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Item 8. Financial Statements and Supplementary Data

2021-11-12 compared with 2020-11-13 · 206 added, 246 removed, 765 unchanged (37% of the section changed)

Financial Statements and Supplementary Data

The information required by this item is included below and incorporated by reference from the financial statement schedule included in “Part IV-Item 15(a)(2)” and the selected quarterly financial data referred to in “Part II-Item 7-Management's Discussion and Analysis of Financial Condition and Results of Operations-Quarterly Results (Unaudited).”

The information required by this item is included below and incorporated by reference from the financial statement schedule included in “Part IV-Item 15(a)(2)”.

Report of Independent Registered Public Accounting Firm

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Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Sanmina Corporation and its subsidiaries (the “Company”) as of October 3, 2020 and September 28, 2019, and the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity and cash flows for each of the three years in the period ended October 3, 2020, including the related notes and financial statement schedule listed in the index appearing under Item 15(a)(2) (collectively referred to as the “consolidated financial statements”).

We have audited the accompanying consolidated balance sheets of Sanmina Corporation and its subsidiaries (the “Company”) as of October 2, 2021 and October 3, 2020, and the related consolidated statements of income, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended October 2, 2021, including the related notes and financial statement schedule listed in the index appearing under Item 15(a)(2) (collectively referred to as the “consolidated financial statements”).

We also have audited the Company's internal control over financial reporting as of October 2, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of October 3, 2020 and September 28, 2019, and the results of its operations and its cash flows for each of the three years in the period ended October 3, 2020 in conformity with accounting principles generally accepted in the United States of America.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of October 2, 2021 and October 3, 2020, and the results of its operations and its cash flows for each of the three years in the period ended October 2, 2021 in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of October 2, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Changes in Accounting Principles

As discussed in Notes 2 and 4 to the consolidated financial statements, the Company changed the manner in which it accounts for leases in 2020 and the manner in which it accounts for revenue in 2019.

As discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which it accounts for leases in 2020 and the manner in which it accounts for revenue in 2019.

Basis for Opinions

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CONSOLIDATED BALANCE SHEETS

2020 September 28,

2021 October 3,

(In thousands, except par value)

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Cash and cash equivalents $ 650,026 $ 480,526

Accounts receivable, net of allowances of $ 8,570 and $ 12,481 as of October 3, 2020 and September 28, 2019, respectively

Accounts receivable, net of allowances of approximately $ 7 million and $ 9 million as of October 2, 2021 and October 3, 2020, respectively

1,192,434 1,043,334

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Common stock, $ 0.01 par value, authorized 166,667 shares;

107,629 and 105,551 shares issued and 64,999 and 69,720 shares outstanding as of October 3, 2020 and September 28, 2019, respectively

Treasury stock, 42,630 and 35,831 shares as of October 3, 2020 and September 28, 2019, respectively, at cost

108,734 and 107,629 shares issued and 64,307 and 64,999 shares outstanding as of October 2, 2021 and October 3, 2020, respectively

Treasury stock, 44,427 and 42,630 shares as of October 2, 2021 and October 3, 2020, respectively, at cost

( 1,047,202 ) ( 983,143 )

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SANMINA CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

2020 September 28,

CONSOLIDATED STATEMENTS OF INCOME

2021 October 3,

2020 September 28,

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Provision for income taxes 38,007 61,045 104,104

Net income (loss) $ 139,713 $ 141,515 $ ( 95,533 )

Net income (loss) per share:

Net income $ 268,998 $ 139,713 $ 141,515

Net income per share:

Basic $ 4.12 $ 2.02 $ 2.05

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SANMINA CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

2020 September 28,

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

2021 October 3,

2020 September 28,

(In thousands)

Net income (loss) $ 139,713 $ 141,515 $ ( 95,533 )

Net income $ 268,998 $ 139,713 $ 141,515

Other comprehensive income (loss), net of tax:

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Amortization of actuarial losses and transition cost 2,417 2,106 939

Total other comprehensive losses $ ( 7,373 ) $ ( 31,685 ) $ ( 2,850 )

Comprehensive income (loss) $ 132,340 $ 109,830 $ ( 98,383 )

Total other comprehensive income (loss) $ 5,804 $ ( 7,373 ) $ ( 31,685 )

Comprehensive income $ 274,802 $ 132,340 $ 109,830

See accompanying notes to the consolidated financial statements.

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Cumulative effect of new accounting pronouncement 28,130 28,130

Net loss — — — — — ( 95,533 ) ( 95,533 )

Net income — — — — — 141,515 141,515

BALANCE AT SEPTEMBER 28, 2019

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Other comprehensive loss — — — — ( 7,373 ) — ( 7,373 )

Cumulative effect of new accounting pronouncement — — — — — 28,130 28,130

Net income — — — — — 139,713 139,713

BALANCE AT SEPTEMBER 28, 2019

BALANCE AT OCTOBER 3, 2020

107,629 $ 6,301,537 ( 42,630 ) $ ( 983,143 ) $ 34,886 $ ( 3,723,364 ) $ 1,629,916

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Repurchases of treasury stock — — ( 1,797 ) ( 64,059 ) — — ( 64,059 )

Other comprehensive loss — — — — ( 7,373 ) — ( 7,373 )

Other comprehensive income — — — — 5,804 — 5,804

Net income — — — — — 268,998 268,998

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CONSOLIDATED STATEMENTS OF CASH FLOWS

2020 September 28,

2021 October 3,

2020 September 28,

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CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES:

Net income (loss) $ 139,713 $ 141,515 $ ( 95,533 )

Adjustments to reconcile net income (loss) to cash provided by operating activities:

Net income $ 268,998 $ 139,713 $ 141,515

Adjustments to reconcile net income to cash provided by operating activities:

Depreciation and amortization 109,656 114,218 116,949

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Impairment of goodwill and other assets — 8,409 —

Gain on sale of intellectual property

( 15,000 ) — —

Gain on liquidation of foreign entity

( 8,263 ) — —

Other, net ( 1,371 ) ( 239 ) 2,219

Changes in operating assets and liabilities:

Changes in operating assets and liabilities, net of amounts acquired:

Accounts receivable ( 146,516 ) 83,623 54,947

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CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES:

Purchases of property, plant and equipment ( 65,982 ) ( 134,674 ) ( 118,881 )

Purchases of property, plant and equipment, net of proceeds from asset sales ( 73,296 ) ( 65,982 ) ( 134,674 )

Proceeds from sales of property, plant and equipment 1,084 1,573 7,532

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Sale of investments — 30,000 —

Cash paid for business acquisition, net of cash acquired

( 21,408 ) — —

Proceeds from sale of intellectual property 5,000 — —

Cash used in investing activities ( 91,325 ) ( 64,409 ) ( 127,641 )

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Repurchases of common stock ( 64,059 ) ( 179,025 ) ( 12,614 )

Other, net — — ( 1,701 )

Proceeds from collection of notes receivable 2,500 — —

Cash used in financing activities ( 77,318 ) ( 210,280 ) ( 220,218 )

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2) Components, Products and Services (CPS).

Components include interconnect systems (printed circuit board fabrication, backplane, cable assemblies and plastic injection molding) and mechanical systems (enclosures and precision machining).

Products include memory from our Viking Technology division;

enterprise solutions from our Viking Enterprise Solutions division;

RF, optical and microelectronic;

Components include interconnect systems (printed circuit board fabrication, backplanes, cable assemblies and plastic injection molding) and mechanical systems (enclosures and precision machining).

Products include memory solutions from our Viking Technology division;

high-performance storage platforms for hyperscale and enterprise solutions from our Viking Enterprise Solutions (VES) division;

optical, radio frequency (RF) and microelectronic (microE) design and manufacturing services from Advanced Micro Systems Technologies;

defense and aerospace products from SCI Technology;

and cloud-based manufacturing execution software from the Company's 42Q division.

Services include design, engineering, global services (logistics and repair).

Services include design, engineering and logistics and repair.

