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 and enterprise solutions from the Company's Viking Technology division; defense and aerospace products from SCI Technology; 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 2018. 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 29, 2018					September 30, 2017			October 1, 2016
	(In thousands)
Gross sales:
IMS	$	5,847,958				$	5,645,499		$	5,297,740
CPS	1,458,754					1,422,264			1,372,412
Intersegment revenue	(196,582		)			(199,144		)	(188,971		)
Net Sales	$	7,110,130				$	6,868,619		$	6,481,181

Gross Profit:
IMS	$	352,361				$	404,350		$	397,309
CPS	117,835			(1	)	127,154			121,696
Total	470,196					531,504			519,005
Unallocated items (2)	(6,413		)			(11,593		)	(4,723		)
Total	$	463,783				$	519,911		$	514,282

Depreciation and amortization:
IMS	$	76,071				$	74,769		$	66,036
CPS	30,048					31,109			33,062
Total	106,119					105,878			99,098
Unallocated corporate items (3)	12,701					12,873			12,812
Total	$	118,820				$	118,751		$	111,910

Capital expenditures (receipt basis):
IMS	$	87,421				$	106,000		$	83,084
CPS	28,696					30,512			21,852
Total	116,117					136,512			104,936
Unallocated corporate items (3)	2,480					4,122			5,624
Total	$	118,597				$	140,634		$	110,560

(1)

During the fourth quarter of fiscal 2018, the Company recorded a $12.5 million pre-tax adjustment to correct errors that occurred from fiscal 2016 through the third quarter of fiscal 2018 with respect to the accounting for certain long-term contracts in one of the Company’s CPS divisions. These errors are immaterial to all prior periods. The impact of this out-of-period adjustment on the full year fiscal 2018 was $11.0 million which is also immaterial to fiscal 2018.


(2)	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.


(3)	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 29, 2018		September 30, 2017		October 1, 2016
	(In thousands)
Net sales:
United States	$	1,338,359	$	1,234,739	$	1,045,998
Mexico	2,067,956		1,935,634		1,869,651
China	1,196,178		1,336,118		1,421,693
Malaysia	687,810		743,359		512,288
Other international	1,819,827		1,618,769		1,631,551
Total	$	7,110,130	$	6,868,619	$	6,481,181



Percentage of net sales represented by ten largest customers	53.0	%	52.9	%	52.0	%
Number of customers representing 10% or more of net sales	1		2		1



	As of
	September 29, 2018		September 30, 2017
	(In thousands)
Property, plant and equipment, net:
United States	$	161,889	$	165,254
Mexico	187,128		187,094
China	74,438		80,787
Other international	219,458		207,140
Total	$	642,913	$	640,275