Concentration of Risk and Segment Data

9 Months Ended

May 31, 2013

Segment Reporting [Abstract]

Concentration of Risk and Segment Data

5. Concentration of Risk and Segment Data

a. Concentration of Risk

Sales of the Company’s products are concentrated among specific customers. During the nine months ended May 31, 2013, the Company’s five largest customers accounted for approximately 53% of its net revenue and 55 customers accounted for approximately 90% of its net revenue. Sales to these customers were reported in the Diversified Manufacturing Services (“DMS”), Enterprise & Infrastructure (“E&I”) and High Velocity Systems (“HVS”) operating segments.

The Company procures components from a broad group of suppliers. Almost all of the products manufactured by the Company require one or more components that are available from only a single source.

Production levels for a portion of the DMS and HVS segments are subject to seasonal influences. The Company may realize greater net revenue during its first fiscal quarter due to higher demand for consumer related products manufactured in the DMS and HVS segments during the holiday selling season. Therefore, quarterly results should not be relied upon as necessarily being indicative of results for the entire fiscal year.

b. Segment Data

Operating segments are defined as components of an enterprise that engage in business activities from which they may earn revenues and incur expenses; for which separate financial information is available; and whose operating results are regularly reviewed by the chief operating decision maker to assess the performance of the individual segment and make decisions about resources to be allocated to the segment.

The Company derives its revenue from providing comprehensive electronics design, production and product management services. The chief operating decision maker evaluates performance and allocates resources on a segment basis. The Company’s operating segments consist of three segments – DMS, E&I and HVS.

The DMS segment is composed of dedicated resources to manage higher complexity global products in regulated and other industries and introduce materials and process technologies including design and aftermarket services to global customers. The E&I and HVS segments offer integrated global manufacturing and supply chain solutions designed to provide cost effective solutions for certain customer groups. The E&I segment is focused on customers primarily in the computing, storage, networking and telecommunication sectors. The HVS segment is focused on the particular needs of the consumer products industry, including mobility, display, set-top boxes and peripheral products such as printers and point of sale terminals.

Net revenue for the operating segments is attributed to the segment in which the service is performed. An operating segment’s performance is evaluated based on its pre-tax operating contribution, or segment income. Segment income is defined as net revenue less cost of revenue, segment selling, general and administrative expenses, segment research and development expenses and an allocation of corporate manufacturing expenses and selling, general and administrative expenses, and does not include stock-based compensation expense and related charges, restructuring and related charges, impairment of notes receivable and related charges, distressed customer charge, amortization of intangibles, other expense, interest income, interest expense, income tax expense or adjustment for net income attributable to noncontrolling interests. Total segment assets are defined as accounts receivable, inventories, net customer-related machinery and equipment, intangible assets net of accumulated amortization and goodwill. All other non-segment assets are reviewed on a global basis by management. Transactions between operating segments are generally recorded at amounts that approximate arm’s length.

The following tables set forth operating segment information (in thousands):

	Three months ended				Nine months ended
	May 31, 2013		May 31, 2012		May 31, 2013		May 31, 2012
Net revenue
DMS	$	1,795,177	$	1,871,508	$	6,041,608	$	5,546,347
E&I		1,374,026		1,323,816		4,150,138		3,747,482
HVS		1,298,564		1,055,594		3,330,290		3,520,032
	$	4,467,767	$	4,250,918	$	13,522,036	$	12,813,861

	Three months ended						Nine months ended
	May 31, 2013			May 31, 2012			May 31, 2013			May 31, 2012
Segment income and reconciliation of income before income tax
DMS	$	100,476		$	122,334		$	336,691		$	353,612
E&I		32,031			29,306			101,940			73,173
HVS		44,388			38,689			101,021			134,283
Total segment income		176,895			190,329			539,652			561,068
Reconciling items:
Stock-based compensation expense and related charges		15,688			20,123			52,201			59,857
Restructuring and related charges		28,392			—			28,392			—
Impairment of notes receivable and related charges		25,597			—			25,597			—
Distressed customer charge		—			10,149			—			10,149
Amortization of intangibles		3,472			3,454			10,394			13,399
Other expense		1,540			1,899			4,663			6,503
Interest income		(402	)		(733	)		(1,334	)		(1,579	)
Interest expense		30,712			26,462			89,498			78,303
Income before income tax	$	71,896		$	128,975		$	330,241		$	394,436

	May 31, 2013		August 31, 2012
Total assets
DMS	$	2,949,272	$	3,002,982
E&I		1,075,153		1,157,464
HVS		984,566		970,819
Other non-allocated assets		3,124,493		2,671,876
	$	8,133,484	$	7,803,141

The Company operates in 30 countries worldwide. Sales to unaffiliated customers are based on the Company’s location that maintains the customer relationship and transacts the external sale. Total foreign net revenue represented 85.4% and 85.9% of net revenue during the three months and nine months ended May 31, 2013, respectively, compared to 84.4% and 85.7% of net revenue during the three months and nine months ended May 31, 2012, respectively.