ý | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
¨ | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
Wisconsin | 39-1344447 | |
(State of Incorporation) | (IRS Employer Identification No.) |
Large accelerated filer ý | Accelerated filer ¨ | Non-accelerated filer ¨ | Smaller reporting company ¨ | |
(Do not check if a smaller reporting company) |
Three Months Ended | |||||||
January 2, 2016 | January 3, 2015 | ||||||
Net sales | $ | 616,664 | $ | 664,690 | |||
Cost of sales | 566,605 | 603,276 | |||||
Gross profit | 50,059 | 61,414 | |||||
Selling and administrative expenses | 27,028 | 30,940 | |||||
Restructuring charges | 1,507 | 1,691 | |||||
Operating income | 21,524 | 28,783 | |||||
Other income (expense): | |||||||
Interest expense | (3,534 | ) | (3,777 | ) | |||
Interest income | 932 | 897 | |||||
Miscellaneous | (1,620 | ) | 138 | ||||
Income before income taxes | 17,302 | 26,041 | |||||
Income tax expense | 2,854 | 2,962 | |||||
Net income | $ | 14,448 | $ | 23,079 | |||
Earnings per share: | |||||||
Basic | $ | 0.43 | $ | 0.69 | |||
Diluted | $ | 0.42 | $ | 0.67 | |||
Weighted average shares outstanding: | |||||||
Basic | 33,396 | 33,602 | |||||
Diluted | 34,062 | 34,439 | |||||
Comprehensive income: | |||||||
Net income | $ | 14,448 | $ | 23,079 | |||
Other comprehensive income (loss) — net of income tax: | |||||||
Derivative instrument fair value adjustments | 5,744 | (4,644 | ) | ||||
Foreign currency translation adjustments | (6,606 | ) | (5,361 | ) | |||
Other comprehensive loss | (862 | ) | (10,005 | ) | |||
Total comprehensive income | $ | 13,586 | $ | 13,074 |
January 2, 2016 | October 3, 2015 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 354,728 | $ | 357,106 | |||
Accounts receivable, net of allowances of $969 and $879, respectively | 360,220 | 384,680 | |||||
Inventories | 549,501 | 569,371 | |||||
Deferred income taxes | 10,662 | 10,686 | |||||
Prepaid expenses and other | 23,130 | 22,882 | |||||
Total current assets | 1,298,241 | 1,344,725 | |||||
Property, plant and equipment, net | 313,656 | 317,351 | |||||
Deferred income taxes | 3,584 | 3,635 | |||||
Other | 36,559 | 36,677 | |||||
Total non-current assets | 353,799 | 357,663 | |||||
Total assets | $ | 1,652,040 | $ | 1,702,388 | |||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Current portion of long-term debt and capital lease obligations | $ | 2,864 | $ | 3,513 | |||
Accounts payable | 368,030 | 400,710 | |||||
Customer deposits | 71,863 | 81,359 | |||||
Accrued salaries and wages | 35,715 | 49,270 | |||||
Other accrued liabilities | 40,030 | 44,446 | |||||
Total current liabilities | 518,502 | 579,298 | |||||
Long-term debt, capital lease obligations and other financing, net of current portion | 259,289 | 259,257 | |||||
Deferred income taxes | 9,664 | 9,664 | |||||
Other liabilities | 13,791 | 11,897 | |||||
Total non-current liabilities | 282,744 | 280,818 | |||||
Total liabilities | 801,246 | 860,116 | |||||
Commitments and contingencies | |||||||
Shareholders’ equity: | |||||||
Preferred stock, $.01 par value, 5,000 shares authorized, none issued or outstanding | — | — | |||||
Common stock, $.01 par value, 200,000 shares authorized, 50,558 and 50,554 shares issued, respectively, and 33,276 and 33,500 shares outstanding, respectively | 506 | 506 | |||||
Additional paid-in capital | 500,888 | 497,488 | |||||
Common stock held in treasury, at cost, 17,282 and 17,054 shares, respectively | (518,431 | ) | (509,968 | ) | |||
Retained earnings | 875,165 | 860,717 | |||||
Accumulated other comprehensive loss | (7,334 | ) | (6,471 | ) | |||
Total shareholders’ equity | 850,794 | 842,272 | |||||
Total liabilities and shareholders’ equity | $ | 1,652,040 | $ | 1,702,388 |
Three Months Ended | |||||||
January 2, 2016 | January 3, 2015 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 14,448 | $ | 23,079 | |||
Adjustments to reconcile net income to cash flows provided by (used in) operating activities: | |||||||
Depreciation | 12,029 | 12,657 | |||||
Amortization of deferred financing fees | 81 | 76 | |||||
Loss (gain) on sale of property, plant and equipment | 9 | (86 | ) | ||||
Deferred income tax net expense | — | 95 | |||||
Share-based compensation expense | 3,390 | 3,741 | |||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | 22,290 | (56,669 | ) | ||||
Inventories | 17,292 | (16,064 | ) | ||||
Other current and noncurrent assets | (345 | ) | (4,722 | ) | |||
