8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 OR 15(d)

of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) September 25, 2018

 

 

Jabil Inc.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   001-14063   38-1886260

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

10560 Dr. Martin Luther King, Jr. Street North, St. Petersburg, Florida 33716

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code (727) 577-9749

N/A

(Former name or former address, if changed since last report.)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

 

 


Item 2.02

Results of Operations and Financial Condition.

On September 25, 2018, Jabil Inc. (the “Company”) issued a press release announcing its results of operations for the fourth fiscal quarter and full fiscal year ended August 31, 2018. A copy of the press release is furnished as Exhibit 99.1 hereto and is incorporated herein by reference.

The information furnished herewith pursuant to Item 2.02 of this Current Report, including Exhibit 99.1, shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section. The information in this Current Report shall not be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date of this Current Report, regardless of any general incorporation language in the filing.

 

Item 9.01.

Financial Statements and Exhibits.

 

(d)

Exhibits

The following exhibit is furnished herewith:

 

Exhibit
No.
  

Description

99.1    Press Release dated September 25, 2018.

 

2


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

    JABIL INC.
    (Registrant)
September 25, 2018     By:  

/s/ MICHAEL DASTOOR

      Michael Dastoor
      Chief Financial Officer
EX-99.1

Exhibit 99.1

 

LOGO

Jabil Delivers Another Strong Fiscal Year

Expects Positive Momentum to Continue

St. Petersburg, FL – September 25, 2018. Today, Jabil Inc. (NYSE: JBL), reported preliminary, unaudited financial results for its fourth quarter and fiscal year ended August 31, 2018.

“I’m really pleased with our fiscal 2018 results and the positive momentum we’re seeing across the business,” said CEO Mark Mondello. “Our team’s performance during the year culminated in double-digit revenue growth, 24 percent core EPS expansion and core ROIC of 19 percent, an increase of approximately 400 basis points year-on-year. At the same time, we made strategically important investments in areas like additive manufacturing and factory automation, while the underlying business allowed for nearly $1 billion in cash flow generation and $500 million in shareholder returns. By many measures, 2018 was another great year as we position the company to continue to deliver on our stated goals,” he added.

Fiscal Year 2018 Highlights:

 

   

Net revenue: $22.1 billion

 

   

Diversified Manufacturing Services (DMS) year-on-year revenue growth: 23 percent

 

   

Electronics Manufacturing Services (EMS) year-on-year revenue growth: 11 percent

 

   

U.S. GAAP operating income: $542.2 million

 

   

U.S. GAAP diluted earnings per share: $0.49

 

   

Core operating income (Non-GAAP): $768.1 million

 

   

Core diluted earnings per share (Non-GAAP): $2.62

“As we begin fiscal 2019, we’re steadfast in our commitment to deliver value for shareholders. We’ll continue to pursue strategic capabilities and technologies in select end-markets that should result in even more sustainable earnings and cash flows over the next three to four years.” added Mondello.

First Quarter of Fiscal Year 2019 Guidance:

 

•  Net revenue

  

$5.8 billion to $6.4 billion

•  U.S. GAAP operating income

  

$158 million to $223 million

•  U.S. GAAP diluted earnings per share

  

$0.45 to $0.74 per diluted share

•  Core operating income (Non-GAAP) (1)

  

$215 million to $265 million

•  Core diluted earnings per share (Non-GAAP) (1)

  

$0.79 to $0.99 per diluted share

•  Diversified Manufacturing Services

  

Increase revenue 5 percent year-on-year

•  Electronics Manufacturing Services

  

Increase revenue 13 percent year-on-year

•  Total company

  

Increase revenue 9 percent year-on-year

 

 

(1) Core operating income and core diluted earnings per share exclude anticipated adjustments of $8 million for amortization of intangibles (or $0.05 per diluted share), $24 million for stock-based compensation expense and related charges (or $0.14 per diluted share), $7 million to $2 million for restructuring and related charges (or $0.04 to $0.01 per diluted share) and $18 million to $8 million for acquisition and integration charges (or $0.11 to $0.05 per diluted share).


