UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)



☒	~~Quarterly Report Pursuant to Section~~	QUARTERLY REPORT PURSUANT TO SECTION 13 orOR 15(d) ~~of the Securities Exchange Act of~~OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~June 29, 2019~~July 4, 2020



☐	~~Transition Report Pursuant to Section~~	TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) ~~of the Securities Exchange Act of~~OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to ______

Commission File Number 001-14423

PLEXUS ~~CORP~~.CORP.

(Exact name of registrant as specified in charter)



Wisconsin						39-1344447
(State or other jurisdiction of ~~Incorporation)~~incorporation)						(~~IRS~~I.R.S. Employer Identification No.)

One Plexus Way

Neenah,, Wisconsin54957

(Address of principal executive offices)~~(Zip~~ (Zip Code)

Telephone Number (~~920~~) (920) 969-6000

(Registrant’s telephone number, including Area Code)

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, $0.01 par value	PLXS	The Nasdaq Global Select Market

Indicate by check mark whether the ~~registrant~~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 ~~Yes~~ýx No ¨o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ~~Yes~~ýx No ¨o

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

Large accelerated filer

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth 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 ☒

As of ~~July 30, 2019,~~August 4, 2020, there were ~~29,280,640~~29,245,563 shares of common stock outstanding.

Table of Contents

PLEXUS CORP.

TABLE OF CONTENTS

~~June 29, 2019~~July 4, 2020




PART I. FINANCIAL INFORMATION	3
ITEM 1. FINANCIAL STATEMENTS		3
Condensed Consolidated Statements of Comprehensive ~~Income (Loss)~~I ncome		3
Condensed Consolidated Balance Sheets		4
Condensed Consolidated Statements of Shareholders' Equity		5
Condensed Consolidated Statements of Cash Flows		6
Notes to Condensed Consolidated Financial Statements		7
ITEM 2. MANAGEMENT'S DICUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		2024
"Safe Harbor" Cautionary Statement Under the Private Securities Litigation Reform Act of 1995		2024
Overview		2024
Results of Operations		2126
Liquidity of Capital Resources		2631
Contractual Obligations, Commitments and Off-Balance Sheet Obligations		3036
Disclosure About Critical Accounting Policies		3137
New Accounting Pronouncements		3137
ITEM 3. QUANTITATIVE AND ~~QUALITIATIVE~~QUALITATIVE DISCLOSURES ABOUT MARKET RISK		3238
ITEM 4. CONTROLS AND PROCEDURES		3238
PART II. OTHER INFORMATION		3339
ITEM 1A. Risk Factors		3339
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds		3340
ITEM 6. Exhibits		3441
SIGNATURES		3542

Table of Contents

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						Nine Months Ended							Three Months Ended						Nine Months Ended
	June 29, 2019			June 30, 2018			June 29, 2019			June 30, 2018				July 4, 2020		June 29, 2019		July 4, 2020		June 29, 2019
Net sales	$	799,644		$	726,385		$	2,354,239		$	2,102,330		Net sales	$	857,394	$	799,644	$	2,477,167	$	2,354,239
Cost of sales	728,614			658,564			2,140,190			1,918,034			Cost of sales	774,513		728,614		2,253,651		2,140,190
Gross profit	71,030			67,821			214,049			184,296			Gross profit	82,881		71,030		223,516		214,049
Selling and administrative expenses	36,627			35,375			109,521			102,978			Selling and administrative expenses	37,028		36,627		114,517		109,521
Restructuring and impairment charges													Restructuring and impairment charges	—		—		6,003		—
Operating income	34,403			32,446			104,528			81,318			Operating income	45,853		34,403		102,996		104,528
Other income (expense):													Other income (expense):
Interest expense	(3,711		)	(2,910		)	(9,105		)	(10,182		)	Interest expense	(3,988)		(3,711)		(11,934)		(9,105)
Interest income	445			1,068			1,410			4,049			Interest income	368		445		1,546		1,410
Miscellaneous, net	(1,419		)	(1,052		)	(4,304		)	(1,875		)	Miscellaneous, net	(600)		(1,419)		(2,619)		(4,304)
Income before income taxes	29,718			29,552			92,529			73,310			Income before income taxes	41,633		29,718		89,989		92,529
Income tax expense	4,917			3,051			20,744			133,012			Income tax expense	5,791		4,917		10,215		20,744
Net income (loss)	$	24,801		$	26,501		$	71,785		$	(59,702	)
Earnings (loss) per share:
Net income													Net income	$	35,842	$	24,801	$	79,774	$	71,785
Earnings per share:													Earnings per share:
Basic	$	0.83		$	0.81		$	2.34		$	(1.79	)	Basic	$	1.23	$	0.83	$	2.73	$	2.34
Diluted	$	0.81		$	0.79		$	2.28		$	(1.79	)	Diluted	$	1.20	$	0.81	$	2.66	$	2.28
Weighted average shares outstanding:													Weighted average shares outstanding:
Basic	29,912			32,796			30,637			33,300			Basic	29,199		29,912		29,210		30,637
Diluted	30,635			33,651			31,420			33,300			Diluted	29,793		30,635		29,936		31,420
Comprehensive income (loss):
Net income (loss)	$	24,801		$	26,501		$	71,785		$	(59,702	)
Other comprehensive income:
Derivative instrument fair value adjustments	(406		)	(5,023		)	1,956			(2,255		)
Comprehensive income:													Comprehensive income:
Net income													Net income	$	35,842	$	24,801	$	79,774	$	71,785
Other comprehensive income (loss):													Other comprehensive income (loss):
Derivative instrument fair value adjustment													Derivative instrument fair value adjustment	3,178		(406)		(1,138)		1,956
Foreign currency translation adjustments	(679		)	(7,965		)	(2,035		)	(1,050		)	Foreign currency translation adjustments	5,586		(679)		3,463		(2,035)
Other comprehensive loss	(1,085		)	(12,988		)	(79		)	(3,305		)
Total comprehensive income (loss)	$	23,716		$	13,513		$	71,706		$	(63,007	)
Other comprehensive income (loss):													Other comprehensive income (loss):	8,764		(1,085)		2,325		(79)
Total comprehensive income													Total comprehensive income	$	44,606	$	23,716	$	82,099	$	71,706

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

Table of Contents

PLEXUS CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except ~~per~~ share data)

Unaudited

June 29,
2019 September 29,
2018
ASSETS
Current assets:
Cash and cash equivalents $ 198,395
$ 297,269
Restricted cash 7,004
417
Accounts receivable, net of allowances of $1,170 and $885, respectively 459,311
394,827
Contract assets 105,201
—
Inventories, net 757,206
794,346
Prepaid expenses and other 30,584
30,302
Total current assets 1,557,701
1,517,161
Property, plant and equipment, net 381,351
341,306
Deferred income taxes 10,827
10,825
Intangible assets, net 7,214
8,239
Other 59,138
55,111
Total non-current assets 458,530
415,481
Total assets $ 2,016,231
$ 1,932,642

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt and capital lease obligations $ 138,976
$ 5,532
Accounts payable 430,586
506,322
Customer deposits 130,626
90,782
Accrued salaries and wages 68,016
66,874
Other accrued liabilities 107,432
68,163
Total current liabilities 875,636
737,673
Long-term debt and capital lease obligations, net of current portion 187,581
183,085
Long-term accrued income taxes payable 58,296
56,130
Deferred income taxes payable 14,829
14,376
Other liabilities 19,098
20,235
Total non-current liabilities 279,804
273,826
Total liabilities 1,155,440
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, 52,862 and 52,567 shares issued, respectively, and 29,487 and 31,838 shares outstanding, respectively 529
526
Additional paid-in capital 592,316
581,488
Common stock held in treasury, at cost, 23,375 and 20,729 shares, respectively (861,842 ) (711,138 )
Retained earnings 1,141,846
1,062,246
Accumulated other comprehensive loss (12,058 ) (11,979 )
Total shareholders’ equity 860,791
921,143
Total liabilities and shareholders’ equity $ 2,016,231
$ 1,932,642


	July 4, 2020		September 28, 2019
ASSETS
Current assets:
Cash and cash equivalents	$	296,545	$	223,761
Restricted cash	3,098		2,493
Accounts receivable, net of allowances of $4,387 and $1,537, respectively	519,323		488,284
Contract assets	116,442		90,841
Inventories, net	819,543		700,938
Prepaid expenses and other	32,836		31,974
Total current assets	1,787,787		1,538,291
Property, plant and equipment, net	380,056		384,224
Operating lease right-of-use assets	71,885		—
Deferred income taxes	14,089		13,654
Other assets	34,707		64,714
Total non-current assets	500,737		462,592
Total assets	$	2,288,524	$	2,000,883

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt and finance lease obligations	$	145,993	$	100,702
Accounts payable	553,254		444,944
Customer deposits	173,027		139,841
Accrued salaries and wages	60,056		73,555
Other accrued liabilities	105,290		106,461
Total current liabilities	1,037,620		865,503
Long-term debt and finance lease obligations, net of current portion	188,626		187,278
Long-term accrued income taxes payable	53,899		59,572
Long-term operating lease liabilities	38,077		—
Deferred income taxes payable	6,394		5,305
Other liabilities	19,087		17,649
Total non-current liabilities	306,083		269,804
Total liabilities	1,343,703		1,135,307
Commitments and contingencies
Shareholders’ equity:
Preferred stock, $0.01 par value, 5,000 shares authorized, NaN issued or outstanding	—		—
Common stock, $0.01 par value, 200,000 shares authorized, 53,442 and 52,917 shares issued, respectively, and 29,214 and 29,004 shares outstanding, respectively	534		529
Additional paid-in capital	615,103		597,401
Common stock held in treasury, at cost, 24,228 and 23,913 shares, respectively	(912,731)		(893,247)
Retained earnings	1,257,374		1,178,677
Accumulated other comprehensive loss	(15,459)		(17,784)
Total shareholders’ equity	944,821		865,576
Total liabilities and shareholders’ equity	$	2,288,524	$	2,000,883

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

Table of Contents

PLEXUS CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(in thousands)

Unaudited


	Three Months Ended						Nine Months Ended							Three Months Ended						Nine Months Ended
	June 29, 2019			June 30, 2018			June 29, 2019			June 30, 2018				July 4, 2020		June 29, 2019		July 4, 2020		June 29, 2019
Common stock - shares outstanding													Common stock - shares outstanding
Beginning of period	30,241			33,293			31,838			33,464			Beginning of period	29,186		30,241		29,004		31,838
Exercise of stock options and vesting of other stock awards	30			16			295			516			Exercise of stock options and vesting of other stock awards	28		30		526		295
Treasury shares purchased	(784		)	(948		)	(2,646		)	(1,619		)	Treasury shares purchased	—		(784)		(316)		(2,646)
End of period	29,487			32,361			29,487			32,361			End of period	29,214		29,487		29,214		29,487

Total stockholders' equity, beginning of period	$	875,444		$	920,503		$	921,143		$	1,025,939		Total stockholders' equity, beginning of period	$	892,558	$	875,444	$	865,576	$	921,143
Common stock - par value													Common stock - par value
Beginning of period	528			524			526			519			Beginning of period	534		528		529		526
Exercise of stock options and vesting of other stock awards	1			1			3			6			Exercise of stock options and vesting of other stock awards	—		1		5		3
End of period	529			525			529			525			End of period	534		529		534		529
Additional paid-in capital													Additional paid-in capital
Beginning of period	586,279			567,535			581,488			555,297			Beginning of period	607,446		586,279		597,401		581,488
Stock-based compensation expense	5,426			4,786			15,355			13,206			Stock-based compensation expense	6,542		5,426		17,367		15,355
Exercise of stock options and vesting of other stock awards, including tax benefits	611			238			(4,527		)	4,056			Exercise of stock options and vesting of other stock awards, including tax benefits	1,115		611		335		(4,527)
End of period	592,316			572,559			592,316			572,559			End of period	615,103		592,316		615,103		592,316
Treasury stock													Treasury stock
Beginning of period	(817,435		)	(615,263		)	(711,138		)	(574,104		)	Beginning of period	(912,731)		(817,435)		(893,247)		(711,138)
Treasury shares purchased	(44,407		)	(56,681		)	(150,704		)	(97,840		)	Treasury shares purchased	—		(44,407)		(19,484)		(150,704)
End of period	(861,842		)	(671,944		)	(861,842		)	(671,944		)	End of period	(912,731)		(861,842)		(912,731)		(861,842)
Retained earnings													Retained earnings
Beginning of period	1,117,045			963,003			1,062,246			1,049,206			Beginning of period	1,221,532		1,117,045		1,178,677		1,062,246
Net income (loss)	24,801			26,501			71,785			(59,702		)
Cumulative effect adjustment for adoption of new accounting pronouncement (1)	—			—			7,815			—
Net income													Net income	35,842		24,801		79,774		71,785
Cumulative effect adjustment for adoption of new accounting pronouncements (1)													Cumulative effect adjustment for adoption of new accounting pronouncements (1)	—		—		(1,077)		7,815
End of period	1,141,846			989,504			1,141,846			989,504			End of period	1,257,374		1,141,846		1,257,374		1,141,846
Accumulated other comprehensive (loss) income
Accumulated other comprehensive loss													Accumulated other comprehensive loss
Beginning of period	(10,973		)	4,704			(11,979		)	(4,979		)	Beginning of period	(24,223)		(10,973)		(17,784)		(11,979)
Other comprehensive loss	(1,085		)	(12,988		)	(79		)	(3,305		)
Other comprehensive (loss) income													Other comprehensive (loss) income	8,764		(1,085)		2,325		(79)
End of period	(12,058		)	(8,284		)	(12,058		)	(8,284		)	End of period	(15,459)		(12,058)		(15,459)		(12,058)
Total stockholders' equity, end of period	$	860,791		$	882,360		$	860,791		$	882,360		Total stockholders' equity, end of period	$	944,821	$	860,791	$	944,821	$	860,791

(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.

Table of Contents

PLEXUS CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

Unaudited


	Nine Months Ended							Nine Months Ended
	June 29, 2019			June 30, 2018				July 4, 2020		June 29, 2019
Cash flows from operating activities							Cash flows from operating activities
Net income (loss)	$	71,785		$	(59,702	)
Adjustments to reconcile net income (loss) to net cash flows from operating activities:
Net income							Net income	$	79,774	$	71,785
Adjustments to reconcile net income to net cash flows from operating activities:							Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization	38,795			35,761			Depreciation and amortization	42,216		38,795
Deferred income taxes	2,448			23,106			Deferred income taxes	2,560		2,448
Share-based compensation expense	15,355			13,206			Share-based compensation expense	17,367		15,355
Provision for allowance for doubtful accounts							Provision for allowance for doubtful accounts	3,155		—
Asset impairment charges							Asset impairment charges	3,054		—
Other, net	148			(117		)	Other, net	491		148
Changes in operating assets and liabilities, excluding impacts of acquisition:							Changes in operating assets and liabilities, excluding impacts of acquisition:
Accounts receivable	(65,324		)	(14,723		)	Accounts receivable	(32,299)		(65,324)
Contract assets	(28,692		)	—			Contract assets	(25,224)		(28,692)
Inventories	(33,756		)	(102,320		)	Inventories	(116,810)		(33,756)
Other current and noncurrent assets	(3,537		)	(21,124		)	Other current and noncurrent assets	1,758		(3,537)
Accrued income taxes payable	(1,648		)	98,552			Accrued income taxes payable	(15,202)		(1,648)
Accounts payable	(72,014		)	63,743			Accounts payable	111,634		(72,014)
Customer deposits	39,979			(6,128		)	Customer deposits	32,962		39,979
Other current and noncurrent liabilities	43,493			11,216			Other current and noncurrent liabilities	(12,917)		43,493
Cash flows provided by operating activities	7,032			41,470			Cash flows provided by operating activities	92,519		7,032
Cash flows from investing activities							Cash flows from investing activities
Payments for property, plant and equipment	(74,602		)	(52,077		)	Payments for property, plant and equipment	(41,223)		(74,602)
Proceeds from sales of property, plant and equipment	160			426			Proceeds from sales of property, plant and equipment	886		160
Business acquisition	1,180			—			Business acquisition	—		1,180
Other, net							Other, net	(200)		—
Cash flows used in investing activities	(73,262		)	(51,651		)	Cash flows used in investing activities	(40,537)		(73,262)
Cash flows from financing activities							Cash flows from financing activities
Borrowings under debt agreements	884,500			673,052			Borrowings under debt agreements	595,240		884,500
Payments on debt and capital lease obligations	(754,743		)	(806,910		)
Payments on debt and finance lease obligations							Payments on debt and finance lease obligations	(554,077)		(754,743)
Debt issuance costs	(688		)	(729		)	Debt issuance costs	(699)		(688)
Repurchases of common stock	(150,704		)	(97,840		)	Repurchases of common stock	(19,484)		(150,704)
Proceeds from exercise of stock options	2,023			9,523			Proceeds from exercise of stock options	10,965		2,023
Payments related to tax withholding for share-based compensation	(6,547		)	(5,461		)	Payments related to tax withholding for share-based compensation	(10,625)		(6,547)
Cash flows used in financing activities	(26,159		)	(228,365		)
Cash flows provided by (used in) financing activities							Cash flows provided by (used in) financing activities	21,320		(26,159)
Effect of exchange rate changes on cash and cash equivalents	102			2,843			Effect of exchange rate changes on cash and cash equivalents	87		102
Net decrease in cash and cash equivalents and restricted cash	(92,287		)	(235,703		)
Net increase (decrease) in cash and cash equivalents and restricted cash							Net increase (decrease) in cash and cash equivalents and restricted cash	73,389		(92,287)
Cash and cash equivalents and restricted cash:							Cash and cash equivalents and restricted cash:
Beginning of period	297,686			569,254			Beginning of period	226,254		297,686
End of period	$	205,399		$	333,551		End of period	$	299,643	$	205,399

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

Table of Contents

PLEXUS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED JULY 4, 2020 AND JUNE 29, 2019 ~~AND JUNE 30, 2018~~

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 ~~June 29, 2019~~July 4, 2020 and September ~~29, 2018,~~28, 2019, the results of operations and shareholders' equity for the three and nine months ended July 4, 2020 and June 29, 2019, ~~and June 30, 2018,~~ and the cash flows for the same nine 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 2020 includes 53 weeks; therefore, the first quarter of fiscal 2020 included 14 weeks while all other 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 ~~2018~~2019 Annual Report on Form 10-K.