Accounts payable | (28,975 | ) | (47,174 | ) | |||
Customer deposits | (9,168 | ) | 7,007 | ||||
Other current and noncurrent liabilities | (9,785 | ) | (12,230 | ) | |||
Cash flows provided by (used in) operating activities | 21,266 | (90,290 | ) | ||||
Cash flows from investing activities: | |||||||
Payments for property, plant and equipment | (11,745 | ) | (9,595 | ) | |||
Proceeds from sale of property, plant and equipment | 14 | 101 | |||||
Cash flows used in investing activities | (11,731 | ) | (9,494 | ) | |||
Cash flows from financing activities: | |||||||
Borrowings under credit facility | 139,000 | 152,000 | |||||
Payments on debt and capital lease obligations | (140,196 | ) | (153,052 | ) | |||
Debt issuance costs | (70 | ) | — | ||||
Repurchases of common stock | (8,463 | ) | (7,289 | ) | |||
Proceeds from exercise of stock options | 10 | 2,104 | |||||
Minimum tax withholding related to vesting of restricted stock | — | (465 | ) | ||||
Cash flows used in financing activities | (9,719 | ) | (6,702 | ) | |||
Effect of exchange rate changes on cash and cash equivalents | (2,194 | ) | (420 | ) | |||
Net decrease in cash and cash equivalents | (2,378 | ) | (106,906 | ) | |||
Cash and cash equivalents: | |||||||
Beginning of period | 357,106 | 346,591 | |||||
End of period | $ | 354,728 | $ | 239,685 |
January 2, 2016 | October 3, 2015 | ||||||
Raw materials | $ | 393,733 | $ | 407,637 | |||
Work-in-process | 69,443 | 84,472 | |||||
Finished goods | 86,325 | 77,262 | |||||
Total inventories | $ | 549,501 | $ | 569,371 |
January 2, 2016 | October 3, 2015 | ||||||
Borrowings under the credit facility | $ | 75,000 | $ | 75,000 | |||
5.20% Senior Notes, due June 15, 2018 | 175,000 | 175,000 | |||||
Capital lease obligations | 3,897 | 4,560 | |||||
Non-cash financing of leased facility | 8,256 | 8,210 | |||||
Total obligations | 262,153 | 262,770 | |||||
Less: current portion | (2,864 | ) | (3,513 | ) | |||
Long-term debt and capital lease obligations, net of current portion | $ | 259,289 | $ | 259,257 |
Fair Values of Derivative Instruments | ||||||||||||||||||||
In thousands of dollars | ||||||||||||||||||||
Asset Derivatives | Liability Derivatives | |||||||||||||||||||
January 2, 2016 | October 3, 2015 | January 2, 2016 | October 3, 2015 | |||||||||||||||||
Derivatives designated as hedging instruments | Balance Sheet Classification | Fair Value | Fair Value | Balance Sheet Classification | Fair Value | Fair Value | ||||||||||||||
Interest rate swaps | Prepaid expenses and other | $ | — | $ | — | Current liabilities – other | $ | 113 | $ | 497 | ||||||||||
Forward contracts | Prepaid expenses and other | $ | — | $ | — | Current liabilities – other | $ | 3,967 | $ | 9,408 |
Fair Values of Derivative Instruments | ||||||||||||||||||||
In thousands of dollars | ||||||||||||||||||||
Asset Derivatives | Liability Derivatives | |||||||||||||||||||
January 2, 2016 | October 3, 2015 | January 2, 2016 | October 3, 2015 | |||||||||||||||||
Derivatives not designated as hedging instruments | Balance Sheet Classification | Fair Value | Fair Value | Balance Sheet Classification | Fair Value | Fair Value | ||||||||||||||
Forward contracts | Prepaid expenses and other | $ | 66 | $ | — | Current liabilities – other | $ | 29 | $ | — |
Derivative Impact on Accumulated Other Comprehensive Loss | ||||||||
for the Three Months Ended | ||||||||
In thousands of dollars | ||||||||
Amount of Gain (Loss) Recognized in Other Comprehensive Income (“OCI”) on Derivatives (Effective Portion) | ||||||||
Derivatives in Cash Flow Hedging Relationships | January 2, 2016 | January 3, 2015 | ||||||
Interest rate swaps | $ | 257 | $ | (310 | ) | |||
Forward contracts | $ | 2,289 | $ | (4,256 | ) |
Derivative Impact on Gain (Loss) Recognized in Income | ||||||||||
for the Three Months Ended | ||||||||||
In thousands of dollars | ||||||||||
Amount of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) | ||||||||||
Derivatives in Cash Flow Hedging Relationships | Classification of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) | January 2, 2016 | January 3, 2015 | |||||||
Interest rate swaps | Interest expense | $ | (127 | ) | $ | (137 | ) | |||
Forward contracts | Selling and administrative expenses | $ | (323 | ) | $ | 12 | ||||
Forward contracts | Cost of goods sold | $ | (2,829 | ) | $ | 113 | ||||
Treasury rate locks | Interest expense | $ | 81 | $ | 86 | |||||
Income tax expense | Income tax benefit | $ | — | $ | 4 | |||||
