under the new guidance, a VIE must be consolidated if the enterprise has both (a) the power to direct the activities of the VIE that most significantly impact the entity’s economic performance, and (b) the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE. The Company is currently evaluating the potential impact that this change will have, if any, on its consolidated financial statements.

     In June 2009, the FASB issued new accounting guidance on accounting for transfers of financial assets. This guidance amends previous guidance by including: the elimination of the concept of a qualifying special-purpose entity, creates more stringent conditions for reporting a transfer of a portion of a financial asset as a sale, clarifies other sale-accounting criteria, and changes the initial measurement of a transferor’s interest in transferred financial assets. Additionally, the guidance requires extensive new disclosure regarding an entity’s involvement in a transfer of financial assets. This new guidance will be effective for the Company on September 1, 2010. The Company is currently evaluating the potential impacts that this change in accounting policy will have, if any, on its consolidated financial statements.

     In December 2008, the FASB issued new accounting guidance that requires enhanced annual disclosures about the plan assets of a company’s defined benefit pension and other postretirement plans intended to provide users of financial statements with a greater understanding of: (1) how investment allocation decisions are made, including the factors that are pertinent to an understanding of investment policies and strategies; (2) the major categories of plan assets; (3) the inputs and valuation techniques used to measure the fair value of plan assets; (4) the effect of fair value measurements, using significant unobservable inputs (Level 3) on changes in plan assets for the period; and (5) significant concentrations of risk within plan assets. The Company will provide the required disclosures beginning with the Company’s Form 10-K for the year ending August 31, 2010. This accounting guidance is not expected to have a significant impact on the Company’s consolidated financial statements.

JABIL CIRCUIT, INC. AND SUBSIDIARIES

     References in this report to “the Company”, “Jabil”, “we”, “our”, or “us” mean Jabil Circuit, Inc. together with its subsidiaries, except where the context otherwise requires. This Quarterly Report on Form 10-Q contains certain statements that are, or may be deemed to be, forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) which are made in reliance upon the protections provided by such acts for forward-looking statements. These forward-looking statements (such as when we describe what “will”, “may” or “should” occur, what we “plan”, “intend”, “estimate”, “believe”, “expect” or “anticipate” will occur, and other similar statements) include, but are not limited to, statements regarding future sales and operating results, future prospects, anticipated benefits of proposed (or future) acquisitions and new facilities, growth, the capabilities and capacities of business operations, any financial or other guidance and all statements that are not based on historical fact, but rather reflect our current expectations concerning future results and events. We make certain assumptions when making forward-looking statements, any of which could prove inaccurate, including, but not limited to, statements about our future operating results and business plans. Therefore, we can give no assurance that the results implied by these forward-looking statements will be realized. Furthermore, the inclusion of forward-looking information should not be regarded as a representation by the Company or any other person that future events, plans or expectations contemplated by the Company will be achieved. The ultimate correctness of these forward-looking statements is dependent upon a number of known and unknown risks and events, and is subject to various uncertainties and other factors that may cause our actual results, performance or achievements to be different from any future results, performance or achievements expressed or implied by these statements. The following important factors, among others, could affect future results and events, causing those results and events to differ materially from those expressed or implied in our forward-looking statements:

	•		business conditions and growth or declines in our customers’ industries, the electronic manufacturing services industry and the general economy;
	•		variability of our operating results;
	•		our dependence on a limited number of major customers;
	•		the potential consolidation of our customer base, and the potential movement by some of our customers of a portion of their manufacturing from us in order to more fully utilize their excess internal manufacturing capacity;
	•		availability of components;
	•		our dependence on certain industries;
	•		our production levels are subject to the variability of customer requirements, including seasonal influences on the demand for certain end products;
	•		our substantial international operations, and the resulting risks related to our operating internationally;
	•		our ability to successfully negotiate definitive agreements and consummate acquisitions, and to integrate operations following the consummation of acquisitions;
	•		our ability to take advantage of our past, current and possible future restructuring efforts to improve utilization and realize savings and whether any such activity will adversely affect our cost structure, our ability to service customers and our labor relations;
	•		our ability to maintain our engineering, technological and manufacturing process expertise;
	•		the results of litigation related to our past stock option grants and any ramifications thereof;
	•		other economic, business and competitive factors affecting our customers, our industry and our business generally; and
	•		other factors that we may not have currently identified or quantified.