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, 2018, the Company’s five largest customers accounted for approximately 51% of its net revenue and 74 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.

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 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, 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. 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 the Company would transact with third parties.

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



	Three months ended						Six months ended
	February 28, 2018			February 28, 2017			February 28, 2018			February 28, 2017
Net revenue
EMS	$	2,870,488		$	2,682,811		$	5,732,548		$	5,386,100
DMS	2,430,613			1,762,826			5,154,085			4,164,435
	$	5,301,101		$	4,445,637		$	10,886,633		$	9,550,535
Segment income and reconciliation of income before income tax
EMS	$	95,283		$	98,089		$	180,993		$	187,635
DMS	83,313			54,105			224,823			174,099
Total segment income	$	178,596		$	152,194		$	405,816		$	361,734
Reconciling items:
Amortization of intangibles	(9,890		)	(8,766		)	(19,869		)	(17,088		)
Distressed customer charge	(14,706		)	—			(14,706		)	—
Stock-based compensation expense and related charges	(15,039		)	(15,318		)	(67,784		)	(15,027		)
Restructuring and related charges	(5,427		)	(44,927		)	(16,815		)	(80,829		)
Business interruption and impairment charges, net	(4,002		)	—			(11,356		)	—
Other expense	(10,485		)	(3,371		)	(16,367		)	(8,051		)
Interest income	5,011			2,289			8,824			4,744
Interest expense	(37,796		)	(33,800		)	(74,042		)	(66,644		)
Income before income tax	$	86,262		$	48,301		$	193,701		$	178,839



	February 28, 2018		August 31, 2017
Total assets
EMS	$	3,318,119	$	2,778,820
DMS	5,238,401		5,290,468
Other non-allocated assets	2,931,737		3,026,707
	$	11,488,257	$	11,095,995

As of February 28, 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. Total foreign net revenue represented 91.9% and 92.1% of net revenue during the three months and six months ended February 28, 2018, respectively, compared to 90.9% and 91.7% of net revenue during the three months and six months ended February 28, 2017.