Amount of Gain on Derivatives Recognized in Income | ||||||||||
Derivatives Not Designated as Hedging Instruments | Location of Gain Recognized on Derivatives in Income | January 2, 2016 | January 3, 2015 | |||||||
Forward contracts | Other income | $ | 37 | $ | 158 |
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
January 2, 2016 | |||||||||||||||
Interest rate swaps | $ | — | $ | (113 | ) | $ | — | $ | (113 | ) | |||||
Foreign currency forward contracts | $ | — | $ | (3,930 | ) | $ | — | $ | (3,930 | ) | |||||
October 3, 2015 | |||||||||||||||
Interest rate swaps | $ | — | $ | (497 | ) | $ | — | $ | (497 | ) | |||||
Foreign currency forward contracts | $ | — | $ | (9,408 | ) | $ | — | $ | (9,408 | ) |
Three Months Ended | |||||||
January 2, 2016 | January 3, 2015 | ||||||
Net income | $ | 14,448 | $ | 23,079 | |||
Basic weighted average common shares outstanding | 33,396 | 33,602 | |||||
Dilutive effect of share-based awards outstanding | 666 | 837 | |||||
Diluted weighted average shares outstanding | 34,062 | 34,439 | |||||
Earnings per share: | |||||||
Basic | $ | 0.43 | $ | 0.69 | |||
Diluted | $ | 0.42 | $ | 0.67 |
Three Months Ended | |||||||
January 2, 2016 | January 3, 2015 | ||||||
Net sales: | |||||||
AMER | $ | 305,097 | $ | 335,262 | |||
APAC | 299,346 | 333,377 | |||||
EMEA | 42,087 | 28,079 | |||||
Elimination of inter-segment sales | (29,866 | ) | (32,028 | ) | |||
$ | 616,664 | $ | 664,690 | ||||
Operating income (loss): | |||||||
AMER | $ | 8,386 | $ | 19,752 | |||
APAC | 36,952 | 41,781 | |||||
EMEA | (735 | ) | (3,831 | ) | |||
Corporate and other costs | (23,079 | ) | (28,919 | ) | |||
$ | 21,524 | $ | 28,783 | ||||
Other income (expense): | |||||||
Interest expense | $ | (3,534 | ) | $ | (3,777 | ) | |
Interest income | 932 | 897 | |||||
Miscellaneous | (1,620 | ) | 138 | ||||
Income before income taxes | $ | 17,302 | $ | 26,041 | |||
January 2, 2016 | October 3, 2015 | ||||||
Total assets: | |||||||
AMER | $ | 546,784 | $ | 573,437 | |||
APAC | 1,008,975 | 1,011,622 | |||||
EMEA | 128,150 | 128,306 | |||||
Corporate and eliminations | (31,869 | ) | (10,977 | ) | |||
$ | 1,652,040 | $ | 1,702,388 |
Limited warranty liability, as of September 27, 2014 | $ | 6,803 | |
Accruals for warranties issued during the period | 1,742 | ||
Settlements (in cash or in kind) during the period | (2,698 | ) | |
Limited warranty liability, as of October 3, 2015 | 5,847 | ||
Accruals for warranties issued during the period | 424 | ||
Settlements (in cash or in kind) during the period | (637 | ) | |
Limited warranty liability, as of January 2, 2016 | $ | 5,634 |
Employee Termination and Severance Costs | Other Exit Costs | Total | |||||||||
Accrued balance, October 3, 2015 | $ | — | $ | — | $ | — | |||||
Restructuring costs | 1,394 | 113 | 1,507 | ||||||||
Amounts utilized | (338 | ) | (113 | ) | (451 | ) | |||||
Accrued balance, January 2, 2016 | $ | 1,056 | $ | — | $ | 1,056 |
ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
Three Months Ended | |||||||
January 2, 2016 | January 3, 2015 | ||||||
Net sales | $ | 616.7 | $ | 664.7 | |||
Gross profit | $ | 50.1 | $ | 61.4 | |||
Gross margin | 8.1 | % | 9.2 | % | |||
Operating income | $ | 21.5 | $ | 28.8 | |||
Operating margin | 3.5 | % | 4.3 | % | |||
Net income | $ | 14.4 | $ | 23.1 | |||
Diluted earnings per share | $ | 0.42 | $ | 0.67 | |||
Return on invested capital* | 10.8 | % | 14.4 | % | |||
Economic return* | (0.2 | )% | 3.4 | % | |||
* Non-GAAP metric; refer to Exhibit 99.1 for reconciliation. |
Three Months Ended | ||||||||
Market Sector | January 2, 2016 | January 3, 2015 | ||||||
Networking/Communications | $ | 156.8 | $ | 233.7 | ||||
Healthcare/Life Sciences | 191.5 | 196.4 | ||||||
Industrial/Commercial | 172.8 | 148.0 | ||||||
Defense/Security/Aerospace | 95.6 | 86.6 | ||||||
Total net sales | $ | 616.7 | $ | 664.7 |
Three Months Ended | |||||
January 2, 2016 | January 3, 2015 | ||||
Effective tax rate | 16.5 | % | 11.4 | % |
Three Months Ended | |||||||
January 2, 2016 | January 3, 2015 | ||||||
Diluted earnings per share, as reported | $ | 0.42 | $ | 0.67 | |||
Impact of restructuring costs | 0.05 | 0.05 | |||||
Diluted earnings per share, as adjusted* | $ | 0.47 | $ | 0.72 |
Three Months Ended | |||||||
January 2, 2016 | January 3, 2015 | ||||||
Annualized operating income (tax effected) | $ | 81,069 | $ | 109,706 | |||
Average invested capital | 753,078 | 759,676 | |||||
After-tax ROIC | 10.8 | % | 14.4 | % | |||
