Concentration of Risk and Segment Data

6 Months Ended

Feb. 28, 2014

Segment Reporting [Abstract]

Concentration of Risk and Segment Data

6. Concentration of Risk and Segment Data

a. Concentration of Risk

Sales of the Company’s products are concentrated among specific customers. During the six months ended February 28, 2014, the Company’s five largest customers accounted for approximately 46% of its net revenue and 68 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 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.

On December 17, 2013, the Company committed to a plan to sell the AMS business, which was included in the DMS segment. Accordingly, for all periods presented, the results of operations of this business are classified as discontinued operations. See Note 2 – “Discontinued Operations” for further details.

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 amortization of intangibles, distressed customer charge, stock-based compensation expense and related charges, restructuring and related charges, other expense, interest income, interest expense, income tax expense or adjustment for net income (loss) attributable to noncontrolling interests. Total segment assets are defined as accounts receivable, inventories, net customer-related property, plant 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						Six months ended
	February 28, 2014			February 28, 2013			February 28, 2014			February 28, 2013
Net revenue
DMS	$	1,532,273		$	1,820,502		$	3,544,419		$	3,728,398
E&I		1,233,418			1,357,595			2,569,413			2,776,112
HVS		811,624			988,258			1,804,439			2,031,726
	$	3,577,315		$	4,166,355		$	7,918,271		$	8,536,236
	Three months ended						Six months ended
	February 28, 2014			February 28, 2013			February 28, 2014			February 28, 2013
Segment income and reconciliation of income before income tax
DMS	$	28,079		$	95,992		$	127,065		$	205,027
E&I		29,988			34,100			68,785			65,278
HVS		2,351			21,427			24,297			53,222
Total segment income		60,418			151,519			220,147			323,527
Reconciling items:
Amortization of intangibles		6,180			2,204			12,501			4,370
Distressed customer charge		3,742			—			3,742			—
Stock-based compensation expense and related charges		14,652			16,274			(7,934	)		33,186
Restructuring and related charges		32,203			—			53,206			—
Other expense		1,850			1,554			3,027			3,123
Interest income		(341	)		(391	)		(1,047	)		(878	)
Interest expense		31,858			29,168			65,163			58,755
(Loss) income from continuing operations before tax	$	(29,726	)	$	102,710		$	91,489		$	224,971

	February 28, 2014		August 31, 2013
Total assets
DMS	$	3,344,445	$	3,580,133
E&I		1,034,229		1,110,458
HVS		835,478		1,031,911
Other non-allocated assets		2,374,668		2,879,439
Assets of discontinued operations		539,388		551,840
	$	8,128,208	$	9,153,781

The Company operates in 24 countries worldwide, excluding the AMS discontinued operations. 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 83.3% and 84.6% of net revenue during the three months and six months ended February 28, 2014, respectively, compared to 86.4% and 86.8% of net revenue during the three months and six months ended February 28, 2013, respectively.