Business Segment, Geographic and Customer Information

ASC Topic 280, Segment Reporting, establishes standards for reporting information about operating segments, products and services, geographic areas of operations and major customers. Operating segments are defined as components of an enterprise for which separate financial information is available and evaluated regularly by the chief operating decision maker or decision making group in deciding how to allocate resources and in assessing performance.

The Company's operations are managed as two businesses:


1)	Integrated Manufacturing Solutions (IMS). IMS is a reportable segment consisting of printed circuit board assembly and test, final system assembly and test, and direct order fulfillment.

Components, Products and Services (CPS). Components include interconnect systems (printed circuit board fabrication, backplane, cable assemblies and plastic injection molding) and mechanical systems (enclosures and precision machining). Products include memory, RF, optical and microelectronics solutions from the Company's Viking Technology division; defense and aerospace products from SCI Technology; storage solutions from the Company's Newisys division and cloud-based manufacturing execution software from the Company's 42Q division. Services include design, engineering, logistics and repair services.

The Company evaluated its operating segments to determine whether they can be aggregated into reportable segments. Factors considered in this evaluation were similarity of economic characteristics, products, production processes, type or classes of customers, distribution methods and regulatory environments. The Company determined that it has only one reportable segment - IMS, which generated approximately 80% of the Company's total revenue in 2017. The Company's CPS business consists of multiple operating segments which, based on this evaluation, do not meet the quantitative threshold for being presented as reportable segments. Therefore, financial information for these operating segments is presented in a single category entitled “Components, Products and Services".

The accounting policies for each segment are the same as those disclosed by the Company for its consolidated financial statements. Intersegment sales consist primarily of sales of components from CPS to IMS.

The Company's chief operating decision making group is the Chief Executive Officer and Chief Financial Officer and they allocate resources and assess performance of operating segments based on a measure of revenue and gross profit that excludes items not directly related to the Company's ongoing business operations. These items are typically either non-recurring or non-cash in nature.

Segment information is as follows:



	Year Ended
	September 30, 2017			October 1, 2016			October 3, 2015
	(In thousands)
Gross sales:
IMS	$	5,645,499		$	5,297,740		$	5,157,427
CPS	1,422,264			1,372,412			1,414,797
Intersegment revenue	(199,144		)	(188,971		)	(197,683		)
Net Sales	$	6,868,619		$	6,481,181		$	6,374,541

Gross Profit:
IMS	$	404,350		$	397,309		$	366,436
CPS	127,154			121,696			135,064
Total	531,504			519,005			501,500
Unallocated items (1)	(11,593		)	(4,723		)	(17,644		)
Total	$	519,911		$	514,282		$	483,856

Depreciation and amortization:
IMS	$	74,769		$	66,036		$	56,428
CPS	31,109			33,062			35,526
Total	105,878			99,098			91,954
Unallocated corporate items (2)	12,873			12,812			8,613
Total	$	118,751		$	111,910		$	100,567

Capital expenditures (receipt basis):
IMS	$	106,000		$	83,084		$	105,755
CPS	30,512			21,852			17,290
Total	136,512			104,936			123,045
Unallocated corporate items (2)	4,122			5,624			3,436
Total	$	140,634		$	110,560		$	126,481


(1)	For purposes of evaluating segment performance, management excludes certain items from its measures of revenue and gross profit. These items consist of stock-based compensation expense, amortization of intangible assets, charges or credits resulting from distressed customers and acquisition-related items.


(2)	Primarily related to selling, general and administration functions.

Segment assets, consisting of accounts receivable, inventories and fixed assets, are substantially proportional to segment sales.

Information by geographic segment, determined based on the country in which a product is manufactured or a service is provided, was as follows:



	Year Ended
	September 30, 2017		October 1, 2016		October 3, 2015
	(In thousands)
Net sales:
United States	$	1,234,739	$	1,045,998	$	1,029,897
Mexico	1,935,634		1,869,651		1,979,085
China	1,336,118		1,421,693		1,510,208
Malaysia	743,359		512,288		200,314
Other international	1,618,769		1,631,551		1,655,037
Total	$	6,868,619	$	6,481,181	$	6,374,541



Percentage of net sales represented by ten largest customers	52.9	%	52.0	%	48.3	%
Number of customers representing 10% or more of net sales	2		1		—



	As of
	September 30, 2017		October 1, 2016
	(In thousands)
Property, plant and equipment, net:
United States	$	165,254	$	164,481
Mexico	187,094		145,916
China	80,787		80,894
Other international	207,140		226,233
Total	$	640,275	$	617,524