UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



ý	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended ~~March 31,~~December 29, 2018



¨	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number 001-14423

PLEXUS CORP.

(Exact name of registrant as specified in charter)



Wisconsin		39-1344447
(State of Incorporation)		(IRS Employer Identification No.)

One Plexus Way

Neenah, Wisconsin 54957

(Address of principal executive offices)(Zip Code)

Telephone Number (920) 969-6000

(Registrant’s telephone number, including Area Code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes ý No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.



Large accelerated filer ý	Accelerated filer ¨	Non-accelerated filer ¨	Smaller reporting company ¨	Emerging growth company ¨
		~~(Do not check if a smaller reporting company)~~

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No ý

As of ~~May 1, 2018,~~January 29, 2019, there were ~~32,977,703~~30,914,029 shares of ~~Common Stock of the Company~~common stock outstanding.

PLEXUS CORP.

TABLE OF CONTENTS

~~March 31,~~December 29, 2018




PART I. FINANCIAL INFORMATION	3
ITEM 1. FINANCIAL STATEMENTS	3
Condensed Consolidated Statements of Comprehensive Income (Loss)	3
Condensed Consolidated Balance Sheets	4
Condensed Consolidated Statements of Shareholders' Equity	5
Condensed Consolidated Statements of Cash Flows	56
Notes to Condensed Consolidated Financial Statements	67
ITEM 2. MANAGEMENT'S DICUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	1619
"Safe Harbor" Cautionary Statement Under the Private Securities Litigation Reform Act of 1995	1619
Overview	1619
Results of Operations	1720
Liquidity of Capital Resources	2224
Contractual Obligations, Commitments and Off-Balance Sheet Obligations	2628
Disclosure About Critical Accounting Policies	2729
New Accounting Pronouncements	2729
ITEM 3. QUANTITATIVE AND QUALITIATIVE DISCLOSURES ABOUT MARKET RISK	2830
ITEM 4. CONTROLS AND PROCEDURES	2830
PART II. OTHER INFORMATION	2931
ITEM 1A. Risk Factors	2931
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds	2931
ITEM 6. Exhibits	2931
SIGNATURES	3032

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

PLEXUS CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands, except per share data)

Unaudited


	Three Months Ended						Six Months Ended						Three Months Ended
	March 31, 2018			April 1, 2017			March 31, 2018			April 1, 2017			December 29, 2018			December 30, 2017
Net sales	$	698,651		$	604,349		$	1,375,945		$	1,239,368		$	765,544		$	677,294
Cost of sales	645,699			540,549			1,259,470			1,111,212			693,161			613,771
Gross profit	52,952			63,800			116,475			128,156			72,383			63,523
Selling and administrative expenses	35,637			31,229			67,603			61,682			35,432			31,966
Operating income	17,315			32,571			48,872			66,474			36,951			31,557
Other income (expense):
Interest expense	(3,547		)	(3,262		)	(7,272		)	(6,536		)	(2,249		)	(3,725		)
Interest income	1,426			1,185			2,981			2,256			525			1,555
Miscellaneous	(477		)	1,925			(823		)	1,251
Miscellaneous, net													(1,112		)	(346		)
Income before income taxes	14,717			32,419			43,758			63,445			34,115			29,041
Income tax expense	2,427			3,124			129,961			5,971			11,889			127,534
Net income (loss)	$	12,290		$	29,295		$	(86,203	)	$	57,474		$	22,226		$	(98,493	)
Earnings (loss) per share:
Basic	$	0.37		$	0.87		$	(2.57	)	$	1.71		$	0.71		$	(2.93	)
Diluted	$	0.36		$	0.84		$	(2.57	)	$	1.66		$	0.69		$	(2.93	)
Weighted average shares outstanding:
Basic	33,538			33,703			33,552			33,619			31,403			33,567
Diluted	34,387			34,702			33,552			34,631			32,286			33,567
Comprehensive income (loss):
Net income (loss)	$	12,290		$	29,295		$	(86,203	)	$	57,474		$	22,226		$	(98,493	)
Other comprehensive income (loss):
Derivative instrument fair value adjustment	1,229			3,159			2,768			(2,244		)	378			1,539
Foreign currency translation adjustments	4,773			2,613			6,915			(8,746		)	(1,871		)	2,142
Other comprehensive income (loss)	6,002			5,772			9,683			(10,990		)	(1,493		)	3,681
Total comprehensive income (loss)	$	18,292		$	35,067		$	(76,520	)	$	46,484		$	20,733		$	(94,812	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

PLEXUS CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

Unaudited


	March 31, 2018			September 30, 2017			December 29, 2018			September 29, 2018
ASSETS
Current assets:
Cash and cash equivalents	$	402,470		$	568,860		$	188,799		$	297,269
Restricted cash	845			394			4,074			417
Accounts receivable, net of allowances of $1,029 and $980, respectively	400,262			365,513
Inventories	701,666			654,642
Accounts receivable, net of allowances of $1,094 and $885, respectively							428,487			394,827
Contract assets							82,775			—
Inventories, net							798,271			794,346
Prepaid expenses and other	32,313			28,046			31,435			30,302
Total current assets	1,537,556			1,617,455			1,533,841			1,517,161
Property, plant and equipment, net	324,484			314,665			361,311			341,306
Deferred income tax assets	5,464			5,292
Deferred income taxes							10,832			10,825
Intangible assets, net							7,807			8,239
Other	42,470			38,770			55,892			55,111
Total non-current assets	372,418			358,727			435,842			415,481
Total assets	$	1,909,974		$	1,976,182		$	1,969,683		$	1,932,642

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt and capital lease obligations	$	180,772		$	286,934		$	8,633		$	5,532
Accounts payable	431,659			413,999			516,989			506,322
Customer deposits	104,914			107,837			112,663			90,782
Accrued salaries and wages	48,973			49,376			58,532			66,874
Other accrued liabilities	66,844			49,445			83,004			68,163
Total current liabilities	833,162			907,591			779,821			737,673
Long-term debt and capital lease obligations, net of current portion	27,217			26,173			187,567			183,085
Long-term accrued income taxes payable	91,905			—			63,848			56,130
Deferred income tax liabilities	19,738			—
Deferred income taxes payable							14,610			14,376
Other liabilities	17,449			16,479			18,674			20,235
Total non-current liabilities	156,309			42,652			284,699			273,826
Total liabilities	989,471			950,243			1,064,520			1,011,499
Commitments and contingencies
Shareholders’ equity:
Preferred stock, $.01 par value, 5,000 shares authorized, none issued or outstanding	—			—			—			—
Common stock, $.01 par value, 200,000 shares authorized, 52,435 and 51,934 shares issued, respectively, and 33,293 and 33,464 shares outstanding, respectively	524			519
Common stock, $.01 par value, 200,000 shares authorized, 52,591 and 52,567 shares issued, respectively, and 30,992 and 31,838 shares outstanding, respectively							526			526
Additional paid-in capital	567,535			555,297			587,011			581,488
Common stock held in treasury, at cost, 19,142 and 18,470 shares, respectively	(615,263		)	(574,104		)
Common stock held in treasury, at cost, 21,599 and 20,729 shares, respectively							(761,189		)	(711,138		)
Retained earnings	963,003			1,049,206			1,092,287			1,062,246
Accumulated other comprehensive income (loss)	4,704			(4,979		)
Accumulated other comprehensive loss							(13,472		)	(11,979		)
Total shareholders’ equity	920,503			1,025,939			905,163			921,143
Total liabilities and shareholders’ equity	$	1,909,974		$	1,976,182		$	1,969,683		$	1,932,642

The accompanying notes are an integral part of these condensed consolidated financial statements.

PLEXUS CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(in thousands)

Unaudited



	Common Stock
	Shares		Amount		Additional Paid-In Capital		Treasury Stock			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total
Balances, September 30, 2017	33,464		$	519	$	555,297	$	(574,104	)	$	1,049,206		$	(4,979	)	$	1,025,939
Net income (loss)	—		—		—		—			(98,493		)	—			(98,493		)
Other comprehensive income (loss)	—		—		—		—			—			3,681			3,681
Treasury shares purchased	(158	)	—		—		(9,547		)	—			—			(9,547		)
Share-based compensation expense	—		—		3,896		—			—			—			3,896
Exercise of stock options, including tax benefits	301		3		8,369		—			—			—			8,372
Balances, December 30, 2017	33,607		$	522	$	567,562	$	(583,651	)	$	950,713		$	(1,298	)	$	933,848

Balances, September 29, 2018	31,838		$	526	$	581,488	$	(711,138	)	$	1,062,246		$	(11,979	)	$	921,143
Net income (loss)	—		—		—		—			22,226			—			22,226
Cumulative effect adjustment for adoption of new accounting pronouncement (1)	—		—		—		—			7,815			—			7,815
Other comprehensive income (loss)	—		—		—		—			—			(1,493		)	(1,493		)
Treasury shares purchased	(870	)	—		—		(50,051		)	—			—			(50,051		)
Share-based compensation expense	—		—		4,753		—			—			—			4,753
Exercise of stock options, including tax benefits	24		—		770		—			—			—			770
Balances, December 29, 2018	30,992		$	526	$	587,011	$	(761,189	)	$	1,092,287		$	(13,472	)	$	905,163

(1) See Note 1, "Basis of Presentation", for a discussion of recently adopted accounting pronouncements.

The accompanying notes are an integral part of these condensed consolidated financial statements.

PLEXUS CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

Unaudited


	Six Months Ended						Three Months Ended
	March 31, 2018			April 1, 2017			December 29, 2018			December 30, 2017
Cash flows from operating activities
Net (loss) income	$	(86,203	)	$	57,474
Adjustments to reconcile net (loss) income to net cash flows from operating activities:
Depreciation	23,602			22,489
Amortization of deferred financing fees	156			155
Gain on sale of property, plant and equipment, net	(201		)	(329		)
Net income (loss)							$	22,226		$	(98,493	)
Adjustments to reconcile net income (loss) to net cash flows from operating activities:
Depreciation and amortization							12,574			11,702
Deferred income taxes	22,326			1			943			21,906
Share-based compensation expense	8,420			8,013			4,753			3,896
Changes in operating assets and liabilities:
Other, net							51			(46		)
Changes in operating assets and liabilities, excluding impacts of acquisition:
Accounts receivable	(32,326		)	92,751			(34,240		)	31,461
Contract assets							(6,339		)	—
Inventories	(42,781		)	(49,325		)	(74,344		)	(14,016		)
Other current and noncurrent assets	(4,766		)	(5,711		)	(2,221		)	(4,453		)
Accrued income taxes payable	102,220			171			10,811			106,156
Accounts payable	15,611			(11,719		)	7,928			8,756
Customer deposits	(3,680		)	(594		)	22,050			(5,195		)
Other current and noncurrent liabilities	463			(7,769		)	2,467			7,432
Cash flows provided by operating activities	2,841			105,607
Cash flows (used in) provided by operating activities							(33,341		)	69,106
Cash flows from investing activities
Payments for property, plant and equipment	(29,115		)	(14,621		)	(24,903		)	(16,702		)
Proceeds from sales of property, plant and equipment	273			427			49			173
Business acquisition							1,180			—
Cash flows used in investing activities	(28,842		)	(14,194		)	(23,674		)	(16,529		)
Cash flows from financing activities
Borrowings under credit facility and other short-term borrowings	504,616			97,926
Borrowings under debt agreements							231,500			216,314
Payments on debt and capital lease obligations	(612,961		)	(84,745		)	(229,469		)	(324,192		)
Repurchases of common stock	(41,159		)	(13,906		)	(50,051		)	(9,547		)
Proceeds from exercise of stock options	9,194			9,883			796			8,513
Payments related to tax withholding for share-based compensation	(5,371		)	(5,833		)	(26		)	(141		)
Cash flows (used in) provided by financing activities	(145,681		)	3,325
Cash flows used in financing activities							(47,250		)	(109,053		)
Effect of exchange rate changes on cash and cash equivalents	5,743			(2,724		)	(548		)	2,073
Net (decrease) increase in cash and cash equivalents and restricted cash	(165,939		)	92,014
Net decrease in cash and cash equivalents and restricted cash							(104,813		)	(54,403		)
Cash and cash equivalents and restricted cash:
Beginning of period	569,254			432,964			297,686			569,254
End of period	$	403,315		$	524,978		$	192,873		$	514,851

The accompanying notes are an integral part of these condensed consolidated financial statements.

PLEXUS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE ~~AND SIX~~ MONTHS ENDED ~~MARCH 31,~~DECEMBER 29, 2018 AND ~~APRIL 1,~~DECEMBER 30, 2017

Unaudited

1. Basis of Presentation

Basis of Presentation:

The accompanying Condensed Consolidated Financial Statements included herein have been prepared by Plexus Corp. and its subsidiaries (together “Plexus” or the “Company”) without audit and pursuant to the rules and regulations of the United States (“U.S.”) Securities and Exchange Commission (“SEC”). The accompanying Condensed Consolidated Financial Statements reflect all adjustments, which include normal recurring adjustments necessary for the fair statement of the consolidated financial position of the Company as of ~~March 31,~~December 29, 2018 and September ~~30, 2017,~~29, 2018, and the results of operations for the three ~~and six~~ months ended ~~March 31,~~December 29, 2018 and ~~April 1,~~December 30, 2017, and the cash flows and shareholders' equity for the same ~~six~~three month periods.

The Company’s fiscal year ends on the Saturday closest to September 30. The Company uses a “4-4-5” weekly accounting system for the interim periods in each quarter. Each quarter, therefore, ends on a Saturday at the end of the 4-4-5 period. Periodically, an additional week must be added to the fiscal year to re-align with the Saturday closest to September 30. All fiscal quarters presented herein included 13 weeks.

Certain information and footnote disclosures, normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP"), have been condensed or omitted pursuant to the SEC’s rules and regulations dealing with interim financial statements. However, the Company believes that the disclosures made in the Condensed Consolidated Financial Statements included herein are adequate to make the information presented not misleading. It is suggested that these Condensed Consolidated Financial Statements be read in conjunction with the Consolidated Financial Statements and notes thereto included in the Company’s ~~2017~~2018 Annual Report on Form 10-K.

~~Certain prior period amounts have been reclassified to conform to the current period presentation.~~

Recently ~~Issued~~Adopted Accounting ~~Pronouncements Not Yet Adopted:~~Pronouncements:

In ~~August 2017,~~October 2016, the Financial Accounting Standards Board (the "FASB") issued ASU 2017-12 related to the accounting for hedging activities. The pronouncement expands and refines hedge accounting, aligns the recognition and presentation of the effects of hedging instruments and hedge items in the financial statements, and includes certain targeted improvements to ease the application of current guidance related to the assessment of hedge effectiveness. This guidance is effective for the Company beginning in the first quarter of fiscal year 2020 and early adoption is permitted. The Company is finalizing its assessment of the impact of the guidance, but does not believe it will have a material impact on the Company's Condensed Consolidated Financial Statements.

~~In October 2016, the FASB~~ issued ASU 2016-16 related to the income tax consequences of intra-entity transfers of assets other than inventory. The new standard eliminates the exception for an intra-entity transfer of an asset other than inventory and requires an entity to recognize the income tax consequences when the transfer occurs. ~~This~~The Company adopted this guidance ~~is effective for~~under the ~~Company beginning in~~modified retrospective approach during the first quarter of fiscal year 2019 and early adoption is permitted. This guidance should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption.2019. The Company ~~is currently assessing~~recognized no net impact to its fiscal 2019 opening Retained Earnings balance upon adoption and does not anticipate any material impact to the ~~impact this new standard may have on its Condensed~~Company's future Consolidated Financial Statements.

In August 2016, the FASB issued ASU 2016-15 related to the classification of certain cash receipts and cash payments, which clarifies how entities should classify certain cash receipts and cash payments on the statement of cash flows. The new standard addresses certain issues where diversity in practice was identified. It also amends existing guidance, which is principles based and often requires judgment to determine the appropriate classification of cash flows as operating, investing or financing activities and clarifies how the predominance principle should be applied when cash receipts and cash payments have aspects of more than one class of cash flows. ~~This~~The Company adopted this guidance ~~is effective for the Company beginning in~~during the first quarter of fiscal ~~year 2019. Early adoption is permitted. The Company is currently assessing~~2019 with no material impact to the ~~impact this new standard may have on its~~Company's Condensed ~~Consolidated~~ Statements of Cash Flows.