The Company's only reportable segment is IMS, which represented approximately 80 % of total revenue in 2021.

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The Company operates on a 52 or 53 week year ending on the Saturday nearest September 30.

Fiscal 2020 is a 53-week year, with the extra week occurring during the fourth quarter of 2020.

Fiscal 2019 and 2018 were each 52 weeks.

Fiscal 2021 and 2019 were each 52 weeks and fiscal 2020 was a 53-week year, with the extra week occurring during the fourth quarter of fiscal 2020.

All references to years relate to fiscal years unless otherwise noted.

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The preparation of consolidated financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period.

Due to the COVID-19 pandemic, the global economy and financial markets were disrupted and there is a significant amount of uncertainty about the length and severity of the consequences caused by the pandemic.

The Company has considered information available to it 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 to the carrying value of its assets or liabilities.

Significant estimates made in preparing the consolidated financial statements relate to allowances for accounts receivable;

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determining the realizability of deferred tax assets;

determining fair values of tangible and intangible assets for purposes of impairment tests;

determining fair values of equity awards;

and determining forfeiture rates for purposes of calculating stock compensation expense.

and determining fair values of tangible and intangible assets for purposes of impairment tests.

These estimates may change as new events occur and additional information becomes available.

Actual results could differ materially from these estimates.

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Financial instruments consist primarily of cash and cash equivalents, accounts receivable, foreign currency forward contracts, interest rate swap agreements, accounts payable and debt obligations.

The fair value of these financial instruments approximates their carrying amount as of October 3, 2020 and September 28, 2019 due to the nature or short maturity of these instruments, or the fact that the instruments are recorded at fair value on the consolidated balance sheets.

The fair value of these financial instruments approximates their carrying amount as of October 2, 2021 and

October 3, 2020 due to the nature or short maturity of these instruments, or because, in some cases, the instruments are recorded at fair value on the consolidated balance sheets.

Accounts Receivable and Other Related Allowances.

The Company had an allowance of $ 9 million and $ 12 million as of October 3, 2020 and September 28, 2019, respectively, for uncollectible accounts, product returns and other net sales adjustments.

One of the Company's most significant risks is the ultimate realization of its accounts receivable.

mitigated by ongoing credit evaluations of customers and frequent contact with customers, especially the most significant customers, which enable the Company to monitor changes in its customers' business operations and respond accordingly.

The Company had allowances of approximately $ 7 million and $ 9 million as of October 2, 2021 and October 3, 2020, respectively, for uncollectible accounts, product returns and other net sales adjustments.

To establish the allowance for doubtful accounts, the Company estimates credit risk associated with accounts receivable by considering the creditworthiness of its customers, past experience, specific facts and circumstances, and the overall economic climate in industries that it serves.

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The effects of these translation adjustments are reported in stockholders' equity as a component of accumulated other comprehensive income ("AOCI").

For all entities, remeasurement adjustments for non-functional currency monetary assets and liabilities are included in other income, net in the accompanying consolidated statements of operations.

For all entities, remeasurement adjustments for non-functional currency monetary assets and liabilities are included in other income (expense), net in the accompanying consolidated statements of income.

Remeasurement gains and losses arising from long-term intercompany loans denominated in a currency other than an entity's functional currency are recorded in AOCI if repayment of the loan is not anticipated in the foreseeable future.

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Therefore, the Company is exposed to movements in foreign currency exchange rates and interest rates.

The Company uses derivatives, such as foreign currency forward contracts and interest rate swaps, to minimize the volatility of earnings and cash flows associated with changes in foreign currency exchange rates and interest rates.

The Company uses derivatives, such as foreign currency

forward contracts and interest rate swaps, to minimize the volatility of earnings and cash flows associated with changes in foreign currency exchange rates and interest rates.

The Company accounts for derivative instruments and hedging activities in accordance with ASC Topic 815, Derivatives and Hedging, which requires each derivative instrument to be recorded on the consolidated balance sheets at its fair value as either an asset or a liability.

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The Company minimizes such risk by seeking high quality counterparties.

The Company's leases consist primarily of operating leases for buildings and land.

These leases have initial lease terms of up to 44 years and, upon adoption of ASC 842, are recorded on the Company's balance sheet as lease liabilities and corresponding right-of-use ("ROU") assets.

The Company's leases consist primarily of operating leases for buildings and land and have initial lease terms of up to 44 years.

Certain of these leases contain an option to extend the lease term for additional periods or to terminate the lease after an initial non-cancelable term.

Renewal options are considered in the measurement of the Company's initial lease liability and corresponding ROU asset only if it is reasonably certain that the Company will exercise such options.

Renewal options are considered in the measurement of the Company's initial lease liability and corresponding right-of-use ("ROU") asset only if it is reasonably certain that the Company will exercise such options.

Leases with lease terms of twelve months or less are not recorded on the Company's balance sheet.

The Company’s lease liability and ROU assets represent the present value of future lease payments which, pursuant to the Company's accounting election, are a combination of lease components and non-lease components such as maintenance and utilities.

The Company’s lease liability and ROU assets represent the present value of future lease payments which are a combination of lease components and non-lease components such as maintenance and utilities.

Operating lease expense is recognized on a straight line basis over the term of the lease.

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The Company's incremental borrowing rate is based on the term of the lease, the economic environment of the lease and the effect of collateralization, if any.

Upon adoption of ASC 842, the Company used an incremental borrowing rate as of that date for all leases that commenced prior to that date.

The Company adopted ASC 842 on September 29, 2019, the first day of fiscal 2020.

Upon adoption of the new standard, the Company recognized approximately $ 65 million of ROU assets and lease liabilities.

Adoption of the new standard did not have a material impact on the Company’s consolidated statements of income or consolidated statements of cash flows.

Revenue Recognition.

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and (5) recognize revenue when (or as) the Company satisfies a performance obligation.

Each of these steps involves the use of significant judgments.

Each of these steps may involve the use of significant judgments.

The Company recognizes revenue for the majority of its contracts on an over time basis.

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Application of the cost-to-cost method for government contracts in the Company’s Defense and Aerospace division requires the use of significant judgments with respect to estimated materials, labor and subcontractor costs.

This division is an operating segment whose results are aggregated with ten other operating segments and reported under Components, Products

and Services ("CPS") for segment reporting purposes.

This division is an operating segment whose results are aggregated with ten other operating segments and reported under Components, Products and Services ("CPS") for segment reporting purposes.

In 2021, CPS revenue and gross profit was $ 1.3 billion and $ 177 million, respectively.

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Refer to Note 4 for further discussion.

The Company adopted ASC 606 as of the beginning of its first quarter of 2019 using the modified retrospective approach, whereby the cumulative effect of initially applying the guidance was recognized as an adjustment to beginning retained earnings at the date of adoption.

This adjustment resulted in an increase to beginning retained earnings of $ 28 million.

Income taxes.

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A valuation allowance has been established for deferred tax assets which do not meet the “more likely than not” criteria discussed above .

The Company's tax rate is highly dependent upon the geographic distribution of its worldwide income or losses, the tax regulations and tax holidays in each geographic region, the availability of tax credits and carryforwards, including net operating losses, and the effectiveness of its tax planning strategies.

The Company's tax rate is dependent upon the geographic distribution of its worldwide income or losses, the tax regulations and tax holidays in each geographic region, the availability of tax credits and carryforwards, including net operating losses, and the effectiveness of its tax planning strategies.

The Company makes an assessment of whether each income tax position is “more likely than not” of being sustained on audit, including resolution of related appeals or litigation, if any.

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Recent Accounting Pronouncements Adopted in Fiscal Year 2021

In December 2019, the FASB issued ASU 2019-12, "Simplifying the Accounting for Income Taxes (Topic 740)", which is intended to simplify various aspects related to accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and which also clarifies and amends existing guidance to improve consistent application.

The Company adopted this ASU in the second quarter of 2020.

The impact of adoption was not material.