The preparation of financial statements requires management to make estimates and assumptions that affect the amounts reported in the Condensed Consolidated Financial Statements and notes thereto. The full extent to which the COVID-19 outbreak will impact the Company's business and operating results will depend on future developments that are highly uncertain and cannot be accurately predicted. The Company has considered information available as of the date of issuance of these financial statements and is not aware of any specific events or circumstances that would require an update to its estimates or judgments, or a revision of the carrying value of its assets or liabilities. These estimates may change as new events occur and additional information becomes available. Actual results could differ materially from these estimates.

Recently Adopted Accounting Pronouncements:

In October 2016, the Financial Accounting Standards Board (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. The Company adopted this guidance under the modified retrospective approach during the first quarter of fiscal 2019. The Company recognized no net impact to its fiscal 2019 opening Retained Earnings balance upon adoption and does not anticipate any material impact to the 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. The Company adopted this guidance during the first quarter of fiscal 2019 with no material impact to the Company's Condensed Statements of Cash Flows.

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 was 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 fiscal 2019 beginning Retained ~~Earnings~~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:~~

In February 2016, the FASB issued ASU 2016-02 (“Topic 842”), which ~~requires~~is intended to improve financial reporting of lease transactions by requiring lessees to recognize most leases as a right-of-use (“ROU”) asset and lease liability on their balance sheets for the rights and obligations created by leases, but record expenses on their income statements in a ~~manner~~ similar ~~to current accounting.~~manner. For lessors, the guidance modifies the

classification criteria and the accounting for sales-type and direct financing leases. ~~The guidance is effective~~ASU 2016-02 also requires disclosures regarding the amount, timing and judgments related to accounting for an entity’s leases and related cash flows.

On September 29, 2019, the Company ~~beginning in~~adopted Topic 842 using the ~~first quarter~~modified retrospective method of ~~fiscal year 2020. Early~~ adoption, ~~is permitted~~which allows financial information for comparative periods prior to adoption not to be updated. The Company recognized right-of-use assets and operating lease liabilities on its Consolidated Balance Sheets, but the standard ~~must be adopted using~~did not have a ~~modified retrospective approach. The Company plans~~material impact on its Consolidated Statements of Comprehensive Income or Consolidated Statements of Cash Flows.

ASC 842 provides optional practical expedients to ~~adopt~~assist with transition to the ~~standard in the first quarter of fiscal year 2020 and intends to elect~~new standard. Management elected the package of practical expedients offered, which allows entities to not reassess: (i) whether any contracts prior to the adoption date are or contain leases, (ii) lease classification, and (iii) whether capitalized initial direct costs continue to meet the definition of initial direct costs under the new guidance. ~~While~~For all new and modified leases after adoption, management elected the ~~Company is currently evaluating accounting policy elections and assessing overall impacts this standard will on its Consolidated Financial Statements,~~short-term lease

Table of Contents

recognition exemption for all of the ~~new guidance is expected to have a material impact on the Consolidated Balance Sheets upon adoption, primarily due~~Company’s leases that qualify, in addition to the ~~recognition of right-of-use assets~~practical expedient to not separate lease and ~~operating lease liabilities.~~nonlease components. Refer to Note 7, "Leases," for further information.

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 Company adopted this guidance during the first quarter of fiscal 2020 with no material impact to the Company's Consolidated Financial Statements; however, the impact of the new standard on future periods will depend on the facts and circumstances of future transactions.

Recently Issued Accounting Pronouncements Not Yet Adopted:

In June 2016, the FASB issued ASU 2016-13, which replaces the current incurred loss impairment methodology with a methodology that reflects expected credit losses and required consideration of a broader range of reasonable and supportable information to inform credit loss estimates. This guidance is effective for the Company beginning in the first quarter of fiscal year ~~2020.~~2021. Early adoption is permitted. The Company plans to adopt this methodology the first quarter of fiscal 2021 and does not expect a material impact on its Consolidated Financial Statements.

In March 2020, the FASB issued ASU 2020-04, which provides guidance in accounting for contracts, hedging relationships, and other transactions that are affected by reference rate reform. The amendments in this update are elective and were effective immediately upon issuance. The Company is currently in the process of assessing the ~~impact~~impacts of ~~the adoption of the new~~reference rate reform but does not expect this standard to have a material impact on its Consolidated Financial ~~Statements and plans to adopt the standard in the first quarter of fiscal year 2020.~~Statements.

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 ~~June 29, 2019~~July 4, 2020 and September ~~29, 2018~~28, 2019 consisted of the following (in thousands):

June 29,
2019 September 29,
2018
Raw materials $ 629,668
$ 579,377
Work-in-process 52,470
102,337
Finished goods 75,068
112,632
Total inventories, net $ 757,206
$ 794,346


	July 4, 2020		September 28, 2019
Raw materials	$	686,130	$	577,545
Work-in-process	61,161		49,315
Finished goods	72,252		74,078
Total inventories, net	$	819,543	$	700,938

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 July 4, 2020 and September 28, 2019 w~~June 29, 2019~~as $166.9 million and ~~September 29, 2018~~ ~~was $128.8 million and $87.7~~$136.5 million, respectively.

~~In the first quarter~~

Table 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 fiscal 2018. Refer to Note 13, "Revenue from Contracts with Customers," for further information.Contents

3. Debt, ~~Capital~~Finance Lease Obligations and Other Financing

Debt, ~~and capital~~finance lease obligations and other financing as of ~~June 29, 2019~~July 4, 2020 and September ~~29, 2018,~~28, 2019 consisted of the following (in thousands):

June 29,
2019 September 29,
2018
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 133,000
—
Capital lease and other financing obligations 45,227
39,857
Unamortized deferred financing fees (1,670 ) (1,240 )
Total obligations 326,557

188,617
Less: current portion (138,976 ) (5,532 )
Long-term debt and capital lease obligations, net of current portion $ 187,581
$ 183,085


	July 4, 2020		September 28, 2019
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 revolving commitment	—		95,000
Term Loans, due April 28, 2021	138,000		—
Finance lease and other financing obligations	48,497		44,492
Unamortized deferred financing fees	(1,878)		(1,512)
Total obligations	334,619		287,980
Less: current portion	(145,993)		(100,702)
Long-term debt and finance lease obligations, net of current portion	$	188,626	$	187,278

On June 15, 2018, the Company 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 NPA includes customary operational and financial covenants with which the Company is required to comply, including, among others, maintenance of certain financial ratios such as a total leverage ratio and a minimum interest coverage ratio. The 2018 Notes may be prepaid in whole or in part at any time, subject to payment of a make-whole ~~amount. Interest~~amount; interest on the 2018 Notes is payable semiannually. ~~At June 29, 2019,~~As of July 4, 2020, the Company was in compliance with the covenants under the 2018 NPA.

On May 15, 2019, the Company refinanced its then-existing senior unsecured revolving credit facility ~~(the "Prior Credit Facility")~~ by entering into a new ~~five-year~~5-year senior unsecured revolving credit facility ~~(collectively with the Prior Credit Facility, referred~~(referred to as the "Credit Facility"), which expanded the maximum commitment from ~~$300~~$300.0 million to ~~$350~~$350.0 million and extended the maturity from July 5, 2021 to May 15, 2024. The maximum commitment under the Credit Facility may be further increased to ~~$600~~$600.0 million, generally by mutual agreement of the Company and the lenders, subject to certain customary conditions. The increase of the maximum facility is not able to be exercised until after the effective date of the 364 day delayed draw term loans ("Term Loans") on April 28, 2021, as outlined in Amendment No. 1 to the Credit Agreement (the "Amendment") subsequently discussed. During the nine months ended ~~June 29, 2019,~~July 4, 2020, the highest daily borrowing was ~~$235.5~~$164.5 million; the average daily borrowings were ~~$124.6~~$97.1 million. The Company borrowed ~~$884.5~~$455.7 million and repaid ~~$751.5~~$550.7 million of revolving borrowings ("Revolving Commitment") under the Credit Facility during the nine months ended ~~June 29, 2019.~~July 4, 2020. As of ~~June 29, 2019,~~July 4, 2020, the Company was in compliance with all financial covenants relating to the Credit Facility, which are generally consistent with those in the 2018 NPA ~~discussed above.~~previously discussed. 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 0.125% as of ~~June~~July 4, 2020.

To further ensure our ability to meet our working capital and fixed capital requirements, on April 29, 2020, the Company entered into the Amendment in response to the COVID-19 outbreak, which amends the Credit Agreement, dated as of May 15, 2019. The Amendment amends certain provisions of the Credit Facility to, among other things, provide for a $138.0 million unsecured delayed draw term loans facility. Term loans borrowed under the new facility were funded in a single draw on May 4, 2020 and will mature on April 28, 2021. Outstanding term loans will bear interest, at the Company’s option, at a eurocurrency rate plus a margin of 1.75% per annum or at a base rate plus a margin of 0.75% per annum. In addition, the Company is required to pay, on a quarterly basis, a ticking fee at a rate equal to 0.75% per annum on the average daily aggregate unused term loan commitments from the effective date of the Amendment to and including the date all of the term loan commitments are terminated in accordance with the terms of the Credit Facility. The proceeds of the term loans were used to prepay outstanding revolving and swing line loans under the Credit Facility and for the general corporate purposes of the Company and its subsidiaries. The $138.0 million of outstanding term loans as of July 4, 2020 was subject to a 2.75% per annum interest rate.

The fair value of the Company’s debt, excluding ~~capital~~finance leases, was ~~$287.6~~$298.3 million and ~~$151.9~~$252.3 million as of ~~June 29, 2019~~July 4, 2020 and September ~~29, 2018,~~28, 2019, respectively. The carrying value of the Company's debt, excluding ~~capital~~finance leases and other financing obligations, was ~~$283.0~~$288.0 million and ~~$150.0~~$245.0 million as of ~~June 29, 2019~~July 4, 2020 and September ~~29, 2018,~~28, 2019, 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.

Table of Contents

4. 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 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.

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 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 $0.3~~that $1.8 million of ~~unrealized~~unrealized gains, ~~net~~net of tax, related to cash flow hedges will be reclassified from other comprehensive ~~income (loss)~~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, net" in the accompanying Condensed Consolidated Statements of Comprehensive ~~Income (Loss).~~Income.

The Company enters into forward currency exchange contracts for its operations in Malaysia and Mexico on a rolling basis. The Company had cash flow hedges outstanding with a notional value ~~of $78.3~~of $79.2 million as of ~~June 29, 2019,~~July 4, 2020, and ~~$74.0~~$80.0 million as of September ~~29, 2018.~~28, 2019. These forward currency contracts fix the exchange rates for the settlement of ~~future~~future foreign currency obligations that have yet to be realized. The total fair value of ~~these~~the forward currency exchange contracts was a ~~$0.3~~$1.8 million asset as of ~~June 29, 2019,~~July 4, 2020, and a ~~$1.7~~$0.6 million liability as of September ~~29, 2018.~~28, 2019.

The Company had additional forward currency exchange contracts outstanding as of July 4, 2020, with a notional value of ~~$33.8~~$18.8 million; there were $34.4 million ~~as of June 29, 2019, and $28.6 million~~such contracts outstanding as of September ~~29, 2018.~~28, 2019. The Company did not designate these derivative instruments as hedging instruments. 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, and as an element of "Miscellaneous, ~~net" within the Condensed Consolidated Statements of Comprehensive Income (Loss).~~net." The total fair value of these derivatives ~~was~~was a ~~$0.3~~$0.2 million ~~liability as~~asset as of ~~June 29, 2019,~~July 4, 2020, and a ~~$0.1~~$0.9 million ~~liability~~asset as of September ~~29, 2018.~~

28, 2019.

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)

Derivative Assets

Derivative Liabilities

July 4,
2020

September 28,
2019

July 4,
2020

September 28,
2019

Derivatives designated as hedging instruments

Balance sheet
classification

Fair Value

Balance sheet
classification

Fair Value

Foreign currency forward contracts

Prepaid expenses and other

1,955

156

Other accrued liabilities

175

798

Fair Values of Derivative Instruments
In thousands of dollars
   Asset Derivatives Liability Derivatives
      June 29,
2019 September 29,
2018    June 29,
2019 September 29,
2018
Derivatives Designated as Hedging Instruments
Balance Sheet
Classification
Fair Value Fair Value
Balance Sheet
Classification
Fair Value Fair Value
Foreign currency forward contracts Prepaid expenses and other $ 285
$ 292
Other accrued liabilities $ 21
$ 1,984

Fair Values of Derivative Instruments (in thousands)

Derivative Assets

Derivative Liabilities

July 4,
2020

September 28,
2019

July 4,
2020

September 28,
2019

Derivatives not designated as hedging instruments

Balance sheet
classification

Fair Value

Balance sheet
classification

Fair Value

Foreign currency forward contracts

Prepaid expenses and other

297

912

Other accrued liabilities

141

The Effect of Cash Flow Hedge Accounting on Accumulated Other Comprehensive Loss ("OCL") (in thousands)

for the Three Months Ended

Derivatives in cash flow hedging relationships

Amount of Gain (Loss) Recognized in OCL on Derivatives

July 4, 2020

June 29, 2019

Foreign currency forward contracts

1,990

(578)

Fair Values of Derivative Instruments
In thousands of dollars
   Asset Derivatives Liability Derivatives
      June 29,
2019 September 29,
2018    June 29,
2019 September 29,
2018
Derivatives Not Designated as Hedging Instruments
Balance Sheet
Classification
Fair Value Fair Value
Balance Sheet
Classification
Fair Value Fair Value
Foreign currency forward contracts Prepaid expenses and other $ 89
$ 42
Other accrued liabilities $ 400
$ 81

Derivative Impact on Accumulated Other Comprehensive Income (Loss) ("OCI")
for the Three Months Ended
In thousands of dollars
Derivatives in Cash Flow Hedging Relationships Amount of Gain (Loss) Recognized in OCI on Derivatives (Effective Portion)
June 29, 2019 June 30, 2018
Foreign currency forward contracts $ (578 ) $ (2,856 )

Table of Contents

Derivative Impact on (Loss) Gain Recognized in Income
for the Three Months Ended
In thousands of dollars
Derivatives in Cash Flow Hedging Relationships Classification of (Loss) Gain Reclassified from Accumulated OCI into Income (Effective Portion) Amount of (Loss) Gain Reclassified from Accumulated OCI into Income (Effective Portion)
June 29, 2019 June 30, 2018
Foreign currency forward contracts Cost of sales $ (153 ) $ 1,894
Foreign currency forward contracts Selling and administrative expenses $ (19 ) $ 207
Treasury rate locks Interest expense $ —
$ 66

Derivatives Not Designated as Hedging Instruments Location of Gain Recognized on Derivatives in Income
Amount of Gain on Derivatives
Recognized in Income
June 29, 2019 June 30, 2018
Foreign currency forward contracts Miscellaneous, net $ 235
$ 717

Derivative Impact on Accumulated Other Comprehensive Income (Loss) ("OCI")
for the Nine Months Ended
In thousands of dollars
Derivatives in Cash Flow Hedging Relationships Amount of Gain Recognized in OCI on Derivatives (Effective Portion)
June 29, 2019 June 30, 2018
Foreign currency forward contracts $ 275
$ 3,483

Derivative Impact on (Loss) Gain Recognized in Condensed Consolidated Statements of Comprehensive Income (in thousands)

for the Three Months Ended

Derivatives in cash flow hedging relationships

Classification of Loss Reclassified from Accumulated OCL into Income

Amount of Loss Reclassified from Accumulated OCL into Income

July 4, 2020

June 29, 2019

Foreign currency forward contracts

Cost of sales

(1,102)

(153)

Foreign currency forward contracts

Selling and administrative expenses

(86)

(19)

Derivative Impact on (Loss) Gain Recognized in Income
for the Nine Months Ended
In thousands of dollars
Derivatives in Cash Flow Hedging Relationships Classification of (Loss) Gain Reclassified from Accumulated OCI into Income (Effective Portion) Amount of (Loss) Gain Reclassified from Accumulated OCI into Income (Effective Portion)
June 29, 2019 June 30, 2018
Foreign currency forward contracts Cost of sales $ (1,507 ) $ 4,976
Foreign currency forward contracts Selling and administrative expenses $ (174 ) $ 536
Treasury Rate Locks Interest expense $ —
$ 226

Derivatives not designated as hedging instruments

Location of Gain Recognized on Derivatives in Income

Amount of Gain on Derivatives Recognized in Income

July 4, 2020

June 29, 2019

Foreign currency forward contracts

Miscellaneous, net

166

235

Derivatives Not Designated as Hedging Instruments Location of Gain (Loss) Recognized on Derivatives in Income
Amount of Gain (Loss) on Derivatives
Recognized in Income
June 29, 2019 June 30, 2018
Foreign currency forward contracts Miscellaneous, net $ 1,865
$ (234 )

The Effect of Cash Flow Hedge Accounting on Accumulated Other Comprehensive Loss (in thousands)

for the Nine Months Ended

Derivatives in cash flow hedging relationships

Amount of (Loss) Gain Recognized in OCL on Derivatives

July 4, 2020

June 29, 2019

Foreign currency forward contracts

(2,150)

275

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 nine months ended June 29, 2019 and June 30, 2018.

