Concentration of Risk and Segment Data

12 Months Ended

Aug. 31, 2021

Segment Reporting [Abstract]

Concentration of Risk and Segment Data

Concentration of Risk and Segment Data

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. For trade receivables, the Company performs ongoing credit evaluations of its customers and generally does not require collateral. The Company maintains an allowance for expected credit losses on trade receivables.

Sales of the Company’s products are concentrated among specific customers. For fiscal year 2021, the Company’s five largest customers accounted for approximately 47% of its net revenue and 82 customers accounted for approximately 90% of its net revenue. As the Company is a provider of 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 customer that 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 the customer, were as follows:

	Percentage of Net Revenue Fiscal Year Ended August 31,						Percentage of Accounts Receivable as of August 31,
	2021		2020		2019		2021	2020
Apple, Inc.(1)	22	%	20	%	22	%	*	*
Amazon.com(2)	*		11	%	*		*	*

*  Amount was less than 10% of total.

(1)Sales to this customer were reported in the DMS operating segment.

(2)Sales to this customer were reported primarily in the EMS operating segment.

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

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 (“CODM”) 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 CODM evaluates performance and allocates resources on a segment basis. The Company’s operating segments consist of two segments – EMS and DMS, which are also the Company’s reportable segments. The segments are organized based on the economic profiles of the services performed, including manufacturing capabilities, market strategy, margins, return on capital and risk profiles.

The EMS segment is focused around leveraging IT, supply chain design and engineering, technologies largely centered on core electronics, utilizing the Company’s large scale manufacturing infrastructure and the ability to serve a broad range of end markets. The EMS segment is a high volume business that produces product at a quicker rate (i.e. cycle time) and in larger quantities and includes customers primarily in the 5G, wireless and cloud, digital print and retail, industrial and semi-cap, and networking and storage industries.

The DMS segment is focused on providing engineering solutions, with an emphasis on material sciences, technologies and healthcare. The DMS segment includes customers primarily in the automotive and transportation, connected devices, healthcare and packaging, and mobility industries.

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, severance 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, (gain) loss on securities, goodwill impairment charges, business interruption and impairment charges, net, income (loss) from discontinued operations, gain (loss) on sale of discontinued operations, other expense (excluding certain components of net periodic benefit cost), 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, contract assets, 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.

As of September 1, 2020, certain customers were realigned within the Company’s operating segments. As there have been no changes to how the Company’s CODM assesses operating performance and allocates resources, the Company’s operating segments which are the reporting segments continue to consist of the DMS and EMS segments. Beginning in fiscal year 2021, customers within the automotive and transportation and smart home and appliances industries are presented within the DMS segment. Prior period disclosures are restated to reflect the realignment.

The following table presents the Company’s revenues disaggregated by segment (in millions):

	Fiscal Year Ended August 31,
	2021						2020						2019
	EMS		DMS		Total		EMS		DMS		Total		EMS		DMS		Total
Timing of transfer
Point in time	$	4,464	$	7,183	$	11,647	$	4,363	$	6,068	$	10,431	$	2,832	$	6,101	$	8,933
Over time	9,440		8,198		17,638		9,730		7,105		16,835		10,135		6,214		16,349
Total	$	13,904	$	15,381	$	29,285	$	14,093	$	13,173	$	27,266	$	12,967	$	12,315	$	25,282

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

	Fiscal Year Ended August 31,
	2021		2020		2019
Segment income and reconciliation of income before tax
EMS	$	509	$	374	$	394
DMS	732		490		483
Total segment income	$	1,241	$	864	$	877
Reconciling items:
Amortization of intangibles	(47)		(56)		(32)
Stock-based compensation expense and related charges	(102)		(83)		(61)
Restructuring, severance and related charges	(10)		(157)		(26)
Distressed customer charges	—		(15)		(6)
Business interruption and impairment charges, net	1		(6)		3
Acquisition and integration charges	(4)		(31)		(54)
Gain (loss) on securities	2		(49)		(30)
Other expense (net of periodic benefit cost)	(13)		(47)		(53)
Interest income	6		15		21
Interest expense	(130)		(174)		(188)
Income before income tax	$	944	$	261	$	451

(in millions)	August 31, 2021		August 31, 2020
Total assets:
EMS	$	4,340	$	3,729
DMS	8,228		7,251
Other non-allocated assets	4,086		3,417
Total	$	16,654	$	14,397

The Company operates in more than 30 countries worldwide. Sales to unaffiliated customers are based on the Company 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 millions):

	Fiscal Year Ended August 31,
	2021		2020		2019
External net revenue:
Singapore	$	7,943	$	6,512	$	6,719
China	4,666		4,583		4,958
Mexico	4,323		4,686		4,526
Malaysia	2,121		1,903		1,682
Hungary	894		717		809
Other	4,523		4,117		3,490
Foreign source revenue	24,470		22,518		22,184
U.S.	4,815		4,748		3,098
Total	$	29,285	$	27,266	$	25,282

    

	August 31, 2021		August 31, 2020
Long-lived assets:
China	$	2,046	$	1,670
Mexico	361		376
Malaysia	281		232
Switzerland	217		219
Singapore	128		142
Hungary	125		101
Taiwan	106		115
Vietnam	103		108
Other	526		501
Long-lived assets related to foreign operations	3,893		3,464
U.S.	1,079		1,108
Total	$	4,972	$	4,572