In February 2018, the FASB issued ASU 2018-02, "Income Statement-Reporting Comprehensive Income (Topic 220):

Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income", which allows companies to reclassify stranded tax effects resulting from the U.S.

Tax Cuts and Jobs Act (H.R.

1) from accumulated other comprehensive income to retained earnings.

The Company adopted this ASU at the beginning of fiscal 2020.

There was no impact upon adoption.

In August 2017, the FASB issued ASU 2017-12, "Derivatives and Hedging (Topic 815):

Targeted Improvements for Accounting For Hedging Activities", simplifying hedge accounting guidance and improving the financial reporting of hedging relationships by allowing an entity to better align its risk management activities and financial reporting for hedging relationships through changes to both designation and measurement for qualifying hedging relationships and the presentation of hedge results.

This standard eliminates the requirement to separately measure and report hedge ineffectiveness, resulting in full recognition of the change in fair value that impacts earnings in the same income statement line item that is used to present the earnings effect of the hedged item.

In addition, the guidance allows more flexibility in the requirements to qualify for and maintain hedge accounting.

The Company adopted this ASU at the beginning of fiscal 2020.

The impact of adoption was not material.

In February 2016, the FASB issued ASU 2016-02, "Leases:

Amendments to the FASB Accounting Standards Codification (Topic 842)".

This ASU requires the Company to recognize on the balance sheet the assets and liabilities for the rights and obligations created by leases with terms of more than twelve months.

This ASU also requires disclosures enabling

the users of financial statements to understand the amount, timing and uncertainty of cash flows arising from leases.

In addition, the FASB provided a practical expedient transition method that allows entities to initially apply the requirements by recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption, as opposed to applying the requirements retrospectively and providing comparative prior period financial statements.

The Company adopted the new standard on September 29, 2019, the first day of fiscal 2020, and applied the above practical expedient transition method.

The Company elected certain other transition options which, among other things, allowed the Company to carry forward its prior conclusions about lease identification and classification.

Upon adoption of the new standard, the Company recognized approximately $ 65 million of right-of-use ("ROU") assets and lease liabilities.

Adoption of the new standard did not have a material impact on the Company's consolidated statements of income or consolidated statements of cash flows.

Refer to Note 8 for additional information and disclosures related to the adoption of ASC 842.

Recent Accounting Pronouncements Not Yet Adopted

In March 2020, the FASB issued ASU 2020-04, "Reference Rate Reform (Topic 848)", which provides optional expedients and exceptions for applying U.S.

GAAP to contracts, hedging relationships and other transactions affected by reference rate reform.

The amendments are effective for all entities as of March 12, 2020 through December 31, 2022.

The Company has not yet applied any of the expedients and exceptions and is currently evaluating the impact of the provisions of ASU 2020-04.

In August 2018, the FASB issued ASU 2018-15, "Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40):

Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract." The new guidance aligns the requirements for capitalizing implementation costs incurred in a cloud-based hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license).

This ASU is effective for the Company at the beginning of fiscal 2021, including interim periods within that reporting period.

This ASU was effective for the Company at the beginning of fiscal 2021.

There was no impact upon adoption of this ASU.

In June 2016, the FASB issued ASU 2016-13 "Financial Instruments-Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments", which replaces the existing incurred loss impairment methodology with an expected credit loss methodology and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates.

This new standard is effective for the Company at the beginning of fiscal 2021, including interim periods within that reporting period.

The Company does not expect the impact of adoption to be significant.

Balance Sheet Details

This ASU was effective for the Company at the beginning of fiscal 2021.The impact of adoption of this ASU was not material.

Recent Accounting Pronouncements Not Yet Adopted

In March 2020, the FASB issued ASU 2020-04, "Reference Rate Reform (Topic 848)", which provides optional expedients and exceptions for applying U.S.

GAAP to contracts, hedging relationships and other transactions affected by reference rate reform.

The amendments are effective for all entities as of March 12, 2020 through December 31, 2022.

The Company has not yet applied any of the expedients and exceptions and is currently evaluating the impact of the provisions of this ASU.

Balance Sheet and Income Statement Details

Property, Plant and Equipment, net

Property, plant and equipment consisted of the following:

2020 September 28,

2021 October 3,

(In thousands)

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Depreciation expense was $ 109 million, $ 113 million and $ 115 million for 2021, 2020 and 2019, respectively.

Other Income (Expense), net

Other income (expense), net was primarily composed of the following in 2021:

The Company sold certain intellectual property assets for $ 15 million, of which $ 8 million was received in cash and $ 7 million is due in two remaining installments, the last of which is due August 31, 2022 .

A foreign entity of the Company was substantially liquidated and the Company reclassified $ 8 million of cumulative translation adjustments associated with this entity from accumulated other comprehensive income to other income (expense), net in the consolidated statements of income.

There were no other significant reclassifications from accumulated other comprehensive income to the consolidated statements of income for any period presented.

The Company received $ 16 million in connection with settlements of certain anti-trust class action matters.

Revenue Recognition

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and (5) recognize revenue when (or as) the Company satisfies a performance obligation.

Each of these steps involves the use of significant judgments, as discussed below.

Each of these steps may involve the use of significant judgments, as discussed below.

Step 1 - Identify the contract with a customer

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The Company generally enters into a master supply agreement (“MSA”) with its customers that provides the framework under which business will be conducted, and pursuant to which a customer will issue purchase orders or other binding documents to specify the quantity, price and delivery requirements for products or services the customer wishes to purchase.

The Company generally considers its contract with a customer to be a firm commitment, consisting of the combination of an MSA and a purchase order or any other similar binding document.

generally considers its contract with a customer to be a firm commitment, consisting of the combination of an MSA and a purchase order or any other similar binding document.

Step 2 - Identify the performance obligations in the contract

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Because of this, and the fact that there is no work-in-process or finished goods inventory associated with contracts for which revenue is recognized on an over-time basis, 99 % or more of the Company’s inventory at the end of a given period is in the form of raw materials.

For contracts for which revenue is

required to be recognized at a point-in-time, the Company recognizes revenue when it has transferred control of the related goods, which generally occurs upon shipment or delivery of the goods to the customer.

For contracts for which revenue is required to be recognized at a point-in-time, the Company recognizes revenue when it has transferred control of the related goods, which generally occurs upon shipment or delivery of the goods to the customer.

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Because of the Company’s short manufacturing cycle times, the transfer from contract assets to accounts receivable generally occurs within the next fiscal quarter.

Other than the impact upon adoption of ASC 606 at the beginning of the first quarter of 2019 which was limited to beginning retained earnings, the application of ASC 606 has not materially impacted any financial statement line item for any period presented herein.

Taxes assessed by governmental authorities that are both imposed on and concurrent with a specific revenue-producing transaction, and are collected by the Company from a customer, are excluded from revenue.

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In the following table, revenue is disaggregated by segment, market sector and geography.

2020 September 28,

2021 October 3,

2020 September 28,

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Total $ 6,756,643 $ 6,960,370 $ 8,233,859

Communications Networks $ 2,323,712 $ 2,906,575 $ 2,684,609

Industrial, Medical, Automotive and Defense 4,127,720 4,572,006 3,681,788

Cloud Solutions 508,938 755,278 743,733

Communications Networks and Cloud Infrastructure $ 2,866,602 $ 2,832,650 $ 3,661,853

Industrial, Medical, Defense and Automotive 3,890,041 4,127,720 4,572,006

Total $ 6,756,643 $ 6,960,370 $ 8,233,859

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The Company's primary financial assets and financial liabilities measured at fair value on a recurring basis are deferred compensation plan assets and defined benefit plan assets, which are both measured using Level 1 inputs.

Deferred compensation plan assets were $ 46 million and $ 40 million as of October 2, 2021 and October 3, 2020, respectively.

Defined benefit plan assets were $ 40 million and $ 39 million as of October 2, 2021 and October 3, 2020, respectively.

Other financial assets and financial liabilities measured at fair value on a recurring basis include foreign exchange contracts and interest rate swaps, which are both measured using Level 2 inputs.