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

Forward Looking Statements: This release contains forward-looking statements, including those regarding our anticipated financial results for our fourth quarter and full fiscal year 2018 and our guidance for future financial performance in our first quarter of fiscal year 2019 (including, net revenue, total company and segment revenue, U.S. GAAP operating income, U.S. GAAP diluted earnings per share, core operating income (Non-GAAP), core diluted earnings per share (Non-GAAP) results and the components thereof, net interest expense, and core tax rate(Non-GAAP). The statements in this release are based on current expectations, forecasts and assumptions involving risks and uncertainties that could cause actual outcomes and results to differ materially from our current expectations. Such factors include, but are not limited to: our determination as we finalize our financial results for our fourth quarter and full fiscal year 2018 that our financial results and conditions differ from our current preliminary unaudited numbers set forth herein; unexpected, adverse seasonal impacts on demand; performance in the markets in which we operate; changes in macroeconomic conditions; the occurrence of, success and expected financial results from, product ramps; our ability to maintain and improve costs, quality and delivery for our customers; whether our restructuring activities and the realignment of our capacity will adversely affect our cost structure, ability to service customers and labor relations; reliance on a limited number of suppliers for critical components; changes in technology; competition; anticipated growth for us and our industry that may not occur; managing rapid growth; managing rapid declines in customer demand and other related customer challenges that may occur; our ability to successfully consummate acquisitions and divestitures; managing the integration of businesses we acquire; risks associated with international sales and operations; retaining key personnel; our dependence on a limited number of large customers; and adverse changes in political conditions, in the U.S. and internationally, including, among others, adverse changes in tax laws and rates and our ability to estimate and manage their impact. Additional factors that could cause such differences can be found in our Annual Report on Form 10-K for the fiscal year ended August 31, 2017 and our other filings with the Securities and Exchange Commission. We assume no obligation to update these forward-looking statements.


Supplemental Information Regarding Non-GAAP Financial Measures: Jabil provides supplemental, non-GAAP financial measures in this release to facilitate evaluation of Jabil’s core operating performance. These non-GAAP measures exclude certain amounts that are included in the most directly comparable U.S. GAAP measures, do not have standard meanings and may vary from the non-GAAP financial measures used by other companies. Management believes these “core” financial measures are useful measures that facilitate evaluation of the past and future performance of Jabil’s ongoing operations on a comparable basis.

Jabil reports core operating income, core earnings, core ROIC and core diluted and basic earnings per share to provide investors an additional method for assessing operating income, earnings and earnings per share from what it believes are its core manufacturing operations. Among other uses, management uses non-GAAP financial measures to make operating decisions, assess business performance and as a factor in determining certain employee performance when determining incentive compensation. The Company determines the tax effect of the items excluded from core earnings and core basic and diluted earnings per share based upon evaluation of the statutory tax treatment and the applicable tax rate of the jurisdiction in which the pre-tax items were incurred, and for which realization of the resulting tax benefit, if any, is expected. In certain jurisdictions where the Company does not expect to realize a tax benefit (due to existing tax incentives or a history of operating losses or other factors resulting in a valuation allowance related to deferred tax assets), a reduced or 0% tax rate is applied. Detailed definitions of certain of the core financial measures are included above under “Definitions” and a reconciliation of the disclosed core financial measures to the most directly comparable U.S. GAAP financial measures is included under the heading “Supplemental Data” at the end of this release.

Meeting and Replay Information: Jabil will hold a conference call today at 8:30 a.m. ET to discuss its earnings for the fourth quarter and full fiscal year 2018 and to provide an investor briefing. To access the live audio webcast and view the accompanying slide presentations, visit the Investor Relations section of Jabil’s website, located at https://investors.jabil.com. An archived replay of the webcast will also be available after completion of the call.

About Jabil: Jabil (NYSE: JBL) is a product solutions company providing comprehensive design, manufacturing, supply chain and product management services. Operating from over 100 facilities in 29 countries, Jabil delivers innovative, integrated and tailored solutions to customers across a broad range of industries. For more information, visit jabil.com.