WACC | 11.0 | % | 11.0 | % | |||
Economic Return | (0.2 | )% | 3.4 | % |
Three Months Ended | |||||||
January 2, 2016 | January 3, 2015 | ||||||
Net sales: | |||||||
AMER | $ | 305.1 | $ | 335.3 | |||
APAC | 299.4 | 333.4 | |||||
EMEA | 42.1 | 28.0 | |||||
Elimination of inter-segment sales | (29.9 | ) | (32.0 | ) | |||
Total net sales | $ | 616.7 | $ | 664.7 | |||
Operating income (loss): | |||||||
AMER | $ | 8.4 | $ | 19.7 | |||
APAC | 36.9 | 41.8 | |||||
EMEA | (0.7 | ) | (3.8 | ) | |||
Corporate expenses and other costs | (23.1 | ) | (28.9 | ) | |||
Total operating income | $ | 21.5 | $ | 28.8 |
Three Months Ended | |||||||
January 2, 2016 | January 3, 2015 | ||||||
Cash provided by (used in) operating activities | $ | 21.3 | $ | (90.3 | ) | ||
Cash used in investing activities | $ | (11.7 | ) | $ | (9.5 | ) | |
Cash used in financing activities | $ | (9.7 | ) | $ | (6.7 | ) |
Three Months Ended | |||||
January 2, 2016 | January 3, 2015 | ||||
Days in accounts receivable | 53 | 52 | |||
Days in inventory | 88 | 82 | |||
Days in accounts payable | (59 | ) | (53 | ) | |
Days in cash deposits | (11 | ) | (9 | ) | |
Annualized cash cycle | 71 | 72 |
Three Months Ended | |||||||
January 2, 2016 | January 3, 2015 | ||||||
Cash flows provided by (used in) operating activities | $ | 21.3 | $ | (90.3 | ) | ||
Payments for property, plant and equipment | (11.8 | ) | (9.6 | ) | |||
Free cash flow | $ | 9.5 | $ | (99.9 | ) |
Payments Due by Fiscal Year | ||||||||||||||||||||
Contractual Obligations | Total | Remaining 2016 | 2017-2018 | 2019-2020 | 2021 and thereafter | |||||||||||||||
Long-Term Debt Obligations (1,2) | $ | 276.5 | $ | 7.7 | $ | 192.8 | $ | 76.0 | $ | — | ||||||||||
Capital Lease Obligations | 3.9 | 2.6 | 1.3 | — | — | |||||||||||||||
Operating Lease Obligations | 27.5 | 5.4 | 11.3 | 8.4 | 2.4 | |||||||||||||||
Purchase Obligations (3) | 437.6 | 431.8 | 5.8 | — | — | |||||||||||||||
Other Long-Term Liabilities on the Balance Sheet (4) | 10.8 | 0.5 | 0.7 | 0.3 | 9.3 | |||||||||||||||
Other Long-Term Liabilities not on the Balance Sheet (5) | 7.4 | 1.8 | 3.5 | 1.3 | 0.8 | |||||||||||||||
Other Financing Obligations (6) | 14.0 | 1.1 | 3.0 | 3.2 | 6.7 | |||||||||||||||
Total Contractual Cash Obligations | $ | 777.7 | $ | 450.9 | $ | 218.4 | $ | 89.2 | $ | 19.2 |
1) | Includes amounts outstanding under the Credit Facility. As of January 2, 2016, the outstanding balance was $75.0 million. The amounts listed above include estimated interest obligations; see Note 3, "Debt," in Notes to Condensed Consolidated Financial Statements for further information. |
2) | Includes $175.0 million in principal amount of the Notes. The amounts listed above include estimated interest obligations; see Note 3, "Debt," in Notes to Condensed Consolidated Financial Statements for further information. |
3) | As of January 2, 2016, purchase obligations consist of commitments to purchase inventory and equipment in the ordinary course of business. |
4) | As of January 2, 2016, other long-term obligations on the balance sheet included deferred compensation obligations to certain of our former and current executive officers, as well as other key employees, and asset retirement obligations. We have excluded from the above table the impact of approximately $2.4 million, as of January 2, 2016, related to |
5) | As of January 2, 2016, other long-term obligations not on the balance sheet consisted of guarantees and a commitment for salary continuation and certain benefits in the event employment of one executive officer of the Company is terminated without cause. Excluded from the amounts disclosed are certain bonus and incentive compensation amounts, which would be paid on a prorated basis in the year of termination. |
6) | Includes future minimum payments under the lease agreement for our Guadalajara, Mexico facility. Excludes $20.3 million of future minimum payments under renewal options from 2025 through 2034. |
Three Months Ended | |||||
January 2, 2016 | January 3, 2015 | ||||
Net sales | 8.2 | % | 5.8 | % | |
Total costs | 12.7 | % | 12.2 | % |
Period | Total number of shares purchased | Average price paid per share | Total number of shares purchased as part of publicly announced plans or programs | Maximum approximate dollar value of shares that may yet be purchased under the plans or programs* | ||||||||||
October 4, 2015 to October 31, 2015 | 54,639 | $ | 40.22 | 54,639 | $ | 27,802,387 | ||||||||