Foreign exchange contracts were not material as of October 3, 2020 or September 28, 2019 .

The interest rate swaps had a negative value of $ 29 million and $ 20 million, as of October 3, 2020 and September 28, 2019, respectively.

Foreign exchange contracts were not material as of October 2, 2021 or October 3, 2020 .

Interest rate swaps had a negative value of $ 19 million and $ 29 million, as of October 2, 2021 and October 3, 2020, respectively.

Offsetting Derivative Assets and Liabilities

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The Company presents its derivative assets and derivative liabilities on a gross basis on the consolidated balance sheets.

The amount that the Company had the right to offset under these netting arrangements was not material as of October 3, 2020 or September 28, 2019 .

The amount that the Company had the right to offset under these netting arrangements was not material as of October 2, 2021 or October 3, 2020 .

Non-Financial Assets Measured at Fair Value on a Nonrecurring Basis

Other non-financial assets, such as intangible assets, goodwill and other long-lived assets, are measured at fair value as of the date such assets are acquired or in the period an impairment is recorded.

During the second quarter of 2020, commodity prices in the oil and gas market experienced a sharp decline due to a combination of an oversaturated supply and a decrease in demand caused by the COVID-19 global pandemic.

During 2020, commodity prices in the oil and gas market experienced a sharp decline due to a combination of an oversaturated supply and a decrease in demand caused by the COVID-19 pandemic.

This commodity price decline resulted in a negative impact to the projected cash flows of the Company’s oil and gas reporting unit that is part of the Company's Components, Products and Services ("CPS") operating segment and, therefore, the Company performed a goodwill impairment test for this particular reporting unit.

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The fair value of the reporting unit was estimated based on the present value of future discounted cash flows.

The Company also recorded an impairment charge of $ 2 million in the second quarter of 2020 for certain long-lived assets.

These impairment charges are included in "Restructuring and other" on the condensed consolidated statements of income.

The Company also recorded an impairment charge of $ 2 million in 2020 for certain long-lived assets, which is included in "Restructuring and other" on the consolidated statements of income.

Derivative Instruments

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The Company had the following outstanding foreign currency forward contracts that were entered into to hedge foreign currency exposures:

October 3, 2020 September 28, 2019

October 2, 2021 October 3, 2020

Derivatives Designated as Accounting Hedges:

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Gains or losses on the derivative not caused by changes in time value are recorded in Accumulated Other Comprehensive Income ("AOCI"), a component of equity, and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings.

The amount of gain or loss recognized in Other Comprehensive Income ("OCI") on derivative instruments and the amount of gain or loss reclassified from AOCI into income were not material for any period

presented herein.

Pursuant to a new accounting standard, as of the beginning of 2020, the Company is no longer required to separately measure and report hedge ineffectiveness.

The amount of hedge ineffectiveness was not material for 2019 or 2018.

The amount of gain or loss recognized in Other Comprehensive Income on derivative instruments and the amount of gain or loss reclassified from AOCI into income were not material for any period presented herein.

The Company enters into short-term foreign currency forward contracts to hedge currency exposures associated with certain monetary assets and liabilities denominated in non-functional currencies.

These contracts have maturities of up to two months and are not designated as accounting hedges.

Accordingly, these contracts are marked-to-market at the end of each period with unrealized gains and losses recorded in other income (expense), net, in the consolidated statements of operations.

Accordingly, these contracts are marked-to-market at the end of each period with unrealized gains and losses recorded in other income (expense), net, in the consolidated statements of income.

The amount of gains or losses associated with these forward contracts was not material for any period presented herein.

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These swaps are accounted for as cash flow hedges under ASC Topic 815, Derivatives and Hedging.

Interest rate swaps with an aggregate notional amount of $ 350 million were outstanding as of October 3, 2020 and September 28, 2019.

Interest rate swaps with an aggregate notional amount of $ 350 million were outstanding as of October 2, 2021 and October 3, 2020.

The aggregate effective interest rate of these swaps as of October 2, 2021 was approximately 4.3 %.

Due to a decline in interest rates since the time the swaps were put in place, these interest rate swaps had a negative value of $ 29 million, of which $ 9 million is included in accrued liabilities and the remaining amount is included in other long-term liabilities on the consolidated balance sheets.

Due to a decline in interest rates since the time the swaps were put in place, these interest rate swaps had a negative value of $ 19 million as of October 2, 2021, of which $ 9 million is included in accrued liabilities and the remaining amount is included in other long-term liabilities on the consolidated balance sheets.

Financial Instruments and Concentration of Credit Risk

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One of the Company's most significant credit risks is the ultimate realization of accounts receivable.

This risk is mitigated by ongoing credit evaluations of, and frequent contact with, the Company's customers, especially its most significant customers, thus enabling it to monitor changes in business operations and respond accordingly.

This risk is mitigated by ongoing credit evaluations of, and frequent contact with, the Company's customers, especially its most

significant customers, thus enabling it to monitor changes in business operations and respond accordingly.

The Company generally does not require collateral for sales on credit.

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Foreign currency forward contracts and interest rate swaps are maintained with high quality counterparties to reduce the Company's credit risk and are recorded on the Company's balance sheets at fair value.

Nokia represented more than 10 % of the Company's net sales in 2020, 2019 and 2018 and 10 % or more of the Company's gross accounts receivable as of October 3, 2020 and September 28, 2019.

Nokia represented more than 10 % of the Company's net sales in 2021, 2020 and 2019 and 10 % or more of the Company's gross accounts receivable as of October 2, 2021 and October 3, 2020.

Long-term debt consisted of the following:

2020 September 28,

2021 October 3,

(In thousands)

Term loan due 2023 ("Term Loan"), net of issuance costs $ 330,322 $ 347,999

Non-interest bearing promissory notes — 14,916

Total long-term debt 347,999 385,325

Current portion of non-interest bearing promissory notes — 14,916

Current portion of long-term debt 18,750 18,750

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On February 1, 2016 , the Company completed an acquisition and financed $ 15 million of the purchase price with the acquiree using a four-year non-interest bearing promissory note .

The Company repaid these notes during the second quarter of 2020.

The Company repaid these notes during 2020.

Revolving Credit Facility.

During the first quarter of 2019, the Company entered into a Fourth Amended and Restated Credit Agreement (the "Amended Cash Flow Revolver") that provided for a committed $ 375 million Term Loan.

On April 5, 2019, the Company entered into an amendment to the Amended Cash Flow Revolver that increased the amount available under the facility from $ 500 million to $ 700 million.

On May 31, 2019, the Company drew down the Term Loan and used the proceeds to repay the Company's Secured Notes as discussed above.

As of October 3, 2020, costs incurred in connection with the amendment of the Amended Cash Flow Revolver and Term Loan are classified as long-term debt and are being amortized to interest expense over the life of the Term Loan using the effective interest method.

Following the satisfaction and discharge of the Indenture dated as of June 4, 2014, using the proceeds of the Term Loan, and the release of all liens securing the Secured Notes, the Company’s debt structure changed as follows, effective June 3, 2019:

(i) revolving commitments under the Amended Cash Flow Revolver increased for a total of $ 700 million in revolving commitments, (ii) the accordion feature of the Amended Cash Flow Revolver was reset so that the Company can obtain, subject to the satisfaction of specified conditions and commitments of the lenders, additional revolving commitments in an aggregate amount of up to $ 200 million, and (iii) the Company and its subsidiary guarantors’ obligations under the Amended Cash Flow Revolver became secured by substantially all of the assets (excluding real property) of the Company and the subsidiary guarantors, subject to certain exceptions.

During the first quarter of 2019, the Company entered into a Fourth Amended and Restated Credit Agreement that provides for a committed $ 375 million term loan ("Term Loan"), which was further amended on April 5, 2019 to provide for a total of $ 700 million in revolving commitments, together with an accordion feature by which we can obtain, subject to the satisfaction of specified conditions and commitment of the lenders, additional revolving commitments in an aggregate amount of up to $ 200 million (the "Amended Cash Flow Revolver").

