SANMINA CORP 10-K

Item 8. 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)” of this report. 45 Table of Contents Report of Independent Registered Public Accounting Firm To the Bo ard of Directors and Stockholders of Sanmina Corporation 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 September 30, 2023 and October 1, 2022, and the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for each of the three years in the period ended September 30, 2023, 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 September 30, 2023, 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 September 30, 2023 and October 1, 2022, and the results of its operations and its cash flows for each of the three years in the period ended September 30, 2023 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company did not maintain, in all material respects, effective internal control over financial reporting as of September 30, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO because material weaknesses in internal control over financial reporting existed as of that date related to (i) inappropriate tone at the top in the control environment at one of the Company’s divisions, specifically division management did not sufficiently promote, monitor or enforce appropriate accounting policies and procedures, thereby resulting in inappropriate and unsupported adjustments to the quarterly contract cost estimate process; (ii) the Company not maintaining a sufficient complement of finance personnel at the division with an appropriate level of expertise, knowledge and training in internal control over financial reporting commensurate with the Company’s financial reporting requirements; and (iii) the division not designing and maintaining effective controls over the quarterly contract estimate review process, which led to the failure to timely and appropriately record adjustments to quarterly estimates. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis. The material weaknesses referred to above are described in Management's Report on Internal Control Over Financial Reporting appearing under Item 9A. We considered these material weaknesses in determining the nature, timing, and extent of audit tests applied in our audit of the 2023 consolidated financial statements, and our opinion regarding the effectiveness of the Company’s internal control over financial reporting does not affect our opinion on those consolidated financial statements. Basis for Opinions The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in management's report referred to above. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based 46 Table of Contents on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Revenue Recognition using the Cost-to-cost Method for Government Contracts in the Defense and Aerospace Division As described in Notes 2 and 4 to the consolidated financial statements, revenues for the CPS segment were $1.6 billion for the year ended September 30, 2023, of which the defense and aerospace division represents a portion of the segment. The Company recognizes revenue for defense and aerospace government contracts on an over time basis using the cost-to-cost method (ratio of costs incurred to date to total estimated costs at completion), which management believes best depicts the transfer of control to the customer. Recognition of revenue on government contracts requires the use of significant judgments with respect to estimated materials, labor and subcontractor costs. The principal considerations for our determination that performing procedures relating to revenue recognition using the cost-to-cost method for government contracts in the defense and aerospace division is a critical audit matter are (i) the significant judgment by management when developing the estimated costs for such contracts and (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and in evaluating the audit evidence related to management’s determination of estimated materials, labor, and subcontractor costs. Also, as described in the “Opinions on the Financial Statements and Internal Control over Financial Reporting” section, material weaknesses were identified related to this matter. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included, among others, (i) testing management’s process for developing the estimation of costs for a sample of defense and aerospace government contracts; (ii) testing the completeness and accuracy of underlying data used in the estimate; and (iii) evaluating the reasonableness of management’s determination of estimated materials, labor, and subcontractor costs. Evaluating the reasonableness of management’s determination of the estimated materials, labor and subcontractor costs used involved (i) assessing management’s ability to reasonably estimate costs for government contracts by assessing the nature and status of government contracts; (ii) performing retrospective reviews of government contract estimates and changes in estimates over time; and (iii) obtaining evidence to support estimated costs. Consolidation of Sanmina SCI India Private Limited (“SIPL”) As described in Note 18 to the consolidated financial statements, the Company completed a joint venture transaction with Reliance Strategic Business Ventures Limited (“RSBVL”) to establish SIPL as a joint venture. As a result of the transaction, RSBVL holds 50.1% of the outstanding shares of SIPL and the Company holds the remaining 49.9% of the outstanding shares of SIPL. In connection with RSBVL’s investment, the Company and RSBVL entered into a management services contract 47 Table of Contents pursuant to which the Company has the unilateral ability to make the significant financial and operating decisions made in the ordinary course of SIPL’s business. Management determined the voting interest model was applicable and concluded that, despite not having a majority ownership interest, the Company has a controlling financial interest in SIPL through the management services contract. Because of this controlling financial interest, the Company consolidated SIPL. In connection with the transaction close on October 3, 2022, the Company recognized a noncontrolling interest of $132 million and an increase in additional paid-in-capital of $84 million. The principal considerations for our determination that performing procedures relating to the consolidation of SIPL is a critical audit matter are (i) the significant judgment by management in the assessment of whether the Company has a controlling financial interest in SIPL under the voting interest model, despite not having a majority ownership interest; (ii) a high degree of auditor judgment and subjectivity in performing procedures and evaluating audit evidence related to management’s assessment of whether the Company has a controlling financial interest in SIPL based on the Company’s contractual rights under the joint venture and shareholders’ agreement and the management services contract; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management's assessment of whether the Company has a controlling financial interest in SIPL under the voting interest model. These procedures also included, among others, (i) reading the joint venture and shareholders’ agreement and the management services contract; (ii) evaluating whether the contractual terms of the joint venture and shareholders’ agreement and the management service contract are consistent with management’s assessment of whether the Company has a controlling financial interest in SIPL; and (iii) evaluating management’s determination that the Company has the unilateral ability to make the significant financial and operating decisions made in the ordinary course of SIPL’s business. Professionals with specialized skill and knowledge were used to assist in evaluating the appropriateness of management's conclusion that the Company has a controlling financial interest in SIPL. /s/ PricewaterhouseCoopers LLP San Jose, California November 16, 2023 We have served as the Company’s auditor since 2016. 48 Table of Contents SANMINA CORPORATION CONSOLIDATED BALANCE SHEETS As of September 30, 2023 October 1, 2022 (In thousands, except par value) ASSETS Current assets: Cash and cash equivalents $ 667,570 $ 529,857 Accounts receivable, net of allowances of approximately $ 8 million as of September 30, 2023 and October 1, 2022, respectively 1,230,771 1,138,894 Contract assets 445,757 475,721 Inventories 1,477,223 1,684,099 Prepaid expenses and other current assets 58,249 62,044 Total current assets 3,879,570 3,890,615 Property, plant and equipment, net 632,836 575,170 Deferred income tax assets 177,597 209,554 Other 183,965 160,192 Total assets $ 4,873,968 $ 4,835,531 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 1,612,833 $ 2,041,434 Accrued liabilities 267,148 281,599 Accrued payroll and related benefits 127,406 130,892 Short-term debt, including current portion of long-term debt 25,945 17,500 Total current liabilities 2,033,332 2,471,425 Long-term liabilities: Long-term debt 312,327 329,237 Other 209,684 215,333 Total long-term liabilities 522,011 544,570 Commitments and contingencies Stockholders' equity: Preferred stock, $ 0.01 par value, authorized 5,000 shares, none issued and outstanding — — Common stock, $ 0.01 par value, authorized 166,667 shares; 111,550 and 110,160 shares issued and 56,833 and 57,394 shares outstanding as of September 30, 2023 and October 1, 2022, respectively 568 574 Treasury stock, 54,718 and 52,766 shares as of September 30, 2023 and October 1, 2022, respectively, at cost ( 1,485,252 ) ( 1,378,159 ) Additional paid-in capital 6,512,763 6,380,774 Accumulated other comprehensive income 70,879 56,325 Accumulated deficit ( 2,930,008 ) ( 3,239,978 ) Noncontrolling interest 149,675 — Total stockholders' equity 2,318,625 1,819,536 Total liabilities and stockholders' equity $ 4,873,968 $ 4,835,531 See accompanying notes to the consolidated financial statements. 49 Table of Contents SANMINA CORPORATION CONSOLIDATED STATEMENTS OF INCOME Year Ended September 30, 2023 October 1, 2022 October 2, 2021 (In thousands, except per share amounts) Net sales $ 8,935,048 $ 7,919,622 $ 6,738,356 Cost of sales 8,191,837 7,297,416 6,211,915 Gross profit 743,211 622,206 526,441 Operating expenses: Selling, general and administrative 255,072 244,569 234,537 Research and development 26,427 21,343 20,911 Restructuring and other 6,054 6,815 15,057 Total operating expenses 287,553 272,727 270,505 Operating income 455,658 349,479 255,936 Interest income 13,595 1,628 925 Interest expense ( 36,290 ) ( 22,473 ) ( 19,551 ) Other income (expense), net ( 20,156 ) ( 26,314 ) 44,331 Interest and other, net ( 42,851 ) ( 47,159 ) 25,705 Income before income taxes 412,807 302,320 281,641 Provision for income taxes 85,294 61,936 32,095 Net income before noncontrolling interest 327,513 240,384 249,546 Less: Net income attributable to noncontrolling interest 17,543 — — Net income attributable to common shareholders $ 309,970 $ 240,384 $ 249,546 Net income attributable to common shareholders per share: Basic $ 5.36 $ 3.92 $ 3.82 Diluted $ 5.18 $ 3.81 $ 3.72 Weighted-average shares used in computing per share amounts: Basic 57,847 61,310 65,318 Diluted 59,815 63,117 67,084 See accompanying notes to the consolidated financial statements. 