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Revenue | 12 Months Ended
--- | ---
Aug. 31, 2019
Revenue from Contract with Customer [Abstract] |
Revenue | Revenue Effective September 1, 2018, the Company adopted ASU 2014-09, Revenue Recognition (Topic 606). The new standard is a comprehensive new revenue recognition model that requires the Company to recognize revenue in a manner which depicts the transfer of goods or services to its customers at an amount that reflects the consideration the Company expects to receive in exchange for those goods or services. Prior to the adoption of the new standard, the Company recognized substantially all of its revenue from contracts with customers at a point in time, which was generally when the goods were shipped to or received by the customer, title and risk of ownership had passed, the price to the buyer was fixed or determinable and collectability was reasonably assured (net of estimated returns). Under the new standard, the Company recognizes revenue over time for the majority of its contracts with customers which results in revenue for those customers being recognized earlier than under the previous guidance. Revenue for all other contracts with customers continues to be recognized at a point in time, similar to recognition prior to the adoption of the standard. Additionally, the new standard impacts the Company’s accounting for certain fulfillment costs, which include upfront costs to prepare for manufacturing activities that are expected to be recovered. Under the new standard, such upfront costs are recognized as an asset and amortized on a systematic basis consistent with the pattern of the transfer of control of the products or services to which to the asset relates. The Company adopted ASU 2014-09 using the modified retrospective method by applying the guidance to all open contracts upon adoption and recorded a cumulative effect adjustment as of September 1, 2018, net of tax, of $42.6 million. No adjustments have been made to prior periods. Following is a summary of the cumulative effect adjustment (in thousands):
| Balance as of August 31, 2018 |  | Adjustments due to adoption of ASU 2014-09 |  | Balance as of September 1, 2018
Assets |  |  |  |  |
Contract assets (1) | $ | — |  |  | $ | 591,616 |  |  | $ | 591,616 |
Inventories, net (1) | $ | 3,457,706 |  |  | $ | (461,271 | ) |  | $ | 2,996,435 |
Prepaid expenses and other current assets (1)(2) | $ | 1,141,000 |  |  | $ | (37,271 | ) |  | $ | 1,103,729 |
Deferred income taxes (1)(2) | $ | 218,252 |  |  | $ | (8,325 | ) |  | $ | 209,927 |
Liabilities |  |  |  |  |
Contract liabilities (2)(3) | $ | — |  |  | $ | 690,142 |  |  | $ | 690,142 |
Deferred income (2)(3)(4) | $ | 691,365 |  |  | $ | (691,365 | ) |  | $ | — |
Other accrued expenses (3)(4) | $ | 1,000,979 |  |  | $ | 40,392 |  |  | $ | 1,041,371 |
Deferred income taxes (1) | $ | 114,385 |  |  | $ | 2,977 |  |  | $ | 117,362 |
Equity |  |  |  |  |
Retained earnings (1)(2) | $ | 1,760,097 |  |  | $ | 42,602 |  |  | $ | 1,802,699 |
(1) | Differences primarily relate to the timing of revenue recognition for over time customers and certain balance sheet reclassifications.
(2) | Differences primarily relate to the timing of recognition and recovery of fulfillment costs and certain balance sheet reclassifications.
(3) | Included within accrued expenses on the Consolidated Balance Sheets.
(4) | Differences included in contract liabilities as of September 1, 2018.
The following table presents the effect of the adoption of the new revenue guidance on the Consolidated Balance Sheets as of August 31, 2019 (in thousands):
|  | August 31, 2019
|  | As reported |  | Balance without the adoption of ASU 2014-09
Assets |  |  |  |
Contract assets (1) |  | $ | 911,940 |  |  | $ | — |
Inventories, net (1) |  | $ | 3,023,003 |  |  | $ | 3,761,591 |
Prepaid expenses and other current assets (1)(2) |  | $ | 501,573 |  |  | $ | 514,769 |
Deferred income taxes (1) |  | $ | 198,827 |  |  | $ | 202,791 |
Liabilities |  |  |  |
Contract liabilities (2)(3) |  | $ | 511,329 |  |  | $ | — |
Deferred income (2)(3)(4) |  | $ | — |  |  | $ | 521,035 |
Other accrued expenses (3)(4) |  | $ | 1,877,908 |  |  | $ | 1,868,201 |
Deferred income taxes (1) |  | $ | 115,818 |  |  | $ | 111,304 |
Equity |  |  |  |
Retained earnings (1)(2) |  | $ | 2,037,037 |  |  | $ | 1,885,360 |
(1) | Differences primarily relate to the timing of revenue recognition for over time customers and certain balance sheet reclassifications.
(2) | Differences primarily relate to the timing of recognition and recovery of fulfillment costs and certain balance sheet reclassifications.
(3) | Included within accrued expenses on the Consolidated Balance Sheets.
(4) | Differences included in contract liabilities as of September 1, 2018.
The following table presents the effect of the adoption of the new revenue guidance on the Consolidated Statement of Operations for the fiscal year ended August 31, 2019 (in thousands):
|  | Fiscal Year Ended
|  | August 31, 2019
|  | As reported |  | Balance without the adoption of ASU 2014-09
Net revenue (1) |  | $ | 25,282,320 |  |  | $ | 24,864,754 |
Cost of revenue (2) |  | $ | 23,368,919 |  |  | $ | 23,057,603 |
Operating income |  | $ | 701,356 |  |  | $ | 595,105 |
Income tax expense |  | $ | 161,230 |  |  | $ | 164,054 |
Net income |  | $ | 289,474 |  |  | $ | 180,399 |
(1) | Differences primarily relate to the timing of revenue recognition for over-time customers and to the recovery of fulfillment costs.
(2) | Differences primarily relate to the timing of cost recognition for over-time customers and the recognition of fulfillment costs.
The following table presents the Company’s revenues disaggregated by segment (in thousands):
|  | Fiscal Year Ended
|  | August 31, 2019
|  | EMS |  | DMS |  | Total
Timing of transfer |  |  |  |  |  |
Point in time |  | $ | 2,877,082 |  |  | $ | 6,055,716 |  |  | $ | 8,932,798 |
Over time |  | $ | 12,553,447 |  |  | $ | 3,796,075 |  |  | $ | 16,349,522 |
Total |  | $ | 15,430,529 |  |  | $ | 9,851,791 |  |  | $ | 25,282,320 |
Contract Balances No impairment costs related to contract assets were recognized during the fiscal year ended August 31, 2019. Revenue recognized during the fiscal year ended August 31, 2019 that was included in the contract liability balance as of September 1, 2018 was $404.0 million. Fulfillment Costs As of August 31, 2019, capitalized costs to fulfill are $67.1 million. Amortization of fulfillment cost was $48.6 million during the fiscal year ended August 31, 2019. No impairments related to fulfillments costs were recognized during the fiscal year ended August 31, 2019. Remaining Performance Obligations The Company applied the practical expedient and did not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less.

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- References No definition available. + Details
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- Definition The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -URI http://asc.fasb.org/topic&trid=49130388 + Details
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