Loans under the Amended Cash Flow Revolver bear interest, at the Company's option, at either the LIBOR or a base rate, in each case plus a spread determined based on the Company's credit rating.

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(In Thousands)

2022 $ 18,750

Certain of the Company’s domestic subsidiaries are required to be guarantors in respect of the Amended Cash Flow Revolver.

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The Amended Cash Flow Revolver contains customary affirmative covenants, including covenants regarding the payment of taxes and other obligations, maintenance of insurance, reporting requirements and compliance with applicable laws and regulations.

The Company enters into forward interest rate swap agreements with independent counterparties to partially hedge the variability in cash flows due to changes in the benchmark interest rate (LIBOR) associated with anticipated variable rate borrowings.

These interest rate swaps have a maturity date of December 1, 2023 , and effectively convert the Company's variable interest rate obligations to fixed interest rate obligations.

These swaps are accounted for as cash flow hedges under ASC Topic 815, Derivatives and Hedging.

Interest rate swaps with an aggregate notional amount of $ 350 million were outstanding as of October 3, 2020 and September 28, 2019.

The aggregate effective interest rate of these swaps as of October 3, 2020 was approximately 4.3 %.

As of October 3, 2020, due to a decline in interest rates since the time the swaps were put in place, these interest rate swaps had a negative value of $ 29 million, of which $ 9 million is included in accrued liabilities and the remaining amount is included in other long-term liabilities on the consolidated balance sheets.

As of October 2, 2021, no borrowings and $ 8 million of letters of credit were outstanding under the Amended Cash Flow Revolver, under which $ 692 million was available to borrow.

There were no borrowings outstanding under the Amended Cash Flow Revolver as of September 28, 2019.

There were no borrowings outstanding under the Amended Cash Flow Revolver as of October 3, 2020.

Foreign Short-term Borrowing Facilities .

As of October 2, 2021, certain foreign subsidiaries of the Company had a total of $ 69 million of short-term borrowing facilities available, under which no borrowings were outstanding.

These facilities expire at various dates through the second quarter of 2022 .

These facilities expire at various dates through the first quarter of 2023 .

Debt Covenants

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The Company was in compliance with these covenants as of October 2, 2021.

ROU assets and lease liabilities recorded in the condensed consolidated balance sheet as of October 3, 2020 are as follows:

October 3, 2020

ROU assets and lease liabilities recorded in the consolidated balance sheet as of October 2, 2021 are as follows:

October 2, 2021 October 3,

(In thousands)

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Total lease liabilities

$ 55,806 $ 53,674

Weighted average remaining lease term (in years) 14.46 6.88

Weighted average discount rate 2.72 % 3.13 %

(1) Net of accumulated amortization of $ 16 million.

Cash paid in satisfaction of operating lease liabilities was $ 19 million for the year ended October 3, 2020.

Operating lease expense, which includes immaterial amounts of short-term leases, variable lease costs and sublease income, was $ 21 million, $ 26 million and $ 27 million for the years ended October 3, 2020, September 28, 2019 and September 29, 2018, respectively.

(1) Net of accumulated amortization of $ 29 million and $ 16 million as of October 2, 2021 and October 3, 2020, respectively.

Cash paid for operating lease liabilities was $ 20 million and $ 19 million for the years ended October 2, 2021 and October 3, 2020, respectively.

Operating lease expense, which includes immaterial amounts of short-term leases, variable lease costs and sublease income, was $ 21 million, $ 21 million and $ 26 million for the years ended October 2, 2021, October 3, 2020 and September 28, 2019, respectively.

Future lease payments under non-cancelable operating leases as of October 2, 2021, by fiscal year, are as follows:

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imputed interest 5,573

As of September 28, 2019, prior to the adoption of ASC 842, future minimum lease payments, net of sublease income, under operating leases were as follows:

Operating Leases

(In thousands)

2020 $ 18,472

Thereafter 17,071

Total $ 72,707

Accounts Receivable Sale Program

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Under each of the programs noted above, the Company sells its entire interest in a trade receivable for 100 % of face value, less a discount.

For the years ended October 3, 2020 and September 28, 2019, the Company sold approximately $ 1.7 billion and approximately $ 2.7 billion, respectively, of accounts receivable under these programs.

For the years ended October 2, 2021 and October 3, 2020, the Company sold approximately $ 0.5 billion and approximately $ 1.7 billion, respectively, of accounts receivable under these programs.

Upon sale, these receivables are removed from the consolidated balance sheets and cash received is presented as cash provided by operating activities in the consolidated statements of cash flows.

Discounts on sold receivables were not material for any period presented.

As of October 3, 2020 and September 28, 2019, $ 97 million and $ 241 million, respectively, of accounts receivable sold under the RPA and subject to servicing by the Company remained outstanding and had not yet been collected.

As of October 2, 2021 and October 3, 2020, $ 7 million and $ 97 million, respectively, of accounts receivable sold under the RPA and subject to servicing by the Company remained outstanding and had not yet been collected.

The Company's sole risk with respect to receivables it services is with respect to commercial disputes regarding such receivables.

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Additionally, the Company is required to remit amounts collected as servicer under the RPA on a weekly basis to the financial institutions that purchased the receivables.

As of October 3, 2020 and September 28, 2019, $ 39 million and $ 76 million, respectively, had been collected but not yet remitted.

As of October 2, 2021 and October 3, 2020, $ 18 million and $ 39 million, respectively, had been collected but not yet remitted.

This amount is classified in accrued liabilities on the consolidated balance sheets.

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The Company records a contingent liability when it is probable that a loss has been incurred and the amount of loss is reasonably estimable in accordance with ASC Topic 450, Contingencies, or other applicable accounting standards.

As of October 3, 2020 and September 28, 2019, the Company had reserves of $ 37 million and $ 36 million, respectively, for environmental matters, warranty, litigation and other contingencies (excluding reserves for uncertain tax positions), which the Company believes are adequate.

As of October 2, 2021 and October 3, 2020, the Company had reserves of $ 37 million for environmental matters, warranty, litigation and other contingencies (excluding reserves for uncertain tax positions), which the Company believes are adequate.

However, there can be no assurance that the Company's reserves will be sufficient to settle these contingencies.

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Environmental Matters

The Company is subject to various federal, state, local and foreign laws and regulations and administrative orders concerning environmental protection, including those addressing the discharge of pollutants into the environment, the management and disposal of hazardous substances, the cleanup of contaminated sites, the materials used in products, and the recycling, treatment and disposal of hazardous waste.

management and disposal of hazardous substances, the cleanup of contaminated sites, the materials used in products, and the recycling, treatment and disposal of hazardous waste.

As of October 2, 2021, the Company had been named in a lawsuit and several administrative orders alleging certain of its current and former sites contributed to groundwater contamination.

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The plaintiff appealed this dismissal and the appellate court reversed the judgment in August 2017.

In November 2017, the California Supreme Court denied the Company’s petition to review this decision and, in December 2017, the Court of Appeal

remanded the case back to the Superior Court for further proceedings.

The first part of a multi-phase trial is scheduled to commence on April 12, 2021.

The Company intends to contest the plaintiff’s claims vigorously.

In November 2017, the California Supreme Court denied the Company’s petition to review this decision and, in December 2017, the Court of Appeal remanded the case back to the Superior Court for further proceedings.

The first phase of a multi-phase trial against the Company and several other defendants commenced on April 12, 2021 and is expected to last for several more months.

Subsequent trial phases, if necessary, likely would occur in the 2022/2023 timeframe.

The Company is contesting the plaintiff’s claims vigorously.

Other Matters

In October 2018, a contractor who had been retained by the Company through a third party temporary staffing agency from November 2015 to March 2016 filed a lawsuit against the Company in the Santa Clara County Superior Court on behalf of himself and all other similarly situated Company contractors and employees in California, alleging violations of California Labor Code provisions governing overtime, meal and rest periods, wages, wage statements and reimbursement of business expenses.

