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8-K - 8-K - JABIL CIRCUIT INCd415333d8k.htm

Exhibit 99.1

 

LOGO

Jabil Posts Fourth Quarter & Fiscal Year 2012 Results

Record Fiscal Year Despite Macro Weakness

St. Petersburg, FL – September 25, 2012...Today Jabil Circuit, Inc. (NYSE: JBL), announced its preliminary, unaudited financial results for the fourth quarter and full fiscal year, ended August 31, 2012. The company reported fourth quarter revenue of $4.3 billion and fiscal year revenue of $17.2 billion. “In this environment, posting another record fiscal year in revenue, income and earnings was quite an achievement,” said Timothy L. Main, President and CEO of Jabil.

Market share gains, new customer wins and new production from existing customers allowed Jabil to grow its targeted markets during the fiscal year while most of the industry contracted. Jabil’s Diversified Manufacturing Services business grew 24 percent in fiscal 2012. Although Jabil picked up share gains in its Enterprise & Infrastructure business during the year, overall demand weakened, resulting in a decrease of 2 percent from fiscal 2011. Jabil’s High Velocity business declined 14 percent during the fiscal year.

“Results for the fourth quarter were negatively impacted by a challenging new program ramp in our Specialized Services sector,” said Main. “Additionally demand remained weak in most of our business segments.” Generally accepted accounting principles (GAAP) operating income for the quarter was $144 million. These results were negatively impacted by a distressed customer charge of $5.9 million. Excluding amortization of intangibles, stock-based compensation and distressed customer charges, operating income was $175 million. GAAP diluted earnings per share was $0.39 cents and core diluted earnings per share was $0.54 cents.

“We are pleased to have generated cash flow from operations of $443 million during the quarter and $634 million over the course of the year. Due to this outstanding performance and ongoing strength of the balance sheet, we were able to return $136 million in capital to shareholders during the fiscal year through dividends and share repurchases,” said Chief Financial Officer Forbes Alexander. “We see this positive performance continuing and are estimating operating cash flow of $1 billion in fiscal 2013,” Alexander noted.

Management also announced that the Jabil Board of Directors has authorized the repurchase of up to $100 million worth of shares of the Company’s common stock during the next twelve months. The shares will be repurchased from time-to-time in open market or through privately negotiated transactions at the Company’s discretion, subject to factors such as market conditions, levels of cash generation from operations, cash requirements for capital expenses and acquisitions and stock price. The repurchased shares should help to minimize the dilution from the Company’s employee equity issuance.

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


Operational Highlights Fiscal 2012 versus Fiscal 2011

   

Revenue from Diversified Manufacturing Services increased 24 percent.

   

Specialized Services revenue expanded 48 percent.

   

Healthcare & Instrumentation revenue grew 7 percent.

   

Industrial & Clean Tech revenue improved 2 percent.

   

Enterprise & Infrastructure revenue contracted by 2 percent.

   

High Velocity revenue decreased 14 percent.

   

Generated $634 million in cash flow from operations during fiscal 2012.

   

GAAP return on invested capital of 22 percent.

   

Returned $65 million in dividends to shareholders during fiscal 2012.

 

Quarterly Results   Q4 2012   Q4 2011

Net revenue

  $4.3 billion   $4.3 billion

GAAP operating income

  $144.3 million   $165.6 million

GAAP net income

  $82.8 million   $114.3 million

GAAP diluted earnings per share

  $0.39   $0.52

GAAP return on invested capital

  17%   26%

Core operating income

  $175.1 million   $187.2 million

Core earnings

  $113.3 million   $136.3 million

Core diluted earnings per share

  $0.54   $0.62

Core return on invested capital

  22%   30%

Fiscal Year Results

  Fiscal 2012   Fiscal 2011

Net revenue

  $17.2 billion   $16.5 billion

GAAP operating income

  $621.9 million   $578.7 million

GAAP net income

  $394.7 million   $381.1 million

GAAP diluted earnings per share

  $1.87   $1.73

GAAP return on invested capital

  22%   23%

Core operating income

  $736.2 million   $715.2 million

Core earnings

  $507.1 million   $516.3 million

Core diluted earnings per share

  $2.40   $2.34

Core return on invested capital

  26%   29%

 

Business Update

“We are fortunate to have a healthy balance sheet, strong operations, dedicated employees and a roster of market-leading customers heading into fiscal 2013,” said Jabil CEO Timothy Main. “While the macroeconomic climate remains challenging, our long-term goals and competitive position are intact and we expect earnings to increase between five and ten percent in fiscal 2013.” Jabil provided guidance for its first fiscal quarter of 2013, which began on September 1st.

