Discontinued Operations

6 Months Ended

Feb. 28, 2014

Discontinued Operations And Disposal Groups [Abstract]

Discontinued Operations

2. Discontinued Operations

On December 17, 2013, the Company announced that it entered into a stock purchase agreement with iQor Holdings, Inc. (“iQor”) for the sale of Jabil’s Aftermarket Services (“AMS”) business for consideration of $725.0 million, which consists of $675.0 million in cash and an aggregate liquidation preference value of $50.0 million in Senior Non-Convertible Cumulative Preferred Stock of iQor that accretes dividends at an annual rate of 8 percent and is redeemable in nine years or upon a change in control. The final purchase price is subject to adjustment based on the amounts, as of the closing date, for cash, indebtedness, taxes, interest and certain working capital accounts of the Company’s AMS business. Also, as part of this transaction, the Company is subject to a limited covenant not to compete. As of February 28, 2014, AMS meets the criteria for classification as held for sale and discontinued operations reporting because the Company will not have any significant continuing involvement in the operations of AMS after the disposal transaction and the operations and cash flows of AMS will be eliminated from the ongoing operations of the Company as a result of the disposal transaction. As of February 28, 2014, the carrying value is less than the estimated fair value less cost to sell and, thus, no adjustment to the carrying value of the disposal group is necessary. On April 1, 2014, the Company completed the sale of substantially all of the AMS business except for the Malaysian operations due to certain regulatory approvals that are still pending in that jurisdiction. As a result, $20.0 million associated with the Malaysian operations was included in escrow until the closing of the Malaysian operations, which is anticipated to occur once such approvals are obtained. The amount of proceeds payable at closing was subject to a reduction of $90.5 million for cash, indebtedness, taxes, interest, certain working capital accounts and other items of the Company’s AMS business, which is subject to a future reconciliation and potential adjustment. In connection with the AMS transaction, the Company entered into a transition services agreement effective April 1, 2014 to provide certain administrative services to facilitate the orderly transfer of the business operations to iQor. This agreement is not material and the continuing cash flows are not significant.

For all periods presented, the operating results associated with this business have been reclassified into income from discontinued operations, net of tax in the Condensed Consolidated Statements of Operations, and the assets and liabilities associated with this business have been reflected as assets and liabilities of discontinued operations in the Condensed Consolidated Balance Sheets.

The following table provides a summary of AMS amounts included in discontinued operations (in thousands):

	Three months ended					Six months ended
	February 28, 2014			February 28, 2013		February 28, 2014		February 28, 2013
Net revenue	$	224,040		$	250,896	$	494,526	$	518,033
(Loss) income from discontinued operations, before tax	$	(2,386	)	$	16,021	$	15,246	$	33,380
Income tax expense	$	3,865		$	3,224	$	5,074	$	5,675
(Loss) income from discontinued operations, net of tax	$	(6,251	)	$	12,797	$	10,172	$	27,705