In February 2016, the FASB issued ASU 2016-02, which requires lessees to recognize most leases on their balance sheets but record expenses on their income statements in a manner similar to current accounting. For lessors, the guidance modifies the classification criteria and the accounting for sales-type and direct financing leases. This guidance is effective for the Company beginning in the first quarter of fiscal year 2020. Early adoption is permitted. The Company is currently in the process of

~~assessing the impact of the adoption of the new standard on its Condensed Consolidated Financial Statements and the timing of adoption.~~

In May 2014, the FASB issued ASU 2014-09, which requires an entity to recognize revenue relating to contracts with customers that depicts the transfer of promised goods or services to customers in an amount reflecting the consideration to which the entity expects to be entitled in exchange for such goods or services ("Topic 606"). Topic 606 also requires disclosures enabling users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers and is effective for the Company beginning in the first quarter of fiscal year 2019.

On September 30, 2018, the Company adopted and applied Topic 606 to all contracts using the modified retrospective method of adoption. Upon adoption, the Company recognized an increase to its beginning Retained Earnings balance of $7.8 million. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. Refer to Note 13, "Revenue from Contracts with Customers," for further information.

Recently Issued Accounting Pronouncements Not Yet Adopted:

classification criteria and the accounting for sales-type and direct financing leases. The guidance is effective for the Company beginning in the first quarter of fiscal year 2020. Early adoption is permitted. The Company ~~developed a comprehensive project plan that includes a global cross-functional team~~is currently in the process of ~~representatives to conduct an assessment~~assessing the impact of ~~Topic 606 and its potential impacts on~~ the ~~Company. The project plan includes analyzing the standard’s impact on the Company’s various revenue streams, comparing its historical accounting policies and practices to the requirements~~adoption of the new standard on its Consolidated Financial Statements and ~~identifying potential differences from applying~~plans to adopt the ~~requirements~~standard in the first quarter of fiscal year 2020.

In August 2017, the FASB issued ASU 2017-12 related to the accounting for hedging activities. The pronouncement expands and refines hedge accounting, aligns the recognition and presentation of the effects of hedging instruments and hedge items in the financial statements, and includes certain targeted improvements to ease the application of current guidance related to the assessment of hedge effectiveness. The guidance is effective for the Company beginning in the first quarter of fiscal year 2020. Early adoption is permitted. The Company is currently in the process of assessing the impact of the adoption of the new standard toon its ~~contracts. The Company is in the process of identifying~~Consolidated Financial Statements and ~~implementing appropriate changes to its current accounting policies, business processes, systems and controls to support revenue recognition and disclosures under Topic 606.~~

~~The Company has determined that the new standard will result in a change to~~ the timing of revenue recognition for a significant portion of the Company's revenue, whereby revenue will be recognized "over time," as products are produced, as opposed to at a "point in time" upon physical delivery. The new standard is expected to have a material impact on the Company's consolidated financial statements upon initial adoption, primarily as the Company recognizes an increase in contract assets for unbilled receivables with a corresponding reduction in finished goods and work-in-process inventory. The Company expects to adopt Topic 606 at the beginning of fiscal year 2019 using the modified retrospective approach.adoption.

The Company believes that no other recently issued accounting standards will have a material impact on its Consolidated Financial Statements, or apply to its operations.

2. Inventories

Inventories as of ~~March 31,~~December 29, 2018 and September ~~30, 2017~~29, 2018 consisted of the following (in thousands):


	March 31, 2018		September 30, 2017		December 29, 2018		September 29, 2018
Raw materials	$	526,709	$	477,921	$	637,324	$	579,377
Work-in-process	89,437		86,367		70,956		102,337
Finished goods	85,520		90,354		89,991		112,632
Total inventories	$	701,666	$	654,642
Total inventories, net					$	798,271	$	794,346

In certain circumstances, per contractual terms, customer deposits are received by the Company to offset obsolete and excess inventory risks. The total amount of customer deposits related to inventory and included within current liabilities on the accompanying Condensed Consolidated Balance Sheets as of ~~March 31,~~December 29, 2018 and September ~~30, 2017~~29, 2018 was ~~$102.2~~$110.7 million and ~~$106.2~~$87.7 million, respectively.

In the first quarter of fiscal year 2019, the Company adopted and applied Topic 606 to all contracts using the modified retrospective method of adoption. The prior year comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. Refer to Note 13, "Revenue from Contracts with Customers," for further information.

3. Debt, Capital Lease Obligations and Other Financing

Debt and capital lease ~~and other~~ obligations as of ~~March 31,~~December 29, 2018 and September ~~30, 2017,~~29, 2018, consisted of the following (in thousands):


	March 31, 2018			September 30, 2017			December 29, 2018			September 29, 2018
5.20% Senior notes, due June 15, 2018	$	175,000		$	175,000
4.05% Senior Notes, due June 15, 2025							$	100,000		$	100,000
4.22% Senior Notes, due June 15, 2028							50,000			50,000
Borrowings under the credit facility	—			108,000			3,000			—
Capital lease and other financing obligations	33,626			30,901			44,368			39,857
Unamortized deferred financing fees	(637		)	(794		)	(1,168		)	(1,240		)
Total obligations	207,989			313,107			196,200			188,617
Less: current portion	(180,772		)	(286,934		)	(8,633		)	(5,532		)
Long-term debt and capital lease obligations, net of current portion	$	27,217		$	26,173		$	187,567		$	183,085

~~The~~On June 15, 2018, the Company ~~has outstanding 5.20%~~entered into a Note Purchase Agreement (the “2018 NPA”) pursuant to which it issued an aggregate of $150.0 million in principal amount of unsecured senior notes, consisting of $100.0 million in principal amount of 4.05% Series A Senior Notes, due on June 15, 2025, and $50.0 million in principal amount of 4.22% Series B Senior Notes, due on June 15, 2028 (collectively, the “2018 Notes”), in a private placement. The 2018 ~~(the "Notes"). As of March 31, 2018~~NPA includes customary operational and ~~September 30, 2017, $175.0 million was outstanding. The related Note Purchase Agreement contains certain~~ financial covenants with which ~~include~~the Company is required to comply, including, among others, maintenance of certain

financial ratios such as a ~~maximum~~ total leverage ratio and a minimum interest coverage ~~ratio and~~ratio. The 2018 Notes may be prepaid in whole or in part at any time, subject to payment of a ~~minimum net worth test, all as defined in~~make-whole amount. Interest on the ~~agreement. As of March 31,~~2018 Notes is payable semiannually. At December 29, 2018, the Company was in compliance with ~~all such~~the covenants ~~relating to~~under the ~~Notes and the Note Purchase Agreement.~~2018 NPA.

The Company also has a senior unsecured revolving credit facility (the "Credit Facility"), with a $300.0 million maximum commitment that expires on July 5, 2021. The Credit Facility may be further increased to $500.0 million, generally by mutual agreement of the Company and the lenders, subject to certain customary conditions. During the ~~six~~three months ended ~~March 31,~~December 29, 2018, the highest daily borrowing was ~~$208.0~~$107.5 million; the average daily borrowings were ~~$108.5 million and the~~$47.6 million. The Company borrowed ~~an aggregate of $503.5~~$231.5 million and repaid ~~a total of $611.5~~$228.5 million of revolving borrowings under the Credit ~~Facility.~~Facility during the three months ended December 29, 2018. The Company was in compliance with all financial covenants relating to the Credit ~~Agreement,~~Facility, which are generally consistent with those in the ~~Note Purchase Agreement~~2018 NPA discussed above. The Company is required to pay a commitment fee on the daily unused revolver credit commitment based on the Company's leverage ratio; the fee was ~~assessed at an annual rate of~~ 0.175%~~, payable quarterly,~~ as of ~~March 31,~~December 29, 2018.

The fair value of the Company’s debt, excluding capital leases, was ~~$176.4~~$150.5 million and ~~$284.5~~$151.9 million as of ~~March 31,~~December 29, 2018 and September ~~30, 2017,~~29, 2018, respectively. The carrying value of the Company's debt, excluding capital leases, was ~~$175.0~~$153.0 million and ~~$283.0~~$150.0 million as of ~~March 31,~~December 29, 2018 and September ~~30, 2017,~~29, 2018, respectively. If measured at fair value in the financial statements, the Company's debt would be classified as Level 2 in the fair value hierarchy. Refer to Note 4, "Derivatives," for further information regarding the Company's fair value calculations and classifications.

4. Derivatives

~~Derivatives:~~

All derivatives are recognized in the accompanying Condensed Consolidated Balance Sheets at their estimated fair value. The Company uses derivatives to manage the variability of foreign currency obligations. The Company has cash flow hedges related to ~~variable rate debt and~~ forecasted foreign currency obligations, in addition to non-designated hedges to manage foreign currency exposures associated with certain foreign currency denominated assets and liabilities. The Company does not enter into derivatives for speculative purposes.

U.S. GAAP, requires companies to recognize all derivative instruments as either assets or liabilities at fair value in the statement of financial position. Accordingly, the Company designates some foreign currency exchange contracts as cash flow hedges of forecasted foreign currency expenses.

Changes in the fair value of the derivatives that qualify as cash flow hedges are recorded in "Accumulated other comprehensive ~~income (loss)"~~loss" in the accompanying Condensed Consolidated Balance Sheets until earnings are affected by the variability of the cash flows. In the next twelve months, the Company estimates that ~~$5.0~~$1.3 million of unrealized ~~gains,~~losses, net of tax, related to cash flow hedges will be reclassified from other comprehensive income (loss) into earnings. Changes in the fair value of the non-designated derivatives related to recognized foreign currency denominated assets and liabilities are recorded in "Miscellaneous, ~~other income (expense)"~~net" in the accompanying Condensed Consolidated Statements of Comprehensive Income (Loss).

The Company enters into forward currency exchange contracts for its ~~Malaysian~~ operations in Malaysia and Mexico on a rolling basis. The Company had cash flow hedges outstanding with a notional value of ~~$67.6~~$74.1 million as of ~~March 31,~~December 29, 2018, and ~~$67.0~~$74.0 million as of September ~~30, 2017.~~29, 2018. These forward currency contracts fix the exchange rates for the settlement of future foreign currency obligations that have yet to be realized. The total fair value of the forward currency exchange contracts was a ~~$5.0~~$1.3 million ~~asset~~liability as of ~~March 31,~~December 29, 2018, and a ~~$2.0~~$1.7 million ~~asset~~liability as of September ~~30, 2017.~~29, 2018.

The Company had additional forward currency exchange contracts outstanding ~~as of March 31, 2018,~~ with a notional value of ~~$25.9 million; there were $10.6~~$34.6 million ~~such contracts outstanding~~as of December 29, 2018, and $28.6 million as of September ~~30, 2017.~~29, 2018. The Company did not designate these derivative instruments as hedging instruments. ~~In accordance with U.S. GAAP, the~~The net settlement amount (fair value) related to these contracts is recorded on the Condensed Consolidated Balance Sheets as either a current or long-term asset or liability, depending on the ~~term. The change in fair value is recorded~~term, and as an element of "Miscellaneous, ~~other income (expense)"~~net" within the Condensed Consolidated Statements of Comprehensive Income (Loss). The total fair value of these derivatives was a ~~$0.1~~$0.4 million asset as of ~~March 31,~~December 29, 2018, and a $0.1 million liability as of September ~~30, 2017.~~29, 2018.

The tables below present information regarding the fair values of derivative instruments and the effects of derivative instruments on the Company’s Condensed Consolidated Financial Statements:

Fair Values of Derivative Instruments

In thousands of dollars

Asset Derivatives

Liability Derivatives

Asset Derivatives

Liability Derivatives

March 31,
2018

September 30,
2017

March 31,
2018

September 30,
2017

December 29,
2018

September 29,
2018

December 29,
2018

September 29,
2018

Derivatives designated as hedging instruments

Balance Sheet

Classification

Fair Value

Balance Sheet

Classification

Fair Value

Balance Sheet

Classification

Fair Value

Balance Sheet

Classification

Fair Value

Forward currency forward contracts

Prepaid expenses and other

4,952

2,024

Other accrued liabilities

—

Foreign currency forward contracts

Prepaid expenses and other

292

Other accrued liabilities

1,361

1,984

Fair Values of Derivative Instruments

In thousands of dollars

Asset Derivatives

Liability Derivatives

Asset Derivatives

Liability Derivatives

March 31,
2018

September 30,
2017

March 31,
2018

September 30,
2017

December 29,
2018

September 29,
2018

December 29,
2018

September 29,
2018

Derivatives not designated as hedging instruments

Balance Sheet

Classification

Fair Value

Balance Sheet

Classification

Fair Value

Balance Sheet

Classification

Fair Value

Balance Sheet

Classification

Fair Value

Forward currency forward contracts

Prepaid expenses and other

159

Other accrued liabilities

118

Foreign currency forward contracts

Prepaid expenses and other

460

Other accrued liabilities


Derivative Impact on Accumulated Other Comprehensive Income (Loss)
Derivative Impact on Accumulated Other Comprehensive Income (Loss) ("OCI")						Derivative Impact on Accumulated Other Comprehensive Income (Loss) ("OCI")
for the Three Months Ended	for the Three Months Ended					for the Three Months Ended
In thousands of dollars
Derivatives in Cash Flow Hedging Relationships		Amount of Gain (Loss) Recognized in Other Comprehensive Income (Loss) ("OCI") on Derivatives (Effective Portion)					Amount of (Loss) Gain Recognized in OCI on Derivatives (Effective Portion)
		March 31, 2018		April 1, 2017			December 29, 2018			December 30, 2017
Forward currency forward contracts		$	3,625	$	1,175
Interest rate swaps		$	—	$	12
Foreign currency forward contracts							$	(388	)	$	2,714

															Derivative Impact on Gain (Loss) Recognized in Income
for the Three Months Ended	for the Three Months Ended							for the Three Months Ended
In thousands of dollars
Derivatives in Cash Flow Hedging Relationships		Classification of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)	Amount of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)						Classification of (Loss) Gain Reclassified from Accumulated OCI into Income (Effective Portion)	Amount of (Loss) Gain Reclassified from Accumulated OCI into Income (Effective Portion)
Derivatives in Cash Flow Hedging Relationships			March 31, 2018		April 1, 2017					December 29, 2018			December 30, 2017
Forward currency forward contracts		Selling and administrative expenses	$	224	$	(193	)
Forward currency forward contracts		Cost of sales	$	2,091	$	(1,843	)
Foreign currency forward contracts									Selling and administrative expenses	$	(82	)	$	105
Foreign currency forward contracts									Cost of sales	$	(684	)	$	991
Treasury Rate Locks		Interest expense	$	81	$	92			Interest expense	$	—		$	79
Interest rate swaps		Interest expense	$	—	$	(28	)

Derivatives Not Designated as Hedging Instruments Location of (Loss) Gain Recognized on Derivatives in Income Amount of (Loss) Gain on Derivatives Recognized in Income
March 31, 2018 April 1, 2017
Forward currency forward contracts Miscellaneous other income (expense) $ (416 ) $ 1,786

Derivative Impact on Accumulated Other Comprehensive Income (Loss)
for the Six Months Ended

In thousands of dollars
Derivatives in Cash Flow Hedging Relationships Amount of Gain (Loss) Recognized in OCI on Derivatives (Effective Portion)
March 31, 2018 April 1, 2017
Forward currency forward contracts $ 6,339
$ (4,043 )
Interest rate swaps $ —
$ 1

Derivative Impact on Gain (Loss) Recognized in Income
for the Six Months Ended

In thousands of dollars
Derivatives in Cash Flow Hedging Relationships Classification of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) Amount of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)
March 31, 2018 April 1, 2017
Forward currency forward contracts Selling and administrative expenses $ 329
$ (172 )
Forward currency forward contracts Cost of sales $ 3,082
$ (1,662 )
Treasury Rate Locks Interest expense $ 160
$ 171
Interest rate swaps Interest expense $ —
$ (135 )

Derivatives Not Designated as Hedging Instruments

Location of (Loss) Gain Recognized on Derivatives in Income

Amount of (Loss) Gain on Derivatives Recognized in Income

Location of (Loss) Gain Recognized on Derivatives in Income

Amount of Gain (Loss) on Derivatives Recognized in Income

March 31, 2018

April 1, 2017

December 29, 2018

December 30, 2017

Forward currency forward contracts

Miscellaneous other income (expense)

(951

)

1,861

Foreign currency forward contracts

Miscellaneous, net

787

(535

)

There were no gains or losses recognized in income for derivatives related to ineffective portions and amounts excluded from effectiveness testing for the three ~~or six~~ months ended ~~March 31,~~December 29, 2018 and ~~April 1,~~December 30, 2017.

