Jabil Announces Non-Cash Charges

29 March 2007
St. Petersburg, FL

ST. PETERSBURG, FL – March 29, 2007 –- As a result of its review of its historical stock option grant practices, (previously disclosed on Form 8-K filed, November 14, 2006) Jabil Circuit, Inc. (NYSE:JBL) concluded that the Company needed to restate its 2005 financial statements and related disclosures, and that 2005 statements and related disclosures should no longer be relied upon.  In the same filing, Jabil said its review of its historical stock option grant practices was ongoing and not complete.  As a result of the ongoing review, Jabil concluded on March 21, 2007 that its 2003 financial statements and related disclosures should also not be relied upon and Jabil plans to adjust its 2004 financial statements by an immaterial amount. 

Jabil’s review of its historical stock option practices confirmed that in almost all instances Jabil used the date on which committees of its Board of Directors met or acted to consider long-term compensation grants for purposes of determining both stock option exercise prices and the accounting measurement dates for purposes of calculating stock-related compensation charges.  However, the Office of the Chief Accountant of the Securities and Exchange Commission has issued recent guidance clarifying that if options are approved for a group of employees the accounting measurement date for those options does not occur until the list of recipients and the amount of their awards are final.  In some instances, the amount of each employee's option award was not finalized until after the Board committee acted.  As a result, Jabil incorrectly calculated stock-related compensation charges.  In other instances, Jabil misapplied certain accounting guidance or administrative errors or other events occurred that contributed to it not recording stock-related compensation charges.

Jabil currently estimates that it will record approximately $54.3 million of aggregate incremental non-cash stock-related compensation charges for the fiscal years 1996 through August 31, 2005.  Of that amount, it is estimated that the incremental charge for 2005 will be approximately $35.0 million. For 2003 the estimated incremental charge will be approximately $16.2 million. For fiscal years 1996 through 2002 there are estimated aggregate incremental charges of approximately $8.4 million.   For fiscal year 2004 there will be a reduction in expense of approximately $5.3 million.  All of these amounts are prior to any tax benefit related to the adjustments.  The disclosure provided here represents the Jabil's preliminary unaudited conclusions.

Of the $54.3 million of incremental compensation expense for the 1996-2005 period, approximately $48.9 million was related to options granted to employees that were neither executive officers nor directors of Jabil at the time the grants.  Approximately $1.7 million related to various options granted to individuals that were executive officers of Jabil at the time the grants were made.   The remaining $3.7 million related to options granted to a director over a period of five years for his providing consulting services to Jabil on its merger and acquisition activities.  In that instance, Jabil misapplied existing accounting guidance and recorded part, but not all, of the expense associated with those grants.

The Company's evaluation of its historical stock option grant practices has largely been completed, although Jabil continues to cooperate with the Securities and Exchange Commission in its inquiry and the Company is still involved in several lawsuits and inquiries from governmental authorities. As disclosed on December 8, 2006, a Special Review Committee of Jabil’s Board, created to review allegations in certain of the option related lawsuits, determined that there was no merit to the allegations that Jabil’s officers issued themselves backdated stock options or attempted to cause others to issue them. As previously disclosed, Jabil is evaluating its historical recognition of revenue for certain periods.  As a result, Jabil is unable to finalize the preparation of its financial statements. 

Jabil plans to avail itself of recent guidance issued by the Securities and Exchange Commission in filing its Annual Report on Form 10-K for the year ending August 31, 2006.  Jabil anticipates that the amount of incremental stock-related compensation credit and charges for its 2004 and 2005 fiscal years will be recorded in audited restated financial statements in the 2006 10-K and the incremental charges for the 1996 through 2003 fiscal years will be recorded in the aggregate as an opening balance sheet adjustment for 2004.  In addition, the five year table in the 2006 10-K will be restated to record the 2002 and 2003 charges in those fiscal years and the fiscal year 1996 through 2001 charges will be recorded as an opening balance sheet adjustment for 2002. 

Investor & Media Contact:
Beth Walters
Vice President, Investor Relations
Jabil Circuit, Inc.
(727) 803-3349
investor_relations@jabil.com