November 1, 2015 to November 28, 2015 | 72,903 | $ | 36.43 | 72,903 | $ | 25,146,761 | ||||||||
November 29, 2015 to January 2, 2016 | 99,770 | $ | 36.18 | 99,770 | $ | 21,537,120 | ||||||||
Total | 227,312 | $ | 37.23 | 227,312 |
31.1 | Certification of Chief Executive Officer pursuant to Section 302(a) of the Sarbanes Oxley Act of 2002. | |
31.2 | Certification of Chief Financial Officer pursuant to Section 302(a) of the Sarbanes Oxley Act of 2002. | |
32.1 | Certification of the CEO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
32.2 | Certification of the CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
99.1 | Reconciliation of ROIC and Economic Return to GAAP Financial Statements | |
101 | The following materials from Plexus Corp.’s Quarterly Report on Form 10-Q for the quarter ended January 2, 2016, formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Statements of Comprehensive Income, (ii) the Consolidated Balance Sheets, (iii) the Consolidated Statements of Cash Flows, and (iv) Notes to Consolidated Financial Statements. | |
101.INS | XBRL Instance Document | |
101.SCH | XBRL Taxonomy Extension Schema Document | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document |
Plexus Corp. | ||
Registrant | ||
Date: 2/8/16 | /s/ Dean A. Foate | |
Dean A. Foate | ||
Chairman, President and Chief Executive Officer | ||
Date: 2/8/16 | /s/ Patrick J. Jermain | |
Patrick J. Jermain | ||
Senior Vice President and Chief Financial Officer |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Dean A. Foate | |
Dean A. Foate | |
Chairman, President and Chief Executive Officer |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Patrick J. Jermain | |
Patrick J. Jermain | |
Senior Vice President and Chief Financial Officer |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Dean A. Foate | |
Dean A. Foate | |
Chairman, President and Chief Executive Officer | |
February 8, 2016 |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Patrick J. Jermain | |
Patrick J. Jermain | |
Senior Vice President and Chief Financial Officer | |
February 8, 2016 |
Three Months Ended | Twelve Months Ended | Three Months Ended | ||||||||||||
January 2, 2016 | October 3, 2015 | January 3, 2015 | ||||||||||||
Operating income | $ | 21,524 | $ | 115,436 | $ | 28,783 | ||||||||
Restructuring charges | 1,507 | 1,691 | 1,691 | |||||||||||
Adjusted operating income | $ | 23,031 | $ | 117,127 | $ | 30,474 | ||||||||
x | 4 | x | 1 | x | 4 | |||||||||
Annualized operating income | $ | 92,124 | 117,127 | $ | 121,896 | |||||||||
Tax rate | x | 12 | % | x | 11 | % | x | 10 | % | |||||
Tax impact | 11,055 | 12,884 | 12,190 | |||||||||||
Operating income (tax effected) | $ | 81,069 | $ | 104,243 | $ | 109,706 | ||||||||
Average invested capital | $ | 753,078 | $ | 745,611 | $ | 759,676 | ||||||||
ROIC | 10.8 | % | 14.0 | % | 14.4 | % | ||||||||
Weighted average cost of capital ("WACC") | 11.0 | % | 11.0 | % | 11.0 | % | ||||||||
Economic return | (0.2 | )% | 3.0 | % | 3.4 | % |
January 2, | October 3, | July 4, | April 4, | January 3, | September 27, | |||||||||||||||||||
2016 | 2015 | 2015 | 2015 | 2015 | 2014 | |||||||||||||||||||
Equity | $ | 850,794 | $ | 842,272 | $ | 835,063 | $ | 808,468 | $ | 792,298 | $ | 781,133 | ||||||||||||
Plus: | ||||||||||||||||||||||||
Debt—current | 2,864 | 3,513 | 4,281 | 4,774 | 4,793 | 4,368 | ||||||||||||||||||
Debt—non-current | 259,289 | 259,257 | 259,284 | 260,025 | 260,990 | 262,046 | ||||||||||||||||||
Less: | ||||||||||||||||||||||||
Cash and cash equivalents | (354,728 | ) | (357,106 | ) | (354,830 | ) | (356,296 | ) | (239,685 | ) | (346,591 | ) | ||||||||||||
$ | 758,219 | $ | 747,936 | $ | 743,798 | $ | 716,971 | $ | 818,396 | $ | 700,956 |
Document And Entity Information - shares |
3 Months Ended | |
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Jan. 02, 2016 |
Feb. 04, 2016 |
|
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jan. 02, 2016 | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q1 | |
Entity Registrant Name | PLEXUS CORP | |
Entity Central Index Key | 0000785786 | |
Current Fiscal Year End Date | --10-01 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 33,374,556 |
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Jan. 02, 2016 |
Oct. 03, 2015 |
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Statement of Financial Position [Abstract] | ||
Accounts receivable, allowances | $ 969 | $ 879 |
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 50,558,000 | 50,554,000 |