Fair Value Measurements:

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (or exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The Company uses quoted market prices when available or discounted cash flows to calculate fair value. The accounting guidance establishes a fair value hierarchy based on three levels of inputs that may be used to measure fair value. The input levels are:

Level 1: Quoted (observable) market prices in active markets for identical assets or liabilities.

Level 2: Inputs other than Level 1 that are observable, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability.

Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the asset or liability.

The following table lists the fair values of ~~assets (liabilities)~~liabilities of the Company’s derivatives as of ~~March 31,~~December 29, 2018 and September ~~30, 2017,~~29, 2018, by input level:


Fair Value Measurements Using Input Levels Asset/(Liability)
Fair Value Measurements Using Input Levels (Liability)/Asset									Fair Value Measurements Using Input Levels (Liability)/Asset
In thousands of dollars
March 31, 2018	Level 1		Level 2		Level 3		Total
December 29, 2018										Level 1		Level 2			Level 3		Total
Derivatives
Forward currency forward contracts	$	—	$	5,046	$	—	$	5,046		$	—	$	(922	)	$	—	$	(922	)

September 30, 2017
September 29, 2018
Derivatives
Forward currency forward contracts	$	—	$	1,941	$	—	$	1,941		$	—	$	(1,731	)	$	—	$	(1,731	)

The fair value of ~~interest rate swaps and~~ foreign currency forward contracts is determined using a market approach, which includes obtaining directly or indirectly observable values from third parties active in the relevant markets. ~~The primary input in the fair value of the interest rate swaps is the relevant LIBOR forward curve.~~ Inputs in the fair value of the foreign currency forward contracts include prevailing forward and spot prices for currency and interest rate forward curves.

5. Income Taxes

Income tax expense for the three months ended December 29, 2018 was $11.9 million. Income tax expense for the three months ended December 30, 2017 was $127.5 million.

On December 22, 2017, the U.S. Tax Cuts & Jobs Act was enacted ("Tax Reform"). Due to the complexities in implementing Tax Reform, the SEC issued Staff Accounting Bulletin 118, which ~~allows~~allowed the Company to record a ~~provisional~~ tax expense when uncertainty or other factors may impact the final outcome. ~~In accordance with U.S. GAAP, which requires~~During fiscal year 2018, the Company made reasonable estimates related to ~~recognize~~ the ~~effects~~impact of Tax Reform and, in ~~the period of enactment, $124.5 million of~~accordance with SAB118, recorded a net income tax expense ~~was recorded during~~of $85.9 million. The components of the ~~three months ended December 30, 2017. The $124.5 million~~tax expense included ~~$101.8~~$61.2 million of U.S. federal and state taxes on ~~the~~ deemed repatriation of historical undistributed foreign earnings, which are payable over an eight year period beginning in fiscal 2019, ~~and $22.7~~$21.8 million of foreign withholding taxes due to a change in the ~~Company's~~Company’s permanently reinvested assertion on ~~certain~~ foreign earnings that are payable upon repatriation to the U.S. ~~The Company continues to believe this is a reasonable estimate of~~and $2.9 million for unrecognized tax ~~expense~~benefits related to ~~Tax Reform using all analyses, interpretations and guidance available at this time. The Company continues to assess~~ the ~~impact~~implementation of Tax Reform, and the final impact may differ from this estimate, perhaps materially, due to, among other things, changes in interpretations, assumptions, and/or guidance that may be issued in the near future or actions the Company may take as a result. Reform.

For the three months ended ~~March 31,~~December 29, 2018, ~~there have been no changes in interpretations, assumptions and/or guidance that require an adjustment to the provisional tax expense~~ the Company recorded ~~during~~a $7.0 million increase to its income tax expense, inclusive of unrecognized tax benefits, as a result of additional proposed guidance issued by the U.S. Department of the Treasury on November 28, 2018, related to Tax Reform. The guidance related to the treatment of foreign taxes paid that impacted the tax on the deemed repatriation of historical undistributed foreign earnings. The Company's final tax expense recorded for Tax Reform was $92.9 million. Additionally, the effects of the Global Intangible Low-Taxed Income provision added by Tax Reform have been recorded in the three months ended December ~~30, 2017.~~

~~As of March 31, 2018,~~29, 2018. The Company has elected to treat the ~~Company reported outstanding liabilities of $121.8 million for Tax Reform, of which $91.9 million is recorded in "Long-term accrued income taxes payable", $20.0 million is recorded in "Deferred~~ income tax liabilities" and $9.9 million is recorded in “Other accrued liabilities” in the accompanying Condensed Consolidated Balance Sheet. The total outstanding liabilities are lower than the Tax Reform expenseeffects of $124.5 million for the three months ended December 30, 2017 due to withholding taxes paid on dividends and the related foreign exchange impact during the three months ended March 31, 2018, which are recorded in "Miscellaneous other income (expense)" in the accompanying Condensed Consolidated Statements of Comprehensive Income (Loss).this provision as a period cost.

Income tax expense for the three and six months ended March 31, 2018 was $2.4 million and $130.0 million, respectively. For the six months ended March 31, 2018, the tax expense of $130.0 million includes $124.5 million due to the impact of Tax Reform recorded during the three months ended December 30, 2017. Income tax expense for the three and six months ended April 1, 2017 was $3.1 million and $6.0 million, respectively.

The effective tax rates for the three ~~and six~~ months ended ~~March 31,~~December 29, 2018 and December 30, 2017, were ~~16.5%~~34.9% and ~~297.0%~~439.2%, ~~respectively, compared to the effective tax rates of 9.6% and 9.4% for the three and six months ended April 1, 2017,~~ respectively. The effective tax rate for the three months ended ~~March 31,~~December 29, 2018 ~~increased~~decreased from the effective tax rate for the three months ended April 1, 2017, primarily due to a $13.5 million one-time bonus paid to full-time, non-executive employees ("one-time employee bonus") during the three months ended March 31, 2018, and a decrease in pre-tax earnings in jurisdictions where the Company maintains a valuation allowance. The effective tax rate for the six months ended March 31, 2018 increased from the effective tax rate for the six months ended April 1,December 30, 2017, primarily due to the impact of Tax ~~Reform,~~Reform.

For the ~~one-time employee bonus and a decrease in pre-tax earnings in jurisdictions where~~three months ended December 29, 2018, the Company ~~maintains a valuation allowance.~~

~~There were no material additions~~recorded an income tax benefit of $1.7 million primarily related to ~~the amount of~~ unrecognized tax benefits ~~recorded~~as the U.S. Department of the Treasury issued additional guidance for ~~uncertain tax positions as of March 31, 2018, as compared to September 30, 2017.~~Tax Reform. The Company recognizes accrued interest and penalties on uncertain tax positions as a component of income tax expense. The amount of interest and penalties recorded for the three ~~and six~~ months ended ~~March 31,~~December 29, 2018 was not material.

One or more uncertain tax positions may be settled within the next 12 months. Settlement of these matters is not expected to have a material effect on the Company's consolidated results of operations, financial position and cash flows. The Company is not currently under examination by taxing authorities in the U.S. or any foreign jurisdictions in which the Company operates.

The Company maintains valuation allowances when it is more likely than not that all or a portion of a net deferred tax asset will not be realized. During the three months ended ~~March 31,~~December 29, 2018, the Company continued to record a full valuation allowance against its net deferred tax assets in certain jurisdictions within the EMEA segment and a partial valuation against its net deferred tax assets in certain jurisdictions within the AMER ~~and EMEA segments,~~segment, as it was more likely than not that these assets would not be fully realized based primarily on historical performance. The Company will continue to provide a valuation allowance against its net deferred tax assets in each of the applicable jurisdictions going forward until it determines it is more likely than not that the deferred tax assets will be realized.

6. Earnings Per Share

The following is a reconciliation of the amounts utilized in the computation of basic and diluted earnings per share for the three ~~and six~~ months ended ~~March 31,~~December 29, 2018 and ~~April 1,~~December 30, 2017 (in thousands, except per share amounts):


	Three Months Ended				Six Months Ended					Three Months Ended
	March 31, 2018		April 1, 2017		March 31, 2018			April 1, 2017		December 29, 2018		December 30, 2017
Net income (loss)	$	12,290	$	29,295	$	(86,203	)	$	57,474	22,226		(98,493		)
Basic weighted average common shares outstanding	33,538		33,703		33,552			33,619		31,403		33,567
Dilutive effect of share-based awards outstanding	849		999		—			1,012		883		—
Diluted weighted average shares outstanding	34,387		34,702		33,552			34,631		32,286		33,567
Earnings (loss) per share:
Basic	$	0.37	$	0.87	$	(2.57	)	$	1.71	$	0.71	$	(2.93	)
Diluted	$	0.36	$	0.84	$	(2.57	)	$	1.66	$	0.69	$	(2.93	)

For the three ~~and six~~ months ended ~~March 31,~~December 29, 2018, share-based awards for approximately ~~0.3~~0.1 million shares were not included in the computation of diluted earnings per share as they were antidilutive. For the ~~six~~three months ended ~~March 31, 2018,~~December 30, 2017, there were no antidilutive shares, but the total number of potentially dilutive share-based awards was ~~2.0 million. However,~~1.1 million; however, these awards were not included in the computation of diluted loss per share, as doing so would have decreased the loss per share.

For the three and six months ended April 1, 2017, share-based awards for approximately 0.1 million and 0.9 million shares, respectively, were not included in the computation of diluted earnings per share as they were antidilutive.

See also Note 11, "Shareholders' Equity," for information regarding the Company's share repurchase plans.

7. Share-Based Compensation

The Company recognized ~~$4.5~~$4.8 million and ~~$8.4~~$3.9 million of compensation expense associated with ~~the~~ share-based awards for the three ~~and six~~ months ended ~~March 31,~~December 29, 2018 ~~respectively,~~ and ~~$4.4 million and $8.0 million for the three and six months ended April 1,~~December 30, 2017, respectively.

The Company uses the Black-Scholes valuation model to determine the fair value of stock options and stock-settled stock appreciation rights ("SARs"). The Company uses its stock price on grant date as the fair value assigned to restricted stock units ("RSUs").

Performance stock units ("PSUs") are payable in shares of the Company's common stock. Beginning for fiscal 2017 grants, PSUs vest based on the relative total shareholder return ("TSR") of the Company's common stock as compared to the companies in the Russell 3000 index, a market condition, and the Company's economic return performance during the three year performance period, a performance condition. The Company uses the Monte Carlo valuation model to determine the fair value of PSUs at the date of grant for PSUs that vest based on the relative TSR of the Company's common stock. The Company

uses its stock price on grant date as the fair value assigned to PSUs that vest based on the Company's economic return performance. The PSUs granted in fiscal 2016 and prior years vest based solely on the relative TSR of the Company's common stock as compared to companies in the Russell 3000 Index during a three year performance period. The number of shares that may be issued pursuant to PSUs ranges from zero to 0.4 million and is dependent upon the Company's TSR and economic return performance over the applicable performance periods.

The Company recognizes share-based compensation expense over the share-based awards' vesting period.

8. Litigation

The Company is party to lawsuits in the ordinary course of business. ~~Although the outcome of these legal matters cannot be predicted with certainty, management~~Management does not ~~expect~~believe that these proceedings, individually or in the aggregate, will have a material positive or adverse effect on the Company’s consolidated financial position, results of operations or cash flows.

9. Reportable Segments

Reportable segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or group, in assessing performance and allocating resources. The Company uses an internal management reporting system, which provides important financial data ~~to the chief operating decision maker~~ to evaluate performance and allocate the Company’s resources on a regional basis. Net sales for the segments are attributed to the region in which the product is manufactured or the service is performed. The services provided, manufacturing processes used, class of customers serviced and order fulfillment processes used are similar and generally interchangeable across the segments. A segment’s performance is evaluated based upon its operating income (loss). A segment’s operating income (loss) includes its net sales less cost of sales and selling and administrative expenses, but excludes corporate and other expenses. Corporate and other expenses primarily represent corporate selling and administrative expenses, and restructuring costs and other charges, if ~~any, such as the one-time employee bonus.~~any. These costs are not allocated to the segments, as management excludes such costs when assessing the performance of the segments. Inter-segment transactions are generally recorded at amounts that approximate arm’s length transactions. The accounting policies for the segments are the same as for the Company taken as a whole.

Information about the Company’s three reportable segments for the three ~~and six~~ months ended ~~March 31,~~December 29, 2018 and ~~April 1,~~December 30, 2017, respectively, is as follows (in thousands):


	Three Months Ended						Six Months Ended						Three Months Ended
	March 31, 2018			April 1, 2017			March 31, 2018			April 1, 2017			December 29, 2018			December 30, 2017
Net sales:
AMER	$	301,835		$	272,064		$	600,878		$	586,715		$	353,867		$	299,043
APAC	350,375			309,758			696,498			619,727			378,112			346,123
EMEA	73,942			44,975			137,774			84,424			72,298			63,832
Elimination of inter-segment sales	(27,501		)	(22,448		)	(59,205		)	(51,498		)	(38,733		)	(31,704		)
	$	698,651		$	604,349		$	1,375,945		$	1,239,368		$	765,544		$	677,294

Operating income (loss):
AMER	$	10,702		$	8,229		$	21,225		$	23,026		$	14,450		$	10,523
APAC	49,171			50,484			99,703			98,724			51,811			50,532
EMEA	389			(1,221		)	(732		)	(3,456		)	996			(1,121		)
Corporate and other costs	(42,947		)	(24,921		)	(71,324		)	(51,820		)	(30,306		)	(28,377		)
	$	17,315		$	32,571		$	48,872		$	66,474		$	36,951		$	31,557
Other income (expense):
Interest expense	(3,547		)	(3,262		)	(7,272		)	(6,536		)	(2,249		)	(3,725		)
Interest income	1,426			1,185			2,981			2,256			525			1,555
Miscellaneous	(477		)	1,925			(823		)	1,251
Miscellaneous, net													(1,112		)	(346		)
Income before income taxes	$	14,717		$	32,419		$	43,758		$	63,445		34,115			29,041


	March 31, 2018		September 30, 2017		December 29, 2018		September 29, 2018
Total assets:
AMER	$	599,331	$	595,851	$	718,078	$	645,791
APAC	984,816		1,163,111		989,574		937,510
EMEA	190,426		172,830		193,002		193,797
Corporate and eliminations	135,401		44,390		69,029		155,544
	$	1,909,974	$	1,976,182	$	1,969,683	$	1,932,642

10. Guarantees

The Company offers certain indemnifications under its customer manufacturing agreements. In the normal course of business, the Company may from time to time be obligated to indemnify its customers or its customers’ customers against damages or liabilities arising out of the Company’s negligence, misconduct, breach of contract, or infringement of third party intellectual property rights. Certain agreements have extended broader indemnification, and while most agreements have contractual limits, some do not. However, the Company generally does not provide for such indemnities and seeks indemnification from its customers for damages or liabilities arising out of the Company’s adherence to customers’ specifications or designs or use of materials furnished, or directed to be used, by its customers. The Company does not believe its obligations under such indemnities are material.