50 Table of Contents SANMINA CORPORATION CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Year Ended September 30, 2023 October 1, 2022 October 2, 2021 (In thousands) Net income before noncontrolling interest $ 327,513 $ 240,384 $ 249,546 Other comprehensive income (loss), net of tax: Foreign currency translation adjustments 4,376 ( 12,191 ) ( 9,223 ) Derivative financial instruments: Change in net unrealized amount 19,279 8,414 3,034 Amount reclassified into net income before noncontrolling interest ( 13,964 ) 10,003 4,863 Defined benefit plans: Changes in unrecognized net actuarial losses and unrecognized transition cost 3,996 5,884 4,713 Amortization of actuarial losses and transition cost 867 3,525 2,417 Total other comprehensive income (loss), net of tax 14,554 15,635 5,804 Comprehensive income before noncontrolling interest 342,067 256,019 255,350 Less: Net income attributable to noncontrolling interest 17,543 — — Comprehensive income attributable to common shareholders $ 324,524 $ 256,019 $ 255,350 See accompanying notes to the consolidated financial statements. 51 Table of Contents SANMINA CORPORATION CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY Common Stock and Additional Paid-in Capital Treasury Stock Number of Shares Amount Number of Shares Amount Accumulated Other Comprehensive Income Accumulated Deficit Noncontrolling Interest Total (In thousands) BALANCE AT OCTOBER 3, 2020 107,629 $ 6,301,537 ( 42,630 ) $ ( 983,143 ) $ 34,886 $ ( 3,729,908 ) $ — $ 1,623,372 Issuances under stock plans 1,105 2,993 — — — — — 2,993 Stock-based compensation — 34,976 — — — — — 34,976 Repurchases of treasury stock — — ( 1,797 ) ( 64,059 ) — — — ( 64,059 ) Other comprehensive income — — — — 5,804 — — 5,804 Net income — — — — — 249,546 — 249,546 BALANCE AT OCTOBER 2, 2021 108,734 $ 6,339,506 ( 44,427 ) $ ( 1,047,202 ) $ 40,690 $ ( 3,480,362 ) $ — $ 1,852,632 Issuances under stock plans 1,426 2,378 — — — — — 2,378 Stock-based compensation — 39,608 — — — — — 39,608 Repurchases of treasury stock — ( 144 ) ( 8,339 ) ( 330,957 ) — — — ( 331,101 ) Other comprehensive income — — — — 15,635 — — 15,635 Net income — — — — — 240,384 — 240,384 BALANCE AT OCTOBER 1, 2022 110,160 $ 6,381,348 ( 52,766 ) $ ( 1,378,159 ) $ 56,325 $ ( 3,239,978 ) $ — $ 1,819,536 Issuances under stock plans 1,390 3,412 — — — — — 3,412 Stock-based compensation — 50,402 — — — — — 50,402 Repurchases of treasury stock — — ( 1,952 ) ( 107,093 ) — — — ( 107,093 ) Other comprehensive income — — — — 14,554 — — 14,554 Sale of noncontrolling interest — 78,169 — — — — 132,132 210,301 Net income — — — — — 309,970 17,543 327,513 BALANCE AT SEPTEMBER 30, 2023 111,550 $ 6,513,331 ( 54,718 ) $ ( 1,485,252 ) $ 70,879 $ ( 2,930,008 ) $ 149,675 $ 2,318,625 See accompanying notes to the consolidated financial statements. 52 Table of Contents SANMINA CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended September 30, 2023 October 1, 2022 October 2, 2021 (In thousands) CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES: Net income before noncontrolling interest $ 327,513 $ 240,384 $ 249,546 Adjustments to reconcile net income before noncontrolling interest to cash provided by operating activities: Depreciation and amortization 118,237 108,783 109,656 Stock-based compensation expense 50,402 39,608 34,976 Deferred income taxes 28,753 27,910 28,375 Loss (Gain) on sale of intellectual property — 7,000 ( 15,000 ) Gain on liquidation of foreign entity — — ( 8,263 ) Other, net 1,768 3,108 ( 1,371 ) Changes in operating assets and liabilities, net of amounts acquired: Accounts receivable ( 89,462 ) 47,483 ( 145,810 ) Contract assets 29,964 ( 143,531 ) 54,479 Inventories 210,218 ( 651,118 ) ( 157,278 ) Prepaid expenses and other assets ( 17,753 ) ( 31,700 ) ( 5,780 ) Accounts payable ( 414,490 ) 558,828 243,834 Accrued liabilities ( 9,982 ) 124,099 ( 49,022 ) Cash provided by operating activities 235,168 330,854 338,342 CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES: Purchases of property, plant and equipment ( 191,367 ) ( 138,639 ) ( 73,296 ) Proceeds from sales of property, plant and equipment 1,409 8,425 1,084 Purchases of investments ( 2,500 ) ( 2,000 ) ( 2,705 ) Cash paid for business acquisition, net of cash acquired — — ( 21,408 ) Proceeds from sale of intellectual property — — 5,000 Cash used in investing activities ( 192,458 ) ( 132,214 ) ( 91,325 ) CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES: Proceeds from revolving credit facility borrowings 2,980,800 1,874,000 399,600 Repayments of revolving credit facility borrowings ( 2,980,800 ) ( 1,874,000 ) ( 399,600 ) Repayments of long-term debt ( 17,500 ) ( 332,814 ) ( 18,752 ) Proceeds from issuance of long-term debt — 350,000 — Debt issuance costs — ( 3,263 ) — Holdback paid in connection with previous business combination ( 8,558 ) — — Proceeds from short-term borrowing 8,445 — — Net proceeds from stock issuances 3,412 2,379 2,993 Repurchases of common stock ( 107,093 ) ( 331,101 ) ( 64,059 ) Proceeds from sale of noncontrolling interest 215,799 — — Proceeds from collection of notes receivable — 500 2,500 Cash provided by (used in) financing activities 94,505 ( 314,299 ) ( 77,318 ) Effect of exchange rate changes 498 ( 4,510 ) ( 199 ) Increase (decrease) in cash and cash equivalents 137,713 ( 120,169 ) 169,500 Cash and cash equivalents at beginning of year 529,857 650,026 480,526 Cash and cash equivalents at end of year $ 667,570 $ 529,857 $ 650,026 Cash paid during the year: Interest, net of capitalized interest $ 32,486 $ 18,243 $ 15,264 Income taxes, net of refunds $ 57,339 $ 48,131 $ 33,358 Unpaid purchases of property, plant and equipment at end of period $ 21,590 $ 38,570 $ 20,929 See accompanying notes to the consolidated financial statements. 53 Table of Contents SANMINA CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1. Organization of Sanmina Sanmina Corporation (“Sanmina,” or the “Company”) was incorporated in Delaware in 1989. The Company is a leading global provider of integrated manufacturing solutions, components, products and repair, logistics and after-market services. The Company provides these comprehensive solutions primarily to original equipment manufacturers (“OEMs”) that serve the industrial, medical, defense and aerospace, automotive, communications networks and cloud infrastructure industries. The Company's operations are managed as two businesses: 1) Integrated Manufacturing Solutions (“IMS”). IMS is a single operating segment consisting of printed circuit board assembly and test, high-level assembly and test and direct-order-fulfillment. 2) Components, Products and Services (“CPS”). Components include printed circuit boards, backplanes and backplane assemblies, cable assemblies, fabricated metal parts, precision machined parts, and plastic injected molded parts. Products include optical, radio frequency and microelectronic design and manufacturing services from the Company’s Advanced Microsystems Technologies division; multi-chip package memory solutions from the Company’s Viking Technology division; high-performance storage platforms for hyperscale and enterprise solutions from the Company’s Viking Enterprise Solutions division; defense and aerospace products, design, manufacturing, repair and refurbishment services from the Company’s SCI Technology, Inc. (“SCI”) subsidiary; and cloud-based smart manufacturing execution software from the Company’s 42Q division. Services include design, engineering, and logistics and repair. The Company's only reportable segment is IMS, which represented approximately 80 % of total revenue in 2023. CPS consists of multiple operating segments which do not individually meet the quantitative thresholds for being presented as reportable segments. Therefore, financial information for these operating segments is combined and presented in a single category entitled “Components, Products and Services”. The accounting policies for each segment are the same as those disclosed by the Company for its consolidated financial statements. Basis of Presentation Fiscal Year. The Company operates on a 52 or 53 week year ending on the Saturday nearest September 30. Fiscal 2023, 2022 and 2021 were each a 52 week year. All references to years relate to fiscal years unless otherwise noted. Principles of Consolidation. The consolidated financial statements include all accounts of the Company, its wholly-owned subsidiaries and subsidiaries in which the Company has a controlling financial interest. All intra-company accounts and transactions have been eliminated. Noncontrolling interest represents a noncontrolling investor’s interest in the results of operations of subsidiaries that the Company controls and consolidates. Note 2. Summary of Significant Accounting Policies Management Estimates and Uncertainties. 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. 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; provisions for excess and obsolete inventories, environmental matters, and legal exposures; determining liabilities for uncertain tax positions; determining the realizability of deferred tax assets; determining fair values of tangible and intangible assets for purposes of impairment tests; and estimating costs expected to be incurred to satisfy performance obligations under long-term contracts and variable consideration related to such contracts. These estimates may change as new events occur and additional information becomes available. Actual results could differ materially from these estimates. Financial Instruments and Concentration of Credit Risk. Financial instruments consist primarily of cash and cash equivalents, accounts receivable, foreign currency forward contracts, interest rate swap agreements, accounts payable and debt 54 Table of Contents obligations. The fair value of these financial instruments approximates their carrying amount as of September 30, 2023 and October 1, 2022 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. Cash and Cash Equivalents. Cash and cash equivalents include cash on hand and on deposit and investments in highly liquid debt instruments with initial maturities of three months or less. Accounts Receivable and Other Related Allowances. The Company had allowances of approximately $ 8 million as of September 30, 2023 and October 1, 2022, 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. To establish the allowance for product returns and other adjustments, the Company primarily utilizes historical data. Accounts Receivable Sales. The Company is a party to a Receivables Purchase Agreement (the “RPA”) with certain third-party banking institutions for the sale of trade receivables generated from sales to certain customers, subject to acceptance by, and a funding commitment from, the banks that are party to the RPA. Trade receivables sold pursuant to the RPA are serviced by the Company. In addition to the RPA, the Company has the option to participate in trade receivables sales programs that have been implemented by certain of the Company’s customers, as in effect from time to time. The Company does not service trade receivables sold under these other programs. 