The complaint seeks certification of a class of all non-exempt employees, whether employed directly or through a temporary staffing agency, employed from four years before the filing of the initial complaint to the time of trial.

Additionally, on November 1, 2019, another contractor retained through a temporary staffing agency filed a lawsuit against the Company in the Santa Clara County Superior Court.

The complaint, which includes a single cause of action under California’s Private Attorneys General Act of 2004, alleges Labor Code violations substantially similar to those alleged in the October 2018 class action lawsuit and seeks penalties on behalf of the State of California and other “aggrieved employees” (defined to be current and former hourly, non-exempt employees employed by the Company between August 22, 2018 and the present).

The Company intends to vigorously defend these matters.

In October 2018, a contractor who had been retained by the Company through a third party temporary staffing agency filed a lawsuit in the Santa Clara County Superior Court on behalf of himself and all other similarly situated Company contractors and employees in California, alleging violations of California Labor Code provisions governing overtime, meal and rest periods, wages, wage statements and reimbursement of business expenses.

The complaint sought certification of a class of all non-exempt employees.

Although the Company continued to deny any wrongdoing, on November 19, 2020, the Company reached an agreement to resolve all claims (the “Settlement”), which is also expected to result in the dismissal of a suit alleging substantially similar claims filed in the Santa Clara County Superior Court in June 2021.

The final amount of the judicially approved Settlement was approximately $ 3.8 million, which will be paid during the first quarter of fiscal 2022.

In December 2019, the Company sued a former customer, Dialight plc (“Dialight”), in the United States District Court for the Southern District of New York to collect approximately $ 10 million in unpaid accounts receivable and net obsolete inventory obligations.

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Dialight seeks an unspecified amount of compensatory and punitive damages.

The Company intends to vigorously prosecute its claim against Dialight.

The Company continues to vigorously prosecute its claim against Dialight.

Further, the Company strongly disagrees with Dialight’s allegations and intends to defend against them vigorously.

For each of the matters noted above, the Company is unable to reasonably estimate a range of possible loss at this time.

Other Contingencies

One of the Company's most significant risks is the ultimate realization of accounts receivable and customer inventory exposures.

This risk is partially mitigated by ongoing credit evaluations of, and frequent contact with, the Company's customers, especially its most significant customers, thus enabling the Company to monitor changes in business operations and respond accordingly.

Customer bankruptcies also entail the risk of potential recovery by the bankruptcy estate of amounts previously paid to the Company that are deemed a preference under bankruptcy laws.

Given the current economic environment resulting from the COVID-19 global pandemic, the Company continues to closely monitor the impact of the pandemic on all aspect of its business, including customer payment patterns and available information with respect to the financial condition of its customers and suppliers in order to identify potential problems early and implement risk mitigation measures.

For each of the matters noted above, with the exception of the Settlement above, the Company is unable to reasonably estimate a range of possible loss at this time.

Restructuring

1 unchanged sentence

The following table is a summary of restructuring costs:

October 3, 2020 September 28, 2019 September 29, 2018

October 2, 2021 October 3, 2020 September 28, 2019

(In thousands)

Severance costs (approximately 2,350 employees)

$ 17,919 $ — $ —

Other exit costs (recognized as incurred) 71 — —

Total - Q1 FY20 plan 17,990 — —

Severance costs (approximately 2,900 employees)

178 1,900 26,425

Severance costs $ 9,405 $ 17,919 $ —

Other exit costs (recognized as incurred) 1,834 71 —

2,149 5,147 31,409

Severance reimbursement — — ( 10,000 )

Total - Q1 FY20 Plan 11,239 17,990 —

2 unchanged sentences

$ 15,057 $ 26,783 $ 13,753

On October 28, 2019, the Company adopted a Company-wide restructuring plan ("Q1 FY20 Plan").

Additional actions under this plan are expected to be implemented through the second quarter of fiscal 2021 and cash payments of severance are expected to occur through the fourth quarter of fiscal 2021.

All actions under our Q1 FY18 Plan have been implemented and all severance has been paid.

In connection with this plan, the Company entered into a contractual agreement with a third party pursuant to which $ 10 million of severance and retention costs incurred by the Company was reimbursed.

Costs incurred for other exit costs consist primarily of costs to maintain vacant facilities that are owned.

On October 28, 2019, the Company adopted a Company-wide restructuring plan ("Q1 FY20 Plan") under which the Company has incurred restructuring costs of approximately $ 29 million as of October 2, 2021.

These costs consist primarily of severance, the majority of which had been paid as of the end of fiscal 2021.

Remaining cash payments are expected to occur through the end of fiscal 2022.

Actions under this plan are substantially complete.

Other plans include a number of plans for which costs are not expected to be material individually or in the aggregate.

The Company’s Integrated Manufacturing Solutions ("IMS") segment incurred costs of $ 13 million for the year ended October 3, 2020.

This compares to a benefit incurred of $ 4 million for the year ended September 28, 2019, primarily as a result of a recovery from a third party of certain environmental remediation costs.

The Company’s CPS segment incurred costs of $ 9 million and $ 18 million for the years ended October 3, 2020 and September 28, 2019, respectively.

In addition, $ 5 million of costs were incurred during the year ended October 3, 2020 for Corporate headcount reductions that were not allocated to the Company's IMS and CPS segments.

The Company had accrued liabilities of $ 9 million and $ 5 million as of October 3, 2020 and September 28, 2019, respectively, for restructuring costs (exclusive of long-term environmental remediation liabilities).

In addition to costs expected to be incurred under the Q1 FY20 Plan and Q1 FY18 Plan, the Company expects to incur restructuring costs in future periods primarily for vacant facilities and former sites for which the Company is or may be responsible for environmental remediation.

The Company’s Integrated Manufacturing Solutions ("IMS") segment incurred costs of $ 9 million and $ 13 million for the years ended October 2, 2021 and October 3, 2020, respectively.

The Company’s CPS segment incurred costs of $ 5 million and $ 9 million for the years ended October 2, 2021 and October 3, 2020, respectively.

In addition, the Company incurred costs of $ 1 million and $ 5 million for the years ended October 2, 2021 and October 3, 2020, respectively, for Corporate headcount reductions that were not allocated to the Company's IMS and CPS segments.

The Company had accrued liabilities of $ 6 million and $ 9 million as of October 2, 2021 and October 3, 2020, respectively, for restructuring costs (exclusive of long-term environmental remediation liabilities).

The Company expects to incur restructuring costs in future periods primarily for vacant facilities and former sites for which the Company is or may be responsible for environmental remediation.

Domestic and foreign components of income before income taxes were as follows:

2020 September 28,

2021 October 3,

2020 September 28,

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The provision for income taxes consists of the following:

2020 September 28,

2021 October 3,

2020 September 28,

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Total provision for income taxes $ 38,007 $ 61,045 $ 104,104

Impact of U.S.

On December 22, 2017, the U.S.

Tax Cuts and Jobs Act (the “Tax Act”) was enacted into law.

In accordance with ASC 740, Income Taxes , the Company is required to recognize the effect of the Tax Act in the period of enactment, which was the Company’s first quarter of fiscal 2018 that ended on December 30, 2017.

The many changes in the Tax Act include a permanent reduction in the maximum federal corporate income tax rate from 35 % to 21 % effective as of January 1, 2018.

Because of this reduction in rate, the Company was required to revalue its U.S.

deferred tax assets and liabilities to the new rate in the Company's first quarter of 2018.

The Tax Act also required a mandatory deemed repatriation of undistributed earnings and profits, at the rate of either 15.5 % for cash or 8 % for non-liquid assets.

The Tax Act also includes provisions for Global Intangible Low-Taxed Income (“GILTI”), which imposes taxes on foreign income in excess of a deemed return on tangible assets of foreign corporations.

These new provisions were effective for the Company in fiscal year 2019.

During the first quarter of 2019, the Company elected to record the effects of GILTI as a period cost.