In the normal course of business, the Company also provides its customers a limited warranty covering workmanship, and in some cases materials, on products manufactured by the Company. Such warranty generally provides that products will be free from defects in the Company’s workmanship and meet mutually agreed-upon specifications for periods generally ranging from 12 months to 24 months. ~~If a product fails to comply with the Company’s limited warranty, the~~The Company’s obligation is generally limited to correcting, at its expense, any defect by repairing or replacing such defective product. The Company’s warranty generally excludes defects resulting from faulty customer-supplied components, ~~customer~~ design defects or damage caused by any party or cause other than the Company.

The Company provides for an estimate of costs that may be incurred under its limited warranty at the time product revenue is recognized and establishes additional reserves for specifically identified product issues. These costs primarily include labor and materials, as necessary, associated with repair or replacement and are included in the Company's accompanying Condensed Consolidated Balance Sheets in "Other accrued liabilities." The primary factors that affect the Company’s warranty liability include the value and the number of shipped units and historical and anticipated rates of warranty claims. As these factors are impacted by actual experience and future expectations, the Company assesses the adequacy of its recorded warranty liabilities and adjusts the amounts as necessary.

Below is a table summarizing the activity related to the Company’s limited warranty liability for the ~~six~~three months ended ~~March 31,~~December 29, 2018 and ~~April 1,~~December 30, 2017 (in thousands):


	Six Months Ended						Three Months Ended
	March 31, 2018			April 1, 2017			December 29, 2018			December 30, 2017
Reserve balance, beginning of period	$	4,756		$	6,109		$	6,646		$	4,756
Accruals for warranties issued during the period	2,131			869			1,900			1,017
Settlements (in cash or in kind) during the period	(1,579		)	(1,799		)	(1,255		)	(1,352		)
Reserve balance, end of period	$	5,308		$	5,179		$	7,291		$	4,421

11. Shareholders' Equity

On June 6, 2016, the Board of Directors approved a multi-year stock repurchase program under which the Company is authorized to repurchase up to $150.0 million of its common stock (the "2016 Share Repurchase Plan"). During the three months ended March 31, 2018, the Company repurchased 512,943 shares for approximately $31.6 million, at an average price of $61.63 per share. During the six months ended March 31, 2018, the company repurchased 671,409 shares for approximately $41.2 million at an average price of $61.30 per share. During the three months ended April 1, 2017, the Company repurchased 123,082 shares for approximately $6.8 million, at an average price of $55.61 per share. During the six months ended April 1, 2017, the company repurchased 267,811 shares for approximately $13.9 million at an average price of $51.93 per share.

~~All of the purchases under the 2016 Share Repurchase Plan were recorded as treasury stock.~~

On February 14, 2018, the Board of Directors approved a ~~new~~ stock repurchase plan under which the Company is authorized to repurchase $200.0 million of its common stock ~~commencing~~(the "2018 Program"). The 2018 Program commenced upon completion of the 2016 ~~Share Repurchase Plan (the "2018 Share Repurchase Plan"). No purchases have yet been made~~Program, as defined below. During the three months ended December 29, 2018, the Company repurchased 869,949 shares under this program for $50.1 million, at an average price of $57.53 per share. As of December 29, 2018, $128.8 million of authority remained under the 2018 ~~Share Repurchase Plan.~~Program.

On June 6, 2016, the Board of Directors authorized a multi-year stock repurchase program under which the Company was authorized to repurchase up to $150.0 million of its common stock beginning in fiscal 2017 (the "2016 Program"). During the three months ended December 30, 2017, the Company repurchased 158,466 shares for $9.5 million, at an average price of $60.25 per share.

All shares repurchased under the aforementioned programs were recorded as treasury stock.

12. Trade Accounts Receivable Sale Programs

The Company has Master Accounts Receivable Purchase Agreements with MUFG Bank, New York Branch, formerly known as The Bank of Tokyo-Mitsubishi UFJ, Ltd.~~, New York Branch~~ (the ~~"BTMU~~"MUFG RPA"), and HSBC Bank (China) Company Limited, Xiamen branch (the "HSBC RPA"), under which the Company may elect to sell receivables, at a discount, on an ongoing basis. As of ~~March 31,~~December 29, 2018, the maximum facility amounts ~~of these uncommitted facilities~~ were ~~$160.0~~$230.0 million and $60.0 million, respectively. The ~~BTMU~~MUFG RPA is subject to expiration on October 3, ~~2018,~~2019, but will be automatically extended each year unless any party gives no less than 10 days prior notice that the agreement should not be extended. The terms of the HSBC RPA are generally consistent with the terms of the ~~BTMU RPA discussed above.~~MUFG RPA.

~~The Company previously sold~~Transfers of receivables under ~~a former trade accounts receivable sale program that expired during~~ the ~~first fiscal quarter of 2017.~~

~~Receivables~~programs are accounted for as sales and, accordingly, receivables sold under the programs are excluded from accounts receivable on the Condensed Consolidated Balance Sheets and are reflected as cash provided by operating activities on the Condensed Consolidated Statements of Cash Flows. Proceeds from the transfer reflect the face value of the receivables less a discount. The sale discount is recorded within "Miscellaneous, ~~other income (expense)"~~net" in the Condensed Consolidated Statements of Comprehensive Income ~~(Loss)~~ in the period of the sale.

The Company sold ~~$135.9~~$232.5 million and ~~$91.5~~$162.4 million of trade accounts receivable under these programs during the three months ended ~~March 31,~~December 29, 2018 and ~~April 1,~~December 30, 2017, respectively, in exchange for cash proceeds of ~~$135.2~~$231.2 million and ~~$91.1~~$161.5 million, respectively.

13. Revenue from Contracts with Customers

Impact of Adopting Topic 606

The Company ~~sold $298.3~~adopted Topic 606 using the modified retrospective method. The new standard resulted in a change to the timing of revenue recognition for a significant portion of the Company's revenue, whereby revenue is recognized "over time," as products are produced, as opposed to at a "point in time" based upon shipping terms. As a result of adoption of Topic 606, the following adjustments were made to the opening balances of the Company's Condensed Consolidated Balance Sheets (in thousands):



	Balance at September 29, 2018		Impacts due to adoption of Topic 606			Balance at September 30, 2018
ASSETS
Contract assets	$	—	$	76,417		$	76,417
Inventories	794,346		(68,959		)	725,387
LIABILITIES AND SHAREHOLDERS' EQUITY
Other accrued liabilities	$	68,163	$	(357	)	$	67,806
Retained earnings	1,062,246		7,815			1,070,061

The cumulative effect of applying the new guidance in Topic 606 resulted in the Company increasing its opening Retained Earnings balance by $7.8 million due to certain customer contracts requiring revenue recognition over time. Contract assets in the amount of $76.4 million were recognized due to the recognition of revenue on an over time basis for some customers rather than at a specific point in time. Inventory declined $69.0 million primarily due to earlier recognition of costs related to the contracts for which revenue was recognized on an over time basis. The decline in other accrued liabilities is primarily due to the reclassification of deferred revenue to contract assets for prepayments associated with revenue recognized over time, partially offset by an increase in taxes payable associated with the increase in revenue recognized over time.

The effects of the adoption on the Company's Condensed Consolidated Financial Statements for the three months ended December 29, 2018 were as follows (in thousands):



	Three Months Ended
	December 29, 2018 As Reported		Adjustments due to Topic 606		December 29, 2018 As Adjusted - Without Adoption of ASC Topic 606
Net sales	$	765,544	$	6,185	$	759,359
Cost of sales	693,161		5,194		687,967
Gross profit	72,383		991		71,392
Operating income	36,951		991		35,960
Income before income taxes	34,115		991		33,124
Income tax expense	11,889		194		11,695
Net income	$	22,226	$	797	$	21,429



	December 29, 2018 As Reported		Effect of the Adoption of ASC Topic 606			December 29, 2018 As Adjusted - Without Adoption of ASC Topic 606
ASSETS
Contract assets	$	82,775	$	82,775		$	—
Inventories	798,271		(74,152		)	872,423
LIABILITIES AND SHAREHOLDERS' EQUITY
Other accrued liabilities	$	83,004	$	11		$	82,993
Retained earnings	1,092,287		8,612			1,083,675

Significant Judgments

Topic 606 results in a change to the timing of revenue recognition for a significant portion of the Company's revenue, whereby revenue is now recognized "over time" as products are produced, as opposed to at a "point in time" based upon shipping terms. Upon adopting the standard, revenue is now recognized over time for arrangements with customers for which: (i) the Company's performance does not create an asset with an alternative use to the Company, and ~~$169.3 million~~(ii) the Company has an enforceable right to payment for performance completed to date. Revenue recognized over time will be estimated based on costs incurred to date plus a reasonable profit margin. If either of ~~trade accounts receivable~~the two conditions noted above are not met to recognize revenue over time, revenue will be recognized following the transfer of control of such products to the customer, which typically occurs upon shipment or delivery depending on the terms of the underlying arrangement.

The Company recognizes revenue when a contract exists and when, or as, it satisfies a performance obligation by transferring control of a product or service to a customer. Contracts are accounted for when they have approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer.

The Company generally enters into a master services arrangement that establishes the framework under which business will be conducted. These arrangements represent the master terms and conditions of the Company's services that apply to individual orders, but they do not commit the customer to work with, or to continue to work with, the Company nor do they obligate the customer to any specific volume or pricing of purchases. Moreover, these terms can be amended in appropriate situations. Customer purchase orders are received for specific quantities with predominantly fixed pricing and delivery requirements. Thus, for the majority of our contracts, there is no guarantee of any revenue to the Company until a customer submits a purchase order. As a result, the Company generally considers its arrangement with a customer to be the combination of the master services arrangement and the purchase order. Most of the Company's arrangements with customers create a single performance obligation as the promise to transfer the individual manufactured product or service is capable of being distinct.

The Company’s performance obligations are satisfied over time as work progresses or at a point in time. A performance obligation is satisfied over time if the Company has an enforceable right to payment, including a reasonable profit margin.

Determining if an enforceable right to payment includes a reasonable profit margin requires judgment and is assessed on a contract by contract basis.

Generally, there are no subjective customer acceptance requirements or further obligations related to goods or services provided; if such requirements or obligations exist, then a sale is recognized at the time when such requirements are completed and such obligations are fulfilled.

Practical Expedients

The Company applied the following practical expedients during the ~~six~~adoption of Topic 606:

The Company elected not to disclose information about remaining performance obligations as its performance obligations generally have expected durations of one year or less.

The Company will account for certain shipping and handling as activities to fulfill the promise to transfer the good, instead of a promised service to its customer.

The Company elected not to adjust the promised amount of consideration for the effects of a significant financing component as the Company expects, at contract inception, that the period between when the entity transfers a promised good or service to a customer and when the customer pays for that good or service will generally be one year or less.

Contract Costs

For contracts requiring over time revenue recognition, the selection of the method to measure progress towards completion requires judgment and is based on the nature of the products or services to be provided. The Company uses a cost-based input measurement of progress because it best depicts the transfer of assets to the customer, which occurs as costs are incurred during the manufacturing process or as services are rendered. Under the cost-based measure of progress, the extent of progress towards completion is measured based on the costs incurred to date.

There were no other costs to obtain or fulfill customer contracts.

Disaggregated Revenue

The tables below include the Company’s net sales for the three months ended ~~March 31,~~December 29, 2018, disaggregated by geographic reportable segment and ~~April 1, 2017, respectively, in exchange for cash proceeds~~market sector (in thousands):



	Three Months Ended December 29, 2018
	Reportable Segment:
	AMER		APAC		EMEA		Total
Market Sector:
Healthcare/Life Sciences	$	115,765	$	152,106	$	32,707	$	300,578
Industrial/Commercial	83,718		116,271		19,153		219,142
Communications	90,464		30,975		1,920		123,359
Aerospace/Defense	62,373		42,094		17,998		122,465
External revenue	$	352,320	$	341,446	$	71,778	$	765,544
Inter-segment sales	1,547		36,666		520		38,733
Total sales revenue	$	353,867	$	378,112	$	72,298	$	804,277

For the three months ended December 29, 2018, 89.0% of ~~$296.7 million~~the Company's revenue was recognized as products and ~~$168.5 million, respectively.~~services were transferred over time.

Contract Balances

The timing of revenue recognition, billings and cash collections results in billed accounts receivable, contract assets, and deferred revenue on the Company’s accompanying Condensed Consolidated Balance Sheets.

Contract Assets: For performance obligations satisfied at a point in time, billing occurs subsequent to revenue recognition, at which point the customer has been billed and the resulting asset is recorded within accounts receivable. For performance obligations satisfied over time as work progresses, the Company has an unconditional right to payment which results in the recognition of contract assets. The following table summarizes the activity in the Company's contract assets during the three months ended December 29, 2018 (in thousands):



	Contract Assets
Beginning balance, September 29, 2018	$	—
Cumulative effect adjustment at September 29, 2018	76,417
Revenue recognized	681,712
Amounts collected or invoiced	(675,354		)
Ending balance, December 29, 2018	$	82,775

Deferred Revenue: Deferred revenue is recorded when consideration is received from a customer prior to transferring goods or services to the customer under the terms of the contract, which is included in other accrued liabilities. The advance payment is not considered a significant financing component because it is used to meet working capital demands that can be higher in the early stages of a contract, offset obsolete and excess inventory risks and to protect the company from the other party failing to adequately complete some or all of its obligations under the contract. Deferred revenue is recognized into revenue when all revenue recognition criteria are met. For performance obligations satisfied over time, recognition will occur as work progress, otherwise deferred revenue will be recognized based upon shipping terms.

14. Acquisition

On July 27, 2018, the Company purchased the assets of one of the business lines of Cascade Controls, Inc. ("Cascade"), a new product introduction company in Portland, Oregon, for $12.4 million in cash, subject to certain customary post-closing adjustments. In the three months ended December 29, 2018, the Company received a $1.2 million purchase price adjustment as a result of a post-closing adjustment.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

"SAFE HARBOR" CAUTIONARY STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995:

The statements contained in this Form 10-Q that are guidance or which are not historical facts (such as statements in the future tense and statements including believe, expect, intend, plan, anticipate, goal, target and similar terms and concepts), including all discussions of periods which are not yet completed, are forward-looking statements that involve risks and uncertainties. These risks and uncertainties include, but are not limited to: the risk of customer delays, changes, cancellations or forecast inaccuracies in both ongoing and new programs; the lack of visibility of future orders, particularly in view of changing economic conditions; the economic performance of the industries, sectors and customers we serve; the effects of shortages and delays in obtaining components as a result of economic cycles, natural disasters or otherwise; the effects of tariffs and other trade protection measures; the effects of the volume of revenue from certain sectors or programs on our margins in particular periods; our ability to secure new customers, maintain our current customer base and deliver product on a timely basis; the particular risks relative to new or recent customers, programs or services, which risks include customer and other delays, start-up costs, potential inability to execute, the establishment of appropriate terms of agreements, and the lack of a track record of order volume and timing; the risks of concentration of work for certain customers; the effect of start-up costs of new programs and facilities; possible unexpected costs and operating disruption in transitioning programs, including transitions between Company facilities; the risk that new program wins and/or customer demand may not result in the expected revenue or profitability; the fact that customer orders may not lead to long-term relationships; our ability to manage successfully and execute a complex business model characterized by high product mix, low volumes and demanding quality, regulatory, and other requirements; the ability to realize anticipated savings from restructuring or similar actions, as well as the adequacy of related charges as compared to actual expenses; increasing regulatory and compliance requirements; risks related to information technology systems and data security; the effects of U.S. Tax Reform and of related foreign jurisdiction tax developments; current or potential future barriers to the repatriation of funds that are currently held outside of the United States as a result of actions taken by other countries or otherwise; the potential effects of jurisdictional results on our taxes, tax rates, and our ability to use deferred tax assets and net operating losses; ~~the effects of shortages and delays in obtaining components as a result of economic cycles or natural disasters;~~ the risks associated with excess and obsolete inventory, including the risk that inventory purchased on behalf of our customers may not be consumed or otherwise paid for by the customer, resulting in an inventory write-off; the weakness of areas of the global economy; the effect of changes in the pricing and margins of products; raw materials and component cost fluctuations; the potential effect of fluctuations in the value of the currencies in which we transact business; the effects of changes in economic conditions, political conditions ~~tariffs, other trade protection measures,~~ and tax matters in the United States and in the other countries in which we do business (including as a result of the United Kingdom’s pending exit from the European Union); the potential effect of other world or local events or other events outside our control (such as changes in energy prices, terrorism and weather events); the impact of increased competition; changes in financial accounting standards; and other risks detailed herein and in our other Securities and Exchange Commission filings (particularly in "Risk Factors" in our fiscal ~~2017~~2018 Form 10-K).

