12. Concentration of Risk and Segment Data

a. Concentration of Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents and trade receivables. The Company maintains cash and cash equivalents with various domestic and foreign financial institutions. Deposits held with the financial institutions may exceed the amount of insurance provided on such deposits, but may generally be redeemed upon demand. The Company performs periodic evaluations of the relative credit standing of the financial institutions and attempts to limit exposure with any one institution. With respect to trade receivables, the Company performs ongoing credit evaluations of its customers and generally does not require collateral. The Company maintains an allowance for potential credit losses on trade receivables.

Sales of the Company’s products are concentrated among specific customers. For fiscal year 2014, the Company’s five largest customers accounted for approximately 45% of its net revenue and 71 customers accounted for approximately 90% of its net revenue. As the Company is a provider of electronic manufacturing services and solutions and products are built based on customer specifications, it is impracticable to provide revenues from external customers for each product and service. Sales to the following customers who accounted for 10% or more of the Company’s net revenues, expressed as a percentage of consolidated net revenue, and the percentage of accounts receivable for each customer, were as follows:


	Percentage of Net Revenue Fiscal Year Ended August 31,									Percentage of Accounts Receivable August 31,
	2014			2013			2012			2014			2013
Apple, Inc.		18	%		20	%		14	%		12	%		22	%
BlackBerry Limited		*			12	%		11	%		*			*
Cisco Systems, Inc.		*			*			11	%		*			*

*	Amount was less than 10% of total

Sales to the above customers were reported in the DMS, E&I and 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.

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. At August 31, 2014, the Company’s operating segments consisted 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.

As of September 1, 2014, the Company will report its business in the following two segments: Electronics Manufacturing Services (“EMS”) and DMS. The EMS segment is focused around leveraging IT, supply chain design and engineering, technologies largely centered on core electronics, sharing of the Company’s large scale manufacturing infrastructure and the ability to serve a broad range of end markets. The EMS segment includes customers primarily in the automotive, computing, digital home, energy, industrial, networking, printing, storage and telecommunications industries. The DMS segment is focused on providing engineering solutions, heavy participation in consumer markets, access to higher growth markets and a focus on material sciences and technologies. The DMS segment includes customers primarily in the consumer lifestyles, healthcare, mobility and packaging industries.

On April 1, 2014, the Company completed the sale of the AMS business (except for the Malaysian operations due to certain regulatory approvals that are still pending in that jurisdiction), 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, stock-based compensation expense and related charges, restructuring and related charges, distressed customer charges, acquisition costs and certain purchase accounting adjustments, loss on disposal of subsidiaries, settlement of receivables and related charges, impairment of notes receivable and related charges, goodwill impairment charges, income (loss) from discontinued operations, gain on sale of discontinued operations, 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 table sets forth operating segment information (in thousands):


	Fiscal Year Ended August 31,
	2014			2013			2012
Net revenue
DMS	$	6,935,896		$	7,088,026		$	6,458,952
E&I		5,300,872			5,535,083			5,086,959
HVS		3,525,378			4,626,384			4,594,794

	$	15,762,146		$	17,249,493		$	16,140,705

Segment income and reconciliation of income before tax
DMS	$	175,843		$	377,004		$	384,020
E&I		128,216			140,758			102,455
HVS		41,310			124,332			166,952

Total segment income	$	345,369		$	642,094		$	653,427
Reconciling items:
Amortization of intangibles		(23,857	)		(10,954	)		(12,899	)
Stock-based compensation expense and related charges		(8,994	)		(62,574	)		(74,944	)
Restructuring and related charges		(85,369	)		(80,513	)		—
Distressed customer charges		(15,113	)		—			(16,014	)
Loss on disposal of subsidiaries		(7,962	)		—			—
Impairment of notes receivable and related charges		—			(25,597	)		—
Acquisition costs and certain purchase accounting adjustments		—			(10,037	)		—


	Fiscal Year Ended August 31,
	2014			2013			2012
Other expense		(7,637	)		(6,095	)		(8,935	)
Interest income		3,741			1,813			2,002
Interest expense		(128,055	)		(121,023	)		(106,088	)

Income from continuing operations before tax	$	72,123		$	327,114		$	436,549


	August 31,
	2014		2013
Total assets
DMS	$	3,793,005	$	3,580,133
E&I		996,136		1,118,347
HVS		943,912		1,031,911
Other non-allocated assets		2,727,024		2,879,439
Assets of discontinued operations		19,669		543,951

	$	8,479,746	$	9,153,781

The Company operates in 24 countries worldwide. Sales to unaffiliated customers are based on the Company’s location that maintains the customer relationship and transacts the external sale. The following tables set forth external net revenue, net of intercompany eliminations, and long-lived asset information where individual countries represent a material portion of the total (in thousands):


	Fiscal Year Ended August 31,
	2014		2013		2012
External net revenue:
China	$	3,614,174		3,263,400		3,418,906
Singapore		2,935,212		3,296,705		2,030,104
Mexico		2,475,393		3,686,540	$	3,194,275
U.S.		2,444,305		2,281,907		2,239,026
Malaysia		1,299,543		1,207,010		1,126,221
Hungary		902,058		1,145,433		1,259,037
Brazil		308,515		539,349		654,488
Other		1,782,946		1,829,149		2,218,648

	$	15,762,146	$	17,249,493	$	16,140,705


	August 31,
	2014		2013
Long-lived assets:
China	$	1,210,113	$	1,105,828
U.S.		922,286		954,431
Mexico		143,790		200,707
Taiwan		137,237		122,547
Malaysia		73,129		85,851
Poland		70,739		72,730
Singapore		59,335		101,943
Hungary		58,824		59,369
Other		223,952		215,359

	$	2,899,405	$	2,918,765

Total foreign source revenue was approximately $13.3 billion, $15.0 billion and $13.9 billion for fiscal years 2014, 2013 and 2012, respectively. Total long-lived assets related to the Company’s foreign operations were approximately $2.0 billion at August 31, 2014 and 2013, respectively