 

    Fiscal Q1 2013 Guidance Range

Net revenue

  $4.3 to $4.5 billion

GAAP operating income

  $140 to $175 million

GAAP earnings per share

  $0.37 to $0.50 per diluted share

Core operating income

  $170 to $200 million

Core earnings per share

  $0.51 to $0.62 per diluted share

 

 

(GAAP earnings per share for the first quarter of fiscal 2013 are currently estimated to include $0.02 per share for amortization of intangibles and $0.10 to $0.12 per share for stock-based compensation).


FORWARD LOOKING STATEMENT: This news release contains forward-looking statements, including those regarding our anticipated financial results for our fourth quarter of fiscal year 2012; our estimated operating cash flows in fiscal year 2013; potential repurchases of our common stock; our balance sheet, operations, employees and roster of customers heading into fiscal year 2013; the macroeconomic climate; our long-term goals and competitive position; our fiscal year 2013 earnings and our currently expected first quarter of fiscal year 2013 net revenue, core operating income, core and GAAP earnings per share results and the components thereof. The statements in this news release are based on current expectations, forecasts and assumptions involving risks and uncertainties that could cause actual outcomes and results to differ materially. These risks and uncertainties include, but are not limited to: our determination as we finalize our financial results for our fourth fiscal quarter of fiscal year 2012 that our financial results and conditions differ from our current preliminary unaudited numbers set forth herein; fluctuations in our stock’s market price; fluctuations in operating results and cash flows; unexpected, adverse seasonal impacts on demand; changes in macroeconomic conditions, both in the U.S. and internationally; our financial performance during and after the current economic conditions; our ability to maintain and improve costs, quality and delivery for our customers; risks and costs inherent in litigation; whether our realignment of our capacity will adversely affect our cost structure, ability to service customers and labor relations; our ability to take advantage of perceived benefits of offering customers vertically integrated services; changes in technology; competition; anticipated growth for us and our industry that may not occur; managing rapid growth; managing rapid declines in customer demand and other related customer challenges that may occur; our ability to successfully consummate acquisitions and divestitures; managing the integration of businesses we acquire (including, with respect to the acquisition of the Italian and French sites, potential unknown liabilities and the costs associated with addressing potential reduced business activity at these sites); risks associated with international sales and operations; retaining key personnel; our dependence on a limited number of large customers; business and competitive factors generally affecting the electronic manufacturing services industry, our customers and our business; other factors that we may not have currently identified or quantified; and other risks, relevant factors and uncertainties identified in our Annual Report on Form 10-K for the fiscal year ended August 31, 2011, subsequent Reports on Form 10-Q and Form 8-K and our other securities filings. Jabil disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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

Company Conference Call Information: Jabil will hold a conference call to discuss the fourth fiscal quarter 2012 earnings today at 4:30 p.m. ET live on the Internet at http://www.jabil.com. The call will be recorded and archived on the web at http://www.jabil.com. A taped replay of the conference call will also be available September 25, 2012 at approximately 7:30 p.m. ET through midnight on October 2, 2012. To access the replay, call (855) 859-2056 from within the United States, or (404) 537-3406 outside the United States. The pass code is: 29777922. An archived webcast of the conference call will be available at http://www.jabil.com/investors/.

About Jabil

Jabil is an electronic product solutions company providing comprehensive electronics design, manufacturing and aftermarket product management services to global electronics and technology companies. Offering complete product supply chain management from facilities in 29 countries, Jabil provides comprehensive, individualized-focused solutions to customers in a broad range of industries. Jabil common stock is traded on the New York Stock Exchange under the symbol, “JBL”. Further information is available on Jabil’s website: jabil.com.

Investor & Media Contact:

Beth Walters

Senior Vice President, Investor Relations & Communications

Jabil Circuit, Inc.