* * *

OVERVIEW

Plexus Corp. and its subsidiaries (together “Plexus,” the “Company,” or "we") participate in the Electronic Manufacturing Services ("EMS") industry. Since 1979, Plexus has been partnering with companies to create the products that build a better world. We are a team of over ~~17,000~~19,000 employees, providing global support for all facets of the product realization process – Design and Development, Supply Chain Solutions, New Product Introduction, Manufacturing, and Aftermarket Services – to companies in the Healthcare/Life Sciences, Industrial/Commercial, Communications and Aerospace/Defense market sectors. Plexus is an industry leader that specializes in serving customers with complex products used in demanding regulatory environments in the Americas ("AMER"), Asia-Pacific ("APAC") and Europe, Middle East, and Africa ("EMEA") regions. ~~With a culture built around innovation and~~Plexus delivers customer service ~~Plexus’ teams create customized end-to-end~~excellence to leading global companies by providing innovative, comprehensive solutions ~~to assure~~throughout the ~~realization of the most intricate products.~~product’s lifecycle.

The following information should be read in conjunction with our Condensed Consolidated Financial Statements included herein, the “Risk Factors” section in Part I, Item 1A of our annual report on Form 10-K for the fiscal year ended September ~~30, 2017,~~29, 2018, and our “Safe Harbor” Cautionary Statement included above.

RESULTS OF OPERATIONS

Consolidated Performance Summary. The following table presents selected consolidated financial data (dollars in millions, except per share data):


	Three Months Ended						Six Months Ended						Three Months Ended
	March 31, 2018			April 1, 2017			March 31, 2018			April 1, 2017			December 29, 2018			December 30, 2017
Net sales	$	698.7		$	604.3		$	1,375.9		$	1,239.4		$	765.5		$	677.3
Cost of sales	645.7			540.5			1,259.4			1,111.2			693.2			613.8
Gross profit	53.0			63.8			116.5			128.2			72.4			63.5
Gross margin	7.6		%	10.6		%	8.5		%	10.3		%	9.5		%	9.4		%
Operating income	17.3			32.6			48.9			66.5			37.0			31.6
Operating margin	2.5		%	5.4		%	3.6		%	5.4		%	4.8		%	4.7		%
Net income (loss)	12.3			29.3			(86.2		)	57.5			22.2			(98.5		)
Diluted earnings (loss) per share	$	0.36		$	0.84		$	(2.57	)	$	1.66		$	0.69		$	(2.93	)
Return on invested capital*							15.6		%	16.8		%	14.6		%	16.2		%
Economic return*							6.1		%	6.3		%	5.6		%	6.7		%
*Non-GAAP metric; refer to "Return on Invested Capital ("ROIC") and Economic Return" below for more information and Exhibit 99.1 for a reconciliation.

Net sales. For the three months ended ~~March 31,~~December 29, 2018, net sales increased ~~$94.4~~$88.2 million, or ~~15.6%~~13.0%, as compared to the three months ended ~~April 1, 2017. For the six months ended March 31, 2018, net sales increased $136.5 million, or 11.0%, as compared to the six months ended April 1,~~December 30, 2017.

Net sales are analyzed by management by geographic segment, which reflects the Company's reportable segments, and by market sector. Management measures operational performance and allocates resources on a geographic segment basis. The Company’s global business development strategy is based on our targeted market sectors.

A discussion of net sales by reportable segment is presented below (in millions):


	Three Months Ended						Six Months Ended						Three Months Ended
	March 31, 2018			April 1, 2017			March 31, 2018			April 1, 2017			December 29, 2018			December 30, 2017
Net sales:
AMER	$	301.8		$	272.1		$	600.8		$	586.7		$	353.9		$	299.0
APAC	350.4			309.8			696.5			619.7			378.1			346.1
EMEA	74.0			45.0			137.8			84.4			72.3			63.8
Elimination of inter-segment sales	(27.5		)	(22.6		)	(59.2		)	(51.4		)	(38.8		)	(31.6		)
Total net sales	$	698.7		$	604.3		$	1,375.9		$	1,239.4		$	765.5		$	677.3

AMER. Net sales for the three months ended ~~March 31,~~December 29, 2018 in the AMER segment increased ~~$29.7~~$54.9 million, or ~~10.9%~~18.4%, as compared to the three months ended ~~April 1,~~December 30, 2017. The increase in net sales was due to a $23.9 million increase due to the ramp of new products for existing customers as well as overall net increased customer end-market demand.

APAC. Net sales for the three months ended December 29, 2018 in the APAC segment increased $32.0 million, or 9.2%, as compared to the three months ended December 30, 2017. The increase in net sales was primarily the result of a $33.1 million increase due to the ramp of new products for existing customers, $4.5 million due to the ramp of production for new customers and net increased customer end-market demand. Partially offsetting these increases were reductions in net sales of $26.0 million due to a disengagement with a customer.

EMEA. Net sales for the three months ended December 29, 2018 in the EMEA segment increased $8.5 million, or 13.3%, as compared to the three months ended December 30, 2017. The increase in net sales was primarily due to a ~~$45.9~~$9.3 million increase due to the ramp of new products for existing customers and net increased customer end-market demand, partially offset by $4.1 million due to reduction of business with an existing customer.

A discussion of net sales by market sector is presented below (in millions):



	Three Months Ended
	December 29, 2018		December 30, 2017
Market Sector:
Healthcare/Life Sciences	$	300.6	$	237.1
Industrial/Commercial	219.1		206.8
Communications	123.3		133.6
Aerospace/Defense	122.5		99.8
Total net sales	$	765.5	$	677.3

Healthcare/Life Sciences. Net sales for the three months ended December 29, 2018 in the Healthcare/Life Sciences sector increased $63.5 million, or 26.8%, as compared to the three months ended December 30, 2017. The increase was driven by increases in net sales of $16.1 million due to the ramp of new products for existing customers, $4.5 million from the ramp of production for new customers and net increased customer end-market demand.

Industrial/Commercial. Net sales for the three months ended December 29, 2018 in the Industrial/Commercial sector increased $12.3 million, or 5.9%, as compared to the three months ended December 30, 2017. The increase was primarily driven by increases in net sales of $24.5 million due to the ramp of new products for existing customers, partially offset by net decreased customer end-market demand.

Communications. Net sales for the three months ended December 29, 2018 in the Communications sector decreased $10.3 million, or 7.7%, as compared to the three months ended December 30, 2017. The reduction in net sales was primarily driven by a $27.0 million decrease in net sales due to a disengagement with a customer. Partially offsetting these decreases were increases in net sales of $14.7 million due to the ramp of production of new products for existing customers and net increased customer end-market demand.

Aerospace/Defense. Net sales for the three months ended December 29, 2018 in the Aerospace/Defense sector increased $22.7 million, or 22.7%, as compared to the three months ended December 30, 2017. The increase was primarily attributable to a $15.2 million increase in net sales that resulted from the ramp of new products for existing customers and net increased customer end-market demand. Partially offsetting these increases were reductions in net sales of ~~$13.0~~$4.6 million due to ~~end-of-life products and $11.4 million due to customer disengagements.~~

During the six months ended March 31, 2018, net sales increased $14.1 million, or 2.4%, as compared to the six months ended April 1, 2017. The increase in net sales was primarily due to a $104.0 million increase from the rampreduction of ~~new products for~~business with an existing customers and an $8.9 million increase from the ramp of production for new customers. Partially offsetting these increases were reductions in net sales of $63.4 million and $20.7 million due to end-of-life products and customer disengagements, respectively, and a net decrease in end-market demand.

~~APAC.~~ customer.Net sales for the three months ended March 31, 2018, in the APAC segment increased $40.6 million, or 13.1%, as compared to the three months ended April 1, 2017. The increase in net sales was primarily due to a $55.7 million increase from the ramp of new products for existing customers and net increased customer end-market demand. These increases were partially offset by a decrease of $22.3 million that resulted from customer disengagements.

During the six months ended March 31, 2018, net sales increased $76.8 million, or 12.4%, as compared to the six months ended April 1, 2017. The increase in net sales was primarily due to a $96.0 million increase from the ramp of new products for existing customers and net increased customer end-market demand. These increases were partially offset by a decrease of $21.3 million that resulted from customer disengagements.

~~EMEA.~~ Net sales for three months ended March 31, 2018, in the EMEA segment increased $29.0 million, or 64.4%, as compared to three months ended April 1, 2017. The increase in net sales was primarily attributable to net increased customer end-market demand and an increase of $8.4 million due to the ramp of new products for existing customers.

During the six months ended March 31, 2018, net sales increased $53.4 million, or 63.3%, as compared to the six months ended April 1, 2017. The increase was primarily attributable to net increased customer end-market demand and an increase of $17.9 million due to the ramp of new products for existing customers.

~~Our net sales by market sector for the indicated periods were as follows (in millions):~~

Three Months Ended Six Months Ended
Market Sector March 31, 2018 April 1, 2017 March 31, 2018 April 1, 2017
Healthcare/Life Sciences $ 248.1
$ 204.9
$ 485.1
$ 415.9
Industrial/Commercial 241.7
191.9
448.5
397.6
Communications 98.8
108.2
232.4
239.6
Aerospace/Defense 110.1
99.3
209.9
186.3
Total net sales $ 698.7
$ 604.3
$ 1,375.9
$ 1,239.4

~~Healthcare/Life Sciences~~. Net sales for the three months ended March 31, 2018, in the Healthcare/Life Sciences sector increased $43.2 million, or 21.1%, as compared to the three months ended April 1, 2017. The increase was primarily driven by increases in net sales of $31.7 million due to the ramp of new products for existing customers as well as overall net increased customer end-market demand.

During the six months ended March 31, 2018, net sales in the Healthcare/Life Sciences sector increased $69.2 million, or 16.6%, as compared to the six months ended April 1, 2017. The increase was primarily driven by increases in net sales of $56.8 million due to the ramp of new products for existing customers and $7.1 million from the ramp of production for new customers, as well as net increased customer end-market demand. Partially offsetting these increases was a decrease in net sales of $3.5 million from end-of-life products.

~~Industrial/Commercial~~. Net sales for the three months ended March 31, 2018, in the Industrial/Commercial sector increased $49.8 million, or 26.0%, as compared to the three months ended April 1, 2017. The increase was primarily driven by increases in net sales of $55.5 million due to the ramp of new products for existing customers as well as overall net increased customer end-market demand, especially in the semiconductor capital equipment market. Partially offsetting the increases were decreases in net sales of $16.2 million from end-of-life products and $12.0 million related to customer disengagements.

During the six months ended March 31, 2018, net sales in the Industrial/Commercial sector increased $50.9 million, or 12.8%, as compared to the six months ended April 1, 2017. The increase was primarily driven by increases in net sales of $101.9 million due to the ramp of new products for existing customers as well as overall net increased customer end-market demand, especially in the semiconductor capital equipment market. Partially offsetting the increases were decreases in net sales of $54.6 million from end-of-life products and $22.3 million related to customer disengagements.

~~Communications~~. Net sales for the three months ended March 31, 2018, in the Communications sector decreased $9.4 million, or 8.7%, as compared to the three months ended April 1, 2017. The decrease was primarily driven by $21.7 million from customer disengagements as well as overall net decreased end-market demand. The decreases were partially offset by an increase in net sales of $13.5 million due to the ramp of new products for existing customers.

During the six months ended March 31, 2018, net sales in the Communications sector decreased $7.2 million, or 3.0%, as compared to the six months ended April 1, 2017. The decrease was primarily driven by decreases in net sales of $19.8 million from customer disengagements as well as overall net decreased end-market demand. The decreases were partially offset by an increase in net sales of $16.1 million due to the ramp of new products for existing customers.

~~Aerospace/Defense~~. Net sales for the three months ended March 31, 2018, in the Aerospace/Defense sector increased $10.8 million, or 10.9%, as compared to the three months ended April 1, 2017. The increase was primarily driven by a $5.3 million

~~increase due to the ramp of production of new products for existing customers as well as overall net increased customer end-market demand.~~

During the six months ended March 31, 2018, net sales in the Aerospace/Defense sector increased $23.6 million, or 12.7%, as compared to the six months ended April 1, 2017. The increase was primarily driven by a $18.3 million increase due to the ramp of production of new products for existing customers as well as overall net increased customer end-market demand.

Cost of sales. Cost of sales for the three ~~and six~~ months ended ~~March 31,~~December 29, 2018 increased ~~$105.2~~$79.4 million, ~~and $148.2 million, respectively,~~or 12.9%, as compared to the three ~~and six~~ months ended ~~April 1,~~December 30, 2017. Cost of sales is comprised primarily of material and component costs, labor costs and overhead. For ~~both~~ the three ~~and six~~ months ended ~~March 31,~~December 29, 2018 and ~~April 1,~~December 30, 2017, approximately ~~89.0%~~90% and 89%, respectively, of the total cost of sales was variable in nature and fluctuated with sales volumes. Of this amount, approximately ~~91.0%~~90% and 91%, respectively, of these costs in each period were related to material and component costs.

As compared to the prior year ~~periods,~~period, the increase in cost of sales ~~in both~~for the three ~~and six~~ months ended ~~March 31,~~December 29, 2018 was primarily due to the increase in net sales and a one-time bonus. During the three months ended March 31, 2018, due to our ability to access overseas cash as a result of U.S. Tax Reform, a $13.5 million one-time bonus was approved and paid to full-time, non-executive employees ("one-time employee bonus"), of which $12.6 million impacted cost of sales. ~~Also contributing to the increase as compared to the prior year were increased fixed labor costs primarily to support program ramps and a negative shift in customer mix.~~

Gross profit. Gross profit for the three ~~and six~~ months ended ~~March 31,~~December 29, 2018 ~~decreased $10.8~~increased $8.9 million, ~~and $11.7 million, respectively,~~or 14.0%, as compared to the three ~~and six~~ months ended ~~April 1,~~December 30, 2017. Gross margin ~~decreased 300 and 180~~of 9.5% increased 10 basis points ~~respectively,~~ as compared to the three ~~and six~~ months ended ~~April 1,~~December 30, 2017. The primary driver of the ~~decreases~~increase in gross profit ~~and gross margin as compared to the three and six months ended April 1, 2017,~~ was the ~~larger percentage~~net sales increase, inas noted above, and improved fixed cost ~~of sales as compared to~~leverage gained from the increase in net sales ~~driven by~~from the ~~factors previously discussed.~~comparative period last year.

Operating income. Operating income for the three ~~and six~~ months ended ~~March 31,~~December 29, 2018 ~~decreased $15.3~~increased $5.4 million, ~~and $17.6 million~~or 17.1% as compared to the three ~~and six~~ months ended ~~April 1,~~December 30, 2017 as a result of the ~~decreases~~increase in gross profit, ~~and~~partially offset by a ~~$4.4 million and $5.9~~$3.5 million increase in selling and administrative expenses ("S&A")~~, respectively. The increases~~ primarily due to an increase in ~~S&A~~compensation expense. Operating margin of 4.8% increased 10 basis points as compared to the ~~prior year were driven by increases in variable compensation expense and a $0.9 million increase due to the one-time employee bonus.~~three months ended December 30, 2017.

A discussion of operating income ~~(loss)~~ by reportable segment is presented below (in millions):


	Three Months Ended						Six Months Ended						Three Months Ended
	March 31, 2018			April 1, 2017			March 31, 2018			April 1, 2017			December 29, 2018			December 30, 2017
Operating income (loss):
AMER	$	10.7		$	8.2		$	21.2		$	23.0		$	14.5		$	10.5
APAC	49.1			50.5			99.7			98.7			51.8			50.5
EMEA	0.4			(1.2		)	(0.7		)	(3.5		)	1.0			(1.1		)
Corporate and other costs ~~(1)~~	(42.9		)	(24.9		)	(71.3		)	(51.7		)	(30.3		)	(28.3		)
Total operating income	$	17.3		$	32.6		$	48.9		$	66.5		$	37.0		$	31.6

(1) The three and six months ended March 31, 2018, include the $13.5 million one-time employee bonus.