Common stock, shares outstanding | 33,276,000 | 33,500,000 |
Treasury stock, shares | 17,282,000 | 17,054,000 |
Basis Of Presentation And Accounting Policies |
3 Months Ended |
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Jan. 02, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis Of Presentation And Accounting Policies | Basis of Presentation and Significant Accounting Policies Basis of Presentation The accompanying Condensed Consolidated Financial Statements included herein have been prepared by Plexus Corp. and its subsidiaries (together “Plexus” or the “Company”) without audit and pursuant to the rules and regulations of the United States (“U.S.”) Securities and Exchange Commission (“SEC”). In the opinion of the Company, the accompanying Condensed Consolidated Financial Statements reflect all adjustments, which include normal recurring adjustments necessary for the fair statement of the consolidated financial position of the Company as of January 2, 2016 and October 3, 2015, and the results of operations for the three months ended January 2, 2016 and January 3, 2015, and the cash flows for the same three month periods. Certain prior period amounts have been reclassified to conform to the current period presentation. The Company’s fiscal year ends on the Saturday closest to September 30. The Company also uses a “4-4-5” weekly accounting system for the interim periods in each quarter. Each quarter, therefore, ends on a Saturday at the end of the 4-4-5 period. Periodically, an additional week must be added to the fiscal year to re-align with the Saturday closest to September 30. The first quarter of fiscal 2015 included 14 weeks, all other fiscal quarters presented included 13 weeks. Certain information and footnote disclosures, normally included in financial statements prepared in accordance with generally accepted accounting principles, have been condensed or omitted pursuant to the SEC’s rules and regulations dealing with interim financial statements. However, the Company believes that the disclosures made in the Condensed Consolidated Financial Statements included herein are adequate to make the information presented not misleading. It is suggested that these Condensed Consolidated Financial Statements be read in conjunction with the Consolidated Financial Statements and notes thereto included in the Company’s 2015 Annual Report on Form 10-K. The Company’s reportable segments consist of the “Americas” (“AMER”), “Asia-Pacific” (“APAC”) and “Europe, Middle East, and Africa” (“EMEA”) segments. Refer to Note 9, "Reportable Segments," for further details on reportable segments. Cash and Cash Equivalents Cash and cash equivalents include short-term, highly liquid investments and are classified as Level 1 in the fair value hierarchy described below. Fair Value of Financial Instruments The Company holds financial instruments consisting of cash and cash equivalents, accounts receivable, certain deferred compensation assets held under trust arrangements, accounts payable, debt, derivatives, and capital lease obligations. The carrying values of cash and cash equivalents, accounts receivable, accounts payable, and capital lease obligations as reported in the Condensed Consolidated Financial Statements approximate fair value. Derivatives and certain deferred compensation assets held under trust arrangements are recorded at fair value. Accounts receivable are reflected at net realizable value based on anticipated losses due to potentially uncollectible balances. Anticipated losses are based on management’s analysis of historical losses and changes in customers’ credit status. The fair value of the Company’s long-term debt was $249.3 million and $250.2 million as of January 2, 2016 and October 3, 2015, respectively. The carrying value of the Company’s long-term debt was $250.0 million as of both January 2, 2016 and October 3, 2015. The Company uses quoted market prices when available or discounted cash flows to calculate the fair value of its debt. If measured at fair value in the financial statements, long-term debt (including the current portion) would be classified as Level 2 in the fair value hierarchy described below. Refer to Note 4, "Derivatives and Fair Value Measurements," for further details on derivatives. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (or exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The accounting guidance establishes a fair value hierarchy based on three levels of inputs that may be used to measure fair value. The input levels are: Level 1: Quoted (observable) market prices in active markets for identical assets or liabilities. Level 2: Inputs other than Level 1 that are observable, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability. Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the asset or liability. |