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. Accounts receivable balances sold are removed from the consolidated balance sheets and the related proceeds are reported as cash provided by operating activities in the consolidated statements of cash flows. Inventories. Inventories are stated at the lower of cost (based on standard cost, which approximates first-in, first-out method) and net realizable value. Cost includes labor, materials and manufacturing overhead. Provisions are made to reduce excess and obsolete inventories to their estimated net realizable values. The ultimate realization of inventory carrying amounts is primarily affected by changes in customer demand. Inventory provisions are established based on forecasted demand, past experience with specific customers, the age and nature of the inventory, the ability to redistribute inventory to other programs or back to suppliers and whether customers are contractually obligated and have the ability to pay for the related inventory. Certain payments received from customers for inventory held by the Company are recorded as a reduction of inventory. Long-lived Assets. Property, plant and equipment are stated at cost or, in the case of property and equipment acquired through business combinations, at fair value as of the acquisition date. Depreciation is provided on a straight-line basis over 20 to 40 years for buildings and 3 to 15 years for machinery, equipment, furniture and fixtures. Leasehold improvements are amortized on a straight-line basis over the shorter of the lease term or useful life of the asset . The Company reviews property, plant and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. An asset group is the unit of accounting which represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets. An asset or asset group is considered impaired if its carrying amount exceeds the undiscounted future net cash flows the asset or asset group is expected to generate. If an asset or asset group is considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the asset or asset group exceeds its fair value. For asset groups for which the primary asset is a building, the Company estimates fair value based on data provided by commercial real estate brokers. For other asset groups, the Company estimates fair value based on projected discounted future net cash flows. Foreign Currency Translation. For foreign subsidiaries using the local currency as their functional currency, assets and liabilities are translated to U.S. dollars at exchange rates in effect at the balance sheet date and income and expenses are translated at average exchange rates. The effects of these translation adjustments are reported in stockholder’ 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 (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. 55 Table of Contents Derivative Instruments and Hedging Activities. The Company conducts business on a global basis in numerous currencies and certain of the Company’s outstanding debt has a variable interest rate. 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 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. If a derivative is designated as a cash flow hedge, the Company excludes time value from its assessment of hedge effectiveness and recognizes the amount of time value in earnings over the life of the derivative. Gains or losses on the derivative not caused by changes in time value are recorded in AOCI, and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. If a derivative is designated as a fair value hedge, changes in the fair value of the derivative and of the item being hedged are recognized in earnings in the current period. Derivative instruments are entered into for periods of time consistent with the related underlying exposures and are not entered into for speculative purposes. At the inception of a hedge, the Company documents all relationships between derivative instruments and related hedged items, as well as its risk-management objectives and strategies for the hedging transaction. The Company’s foreign currency forward contracts and interest rate swaps potentially expose the Company to credit risk to the extent the counterparties may be unable to meet the terms of the agreement. The Company minimizes such risk by seeking high quality counterparties. Leases. 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 right-of-use (“ROU”) asset only if it is reasonably certain that the Company will exercise such options. Leases with a term 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 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. Certain of the Company’s lease payments are variable because such payments adjust periodically based on changes in consumer price and other indexes. Variable payments are expensed as incurred and not included in the measurement of lease liabilities and ROU assets. Since the Company’s leases generally do not provide an implicit rate, the Company uses an incremental borrowing rate based on information available at the lease commencement date for purposes of determining the present value of lease payments. 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. Revenue Recognition. The Company derives revenue principally from sales of integrated manufacturing solutions, components and Company-proprietary products. Other sources of revenue include logistics and repair services; design, development and engineering services; defense and aerospace programs; and sales of raw materials to customers whose requirements change after the Company has procured inventory to fulfill the customer’s forecasted demand. The Company determines the appropriate revenue to recognize by applying a 5-step model: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when (or as) the Company satisfies a performance obligation. Each of these steps may involve the use of significant judgments, as discussed below. Step 1 - Identify the contract with a customer 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. Step 2 - Identify the performance obligations in the contract 56 Table of Contents A performance obligation is a promised good or service that is material in the context of the contract and is both capable of being distinct (customer can benefit from the good or service on its own or together with other readily available resources) and distinct within the context of the contract (separately identifiable from other promises). The Company reviews its contracts to identify promised goods or services and then evaluates such items to determine which of those items are performance obligations. The majority of the Company’s contracts have a single performance obligation since the promise to transfer an individual good or service is not separately identifiable from other promises in the contract. The Company’s performance obligations generally have an expected duration of one year or less. Step 3 - Determine the transaction price Contracts with customers may include certain forms of variable consideration such as early payment discounts, volume discounts and shared cost savings. The Company includes an estimate of variable consideration when determining the transaction price and the appropriate amount of revenue to be recognized. This estimate is limited to an amount which will not result in a significant reversal of revenue in a future period. Factors considered in the Company’s estimate of variable consideration are the potential amount subject to these contract provisions, historical experience and other relevant facts and circumstances. Step 4 - Allocate the transaction price to the performance obligations in the contract A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. In the event that more than one performance obligation is identified in a contract, a portion of the transaction price is allocated to each performance obligation. This allocation would generally be based on the relative standalone price of each performance obligation, which most often would represent the price at which the Company would sell similar goods or services separately. S tep 5 - Recognize revenue when (or as) a performance obligation is satisfied The Company is required to assess whether control of a product or services promised under a contract is transferred to the customer at a point-in-time or over time as the product is being manufactured or the services are being provided. If the criteria in ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”), for recognizing revenue on an over time basis are not met, revenue must be recognized at the point-in-time determined by the Company at which its customer obtains control of a product or service. The Company has determined that revenue for the majority of its contracts is required to be recognized on an over time basis. This is primarily due to the fact that the Company does not have an alternative use for the end products it manufactures for its customers and has an enforceable right to payment, including a reasonable profit, for work-in-progress upon a customer's cancellation of a contract for convenience. In certain circumstances, the Company recognizes over time because its customer simultaneously receives and consumes the benefits provided by the Company’s services or, the Company’s customer controls the end product as the Company performs manufacturing services (continuous transfer of control). For these contracts, revenue is recognized on an over time basis using the cost-to-cost method (ratio of costs incurred to date to total estimated costs at completion) which the Company believes best depicts the transfer of control to the customer. Revenue streams for which revenue is recognized on an over time basis include sales of vertically integrated manufacturing solutions (integrated manufacturing solutions and components); logistics and repair services; design, development and engineering services; and defense and aerospace programs. At least 95 % of the Company’s revenue is recognized on an over time basis, which is as products are manufactured or services are performed. 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. Revenue streams for which revenue is recognized at a point-in-time include Company-proprietary products and sales of raw materials. 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 included in the total estimated costs at completion. Additionally, the Company evaluates whether contract modifications for claims have been approved and, if so, estimates the amount, if any, of variable consideration that can be included in the transaction price of the contract. This division is an operating segment whose results are combined with thirteen other operating segments and reported under CPS for segment reporting purposes. 