SEGMENT REPORTING

The Company has four reportable segments: HRS, CTG, IEI, and CEC. These segments are determined based on several factors, including the nature of products and services, the nature of production processes, customer base, delivery channels and similar economic characteristics. Refer to note 1 for a description of the various product categories manufactured under each of these segments.

An operating segment's performance is evaluated based on its pre-tax operating contribution, or segment income. Segment income is defined as net sales less cost of sales, and segment selling, general and administrative expenses, and does not include amortization of intangibles, stock-based compensation, customer related asset impairments charges, the new revenue standard adoption impact, contingencies and other, other charges (income), net and interest and other, net.

Selected financial information by segment is in the table below. For the six-month period ended September 28, 2018, we recognized the cumulative effect of initially applying the new revenue standard as an adjustment to the opening balance of retained earnings, as further described in note 1 to the condensed consolidated financial statements. The comparative information for the three and six-month periods ended September 29, 2017 has not been restated and continues to be reported under the accounting standards in effect at the time:



	Three-Month Periods Ended						Six-Month Periods Ended
	September 28, 2018			September 29, 2017			September 28, 2018			September 29, 2017
	(In thousands)
Net sales:
Communications & Enterprise Compute	$	2,140,797		$	1,901,057		$	4,095,083		$	3,874,390
Consumer Technologies Group	1,795,883			1,755,143			3,603,817			3,267,112
Industrial & Emerging Industries	1,565,953			1,454,539			3,012,264			2,845,138
High Reliability Solutions	1,207,971			1,159,681			2,423,396			2,292,052
	$	6,710,604		$	6,270,420		$	13,134,560		$	12,278,692
Segment income and reconciliation of income before tax:
Communications & Enterprise Compute	$	62,855		$	42,733		$	108,873		$	91,335
Consumer Technologies Group	31,212			30,722			57,769			48,726
Industrial & Emerging Industries	65,857			50,945			117,218			106,322
High Reliability Solutions	89,589			92,364			183,123			182,576
Corporate and Other	(25,983		)	(28,438		)	(55,745		)	(62,716		)
Total segment income	223,530			188,326			411,238			366,243
Reconciling items:
Intangible amortization	18,234			16,376			36,751			36,277
Stock-based compensation	19,081			20,464			40,034			42,260
Customer related asset impairments (1)	30,100			4,753			47,464			4,753
New revenue standard adoption impact (Note 1 & Note 3)	—			—			9,291			—
Contingencies and other (2)	(269		)	43,933			24,859			43,933
Other charges (income), net (Note 7)	6,530			(143,167		)	(80,394		)	(179,332		)
Interest and other, net	41,060			27,554			82,802			54,430
Income before income taxes	$	108,794		$	218,413		$	250,431		$	363,922

(1)

Customer related asset impairments for the three and six-month periods ended September 28, 2018 relate to additional provision for doubtful accounts receivable, inventory and impairment of other assets for certain customers experiencing significant financial difficulties as well as $30 million of exit costs primarily related to our estimated impairment of fixed assets considered not recoverable in conjunction with the wind-down of our NIKE footwear manufacturing operations in Mexico.

(2)

Contingencies and other during the three and six-month periods ended September 28, 2018 primarily consists of costs incurred relating to the independent investigation undertaken by the Audit Committee of the Company’s Board of Directors which was completed in June 2018, along with certain restructuring charges incurred during our first quarter of fiscal year 2019 offset by certain immaterial reversals in the second quarter of fiscal year 2019.

During the three and six-month periods ended September 29, 2017, the Company incurred charges in connection with certain legal matters, for loss contingencies where it believed that losses were probable and estimable. Additionally, the Company incurred various other charges predominately related to damages incurred from a typhoon that impacted a China facility, along with certain restructuring charges primarily related to severance for rationalization at existing sites and corporate functions.

Corporate and other primarily includes corporate services costs that are not included in the Chief Operating Decision Maker's ("CODM") assessment of the performance of each of the identified reporting segments.

Property and equipment on a segment basis is not disclosed as it is not separately identified and is not internally reported by segment to the Company's CODM.