The Company's provision for income taxes for 2021, 2020 and 2019 was $ 38 million ( 12 % of income before taxes), $ 61 million ( 30 % of income before taxes) and $ 104 million ( 42 % of income before taxes), respectively.

The effective tax rate for 2021 is lower than the expected U.S.

statutory rate of 21% primarily due to a $ 43 million tax benefit resulting from the release of foreign tax reserves in 2021.

The effective tax rate for 2020 is higher than the expected U.S.

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During 2019, the Company recorded $ 22 million of deferred tax expense for a tax-related restructuring transaction.

During 2018, the Company recorded a net income tax expense for the impact of the Tax Act of $ 161 million, which was comprised of $ 175 million for remeasurement of the Company’s U.S deferred tax assets, zero for the mandatory deemed repatriation of undistributed earnings and profits, and a tax benefit of $ 14 million for the conversion to a territorial system.

The tax effects of temporary differences that give rise to significant portions of deferred tax assets and liabilities are as follows:

October 3, 2020 September 28, 2019

October 2, 2021 October 3, 2020

(In thousands)

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Lease deferred tax liability ( 11,349 ) ( 10,781 )

Other ( 2,495 ) —

Net deferred tax assets $ 231,822 $ 269,096

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Net deferred tax assets $ 231,822 $ 269,096

The Company offsets deferred tax assets and liabilities by tax-paying jurisdiction.

The resulting net amounts by tax jurisdiction are then aggregated without further offset.

A valuation allowance is established or maintained when, based on currently available information and other factors, it is more likely than not that all or a portion of the deferred tax assets will not be realized.

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As of October 2, 2021, the Company has cumulative net operating loss carryforwards for federal, state and foreign tax purposes of $ 505 million, $ 353 million and $ 498 million, respectively.

The federal and state net operating loss carryforwards begin expiring in 2025 and 2021, respectively, and expire at various dates through September 29, 2035 .

The federal and state net operating loss carryforwards begin expiring in fiscal years 2027 and 2024, respectively, and expire at various dates through September 29, 2035 .

Certain foreign net operating losses start expiring in 2022.

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As of October 2, 2021, the Company has federal tax credits of $ 14 million that expire between 2031 and 2041.

The Tax Reform Act of 1986 and similar state provisions impose restrictions on the utilization of net operating loss and tax credit carryforwards in the event of an “ownership change” as defined in the Internal Revenue Code.

There are certain restrictions on the utilization of net operating loss and tax credit carryforwards in the event of an “ownership change” as defined in the Internal Revenue Code.

The utilization of certain net operating losses may be restricted due to changes in ownership and business operations.

Following is a reconciliation of the statutory federal tax rate to the Company's effective tax rate:

2020 September 28,

2021 October 3,

2020 September 28,

Federal tax at statutory tax rate 21.00 % 21.00 % 21.00 %

Tax Act impact — — 165.16

Effect of foreign operations 7.33 13.02 10.28

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State income taxes, net of federal benefit 1.01 1.96 2.19

Release of foreign tax reserves ( 14.43 ) ( 3.61 ) ( 0.98 )

Effective tax rate 12.38 % 30.41 % 42.38 %

A reconciliation of the beginning and ending amount of total liabilities for unrecognized tax benefits, excluding accrued penalties and interest, is as follows:

2020 September 28,

2021 October 3,

2020 September 28,

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Settlements — — ( 626 )

Decrease related to lapse of applicable statute of limitations ( 3,299 ) ( 655 ) ( 1,062 )

Decrease related to lapse of time and expiration of statutes of limitations ( 20,243 ) ( 3,299 ) ( 655 )

Balance, end of year $ 67,781 $ 74,612 $ 66,677

The Company had reserves of $ 40 million and $ 39 million as of October 3, 2020 and September 28, 2019, respectively, for the payment of interest and penalties relating to unrecognized tax benefits.

During 2020 and 2019, the Company recognized a net income tax expense for interest and penalties of $ 1 million in each year compared to a net income tax benefit of $ 3 million in 2018.

The Company had reserves of $ 17 million and $ 40 million as of October 2, 2021 and October 3, 2020, respectively, for the payment of interest and penalties relating to unrecognized tax benefits.

During 2021, the Company recognized a net income tax benefit for interest and penalties of $ 23 million due to lapse of time and expiration of statutes of limitations compared to a net income tax expense of $ 1 million in 2020.

The Company recognizes interest and penalties related to liabilities for unrecognized tax benefits as a component of income tax expense.

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The Company is currently being audited by the Internal Revenue Service for tax years 2008 through 2010.

To the extent the final tax liabilities are different from the amounts accrued, this would result in an increase or decrease in net operating loss carryforwards which would impact tax expense.

To the extent the final tax liabilities are different from the amounts accrued, this would result in an increase or decrease in net operating loss carryforwards which could materially impact tax expense.

Additionally, the Company is being audited by various state tax agencies and certain foreign countries.

To the extent the final tax liabilities are different from the amounts accrued, the increases or decreases would be recorded as income tax expense or benefit in the consolidated statements of operations.

To the extent the final tax liabilities are different from the amounts accrued, the increases or decreases would be recorded as income tax expense or benefit in the consolidated statements of income.

Although the Company believes that the resolution of these audits will not have a material adverse impact on the Company’s results of operations, the outcome is subject to uncertainty.

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Basic and diluted earnings per share amounts are calculated by dividing net income by the weighted average number of shares of common stock outstanding during the period, as follows:

2020 September 28,

2021 October 3,

2020 September 28, 2019

(In thousands, except per share amounts)

Net income (loss) $ 139,713 $ 141,515 $ ( 95,533 )

Net income $ 268,998 $ 139,713 $ 141,515

Weighted average common shares outstanding 65,318 69,041 69,129

1 unchanged sentence

Denominator for diluted earnings per share 67,084 70,793 71,678

Net income (loss) per share:

Net income per share:

Basic $ 4.12 $ 2.02 $ 2.05

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Stock Repurchase Program

During the fourth quarter of 2017, the Board of Directors approved a $ 200 million stock repurchase plan and during the first quarter of 2020, the Board of Directors authorized the Company to purchase an additional $ 200 million of its common stock.

Neither plan provides for an expiration date.

During 2020, 2019 and 2018, the Company repurchased 6.4 million shares, 0.3 million shares and 5.0 million shares of its common stock for $ 166 million, $ 7 million and $ 146 million (including commissions), respectively, under these plans and as of October 3, 2020, $ 135 million remains available under such plans.

Although stock repurchases are intended to increase stockholder value by reducing the number of outstanding shares and to

offset the dilution that results from the issuance of shares under the Company’s equity plans, repurchases of shares also reduce the Company's liquidity.

During the first quarter of 2020, the Board of Directors authorized the Company to purchase $ 200 million of its common stock.

During 2021, 2020 and 2019, the Company repurchased 1.5 million shares, 6.4 million shares and 0.3 million shares of its common stock for $ 54 million, $ 166 million and $ 7 million (including commissions), respectively, under the plan and as of October 2, 2021, $ 81 million remains available under such plan, which has no expiration date.

Although stock repurchases are intended to increase stockholder value by reducing the number of outstanding shares and to offset the dilution that results from the issuance of shares under the Company’s equity plans, repurchases of shares also reduce the Company's

As a result, the timing of future repurchases depends upon the Company’s future capital needs, market conditions and other factors.

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Accumulated other comprehensive income, net of tax as applicable, consisted of the following:

2020 September 28,

2021 October 3,

(In thousands)

3 unchanged sentences

Total $ 40,690 $ 34,886

During the third quarter of 2021, a foreign entity of the Company was substantially liquidated and the Company reclassified $ 8 million of cumulative translation adjustments associated with this entity from accumulated other comprehensive income to other income (expense), net in the condensed consolidated statements of income.

There were no other significant reclassifications from accumulated other comprehensive income to the condensed consolidated statements of income for any period presented.