57 Table of Contents Estimates of materials, labor and subcontractor costs expected to be incurred to satisfy a performance obligation are updated on a quarterly basis. These estimates consider costs incurred to date and estimated costs to be incurred over the remaining expected period of performance to satisfy a performance obligation. Such estimates are reviewed each quarter by a group of employees that includes representatives from numerous functions such as engineering, materials, contracts, manufacturing, program management, finance and senior management. If a change in estimate is deemed necessary, the impact of the change is recognized in the period of change. Additionally, contract modifications for claims are assessed each quarter to determine whether the claims have been approved. If it is determined that a claim has been approved, the amount of the claim, if any, that can be included in transaction price is estimated considering a number of factors such as the length of time expected to lapse until uncertainty about the claim has been resolved and the extent to which our experience with claims for similar contracts has predictive value. Contract Assets A contract asset is recognized when the Company has recognized revenue, but has not issued an invoice to its customer for payment. Contract assets are classified separately on the consolidated balance sheets and transferred to accounts receivable when rights to payment become unconditional. 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 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. Shipping and handling costs associated with outbound freight after control of a product has transferred to a customer are accounted for as fulfillment costs and are included in cost of sales. The Company applies the following practical expedients or policy elections under ASC 606: • The promised amount of consideration under a contract is not adjusted for the effects of a significant financing component because, at inception of a contract, the Company expects the period between when a good or service is transferred to a customer and when the customer pays for that good or service will generally be one year or less. • The Company has elected to not disclose information about remaining performance obligations that have original expected durations of one year or less, which is substantially all of the Company’s remaining performance obligations. • Incremental costs of obtaining a contract are not capitalized if the period over which such costs would be amortized to expense is less than one year. Stock-based Compensation . The Company recognizes stock-based compensation expense, net of estimated forfeitures, on as straight-line basis over the requisite service period of the award, which generally ranges from one year to four years and/or upon achievement of specified performance criteria. The stock-based compensation expense for time-based and performance-based restricted stock awards are valued at the closing market price of the Company’s common stock on the date of grant. During the requisite service period, performance-based restricted stock awards are monitored by management for probability of achievement of performance goals and if become probable, that more or less than the previous estimate of the awarded shares will vest, an adjustment to stock-based compensation expense will be recognized as a change in accounting estimate. The Company recognizes stock-based compensation expense for market-based restricted stock units measured at fair value on the grant date using a Monte Carlo valuation model. The stock-based compensation expense for awards with market conditions will be recognized over the requisite service periods regardless of whether the market conditions are satisfied. Income taxes. The Company estimates its income tax provision or benefit in each of the jurisdictions in which it operates, including estimating exposures and making judgments regarding the realizability of deferred tax assets. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The carrying value of the Company’s net deferred tax assets is based on the Company’s belief that it is more likely than not that the Company will generate sufficient future taxable income in certain jurisdictions to realize these deferred tax assets. A valuation allowance has been established for deferred tax assets which do not meet the “more likely than not” criteria discussed above . 58 Table of Contents 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. For each income tax position that meets the “more likely than not” recognition threshold, the Company then assesses the largest amount of tax benefit that is greater than 50% likely of being realized upon effective settlement with the tax authority. Interest and penalties related to unrecognized tax benefits are recognized as a component of income tax expense. Note 3. Balance Sheet and Income Statement Details Property, Plant and Equipment, net Property, plant and equipment consisted of the following: As of September 30, 2023 October 1, 2022 (In thousands) Machinery and equipment $ 1,626,129 $ 1,523,598 Land and buildings 677,478 656,839 Leasehold improvements 44,619 42,793 Furniture and fixtures 25,845 24,805 Construction in progress 124,657 91,928 2,498,728 2,339,963 Less: Accumulated depreciation and amortization ( 1,865,892 ) ( 1,764,793 ) Property, plant and equipment, net $ 632,836 $ 575,170 Depreciation expense was $ 116 million, $ 108 million and $ 109 million for 2023, 2022 and 2021, respectively. Other Income (Expense), net In 2021, the Company sold intellectual property for $ 15 million in 2021, of which $ 8 million has been received in cash. The sale of intellectual property was included in other income (expense), net on the consolidated statements of income. During 2022, the Company expected to incur credit losses with the counterparty for the remaining $ 7 million due under the arrangement and consequently, recorded a charge of $ 7 million in other income (expense), net, on the consolidated statements of income to establish an allowance. A foreign entity of the Company was substantially liquidated in 2021 and the Company reclassified $ 8 million of cumulative translation adjustments associated with this entity from accumulated other comprehensive income to other income (expense), net on the consolidated statements of income in 2021. The Company received $ 16 million of cash in 2021 in connection with settlements of certain anti-trust class action matters and recognized a gain in other income (expense), net on the consolidated statements of income. 59 Table of Contents Note 4. Revenue The following table presents revenue disaggregated by segment, market sector and geography. Year Ended September 30, 2023 October 1, 2022 October 2, 2021 (In thousands) Segments: IMS $ 7,289,037 $ 6,378,324 $ 5,454,269 CPS $ 1,646,011 $ 1,541,298 $ 1,284,087 Total $ 8,935,048 $ 7,919,622 $ 6,738,356 End Markets: Industrial, Medical, Defense and Aerospace, and Automotive $ 5,388,877 $ 4,744,088 $ 3,871,754 Communications Networks and Cloud Infrastructure $ 3,546,171 $ 3,175,534 $ 2,866,602 Total $ 8,935,048 $ 7,919,622 $ 6,738,356 Geography: Americas (1) $ 4,426,690 $ 3,748,643 $ 3,164,562 APAC $ 3,187,017 $ 3,007,904 $ 2,517,963 EMEA $ 1,321,341 $ 1,163,075 $ 1,055,831 Total $ 8,935,048 $ 7,919,622 $ 6,738,356 Percentage of net sales represented by ten largest customers 48 % 49 % 53 % Number of customers representing 10% or more of net sales 1 2 1 (1) Mexico represents approximately 65 % of the Americas revenue and the U.S. represents approximately 30 % as of September 30, 2023. Note 5. Financial Instruments Fair Value Measurements Fair Value of Financial Instruments The fair values of cash equivalents (representing 17 % of cash and cash equivalents), accounts receivable, accounts payable and short-term debt approximate carrying value due to the short-term duration of these instruments. Additionally, the fair value of variable rate long-term debt approximates carrying value as of September 30, 2023. Assets and Liabilities Measured at Fair Value on a Recurring Basis 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. See Note 17 “Employee Benefit Plans”. 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. Interest rate swaps are valued based on a discounted cash flow analysis that incorporates observable (Level 2) market inputs such as interest rate yield curves and credit spreads. For currency contracts, Level 2 inputs include foreign currency spot and forward rates and interest rates at commonly quoted intervals. Foreign exchange contracts were not material as of September 30, 2023 or October 1, 2022 . 60 Table of Contents Offsetting Derivative Assets and Liabilities The Company has entered into master netting arrangements with each of its derivative counterparties that allows net settlement of derivative assets and liabilities under certain conditions, such as multiple transactions with the same currency maturing on the same date. 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 September 30, 2023 or October 1, 2022 . 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. The Company recorded an impairment charge of $ 2 million in 2022 for certain long-lived assets. Derivative Instruments Foreign Exchange Rate Risk The Company is exposed to certain risks related to its ongoing business operations. The primary risk managed by using derivative instruments is foreign currency exchange risk. Forward contracts on various foreign currencies are used to manage foreign currency risk associated with forecasted foreign currency transactions and certain monetary assets and liabilities denominated in non-functional currencies. The Company’s primary foreign currency cash flows are in Mexico, China and India. The Company had the following outstanding foreign currency forward contracts to hedge foreign currency exposures: As of September 30, 2023 October 1, 2022 Derivatives Designated as Accounting Hedges: Notional amount (in thousands) $ 125,758 $ 123,172 Number of contracts 50 50 Derivatives Not Designated as Accounting Hedges: Notional amount (in thousands) $ 338,283 $ 531,558 Number of contracts 42 43 The Company utilizes foreign currency forward contracts to hedge certain operational (“cash flow”) exposures resulting from changes in foreign currency exchange rates. Such exposures generally result from (1) forecasted non-functional currency sales and (2) forecasted non-functional currency materials, labor, overhead and other expenses. These contracts are designated as cash flow hedges for accounting purposes and are generally one to two months in duration but, by policy, may be up to twelve months in duration. For derivative instruments that are designated and qualify as cash flow hedges, the Company excludes time value from its assessment of hedge effectiveness and recognizes the amount of time value in earnings over the life of the derivative instrument. Gains or losses on the derivative not caused by changes in time value are recorded in AOCI, 