(727) 803-3511

beth_walters@jabil.com


 

JABIL CIRCUIT, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

 

     August 31,
2012 (Unaudited)
    August 31,
2011
 

ASSETS

    

Current assets:

    

Cash and cash equivalents

   $ 1,217,256      $ 888,611   

Accounts receivable, net

     1,125,015        1,100,926   

Inventories

     2,268,949        2,227,339   

Prepaid expenses and other current assets

     989,326        868,892   

Income taxes receivable

     10,949        33,855   

Deferred income taxes

     27,833        15,737   
  

 

 

   

 

 

 

Total current assets

     5,639,328        5,135,360   

Property, plant and equipment, net

     1,779,155        1,641,335   

Goodwill and intangible assets, net

     214,071        125,305   

Deferred income taxes

     73,411        74,989   

Income taxes receivable

     15,651        —     

Other assets

     81,525        80,951   
  

 

 

   

 

 

 

Total assets

   $ 7,803,141      $ 7,057,940   
  

 

 

   

 

 

 

LIABILITIES AND EQUITY

    

Current liabilities:

    

Current installments of notes payable and long-term debt

   $ 18,031      $ 74,160   

Accounts payable

     2,992,865        2,885,168   

Accrued expenses

     808,480        892,391   

Income taxes payable

     35,665        32,987   

Deferred income taxes

     3,955        5,182   
  

 

 

   

 

 

 

Total current liabilities

     3,858,996        3,889,888   

Notes payable and long-term debt, less current installments

     1,658,326        1,112,594   

Other liabilities

     85,714        67,423   

Income tax liability

     68,525        88,451   

Deferred income taxes

     24,245        15,761   
  

 

 

   

 

 

 

Total liabilities

     5,695,806        5,174,117   

Commitments and contingencies

Equity:

    

Jabil Circuit, Inc. stockholders’ equity

    

Common stock

     232        225   

Additional paid-in capital

     1,752,847        1,649,431   

Retained earnings

     766,934        441,793   

Accumulated other comprehensive income

     106,275        194,706   

Treasury stock, at cost

     (521,231     (419,035
  

 

 

   

 

 

 

Total Jabil Circuit, Inc. stockholders’ equity

     2,105,057        1,867,120   
  

 

 

   

 

 

 

Noncontrolling interests

     2,278        16,703   
  

 

 

   

 

 

 

Total equity

     2,107,335        1,883,823   
  

 

 

   

 

 

 

Total liabilities and equity

   $ 7,803,141      $ 7,057,940   
  

 

 

   

 

 

 


JABIL CIRCUIT, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except for per share data)

(Unaudited)

 

     Three months ended      Twelve months ended  
     August 31,
2012
    August 31,
2011
     August 31,
2012
     August 31,
2011
 

Net revenue

   $ 4,338,080      $ 4,280,295       $ 17,151,941       $ 16,518,827   

Cost of revenue

     4,020,532        3,951,092         15,842,896         15,264,257   
  

 

 

   

 

 

    

 

 

    

 

 

 

Gross profit

     317,548        329,203         1,309,045         1,254,570   

Operating expenses:

          

Selling, general and administrative

     163,070        152,204         644,452         590,572   

Research and development

     6,784        6,209         25,837         25,034   

Amortization of intangibles

     3,426        5,230         16,825         22,051   

Restructuring and impairment charges

     —          —           —           628   

Settlement of receivables and related charges

     —          —           —           13,607   

Loss on disposal of subsidiaries

     —          —           —           23,944   
  

 

 

   

 

 

    

 

 

    

 

 

 

Operating income

     144,268        165,560         621,931         578,734   

Interest and other, net

     29,804        24,527         113,031         97,547   
  

 

 

   

 

 

    

 

 

    

 

 

 

Income before income tax

     114,464        141,033         508,900         481,187   

Income tax expense

     31,999        25,492         112,811         98,229   
  

 

 

   

 

 

    

 

 

    

 

 

 

Net income

     82,465        115,541         396,089         382,958   

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

     (332     1,253         1,402         1,895   
  

 

 

   

 

 

    

 

 

    

 

 

 

Net income attributable to Jabil Circuit, Inc.

