Concentration of Risk and Segment Data

Concentration of Risk

Sales of the Company’s products are concentrated among specific customers. During the three months ended November 30, 2018, the Company’s five largest customers accounted for approximately 48% of its net revenue and 75 customers accounted for approximately 90% of its net revenue. Sales to these customers were reported in the Electronics Manufacturing Services (“EMS”) and Diversified Manufacturing Services (“DMS”) operating segments.

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

Segment Data

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. Segment income does not include amortization of intangibles, stock-based compensation expense and related charges, restructuring and related charges, distressed customer charges, acquisition and integration charges, loss on disposal of subsidiaries, settlement of receivables and related charges, impairment of notes receivable and related charges, goodwill impairment charges, business interruption and impairment charges, net, 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. 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):



	Three months ended
	November 30, 2018			November 30, 2017
Net revenue
EMS	$	3,503,103		$	2,862,060
DMS	3,003,172			2,723,472
	$	6,506,275		$	5,585,532
Segment income and reconciliation of income before income tax
EMS	$	84,095		$	85,710
DMS	169,565			141,510
Total segment income	$	253,660		$	227,220
Reconciling items:
Amortization of intangibles	(7,646		)	(9,979		)
Stock-based compensation expense and related charges	(17,249		)	(52,745		)
Restructuring and related charges	(6,025		)	(11,388		)
Acquisition and integration charges	(8,890		)	—
Business interruption and impairment charges, net⁽¹⁾	2,860			(7,354		)
Other expense	(13,550		)	(5,882		)
Interest income	4,379			3,813
Interest expense	(42,652		)	(36,246		)
Income before income tax	$	164,887		$	107,439


⁽¹⁾	Charges, net of insurance proceeds of $2.9 million and $10.3 million, for the three months ended November 30, 2018 and 2017, respectively, relate to business interruption and asset impairment costs associated with damage from Hurricane Maria, which impacted our operations in Cayey, Puerto Rico.

As of November 30, 2018, the Company operated in 29 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 table sets forth, for the periods indicated, foreign source revenue expressed as a percentage of net revenue:



	Three months ended
	November 30, 2018		November 30, 2017
Foreign source revenue	92.7	%	92.3	%