Inventories |
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Inventory, Net [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories | Inventories Inventories as of January 2, 2016 and October 3, 2015 consisted of (in thousands):
Customer deposits are received by the Company to offset obsolete and excess inventory risks. The total amount of customer deposits related to inventory and included within current liabilities on the accompanying Condensed Consolidated Balance Sheets as of January 2, 2016 and October 3, 2015 was $60.0 million and $64.3 million, respectively. |
Debt |
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Debt and Capital Lease Obligations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt, Capital Lease Obligations And Other Financing | Debt, Capital Lease Obligations and Other Financing Debt, capital lease obligations and other financing amounts outstanding at January 2, 2016 and October 3, 2015 are summarized below (in thousands):
The Company has a five-year senior unsecured revolving credit facility (the “Credit Facility”), which expires on May 15, 2019. In October 2015, $30.0 million of an accordion feature thereunder was exercised, increasing the maximum commitment under the Credit Facility to $265.0 million. The Credit Facility may potentially be further increased to $335.0 million, generally by mutual agreement of the Company and the lenders, subject to certain customary conditions. During the three months ended January 2, 2016, the highest daily borrowing was $204.0 million, the average daily borrowing was $173.5 million, and the Company borrowed and repaid $139.0 million of revolving borrowings under the Credit Facility. The financial covenants (as defined under the related Credit Agreement) require that the Company maintain, as of each fiscal quarter end, a maximum total leverage ratio and a minimum interest coverage ratio. As of January 2, 2016, the Company was in compliance with all financial covenants of the Credit Agreement. Borrowings under the Credit Facility, at the Company's option, bear interest at a defined base rate or the LIBOR rate plus, in each case, an applicable margin based upon the Company's leverage ratio as defined in the Credit Agreement. Rates would increase upon negative changes in specified Company financial metrics and would decrease to no less than LIBOR plus 1.00% or base rate plus 0.00% upon reduction in the current total leverage ratio. As of January 2, 2016, the borrowing rate under the Credit Agreement was LIBOR plus 1.125% (or 1.394%). As of January 2, 2016, the $75.0 million of outstanding debt under the Credit Facility is effectively at a fixed interest rate as a result of a $75.0 million interest rate swap contract discussed in Note 4, "Derivatives and Fair Value Measurements." The Company is required to pay an annual commitment fee based on the unused revolver credit commitment based on the Company's leverage ratio; the fee was 0.175% as of January 2, 2016. The Company also has outstanding 5.20% Senior Notes, due on June 15, 2018 (the “Notes”). As of January 2, 2016 and October 3, 2015, $175.0 million was outstanding, and the Company was in compliance with all financial covenants relating to the Notes, which are generally consistent with those in the Credit Agreement discussed above. In fiscal 2014, the Company capitalized certain leased property, plant and equipment related to a footprint expansion in Guadalajara, Mexico for which the Company had direct involvement in construction. The Company continued to have ongoing involvement subsequent to the completion of construction, which resulted in a non-cash financing transaction. |