Derivative Impact on (Loss) Gain Recognized in Condensed Consolidated Statements of Comprehensive Income (in thousands)

for the Nine Months Ended

Derivatives in cash flow hedging relationships

Classification of Loss Reclassified from Accumulated OCL into Income

Amount of Loss Reclassified from Accumulated OCL into Income

July 4, 2020

June 29, 2019

Foreign currency forward contracts

Cost of sales

(925)

(1,507)

Foreign currency forward contracts

Selling and administrative expenses

(87)

(174)

Derivatives not designated as hedging instruments

Location of (Loss) Gain Recognized on Derivatives in Income

Amount of (Loss) Gain on Derivatives Recognized in Income

July 4, 2020

June 29, 2019

Foreign currency forward contracts

Miscellaneous, net

(467)

1,865

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.

Table of Contents

The following table lists the fair values of liabilities of the Company’s derivatives as of ~~June 29, 2019~~July 4, 2020 and September ~~29, 2018,~~28, 2019, by input level:

Fair Value Measurements Using Input Levels (Liability)/Asset
In thousands of dollars
June 29, 2019 Level 1 Level 2 Level 3 Total
Derivatives
Forward currency forward contracts $ —
$ (47 ) $ —
$ (47 )

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


Fair Value Measurements Using Input Levels Asset (in thousands)
July 4, 2020	Level 1		Level 2		Level 3		Total
Derivatives
Foreign currency forward contracts	$	—	$	1,936	$	—	$	1,936

September 28, 2019
Derivatives
Foreign currency forward contracts	$	—	$	216	$	—	$	216

The fair value of 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. 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 and nine months ended ~~June 29, 2019~~July 4, 2020 was $5.8 million and $10.2 million, respectively, compared to $4.9 million and $20.7 million ~~respectively, compared to $3.1 million and $133.0 million for the three and nine months ended June 30, 2018, respectively.~~

~~The effective tax rates~~ for the three and nine months ended June 29, 2019, ~~were 16.5%~~respectively.

The effective tax rate for the three and ~~22.4%~~nine months ended July 4, 2020 was 13.9% and 11.4%, respectively, compared to the effective tax rates of ~~10.3%~~16.5% and ~~181.4%~~22.4% for the three and nine months ended June ~~30, 2018,~~29, 2019, respectively.

The effective tax rate for the three months ended July 4, 2020 decreased from the effective tax rate for the three months ended June 29, 2019, ~~increased from~~primarily due to the ~~effective~~geographic distribution of pre-tax book income as well as a $0.8 million tax ~~rate~~benefit related to the lapse of a statute of limitations for uncertain tax positions recorded during the three months ended ~~June 30, 2018, primarily due to the impact of the Global Intangible Low-Tax Income provision of the U.S. Tax Cuts & Jobs Act (“Tax Reform”).~~ July 4, 2020.

The effective tax rate for the nine months ended ~~June 29, 2019~~July 4, 2020 decreased from the effective tax rate for the nine months ended June ~~30, 2018,~~29, 2019, primarily due to the additional impact of the U.S. Tax ~~Reform, which~~Cuts & Jobs Act of $7.0 million recorded during the nine months ended June 29, 2019. The decrease was ~~enacted~~also due to the geographic distribution of pre-tax book income, an $0.8 million tax benefit related to the lapse of a statute of limitations for uncertain tax positions, an $0.8 million benefit for special tax items and a $0.6 million tax benefit related to restructuring during the nine months ended July 4, 2020. The $0.8 million benefit for special tax items for the nine months ended July 4, 2020 was comprised of a $1.9 million benefit related to guidance issued by the U.S. Department of the Treasury regarding foreign tax credits partially offset by $1.1 million of special tax items.

The Coronavirus Aid, Relief, and Economic Security Act was signed into law on ~~December 22, 2017.~~March 27, 2020. The Company does not expect a material impact from the law.

There were no material additions to the amount of unrecognized tax benefits recorded for uncertain tax positions ~~for the three months ended June 29, 2019. For the nine months ended June 29, 2019, the Company recorded an income tax benefit~~as of $1.7 million primarily related to unrecognized tax benefits as the U.S. Department of Treasury issued additional guidance for 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.July 4, 2020. 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 nine months ended ~~June 29, 2019~~July 4, 2020 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~~The Company is under audit in various foreign jurisdictions ~~in which the Company operates.~~but settlement is not expected to have a material impact.

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 ~~June 29, 2019,~~July 4, 2020, 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 allowance against ~~its~~certain U.S. state net deferred tax assets, ~~in certain jurisdictions within the AMER 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.

Table of Contents

6. Earnings ~~(Loss)~~ 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 nine months ended July 4, 2020 and June 29, 2019 ~~and June 30, 2018~~ (in thousands, except per share amounts):


											Three Months Ended						Nine Months Ended
	Three Months Ended				Nine Months Ended						July 4, 2020		June 29, 2019		July 4, 2020		June 29, 2019
	June 29, 2019		June 30, 2018		June 29, 2019		June 30, 2018
Net income (loss)	24,801		26,501		71,785		(59,702		)
Net income										Net income	$	35,842	$	24,801	$	79,774	$	71,785
Basic weighted average common shares outstanding	29,912		32,796		30,637		33,300			Basic weighted average common shares outstanding	29,199		29,912		29,210		30,637
Dilutive effect of share-based awards outstanding	723		855		783		—
Dilutive effect of share-based awards and options outstanding										Dilutive effect of share-based awards and options outstanding	594		723		726		783
Diluted weighted average shares outstanding	30,635		33,651		31,420		33,300			Diluted weighted average shares outstanding	29,793		30,635		29,936		31,420
Earnings (loss) per share:
Earnings per share:										Earnings per share:
Basic	$	0.83	$	0.81	$	2.34	$	(1.79	)	Basic	$	1.23	$	0.83	$	2.73	$	2.34
Diluted	$	0.81	$	0.79	$	2.28	$	(1.79	)	Diluted	$	1.20	$	0.81	$	2.66	$	2.28

For the three and nine months ended July 4, 2020, share-based awards for approximately 0.3 million and 0.1 million shares were not included in the computation of diluted earnings per share as they were antidilutive.

For both the three and nine months ended June 29, 2019, share-based awards for approximately 0.1 million shares were not included in the computation of diluted earnings per share as they were antidilutive.

For the three months ended June 30, 2018, share-based awards for approximately 0.1 million shares were not included in the computation of diluted earnings per share as they were antidilutive. For the nine months ended June 30, 2018, the total number of potentially dilutive share-based awards was 0.9 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.

See also Note ~~11,~~12, "Shareholders' Equity," for information regarding the Company's share repurchase plans.

7. Leases

The Company’s lease portfolio includes both real estate and non-real estate type leases which are accounted for as either finance or operating leases. Real estate leases generally include office, warehouse and manufacturing facilities and non-real estate leases generally include office equipment and vehicles. The Company determines if a contract is or contains a lease at inception. The Company’s leases have remaining lease terms of less than 1 year to 40 years. Renewal options that are deemed reasonably certain are included as part of the lease term for purposes of calculating the right-of-use (“ROU”) assets and lease liability. Variable lease payments are generally expensed as incurred and include certain index-based changes in rent, certain nonlease components, such as maintenance and other services provided by the lessor, and other charges included in the lease. The Company elected the practical expedient to not separate lease and nonlease components, as such nonlease components are included in the calculation of the ROU asset and lease liability and included in the lease expense over the term of the lease. The Company uses a discount rate to calculate the ROU asset and lease liability. When the implicit rate is known or provided in the lease documents, the Company is required to use this rate. In cases in which the implicit rate is not known, the Company uses an estimated incremental borrowing rate.

Operating lease ROU assets and lease liabilities are recorded on the date the Company takes possession of the leased assets with expense recognized on a straight-line basis over the lease term. Leases with an estimated total term of 12 months or less are not recorded on the balance sheet and the lease expense is recognized on a straight-line basis over the lease term. Generally, the Company's lease agreements do not contain material residual value guarantees or material restrictive covenants.

Upon adoption of ASU 2016-02, the Company recorded $45.5 million of right-of-use assets and lease liabilities, related to its existing operating lease portfolio. The Company also reclassified amounts previously held on the balance sheet to operating right-of-use assets and operating lease liabilities upon adoption due to existing arrangements subject to the new standard, including $30.2 million of prepaid leases in other non-current assets. The accounting for the Company’s finance leases remained substantially unchanged. In addition, the company recognized a $1.1 million reduction to retained earnings as a result of two existing build-to-suit arrangements for the facilities in Guadalajara, Mexico that were reassessed to be finance leases under the new standard. The adoption of this new standard did not have a material impact on the Condensed Consolidated Statements of Cash Flows or Condensed Consolidated Statements of Comprehensive Income.

Table of Contents

As a result of the adoption, the following adjustments were made to the opening balances of the Company's Condensed Consolidated Balance Sheets (in thousands):


	September 28, 2019		Impacts due to adoption of Topic 842		September 29, 2019
ASSETS
Prepaid expenses and other	$	31,974	$	(170)	$	31,804
Operating right-of-use assets	—		75,790		75,790
Property, plant and equipment, net	384,224		(1,833)		382,391
Deferred income taxes	13,654		432		14,086
Other non-current assets	64,714		(30,193)		34,521
LIABILITIES AND SHAREHOLDERS' EQUITY
Other accrued liabilities	$	106,461	$	7,939	$	114,400
Long-term debt and finance lease obligations, net of current portion	187,278		(207)		187,071
Long-term operating lease liabilities	—		37,371		37,371
Retained earnings	1,178,677		(1,077)		1,177,600

The components of lease expense for three and nine months ended July 4, 2020 were as follows (in thousands):


	Three Months Ended		Nine Months Ended
	July 4, 2020		July 4, 2020
Finance lease expense:
Amortization of right-of-use assets	$	951	$	3,220
Interest on lease liabilities	1,236		3,738
Operating lease expense	2,898		8,977
Other lease expense	957		2,216
Total	$	6,042	$	18,151

Based on the nature of the ROU asset, amortization of finance right-of-use assets, operating lease expense and other lease expense are recorded within either cost of goods sold or selling and administrative expenses and interest on finance lease liabilities is recorded within interest expense on the Condensed Consolidated Statements of Comprehensive Income. Other lease expense includes lease expense for leases with an estimated total term of twelve months or less and variable lease expense related to variations in lease payments as a result of a change in factors or circumstances occurring after the lease possession date.

Table of Contents

The following tables sets forth the amount of lease assets and lease liabilities included in the Company’s Condensed Consolidated Balance Sheets (in thousands):


	Financial Statement Line Item	July 4, 2020
ASSETS
Finance lease assets	Property, plant and equipment, net	$	37,484
Operating lease assets	Right-of-use operating lease assets	71,885
Total lease assets		$	109,369

LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Finance lease liabilities	Current portion of long-term debt and finance lease obligations	$	2,765
Operating lease liabilities	Other accrued liabilities	8,061
Non-current
Finance lease liabilities	Long-term debt and finance lease obligations, net of current portion	37,387
Operating lease liabilities	Long-term operating lease liabilities	38,077
Total lease liabilities		$	86,290

Other information related to the Company’s leases was as follows:


	July 4, 2020
Weighted-average remaining lease term (in years)
Finance leases	12.8
Operating leases	18.5
Weighted-average discount rate
Finance leases	17.6	%
Operating leases	3.0	%


	Three Months Ended		Nine Months Ended
	July 4, 2020		July 4, 2020
Cash paid for amounts included in the measurement of lease liabilities (in thousands)
Operating cash flows used in finance leases	$	1,152	$	3,401
Operating cash flows used in operating leases	2,445		8,283
Finance cash flows used in finance leases	989		2,553
ROU assets obtained in exchange for lease liabilities (in thousands)
Operating leases	$	83	$	7,592
Finance leases	2,133		2,490

Table of Contents

Future minimum lease payments required under finance and operating leases as of July 4, 2020, were as follows (in thousands):


	Operating leases		Finance leases
Remaining 2020	$	2,581	$	1,782
2021	8,787		7,285
2022	8,013		6,811
2023	7,570		5,785
2024	5,963		4,993
2025 and thereafter	20,457		98,762
Total minimum lease payments	53,371		125,418
Less: imputed interest	(7,233)		(85,266)
Present value of lease liabilities	$	46,138	$	40,152

As of July 4, 2020, the Company’s future operating leases that have not yet commenced are immaterial.

Future minimum lease payments required under long-term operating and capital leases as of September 28, 2019, were as follows (in thousands):


	Operating leases		Capital leases
2020	$	10,395	$	6,734
2021	6,554		3,490
2022	5,584		2,884
2023	5,153		1,652
2024	3,713		958
Thereafter	9,426		34,143
Total	$	40,825	$	49,861

8. Share-Based Compensation

The Company recognized ~~$5.4~~$6.6 million and ~~$15.4~~$17.4 million of compensation expense associated with share-based awards for the three and nine months ended ~~June 29, 2019,~~July 4, 2020, respectively, and ~~$4.8~~$5.4 million and ~~$13.2~~$15.4 million for the three and nine months ended June ~~30, 2018,~~29, 2019, 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. ~~Since fiscal 2017, grants of~~ PSUs ~~have vested~~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. PSUs granted in fiscal 2016 and prior years vested 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~~0 to 0.5 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.

Table of Contents

9. Litigation

The Company is party to lawsuits in the ordinary course of business. Management does not 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.

10. 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 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. We operate in the Americas ("AMER"), Asia-Pacific ("APAC") and Europe, Middle East, and Africa ("EMEA"). 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. 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~~3 reportable segments for the three and nine months ended July 4, 2020 and June 29, 2019, ~~and June 30, 2018,~~ respectively, is as follows (in thousands):


	Three Months Ended						Nine Months Ended							Three Months Ended						Nine Months Ended
	June 29, 2019			June 30, 2018			June 29, 2019			June 30, 2018				July 4, 2020		June 29, 2019		July 4, 2020		June 29, 2019
Net sales:													Net sales:
AMER	$	366,466		$	298,375		$	1,084,823		$	899,253		AMER	$	305,941	$	366,466	$	993,871	$	1,084,823
APAC	384,841			383,785			1,141,394			1,080,283			APAC	482,267		384,841		1,321,254		1,141,394
EMEA	81,318			74,331			229,438			212,105			EMEA	91,846		81,318		250,326		229,438
Elimination of inter-segment sales	(32,981		)	(30,106		)	(101,416		)	(89,311		)	Elimination of inter-segment sales	(22,660)		(32,981)		(88,284)		(101,416)
	$	799,644		$	726,385		$	2,354,239		$	2,102,330			$	857,394	$	799,644	$	2,477,167	$	2,354,239

Operating income (loss):													Operating income (loss):
AMER	$	14,221		$	6,799		$	42,901		$	28,025		AMER	$	8,516	$	14,221	$	21,102	$	42,901
APAC	51,264			55,274			151,779			154,977			APAC	66,297		51,264		178,549		151,779
EMEA	1,522			1,837			2,385			1,105			EMEA	1,115		1,522		257		2,385
Corporate and other costs	(32,604		)	(31,464		)	(92,537		)	(102,789		)	Corporate and other costs	(30,075)		(32,604)		(96,912)		(92,537)
	$	34,403		$	32,446		$	104,528		$	81,318			$	45,853	$	34,403	$	102,996	$	104,528
Other income (expense):													Other income (expense):
Interest expense	(3,711		)	(2,910		)	(9,105		)	(10,182		)	Interest expense	$	(3,988)	$	(3,711)	$	(11,934)	$	(9,105)
Interest income	445			1,068			1,410			4,049			Interest income	368		445		1,546		1,410
Miscellaneous, net	(1,419		)	(1,052		)	(4,304		)	(1,875		)	Miscellaneous, net	(600)		(1,419)		(2,619)		(4,304)
Income before income taxes	29,718			29,552			92,529			73,310			Income before income taxes	$	41,633	$	29,718	$	89,989	$	92,529

June 29,
2019 September 29,
2018
Total assets:
AMER $ 769,891
$ 645,791
APAC 957,685
937,510
EMEA 211,073
193,797
Corporate and eliminations 77,582
155,544
$ 2,016,231
$ 1,932,642

Table of Contents


	July 4, 2020		September 28, 2019
Total assets:
AMER	$	787,879	$	751,990
APAC	1,116,558		958,744
EMEA	275,134		209,541
Corporate and eliminations	108,953		80,608
	$	2,288,524	$	2,000,883

~~10.~~11. 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~~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. 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, design defects or damage caused by any party or ~~cause~~caused other than by 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~~"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 nine months ended July 4, 2020 and June 29, 2019 ~~and June 30, 2018~~ (in thousands):


	Nine Months Ended
	July 4, 2020		June 29, 2019
Reserve balance, beginning of period	$	6,276	$	6,646
Accruals for warranties issued during the period	2,323		2,930
Settlements (in cash or in kind) during the period	(1,712)		(2,420)
Reserve balance, end of period	$	6,887	$	7,156

Nine Months Ended
June 29,
2019 June 30,
2018
Reserve balance, beginning of period $ 6,646
$ 4,756
Accruals for warranties issued during the period 2,930
3,660
Settlements (in cash or in kind) during the period (2,420 ) (2,136 )
Reserve balance, end of period $ 7,156
$ 6,280

~~11.~~12. Shareholders' Equity

On August 20, 2019, the Board of Directors approved a new stock repurchase plan under which the Company is authorized to repurchase $50.0 million of its common stock (the "2019 Program"). The 2019 Program commenced upon completion of the 2018 Program, as defined below. During the three months ended July 4, 2020, the Company had 0 share repurchases under the 2019 Program. During the nine months ended July 4, 2020, the Company repurchased 315,231 shares under the 2019 Program for $19.5 million at an average price of $61.81 per share. As of July 4, 2020, $27.2 million of repurchase authority remained

Table of Contents

under the 2019 Program. The Company temporarily suspended any share repurchases under the 2019 Program in March 2020 due to the uncertainties created by the COVID-19 outbreak, but expects to resume share repurchase activity in the fourth quarter of fiscal 2020.