   $ 82,797      $ 114,288       $ 394,687       $ 381,063   
  

 

 

   

 

 

    

 

 

    

 

 

 

Earnings per share attributable to the stockholders of
Jabil Circuit, Inc.:

          

Basic

   $ 0.40      $ 0.54       $ 1.91       $ 1.78   
  

 

 

   

 

 

    

 

 

    

 

 

 

Diluted

   $ 0.39      $ 0.52       $ 1.87       $ 1.73   
  

 

 

   

 

 

    

 

 

    

 

 

 

Weighted average shares outstanding:

          

Basic

     205,666        212,753         206,160         214,502   
  

 

 

   

 

 

    

 

 

    

 

 

 

Diluted

     210,847        219,494         211,181         220,719   
  

 

 

   

 

 

    

 

 

    

 

 

 


JABIL CIRCUIT, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

 

     Twelve months ended  
     August 31,
2012
    August 31,
2011
 

Cash flows from operating activities:

    

Net income

   $ 396,089      $ 382,958   

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

    

Depreciation and amortization

     353,492        319,179   

Recognition of stock-based compensation expense

     81,405        76,230   

Settlement of receivables and related charges

     —          12,673   

Loss on disposal of subsidiaries

     —          23,944   

Other, net

     15,477        12,804   

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

    

Accounts receivable

     (22,626     48,232   

Inventories

     (53,268     (158,545

Prepaid expenses and other current assets

     (141,526     (212,265

Other assets

     (2,745     3,205   

Accounts payable and accrued expenses

     21,955        305,814   

Income taxes payable

     (14,027     13,780   
  

 

 

   

 

 

 

Net cash provided by operating activities

     634,226        828,009   
  

 

 

   

 

 

 

Cash flows from investing activities:

    

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

     (125,098     3,985   

Acquisition of property, plant and equipment

     (497,697     (458,989

Proceeds from sale of property, plant and equipment

     16,408        23,483   

Proceeds from disposal of available for sale investments

     —          5,800   

Cost of receivables acquired, net of cash collections

     517        (557
  

 

 

   

 

 

 

Net cash used in investing activities

     (605,870     (426,278
  

 

 

   

 

 

 

Cash flows from financing activities:

    

Payments toward debt agreements

     (8,748,420     (7,586,754

Borrowings under debt agreements

     9,233,414        7,572,157   

Dividends paid to stockholders

     (65,240     (60,411

Dividends paid to noncontrolling interest

     (333     —     

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

     26,003        31,644   

Payments to acquire treasury stock

     (70,991     (200,226

Treasury stock minimum tax withholding related to vesting of restricted stock

     (31,205     (9,763

Debt issuance costs

     (6,254     (14,549

Excess tax benefit related to stock awards

     885        180   

Cash paid to purchase noncontrolling interest

     (20,501     —     
  

 

 

   

 

 

 

Net cash provided by (used in) financing activities

     317,358        (267,722
  

 

 

   

 

 

 

Effect of exchange rate changes on cash and cash equivalents

     (17,069     10,273   
  

 

 

   

 

 

 

Net increase in cash and cash equivalents

     328,645        144,282   

Cash and cash equivalents at beginning of fiscal year

     888,611        744,329   
  

 

 

   

 

 

 

Cash and cash equivalents at end of fiscal year

     1,217,256        888,611   
  

 

 

   

 

 

 


JABIL CIRCUIT, INC. AND SUBSIDIARIES

SUPPLEMENTAL DATA

RECONCILIATION OF GAAP FINANCIAL RESULTS TO NON-GAAP MEASURES

(In thousands, except for per share data)

(Unaudited)

 

     Three months ended      Twelve months ended  
     August 31,
2012
     August 31,
2011
     August 31,
2012
     August 31,
2011
 

Operating income (GAAP)

   $ 144,268       $ 165,560       $ 621,931       $ 578,734   

Amortization of intangibles

     3,426         5,230         16,825         22,051   

Distressed customer charge

     5,865         —           16,014         —     

Stock-based compensation and related charges

     21,552         16,376         81,409         76,230   

Restructuring and impairment charges

     —           —           —           628   

Loss on disposal of subsidiaries

     —           —           —           23,944   

Settlement of receivables and related charges

     —           —           —           13,607   
  

 

 

    

 

 

