Concentration of Risk and Segment Data

6 Months Ended

Feb. 28, 2022

Segment Reporting [Abstract]

Concentration of Risk and Segment Data

Concentration of Risk and Segment Data

Concentration of Risk

Sales of the Company’s products are concentrated among specific customers. During the six months ended February 28, 2022, the Company’s five largest customers accounted for approximately 47% of its net revenue and 78 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. Certain items are excluded from the calculation of segment income. 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 millions):

	Three months ended				Six months ended
	February 28, 2022		February 28, 2021		February 28, 2022		February 28, 2021
Segment income and reconciliation of income before income tax
EMS	$	152	$	98	$	299	$	220
DMS	192		187		445		430
Total segment income	$	344	$	285	$	744	$	650
Reconciling items:
Amortization of intangibles	(8)		(12)		(16)		(23)
Stock-based compensation expense and related charges	(16)		(23)		(51)		(57)
Restructuring, severance and related charges	—		(6)		—		(5)
Business interruption and impairment charges, net	—		1		—		1
Acquisition and integration charges	—		(2)		—		(4)
Other expense (net of periodic benefit cost)	(3)		(5)		(11)		(9)
Interest income	—		2		1		4
Interest expense	(33)		(31)		(66)		(63)
Income before income tax	$	284	$	209	$	601	$	494

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

	Three months ended
	February 28, 2022						February 28, 2021
	EMS		DMS		Total		EMS		DMS		Total
Timing of transfer
Point in time	$	1,327	$	1,418	$	2,745	$	819	$	1,782	$	2,601
Over time	2,447		2,361		4,808		2,360		1,867		4,227
Total	$	3,774	$	3,779	$	7,553	$	3,179	$	3,649	$	6,828

	Six months ended
	February 28, 2022						February 28, 2021
	EMS		DMS		Total		EMS		DMS		Total
Timing of transfer
Point in time	$	2,734	$	3,788	$	6,522	$	1,876	$	4,022	$	5,898
Over time	4,898		4,700		9,598		4,896		3,867		8,763
Total	$	7,632	$	8,488	$	16,120	$	6,772	$	7,889	$	14,661

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 table sets forth, for the periods indicated, foreign source revenue expressed as a percentage of net revenue:

	Three months ended				Six months ended
	February 28, 2022		February 28, 2021		February 28, 2022		February 28, 2021
Foreign source revenue	83.5	%	84.7	%	84.2	%	84.1	%