On February 14, 2018, the Board of Directors approved a stock repurchase plan under which the Company iswas authorized to repurchase $200.0 million of its common stock (the "2018 Program"). ~~The 2018 Program commenced upon completion of the 2016 Program, as defined below.~~ During the three months ended June 29, 2019, the Company repurchased 784,493 shares under the 2018 Program for $44.4 million, at an average price of $56.61 per share. During the nine months ended June 29, 2019, the Company repurchased 2,646,125 shares under the 2018 Program for $150.7 million, at an average price of ~~$56.95. As of June 29, 2019, $28.1 million of authority remained under the 2018 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 June 30, 2018, the Company repurchased 947,685 shares for $56.7 million, at an average price of $59.81$56.95 per share. ~~During~~The 2018 Program was completed during the ~~nine months ended June 30, 2018, the Company repurchased 1,619,094 shares for $97.8 million, at an average price~~fourth quarter of ~~$60.43 per~~fiscal 2019, when all share repurchase authority under ~~the 2016 Program.~~it was exhausted.

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

~~12.~~

13. 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.) (the "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.~~discount. These facilities are uncommitted facilities. The ~~MUFG RPA was amended on June 21, 2019, to increase the~~ maximum facility amount ~~from $260.0 million to $280.0~~under the MUFG RPA as of July 4, 2020 is $340.0 million. The maximum facility amount under the HSBC RPA as of ~~June 29, 2019,~~July 4, 2020 is $60.0 million. The MUFG RPA ~~is subject to expiration on October 3, 2019, but~~ will be automatically extended ~~for another~~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 MUFG ~~RPA.~~RPA previously discussed.

Transfers of receivables under the 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, net" in the Condensed Consolidated Statements of Comprehensive Income in the period of the sale.

The Company sold ~~$223.6~~ $189.9 million and ~~$199.1~~$223.6 million of trade accounts receivable under these programs during the three months ended July 4, 2020 and June 29, 2019, ~~and June 30, 2018,~~ respectively, in exchange for cash proceeds of $189.4 million and $222.1 million, ~~and $197.8 million,~~ respectively.

The Company sold ~~$698.0~~$606.0 million and ~~$497.4~~$698.0 million of trade accounts receivable under these programs during the nine months ended July 4, 2020 and June 29, 2019, ~~and June 30, 2018,~~ respectively, in exchange for cash proceeds of $603.4 million and $693.7 million, ~~and $494.4 million,~~ respectively.

~~13.~~

14. Revenue from Contracts with Customers

~~Impact of Adopting Topic 606~~

The Company adopted Topic 606 at the beginning of fiscal 2019 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 the 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 fiscal 2019 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 and nine months ended June 29, 2019 were as follows (in thousands):~~

Three Months Ended

June 29, 2019
As Reported
Adjustments due to Topic 606
June 29, 2019
As Adjusted - Without Adoption of Topic 606
Net sales $ 799,644
$ 17,728
$ 781,916
Cost of sales 728,614
17,741
710,873
       Gross profit 71,030
(13 ) 71,043
       Operating income 34,403
(13 ) 34,416
       Income before income taxes 29,718
(13 ) 29,731
Income tax expense 4,917
1
4,916
           Net income $ 24,801
$ (14 ) $ 24,815

Nine Months Ended

June 29, 2019
As Reported
Adjustments due to Topic 606
June 29, 2019
As Adjusted - Without Adoption of Topic 606
Net sales $ 2,354,239
$ 29,272
$ 2,324,967
Cost of sales 2,140,190
27,576
2,112,614
       Gross profit 214,049
1,696
212,353
       Operating income 104,528
1,696
102,832
       Income before income taxes 92,529
1,696
90,833
Income tax expense 20,744
419
20,325
           Net income $ 71,785
$ 1,277
$ 70,508

June 29, 2019
As Reported
Adjustments due to Topic 606
June 29, 2019
As Adjusted - Without Adoption of Topic 606
ASSETS
   Contract assets $ 105,201
$ 105,201
$ —
   Inventories 757,206
(96,534 ) 853,740
LIABILITIES AND SHAREHOLDERS' EQUITY
   Other accrued liabilities $ 107,432
$ (425 ) $ 107,857
   Retained earnings 1,141,846
9,092
1,132,754

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~~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 (ii) the Company has an enforceable right to payment, including reasonable profit margin, for performance completed to date. Revenue recognized over time ~~will be~~is 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~~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 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.

customer to any specific volume or pricing of purchases. Moreover, these terms can be amended in appropriate situations.

Table of Contents

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.

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 are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer, are excluded from net sales.

~~Practical Expedients~~

~~The Company applied the following practical expedients during the 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~~table below ~~include~~includes the Company’s revenue for the three and nine months ended July 4, 2020 and June 29, 2019, respectively, disaggregated by geographic reportable segment and market sector (in thousands):


	Three Months Ended July 4, 2020
	Reportable Segment:
	AMER		APAC		EMEA		Total
Market Sector:
Healthcare/Life Sciences	$	106,130	$	172,441	$	51,503	$	330,074
Industrial/Commercial	70,349		226,887		19,809		317,045
Aerospace/Defense	85,277		36,979		18,805		141,061
Communications	42,392		26,240		582		69,214
External revenue	304,148		462,547		90,699		857,394
Inter-segment sales	1,793		19,720		1,147		22,660
Segment revenue	$	305,941	$	482,267	$	91,846	$	880,054

Table of Contents


	Three Months Ended June 29, 2019
	Reportable Segment:
	AMER		APAC		EMEA		Total
Market Sector:
Healthcare/Life Sciences	$	127,644	$	149,312	$	31,801	$	308,757
Industrial/Commercial	91,347		133,374		23,174		247,895
Aerospace/Defense	80,351		47,496		23,580		151,427
Communications	64,799		26,279		487		91,565
External revenue	364,141		356,461		79,042		799,644
Inter-segment sales	2,325		28,380		2,276		32,981
Segment revenue	$	366,466	$	384,841	$	81,318	$	832,625

Three Months Ended June 29, 2019
Reportable Segment:
AMER APAC EMEA Total
Market Sector:
Healthcare/Life Sciences $ 127,644
$ 149,312
$ 31,801
$ 308,757
Industrial/Commercial 91,347
133,374
23,174
247,895
Aerospace/Defense 80,351
47,496
23,580
151,427
Communications 64,799
26,279
487
91,565
External revenue $ 364,141
$ 356,461
$ 79,042
$ 799,644
Inter-segment sales 2,325
28,380
2,276
32,981
Segment revenue $ 366,466
$ 384,841
$ 81,318
$ 832,625


	Nine Months Ended July 4, 2020
	Reportable Segment:
	AMER		APAC		EMEA		Total
Market Sector:
Healthcare/Life Sciences	$	347,469	$	440,199	$	125,673	$	913,341
Industrial/Commercial	249,530		608,815		55,503		913,848
Aerospace/Defense	286,963		123,161		60,545		470,669
Communications	101,186		74,925		3,198		179,309
External revenue	985,148		1,247,100		244,919		2,477,167
Inter-segment sales	8,723		74,154		5,407		88,284
Segment revenue	$	993,871	$	1,321,254	$	250,326	$	2,565,451

Nine Months Ended June 29, 2019
Reportable Segment:
AMER APAC EMEA Total
Market Sector:
Healthcare/Life Sciences $ 368,843
$ 443,073
$ 97,055
$ 908,971
Industrial/Commercial 269,273
381,453
66,547
717,273
Aerospace/Defense 218,578
137,342
58,482
414,402
Communications 222,944
87,238
3,411
313,593
External revenue $ 1,079,638
$ 1,049,106
$ 225,495
$ 2,354,239
Inter-segment sales 5,185
92,288
3,943
101,416
Segment revenue $ 1,084,823
$ 1,141,394
$ 229,438
$ 2,455,655


	Nine Months Ended June 29, 2019
	Reportable Segment:
	AMER		APAC		EMEA		Total
Market Sector:
Healthcare/Life Sciences	$	368,843	$	443,073	$	97,055	$	908,971
Industrial/Commercial	269,273		381,453		66,547		717,273
Aerospace/Defense	218,578		137,342		58,482		414,402
Communications	222,944		87,238		3,411		313,593
External revenue	1,079,638		1,049,106		225,495		2,354,239
Inter-segment sales	5,185		92,288		3,943		101,416
Segment revenue	$	1,084,823	$	1,141,394	$	229,438	$	2,455,655

For the three and nine months ended July 4, 2020, approximately 90% of the Company's revenue was recognized as products and services were transferred over time. For the three and nine months ended June 29, 2019, approximately 92% and 90% of the Company's revenue was recognized as products and services were transferred over time, respectively.

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

Table of Contents

recognition of contract assets. The following table summarizes the activity in the Company's contract assets ~~during~~for the nine months ended July 4, 2020 and June 29, 2019 (in thousands):

Contract Assets
Beginning balance, September 29, 2018 $ —
Cumulative effect adjustment at September 29, 2018 76,417
Revenue recognized 2,126,379
Amounts collected or invoiced (2,097,595 )
Ending balance, June 29, 2019 $ 105,201


	Nine Months Ended
	July 4, 2020		June 29, 2019
Contract assets, beginning of period	$	90,841	$	—
Cumulative effect adjustment at September 29, 2018	—		76,417
Revenue recognized during the period	2,233,243		2,126,379
Amounts collected or invoiced during the period	(2,207,642)		(2,097,595)
Contract assets, end of period	$	116,442	$	105,201

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. As of July 4, 2020 and September 28, 2019 the balance of prepayments from customers that remained in other accrued liabilities was $61.7 million and $67.9 million, respectively. 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,~~progresses; otherwise deferred revenue will be recognized based upon shipping terms.

15. Restructuring and Impairment Charges

Restructuring and impairment costs incurred in the Company's AMER segment primarily relate to the previously announced closure of our Boulder Design Center. These charges are recorded within restructuring and impairment charges on the Condensed Consolidated Statements of Comprehensive Income. Restructuring liabilities are recorded within other accrued liabilities on the Condensed Consolidated Balance Sheets.

There were 0 restructuring and impairment costs incurred during the three months ended July 4, 2020. For the nine months ended July 4, 2020, the Company incurred restructuring and impairment costs of $6.0 million, which consisted of the following:

•$3.1 million of fixed asset and operating right-of-use asset impairment at the Company's Boulder Design Center; and

•$2.9 million of severance from the reduction of the Company's workforce primarily at the Boulder Design Center.

The Company recognized a tax benefit of $0.6 million related to restructuring charges in the nine months ended July 4, 2020.

The Company's restructuring accrual activity for the three and nine months ended July 4, 2020 is included in the table below (in thousands):


	Fixed Asset and Operating Right-of-Use Asset Impairment		Employee Termination and Severance Costs		Total
Accrual balance, January 4, 2020	$	—	$	447	$	447
Restructuring and impairment costs	3,054		2,949		6,003
Amounts utilized	(3,054)		(2,049)		(5,103)
Accrual balance, April 4, 2020	$	—	$	1,347	$	1,347
Restructuring and impairment costs	—		—		—
Amounts utilized	—		(1,089)		(1,089)
Accrual balance, July 4, 2020	$	—	$	258	$	258

There was 0 material restructuring activity for the three months ended January 4, 2020.

Table of Contents

All impairment costs were expensed in the three months ended April 4, 2020. The restructuring accrual balance is expected to be utilized by the end of the fourth quarter of fiscal 2020.

~~14.~~

16. 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.

Table of Contents

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 the evolving effect, which may intensify, of COVID-19 on our employees, customers, suppliers, and logistics providers, including the impact of governmental actions being taken to curtail the spread of the virus. Other 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, trade disputes, trade agreements 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 risks of concentration of work for certain customers; 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~~ effects of start-up costs of new programs and facilities or the costs associated with the closure or consolidation of 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 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; risks related to information technology systems and data security; 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 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 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, global health epidemics and weather events); the impact of increased competition; an inability to successfully manage human capital; 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 ~~2018~~2019 Form ~~10-K)~~10-K and our Quarterly Reports on Form 10-Q for the three months ended January 4, 2020, April 4, 2020 and July 4, 2020).

* * *

OVERVIEW

Plexus Corp. and its subsidiaries (together ~~“Plexus,”~~"Plexus," the ~~“Company,”~~"Company," or "we") participate in the Electronic Manufacturing Services ("EMS") industry. We partner with our customers to create the products that build a better world. Since 1979, Plexus has been partnering with companies to ~~create~~transform concepts into branded products and deliver them to the ~~products that build~~market. From idea to aftermarket and everything in between, Plexus is a ~~better world. We are a team of over 19,000 employees,~~global leader in providing ~~global~~ support for all the 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.~~Services. Plexus ~~is an industry leader that specializes in serving customers with highly complex products and demanding regulatory environments~~delivers comprehensive end-to-end solutions in the Americas ("AMER"), Asia-Pacific ("APAC") and Europe, Middle East, and Africa ("EMEA") ~~regions. Plexus delivers customer service excellence to leading global companies by providing innovative, comprehensive solutions throughout the product’s lifecycle.~~regions for our customers.

The following information should be read in conjunction with our Condensed Consolidated Financial Statements included herein, the ~~“Risk Factors”~~"Risk Factors" section in Part II, Item 1A included herein as well as Part I, Item 1A of our ~~annual report~~Annual Report on Form 10-K for the fiscal year ended September ~~29, 2018,~~28, 2019, and our ~~“Safe Harbor”~~"Safe Harbor" Cautionary Statement included above.

Table of Contents

COVID-19 Update

We continue to monitor the global outbreak and spread of COVID-19 and take steps to mitigate the potential risks to us posed by its spread and related circumstances and impacts.

Workplace Safety

The health and safety of our employees is a top priority for us.We have progressively implemented measures to safeguard our employees from the COVID-19 infection and exposure, in alignment with guidelines established by the Centers for Disease Control, the World Health Organization, governmental requirements, and our own safety standards.They consist of policies, procedures, protocols, and guidance related to, among other things, COVID-19 symptom awareness, effective hygiene practices, travel restrictions, visitor restrictions, social distancing, face covering expectations, temperature and health screening, work-from-home requirements, employee infection assessments, close contact tracing, enhanced workplace cleaning, and large-scale decontamination.In addition, in all geographies in which we operate, regulatory authorities at some point have imposed restrictions regarding the conduct of business and people movement to safeguard its citizens.

We have made significant efforts to mitigate the effects of these measures and impacts on our operations through a combination of adjustments in our shift patterns, flexible work arrangements, productivity improvements, facility enhancements to support social distancing and optimizing employee capability to work from home.These efforts will continue as requirements change, new risks are identified, and infections impact us.While we have been successful in largely mitigating the effects of the pandemic on our productivity and are currently operating at pre-COVID-19 production capacity globally, the continued spread and resurgence of the COVID-19 virus may make our ability to mitigate the impacts more challenging.

Supply Chain

Our suppliers may face challenges in maintaining an adequate workforce or securing materials from their own suppliers as a result of COVID-19. As such, we may experience an inability to procure certain components and materials on a timely basis as a result of the COVID-19 outbreak. We continue to take steps to validate our suppliers’ ability to deliver to us on time, which may also be affected by the impact of COVID-19 on their own financial condition.

Customers

Likewise, we remain in close contact with our customers to understand the impact of COVID-19 on their businesses and the resulting potential impact on our business. COVID-19 has introduced volatility and uncertainty to all of our customers, which has resulted in the need for us to react and respond. While COVID-19 has negatively impacted some of our customers and, therefore, our business with them, we have experienced opportunities with new and existing customers, particularly in our Healthcare/Life Sciences Sector, to manufacture products in high demand to combat the effects of COVID-19.