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 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 foreign 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 income. The amount of gains or losses associated with these forward contracts was not material for any period presented herein. From an economic perspective, the objective of the Company’s hedging program is for gains and losses on forward contracts to substantially offset gains and losses on the underlying hedged items. In addition to the contracts disclosed in the table above, the Company has numerous contracts that have been closed from an economic and financial accounting 61 Table of Contents perspective and will settle early in the first month of the following quarter. Since these offsetting contracts do not expose the Company to risk of fluctuations in exchange rates, these contracts have been excluded from the above table. Interest Rate Risk The Company enters into forward interest rate swap agreements with independent counterparties to partially hedge the variability in cash flows due to changes in Secured Overnight Financing Rate benchmark interest rate (“SOFR”) associated with anticipated variable rate borrowings. These interest rate swaps have maturity dates of December 1, 2023 and September 27, 2027 and effectively convert a portion of 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 $ 650 million and $ 350 million were outstanding as of September 30, 2023 and October 1, 2022, respectively. The aggregate effective interest rate of these swaps as of September 30, 2023 was approximately 4.4 %. Interest rate swaps had a value of $ 12 million and $ 6 million as of September 30, 2023 and October 1, 2022, respectively. As of September 30, 2023, $ 6 million was included in prepaid expenses and other current assets and $ 6 million was included in other assets on the consolidated balance sheets. Note 6. Financial Instruments and Concentration of Credit Risk Financial instruments that potentially subject the Company to credit risk consist primarily of cash, cash equivalents, trade accounts receivable, foreign currency forward contracts and interest rate swap agreements. The carrying value of assets such as cash, cash equivalents and accounts receivable is expected to approximate fair value due to the short duration of the assets. The Company maintains its cash and cash equivalents with recognized financial institutions that management believes to be of high credit quality. 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. The Company generally does not require collateral for sales on credit. The Company considers these concentrations of credit risks when estimating its allowance for doubtful accounts. 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 10 % or more of the Company's net sales in 2023 and 2021. Nokia and Motorola each represented 10 % or more of the Company’s net sales in 2022. No customer represented 10% or more of the Company’s gross accounts receivable as of September 30, 2023 and Motorola represented 10 % or more of the Company’s gross accounts receivable as of October 1, 2022. Note 7. Debt Long-term debt consisted of the following: As of September 30, 2023 October 1, 2022 (In thousands) Term Loan Due 2027, net of issuance costs $ 329,827 $ 346,737 Less: Current portion of Term Loan Due 2027 17,500 17,500 Long-term debt $ 312,327 $ 329,237 Term Loan Due 2027 maturities by fiscal year are as follows: As of September 30, 2023 (In thousands) 2024 $ 13,125 2025 17,500 2026 21,875 2027 280,000 $ 332,500 62 Table of Contents On September 27, 2022 (the “Closing Date”), the Company entered into a Fifth Amended and Restated Credit Agreement (the “Credit Agreement”) that provides for a $ 800 million revolving credit facility and a $ 350 million secured term loan (“Term Loan Due 2027”). Subject to the satisfaction of certain conditions, including obtaining additional commitments from existing and/or new lenders, the Company may increase the revolving commitment up to an additional $ 200 million. Costs incurred in connection with Credit Agreement of $ 3 million are classified as long-term debt and are being amortized to interest expense over the life of the Term Loan Due 2027 using the effective interest method. The Term Loan Due 2027 was fully drawn on the Closing Date and the proceeds were used to repay the term loan issued under the Company’s prior credit agreement. Upon repayment, the Company recorded a loss on extinguishment of debt of $ 1 million consisting of a write-off of unamortized debt issuance costs under such prior agreement. Loans under the Credit Agreement bear interest, at the Company’s option, at either the SOFR or a base rate, in each case plus a spread determined based on the Company’s credit rating. Interest on the loans is payable quarterly in arrears with respect to base rate loans and at the end of an interest period (and at three month intervals if the interest period exceeds three months) in the case of SOFR loans. The outstanding principal amount of all loans under the Credit Agreement, including the Term Loan Due 2027, together with accrued and unpaid interest, is due on September 27, 2027 . The Company is required to repay a portion of the principal amount of the Term Loan Due 2027 equal to 1.25 % of the principal in quarterly installments. On May 17, 2023, as a result of the Company’s failure to timely file its quarterly report on Form 10-Q for the quarter ended April 1, 2023, the Company was in technical default with respect to certain covenants within its Credit Agreement. The Company filed its quarterly report on Form 10-Q for the quarter ended April 1, 2023 on May 22, 2023, which was within the stated cure period of 15 calendar days and ceased to be in default as of that time. Certain of the Company’s domestic subsidiaries are guarantors in respect of the Credit Agreement. The Company and the subsidiary guarantors’ obligations under the Credit Agreement are secured by a lien on substantially all of their respective assets (excluding real property), including cash, accounts receivable and the shares of certain Company subsidiaries, subject to certain exceptions. As of September 30, 2023, no borrowings and $ 13 million of letters of credit were outstanding under the Credit Agreement, under which $ 787 million was available to borrow. There were no borrowings outstanding under the Credit Agreement as of October 1, 2022. Short-term Borrowing Facilities The Company had $ 8 million of short-term borrowings outstanding as of September 30, 2023. Additionally, certain foreign subsidiaries of the Company had a total of $ 72 million of short-term borrowing facilities available, under which no borrowings were outstanding as of September 30, 2023. These facilities expire at various dates through the first quarter of 2025 . Debt Covenants The Credit Agreement requires the Company to comply with certain financial covenants, namely a maximum consolidated leverage ratio and a minimum interest coverage ratio, in both cases measured on the basis of a trailing 12 month look-back period. In addition, the Company's debt agreements contain a number of restrictive covenants, including restrictions on incurring additional debt, making investments and other restricted payments, selling assets and paying dividends, subject to certain exceptions. Finally, the agreements also include covenants that require us to file quarterly and annual financial statements with the SEC on a timely basis. The Company was in compliance with these covenants as of September 30, 2023. 63 Table of Contents Note 8. Leases ROU assets and lease liabilities recorded in the consolidated balance sheets are as follows: As of September 30, 2023 October 1, 2022 (In thousands) Other assets $ 95,750 $ 79,495 Accrued liabilities $ 22,344 $ 16,695 Other long-term liabilities 60,663 48,566 Total lease liabilities $ 83,007 $ 65,261 Weighted average remaining lease term (in years) 12.97 15.74 Weighted average discount rate 3.9 % 2.4 % Lease expense and supplemental cash flow information related to operating leases are as follows: Year Ended September 30, 2023 October 1, 2022 October 2, 2021 (In thousands) Operating lease expense (1) $ 35,347 $ 23,978 $ 21,455 Cash paid for operating lease liabilities $ 24,388 $ 19,249 $ 19,531 (1) Includes immaterial amounts of short term leases, variable lease costs and sublease income. Future lease payments under non-cancelable operating leases as of September 30, 2023, by fiscal year, are as follows: Operating Leases (In thousands) 2024 $ 25,179 2025 22,323 2026 17,184 2027 13,798 2028 4,445 Thereafter 8,780 Total lease payments 91,709 Less: imputed interest 8,702 Total $ 83,007 Note 9. Accounts Receivable Sale Program The Company is a party to a Receivable Purchase Agreement (the “RPA”) with certain third-party banking institutions for the sale of trade receivables generated from sales to certain customers, subject to acceptance by, and a funding commitment from, the banks that are party to the RPA. Trade receivables sold pursuant to the RPA are serviced by the Company. In addition to the RPA, the Company has the option to participate in trade receivables sales programs that have been implemented by certain of the Company’s customers, as in effect from time to time. The Company does not service trade receivables sold under these other programs. Under each of the programs noted above, the Company sells its entire interest in a trade receivable for 100 % of face 64 Table of Contents value, less a discount. For the years ended September 30, 2023 and October 1, 2022, the Company sold approximately $ 2.6 billion and approximately $ 1.9 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 $ 19 million and $ 6 million for the years ended September 30, 2023 and October 1, 2022, respectively and were recorded in other income (expense), net, in the consolidated statements of income. As of September 30, 2023 and October 1, 2022, $ 162 million and $ 194 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. Commercial disputes include billing errors, returns and similar matters. To date, the Company has not been required to repurchase any receivable it has sold due to a commercial dispute. Additionally, the Company is required to remit amounts collected as a servicer under the RPA on a weekly basis to the financial institutions that purchased the receivables. As of September 30, 2023 and October 1, 2022, $ 33 million and $ 49 million, respectively, had been collected but not yet remitted. This amount is classified in accrued liabilities on the consolidated balance sheets. Note 10. Contingencies From time to time, the Company is a party to litigation, claims and other contingencies, including environmental, regulatory and employee matters and examinations and investigations by governmental agencies, which arise in the ordinary course of business. 