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Concentration of Risk and Segment Data
 9 Months Ended
May 31, 2017
Concentration of Risk and Segment Data [Abstract]  
Concentration of Risk and Segment Data

5. Concentration of Risk and Segment Data

a. Concentration of Risk

Sales of the Company’s products are concentrated among specific customers. During the nine months ended May 31, 2017, the Company’s five largest customers accounted for approximately 46% 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. Almost all of the products manufactured by the Company require one or more components that are available from only a single source.

Production levels for a portion of the DMS segment are subject to seasonal influences. The Company may realize greater net revenue during its first fiscal quarter due to higher demand for consumer related products manufactured in the DMS segment during the holiday selling season. Therefore, quarterly results should not be relied upon as necessarily being indicative of results for the entire fiscal year.

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. The Company’s operating segments consist of two segments – EMS and DMS, which are also the Company’s reportable segments. 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 and transportation, capital equipment, computing and storage, digital home, industrial and energy, networking and telecommunications, point of sale and printing 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, healthcare, mobility and packaging 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 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 tables set forth operating segment information (in thousands):
Three months endedNine months ended
May 31,May 31,May 31,May 31,
2017201620172016
Net revenue
EMS$2,819,711$2,846,919$8,205,812$8,228,595
DMS1,669,8461,463,8335,834,2805,693,728
$4,489,557$4,310,752$14,040,092$13,922,323

Segment income and reconciliation of income
before income tax
EMS$109,783$99,758$297,418$267,717
DMS4,022(12,547)178,121254,315
Total segment income$113,805$87,211$475,539$522,032
Reconciling items:
Amortization of intangibles 9,1749,71126,26226,150
Stock-based compensation expense and related
charges18,35013,44533,37758,505
Restructuring and related charges 32,7004,460113,5298,349
Distressed customer charges10,198―10,198―
Other expense 15,8212,41223,8726,346
Interest income (3,663)(2,302)(8,407)(6,653)
Interest expense 35,44335,212102,087102,509
(Loss) income before income tax$(4,218)$24,273$174,621$326,826

May 31, 2017August 31, 2016
Total assets
EMS$2,802,613$2,615,237
DMS5,030,7635,012,798
Other non-allocated assets2,496,2732,694,642
$10,329,649$10,322,677

As of May 31, 2017, the Company operated in 28 countries worldwide. Sales to unaffiliated customers are based on the Company’s location that maintains the customer relationship and transacts the external sale. Total foreign net revenue represented 90.6% and 91.3% of net revenue during the three months and nine months ended May 31, 2017, respectively, compared to 90.4% and 91.0% of net revenue during the three months and nine months ended May 31, 2016, respectively.