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Basis of Presentation and Principles of Consolidation (Tables)

9 Months Ended

May 26, 2017

Summary of Gross Billings to Customers and Net Sales for Services and Products

The following is a summary of the Company’s gross billings to customers and net sales for services and products (in thousands):

	Three Months Ended				Nine Months Ended
	May 26,		May 27,		May 26,		May 27,
	2017		2016		2017		2016
Service revenue, net	$	9,869	$	11,485	$	27,853	$	33,573
Cost of purchased materials - service ⁽¹⁾		246,498		350,231		648,886		1,136,145
Gross billings for services		256,367		361,716		676,739		1,169,718
Product net sales		197,105		138,124		510,419		354,649
Gross billings to customers	$	453,472	$	499,840	$	1,187,158	$	1,524,367

Product net sales	$	197,105	$	138,124	$	510,419	$	354,649
Service revenue, net		9,869		11,485		27,853		33,573
Net sales	$	206,974	$	149,609	$	538,272	$	388,222

(1)

Represents cost of sales associated with service revenue reported on a net basis.

Estimated Useful Lives

Estimated useful lives are presented below:

		Period
Asset:
Manufacturing equipment		2 to 5 years
Office furniture, software, computers and equipment		2 to 5 years
Leasehold improvements*		2 to 60 years

Includes the land lease for the Penang facility with a term expiring in 2070.

Changes in Carrying Amount of Goodwill

The changes in the carrying amount of goodwill during the nine months ended May 26, 2017 and fiscal 2016 are as follows (in thousands):

	Total
Balance as of August 28, 2015	$	43,594
Translation adjustments		1,382
Balance as of August 26, 2016		44,976
Translation adjustments		384
Balance as of May 26, 2017	$	45,360

Summary of Gross Amounts and Accumulated Amortization of Intangible Assets from Acquisition by Type

The following table summarizes the gross amounts and accumulated amortization of intangible assets from the Acquisition by type as of May 26, 2017 and August 26, 2016 (dollars in thousands):

			May 26, 2017							August 26, 2016
	Weighted		Gross							Gross
	avg.		Carrying		Accumulated					Carrying		Accumulated
	life (yrs)		amount		amortization			Net		amount		amortization			Net
Customer relationships		5	$	103,610	$	(97,813	)	$	5,797	$	103,279	$	(92,326	)	$	10,953
Technology		4		74,535		(72,331	)		2,204		74,063		(68,186	)		5,877
Trademarks/tradename		5		10,137		(10,137	)		—		10,092		(10,043	)		49
Favorable leases		4		230		(230	)		—		228		(223	)		5
Total SGH			$	188,512	$	(180,511	)	$	8,001	$	187,662	$	(170,778	)	$	16,884

Amortization of Intangible Assets Classification

	Three Months Ended				Nine Months Ended
	May 26,		May 27,		May 26,		May 27,
	2017		2016		2017		2016
Amortization of intangible assets classification (in thousands):
Research and development	$	1,224	$	1,224	$	3,672	$	3,672
Selling, general and administrative		1,774		2,105		5,296		6,275
Total	$	2,998	$	3,329	$	8,968	$	9,947

Estimated Amortization Expenses of Intangible Assets

As of May 26, 2017, estimated amortization expenses of these intangible assets for each of the fiscal years in the remaining economic live are as follows (in thousands):

Fiscal year ending August:	Amount
Remainder of fiscal 2017	$	2,975
2018		4,757
2019		269
Total	$	8,001

Stock-Based Compensation Expense by Category

	Three Months Ended					Nine Months Ended
	May 26,			May 27,		May 26,		May 27,
	2017			2016		2017		2016
Stock-based compensation expense by category (in thousands):
Cost of sales	$	176		$	112	$	444	$	348
Research and development		(22	)		181		423		563
Selling, general and administrative		1,235			654		2,666		2,059
Total	$	1,389		$	947	$	3,533	$	2,970