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 September 30, 2023 and October 1, 2022, the Company had reserves of $ 34 million and $ 38 million, respectively, 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. Such reserves are included in accrued liabilities and other long-term liabilities on the consolidated balance sheets. Legal Proceedings 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. As of September 30, 2023, the Company had been named in a lawsuit and several administrative orders alleging certain of its current and former sites contributed to groundwater contamination. One such order demands that the Company and other alleged defendants fund continued post-closure care and remediation at four properly-permitted former hazardous waste landfills located in Northern California to which the Company may have sent wastewater in the past. The Company is participating in a working group of a number of other alleged defendants in a settlement of this matter and has reserved its estimated exposure for this matter as of September 30, 2023, which amount is immaterial. In June 2008, the Company was named by the Orange County Water District in a suit alleging that a predecessor company’s actions at a plant the Company sold in 1998 contributed to polluted groundwater managed by the plaintiff. The complaint seeks recovery of compensatory and other damages, as well as declaratory relief, for the payment of costs necessary to investigate, monitor, remediate, abate and contain contamination of groundwater. In April 2013, all claims against the Company were dismissed. The plaintiff appealed this dismissal and the Court of Appeal reversed the judgment in August 2017, remanding the case back to the Superior Court of California for trial. The trial against the Company and several other defendants commenced in April 2021 and the submission of evidence concluded in May 2022. On April 3, 2023, the Superior Court published a statement of decision finding the Company and other remaining defendants liable for certain past investigation costs incurred by the plaintiff. The Company believes a loss in this matter is probable and has recorded its estimated loss as of September 30, 2023. There will be subsequent proceedings to assess the Company’s and other defendants’ liability for the plaintiff’s future remediation and other costs, including attorneys’ fees. It is probable that the Company will record additional losses in connection with this matter, and it is reasonably possible that the amount of such additional losses will be material. However, the Company is unable to estimate the amount of such additional losses or a range of losses. The Company intends to continue defending the case vigorously and to seek appellate review at the appropriate time. 65 Table of Contents Other Matters 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. Later the same day, Dialight commenced its own action in the same court. Dialight’s complaint, which asserts claims for fraudulent inducement, breach of contract and willful misconduct, alleges that the Company fraudulently misrepresented its capabilities to induce Dialight to enter into a Manufacturing Services Agreement (the “Dialight MSA”), and then breached its obligations contained in the Dialight MSA relating to quality, on-time delivery and supply chain management. Dialight seeks compensatory and punitive damages that it contends exceed $ 200 million, but the Company believes Dialight’s claimed damages are vastly overstated and are subject to a contractual limitation of liability that limits any Dialight recovery to less than $ 2 million. In an Opinion and Order dated March 14, 2023, the District Court granted in part the Company’s motion for partial summary judgment and dismissed Dialight’s willful misconduct claim. The Company continues to vigorously prosecute its claims against Dialight. Further, the Company strongly disagrees with Dialight’s allegations and is defending against Dialight’s remaining claims vigorously. No trial date has been set in this matter. In May 2023, the Company and its SCI subsidiary received Civil Investigative Demands (“CIDs”) from the United States Department of Justice (“DOJ") pursuant to the civil False Claims Act (“FCA”). The stated purpose of the CIDs—a form of subpoena requiring responses to written interrogatories and the production of documents relating to certain contracts, projects, proposals and business activities of SCI going back to 2010—is to determine whether there is or has been a violation of the FCA with respect to the provision of products and services to the government. These CIDs supplement several CIDs relating to the same subject matter served upon SCI and certain current and former SCI and Sanmina employees beginning in August 2020, pursuant to which SCI has been producing documents and information and the current and former employees have provided or will provide oral testimony. To date, neither the Company nor SCI has been served with a complaint in this matter. The Company has been, and is, cooperating with the DOJ and continues to produce documents and other information responsive to the CIDs. The Company is unable to predict the ultimate outcome in this matter, although a loss currently is not considered to be probable or estimable. On November 14, 2023, Gerardo Ramirez, an employee at the Company’s Newark, California plant, filed two lawsuits against the Company in the Alameda County Superior Court. The first, a putative class action, alleges violations of various California Labor Code and Wage Order requirements, including provisions governing overtime, meal and rest periods, minimum wage requirements, payment of wages during employment and final wages, wage statements, payroll records, and reimbursement of business expenses. The class action complaint seeks certification of a class of all current and former non-exempt employees who worked for the Company within the State of California at any time between November 14, 2019 and final judgment, as well as unspecified damages, penalties, restitution, attorneys’ fees, pre-judgment interest, and costs of suit. The second action, a complaint under California’s Private Attorneys General Act of 2004 (“PAGA”) (Labor Code §§ 2698 et seq.), alleges substantially similar violations and seeks penalties individually and on behalf of the State of California and other “aggrieved employees,” along with attorneys’ fees and costs. The Company intends to defend these cases vigorously. For each of the pending matters noted above, the Company is unable to reasonably estimate a range of possible loss at this time. In addition, from time to time, the Company may become involved in routine legal proceedings, demands, claims, threatened litigation and regulatory inquiries and investigations that arise in the normal course of our business. The Company records liabilities for such matters when a loss becomes probable and the amount of loss can be reasonably estimated. The ultimate outcome of any litigation is uncertain and unfavorable outcomes could have a negative impact on the Company’s results of operations and financial condition. 66 Table of Contents Note 11. Restructuring and Other Restructuring Restructuring costs were $ 6 million, $ 11 million, and $ 15 million in 2023, 2022, and 2021, respectively. The following table is a summary of restructuring costs: Year Ended September 30, 2023 October 1, 2022 October 2, 2021 (In thousands) Severance costs $ 724 $ 319 $ 9,405 Other exit costs (recognized as incurred) 1,607 1,500 1,834 Total - Q1 FY20 Plan 2,331 1,819 11,239 Costs incurred for Other Plans 3,723 9,606 3,818 Total - All Plans $ 6,054 $ 11,425 $ 15,057 Q1 FY20 Plan On October 28, 2019, the Company adopted a Company-wide restructuring plan (“Q1 FY20 Plan”). Substantially all cash payments have occurred and actions under this plan were completed. Other Plans Other plans include a number of plans for which costs are not expected to be material individually or in the aggregate. All Plans The Company’s IMS segment incurred costs of $ 4 million, $ 1 million and $ 9 million for 2023, 2022, and 2021, respectively. The Company’s CPS segment incurred costs of $ 2 million, $ 10 million and $ 5 million for 2023, 2022, and 2021, respectively. Accrued liabilities for restructuring costs are not material as of September 30, 2023 or October 1, 2022, (excludes environmental remediation liabilities which are disclosed in Note 10 “Contingencies”). Other During the first quarter of 2022, the Company recognized a gain of $ 5 million primarily from the sale of a certain real property. Note 12. Income Taxes Domestic and foreign components of income before income taxes were as follows: Year Ended September 30, 2023 October 1, 2022 October 2, 2021 (In thousands) Domestic $ 157,548 $ 145,671 $ 174,936 Foreign 255,259 156,649 106,705 Total $ 412,807 $ 302,320 $ 281,641 67 Table of Contents The provision for income taxes consists of the following: Year Ended September 30, 2023 October 1, 2022 October 2, 2021 (In thousands) Federal: Current $ 362 $ 1,070 $ 705 Deferred 36,431 25,399 28,809 State: Current 3,188 1,711 3,677 Deferred 3,329 3,081 ( 302 ) Foreign: Current 53,346 31,241 ( 906 ) Deferred ( 11,362 ) ( 566 ) 112 Total provision for income taxes $ 85,294 $ 61,936 $ 32,095 The Company's provision for income taxes for 2023, 2022 and 2021 was $ 85 million ( 21 % of income before taxes), $ 62 million ( 20 % of income before taxes) and $ 32 million ( 11 % of income before taxes), respectively. The effective tax rates for 2023, 2022 and 2021 were lower than the expected U.S. statutory rate of 21 % primarily due to a $ 12 million, $ 16 million and $ 43 million tax benefit, respectively, resulting from the release of certain foreign tax reserves due to lapse of time and expiration of statutes of limitations. In connection with the sale of shares of Sanmina SCI India Private Limited ("SIPL") to Reliance Strategic Business Ventures Limited ("RSBVL") on October 3, 2022, the Company recognized tax expense of $ 6 million for the year ended September 30, 2023, which was allocated to additional paid-in-capital. See Note 18 "Strategic Transactions". 