Note 14 Business Segment, Geographic and Customer Information

12 Months Ended

Sep. 28, 2019

Segment Reporting Disclosure [Text Block]

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 from our Viking Technology division; enterprise solutions from our Viking Enterprise Solutions division; RF, optical and microelectronics; 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 2019. 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 28, 2019			September 29, 2018				September 30, 2017
	(In thousands)
Gross sales:
IMS	$	6,907,129		$	5,847,958			$	5,645,499
CPS	1,555,117			1,458,754				1,422,264
Intersegment revenue	(228,387		)	(196,582		)		(199,144		)
Net Sales	$	8,233,859		$	7,110,130			$	6,868,619

Gross Profit:
IMS	$	444,168		$	352,361			$	404,350
CPS	156,221			117,835			(1)	127,154
Total	600,389			470,196				531,504
Unallocated items (2)	(8,451		)	(6,413		)		(11,593		)
Total	$	591,938		$	463,783			$	519,911

Depreciation and amortization:
IMS	$	81,997		$	76,071			$	74,769
CPS	25,632			30,048				31,109
Total	107,629			106,119				105,878
Unallocated corporate items (3)	9,320			12,701				12,873
Total	$	116,949		$	118,820			$	118,751

Capital expenditures (receipt basis):
IMS	$	79,943		$	87,421			$	106,000
CPS	28,629			28,696				30,512
Total	108,572			116,117				136,512
Unallocated corporate items (3)	3,836			2,480				4,122
Total	$	112,408		$	118,597			$	140,634

(1)

During the fourth quarter of 2018, the Company recorded a $12.5 million pre-tax adjustment to correct errors that occurred from 2016 through the third quarter of 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 million which is also immaterial to 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 28, 2019		September 29, 2018		September 30, 2017
	(In thousands)
Net sales:
Americas (1)	$	4,194,652	$	3,600,967	$	3,306,538
EMEA	1,051,192		841,961		810,332
APAC	2,988,015		2,667,202		2,751,749
Total	$	8,233,859	$	7,110,130	$	6,868,619


(1)	Mexico represents approximately 60% of the Americas revenue and the U.S. represents approximately 35%.



Percentage of net sales represented by ten largest customers	54.2	%	53.0	%	52.9	%
Number of customers representing 10% or more of net sales	1		1		2



	As of
	September 28, 2019		September 29, 2018
	(In thousands)
Property, plant and equipment, net:
Americas	$	369,985	$	385,820
EMEA	72,040		72,051
APAC	188,622		185,042
Total	$	630,647	$	642,913