Adam Berry

Vice President, Investor Relations

(727) 803-5772

adam_berry@jabil.com


JABIL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

 

     August 31, 2018        
     (unaudited)     August 31, 2017  
ASSETS     

Current assets:

    

Cash and cash equivalents

   $ 1,257,949     $ 1,189,919  

Accounts receivable, net

     1,693,268       1,397,424  

Inventories, net

     3,457,706       2,942,083  

Prepaid expenses and other current assets

     1,141,000       1,097,257  
  

 

 

   

 

 

 

Total current assets

     7,549,923       6,626,683  

Property, plant and equipment, net

     3,198,016       3,228,678  

Goodwill and intangible assets, net

     906,876       892,780  

Deferred income taxes

     218,252       205,722  

Other assets

     172,574       142,132  
  

 

 

   

 

 

 

Total assets

   $ 12,045,641     $ 11,095,995  
  

 

 

   

 

 

 
LIABILITIES AND EQUITY     

Current liabilities:

    

Current installments of notes payable and long-term debt

   $ 25,197     $ 444,255  

Accounts payable

     4,942,932       4,257,623  

Accrued expenses

     2,262,744       2,168,715  
  

 

 

   

 

 

 

Total current liabilities

     7,230,873       6,870,593  

Notes payable and long-term debt, less current installments

     2,493,502       1,606,017  

Other liabilities

     94,617       100,812  

Income tax liabilities

     148,884       100,902  

Deferred income taxes

     114,385       49,327  
  

 

 

   

 

 

 

Total liabilities

     10,082,261       8,727,651  
  

 

 

   

 

 

 

Commitments and contingencies

    

Equity:

    

Jabil Inc. stockholders’ equity:

    

Preferred stock

     —         —    

Common stock

     257       253  

Additional paid-in capital

     2,218,673       2,104,203  

Retained earnings

     1,760,097       1,730,893  

Accumulated other comprehensive (loss) income

     (19,399     54,620  

Treasury stock, at cost

     (2,009,371     (1,536,455
  

 

 

   

 

 

 

Total Jabil Inc. stockholders’ equity

     1,950,257       2,353,514  

Noncontrolling interests

     13,123       14,830  
  

 

 

   

 

 

 

Total equity

     1,963,380       2,368,344  
  

 

 

   

 

 

 

Total liabilities and equity

   $ 12,045,641     $ 11,095,995  
  

 

 

   

 

 

 


JABIL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except for per share data)

(Unaudited)

 

     Three Months Ended      Fiscal Year Ended  
     August 31, 2018     August 31, 2017      August 31, 2018      August 31, 2017  

Net revenue

   $ 5,771,831     $ 5,023,029      $ 22,095,416      $ 19,063,121  

Cost of revenue

     5,329,684       4,597,211        20,388,624        17,517,478  
  

 

 

   

 

 

    

 

 

    

 

 

 

Gross profit

     442,147       425,818        1,706,792        1,545,643  

Operating expenses:

          

Selling, general and administrative

     261,234       241,823        1,050,716        907,702  

Research and development

     10,996       7,698        38,531        29,680  

Amortization of intangibles

     8,581       9,262        38,490        35,524  

Restructuring and related charges

     7,440       46,866        36,902        160,395  

Loss on disposal of subsidiaries

     —         2,112        —          2,112  
  

 

 

   

 

 

    

 

 

    

 

 

 

Operating income

     153,896       118,057        542,153        410,230  

Interest and other, net

     45,349       36,445        168,752        153,997  
  

 

 

   

 

 

    

 

 

    

 

 

 

Income before income tax

     108,547       81,612        373,401        256,233  

Income tax expense

     165,155       35,571        285,860        129,066  
  

 

 

   

 

 

    

 

 

    

 

 

 

Net (loss) income

     (56,608     46,041        87,541        127,167  

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

     706       362        1,211        (1,923
  

 

 

   

 

 

    

 

 

    

 

 

 

Net (loss) income attributable to Jabil Inc.

   $ (57,314   $ 45,679      $ 86,330      $ 129,090  
  

 

 

   

 

 

    

 

 

    

 

 

 

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

          

Basic

   $ (0.34   $ 0.26      $ 0.50      $ 0.71  
  

 

 

   

 

 

    

 

 

    

 

 

 

Diluted

   $ (0.34   $ 0.25      $ 0.49      $ 0.69  
  

 

 

   

 

 

    

 

 

    

 

 

 

Weighted average shares outstanding:

          

Basic

     166,968       178,697        172,237        181,902  
  

 

 

   

 

 

    

 

 

    

 

 

 

Diluted

     166,968       182,977        175,044        185,838  
  

 

 

   

 

 

    

 

 

    

 

 

 


JABIL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

 

     Fiscal Year Ended  
     August 31, 2018     August 31, 2017  

Cash flows from operating activities:

    

Net income

   $ 87,541     $ 127,167  

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

    