    

 

 

    

 

 

 

Core operating income (Non-GAAP)

   $ 175,111       $ 187,166       $ 736,179       $ 715,194   
  

 

 

    

 

 

    

 

 

    

 

 

 

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

   $ 82,797       $ 114,288       $ 394,687       $ 381,063   

Amortization of intangibles, net of tax

     3,327         5,213         16,425         21,998   

Distressed customer charge, net of tax

     5,865         —           16,014         —     

Stock-based compensation and related charges, net of tax

     21,329         16,790         79,985         75,068   

Restructuring and impairment charges, net of tax

     —           —           —           628   

Loss on disposal of subsidiaries, net of tax

     —           —           —           23,944   

Settlement of receivables and related charges, net of tax

     —           —           —           13,607   
  

 

 

    

 

 

    

 

 

    

 

 

 

Core earnings (Non-GAAP)

   $ 113,318       $ 136,291       $ 507,111       $ 516,308   
  

 

 

    

 

 

    

 

 

    

 

 

 

Earnings per share: (GAAP)

           

Basic

   $ 0.40       $ 0.54       $ 1.91       $ 1.78   
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted

   $ 0.39       $ 0.52       $ 1.87       $ 1.73   
  

 

 

    

 

 

    

 

 

    

 

 

 

Core earnings per share: (Non-GAAP)

           

Basic

   $ 0.55       $ 0.64       $ 2.46       $ 2.41   
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted

   $ 0.54       $ 0.62       $ 2.40       $ 2.34   
  

 

 

    

 

 

    

 

 

    

 

 

 

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

           

Basic

     205,666         212,753         206,160         214,502   
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted

     210,847         219,494         211,181         220,719   
  

 

 

    

 

 

    

 

 

    

 

 

 


JABIL CIRCUIT, INC. AND SUBSIDIARIES

SUPPLEMENTAL DATA

RECONCILIATION OF GAAP FINANCIAL RESULTS TO NON-GAAP MEASURES

(In thousands)

(Unaudited)

 

CALCULATION OF RETURN ON INVESTED CAPITAL AND

CORE RETURN ON INVESTED CAPITAL

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

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

The Company calculates “net invested capital asset base” as the sum of the averages (the calculation of which are explained below) of (1) its stockholders’ equity, (2) the non-current portion of its notes payable and long term debt and (3) the current portion of its notes payable and long term debt, less the average (the calculation of which is explained below) of its cash and cash equivalents.

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

 

     Three months
ended
August 31,
2012
    Twelve months
ended
August 31,
2012
 

Numerator:

    

Operating income (GAAP)

   $ 144,268      $ 621,931   

Tax effect (1)

     (32,552     (114,341
  

 

 

   

 

 

 

After-tax operating income

     111,716        507,590   
     x4        x1   
  

 

 

   

 

 

 

Annualized after-tax operating income

   $ 446,864      $ 507,590   
  

 

 

   

 

 

 

Core Operating Income (Non-GAAP)

   $ 175,111      $ 736,179   

Tax effect (2)

     (32,761     (115,905
  

 

 

   

 

 

 

After-tax core operating income

     142,350        620,274   
     x4        x1   
  

 

 

   

 

 

 

Annualized after-tax core operating income

   $ 569,400      $ 620,274   
  

 

 

   

 

 

 

Denominator:

    

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

   $ 2,059,312      $ 1,986,089   

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

     1,399,240        1,385,460   

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

     157,225        46,096   

Average cash and cash equivalents (3)

     (979,693     (1,052,934
  

 

 

   

 

 

 

Net invested capital asset base

   $ 2,636,084      $ 2,364,711   
  

 

 

   

 

 

 

Return on Invested Capital (GAAP)

     17.0     21.5

Adjustments noted above

     4.6     4.7

Core Return on Invested Capital (Non-GAAP)

     21.6     26.2

 

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

 

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

 

  (3) The average is based on the addition of the account balance at the end of the most recently-ended quarter to the account balance at the end of the prior quarter for the three months ended August 31, 2012 and dividing by two. The average is based on the addition of the account balance at the end of the most recently-ended fiscal year to the account balance at the end of the prior fiscal year for the twelve months ended August 31, 2012 and dividing by two.