Concentration of Risk and Segment Data

9 Months Ended

May 31, 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 nine months ended May 31, 2022, the Company’s five largest customers accounted for approximately 45% of its net revenue and 79 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				Nine months ended
	May 31, 2022		May 31, 2021		May 31, 2022		May 31, 2021
Segment income and reconciliation of income before income tax
EMS	$	208	$	137	$	507	$	357
DMS	144		140		589		570
Total segment income	$	352	$	277	$	1,096	$	927
Reconciling items:
Amortization of intangibles	(8)		(12)		(24)		(35)
Stock-based compensation expense and related charges	(16)		(19)		(67)		(76)
Restructuring, severance and related charges	—		(1)		—		(6)
Business interruption and impairment charges, net	—		—		—		1
Acquisition and integration charges	—		—		—		(4)
Loss on debt extinguishment	(4)		—		(4)		—
Gain on securities	—		2		—		2
Other expense (net of periodic benefit cost)	(8)		(1)		(19)		(10)
Interest income	1		1		2		5
Interest expense	(39)		(34)		(105)		(97)
Income before income tax	$	278	$	213	$	879	$	707

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

	Three months ended
	May 31, 2022						May 31, 2021
	EMS		DMS		Total		EMS		DMS		Total
Timing of transfer
Point in time	$	1,755	$	1,395	$	3,150	$	1,346	$	1,441	$	2,787
Over time	2,736		2,442		5,178		2,297		2,131		4,428
Total	$	4,491	$	3,837	$	8,328	$	3,643	$	3,572	$	7,215

	Nine months ended
	May 31, 2022						May 31, 2021
	EMS		DMS		Total		EMS		DMS		Total
Timing of transfer
Point in time	$	4,489	$	5,183	$	9,672	$	3,222	$	5,463	$	8,685
Over time	7,634		7,142		14,776		7,193		5,998		13,191
Total	$	12,123	$	12,325	$	24,448	$	10,415	$	11,461	$	21,876

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				Nine months ended
	May 31, 2022		May 31, 2021		May 31, 2022		May 31, 2021
Foreign source revenue	82.6	%	82.7	%	83.7	%	83.6	%