Depreciation and amortization

     773,704       760,405  

Restructuring and related charges

     16,264       94,346  

Recognition of stock-based compensation expense and related charges

     90,664       48,544  

Deferred income taxes

     52,705       (63,001

Provision for allowance for doubtful accounts

     38,030       10,112  

Other, net

     (13,600     22,109  

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

    

Accounts receivable

     (316,262     (31,353

Inventories

     (499,105     (445,089

Prepaid expenses and other current assets

     (76,602     19,346  

Other assets

     (34,747     (30,413

Accounts payable, accrued expenses and other liabilities

     815,258       744,470  
  

 

 

   

 

 

 

Net cash provided by operating activities

     933,850       1,256,643  
  

 

 

   

 

 

 

Cash flows used in investing activities:

    

Acquisition of property, plant and equipment

     (1,036,651     (716,485

Proceeds and advances from sale of property, plant and equipment

     350,291       175,000  

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

     (109,664     (36,620

Other, net

     (2,360     (1,360
  

 

 

   

 

 

 

Net cash used in investing activities

     (798,384     (579,465
  

 

 

   

 

 

 

Cash flows used in financing activities:

    

Borrowings under debt agreements

     9,677,424       7,434,107  

Payments toward debt agreements

     (9,206,016     (7,479,150

Payments to acquire treasury stock

     (450,319     (306,640

Dividends paid to stockholders

     (57,833     (59,959

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

     24,865       21,791  

Treasury stock minimum tax withholding related to vesting of restricted stock

     (22,597     (12,268

Other, net

     (12,568     (2,427
  

 

 

   

 

 

 

Net cash used in financing activities

     (47,044     (404,546
  

 

 

   

 

 

 

Effect of exchange rate changes on cash and cash equivalents

     (20,392     5,228  
  

 

 

   

 

 

 

Net increase in cash and cash equivalents

     68,030       277,860  

Cash and cash equivalents at beginning of period

     1,189,919       912,059  
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 1,257,949     $ 1,189,919  
  

 

 

   

 

 

 


JABIL INC. AND SUBSIDIARIES

SUPPLEMENTAL DATA

RECONCILIATION OF U.S. GAAP FINANCIAL RESULTS TO NON-GAAP MEASURES

(in thousands, except for per share data)

(Unaudited)

 

     Three Months Ended     Fiscal Year Ended  
     August 31, 2018     August 31, 2017     August 31, 2018      August 31, 2017  

Operating income (U.S. GAAP)

   $ 153,896     $ 118,057     $ 542,153      $ 410,230  
  

 

 

   

 

 

   

 

 

    

 

 

 

Amortization of intangibles

     8,581       9,262       38,490        35,524  

Stock-based compensation expense and related charges

     15,689       15,167       98,511        48,544  

Restructuring and related charges

     7,440       46,866       36,902        160,395  

Distressed customer charge

     18,004       —         32,710        10,198  

Business interruption and impairment charges, net

     577       —         11,299        —    

Loss on disposal of subsidiaries

     —         2,112       —          2,112  

Acquisition and integration charges

     8,082       —         8,082        —    
  

 

 

   

 

 

   

 

 

    

 

 

 

Adjustments to operating income

     58,373       73,407       225,994        256,773  
  

 

 

   

 

 

   

 

 

    

 

 

 

Core operating income (Non-GAAP)

   $ 212,269     $ 191,464     $ 768,147      $ 667,003  
  

 

 

   

 

 

   

 

 

    

 

 

 

Net (loss) income attributable to Jabil Inc. (U.S. GAAP)

   $ (57,314   $ 45,679     $ 86,330      $ 129,090  

Adjustments to operating income

     58,373       73,407       225,994        256,773  

Impairment on securities

     —         —         —          11,539  

Adjustments for taxes(1)

     117,167       (1,933     146,206        (4,726
  

 

 

   

 

 

   

 

 

    

 

 

 

Core earnings (Non-GAAP)

   $ 118,226     $ 117,153     $ 458,530      $ 392,676  
  

 

 

   

 

 

   

 

 

    

 

 

 

(Loss) earnings per share (U.S. GAAP):

         

Basic

   $ (0.34   $ 0.26     $ 0.50      $ 0.71  
  

 

 

   

 

 

   

 

 

    

 

 

 

Diluted

   $ (0.34   $ 0.25     $ 0.49      $ 0.69  
  

 