Liquidity

We believe we are positioned with a strong balance sheet as we face the future challenges presented by COVID-19. As of the third quarter of fiscal 2020, cash and cash equivalents and restricted cash was $300 million, while debt, finance lease obligations and other financing was $335 million. This included a $138 million unsecured delayed draw term loans facility secured on April 29, 2020 in response to the uncertainties created by the COVID-19 outbreak that we subsequently drew the full amount. The full amount of our revolving commitment of $350 million remained available for use as of July 4, 2020. Refer to Note 3, "Debt, Finance Lease Obligations and Other Financing," in Notes to Condensed Consolidated Financial Statements and “Management’s Discussion and Analysis Liquidity and Capital Resources” in Part I, Item 2 for further information.

Table of Contents

RESULTS OF OPERATIONS

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


		Three Months Ended						Nine Months Ended							Three Months Ended									Nine Months Ended
		June 29, 2019			June 30, 2018			June 29, 2019			June 30, 2018				July 4, 2020			June 29, 2019			July 4, 2020			June 29, 2019
Net sales		$	799.6		$	726.4		$	2,354.2		$	2,102.3		Net sales	$	857.4		$	799.6		$	2,477.2		$	2,354.2
Cost of sales		728.6			658.6			2,140.2			1,918.0			Cost of sales	774.5			728.6			2,253.7			2,140.2
Gross profit		71.0			67.8			214.0			184.3			Gross profit	82.9			71.0			223.5			214.0
Gross margin		8.9		%	9.3		%	9.1		%	8.8		%	Gross margin	9.7		%	8.9		%	9.0		%	9.1		%
Operating income		34.4			32.4			104.5			81.3			Operating income	45.9			34.4			103.0			104.5
Operating margin		4.3		%	4.5		%	4.4		%	3.9		%	Operating margin	5.3		%	4.3		%	4.2		%	4.4		%
Net income (loss)		24.8			26.5			71.8			(59.7		)
Diluted earnings (loss) per share		$	0.81		$	0.79		$	2.28		$	(1.79	)
Net income														Net income	35.8			24.8			79.8			71.8
Diluted earnings per share														Diluted earnings per share	$	1.20		$	0.81		$	2.66		$	2.28
Return on invested capital*								12.9		%	15.9		%	Return on invested capital*							12.9		%	12.9		%
Economic return*								3.9		%	6.4		%	Economic return*							4.1		%	3.9		%
*Non-GAAP metric; refer to "Return on Invested Capital ("ROIC") and Economic Return" below for more information and Exhibit 99.1 for a reconciliation.	*Non-GAAP metric; refer to "Return on Invested Capital ("ROIC") and Economic Return" below for more information and Exhibit 99.1 for a reconciliation.													*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 ~~June 29, 2019,~~July 4, 2020, net sales increased ~~$73.2~~$57.8 million, or ~~10.1%~~7.2%, as compared to the three months ended June ~~30, 2018.~~29, 2019. For the nine months ended ~~June 29, 2019,~~July 4, 2020, net sales increased ~~$251.9~~$123.0 million, or ~~12.0%~~5.2%, as compared to the nine months ended June ~~30, 2018.~~29, 2019.

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						Nine Months Ended							Three Months Ended						Nine Months Ended
	June 29, 2019			June 30, 2018			June 29, 2019			June 30, 2018				July 4, 2020		June 29, 2019		July 4, 2020		June 29, 2019
Net sales:													Net sales:
AMER	$	366.5		$	298.4		$	1,084.8		$	899.2		AMER	$	306.0	$	366.5	$	993.9	$	1,084.8
APAC	384.8			383.8			1,141.4			1,080.3			APAC	482.3		384.8		1,321.3		1,141.4
EMEA	81.3			74.3			229.4			212.1			EMEA	91.8		81.3		250.3		229.4
Elimination of inter-segment sales	(33.0		)	(30.1		)	(101.4		)	(89.3		)	Elimination of inter-segment sales	(22.7)		(33.0)		(88.3)		(101.4)
Total net sales	$	799.6		$	726.4		$	2,354.2		$	2,102.3		Total net sales	$	857.4	$	799.6	$	2,477.2	$	2,354.2

AMER. Net sales for the three months ended ~~June 29, 2019,~~July 4, 2020 in the AMER segment ~~increased $68.1~~decreased $60.5 million, or ~~22.8%~~16.5%, as compared to the three months ended June ~~30, 2018.~~29, 2019. The ~~increase~~decrease in net sales was driven by overall net decreased customer end-market demand inclusive of decreased demand driven by COVID-19, a ~~$68.5~~reduction in net sales of $6.1 million due to manufacturing transfers to our APAC segment and $5.4 million due to a disengagement with a customer. The decrease was partially offset by a $30.2 million increase in production ramps of new products for existing ~~customers as well as overall net increased customer end-market demand, partially offset by a decrease of $8.2 million for end-of-life products.~~customers.

During the nine months ended ~~June 29, 2019,~~July 4, 2020, net sales in the AMER segment ~~increased $185.6~~decreased $90.9 million, or ~~20.6%~~8.4%, as compared to the nine months ended June ~~30, 2018.~~29, 2019. The ~~increase~~decrease in net sales was driven by ~~a $118.0 million increase in production ramps of new products for existing customers, a $6.0 million increase in production ramps for new customers and~~ overall net ~~increased~~decreased customer end-market ~~demand.~~demand inclusive of decreased demand driven by COVID-19, a reduction in net sales of $42.3 million due to manufacturing transfers to our APAC segment and $14.8 million due to a disengagement with a customer. The ~~increase~~decrease was partially offset by a ~~$9.2 million decrease for end-of-life products and a $5.4 million reduction due to disengagements with customers.~~

~~APAC.~~ Net sales for the three months ended June 29, 2019, in the APAC segment increased $1.0 million, or 0.3%, as compared to the three months ended June 30, 2018. The increase in net sales was the result of a $14.1 million increase in production ramps for new customers and a $12.5 million increase in production ramps of new products for existing customers. The increase was mostly offset by overall net decreased customer end-market demand.

During the nine months ended June 29, 2019, net sales in the APAC segment increased $61.1 million, or 5.7%, as compared to the nine months ended June 30, 2018. The increase in net sales was the result of a $76.9$115.3 million increase in production ramps of new products for existing customers and a ~~$37.9~~$21.5 million increase in production ramps for new customers.

APAC. Net sales for the three months ended July 4, 2020 in the APAC segment increased $97.5 million, or 25.3%, as compared to the three months ended June 29, 2019. The increase in net sales was driven by a $21.3 million increase in production ramps of new products for existing customers, a $6.4 million increase in production ramps for a new customer, a $6.1 million increase

Table of Contents

due to manufacturing transfers from our AMER segment and overall net increased customer end-market demand inclusive of increased demand driven by COVID-19. The increase was partially offset by a ~~$28.4 million reduction due to a disengagement with a customer, a $12.9~~$6.8 million decrease for end-of-life products.

During the nine months ended July 4, 2020, net sales in the APAC segment increased $179.9 million, or 15.8%, as compared to the nine months ended June 29, 2019. The increase in net sales was driven by a $69.6 million increase in production ramps of new products for existing customers, a $42.3 million increase due to manufacturing transfers from our AMER segment, a $13.6 million increase in production ramps for a new customer and overall net ~~decreased~~increased customer end-market ~~demand.~~demand inclusive of increased demand driven by COVID-19. The increase was partially offset by a $27.9 million decrease for end-of-life products.

EMEA. Net sales for the three months ended ~~June 29, 2019,~~July 4, 2020 in the EMEA segment increased ~~$7.0~~$10.5 million, or ~~9.4%~~12.9%, as compared to the three months ended June ~~30, 2018.~~29, 2019. The increase in net sales was ~~primarily due to~~driven by an increase in production ramps for a new program as a result of COVID-19, partially offset by overall net ~~increased customer~~decreased end-market demand.

During the nine months ended ~~June 29, 2019,~~July 4, 2020, net sales in the EMEA segment increased ~~$17.3~~$20.9 million, or ~~8.2%~~9.1%, as compared to the nine months ended June ~~30, 2018.~~29, 2019. The increase in net sales was the result of a $14.3 million increase in production ramps of new products for existing customers inclusive of increased demand driven by COVID-19 and an increase in production ramps for a new program as a result of COVID-19, partially offset by overall net decreased customer end-market demand.

Our net sales by market sector is presented below (in millions):


	Three Months Ended						Nine Months Ended
	July 4, 2020		June 29, 2019		July 4, 2020		June 29, 2019
Market Sector:
Healthcare/Life Sciences	$	330.1	$	308.8	$	913.4	$	909.0
Industrial/Commercial	317.0		247.9		913.8		717.3
Aerospace/Defense	141.1		151.4		470.7		414.4
Communications	69.2		91.5		179.3		313.5
Total net sales	$	857.4	$	799.6	$	2,477.2	$	2,354.2

Healthcare/Life Sciences. Net sales for the three months ended July 4, 2020 in the Healthcare/Life Sciences sector increased $21.3 million, or 6.9%, as compared to the three months ended June 29, 2019. The increase in net sales was driven by a $13.3 million increase in production ramps for a new customer and a $12.4 million increase in production ramps of new products for existing customers, both inclusive of customer ramps for critical care products as a result of COVID-19. The increase was partially offset by overall net decreased customer end-market demand inclusive of decreased demand for products associated with elective procedures as a result of COVID-19.

During the nine months ended July 4, 2020, net sales in the Healthcare/Life Sciences sector increased $4.4 million, or 0.5%, as compared to the nine months ended June 29, 2019. The increase in net sales was driven by a $43.0 million increase in production ramps of new products for existing customers and a $13.5 million increase in production ramps for a new customer, both inclusive of customer ramps for critical care products as a result of COVID-19. The increase was partially offset by overall net decreased customer end-market demand inclusive of decreased demand for products associated with elective procedures as a result of COVID-19.

Industrial/Commercial. Net sales for the three months ended July 4, 2020 in the Industrial/Commercial sector increased $69.1 million, or 27.9%, as compared to the three months ended June 29, 2019. The increase was driven by a $27.6 million increase in production ramps of new products for existing customers and overall net increased customer end-market demand.

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

Three Months Ended Nine Months Ended
June 29,
2019 June 30,
2018 June 29,
2019 June 30,
2018
Market Sector:
Healthcare/Life Sciences $ 308.8
$ 266.0
$ 909.0
$ 751.1
Industrial/Commercial 247.9
225.5
717.3
674.0
Aerospace/Defense 151.4
114.9
414.4
324.8
Communications 91.5
120.0
313.5
352.4
Total net sales $ 799.6
$ 726.4
$ 2,354.2
$ 2,102.3

~~Healthcare/Life Sciences~~. ~~Net sales for the three months ended June 29, 2019, in the Healthcare/Life Sciences sector increased $42.8 million, or 16.1%, as compared to the three months ended June 30, 2018.~~ The increase was ~~the result~~partially offset by a decrease of ~~overall net increased customer end-market demand,~~$5.4 million due to a ~~$7.4 million increase in production ramps for new customers and~~disengagement with a ~~$6.2 million increase in production ramps of new products for existing customers.~~customer.

During the nine months ended ~~June 29, 2019,~~July 4, 2020, net sales in the ~~Healthcare/Life Sciences~~Industrial/Commercial sector increased ~~$157.9~~$196.5 million, or ~~21.0%~~27.4%, as compared to the nine months ended June ~~30, 2018.~~29, 2019. The increase was primarily the result of overall net increased customer end-market demand, a $39.3 million increase in production ramps of new products for existing customers and a $20.2 million increase in production ramps for new customers.

~~Industrial/Commercial~~. Net sales for the three months ended June 29, 2019, in the Industrial/Commercial sector increased $22.4 million, or 9.9%, as compared to the three months ended June 30, 2018. The increase was the result of a $20.1 million increase in productions ramps of new products for existing customers and a $6.6 million increase in production ramps for new customers, partially offsetdriven by a ~~decrease due to end-of-life products.~~

During the nine months ended June 29, 2019, net sales in the Industrial/Commercial sector increased $43.3 million, or 6.4%, as compared to the nine months ended June 30, 2018. The increase was the result of a $31.8$85.1 million increase in production ramps of new products for existing customers, a ~~$12.2~~$6.2 million increase in production ramps for a new ~~customers~~customer and overall net increased customer end-market demand. The increase was partially offset by a ~~$5.6~~decrease of $14.8 million ~~decrease~~ due to ~~end-of-life products.~~a disengagement with a customer.

Aerospace/Defense. Net sales for the three months ended ~~June 29, 2019,~~July 4, 2020 in the Aerospace/Defense sector ~~increased $36.5~~decreased $10.3 million, or ~~31.8%~~6.8%, as compared to the three months ended June ~~30, 2018.~~29, 2019. The decrease was driven by overall net decreased customer end-market demand inclusive of decreased demand driven by COVID-19.

Table of Contents

During the nine months ended July 4, 2020, net sales in the Aerospace/Defense sector increased $56.3 million, or 13.6%, as compared to the nine months ended June 29, 2019. The increase was driven by a ~~$28.1~~$40.0 million increase in production ramps of new products for existing customers and ~~overall net increased customer end-market demand.~~

During the nine months ended June 29, 2019, net sales in the Aerospace/Defense sector increased $89.6 million, or 27.6%, as compared to the nine months ended June 30, 2018. The increase was driven by an $85.5a $15.3 million increase in production ramps offor new ~~products for existing customers and~~customers. The increase was partially offset by overall net ~~increased~~decreased customer end-market demand ~~partially offset~~inclusive of decreased demand driven by ~~a $4.5 million temporary reduction of business with an existing customer.~~COVID-19.

Communications. Net sales for the three months ended ~~June 29, 2019,~~July 4, 2020 in the Communications sector decreased ~~$28.5~~$22.3 million, or ~~23.8%~~24.4%, as compared to the three months ended June 30, 2018. The reduction in net sales was the result of a net decrease in overall customer end-market demand and an $8.2 million decrease due to end-of-life products, partially offset by a $4.1 million increase in production ramps of new products for existing customers.

~~During the nine months ended June~~ 29, ~~2019, net sales in the Communications sector decreased $38.9 million, or 11.0%, as compared to the nine months ended June 30, 2018.~~2019. The decrease was driven by ~~a $34.2 million reduction due to disengagements with customers, a $7.4 million decrease due to end-of-life products and~~ overall net decreased customer end-market demand. The decrease was partially offset by an ~~$11.5~~increase of $6.4 million ~~increase in production ramps of new products for existing customers and a $10.3 million increase in~~due to production ramps for a new ~~customers.~~customer.

During the nine months ended July 4, 2020, net sales in the Communications sector decreased $134.2 million, or 42.8%, as compared to the nine months ended June 29, 2019. The decrease was driven by overall net decreased customer end-market demand. The decrease was partially offset by an increase of $13.6 million due to production ramps for a new customer.

Cost of sales. Cost of sales for the three ~~and~~months ended July 4, 2020 increased $45.9 million, or 6.3%, as compared to the three months ended June 29, 2019, while cost of sales for the nine months ended July 4, 2020 increased $113.5 million, or 5.3%, as compared to the nine months ended June 29, ~~2019, increased $70.0 million and $222.2 million, respectively, as compared to the three and nine months ended June 30, 2018.~~2019. Cost of sales is comprised primarily of material and component costs, labor costs and overhead. For the three months ended July 4, 2020, approximately 90% of the total cost of sales was variable in nature and fluctuated with sales volumes; for the nine months ended July 4, 2020 and the three and nine months ended June 29, 2019, ~~and June 30, 2018,~~ approximately 89% of the total cost of sales was variable in nature and fluctuated with sales volumes. Of ~~this amount,~~these amounts, approximately 91% for the three months ended July 4, 2020, 90% for the nine months ended July 4, 2020, 88% for the three months ended June 29, 2019 and 89% for the nine months ended June 29, 2019 ~~and 91% for the three and nine months ended June 30, 2018,~~ of these costs in each period were related to material and component costs.

~~As compared to the prior year periods, the~~The increase in cost of sales for the three months ended July 4, 2020 compared to the three months ended June 29, 2019 was primarily due to the increase in net sales and $3.6 million related to employee compensation and supplies costs associated with COVID-19. The increase was partially offset by a positive shift in customer mix and decreased fixed ~~costs to support new program ramps.~~costs. The increase in cost of sales for the nine months ended July 4, 2020 compared to the nine months ended June 29, 2019 was primarily due to the increase in net sales, ~~and~~ fixed costs to support new program ~~ramps.~~ramps and $8.2 million related to employee compensation and supplies costs associated with COVID-19. The increase was partially offset by ~~the $13.5 million one-time employee bonus (the "one-time employee bonus") that was paid during the nine months ended June 30, 2018, of which $12.6 million impacted cost of sales~~a positive shift in ~~that period.~~customer mix.