68 Table of Contents The tax effects of temporary differences that give rise to significant portions of deferred tax assets and liabilities are as follows: As of September 30, 2023 October 1, 2022 (In thousands) Deferred tax assets: U.S. net operating loss carryforwards $ 51,741 $ 92,882 Foreign net operating loss carryforwards 109,089 109,416 Intangibles 17,921 25,099 Accruals not currently deductible 43,831 44,963 Property, plant and equipment 28,932 27,514 Tax credit carryforwards 20,235 18,465 Reserves not currently deductible 23,341 14,939 Stock compensation expense 6,049 6,365 Federal benefit of foreign operations 22,486 21,312 Capitalized research and development 4,965 — Lease deferred tax asset 16,987 15,018 Other 2,720 2,753 Valuation allowance ( 116,075 ) ( 118,210 ) Total deferred tax assets 232,222 260,516 Deferred tax liabilities on undistributed earnings ( 14,775 ) ( 14,775 ) Deferred tax liabilities on branch operations ( 24,001 ) ( 24,182 ) Revenue recognition ( 1,874 ) ( 1,572 ) Lease deferred tax liability ( 16,671 ) ( 14,808 ) Net deferred tax assets $ 174,901 $ 205,179 Recorded as: Deferred tax assets $ 177,597 $ 209,554 Deferred tax liabilities ( 2,696 ) ( 4,375 ) Net deferred tax assets $ 174,901 $ 205,179 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. The Company regularly assesses its valuation allowance against deferred tax assets on a jurisdiction-by-jurisdiction basis. The Company considers all available positive and negative evidence, including future reversals of temporary differences, projected future taxable income, tax planning strategies and recent financial results. Significant judgment is required in assessing the Company’s ability to generate revenue, gross profit, operating income and jurisdictional taxable income in future periods. The Company’s valuation allowance as of September 30, 2023 relates primarily to foreign net operating losses, except for $ 14 million related to U.S. state net operating losses. The Company provides deferred tax liabilities for the tax consequences associated with the undistributed earnings that are expected to be repatriated to the subsidiaries' parent unless the subsidiaries' earnings are considered indefinitely reinvested. As of September 30, 2023, income taxes and foreign withholding taxes have not been provided for approximately $ 490 million of cumulative undistributed earnings of several non-U.S. subsidiaries. The Company intends to reinvest these earnings indefinitely in operations outside of the U.S. Determination of the amount of unrecognized deferred tax liabilities on these undistributed earnings is not practicable. 69 Table of Contents As of September 30, 2023, the Company has cumulative net operating loss carryforwards for federal, state and foreign tax purposes of $ 155 million, $ 337 million and $ 433 million, respectively. The federal and state net operating loss carryforwards begin expiring in fiscal years 2028 and 2024, respectively, and expire at various dates through September 29, 2035 . Certain foreign net operating losses will begin expiring in 2024. However, the majority of foreign net operating losses carryforward indefinitely. As of September 30, 2023, the Company has federal tax credits of $ 18 million that expire between 2031 and 2043. 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: Year Ended September 30, 2023 October 1, 2022 October 2, 2021 Federal tax at statutory tax rate 21.00 % 21.00 % 21.00 % Effect of foreign operations 0.81 3.52 7.99 Permanent items 0.96 0.08 ( 2.03 ) Federal credits ( 0.57 ) ( 0.73 ) ( 0.54 ) Other 0.06 0.59 ( 0.20 ) State income taxes, net of federal benefit 1.43 1.60 0.91 Release of foreign tax reserves ( 3.03 ) ( 5.57 ) ( 15.73 ) Effective tax rate 20.66 % 20.49 % 11.40 % A reconciliation of the beginning and ending amount of total liabilities for unrecognized tax benefits, excluding accrued penalties and interest, is as follows: Year Ended September 30, 2023 October 1, 2022 October 2, 2021 (In thousands) Balance, beginning of year $ 53,552 $ 67,781 $ 74,612 Increase (decrease) related to prior year tax positions ( 331 ) ( 4,456 ) 6,063 Increase related to current year tax positions 2,040 7,154 7,349 Settlements ( 1,911 ) ( 7,596 ) — Decrease related to lapse of time and expiration of statutes of limitations ( 8,643 ) ( 9,331 ) ( 20,243 ) Balance, end of year $ 44,707 $ 53,552 $ 67,781 The Company had reserves of $ 8 million and $ 11 million as of September 30, 2023 and October 1, 2022, respectively, for the payment of interest and penalties relating to unrecognized tax benefits. During 2023, the Company recognized an income tax benefit for interest and penalties of $ 4 million due to lapse of time and expiration of statutes of limitations compared to an income tax benefit of $ 3 million in 2022. The Company recognizes interest and penalties related to liabilities for unrecognized tax benefits as a component of income tax expense. Should the Company be able to ultimately recognize all of these uncertain tax positions, it would result in a benefit to net income of $ 34 million in 2023. The Company conducts business globally and, as a result, files income tax returns in the United States federal jurisdiction and various state and foreign jurisdictions. In the normal course of business, the Company is subject to examination by taxing authorities throughout the world. The Company is currently being audited by the Internal Revenue Service (“IRS”) for fiscal years 2008 through 2010. On September 26, 2023, the Company received a final Notice of Proposed Adjustment from the IRS related to a worthless stock deduction and disallowance of the resulting net operating loss carryforward in the 2009 fiscal year. The Company disagrees with the IRS’s proposed adjustment and intends to vigorously contest this matter through the applicable IRS administrative and judicial procedures, as appropriate. In the future, the Company expects to receive a Revenue Agent Report including the IRS’s calculation of the tax assessment related to this matter. Although the final resolution of this proposed adjustment remains uncertain, the Company continues to believe that it is more likely than not the Company’s tax position will be sustained. An unfavorable resolution of this matter could have a material, adverse impact on the Company’s Consolidated Financial 70 Table of Contents Statements. 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 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. In general, the Company is no longer subject to United States federal or state income tax examinations for years before 2003, and to foreign examinations for years prior to 2006 in its major foreign jurisdictions. It is reasonably possible that the balance of gross unrecognized tax benefits could decrease in the next 12 months by approximately $ 5 million related to payments, the resolution of audits and expiration of statutes of limitations. In addition, there could be a corresponding decrease in accrued interest and penalties of approximately $ 2 million. Note 13. Earnings Per Share Basic and diluted earnings per share amounts are calculated by dividing net income attributable to common shareholders by the weighted average number of shares of common stock outstanding during the period, as follows: Year Ended September 30, 2023 October 1, 2022 October 2, 2021 (In thousands, except per share amounts) Numerator: Net income attributable to common shareholders $ 309,970 $ 240,384 $ 249,546 Denominator: Weighted average common shares outstanding 57,847 61,310 65,318 Effect of dilutive stock options and restricted stock units 1,968 1,807 1,766 Denominator for diluted earnings per share 59,815 63,117 67,084 Net income attributable to common shareholders per share: Basic $ 5.36 $ 3.92 $ 3.82 Diluted $ 5.18 $ 3.81 $ 3.72 Weighted-average dilutive securities that were excluded from the above calculation because their inclusion would have had an anti-dilutive effect under ASC Topic 260, Earnings per Share , due to application of the treasury stock method were not material for any period presented. Note 14. Stockholders' Equity The Company's 2009 Stock Plan (“2009 Plan”) expired as to future grants on January 26, 2019. Although the 2009 Plan expired, it will continue to govern all awards granted under it prior to its expiration date. On March 11, 2019, the Company's stockholders approved the Company’s 2019 Equity Incentive Plan (“2019 Plan”) and the reservation of 4 million shares of common stock for issuance thereunder, plus any shares subject to stock options or similar awards granted under the 2009 Plan that expire or otherwise terminate without having been exercised in full and shares issued pursuant to awards granted that are forfeited by the Company. As of September 30, 2023, an aggregate of 6 million shares were authorized for future issuance under the Company’s stock plans, of which 3 million of such shares were issuable upon exercise of outstanding options and delivery of shares upon vesting of restricted stock units and 3 million shares of common stock were available for future grant. Awards other than stock options reduce common stock available for grant by 1.36 shares for every share of common stock subject to such an award. Awards under the 2019 Plan and 2009 Plan that expire or are cancelled without delivery of shares generally become available for issuance under the 2019 Plan. The 2019 Plan will expire as to future grants in December 2028 . 71 Table of Contents Stock Repurchase Program During 2023, 2022 and 2021, the Company repurchased 1.6 million shares, 8.0 million shares and 1.5 million shares of its common stock for $ 84 million, $ 317 million and $ 54 million (including commissions), respectively, under stock repurchase programs authorized by the Company’s Board of Directors. These programs have no expiration dates and the timing of repurchases will depend upon capital needs to support the growth of the Company’s business, market conditions and other factors. Although stock repurchases are intended to increase stockholder value, purchases of shares reduce the Company’s liquidity. The U.S. Inflation Reduction Act of 2022 was enacted on August 16, 2022 and imposes a 1% excise tax on corporate share repurchases effective January 1, 2023 and is excluded from the amount available under the stock repurchase programs. The excise tax is recorded to equity and was not material as of September 30, 2023. As of September 30, 2023, an aggregate of $ 279 million remains available under these programs. In addition to the repurchases discussed above, the Company withheld 374,000 , 369,000 and 286,000 shares of its common stock during 2023, 2022, and 2021, respectively, in settlement of employee tax withholding obligations due upon the vesting of restricted stock units. The Company paid $ 23 million, $ 14 million and $ 10 million, respectively, to applicable tax authorities in connection with these repurchases. Accumulated Other Comprehensive Income Accumulated other comprehensive income, net of tax as applicable, consisted of the following: As of September 30, 2023 October 1, 2022 (In thousands) Foreign currency translation adjustments $ 68,305 $ 63,929 Unrealized holding gain (loss) on derivative financial instruments 9,427 4,112 Unrecognized net actuarial loss and unrecognized transition cost for benefit plans ( 6,853 ) ( 11,716 ) Total $ 70,879 $ 56,325 Unrealized holding gain (loss) on derivative financial instruments includes gains or losses from interest rate swap agreements with independent counterparties to partially hedge the variability in cash flows due to changes in the benchmark interest rate (SOFR) associated with anticipated variable rate borrowings. Interest rate swaps with an aggregate notional amount of $ 650 million and $ 350 million were outstanding as of September 30, 2023 and October 1, 2022, respectively. Given the recent rise in interest rates and the likelihood of additional rate increases, these interest rate swaps had a positive value of $ 12 million and $ 6 million as of September 30, 2023 and October 1, 2022, respectively. As of September 30, 2023, $ 6 million was included in prepaid expenses and other current assets and $ 6 million was included in other assets on the consolidated balance sheets. 