AMER. Operating income for the three months ended ~~March 31,~~December 29, 2018 increased ~~$2.5~~$4.0 million as compared to the three months ended ~~April 1,~~December 30, 2017, primarily as a result of anthe increase in net sales, ~~which was~~a positive shift in customer mix and improved productivity, partially offset by ~~increases in fixed labor and overhead~~increased costs to support new program ramps.

Operating income for the six months ended March 31, 2018, decreased $1.8 million as compared to the six months ended April 1, 2017, driven by an increase in fixed labor costs to support new program ramps, which was partially offset a positive shift in customer mix.

APAC. Operating income for the three months ended ~~March 31,~~December 29, 2018 ~~decreased $1.4~~increased $1.3 million as compared to the three months ended ~~April 1,~~December 30, 2017, primarily ~~due to~~as a ~~negative shift in customer mix and an increase in fixed labor and S&A costs to support new program ramps, which was partially offset by an~~result of the increase in net ~~sales.~~

~~Operating income for the six months ended March 31, 2018, increased $1.0 million as compared to the six months ended April 1, 2017, primarily due to an increase in net~~ sales, ~~which was~~ partially offset by a negative shift in customer mix and ~~increases in fixed labor and S&A~~increased costs to support new program ramps.

EMEA. Operating income for the three months ended ~~March 31,~~December 29, 2018 increased ~~$1.6~~$2.1 million as compared to the three months ended ~~April 1,~~December 30, 2017, primarily due to anthe increase in net sales, ~~which was partially offset by increases~~a positive shift in ~~fixed labor~~customer mix and ~~S&A to support new program ramps.~~improved productivity.

Operating loss for the six months ended March 31, 2018, decreased $2.8 million as compared to the six months ended April 1, 2017, primarily due to an increase in net sales, which was partially offset by increases in fixed labor and S&A to support new program ramps.

Other ~~income (expense).~~expense. Other expense for the three months ended ~~March 31,~~December 29, 2018 increased ~~$2.4~~$0.3 million as compared to the three months ended April 1, 2017, primarily due to the impact of foreign exchange volatility, which resulted in a foreign exchange gain of $0.3 million during the three months ended March 31, 2018 as compared to a $1.7 million gain during the three months ended April 1,December 30, 2017.

Other expense increased $2.1 million for the six months ended March 31, 2018 as compared to the six months ended April 1, 2017, primarily due to a $0.8 million decrease in foreign exchange-related gains and a $0.9 million increase in factoring fees related to the Company's accounts receivable securitization facility. Refer to "Liquidity and Capital Resources - Financing Activities" for additional detail on the Company's accounts receivable securitization facility.

Income taxes. Income tax expense and effective income tax rates for the indicated periods were as follows:



	Three Months Ended
	December 29, 2018			December 30, 2017
Income tax expense, as reported	$	11.9		$	127.5
Impact of Tax Reform	(7.0		)	(124.5		)
Income tax expense, as adjusted (1)	$	4.9		$	3.0



	Three Months Ended
	December 29, 2018		December 30, 2017
Effective tax rate, as reported	34.9	%	439.2	%
Impact of Tax Reform	(20.7	)%	(428.8	)%
Effective tax rate, as adjusted (1)	14.2	%	10.4	%

(1) We believe the non-GAAP presentation of income tax expense and the effective tax rate excluding the impact of Tax Reform provides additional insight over the change from the comparative reporting periods by excluding these non-recurring expenses. In addition, the Company believes that its effective tax rate, as adjusted, enhances the ability of investors to analyze the Company’s operating performance and supplements, but does not replace, its effective tax rate calculated in accordance with U.S. GAAP.

On December 22, 2017, the U.S. Tax Cuts & Jobs Act was enacted ("Tax Reform"). Due to the complexities in implementing Tax Reform, ~~made significant changes to U.S. corporate income tax, including transitioning~~ the U.S. to a dividend exemption system and requiring a deemed dividend on historical undistributed earnings of foreign subsidiaries at a reduced tax rate. Tax Reform also includes provisions that may impact us beginning in fiscal 2019, such as a U.S. tax on certain foreign low-taxed earnings and a limitation placed on the deductibility of domestic interest expense. U.S. GAAP required us to recognize the effects of Tax Reform in the period of enactment, which was the quarter ended December 30, 2017. The SEC issued ~~guidance that~~Staff Accounting Bulletin 118, which allowed usthe Company to record a ~~provisional~~ tax expense when uncertainty or other factors may impact the final outcome.

~~We believe~~ During fiscal year 2018, the ~~provisional tax expense of $124.5 million recorded in the quarter ended December 30, 2017, continues to be a~~Company made reasonable ~~estimate of tax expense~~estimates related to ~~Tax Reform using all analyses, interpretations and guidance available at this time. We continue to assess~~ the impact of Tax Reform ~~on our business,~~ and, ~~the final impact may differ from this estimate, perhaps materially, due to, among other things changes~~ in ~~interpretations, assumptions, and/or guidance that may be issued in the near future or actions we may take as~~accordance with SAB118, recorded a ~~result.~~net income tax expense of $85.9 million. For the three months ended ~~March 31,~~December 29, 2018, ~~there have been no changes in interpretations, assumptions and/or guidance that require an~~the Company recorded a $7.0 million adjustment to ~~our provisional~~its income tax expense, inclusive of unrecognized tax benefits, as a result of proposed additional guidance issued by the U.S. Department of the Treasury on November 28, 2018, related to Tax Reform. The guidance related to the treatment of foreign taxes paid that impacted the tax on the deemed repatriation of historical undistributed foreign earnings. Additionally, the effects of the Global

Intangible Low-Taxed Income provision added by Tax Reform have been recorded in the three months ended December ~~30, 2017.~~

~~Effective~~29, 2018. The Company has elected to treat the income tax ~~rates for the indicated periods were~~effects of this provision as ~~follows:~~a period cost.

Three Months Ended Six Months Ended
March 31, 2018 April 1, 2017 March 31, 2018 April 1, 2017
Effective tax rate, as reported 16.5 % 9.6 % 297.0 % 9.4 %
Impact of Tax Reform — % — % (284.6 )% — %
Impact of one-time employee bonus (6.7 )% — % (2.3 )% — %
Effective tax rate, as adjusted (1) 9.8 % 9.6 % 10.1 % 9.4 %

(1) We believe the non-GAAP presentation of the effective annual tax rate excluding the impact of Tax Reform and the one-time employee bonus provides additional insight over the change from the comparative reporting periods by excluding these non-recurring expenses. In addition, the Company believes that its effective tax rate, as adjusted, enhances the ability of investors to analyze the Company’s operating performance and supplements, but does not replace, its effective tax rate calculated in accordance with U.S. GAAP.

Income tax expense for the three months ended ~~March 31,~~December 29, 2018 and ~~April 1,~~December 30, 2017, was ~~$2.4~~$11.9 million and ~~$3.1~~$127.5 million, respectively. ~~Income~~The impacts related to Tax Reform included in income tax expense for the ~~six~~three months ended ~~March 31,~~December 29, 2018 and ~~April 1,~~December 30, 2017, was ~~$130.0~~$7.0 million and ~~$6.0~~$124.5 million, respectively.

The effective tax rates for the three and six months ended March 31, 2018, were 16.5% and 297.0%, respectively, compared to the effective tax rates of 9.6% and 9.4% for the three and six months ended April 1, 2017. The effective tax rate for the three months ended ~~March 31,~~December 29, 2018 ~~increased from~~and December 30, 2017 was 34.9% and 439.2%, respectively. As noted in the table above, the impact of Tax Reform on the effective tax rate for the three months ended ~~April 1,~~December 29, 2018 and December 30, 2017, was 20.7% and 428.8%, respectively. The remaining increase in income tax expense and the effective tax rate is primarily due to the ~~one-time employee bonus and~~Global Intangible Low-Tax Income provision of Tax Reform recorded during the three months ended December 29, 2018.

As a ~~decrease in pre-tax earnings in jurisdictions where we maintain a valuation allowance. The~~

~~effective~~result of Tax Reform, our U.S. statutory tax rate for the six months ended March 31, 2018 increased from the effective tax rate for the six months ended April 1, 2017, primarily due to the impact of Tax Reform, the one-time employee bonus, and a decrease in pre-tax earnings in jurisdictions where we maintain a valuation allowance.

~~The impact of Tax Reform and the one-time employee bonus on our income tax expense~~fiscal 2019 is ~~reflected in the following table (in millions):~~

Three Months Ended Six Months Ended
March 31, 2018 April 1, 2017 March 31, 2018 April 1, 2017
Income tax expense, as reported $ 2.4
$ 3.1
$ 130.0
$ 6.0
Impact of Tax Reform —
—
(124.5 ) —
Impact of one-time employee bonus $ 0.4
$ —
0.3
—
Income tax expense, as adjusted (1) $ 2.8
$ 3.1
$ 5.8
$ 6.0

(1) We believe the non-GAAP presentation of income tax expense excluding the impact of Tax Reform and the one-time employee bonus provides additional insight over the change from the comparative reporting periods by excluding these non-recurring expenses. In addition, the Company believes that its income tax expense, as adjusted, enhances the ability of investors to analyze the Company's operating performance and supplements, but does not replace, its income tax expense calculated in accordance with U.S. GAAP.

The income tax expense of $2.4 million recorded in the quarter ended March 31, 2018, included a reduction in tax expense from the one-time employee bonus of $0.4 million. The income tax expense of $124.5 million recorded in the quarter ended December 30, 2017, due to Tax Reform included $101.8 million for federal and state purposes on the deemed repatriation of our historical undistributed foreign earnings. This amount is payable over an eight year period beginning in fiscal 2019. An additional tax expense of $22.7 million was recorded in the quarter ended December 30, 2017, for foreign withholding taxes that are payable on certain dividends due to a change in our permanently reinvested assertion on foreign earnings.

~~Due to Tax Reform, our blended U.S. statutory rate for fiscal 2018 is 24.5%~~21%. ~~This results from a statutory tax rate of 35% for the first three months of fiscal 2018, and a statutory tax rate of 21% for the remainder of fiscal 2018.~~ Our effective tax rate varies from our blended U.S. statutory rate ~~of 24.5%~~ primarily due to the geographic distribution of worldwide earnings as well as a tax holiday granted to a subsidiary within our APAC segment, where we derive a significant portion of our earnings. In addition, our effective tax rate has been impacted by changes due to Tax Reform ~~and the one-time employee bonus~~ discussed ~~above, and~~above. Our effective tax rate may be impacted by disputes with taxing authorities, tax planning activities, adjustments to uncertain tax positions and changes in valuation allowances.

The estimated effective income tax rate for fiscal ~~2018~~2019 is expected to be between ~~122%~~13% and ~~130%. Excluding the impact of Tax Reform and one-time employee bonus discussed above, the estimated effective income tax rate, as adjusted, for fiscal 2018 is expected to be between 10.0% and 12.0%~~15%.

Net income (loss) ~~income.~~. Net income for the three months ended ~~March 31,~~December 29, 2018 decreased $17.0 million as compared to the three months ended April 1, 2017, primarily due to the $13.2 million after-tax one-time employee bonus and a net $3.5 million increase in S&A, as previously discussed.

~~Net loss of $86.2 million for the six months ended March 31, 2018 reflected a decrease of $143.7~~was $22.2 million as compared to the net ~~income~~loss of ~~$57.5~~$98.5 million for ~~the six months ended April 1, 2017. The decrease was primarily a result of the $124.5 million of tax expense that was recorded during~~ the three months ended December 30, ~~2017~~2017. Net income increased primarily as a result of the $115.6 million decrease in ~~connection with~~income tax expense, which, as noted above, was substantially due to the impact of Tax Reform, as well as the ~~$13.2 million after-tax one-time employee bonus and a net $5.0 million~~ increase in ~~S&A, as previously discussed.~~net sales noted above.

Diluted earnings (loss) per share. Diluted earnings per share for the three months ended ~~March 31,~~December 29, 2018 was ~~$0.36,~~$0.69, as compared to a ~~$0.48 decrease from~~ diluted ~~earnings~~loss per share of ~~$0.84~~$2.93 for the three months ended ~~April 1,~~December 30, 2017, primarily as a result of decreased tax expense related to Tax Reform and increased net ~~income.~~

~~Diluted loss per share for~~income in the ~~six~~three months ended ~~March 31,~~December 29, 2018, ~~was $2.57, a $4.23 decrease from the diluted earnings per share of $1.66 for the six months ended April 1, 2017, primarily~~ as a result of decreased net income, including due to the impact of Tax Reform. This was partially offset by the positive impact of fewer weighted average outstanding shares as compared to the prior year due to our common stock repurchase program. See also Note 11, "Shareholders' Equity," for information regarding the Company's share repurchase plans.noted above.

Return on Invested Capital ("ROIC") and Economic Return. We use a financial model that is aligned with our business strategy and includes a ROIC goal of 500 basis points over our weighted average cost of capital ("WACC"), which we refer to as "Economic Return," and a 4.7% to 5.0% operating margin target. Our primary focus is on our Economic Return goal of

5.0%, which is designed to create shareholder value and generate sufficient cash to self-fund our targeted organic revenue growth rate of 12.0%. ROIC and Economic Return are non-GAAP financial measures.

Non-GAAP financial measures, including ROIC and Economic Return, are used for internal management goals and decision making because such measures provide management and investors additional insight into financial performance. In particular, we provide ROIC and Economic Return because we believe they offer insight into the metrics that are driving management decisions because we view ROIC and Economic Return as important measures in evaluating the efficiency and effectiveness of our long-term capital requirements. We also use a derivative measure of ROIC as a performance criteria in determining certain elements of compensation, and certain compensation incentives are based on Economic Return performance.

We define ROIC as tax-effected operating income before restructuring and other special items divided by average invested capital over a rolling ~~three-quarter~~two-quarter period for the ~~second~~first quarter. Invested capital is defined as equity plus debt, less cash and cash equivalents. Other companies may not define or calculate ROIC in the same way. ROIC and other non-GAAP financial measures should be considered in addition to, not as a substitute for, measures of our financial performance prepared in accordance with U.S. generally accepted accounting principles ~~in the United States of America~~ ("~~U.S.~~ GAAP").

We review our internal calculation of WACC annually, and our estimated WACC is ~~9.5%~~9.0% for fiscal ~~2018.~~2019. By exercising discipline to generate ROIC in excess of our WACC, our goal is to create value for our shareholders. ROIC was ~~15.6%~~14.6% and ~~16.8%~~16.2% for the ~~six~~three months ended ~~March 31,~~December 29, 2018 and ~~April 1,~~December 30, 2017, respectively.

For a reconciliation of ROIC and Economic Return to our financial statements that were prepared using U.S. GAAP, see Exhibit 99.1 to this quarterly report on Form 10-Q, which is incorporated herein by reference.

Refer to the table below, which includes the calculation of ROIC and Economic Return (dollars in millions) for the indicated periods:


	Six Months Ended						Three Months Ended
	March 31, 2018			April 1, 2017			December 29, 2018			December 30, 2017
Annualized operating income (tax effected)	$	111.0		$	121.0		$	125.6		$	113.6
Average invested capital	709.8			718.5			862.5			701.6
After-tax ROIC	15.6		%	16.8		%	14.6		%	16.2		%
WACC	9.5		%	10.5		%	9.0		%	9.5		%
Economic Return	6.1		%	6.3		%	5.6		%	6.7		%

LIQUIDITY AND CAPITAL RESOURCES

Cash and cash equivalents and restricted cash were ~~$403.3~~$192.9 million as of ~~March 31,~~December 29, 2018, as compared to ~~$569.3~~$297.7 million as of September ~~30, 2017.~~29, 2018.