Gross profit. Gross profit for the three months ended ~~June 29, 2019~~July 4, 2020 increased ~~$3.2~~$11.9 million, or 16.8%, as compared to the three months ended June ~~30, 2018.~~29, 2019. Gross profit for the nine months ended ~~June 29, 2019~~July 4, 2020 increased ~~$29.7~~$9.5 million, or 4.4%, as compared to the nine months ended June ~~30, 2018.~~29, 2019. Gross margin ~~decreased 40~~for the three months ended July 4, 2020 increased 80 basis points while gross margin for the nine months ended July 4, 2020 deceased 10 basis points as compared to the three ~~months ended June 30, 2018, but increased 30 basis points as compared to the~~and nine months ended June 30, 2018. The primary driver of the increase in gross profit as compared to the three months ended June 30, 2018, was the increase in net sales, partially offset by higher labor costs and fixed costs due to the ramp of new programs, which drove the decrease in gross margin in that period.29, 2019, respectively. The primary driver of the increase in gross profit and gross margin ~~as compared~~for the three months ended July 4, 2020 was the increase in net sales, positive shift in customer mix and fixed cost leverage. The increase was partially offset by increased employee compensation and supplies costs related to COVID-19. The primary driver of the increase in gross profit for the nine months ended ~~June 30, 2018,~~July 4, 2020 was the increase in net sales, ~~increase~~partially offset by fixed costs due to the ramp of new programs and increased employee compensation and supplies costs related to COVID-19, which drove the ~~one-time employee bonus~~decrease in gross margin in that ~~was paid during the nine months ended June 30, 2018.~~period.

Operating income. Operating income for the three months ended ~~June 29, 2019~~July 4, 2020 increased ~~$2.0~~$11.5 million, or ~~6.2%~~33.4%, as compared to the three months ended June ~~30, 2018~~29, 2019 as a result of the increase in gross ~~profit, partially offset by~~profit. Operating margin of 5.3% increased 100 basis points compared to the three months ended June 29, 2019 primarily due to the increase in gross margin as a ~~$1.2~~result of the factors previously discussed.

Operating income for the nine months ended July 4, 2020 decreased $1.5 million, or 1.4%, as compared to the nine months ended June 29, 2019 as a result of the $11.0 million increase in selling and administrative expenses ("S&A") that was primarily due to ~~higher~~a $6.0 million increase in restructuring and impairment charges due to the previously announced closure of our Boulder Design Center, $2.5 million increase in bad debt expense and increased compensation ~~expense.~~expenses. Operating margin of ~~4.3%~~4.2% decreased 20 basis points as compared to ~~the three months ended June 30, 2018 as a result of the decrease in gross margin.~~

~~Operating income for~~ the nine months ended June 29, 2019 ~~increased $23.2 million, or 28.5%, as compared~~primarily due to the ~~nine months ended June 30, 2018~~decrease in gross margin as a result of the increase in gross profit. This was partially offset by a $6.5 million increase in S&A primarily due to an increase in compensation expense, partially offset by $0.9 million due to the one-time employee bonus that was paid during the nine months ended June 30, 2018, as noted above. Operating marginfactors previously discussed.

Table of ~~4.4% increased 50 basis points as compared to the nine months ended June 30, 2018 primarily as a result of the one-time employee bonus.~~Contents

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


	Three Months Ended						Nine Months Ended							Three Months Ended						Nine Months Ended
	June 29, 2019			June 30, 2018			June 29, 2019			June 30, 2018				July 4, 2020		June 29, 2019		July 4, 2020		June 29, 2019
Operating income (loss):													Operating income (loss):
AMER	$	14.2		$	6.8		$	42.9		$	28.0		AMER	$	8.5	$	14.2	$	21.1	$	42.9
APAC	51.3			55.3			151.8			155.0			APAC	66.2		51.3		178.5		151.8
EMEA	1.5			1.8			2.4			1.1			EMEA	1.2		1.5		0.3		2.4
Corporate and other costs (1)	(32.6		)	(31.5		)	(92.6		)	(102.8		)
Corporate and other costs													Corporate and other costs	(30.0)		(32.6)		(96.9)		(92.6)
Total operating income	$	34.4		$	32.4		$	104.5		$	81.3		Total operating income	$	45.9	$	34.4	$	103.0	$	104.5
(1) The nine months ended June 30, 2018, include the $13.5 million one-time employee bonus.

AMER. Operating income for the three months ended ~~June 29, 2019, in the AMER segment increased $7.4~~July 4, 2020 decreased $5.7 million as compared to the three months ended June ~~30, 2018,~~29, 2019, primarily as a result of the decrease in net sales, partially offset by a positive shift in customer mix and decreased fixed costs.

During the nine months ended July 4, 2020, operating income in the AMER segment decreased $21.8 million as compared to the nine months ended June 29, 2019, primarily as a result of the decrease in net sales and increased fixed costs to support new program ramps, as well as employee compensation and supplies costs associated with COVID-19. In addition, there was an increase in S&A primarily due to an increase in bad debt expense, which was partially offset by a positive shift in customer mix.

APAC. Operating income for the three months ended July 4, 2020 increased $14.9 million as compared to the three months ended June 29, 2019, primarily as a result of the increase in net sales.

During the nine months ended July 4, 2020, operating income in the APAC segment increased $26.7 million as compared to the nine months ended June 29, 2019, primarily as a result of the increase in net sales, ~~and a positive shift in customer mix,~~ partially offset by ~~increased costs to support new program ramps.~~

During the nine months ended June 29, 2019, operating income in the AMER segment increased $14.9 million as compared to the nine months ended June 30, 2018, primarily as a result of the increase in net sales and a positive shift in customer mix, partially offset by increased costs to support new program ramps.

~~APAC.~~ Operating income for the three and nine months ended June 29, 2019, in the APAC segment decreased $4.0 million and $3.2 million, respectively, as compared to the three and nine months ended June 30, 2018, primarily as a result of a negative shift in customer mix and ~~increased~~employee compensation and supplies costs ~~to support new program ramps, partially offset by the increase in net sales.~~associated with COVID-19.

EMEA. Operating income for the three months ended ~~June 29, 2019, in the EMEA segment~~July 4, 2020 decreased $0.3 million as compared to the three months ended June ~~30, 2018,~~29, 2019, primarily ~~due to~~as a ~~negative shift in customer mix and~~result of the increased fixed costs to support new program ramps ~~partially offset by the increase in net sales.~~and increased S&A primarily due to compensation expense.

During the nine months ended ~~June 29, 2019,~~July 4, 2020, operating income in the EMEA segment ~~increased $1.3~~decreased $2.1 million as compared to the nine months ended June ~~30, 2018,~~29, 2019, primarily as a result of the increase in ~~net sales and a positive shift in customer mix, partially offset by increased~~fixed costs to support new program ramps.

Other expense. Other expense for the three months ended ~~June 29, 2019 increased $1.8~~July 4, 2020 decreased $0.5 million as compared to the three months ended June ~~30, 2018 due to an $0.8 million increase in interest expense and~~29, 2019, primarily as a ~~$0.6 million decrease in interest income.~~result of decreased factoring fees.

Other expense for the nine months ended ~~June 29, 2019~~July 4, 2020 increased ~~$4.0~~$1.0 million as compared to the nine months ended June ~~30, 2018,~~29, 2019, primarily due to ~~a $2.6~~an increase of $2.8 million ~~decrease~~ in interest ~~income, a $1.4 million increase in factoring fees related to the Company's accounts receivable sale programs and a $1.1 million decrease in foreign exchange gains,~~expense, partially offset by a ~~$1.1~~decrease of $1.7 million ~~decrease~~ in ~~interest expense.~~factoring fees.

Income taxes. Income tax expense and effective income tax rates ~~for~~are presented below (dollars in millions):


	Three Months Ended						Nine Months Ended
	July 4, 2020		June 29, 2019		July 4, 2020		June 29, 2019
Income tax expense, as reported (GAAP)	$	5.8	$	4.9	$	10.2	$	20.7
Special tax items	—		—		0.8		(7.0)
Restructuring charges	—		—		0.6		—
Income tax expense, as adjusted (non-GAAP) (1)	$	5.8	$	4.9	$	11.6	$	13.7

Table of Contents


	Three Months Ended						Nine Months Ended
	July 4, 2020		June 29, 2019		July 4, 2020		June 29, 2019
Effective tax rate, as reported (GAAP)	13.9	%	16.5	%	11.4	%	22.4	%
Special tax items	—		—		0.4		(7.6)
Restructuring charges	—		—		0.3		—
Effective tax rate, as adjusted (non-GAAP) (1)	13.9	%	16.5	%	12.1	%	14.8	%

(1) We believe the ~~indicated periods were as follows:~~

Three Months Ended Nine Months Ended
June 29,
2019 June 30,
2018 June 29,
2019 June 30,
2018
Income tax expense, as reported $ 4.9
$ 3.1
$ 20.7
$ 133.0
One-time impact of Tax Reform —
—
(7.0 ) (124.5 )
Impact of one-time employee bonus —
—
—
0.3
Income tax expense, as adjusted (1) $ 4.9
$ 3.1
$ 13.7
$ 8.8

Three Months Ended Nine Months Ended
June 29,
2019 June 30,
2018 June 29,
2019 June 30,
2018
Effective tax rate, as reported 16.5 % 10.3 % 22.4 % 181.4 %
One-time impact of Tax Reform —
—
(7.6 ) (169.8 )
Impact of one-time employee bonus —
—
—
(1.4 )
Effective tax rate, as adjusted (1) 16.5 % 10.3 % 14.8 % 10.2 %

(1) We believe the non-GAAP presentation of income tax expense and the effective tax rate excluding the one-time 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.

~~The effective~~non-GAAP presentation of income tax ~~rate for the three months ended June 29, 2019 increased from~~expense and the effective tax rate ~~for~~excluding special tax items and restructuring charges provides additional insight into the ~~three months ended June 30, 2018, primarily due to~~change between comparative reporting periods by isolating the impact of ~~the Global Intangible Low-Taxed Income provision of the U.S. Tax Cuts & Jobs Act ("Tax Reform"). The~~these significant, special items. In addition, we believe that our income tax expense, as adjusted, and effective tax rate, as ~~reported, for~~adjusted, enhance the ability of investors to analyze our operating performance and supplement, but do not replace, income tax expense and effective tax rate calculated in accordance with U.S. GAAP.

For the nine months ended July 4, 2020, we recorded a tax benefit of $1.9 million related to guidance issued by the U.S. Department of the Treasury regarding foreign tax credits and a tax benefit of $0.6 million related to restructuring charges, partially offset by $1.1 million of other special tax items. For the nine months ended June 29, 2019, ~~decreased from~~we recorded a $7.0 million adjustment to income tax expense, inclusive of unrecognized tax benefits, as a result of proposed additional guidance issued by the ~~effective~~U.S. Department of the Treasury, related to the U.S. Tax Cuts and Jobs Act ("Tax Reform").

Income tax ~~rate, as reported~~expense for the three and nine months ended July 4, 2020 was $5.8 million and $10.2 million, respectively, compared to $4.9 million and $20.7 million for the three and nine months ended June 29, 2019, respectively. The increase in income tax expense for the three months ended July 4, 2020 was primarily due to the increase in pre-tax book income and the geographic distribution of pre-tax book income, partially offset by an $0.8 million tax benefit for a lapse of a statute of limitation for an uncertain tax position. The decrease in income tax expense for the nine months ended ~~June 30, 2018,~~July 4, 2020 was primarily due to the $7.0 million impact of Tax ~~Reform.~~Reform recorded in the nine months ended June 29, 2019. The decrease was also due to the geographic distribution of pre-tax book income, an $0.8 million tax benefit related to the lapse of a statute of limitations for uncertain tax positions, an $0.8 million benefit for special tax items and a $0.6 million tax benefit related to restructuring during the nine months ended July 4, 2020. The $0.8 million benefit for special tax items for the nine months ended July 4, 2020 was comprised of a $1.9 million benefit related to guidance issued by the U.S. Department of the Treasury regarding foreign tax credits partially offset by $1.1 million of special tax items

AsThe Coronavirus Aid, Relief, and Economic Security Act was signed into law on March 27, 2020. The Company does not expect a ~~result of Tax Reform, our~~material impact from the law.

Our U.S. statutory tax rate for fiscal ~~2019~~2020 is 21%. Our effective tax rate varies from our blended U.S. statutory rate 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 ~~discussed above.~~previously discussed. 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 ~~as reported,~~ for fiscal ~~2019~~2020 is expected to be between ~~19%~~12% and ~~21%~~14%. The estimated effective income tax rate, as adjusted, for fiscal 2019, is expected to be between 13% and 15%. The difference is due to the impact of Tax Reform recorded in the first quarter of fiscal 2019.

Net ~~income (loss).~~income. Net income for the three months ended ~~June 29, 2019 decreased $1.7~~July 4, 2020 increased $11.0 million, ~~to $24.8 million~~or 44.4%, as compared to ~~net income of $26.5 million for~~ the three months ended June ~~30, 2018.~~29, 2019 to $35.8 million. Net income ~~decreased as compared to the prior year~~increased primarily ~~due to the increase in income tax expense~~ as a result of the ~~impact of the Global Intangible Low-Tax Income provision of Tax Reform,~~increase in operating income as ~~discussed above.~~previously discussed.

Net income for the nine months ended ~~June 29, 2019~~July 4, 2020 increased ~~$131.5~~$8.0 million, ~~to $71.8 million~~or 11.1%, as compared to ~~the net loss of $59.7 million for~~ the nine months ended June ~~30, 2018.~~29, 2019 to $79.8 million. Net income increased ~~as compared to the prior year~~ primarily as a result of the ~~$112.3 million~~increase in operating income and decrease in income tax expense ~~which,~~ as ~~noted above, was substantially due to the impact of Tax Reform, as well as the increase in operating income~~ previously discussed.

Diluted earnings ~~(loss)~~ per share. Diluted earnings per share for the three months ended ~~June 29, 2019 was~~July 4, 2020 increased to $1.20 as compared to $0.81 ~~a $0.02 increase from diluted earnings per share of $0.79~~ for the three months ended June ~~30, 2018. The increase~~29, 2019, primarily ~~resulted from decreased weighted average~~as a result of increased net income due to the factors previously discussed and a reduction in diluted shares outstanding due to ~~increased share~~ repurchase ~~activity.~~activity under the Company's stock repurchase plans.

Diluted earnings per share for the nine months ended ~~June 29, 2019 was $2.28,~~July 4, 2020 increased to $2.66 as compared to ~~diluted loss per share of $1.79~~$2.28 for ~~the nine months ended June 30, 2018. The increase primarily resulted from decreased tax expense related to the impact of Tax Reform and increased net income in~~ the nine months ended June 29, 2019, primarily as ~~noted above.~~a result of increased net income due to the factors previously discussed and a reduction in diluted shares outstanding due to repurchase activity under the Company's stock repurchase plans.

Table of Contents

Return on Invested Capital ("ROIC") and ~~Economic Return.~~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,~~"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,~~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~~economic return because we believe they offer insight into the metrics that are driving management decisions because we view ROIC and ~~Economic Return~~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~~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 four-quarter period for the third quarter. Invested capital is defined as equity plus debt and operating lease liabilities, 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 ("GAAP").

We review our internal calculation of WACC annually, and our estimated WACC is ~~9.0%~~8.8% for fiscal ~~2019.~~2020. By exercising discipline to generate ROIC in excess of our WACC, our goal is to create value for our shareholders. ROIC was 12.9% ~~and 15.9%~~ for both the nine months ended July 4, 2020 and June 29, ~~2019 and June 30, 2018, respectively.~~2019.

For a reconciliation of ROIC and ~~Economic Return~~economic return to our financial statements that were prepared using ~~U.S.~~ GAAP, see Exhibit 99.1 to this ~~quarterly report~~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~~economic return (dollars in millions) for the indicated periods:

Nine Months Ended
June 29,
2019 June 30,
2018
Annualized operating income (tax effected) $ 118.5
$ 113.8
Average invested capital 921.4
716.4
After-tax ROIC 12.9 % 15.9 %
WACC 9.0 % 9.5 %
Economic Return 3.9 % 6.4 %


	Nine Months Ended
	July 4, 2020			June 29, 2019
Adjusted operating income (tax-effected)	$	126.4		$	118.5
Average invested capital	980.9			921.4
ROIC	12.9		%	12.9		%
WACC	8.8		%	9.0		%
Economic return	4.1		%	3.9		%

LIQUIDITY AND CAPITAL RESOURCES

Cash and cash equivalents and restricted cash were ~~$205.4~~$299.6 million as of ~~June 29, 2019,~~July 4, 2020, as compared to ~~$297.7~~$226.3 million as of September ~~29, 2018.~~28, 2019.

As of ~~June 29, 2019, 97.5%~~July 4, 2020, 86% 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 than before Tax Reform. Currently, we believe that our cash balance, together with cash available under our Credit Facility, will be sufficient to meet our liquidity needs and potential share repurchases, if any, for the next twelve months and for the foreseeable future.

