Concentration of Risk and Segment Data

12 Months Ended

Aug. 31, 2015

Concentration of Risk and Segment Data [Abstract]

Concentration of Risk and Segment Data

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 2015, the Company’s five largest customers accounted for approximately 50% of its net revenue and 81 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						Percentage of Accounts Receivable
	Fiscal Year Ended August 31,						Fiscal Year Ended August 31,
	2015		2014		2013		2015		2014
Apple, Inc.	24	%	18	%	20	%	19	%	12	%
BlackBerry Limited	*		*		12	%	*		*

* Amount was less than 10% of total.

Sales to the above customers were reported in the EMS and DMS 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. Prior to the first quarter of fiscal year 2015, the Company’s operating segments consisted of three segments – DMS, Enterprise & Infrastructure and High Velocity Systems.On September 1, 2014, the Company changed its reporting structure to align with the chief operating decision maker’s management of resource allocation and performance assessment. Accordingly, the Company’s operating segments now consist of two segments – EMS and DMS, which are also the Company’s reportable segments. All prior period disclosures presented have been restated to reflect this change.

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, digital home, industrial and energy, networking and telecommunications, point of sale, printing and storage industries. The DMS segment is focused on providing engineering solutions and a focus on material sciences and technologies. The DMS segment includes customers primarily in the consumer lifestyles and wearable technologies, defense and aerospace, emerging growth, healthcare, mobility and packaging industries.

On April 1, 2014, the Company completed the sale of the AMS business except for the Malaysian operations, for which the sale was completed on December 31, 2014. The AMS business was included in the DMS segment, and the results of operations of this business are classified as discontinued operations for all periods presented. 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 (loss) 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 those at which we would transact with third parties.

The following table sets forth operating segment information (in thousands):
		Fiscal Year Ended August 31,
		2015		2014		2013
	Net revenue
	EMS	$	10,777,810	$	10,638,588	$	12,023,685
	DMS		7,121,386		5,123,558		5,225,808
		$	17,899,196	$	15,762,146	$	17,249,493

			Fiscal Year Ended August 31,
			2015		2014		2013
Segment income and reconciliation of income before tax
EMS			$	297,097	$	242,181	$	304,043
DMS				372,912		103,188		338,051
	Total segment income		$	670,009	$	345,369	$	642,094
Reconciling items:
	Amortization of intangibles			(24,449)		(23,857)		(10,954)
	Stock-based compensation expense and related charges			(62,563)		(8,994)		(62,574)
	Restructuring and related charges			(33,066)		(85,369)		(80,513)
	Distressed customer charges			―		(15,113)		―
	Loss on disposal of subsidiaries			―		(7,962)		―
	Impairment of notes receivable and related charges			―		―		(25,597)
	Acquisition costs and certain purchase accounting
		adjustments		5,480		―		(10,037)
	Other expense			(5,627)		(7,637)		(6,095)
	Interest income			9,953		3,741		1,813
	Interest expense			(128,091)		(128,055)		(121,023)
Income from continuing operations before tax			$	431,646	$	72,123	$	327,114

	August 31, 2015		August 31, 2014
Total assets
EMS	$	2,865,172	$	2,300,262
DMS		4,241,699		3,460,769
Other non-allocated assets		2,496,336		2,699,046
Assets of discontinued operations		―		19,669
	$	9,603,207	$	8,479,746

The Company operates in 27countries 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,
		2015		2014		2013
External net revenue:
	Singapore	$	5,053,864	$	2,935,212	$	3,296,705
	China		3,941,714		3,614,174		3,263,400
	Mexico		2,555,502		2,475,393		3,686,540
	U.S.		2,142,691		2,444,305		2,281,907
	Malaysia		1,247,897		1,299,543		1,207,010
	Hungary		912,669		902,058		1,145,433
	Brazil		372,574		308,515		539,349
	Other		1,672,285		1,782,946		1,829,149
		$	17,899,196	$	15,762,146	$	17,249,493

		August, 31
		2015		2014
Long-lived assets:
	China	$	1,676,630	$	1,210,113
	U.S.		946,238		922,286
	Mexico		173,188		143,790
	Taiwan		135,316		137,237
	Hungary		95,084		58,824
	Spain		74,354		―
	Malaysia		68,467		73,129
	Singapore		62,468		59,335
	Poland		52,129		70,739
	Other		266,377		223,952
		$	3,550,251	$	2,899,405

Total foreign source revenue was approximately $15.8 billion, $13.3 billion and $15.0 billion for fiscal years 2015, 2014 and 2013, respectively. Total long-lived assets related to the Company’s foreign operations were approximately $2.6 billion and $2.0 billionat August 31,2015 and2014,respectively.