As of ~~March 31,~~December 29, 2018, ~~approximately 80%~~96.5% of our cash balance was held outside of the U.S. by our foreign subsidiaries. With the enactment of Tax Reform, we believe that our offshore cash can be accessed in a more tax efficient manner. As previously discussed, we recorded $124.5 million of tax expense during the three months ended December 30, 2017, associated with the repatriation of undistributed foreign earnings and the reversal of our permanently reinvested assertion on certain foreign earnings in connection withmanner than before Tax Reform. ~~During~~Currently, we believe that our cash balance, together with cash available under our Credit Facility, will be sufficient to meet our liquidity needs, including potential share repurchases, for the ~~three~~next twelve months ~~ended March 31, 2018, we repatriated approximately $280.0 million from our APAC region~~ and ~~we anticipate repatriating additional funds during~~for the fiscal third quarter while continuing to execute our revised capital allocation strategy; however, that additional repatriation is subject to future events and conditions that may be beyond our control. In addition to the $13.5 million one-time employee bonus paid in the quarter ended March 31, 2018, and apart from funding the remaining $121.8 million in taxes payable related to Tax Reform, other uses of such capital are expected to include the following:

~~Returning cash to shareholders by accelerating repurchase activity. Our intent is to use the remaining $74.7 million under the 2016 Share Repurchase Plan during fiscal 2018;~~

~~Repurchasing an additional $200.0 million of shares under the 2018 Share Repurchase Plan through fiscal 2019;~~

~~Paying down $25.0 million of the $175.0 million in principal amount of our Senior Notes due on June 15, 2018 (the "Notes"), and refinancing the balance; and~~

~~Reinvestment in the business to support growth and productivity improvements~~

foreseeable future.

Our future cash flows from operating activities will be reduced by ~~$121.8~~$80.0 million due to ~~the~~ cash payments offor accrued income taxes related to Tax Reform. The table below provides ~~our best estimate of~~ the expected timing ~~and amount~~ of these future cash flows; however, these amounts may change, perhaps materially, as noted within "Results of Operations - Income Taxes" above. The $121.8 million includes $100.0 million of U.S. federal taxes on the deemed repatriation of undistributed foreign earnings, which are payable over an eight year period in accordance with the following installment schedule beginning in fiscal 2019 (in millions):

2019 $ 8.0
2020 8.0
2021 8.0
2022 8.0
2023 8.0
2024 15.0
2025 20.0
2026 25.0
Total $ 100.0

~~The schedule above excludes an additional $20.0~~outflows, excluding $10.6 million of foreign withholding ~~taxes and $1.8 million of state~~ taxes on the deemed repatriation of undistributed foreign earnings since the exact timing of the payments is unknown as of ~~March 31,~~December 29, 2018. The remaining $69.4 million represents U.S. federal taxes on the deemed repatriation of undistributed foreign earnings that are payable over an eight year period in accordance with the following installment schedule beginning in the fiscal second quarter of 2019 (in millions):



2019	$	5.6
2020	5.6
2021	5.6
2022	5.6
2023	5.6
2024	10.4
2025	13.9
2026	17.1
Total	$	69.4

Cash Flows. The following table provides a summary of cash flows for the periods presented, excluding the effect of exchange rates on cash and cash equivalents and restricted cash (in millions):

Six Months Ended
March 31, 2018 April 1, 2017
Cash provided by operating activities $ 2.8
$ 105.6
Cash used in investing activities $ (28.8 ) $ (14.2 )
Cash (used in) provided by financing activities $ (145.7 ) $ 3.3



	Three Months Ended
	December 29, 2018			December 30, 2017
Cash (used in) provided by operating activities	$	(33.3	)	$	69.1
Cash used in investing activities	$	(23.7	)	$	(16.5	)
Cash used in financing activities	$	(47.3	)	$	(109.1	)

Operating Activities. Cash flows used in operating activities were $33.3 million for the three months ended December 29, 2018, as compared to cash flows provided by operating activities ~~during the six months ended March 31, 2018, was $2.8 million, as compared to $105.6~~of $69.1 million for the ~~six~~three months ended ~~April 1,~~December 30, 2017. The decrease was primarily due to ~~a $125.1~~cash flow (reductions) improvements of:

$(65.7) million ~~decrease~~ in accounts receivable cash flows, which resulted primarily from the increase in net sales and the ~~initial implementation~~timing of ~~a new factoring program during fiscal 2017. The decrease was partially offset by improvements of $27.3~~shipments in the quarter.

$(60.3) million in ~~accounts payable~~inventory cash flows driven by increased ~~purchasing activity~~inventory levels to support the ramp of customer programs and continued longer lead times for certain components.

$27.2 million in ~~support of~~customer deposit cash flows driven by significant deposits received from two customers during the ~~increased net sales.~~three months ended December 29, 2018.

The following table provides a summary of cash cycle days for the periods indicated (in days):


	Three Months Ended		Three Months Ended
	March 31, 2018	April 1, 2017	December 29, 2018	December 30, 2017
Days in accounts receivable	52	48	51	45
Days in contract assets			10	—
Days in inventory	100	103	105	100
Days in accounts payable	(61)	(64)	(68)	(63)
Days in cash deposits	(15)	(14)	(15)	(15)
Annualized cash cycle	76	73	83	67

We calculate days in accounts receivable and contract assets as ~~accounts receivable~~each balance sheet item for the respective quarter divided by annualized sales for the respective quarter by day. We calculate days in inventory, accounts payable, and cash deposits as each balance sheet line item for the respective quarter divided by annualized cost of sales for the respective quarter by day. We calculate annualized cash cycle as the sum of days in accounts receivable, days in contract assets and days in inventory, less days in accounts payable and days in cash deposits. On September 30, 2018, the Company adopted Accounting Standards Update No. 2014-09 (“ASU 2014-09”), Revenue Recognition (Topic 606). For the three months ended December 29, 2018, cash cycle days include contract assets and an associated reduction in inventory. As the guidance was adopted using a modified retrospective approach, no impact to prior periods was required to be recognized.

As of ~~March 31,~~December 29, 2018, annualized cash cycle days increased ~~three~~sixteen days compared to ~~April 1,~~December 30, 2017 due to the following factors:

Days in accounts receivable for the three months ended ~~March 31,~~December 29, 2018 increased ~~four~~six days compared to the three months ended ~~April 1,~~December 30, 2017. The increase is primarily attributable to the timing of ~~customer~~ shipments ~~and payments and a $94.3~~in the quarter.

~~million increase~~Days in ~~net sales as~~contract assets for the three months ended December 29, 2018 increased ten days compared to the three months ended ~~April 1,~~December 30, 2017 due to ~~the factors noted within "Results of Operations - Net sales" above, which was partially offset by a $44.4 million increase in accounts receivable sold under factoring programs.~~Topic 606 revenue recognition adoption.

Days in inventory for the three months ended ~~March 31,~~December 29, 2018 ~~decreased three~~increased five days compared to the three months ended ~~April 1,~~December 30, 2017. The ~~decrease~~increase is primarily ~~due~~attributable to ~~the increase in annualized cost of sales due to the factors noted within "Results of Operations - Cost of sales" above, which was partially offset by a $92.0 million increase in~~increased inventory levels to support ~~new program ramps~~the ramp of customer programs and ~~as a result of experiencing~~continued longer lead times for certain ~~components, mainly capacitors, resistors and memory. In order to maintain a high level~~components. This increase is partially offset by inventory that was recognized with over time revenue as part of ~~customer service, we are procuring components earlier, which has led to the increase in inventory.~~our adoption of Topic 606.

Days in accounts payable for the three months ended ~~March 31,~~December 29, 2018 ~~decreased three~~increased five days compared to the three months ended ~~April 1,~~December 30, 2017. The ~~decrease~~increase is primarily ~~due to the increase in annualized cost of sales due to the factors noted within "Results of Operations - Cost of sales" above, which was partially offset~~driven by increased purchasing activity to support anticipated higher revenue levels.

Days in cash deposits for the three months ended ~~March 31,~~December 29, 2018 ~~increased one day~~remained consistent compared to the three months ended ~~April 1,~~December 30, 2017. The increase was primarily driven by an increase in customer deposits primarily due to deposits received from two customers to cover higher inventory balances, which was substantially offset by the increase in annualized cost of sales.

Free Cash Flow. We define free cash flow ("FCF"), a non-GAAP financial measure, as cash ~~flow~~flows provided by operations less capital expenditures. FCF was $(58.2) million for the ~~six~~three months ended ~~March 31,~~December 29, 2018, ~~was $(26.3)~~compared to $52.4 million for the three months ended December 30, 2017, a decrease of ~~$117.3~~$110.6 million, ~~from $91.0 million for the six months ended April 1, 2017,~~ primarily due to a ~~$102.8~~$102.4 million decrease in cash flows provided by operations, due to the factors discussed above, and a ~~$14.5~~$8.2 million increase in capital expenditures, discussed below.

Non-GAAP financial measures, including FCF, are used for internal management assessments because such measures provide additional insight to investors into ongoing financial performance. In particular, we provide FCF because we believe it offers insight into the metrics that are driving management decisions. We view FCF as an important financial metric as it demonstrates our ability to generate cash and can allow us to pursue opportunities that enhance shareholder value. FCF is a non-GAAP financial measure that should be considered in addition to, not as a substitute for, measures of our financial performance prepared in accordance with ~~U.S.~~ GAAP.

A reconciliation of FCF to our financial statements that were prepared using ~~U.S.~~ GAAP follows (in millions):


	Six Months Ended						Three Months Ended
	March 31, 2018			April 1, 2017			December 29, 2018			December 30, 2017
Cash flows provided by operating activities	$	2.8		$	105.6
Cash flows (used in) provided by operating activities							$	(33.3	)	$	69.1
Payments for property, plant and equipment	(29.1		)	(14.6		)	(24.9		)	(16.7		)
Free cash flow	$	(26.3	)	$	91.0		$	(58.2	)	$	52.4

Investing Activities. Cash flows used in investing activities ~~totaled $28.8 million for the six months ended March 31, 2018, an increase of $14.6 million as compared to $14.2~~were $23.7 million for the three months ended ~~April 1,~~December 29, 2018 compared to $16.5 million for the three months ended December 30, 2017. The increase in cash used in investing activities was due to a ~~$14.5~~$8.2 million increase in capital expenditures primarily to fund both the purchase of equipment and building improvements for the new manufacturing facility in Penang, Malaysia, and the construction of a second manufacturing facility in Guadalajara, Mexico, as well as to support new capabilities, new program ramps, and to replace ~~or refresh manufacturing~~older equipment.

We estimate funded capital expenditures for fiscal ~~2018~~2019 to be approximately ~~$80.0~~$70.0 to $90.0 million, of which ~~$29.1~~$24.9 million was utilized through the first ~~six~~three months of fiscal ~~2018.~~2019. The remaining fiscal ~~2018~~2019 capital expenditures are anticipated to be used primarily ~~to fund a building purchase~~ in ~~Penang, Malaysia,~~the construction of the second manufacturing facility in Guadalajara, Mexico, and to support new program ramps ~~and~~as well as to replace ~~or refresh~~ older equipment. We believe our estimated capital expenditures will continue to be funded from cash flows provided by operations, and may be supplemented by available cash ~~and~~or borrowings, ~~under our credit facility,~~ if required.

Financing Activities. Cash flows used in financing activities ~~totaled $145.7~~were $47.3 million for the ~~six~~three months ended ~~March 31,~~December 29, 2018 ~~an increase of $149.0 million as~~ compared to cash flows provided by financing activities of ~~$3.3~~$109.1 million for ~~six~~the three months ended ~~April 1,~~December 30, 2017. The ~~increase~~decrease was primarily attributable to ~~an increase~~a $105.0 million decrease in pay-downs ofon our revolving credit facility ~~under which there were no outstanding borrowings as of March 31, 2018, as compared to $90.0 million of outstanding borrowings as of April 1, 2017, as well as~~partially offset by a ~~$27.3~~$40.5 million increase in cash used to repurchase our common stock.

other considerations (the "2016 Share Repurchase Plan"). During the six months ended March 31, 2018, the Company repurchased 671,409 shares for approximately $41.2 million, at an average price of $61.30 per share. During the six months ended April 1, 2017, the Company repurchased 267,811 shares for approximately $13.9 million, at an average price of $51.93 per share. All shares repurchased under the 2016 Share Repurchase Plan were recorded as treasury stock. As noted above, the Company expects to complete the 2016 Share Repurchase Plan during the remainder of fiscal 2018. On February 14, 2018, the Board of Directors approved ~~an additional~~a stock repurchase plan under which the Company is authorized to repurchase $200.0 million of its common stock ~~commencing~~(the "2018 Program"). The 2018 Program commenced upon completion of the 2016 ~~Share Repurchase Plan~~Program, as defined below. During the three months ended December 29, 2018, the Company repurchased 869,949 shares under this program for $50.1 million, at an average price of $57.53 per share. As of December 29, 2018, $128.8 million of authority remained under the 2018 Program.

All shares repurchased under the aforementioned programs were recorded as treasury stock.

On June 15, 2018, the Company entered into a Note Purchase Agreement (the “2018 ~~Share Repurchase Plan”~~NPA”).

~~In fiscal 2011, Plexus~~ pursuant to which it issued ~~$175.0~~an aggregate of $150.0 million in principal amount of unsecured senior notes, consisting of $100.0 million in principal amount of 4.05% Series A Senior Notes, due on June 15, 2025, and $50.0 million in principal amount of 4.22% Series B Senior Notes, due on June 15, 2028 (collectively, the ~~Notes.~~“2018 Notes”), in a private placement. The ~~related Note Purchase Agreement contains~~2018 NPA includes customary operational and financial covenants with which the Company is required to comply, including, among others, maintenance of certain financial ~~covenants, which include~~ratios such as a ~~maximum~~ total leverage ratio and a minimum interest coverage ~~ratio and~~ratio. The 2018 Notes may be prepaid in whole or in part at any time, subject to payment of a ~~minimum net worth test, all as defined in~~make-whole amount; interest on the ~~agreement.~~2018 Notes is payable semiannually. As of ~~March 31,~~December 29, 2018, the Company was in compliance with ~~all such~~the covenants ~~relating to~~under the ~~Notes and the Note Purchase Agreement. We plan to refinance $150.0 million of the existing $175.0 million of the Notes, which mature in June~~ 2018 under terms similar to the existing Note Purchase Agreement. The Company has been negotiating with potential purchasers related to the refinancing of the Notes and believes that it has reached an agreement in principle on pricing and maturities that would reduce interest rates and extend the term for a portion of such borrowing as compared to the Notes. We expect to close the refinancing later in the third quarter of fiscal 2018. However, definitive agreements are not yet executed; therefore, we cannot provide assurances that such refinancing will occur on these, or any other, terms.NPA.

The Company's Credit Facility has a $300.0 million maximum commitment that expires on July 5, 2021. The Credit Facility may be further increased to $500.0 million, generally by mutual agreement of the Company and the lenders, subject to certain customary conditions. For further information regarding the Credit Facility, see Note 3, "Debt, Capital Lease Obligations and Other ~~Financing,"~~Financing" in Notes to Condensed Consolidated Financial Statements.

The financial covenants (as defined under the related Credit ~~Agreement)~~Facility) require, among other covenants, that the Company maintain, as of each fiscal quarter end, a maximum total leverage ratio and a minimum interest coverage ratio. As of ~~March 31,~~December 29, 2018, the Company was in compliance with all financial covenants of the Credit ~~Agreement.~~Facility.

The Credit ~~Agreement~~Facility and the ~~Note Purchase Agreement~~2018 NPA allow for the future payment of cash dividends or the repurchase of shares provided that no event of default (including any failure to comply with a financial covenant) exists at the time of, or would be caused by, the dividend payment or the share repurchases. We have not paid cash dividends in the past and do not currently anticipate paying

them in the future. However, we evaluate from time to time potential uses of excess cash, which in the future may include share repurchases above those already authorized, a special dividend or recurring dividends.

~~The Company previously sold receivables under a former trade accounts receivable sale program that expired during the first fiscal quarter of 2017.~~MUFG RPA.