Table of Contents

Our future cash flows from operating activities will be reduced by ~~$72.9~~$59.6 million due to cash payments for accrued income taxes related to Tax Reform. The table below provides the expected timing of these future cash outflows, excluding $9.1 million of foreign withholding taxes on the deemed repatriation of undistributed foreign earnings since the exact timing of the payments is unknown as of June 29, 2019. The remaining $63.8 million represents U.S. federal taxes on the deemed repatriation of undistributed foreign earnings that are payable over an eight year period that began in fiscal 2019 with the first payment. The table below provides the expected timing of these future cash outflows, in accordance with the following installment schedule for the remaining seven years (in millions):


2020	$	5.6
Remaining 2020			Remaining 2020	$	—
2021	5.6		2021	5.7
2022	5.6		2022	5.7
2023	5.6		2023	5.7
2024	10.4		2024	10.6
2025	13.9		2025	14.2
2026	17.1		2026	17.7
Total	$	63.8	Total	$	59.6

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):


	Nine Months Ended							Nine Months Ended
	June 29, 2019			June 30, 2018				July 4, 2020		June 29, 2019
Cash provided by operating activities	$	7.0		$	41.5		Cash provided by operating activities	$	92.5	$	7.0
Cash used in investing activities	$	(73.3	)	$	(51.7	)	Cash used in investing activities	$	(40.5)	$	(73.3)
Cash used in financing activities	$	(26.2	)	$	(228.4	)
Cash provided by (used in) financing activities							Cash provided by (used in) financing activities	$	21.3	$	(26.2)

Operating Activities. Cash flows provided by operating activities were ~~$7.0~~$92.5 million for the nine months ended ~~June 29, 2019,~~July 4, 2020, as compared to cash flows provided by operating activities of ~~$41.5~~$7.0 million for the nine months ended June ~~30, 2018.~~29, 2019. The ~~decrease~~increase was primarily due to cash flow improvements (reductions) ~~improvements~~ of:

•$~~(135.8)~~183.6 million in accounts payable cash flows driven by ~~reduced~~increased purchasing activity ~~in an effort~~ to ~~manage inventory.~~support ramp of customer programs and longer lead times for certain components heightened by the COVID-19 outbreak.

•$~~(50.6)~~33.0 million in accounts receivable cash flows, which resulted ~~primarily~~ from the ~~increase in net sales.~~timing of payments.

•$~~68.6~~(83.1) million in inventory cash flows driven by increased inventory ~~management efforts.~~levels to support the ramp of customer programs and longer lead times for certain components heightened by the COVID-19 outbreak.

•$~~46.1~~(56.4) million in ~~customer deposit~~other current and noncurrent liabilities cash flows driven by ~~significant deposits received~~decreases in advance payments from ~~two~~ customers ~~during~~and accrued salaries and wages due to timing of the ~~nine months ended June 29, 2019.~~


•	~~$32.3 million~~quarter-end. ~~in other current and noncurrent liabilities cash flows driven by an increase in advance payments from customers.~~

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


	Three Months Ended			Three Months Ended
	June 29, 2019	June 30, 2018		July 4, 2020	June 29, 2019
Days in accounts receivable	52	48	Days in accounts receivable	55	52
Days in contract assets	12	—	Days in contract assets	12	12
Days in inventory	95	105	Days in inventory	97	95
Days in accounts payable	(54)	(66)	Days in accounts payable	(65)	(54)
Days in cash deposits	(16)	(14)	Days in cash deposits	(20)	(16)
Annualized cash cycle	89	73	Annualized cash cycle	79	89

We calculate days in accounts receivable and contract assets as 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 June 29, 2019, 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.

Table of Contents

As of ~~June 29, 2019,~~July 4, 2020, annualized cash cycle days ~~increased 16~~decreased ten days compared to June ~~30, 2018~~29, 2019 due to the following factors:

•Days in accounts receivable for the three months ended July 4, 2020 increased three days compared to the three months ended June 29, ~~2019~~2019. The increase is primarily attributable to the timing of shipments and reduction in factored receivables.

•Days in contract assets for the three months ended July 4, 2020 remained flat compared to the three months ended June 29, 2019.

•Days in inventory for the three months ended July 4, 2020 increased two days compared to the three months ended June 29, 2019. The increase is primarily attributable to increasing inventory levels to support the ramp of customer programs and longer lead times for certain components heightened by the COVID-19 outbreak.

•Days in accounts payable for the three months ended July 4, 2020 increased eleven days compared to the three months ended June 29, 2019. The increase is primarily attributable to increased purchasing activity to support the ramp of customer programs and longer lead times for certain components heightened by the COVID-19 outbreak.

•Days in cash deposits for the three months ended July 4, 2020 increased four days compared to the three months ended June ~~30, 2018.~~29, 2019. The increase iswas primarily attributable to ~~the timing of customer shipments and payments, partially offset by an increase in accounts receivable sold under factoring programs.~~

~~Days in contract assets for the three months ended June 29, 2019 increased 12 days compared to the three months ended June 30, 2018 due to the impact of the adoption of Topic 606.~~

Days in inventory for the three months ended June 29, 2019 decreased 10 days compared to the three months ended June 30, 2018. The decrease is primarily attributable to inventory that was recognized with over time revenue as part of our adoption of Topic 606.

Days in accounts payable for the three months ended June 29, 2019 decreased 12 days compared to the three months ended June 30, 2018. The decrease is primarily attributable to reduced purchasing activity in connection with our inventory management efforts.

~~Days in cash deposits for the three months ended June 29, 2019 increased two days compared to the three months ended June 30, 2018, primarily driven by~~ significant deposits received from ~~three~~3 customers to cover higher inventory balances.

Free Cash Flow. We define free cash flow ("FCF"), a non-GAAP financial measure, as cash ~~flows~~flow provided by operations less capital expenditures. FCF was $51.3 million for the nine months ended July 4, 2020 compared to $(67.6) million for the nine months ended June 29, 2019, ~~compared to $(10.6) million for the nine months ended June 30, 2018, a decrease~~an increase of $57.0 million, primarily due to a $34.4 million decrease in cash flows provided by operations due to the factors discussed above, and a $22.5 million increase in capital expenditures, which is discussed below.$118.9 million.

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 GAAP.

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


	Nine Months Ended							Nine Months Ended
	June 29, 2019			June 30, 2018				July 4, 2020		June 29, 2019
Cash flows provided by operating activities	$	7.0		$	41.5		Cash flows provided by operating activities	$	92.5	$	7.0
Payments for property, plant and equipment	(74.6		)	(52.1		)	Payments for property, plant and equipment	(41.2)		(74.6)
Free cash flow	$	(67.6	)	$	(10.6	)	Free cash flow	$	51.3	$	(67.6)

Investing Activities. Cash flows used in investing activities were $40.5 million for the nine months ended July 4, 2020 compared to $73.3 million for the nine months ended June 29, ~~2019, compared to $51.7 million for the nine months ended June 30, 2018.~~2019. The ~~increase~~decrease in cash used in investing activities was due to a ~~$22.5~~$33.4 million ~~increase~~decrease in capital expenditures, primarily due to ~~fund both the purchase of equipment and building improvements for our new manufacturing facility in Penang, Malaysia, and~~ the construction of a second manufacturing facility in Guadalajara, ~~Mexico.~~Mexico which was completed in the first quarter of fiscal 2020.

We estimate funded capital expenditures for fiscal ~~2019~~2020 to be approximately ~~$80.0~~$50 to ~~$90.0~~$60 million, of which ~~$74.6~~$41.2 million was utilized through the first nine months of fiscal ~~2019.~~2020. The remaining fiscal ~~2019~~2020 capital expenditures are anticipated to be used primarily ~~in the construction of the second manufacturing facility in Guadalajara, Mexico, and~~ to support new program ramps as well as to replace 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 or borrowings, if required.

Financing Activities. Cash flows provided by financing activities were $21.3 million for the nine months ended July 4, 2020 compared to cash flows used in financing activities ~~were~~of $26.2 million for the nine months ended June 29, ~~2019 compared to $228.4 million for the nine months ended June 30, 2018.~~2019. The ~~decrease~~increase was primarily attributable to drawing $138.0 million on the unsecured term loans, a ~~$241.0~~$131.2 million decrease in ~~pay-downs on~~cash used to repurchase our ~~Credit Facility. The decrease was also due to a $25.0~~common stock and an $8.9 million ~~reduction~~increase in the balance of outstanding senior notes as a result of refinancing $175.0 million in principal amount of Notes that matured in the third quarter of fiscal 2018 by repaying $25.0 million in principal amount and by issuing $150.0 million in principal amount of the 2018 Notes (as defined below), and a $7.5 million decrease related to proceeds from the exercise of stock options. This change was partially offset by a ~~$52.9~~$228.0 million decrease in borrowing and increase in ~~cash used~~repayments on our revolving commitment.

On August 20, 2019, the Board of Directors approved a new stock repurchase plan, pursuant to which the Company is authorized to repurchase ~~our~~$50.0 million of its common ~~stock.~~stock (the "2019 Program"). The 2019 Program commenced upon completion of the 2018 Program, as defined below. During the nine months ended July 4, 2020, the Company repurchased

Table of Contents

315,231 shares under the 2019 Program for $19.5 million at an average price of $61.81. As of July 4, 2020, $27.2 million of authority remained under the 2019 Program. The Company temporarily suspended any share repurchases under the 2019 Program in March 2020 due to the uncertainties created by the COVID-19 outbreak, but expects to resume share repurchase activity in the fourth quarter of fiscal 2020.

On February 14, 2018, the Board of Directors approved a stock repurchase plan under which the Company iswas authorized to repurchase $200.0 million of its common stock (the "2018 Program"). ~~The 2018 Program commenced upon completion of the 2016 Program, as defined below.~~ During the nine months ended June 29, 2019, the Company repurchased 2,646,125 shares under this program for $150.7 million, at an average price of $56.95 per share. AsThe 2018 Program was completed during the fourth quarter of ~~June 29,~~fiscal 2019, ~~$28.1 million of~~when all share repurchase authority ~~remained~~ under ~~the 2018 Program.~~

~~On June 6, 2016, the Board of Directors authorized a multi-year stock repurchase program under which the Company~~it was authorized to repurchase up to $150.0 million of its common stock beginning in fiscal 2017 (the "2016 Program"). During the nine months ended June 30, 2018, the Company repurchased 1,619,094 shares for $97.8 million, at an average price of $60.43 per share under the 2016 Program.exhausted.

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 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 NPA includes customary operational and financial covenants with which the Company is required to comply, including, among others, maintenance of certain financial ratios such as a total leverage ratio and a minimum interest coverage ratio. The 2018 Notes may be prepaid in whole or in part at any time, subject to payment of a make-whole amount; interest on the 2018 Notes is payable semiannually. As of ~~June 29, 2019,~~July 4, 2020, the Company was in compliance with the covenants under the 2018 NPA.

On May 15, 2019, the Company refinanced its then-existing senior unsecured revolving credit facility ~~(the "Prior Credit Facility")~~ by entering into a new ~~five-year~~5-year senior unsecured revolving credit facility ~~(collectively with the Prior Credit Facility referred~~(referred to as the "Credit ~~Facility)~~Facility"), which expanded the maximum commitment from ~~$300~~$300.0 million to ~~$350~~$350.0 million and extended the maturity from July 5, 2021 to May 15, 2024. The maximum commitment under the Credit Facility may be further increased to ~~$600~~$600.0 million, generally by mutual agreement of the Company and the lenders, subject to certain customary conditions. ~~For further information regarding~~The increase of the maximum facility is not able to be exercised until after the effective date of the 364 day delayed draw term loans ("Term Loans") on April 28, 2021, as outlined in Amendment No. 1 to the Credit Agreement (the "Amendment") subsequently discussed. During the nine months ended July 4, 2020, the highest daily borrowing was $164.5 million; the average daily borrowings were $97.1 million. The Company borrowed $455.7 million and repaid $550.7 million of revolving borrowings ("Revolving Commitment") under the Credit Facility ~~see Note 3, "Debt, Capital Lease Obligations and Other Financing" in Notes to Condensed Consolidated Financial Statements. The financial covenants (as defined under~~during the ~~related Credit Agreement) 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.~~nine months ended July 4, 2020. As of ~~June 29, 2019,~~July 4, 2020, the Company was in compliance with all financial covenants relating to the Credit Facility, which are generally consistent with those in the 2018 NPA previously discussed. 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 0.125% as of July 4, 2020.

To further ensure our ability to meet our working capital and fixed capital requirements, on April 29, 2020, the Company entered into the Amendment in response to the COVID-19 outbreak, which amends the Credit Agreement, dated as of May 15, 2019. The Amendment amends certain provisions of the Existing Credit Agreement to, among other things, provide for a $138 million unsecured delayed draw term loans facility. Term loans borrowed under the new facility were funded in a single draw on May 4, 2020 and will mature on April 28, 2021. Outstanding term loans will bear interest, at the Company’s option, at a eurocurrency rate plus a margin of 1.75% per annum or at a base rate plus a margin of 0.75% per annum. In addition, the Company is required to pay, on a quarterly basis, a ticking fee at a rate equal to 0.75% per annum on the average daily aggregate unused term loan commitments from the effective date of the Amendment to and including the date all of the term loan commitments are terminated in accordance with the terms of the Credit Facility. The proceeds of the term loans were used to prepay outstanding revolving and swing line loans under the Credit Facility and for the general corporate purposes of the Company and its subsidiaries. The $138.0 million of outstanding term loans as of July 4, 2020 was subject to a 2.75% per annum interest rate.

The Credit ~~Facility~~Agreement and the 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~~past. However, the ~~future. However, we evaluate~~Board of Directors of the Company evaluates 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 has Master Accounts Receivable Purchase Agreements with MUFG Bank, New York Branch (formerly known as The Bank of Tokyo-Mitsubishi UFJ, Ltd.) (the "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.~~discount. These facilities are uncommitted facilities. The ~~MUFG RPA was amended on June 21, 2019, to increase the~~ maximum facility amount ~~from $260.0 million to $280.0~~under the MUFG RPA as of July 4, 2020 is $340.0 million. The maximum facility amount under the HSBC RPA as of ~~June 29, 2019~~July 4, 2020 is $60.0 million. The MUFG RPA ~~is subject to expiration on October 3, 2019, but~~ will be automatically extended ~~for another~~each year

Table of Contents

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 MUFG ~~RPA.~~RPA previously discussed.

The Company sold ~~$223.6~~$189.9 million and ~~$199.1~~$223.6 million of trade accounts receivable under these programs during the three months ended July 4, 2020 and June 29, 2019, ~~and June 30, 2018,~~ respectively, in exchange for cash proceeds of ~~$222.1~~$189.4 million and ~~$197.8~~$222.1 million, respectively.

The Company sold ~~$698.0~~$606.0 million and ~~$497.4~~$698.0 million of trade accounts receivable under these programs during the nine months ended July 4, 2020 and June 29, 2019, ~~and June 30, 2018,~~ respectively, in exchange for cash proceeds of ~~$693.7~~$603.4 million and ~~$494.4~~$693.7 million, respectively.

In all cases, the sale discount was recorded within "Miscellaneous, net" in the Condensed Consolidated Statements of Comprehensive (Loss) Income in the period of the sale. For further information regarding the receivable sale programs, see Note ~~12,~~13, "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 and our leasing capabilities should be sufficient to meet our working capital and fixed capital requirements for the next twelve months. We believe we are positioned with a strong balance sheet as we face the future challenges presented by COVID-19. As of the third quarter of fiscal 2020, cash and cash equivalents and restricted cash was $300 million, while debt, finance lease obligations and other financing were $335 million. In addition to our strong balance sheet, we have significant funding availability through our Credit Facility, should future needs arise. In addition, to further ensure our ability to meet our working capital and fixed capital requirements, we drew the full amount of the unsecured delayed draw term loans facility previously discussed in response to the COVID-19 outbreak. If our future financing needs increase, then 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.

Table of Contents

CONTRACTUAL OBLIGATIONS, COMMITMENTS AND OFF-BALANCE SHEET OBLIGATIONS

Our disclosures regarding contractual obligations and commercial commitments are located in ~~various parts of~~ our ~~regulatory~~SEC filings. Information in the following table provides a summary of our contractual obligations and commercial commitments as of ~~June 29, 2019~~July 4, 2020 (dollars in millions):


	Payments Due by Fiscal Year
Contractual Obligations	Total		Remaining 2020		2021-2022		2023-2024		2025 and thereafter
Debt Obligations (1)	$	328.8	$	1.0	$	153.1	$	12.2	$	162.5
Finance Lease Obligations	125.4		1.8		14.1		10.8		98.7
Operating Lease Obligations	53.4		2.6		16.8		13.6		20.4
Purchase Obligations (2)	685.3		446.5		238.1		0.7		—
Repatriation Tax on Undistributed Foreign Earnings (3)	59.6		—		11.4		16.3		31.9
Other Liabilities on the Balance Sheet (4)	19.3		0.7		8.2		1.6		8.8
Other Liabilities not on the Balance Sheet (5)	8.7		0.5		4.2		0.7		3.3
Total Contractual Cash Obligations	$	1,280.5	$	453.1	$	445.9	$	55.9	$	325.6

1)As of July 4, 2020, debt obligations includes $150.0 million in principal amount of 2018 Notes and $138.0 million in term loans borrowed under the credit facility, as well as interest.

2)As of July 4, 2020, purchase obligations consist primarily of purchases of inventory and equipment in the ordinary course of business.

3)As of July 4, 2020, repatriation tax on undistributed foreign earnings consists of U.S. federal income taxes on the deemed repatriation of undistributed foreign earnings due to Tax Reform. Refer to "Liquidity and Capital Resources" above for further detail.