 

   

 

 

   

 

 

    

 

 

 

Core earnings per share (Non-GAAP):

         

Basic

   $ 0.71     $ 0.66     $ 2.66      $ 2.16  
  

 

 

   

 

 

   

 

 

    

 

 

 

Diluted

   $ 0.70     $ 0.64     $ 2.62      $ 2.11  
  

 

 

   

 

 

   

 

 

    

 

 

 

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

         

Basic

     166,968       178,697       172,237        181,902  
  

 

 

   

 

 

   

 

 

    

 

 

 

Diluted

     166,968       182,977       175,044        185,838  
  

 

 

   

 

 

   

 

 

    

 

 

 

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

         
  

 

 

   

 

 

   

 

 

    

 

 

 

Basic

     166,968       178,697       172,237        181,902  
  

 

 

   

 

 

   

 

 

    

 

 

 

Diluted

     169,728       182,977       175,044        185,838  
  

 

 

   

 

 

   

 

 

    

 

 

 

 

(1) 

Includes a $111.4 million and $142.3 million provisional estimate to account for the effects of the Tax Cuts and Jobs Act for the three months and fiscal year ended August 31, 2018, respectively.


JABIL INC. AND SUBSIDIARIES

SUPPLEMENTAL DATA

RETURN ON INVESTED CAPITAL AND CORE RETURN ON INVESTED CAPITAL

(in thousands)

(Unaudited)

 

     Three Months Ended     Fiscal Year Ended  
     August 31, 2018     August 31, 2017     August 31, 2018     August 31, 2017  

Numerator:

        

Operating income (U.S. GAAP)

   $ 153,896     $ 118,057     $ 542,153     $ 410,230  

Tax effect (1)

     (88,126     (35,771     (300,979     (137,087
  

 

 

   

 

 

   

 

 

   

 

 

 

After-tax operating income

     65,770       82,286       241,174       273,143  
     x4       x4       x1       x1  
  

 

 

   

 

 

   

 

 

   

 

 

 

Annualized after-tax operating income

   $ 263,080     $ 329,144     $ 241,174     $ 273,143  
  

 

 

   

 

 

   

 

 

   

 

 

 

Core operating income (Non-GAAP)

   $ 212,269     $ 191,464     $ 768,147     $ 667,003  

Tax effect (2)

     (49,875     (37,610     (144,261     (134,930
  

 

 

   

 

 

   

 

 

   

 

 

 

After-tax core operating income

     162,394       153,854       623,886       532,073  
     x4       x4       x1       x1  
  

 

 

   

 

 

   

 

 

   

 

 

 

Annualized after-tax core operating income

   $ 649,576     $ 615,416     $ 623,886     $ 532,073  
  

 

 

   

 

 

   

 

 

   

 

 

 

Denominator:

        

Average total Jabil Inc. stockholders’ equity (3)

   $ 2,061,699     $ 2,340,495     $ 2,151,886     $ 2,395,843  

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

     2,321,562       1,638,591       2,063,047       1,853,302  

Average current installments of notes payable and long-term debt (3)

     148,698       492,241       235,348       245,654  

Average cash and cash equivalents (3)

     (967,720     (966,925     (1,223,934     (1,050,989
  

 

 

   

 

 

   

 

 

   

 

 

 

Net invested capital base

   $ 3,564,239     $ 3,504,402     $ 3,226,347     $ 3,443,810  
  

 

 

   

 

 

   

 

 

   

 

 

 

Return on Invested Capital (U.S. GAAP)

     7.4     9.4     7.5     7.9

Adjustments noted above

     10.8     8.2     11.8     7.6

Core Return on Invested Capital (Non-GAAP)

     18.2     17.6     19.3     15.5

 

(1) 

This amount is calculated by adding the amount of income taxes attributable to its operating income (U.S. GAAP) and its interest expense.

(2) 

This amount is calculated by adding the amount of income taxes attributable to its core operating income (Non-GAAP) and its interest expense.

(3) 

The average is based on the addition of the account balance at the end of the most recently-ended quarter to the account balance at the end of the prior quarter for the three months ended August 31, 2018 and 2017, respectively, and dividing by two. The average is based on the addition of the account balance at the end of the most recently-ended fiscal year to the account balance at the end of the prior fiscal year for the fiscal years ended August 31, 2018 and 2017, respectively, and dividing by two.