The Company sold $298.3 million and $169.3 million of trade accounts receivable during the six months ended March 31, 2018 and April 1, 2017, respectively, in exchange for cash proceeds of $296.7 million and $168.5$161.5 million, respectively.

In all cases, the sale discount was recorded within "Miscellaneous, ~~other income (expense)"~~net" in the Condensed Consolidated Statements of Comprehensive Income ~~(Loss)~~ in the period of the sale. For further information regarding the receivable sale programs, see Note 12, "Trade Accounts Receivable Sale Programs," in Notes to Condensed Consolidated Financial Statements.

Based on current expectations, we believe that our projected cash flows provided by operations, available cash and cash equivalents, potential borrowings under the Credit Facility ~~partial pay-down and refinancing of the Notes~~ and our leasing capabilities should be sufficient to meet our working capital and fixed capital requirements for the next twelve ~~months,~~

~~including the partial repayment of the Notes.~~months. If our future financing needs increase, we may need to arrange additional debt or equity financing. Accordingly, we evaluate and consider from time to time various financing alternatives to supplement our financial resources. However, we cannot be assured that we will be able to make any such arrangements on acceptable terms.

CONTRACTUAL OBLIGATIONS, COMMITMENTS AND OFF-BALANCE SHEET OBLIGATIONS

Our disclosures regarding contractual obligations and commercial commitments are located in various parts of our regulatory filings. Information in the following table provides a summary of our contractual obligations and commercial commitments as of ~~March 31,~~December 29, 2018 (dollars in millions):


	Payments Due by Fiscal Year										Payments Due by Fiscal Year
Contractual Obligations	Total		Remaining 2018		2019-2020		2021-2022		2023 and thereafter		Total		Remaining2019		2020-2021		2022-2023		2024 and thereafter
Short-Term Debt Obligations (1)	$	176.8	$	176.8	$	—	$	—	$	—
Capital Lease and Other Financing Obligations (2)	40.2		4.8		7.5		3.7		24.2
Debt Obligations (1)											$	205.1	$	6.4	$	13.8	$	13.8	$	171.1
Capital Lease Obligations (2)											50.4		5.7		6.6		3.7		34.4
Operating Lease Obligations	38.7		4.8		17.6		7.0		9.3		37.1		7.5		14.7		7.2		7.7
Purchase Obligations (3)	659.7		559.6		99.7		0.2		0.2		729.0		671.5		56.5		0.8		0.2
Repatriation Tax on Undistributed Foreign Earnings (4)	100.0		—		16.0		16.0		68.0		69.4		5.6		11.2		11.0		41.6
Other Long-Term Liabilities on the Balance Sheet (5)	14.4		0.1		0.1		0.3		13.9
Other Long-Term Liabilities not on the Balance Sheet (6)	6.4		0.7		2.8		—		2.9
Other Liabilities on the Balance Sheet (5)											13.2		1.4		2.8		2.6		6.4
Other Liabilities not on the Balance Sheet (6)											7.9		0.9		0.7		1.4		4.9
Other Financing Obligations (7)	31.0		0.8		3.2		3.3		23.7		120.9		2.9		8.7		9.1		100.2
Total Contractual Cash Obligations	$	1,067.2	$	747.6	$	146.9	$	30.5	$	142.2	$	1,233.0	$	701.9	$	115.0	$	49.6	$	366.5


1)	Includes ~~$175.0~~$150.0 million in principal amount of 2018 Notes as well as interest; see Note 3, "Debt, Capital Lease Obligations and Other ~~Financing,"~~Financing" in Notes to Condensed Consolidated Financial Statements for further information.


2)	As of ~~March 31,~~December 29, 2018, capital lease ~~and other financing~~ obligations consists of capital lease payments and interest as well as athe non-cash financing obligation related to the failed ~~sale-leaseback of a building~~sale-leasebacks in Guadalajara, Mexico.


3)	As of ~~March 31,~~December 29, 2018, purchase obligations consist primarily of purchases of inventory and equipment in the ordinary course of business.


4)	Consists of U.S. federal income taxes on the deemed repatriation of undistributed foreign earnings due to Tax ~~Reform, which is our best estimate and may change, perhaps materially.~~Reform. Refer to "Liquidity and Capital Resources" above for further detail.

As of ~~March 31,~~December 29, 2018, other ~~long-term~~ obligations on the balance sheet included deferred compensation obligations to certain of our former and current executive officers, as well as other key employees, and an asset retirement ~~obligations.~~obligation. We have excluded from the above table the impact of approximately ~~$3.1~~$4.2 million, as of ~~March 31,~~December 29, 2018, related to unrecognized income tax benefits. The Company cannot make reliable estimates of the future cash flows by period related to these obligations.

As of ~~March 31,~~December 29, 2018, other ~~long-term~~ obligations not on the balance sheet ~~consisted~~consist of guarantees and a commitment for salary continuation and certain benefits in the event employment of one executive officer of the Company is terminated without cause. Excluded from the amounts disclosed are certain bonus and incentive compensation amounts, which would be paid on a prorated basis in the year of termination.


7)	Includes future minimum lease payments for two facilities in Guadalajara, Mexico, leased under ~~the~~ 10-year and 15-year base lease ~~agreement in Guadalajara as well as~~agreements, both of which include two 5-year renewal options.

DISCLOSURE ABOUT CRITICAL ACCOUNTING POLICIES

Our critical accounting policies are disclosed in our ~~2017~~2018 annual report on Form 10-K. Other than the item noted below, there were no material changes to these policies.

~~Income Taxes: Deferred tax assets~~Revenue Recognition: Topic 606 results in a change to the timing of revenue recognition for a significant portion of the Company's revenue, whereby revenue is now recognized "over time" as products are produced, as opposed to at a "point in time" based upon shipping terms. Upon adopting the standard, revenue is now recognized over time for arrangements with customers for which: (i) the Company's performance does not create an asset with an alternative use to the Company, and ~~liabilities~~(ii) the Company has an enforceable right to payment for performance completed to date. Revenue recognized over time will be estimated based on costs incurred to date plus a reasonable profit margin. If either of the two conditions noted above are not met to recognize revenue over time, revenue will be recognized following the transfer of control of such products to the customer, which typically occurs upon shipment or delivery depending on the terms of the underlying arrangement.

The Company generally enters into a master services arrangement that establishes the framework under which business will be conducted. These arrangements represent the master terms and conditions of the Company's services that apply to individual orders, but they do not commit the customer to work with, or to continue to work with, the Company nor do they obligate the customer to any specific volume or pricing of purchases. Moreover, these terms can be amended in appropriate situations. Customer purchase orders are received for specific quantities with predominantly fixed pricing and delivery requirements. Thus, for the ~~future tax consequences attributable~~majority of our contracts, there is no guarantee of any revenue to ~~differences between~~ the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income inCompany until a customer submits a purchase order. As a result, the ~~years in which those temporary differences are expected~~Company generally considers its arrangement with a customer to be ~~recovered~~the combination of the master services arrangement and the purchase order. Most of the Company's arrangements with customers create a single performance obligation as the promise to transfer the individual manufactured product or ~~settled. With the enactment~~service is capable of ~~Tax Reform,~~being distinct.

The Company’s performance obligations are satisfied over time as work progresses or at a point in time. A performance obligation is satisfied over time if the Company ~~now provides~~has an enforceable right to payment, including a reasonable profit margin. Determining if an enforceable right to payment includes a reasonable profit margin requires judgment and is assessed on a contract by contract basis.

If an enforceable right to payment for ~~additional U.S.~~work-in-process does not exist, revenue is recognized following the transfer of control of such products to the customer, which typically occurs upon shipment or delivery depending on the terms of the underlying contract.

For contracts requiring over time revenue recognition, the selection of the method to measure progress towards completion requires judgment and ~~foreign income taxes that would become payable upon~~is based on the ~~repatriation~~nature of ~~undistributed earnings of foreign subsidiaries.~~the products or services to be provided. The Company ~~maintains valuation allowances~~uses a cost-based input measurement of progress because it best depicts the transfer of assets to the customer, which occurs as costs are incurred during the manufacturing process or as services are rendered. Under the cost-based measure of progress, the extent of progress towards completion is measured based on the costs incurred to date.

Generally, there are no subjective customer acceptance requirements or further obligations related to goods or services provided; if such requirements or obligations exist, then a sale is recognized at the time when ~~it is more likely than~~such requirements are completed and such obligations are fulfilled.

The Company does not allow for a general right of return. Net sales include amounts billed to customers for shipping and handling and out-of-pocket expenses. The corresponding shipping and handling costs and out-of-pocket expenses are included in cost of sales. Taxes assessed by a governmental authority that ~~all or~~are both imposed on and concurrent with a ~~portion of a deferred tax asset will not be realized. In determining whether a valuation allowance is required,~~specific revenue-producing transaction, that are collected by the Company takes into account such factors as prior earnings history, expected future earnings, carryback and carryforward periods, and tax strategies that could potentially enhance the likelihood of the realization offrom a ~~deferred tax asset.~~customer, are excluded from net sales.

NEW ACCOUNTING PRONOUNCEMENTS

See Note 1, "Basis of Presentation," in Notes to Condensed Consolidated Financial Statements for further information regarding new accounting pronouncements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risk from changes in foreign exchange and interest rates. We selectively use financial instruments to reduce such risks. We do not use derivative financial instruments for speculative purposes.

Foreign Currency Risk

Our international operations create potential foreign exchange risk. Our policy is to selectively hedge our foreign currency denominated transactions in a manner that partially offsets the effects of changes in foreign currency exchange rates. We typically use foreign currency contracts to hedge only those currency exposures associated with certain assets and liabilities denominated in non-functional currencies. Corresponding gains and losses on the underlying transaction generally offset the gains and losses on these foreign currency hedges.

Our percentages of transactions denominated in currencies other than the U.S. dollar for the indicated periods were as follows:


	Three Months Ended		Three Months Ended
	March 31, 2018	April 1, 2017	December 29, 2018	December 30, 2017
Net Sales	10.3%	8.3%	9.3%	9.8%
Total Costs	15.0%	13.9%	15.6%	14.9%

The Company has evaluated the potential foreign currency exchange rate risk on transactions denominated in currencies other than the U.S. dollar for the periods presented above. Based on the Company’s overall currency exposure, as of ~~March 31,~~December 29, 2018, a 10.0% change in the value of the U.S. dollar relative to our other transactional currencies would not have a material effect on the Company’s financial position, results of operations, or cash flows.

Interest Rate Risk

We have financial instruments, including cash equivalents and debt, which are sensitive to changes in interest rates. The primary objective of our investment activities is to preserve principal, while maximizing yields without significantly increasing market risk. To achieve this, we maintain our portfolio of cash equivalents in a variety of highly rated securities, money market funds and certificates of deposit, and limit the amount of principal exposure to any one issuer. In addition, debt and other financing obligations primarily have fixed rates to further limit exposure.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures designed to ensure that the information the Company must disclose in its filings with the Securities and Exchange Commission ("SEC") is recorded, processed, summarized and reported on a timely basis. The Company’s Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO") have reviewed and evaluated, with the participation of the Company’s management, the Company’s disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act") as of the end of the period covered by this report (the "Evaluation Date"). Based on such evaluation, the CEO and CFO have concluded that, as of the Evaluation Date, the Company’s disclosure controls and procedures are effective, at the reasonable assurance level, (a) in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Company in the reports the Company files or submits under the Exchange Act, and (b) in assuring that information is accumulated and communicated to the Company’s management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

During the ~~second~~first quarter of fiscal ~~2018,~~2019, other than explained below, there have been no changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Effective September 30, 2018, we adopted the new revenue standard under ASC Topic 606, Revenue from Contracts with Customers, using the modified retrospective method of adoption. The adoption of this guidance required changes to our processes, policies and internal controls to meet the impact of the new standard and disclosure requirements.

PART II. OTHER INFORMATION

ITEM 1A. Risk Factors

In addition to the risks and uncertainties discussed herein, particularly those discussed in the “Safe Harbor” Cautionary Statement and "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in Part I, Item 2, see the risk factors set forth in Part I, Item 1A of our annual report on Form 10-K for the fiscal year ended September ~~30, 2017.~~29, 2018.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table provides the specified information about the repurchases of shares by the Company during the three months ended ~~March 31,~~December 29, 2018.

Period Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced plans or programs Maximum approximate dollar value of shares that may yet be purchased under the plans or programs*
December 31, 2017 to January 27, 2018 45,668
$ 60.94
45,668
$ 103,533,921
January 28, 2018 to February 24, 2018 187,545
$ 59.33
187,545
$ 292,406,289
February 25, 2018 to March 31, 2018 279,730
$ 63.28
279,730
$ 274,704,865
Total 512,943
$ 61.63
512,943



Period	Total number of shares purchased	Average price paid per share		Total number of shares purchased as part of publicly announced plans or programs	Maximum approximate dollar value of shares that may yet be purchased under the plans or programs*
September 30, 2018 to October 27, 2018	246,967	$	55.44	246,967	$	165,138,176
October 28, 2018 to November 24, 2018	311,082	$	58.89	311,082	$	146,818,411
November 25, 2018 to December 29, 2018	311,900	$	57.84	311,900	$	128,779,079
Total	869,949	$	57.53	869,949

* ~~On June 6, 2016, the Board of Directors approved a multi-year stock repurchase program under which the Company is authorized to repurchase up to $150.0 million of its common stock.~~ On February 14, 2018, the Board of Directors approved ~~an additional~~a stock repurchase ~~program~~plan under which the Company is authorized to repurchase ~~up to~~ $200.0 million of its common stock ~~commencing upon completion~~(the "2018 Program"). As of ~~the stock repurchase program approved in 2016.~~December 29, 2018, $128.8 million of authority remained under that Program.


ITEM 6.	Exhibits

The list of exhibits is included below:



Exhibit No.		Exhibit
31.1		Certification of Chief Executive Officer pursuant to Section 302(a) of the ~~Sarbanes Oxley~~Sarbanes-Oxley Act of 2002.
31.2		Certification of Chief Financial Officer pursuant to Section 302(a) of the ~~Sarbanes Oxley~~Sarbanes-Oxley Act of 2002.
32.1		Certification of the CEO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of ~~2002.~~2002
32.2		Certification of the CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of ~~2002.~~2002
99.1		Reconciliation of ROIC to GAAP and Economic Return ~~to GAAP~~ Financial Statements
101		The following materials from Plexus Corp.’s Quarterly Report on Form 10-Q for the quarter ended ~~March 31,~~December 29, 2018, formatted in XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Statements of Comprehensive Income (Loss), (ii) the Condensed Consolidated Balance Sheets, (iii) the Condensed Consolidated Statements of Shareholders' Equity, (iv) the Condensed Consolidated Statements of Cash Flows, and ~~(iv)~~(v) Notes to Condensed Consolidated Financial Statements.
101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema Document
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB		XBRL Taxonomy Extension Label Linkbase Document
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



		Plexus Corp.
		Registrant

Date: ~~5/4/18~~2/1/19		/s/ Todd P. Kelsey
		Todd P. Kelsey
		President and Chief Executive Officer

Date: ~~5/4/18~~2/1/19		/s/ Patrick J. Jermain
		Patrick J. Jermain
		Senior Vice President and Chief Financial Officer

3032



Derivative Impact on Accumulated Other Comprehensive Income (Loss)
for the Six Months Ended
In thousands of dollars
Derivatives in Cash Flow Hedging Relationships	Amount of Gain (Loss) Recognized in OCI on Derivatives (Effective Portion)
Derivatives in Cash Flow Hedging Relationships	March 31, 2018		April 1, 2017
Forward currency forward contracts	$	6,339	$	(4,043	)
Interest rate swaps	$	—	$	1



	Three Months Ended				Six Months Ended
Market Sector	March 31, 2018		April 1, 2017		March 31, 2018		April 1, 2017
Healthcare/Life Sciences	$	248.1	$	204.9	$	485.1	$	415.9
Industrial/Commercial	241.7		191.9		448.5		397.6
Communications	98.8		108.2		232.4		239.6
Aerospace/Defense	110.1		99.3		209.9		186.3
Total net sales	$	698.7	$	604.3	$	1,375.9	$	1,239.4