Business Segment, Geographic and Customer Information

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2) Components, Products and Services (CPS).

Components include interconnect systems (printed circuit board fabrication, backplane, cable assemblies and plastic injection molding) and mechanical systems (enclosures and precision machining).

Products include memory from our Viking Technology division;

enterprise solutions from our Viking Enterprise Solutions division;

RF, optical and microelectronics;

Components include interconnect systems (printed circuit board fabrication, backplanes, cable assemblies and plastic injection molding) and mechanical systems (enclosures and precision machining).

Products include memory solutions from our Viking Technology division;

high-performance storage platforms for hyperscale and enterprise solutions from our Viking Enterprise Solutions (VES) division;

optical, radio frequency (RF) and microelectronics (microE) design and manufacturing services from Advanced Micro Systems Technologies;

defense and aerospace products from SCI Technology;

and cloud-based manufacturing execution software from the Company's 42Q division.

Services include design, engineering, global services (logistics and repair).

Services include design, engineering and logistics and repair.

The Company evaluated its operating segments to determine whether they can be aggregated into reportable segments.

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Segment information is as follows:

October 3, 2020 September 28, 2019 September 29, 2018

October 2, 2021 October 3, 2020 September 28, 2019

(In thousands)

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Total $ 81,854 $ 51,075 $ 112,408

(1) During the fourth quarter of 2018, the Company recorded a $ 12.5 million pre-tax adjustment to correct errors that occurred from 2016 through the third quarter of 2018 with respect to the accounting for certain long-term contracts in one of the Company’s CPS divisions.

These errors are immaterial to all prior periods.

The impact of this out-of-period adjustment on the full year fiscal 2018 was $ 11 million which is also immaterial to 2018.

(1) For purposes of evaluating segment performance, management excludes certain items from its measures of gross profit.

These items consist of stock-based compensation expense, amortization of intangible assets, charges or credits resulting from distressed customers, litigation settlements and acquisition-related items.

These items consist of stock-based compensation expense, amortization of intangible assets, charges or credits resulting from distressed customers and litigation settlements.

(2) Primarily related to selling, general and administration functions.

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Net sales by geographic segment, determined based on the country in which a product is manufactured were as follows:

2020 September 28,

2021 October 3,

2020 September 28,

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Number of customers representing 10% or more of net sales 1 1 1

2020 September 28,

2021 October 3,

(In thousands)

3 unchanged sentences

APAC 143,111 168,162

$ 559,242 $ 630,647

Total $ 532,985 $ 559,242

Stock-Based Compensation

Stock-based compensation expense was attributable to:

2020 September 28,

2021 October 3,

2020 September 28,

4 unchanged sentences

Stock-based compensation expense was recognized as follows:

2020 September 28,

2021 October 3,

2020 September 28,

4 unchanged sentences

Total $ 34,976 $ 26,235 $ 30,844

Restricted and Performance Stock Units

The Company grants restricted stock units and restricted stock units with performance conditions ("PSUs") to executive officers, directors and certain other employees.

These units vest over periods ranging from one year to four years and/

or upon achievement of specified performance criteria and are automatically exchanged for shares of common stock at the vesting date.

These units vest over periods ranging from one year to four years and/or upon achievement of specified performance criteria and are automatically exchanged for shares of common stock at the vesting date.

If performance metrics are not met within specified time limits, the award will be canceled.

Compensation expense associated with restricted stock units and PSUs is recognized ratably over the vesting period, subject to probability of achievement for PSUs.

During the first two quarters of 2020, the Company granted PSUs for 304,500 shares for which vesting is contingent on cumulative non-GAAP earnings per share measured over three fiscal years.

Compensation expense

associated with restricted stock units and PSUs is recognized ratably over the vesting period, subject to probability of achievement for PSUs.

During 2021 and 2020, the Company granted 373,000 and 304,500 PSUs shares, respectively, for which vesting is contingent on cumulative non-GAAP earnings per share measured over three fiscal years.

If a minimum threshold is not achieved, no shares will vest.

1 unchanged sentence

Additionally, the number of shares that vest may be adjusted up or down by up to 15 % based on the Company's total shareholder return relative to that of its peer group over this same period.

These PSUs will expire on December 31, 2022 if such performance conditions have not been met.

These PSUs will be cancelled if such performance conditions have not been met during the measurement period.

Activity with respect to the Company's restricted stock units and PSUs was as follows:

4 unchanged sentences

Outstanding as of September 29, 2018

3,303 30.33 1.21 97,913

Granted 1,843 25.09

1 unchanged sentence

Outstanding as of September 28, 2019

3,153 27.82 1.30 102,720

Granted 1,340 32.51

Vested/Forfeited/Cancelled ( 1,925 ) 28.62

Outstanding as of September 28, 2019 3,153 27.82 1.30 102,720

Outstanding as of October 3, 2020

2,568 29.67 1.23 71,571

Granted 1,529 34.26

1 unchanged sentence

Outstanding as of October 2, 2021

2,954 32.21 1.23 113,591

Expected to vest as of October 2, 2021

2,629 32.10 1.17 101,111

The fair value of restricted stock units that vested during the year was $ 32 million for 2021, $ 43 million for 2020 and $ 29 million for 2019.

As of October 2, 2021, unrecognized compensation expense of $ 47 million is expected to be recognized over a weighted average period of 1.2 years.

Additionally, as of October 3, 2020, unrecognized compensation expense related to performance-based restricted stock units for which achievement of performance criteria was not currently considered probable was $ 7 million.

Employee Benefit Plans

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Deferrals under this plan were immaterial.

Assets associated with these plans were $ 40 million and $ 36 million as of October 3, 2020 and September 28, 2019, respectively.

Liabilities associated with these plans were $ 40 million and $ 36 million as of October 3, 2020 and September 28, 2019, respectively.

Assets associated with these plans were $ 46 million and $ 40 million as of October 2, 2021 and October 3, 2020, respectively.

Liabilities associated with these plans were $ 46 million and $ 40 million as of October 2, 2021 and October 3, 2020, respectively.

These amounts are recorded in other non-current assets and other long-term liabilities on the consolidated balance sheets.

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The funded status and plan assets for the defined benefit plans and amount reported on the consolidated balance sheets were as follows:

October 3, 2020 September 28, 2019 September 29, 2018

October 2, 2021 October 3, 2020 September 28, 2019

(In thousands)

Plan Assets $ 16,435 $ 23,575 $ 15,430 $ 23,575 $ 15,421 $ 23,877

9 unchanged sentences

All other amounts and assumptions were not material for any period presented herein.

On April 6, 2021 , the Company purchased all of the outstanding stock of a European subsidiary of a multinational company.

This acquisition is expected to increase the Company's IMS capabilities in Europe.

The Company also entered into a master supply agreement with the seller in connection with this acquisition.

Total consideration paid in this acquisition was $ 38 million of cash, of which $ 29 million was paid upon closing and $ 9 million is due in April 2023 .

The acquiree had $ 8 million of cash as of the acquisition date, resulting in a net cash outlay upon closing of $ 21 million.

The pro-forma effect of the acquisition, as if it had occurred at the beginning of the year, was not material to the consolidated financial statements.

The acquisition will be reported in the Company's IMS reportable segment.

The Company's allocation of the purchase price was based on management's estimate of the acquisition-date fair values of the tangible and identifiable intangible assets acquired and liabilities assumed.

The following represents the allocation of the purchase price to the acquired assets and liabilities assumed.

(In thousands)

Current assets, including cash acquired of $ 8.1 million

Noncurrent assets, including identifiable intangible assets of $ 4.4 million and goodwill of $ 8.5 million

Current liabilities ( 10,671 )

Noncurrent liabilities ( 152 )

Total net assets acquired $ 38,584

Goodwill reflects the expectation that the acquisition will enable the Company to increase its IMS capabilities in Europe.

Goodwill and identifiable intangible assets are recorded in other non-current assets on the consolidated balance sheets.

Identifiable intangible assets are being amortized over four years .

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data