4)As of July 4, 2020, other obligations on the balance sheet included deferred compensation obligations to certain of our former and current executive officers, as well as other key employees, other financing obligations arising from information technology maintenance agreements, and asset retirement obligations related to our buildings. We have excluded from the above table the impact of approximately $1.4 million, as of July 4, 2020, related to unrecognized income tax benefits. We cannot make reliable estimates of the future cash flows by period related to these obligations.

5)As of July 4, 2020, other obligations not on the balance sheet 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.

Payments Due by Fiscal Year
Contractual Obligations Total Remaining2019 2020-2021 2022-2023 2024 and thereafter
Debt Obligations (1) $ 326.3
$ 133.0
$ 12.4
$ 12.2
$ 168.7
Capital Lease Obligations (2) 50.8
3.0
8.4
4.5
34.9
Operating Lease Obligations 43.3
2.7
16.8
10.8
13.0
Purchase Obligations (3) 592.9
368.0
221.0
3.8
0.1
Repatriation Tax on Undistributed Foreign Earnings (4) 63.8
—
11.2
11.0
41.6
Other Liabilities on the Balance Sheet (5) 13.4
0.1
3.8
2.6
6.9
Other Liabilities not on the Balance Sheet (6) 8.9
—
2.0
1.4
5.5
Other Financing Obligations (7) 120.1
1.1
8.7
9.2
101.1
Total Contractual Obligations $ 1,219.5
$ 507.9
$ 284.3
$ 55.5
$ 371.8

Table of Contents


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


2)	As of June 29, 2019, capital lease obligations consists of capital lease payments and interest as well as the non-cash financing obligation related to the failed sale-leasebacks in Guadalajara, Mexico.


3)	~~As of June 29, 2019, 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. Refer to "Liquidity and Capital Resources" above for further detail.~~

As of June 29, 2019, other 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 obligation. We have excluded from the above table the impact of approximately $4.2 million, as of June 29, 2019, related to unrecognized income tax benefits. The Company cannot make reliable estimates of the future cash flows by period related to these obligations.


6)	As of June 29, 2019, other obligations not on the balance sheet 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 10-year and 15-year base lease agreements, both of which include two 5-year renewal options.~~

DISCLOSURE ABOUT CRITICAL ACCOUNTING POLICIES

Our critical accounting policies are disclosed in our ~~2018 annual report~~2019 Annual Report on Form 10-K. ~~Other than~~During the ~~item noted below,~~third quarter of fiscal 2020, there were no material ~~changes to these policies.~~changes.

~~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 (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 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.

If an enforceable right to payment for 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.

NEW ACCOUNTING PRONOUNCEMENTS

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

Table of Contents

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. We cannot predict changes in currency rates, nor the degree to which we will be able to manage the impacts of currency exchange rate changes, including the impacts on currency exchange rates related to the COVID-19 outbreak. Such changes could have a material effect on our business, results of operations and financial condition.

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

Three Months Ended
June 29,
2019 June 30,
2018
Net sales 9.9% 9.6%
Total costs 15.6% 15.2%


	Three Months Ended
	July 4, 2020	June 29, 2019
Net Sales	13.1%	9.9%
Total Costs	16.6%	15.6%

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 ~~June 29, 2019,~~July 4, 2020, a ~~10.0%~~10% 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. We cannot predict changes in interest rates, including the impacts on interest rates related to the COVID-19 outbreak. Such changes could have a material effect on our business, results of operations and financial condition.

As of July 4, 2020, our only material interest rate risk is associated with our Credit Facility. Revolving commitments under the Credit Facility bear interest, at the Company's option, at a eurocurrency or base rate plus, in each case, an applicable interest rate margin based on the Company's then-current leverage ratio (as defined in the Credit Agreement). As of July 4, 2020, the borrowing rate under the revolving commitment was LIBOR plus 1.10%. In addition, ~~debt~~the outstanding term loans will bear interest, at the Company’s option, at a eurocurrency rate plus a margin of 1.75% per annum or at a base rate plus a margin of 0.75% per annum. In addition, the Company is required to pay, on a quarterly basis, a ticking fee at a rate equal to 0.75% per annum on the average daily aggregate unused term loan commitments from the effective date of the Amendment to and ~~other financing obligations primarily~~including the date all of the term loan commitments are terminated in accordance with the terms of the Credit Facility. As of July 4, 2020 the term loans was subject to a 2.75% per annum interest rate. The Company is monitoring developments related to LIBOR; see also Part I, Item 1A "Risk Factors" of our Annual Report on Form 10-K for the fiscal year ended September 28, 2019 for more information. Borrowings under the 2018 NPA are based on a fixed interest rate, thus mitigating much of our interest rate risk. Based on the Company's overall interest rate exposure, as of July 4, 2020, a 10.0% change in interest rates would not have ~~fixed rates to further limit exposure.~~a material effect on the Company's financial position, results of operations, or cash flows.

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

Table of Contents

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 third quarter of fiscal ~~2019~~2020 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.

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~~Annual Report on Form 10-K for the fiscal year ended September ~~29, 2018.~~28, 2019 that have had no material changes, except as disclosed below, which new risk factor was previously outlined in our Form 10-Q for the three months ended April 4, 2020.

Our financial condition and results of operations for fiscal year 2020 and beyond may be materially adversely affected by the ongoing coronavirus (COVID-19) outbreak.

The full extent to which the COVID-19 outbreak will impact our business and operating results will depend on future developments that are highly uncertain and cannot be accurately predicted, including new medical and other information that may emerge concerning COVID-19 and the actions by governmental entities or others to contain it or treat its impact.

The COVID-19 outbreak poses the risk that we or our employees, suppliers, customers and others may be restricted or prevented from conducting business activities for indefinite or intermittent periods of time, including as a result of employee health and safety concerns, shutdowns, shelter in place orders, travel restrictions and other actions and restrictions that may be prudent or required by governmental authorities. For example, in China, at the onset of the COVID-19 outbreak in that country during our second fiscal quarter, our operations were significantly impacted for several weeks due to quarantines, travel restrictions, and other factors affecting us and our suppliers. In addition, we experienced a temporary reduction of our operating capacity in Malaysia during our second quarter of fiscal 2020 as a result of government-mandated actions to control the spread of COVID-19. Finally, while our facilities have been classified as essential or otherwise permitted to operate in jurisdictions in which facility closures have been mandated, we can give no assurance that this will not change in the future or that we will continue to be permitted to conduct business in each of the jurisdictions in which we operate.

Additionally, we have modified our business practices for the continued health and safety of our employees. We may take further actions, or be required to take further actions, that are in the best interests of our employees. Our suppliers and customers have also implemented such measures, which has resulted in, and we expect it will continue to result in, disruptions or delays and higher costs. The implementation of health and safety practices by us, our suppliers, or our customers could impact customer demand, supplier deliveries, our productivity, and costs, which could have a material adverse impact on our business, financial condition, or results of operations.

While we currently believe we have ample liquidity to manage the financial impact of COVID-19, we can give no assurance that this will continue to be the case if the impact of COVID-19 is prolonged or if there is an extended impact on us or the economy generally. Further, the impacts of COVID-19 have caused significant uncertainty and volatility in the credit markets. If our liquidity or access to capital becomes significantly constrained, or if costs of capital increase significantly due to the impact of COVID-19 as result of volatility in the capital markets, a reduction in our creditworthiness or other factors, then our financial condition, results of operations and cash flows could be materially adversely affected.

Our management of the impact of COVID-19 has and will continue to require significant investment of time from our management and employees, as well as resources across our enterprise. The focus on managing and mitigating the impacts of

Table of Contents

COVID-19 on our business may cause us to divert or delay the application of our resources toward existing or new initiatives or investments, which could have a material adverse impact on our results of operations.

The foregoing and other continued disruptions to our business as a result of COVID-19 has had and could continue to have a material adverse effect on our business, results of operations, financial condition during 2020 and beyond.

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

On August 20, 2019, the Board of Directors approved a new stock repurchase plan under which the Company is authorized to repurchase $50.0 million of its common stock (the "2019 Program"). The ~~following table provides~~2019 Program commenced upon completion of the ~~specified information about~~stock repurchase plan approved by the Board of Directors on February 14, 2018, pursuant to which the Company was authorized to repurchase $200.0 million of its common stock. The 2019 Program has no expiration. There were no repurchases of shares by the Company during the three months ended ~~June 29, 2019.~~

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*
March 31, 2019 to
April 27, 2019
155,723
$ 63.54
155,723
$ 62,637,842
April 28, 2019 to
May 25, 2019
261,717
$ 57.89
261,717
$ 47,486,079
May 26, 2019 to
June 29, 2019
367,053
$ 52.74
367,053
$ 28,126,055
Total 784,493
$ 56.61
784,493

* On February 14, 2018,July 4, 2020 due to a temporary suspension of share repurchases under the ~~Board of Directors approved a stock repurchase plan under which~~2019 Program due to the uncertainties created by the COVID-19 outbreak. However, the Company ~~is authorized~~expects to resume share repurchase ~~$200.0~~activity in the fourth quarter of fiscal 2020. As of July 4, 2020, $27.2 million of ~~its common stock (the "2018 Program").~~authority remained under the 2019 Program.

Table of Contents


~~ITEM 6.~~	~~Exhibits~~

ITEM 6. EXHIBITS

The list of exhibits is included below:



Exhibit No.		Exhibit
10.1		First Amendment, dated as of June 25, 2019, to the Note Purchase Agreement, dated as of June 15, 2018, between Plexus Corp. and the Noteholders named therein relating to an aggregate of $150,000,000 in principal amount of 4.05% Series A Senior Notes, due June 15, 2025, and 4.22% Series B Senior Notes, due June 15, 2028.~~(Reflects non-material changes finalized in June 2019.)~~
~~10.2~~	Amendment No. 91 to Amended and Restated Master Accounts Receivable Purchase Agreement between Plexus Corp. and Plexus Manufacturing Sdn. Bhd., Plexus Intl. Sales & Logistics, LLC, Plexus Services Ro SRL, Plexus Corp. (UK) Limited and each additional seller party thereto from time to time as the Sellers, Plexus Corp., as Seller Representative, and MUFG Bank Ltd. (f/k/a The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch), as the Purchaser, dated as of June 21, 2019.~~(Reflects non-material changes finalized in June 2019.)~~
~~10.3~~	Credit Agreement, dated as of ~~May 15, 2019,~~April 29, 2020, among Plexus Corp., the ~~banks, financial institutions~~lenders party thereto and ~~other institutional lenders listed on the signature pages thereto,~~ JPMorgan Chase Bank, N.A., as administrative agent ~~U.S. Bank National Association, as syndication agent, PNC Bank, National Association, Bank of America, N.A., MUFG Bank, Ltd., HSBC Bank USA, N.A., Bank of~~(incorporated by reference to Exhibit 10.1 to the West and Wells Fargo Bank, National Association, as co-documentation agents, and JPMorgan Chase Bank, N.A. and U.S. Bank National Association, as joint lead arrangers and joint book runners (including the related subsidiary guaranty)Current Report on Form 8-K filed on April 30, 2020 by Plexus Corp.).
31.1		Certification of Chief Executive Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002.
31.2		Certification of Chief Financial Officer pursuant to Section 302(a) of the 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
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
99.1		Reconciliation of ROIC to GAAP and ~~Economic Return Financial Statements~~economic return financial statements
101		The following materials from Plexus Corp.’s Quarterly Report on Form 10-Q for the quarter ended ~~June 29, 2019,~~July 4, 2020, formatted in iXBRL (Inline Extensible Business Reporting Language): (i) the Condensed Consolidated Statements of Comprehensive (Loss) Income, ~~(Loss),~~ (ii) the Condensed Consolidated Balance Sheets, (iii) the Condensed Consolidated Statements of ~~Shareholders'~~Shareholders’ Equity, (iv) the Condensed Consolidated Statements of Cash Flows, and (v) Notes to Condensed Consolidated Financial Statements.
101.INS		Inline XBRL Instance Document - (the instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL ~~document.~~document)
101.SCH		Inline XBRL Taxonomy Extension Schema Document
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document
104		~~The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 29, 2019, formatted in~~Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

Table of Contents

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~~

Plexus Corp.

Registrant

~~Date: 8/2/19~~

Date:

August 7, 2020

/s/ Todd P. Kelsey

Todd P. Kelsey

President and Chief Executive Officer

Date: ~~8/2/19~~

August 7, 2020

/s/ Patrick J. Jermain

Patrick J. Jermain

Executive Vice President and Chief Financial Officer

3542



	June 29, 2019			September 29, 2018
ASSETS
Current assets:
Cash and cash equivalents	$	198,395		$	297,269
Restricted cash	7,004			417
Accounts receivable, net of allowances of $1,170 and $885, respectively	459,311			394,827
Contract assets	105,201			—
Inventories, net	757,206			794,346
Prepaid expenses and other	30,584			30,302
Total current assets	1,557,701			1,517,161
Property, plant and equipment, net	381,351			341,306
Deferred income taxes	10,827			10,825
Intangible assets, net	7,214			8,239
Other	59,138			55,111
Total non-current assets	458,530			415,481
Total assets	$	2,016,231		$	1,932,642

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt and capital lease obligations	$	138,976		$	5,532
Accounts payable	430,586			506,322
Customer deposits	130,626			90,782
Accrued salaries and wages	68,016			66,874
Other accrued liabilities	107,432			68,163
Total current liabilities	875,636			737,673
Long-term debt and capital lease obligations, net of current portion	187,581			183,085
Long-term accrued income taxes payable	58,296			56,130
Deferred income taxes payable	14,829			14,376
Other liabilities	19,098			20,235
Total non-current liabilities	279,804			273,826
Total liabilities	1,155,440			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, 52,862 and 52,567 shares issued, respectively, and 29,487 and 31,838 shares outstanding, respectively	529			526
Additional paid-in capital	592,316			581,488
Common stock held in treasury, at cost, 23,375 and 20,729 shares, respectively	(861,842		)	(711,138		)
Retained earnings	1,141,846			1,062,246
Accumulated other comprehensive loss	(12,058		)	(11,979		)
Total shareholders’ equity	860,791			921,143
Total liabilities and shareholders’ equity	$	2,016,231		$	1,932,642



Derivative Impact on Accumulated Other Comprehensive Income (Loss) ("OCI")
for the Three 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	June 29, 2019			June 30, 2018
Foreign currency forward contracts	$	(578	)	$	(2,856	)



Derivatives Not Designated as Hedging Instruments	Location of Gain Recognized on Derivatives in Income	Amount of Gain on Derivatives Recognized in Income
Derivatives Not Designated as Hedging Instruments	Location of Gain Recognized on Derivatives in Income	June 29, 2019		June 30, 2018
Foreign currency forward contracts	Miscellaneous, net	$	235	$	717



Derivatives Not Designated as Hedging Instruments	Location of Gain (Loss) Recognized on Derivatives in Income	Amount of Gain (Loss) on Derivatives Recognized in Income
Derivatives Not Designated as Hedging Instruments	Location of Gain (Loss) Recognized on Derivatives in Income	June 29, 2019		June 30, 2018
Foreign currency forward contracts	Miscellaneous, net	$	1,865	$	(234	)



	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



	Three Months Ended
	June 29, 2019 As Reported		Adjustments due to Topic 606			June 29, 2019 As Adjusted - Without Adoption of Topic 606
Net sales	$	799,644	$	17,728		$	781,916
Cost of sales	728,614		17,741			710,873
Gross profit	71,030		(13		)	71,043
Operating income	34,403		(13		)	34,416
Income before income taxes	29,718		(13		)	29,731
Income tax expense	4,917		1			4,916
Net income	$	24,801	$	(14	)	$	24,815



	Three Months Ended June 29, 2019
	Reportable Segment:
	AMER		APAC		EMEA		Total
Market Sector:
Healthcare/Life Sciences	$	127,644	$	149,312	$	31,801	$	308,757
Industrial/Commercial	91,347		133,374		23,174		247,895
Aerospace/Defense	80,351		47,496		23,580		151,427
Communications	64,799		26,279		487		91,565
External revenue	$	364,141	$	356,461	$	79,042	$	799,644
Inter-segment sales	2,325		28,380		2,276		32,981
Segment revenue	$	366,466	$	384,841	$	81,318	$	832,625



	Nine Months Ended June 29, 2019
	Reportable Segment:
	AMER		APAC		EMEA		Total
Market Sector:
Healthcare/Life Sciences	$	368,843	$	443,073	$	97,055	$	908,971
Industrial/Commercial	269,273		381,453		66,547		717,273
Aerospace/Defense	218,578		137,342		58,482		414,402
Communications	222,944		87,238		3,411		313,593
External revenue	$	1,079,638	$	1,049,106	$	225,495	$	2,354,239
Inter-segment sales	5,185		92,288		3,943		101,416
Segment revenue	$	1,084,823	$	1,141,394	$	229,438	$	2,455,655



	Contract Assets
Beginning balance, September 29, 2018	$	—
Cumulative effect adjustment at September 29, 2018	76,417
Revenue recognized	2,126,379
Amounts collected or invoiced	(2,097,595		)
Ending balance, June 29, 2019	$	105,201



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*
March 31, 2019 to April 27, 2019	155,723	$	63.54	155,723	$	62,637,842
April 28, 2019 to May 25, 2019	261,717	$	57.89	261,717	$	47,486,079
May 26, 2019 to June 29, 2019	367,053	$	52.74	367,053	$	28,126,055
Total	784,493	$	56.61	784,493