Discontinued Operations

12 Months Ended

Aug. 31, 2016

Discontinued Operations [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 purchase price was finalized during fiscal year 2015 and was reduced by $100.2 million 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. On April 1, 2014, the Company completed the sale of the AMS business except for the Malaysian operations, for which the sale was completed on December 31, 2014.

The Company recognized a gain on sale of discontinued operations, net of tax, of approximately $223.3 million for the fiscal year ended August 31, 2014. The Company incurred direct transaction costs in connection with the sale of approximately $16.5million during the fiscal year ended August 31, 2014, which is included in gain on sale of discontinued operations, net of tax. The income tax expense recognized on the gain on sale of discontinued operations during the fiscal year ended August 31, 2014 was significantly reduced to $7.6 million primarily due to the utilization of net operating loss related deferred tax assets with corresponding valuation allowances. At April 1, 2014, the fair value of the Senior Non-Convertible Cumulative Preferred Stock was approximately $33.2 million, which is included in gain on sale of discontinued operations, net of tax.

For all periods presented, the operating results associated with this business have been reclassified into discontinued operations, net of tax in the Consolidated Statements of Operations. The following table provides a summary of AMS amounts included in discontinued operations (in thousands):

	Fiscal Year Ended August 31,
	2016		2015		2014
Net revenue	$	―	$	14,624	$	586,652
(Loss) income from discontinued operations, before tax	$	―		(7,689)		26,694
Income tax expense		―		9		6,140
(Loss) income from discontinued operations, net of tax	$	―	$	(7,698)	$	20,554
(Loss) gain on sale of discontinued operations, before tax	$	―	$	(300)	$	230,878
Income tax expense		―		575		7,579
(Loss) gain on sale of discontinued operations, net of tax	$	―	$	(875)	$	223,299
Discontinued operations, net of tax	$	―	$	(8,573)	$	243,853