72 Table of Contents Note 15. Business Segment, Geographic and Customer Information The Company's chief operating decision making group is the Chief Executive Officer who allocates resources and assesses performance of operating segments based on a measure of revenue and gross profit that excludes items not directly related to the Company's ongoing business operations. These items are typically either non-recurring or non-cash in nature. Intersegment sales consist primarily of sales of components from CPS to IMS. Segment information is as follows: Year Ended September 30, 2023 October 1, 2022 October 2, 2021 (In thousands) Gross sales: IMS $ 7,328,651 $ 6,413,606 $ 5,485,612 CPS 1,747,854 1,655,183 1,379,455 Intersegment sales ( 141,457 ) ( 149,167 ) ( 126,711 ) Net Sales $ 8,935,048 $ 7,919,622 $ 6,738,356 Gross Profit: IMS $ 561,166 $ 462,606 $ 391,339 CPS 202,000 175,509 151,884 Total 763,166 638,115 543,223 Unallocated corporate items (1) ( 19,955 ) ( 15,909 ) ( 16,782 ) Total $ 743,211 $ 622,206 $ 526,441 Depreciation and amortization: IMS $ 79,508 $ 73,914 $ 77,076 CPS 34,348 30,061 27,770 Total 113,856 103,975 104,846 Unallocated corporate items (2) 4,381 4,808 4,810 Total $ 118,237 $ 108,783 $ 109,656 Capital expenditures (receipt basis): IMS $ 114,036 $ 94,636 $ 44,672 CPS 53,102 55,993 33,839 Total 167,138 150,629 78,511 Unallocated corporate items (2) 7,249 5,650 3,343 Total $ 174,387 $ 156,279 $ 81,854 (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 investigation costs. (2) Primarily related to selling, general and administration functions. 73 Table of Contents Segment assets, consisting of accounts receivable, inventories and fixed assets, are substantially proportional to segment sales. Property, plant and equipment, net by geographic segment is as follows: As of September 30, 2023 October 1, 2022 (In thousands) Property, plant and equipment, net: Americas $ 428,941 $ 367,172 APAC 152,024 151,254 EMEA 51,871 56,744 Total $ 632,836 $ 575,170 Note 16. Stock-Based Compensation Stock-based compensation expense was recognized as follows: Year Ended September 30, 2023 October 1, 2022 October 2, 2021 (In thousands) Cost of sales $ 16,763 $ 14,065 $ 14,472 Selling, general and administrative 32,781 25,037 20,118 Research and development 858 506 386 Total $ 50,402 $ 39,608 $ 34,976 The Company grants restricted stock units (“RSUs”) 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, with associated compensation expense recognized ratably over the vesting period. Generally, the Company’s PSUs vest contingent on achievement of cumulative non-GAAP earnings per share measured over three fiscal years. If a minimum threshold is not achieved during the measurement period, the PSUs will be cancelled. If a minimum threshold is achieved or exceeded, the number of shares of common stock that will be issued will range from 70 % to 130 % of the number of PSUs granted, depending on the extent of performance. 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. 74 Table of Contents Activity with respect to the Company’s RSUs and PSUs was as follows: Number of Shares Weighted Average Grant-Date Fair Value ($) Weighted-Average Remaining Contractual Term (Years) Aggregate Intrinsic Value ($) (In thousands) (In thousands) Outstanding as of October 3, 2020 2,568 29.67 1.23 71,571 Granted 1,529 34.26 Vested/Forfeited/Cancelled ( 1,143 ) 29.27 Outstanding as of October 2, 2021 2,954 32.21 1.23 113,591 Granted 1,644 40.54 Vested/Forfeited/Cancelled ( 1,318 ) 30.42 Outstanding as of October 1, 2022 3,280 37.11 1.35 155,049 Granted 972 59.78 Vested/Forfeited/Cancelled ( 1,371 ) 36.45 Outstanding as of September 30, 2023 2,881 45.07 1.14 150,547 Expected to vest as of September 30, 2023 2,607 44.63 1.08 136,192 The fair value of RSUs that vested during the year was $ 70 million for 2023, $ 44 million for 2022 and $ 32 million for 2021. As of September 30, 2023, unrecognized compensation expense of $ 68 million is expected to be recognized over a weighted average period of 1.1 years. Note 17. Employee Benefit Plans The Company has various defined contribution retirement plans that cover the majority of its domestic employees. These retirement plans permit participants to elect to have contributions made to the retirement plans in the form of salary deferrals. Under these retirement plans, the Company may match a portion of employee contributions. Amounts contributed by the Company were not material for any period presented herein. The Company sponsors a deferred compensation plan for eligible employees that allows participants to defer payment of all or part of their compensation. Deferrals under this plan were immaterial. Assets associated with these plans were $ 38 million and $ 37 million as of September 30, 2023 and October 1, 2022, respectively. Liabilities associated with these plans were $ 38 million and $ 37 million as of September 30, 2023 and October 1, 2022, respectively. These amounts are recorded in other non-current assets and other long-term liabilities on the consolidated balance sheets. Defined benefit plans covering certain employees in the United States and Canada were frozen in 2001. During 2022, the Board of Directors approved the termination of the Company's frozen U.S. defined benefit plan (the “Plan”) effective July 3, 2022. In connection with this termination, the Company purchased a group annuity contract for $ 6 million during 2022 that provides for the administration of future payments to eligible plan participants. In addition, the Company recorded a pension settlement charge of $ 2 million during 2022, which includes the reclassification of unrecognized pension losses from accumulated other comprehensive income to other income (expense), net on the consolidated statements of income. The Company provides defined benefit pension plans in certain other countries. The assumptions used for calculating the pension benefit obligations for non-U.S. plans depend on the local economic environment and regulations. The measurement date for the Company's defined benefit plans is September 30, 2023. 75 Table of Contents The funded status and plan assets for the non-U.S defined benefit plans and amount reported on the consolidated balance sheets were as follows: As of September 30, 2023 October 1, 2022 (In thousands) Plan Assets $ 17,307 $ 17,290 Projected Benefit Obligation 52,670 50,871 Underfunded Status $ 35,363 $ 33,581 Current Liabilities $ 3,147 $ 3,038 Non-current liabilities 32,216 30,543 Total liabilities $ 35,363 $ 33,581 The Company’s investment strategy is designed to help ensure that sufficient pension assets are available to pay benefits as they become due. Plan assets are invested in mutual funds that are valued using the NAV that is quoted in active markets (Level 1 input). These plans are managed consistent with regulations or market practices of the country in which the assets are invested. As of September 30, 2023, there were no significant concentrations of credit risk related to pension plan assets. All other amounts and assumptions were not material for any period presented herein. Note 18. Strategic Transactions India Joint Venture On October 3, 2022 (“Transaction Date”), the Company completed a joint venture transaction pursuant to a Share Subscription and Purchase Agreement (the “SSPA”) and a Joint Venture and Shareholders’ Agreement (the “Shareholders’ Agreement”) previously entered into with RSBVL, a wholly owned subsidiary of Reliance Industries Limited. Pursuant to the SSPA and the Shareholders’ Agreement, the parties established SIPL, the Company’s existing Indian manufacturing entity, as a joint venture to engage in manufacturing in India of telecommunications equipment, data center and internet equipment, medical equipment, clean technology equipment and other high-tech equipment. This partnership leverages the Company’s advanced manufacturing experience and RSBVL’s expertise and leadership in the Indian business ecosystem. In addition to supporting the Company’s current customer base, the joint venture will create a state-of-the-art “Manufacturing Technology Center of Excellence” that will serve as an incubation center to support the product development and hardware start-up ecosystem in India, as well as promote research and innovation of leading-edge technologies. As a result of the transaction, RSBVL acquired shares of SIPL for approximately $ 216 million of cash such that RSBVL holds 50.1 % of the outstanding shares of SIPL and the Company holds the remaining 49.9 % of the outstanding shares of SIPL. In connection with RSBVL’s investment, the Company and RSBVL entered into a management services contract pursuant to which the Company has the unilateral ability to make the significant financial and operating decisions made in the ordinary course of SIPL’s business. In accordance with ASC Topic 810, Consolidation (“ASC 810”), the Company is required to consolidate entities in which it has a controlling financial interest. The Company determined the voting interest model was applicable under ASC 810 and concluded that, despite not having a majority ownership interest, the Company has a controlling financial interest in SIPL through the management services contract. Therefore, the Company has, by contract, the unilateral ability to control the significant decisions made in the ordinary course of SIPL’s business. Because the Company has a controlling financial interest in SIPL, it consolidates SIPL. However, the Company periodically assesses whether any changes in facts and circumstances have occurred that could require the Company to deconsolidate SIPL. The Company recognized a noncontrolling interest of $ 132 million and an increase in additional paid-in-capital of $ 84 million ($ 78 million, net of tax expense) in the consolidated financial statements in connection with the sale of shares of SIPL to RSBVL as of the Transaction Date. SIPL’s cash and cash equivalents balance of $ 186 million as of September 30, 2023 is not available for general corporate purposes and must be retained in SIPL to fund its operations. 76 Table of Contents Acquisition On April 6, 2021 , the Company purchased all of the outstanding stock of a European subsidiary of a multinational company in the industrial end market. This acquisition increased 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 was paid in 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 is 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 $ 18,696 Noncurrent assets, including identifiable intangible assets of $ 4.4 million and goodwill of $ 8.5 million 30,711 Current liabilities ( 10,671 ) Noncurrent liabilities ( 152 ) Total net assets acquired $ 38,584 Goodwill reflects the expectation that the acquisition enables 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 were fully amortized as of September 30, 2023. 77 Table of Contents Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure None.