Derivatives And Fair Value Measurements |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivatives And Fair Value Measurements | Derivatives and Fair Value Measurements All derivatives are recognized in the accompanying Condensed Consolidated Balance Sheets at their estimated fair value. The Company uses derivatives to manage the variability of foreign currency obligations and interest rates. The Company has cash flow hedges related to variable rate debt and forecasted foreign currency obligations, in addition to non-designated hedges to manage foreign currency exposures associated with certain foreign currency denominated assets and liabilities. The Company does not enter into derivatives for speculative purposes. ASC Topic 815-10, “Derivatives and Hedging,” requires companies to recognize all derivative instruments as either assets or liabilities at fair value in the statement of financial position. In accordance with ASC Topic 815-10, the Company designates some foreign currency exchange contracts and float-to-fixed interest rate derivative contracts as cash flow hedges of forecasted foreign currency expenses and of variable rate interest payments, respectively. Changes in the fair value of the derivatives that qualify as cash flow hedges are recorded in “Accumulated other comprehensive loss” in the accompanying Condensed Consolidated Balance Sheets until earnings are affected by the variability of the cash flows. In the next twelve months, the Company estimates that $4.0 million of unrealized losses, net of tax, related to foreign exchange contracts will be reclassified from other comprehensive loss into earnings. Changes in the fair value of the non-designated derivatives related to recognized foreign currency denominated assets and liabilities are recorded in "Other income (expense)" in the accompanying Condensed Consolidated Statements of Comprehensive Income. The Company enters into forward currency exchange contracts for its Malaysian operations on a rolling basis. The Company had cash flow hedges outstanding with a notional value of $67.4 million as of January 2, 2016 and a notional value of $67.0 million as of October 3, 2015. These forward currency contracts fix the exchange rates for the settlement of future foreign currency obligations that have yet to be realized. The total fair value of the cash flow hedges was a $4.0 million liability as of January 2, 2016, and a $9.4 million liability as of October 3, 2015. The Company had additional forward currency exchange contracts outstanding with a notional value of $50.9 million as of January 2, 2016, and there were no such contracts outstanding as of October 3, 2015. The Company has not designated these derivative instruments as hedging instruments. In accordance with ASC Topic 815-10, the net settlement amount (fair value) related to these contracts is recorded on the Condensed Consolidated Balance Sheets as either a current or long-term asset or liability, depending on the term, and as an element of "Other income (expense)." The total fair value of these derivatives was a net $0.1 million asset as of January 2, 2016. In 2013, the Company entered into a $75.0 million notional amount interest rate swap contract which expires on May 5, 2017, related to $75.0 million of borrowings outstanding under the Company's Credit Facility. This interest rate swap pays the Company variable interest at the one month LIBOR rate, and the Company pays the counterparty a fixed interest rate. The fixed interest rate for the contract is 0.875%. Based on the terms of the interest rate swap contract and the underlying borrowings outstanding under the Credit Facility, the interest rate contract was determined to be effective, and thus qualifies as a cash flow hedge. As such, any changes in the fair value of the interest rate swap are recorded in "Accumulated other comprehensive loss" on the accompanying Condensed Consolidated Balance Sheets until earnings are affected by the variability of cash flows. The total fair value of the interest rate swap contract as of January 2, 2016 and October 3, 2015, was a $0.1 million and $0.5 million liability, respectively. The notional amount of the Company’s interest rate swap was $75.0 million as of January 2, 2016 and October 3, 2015. The tables below present information regarding the fair values of derivative instruments (as defined in Note 1, "Basis of Presentation and Accounting Policies,") and the effects of derivative instruments on the Company’s Condensed Consolidated Financial Statements:
There were no gains or losses recognized in income for derivatives related to ineffective portions and amounts excluded from effectiveness testing for the three months ended January 2, 2016 and January 3, 2015. The following table lists the fair values of liabilities of the Company’s derivatives as of January 2, 2016 and October 3, 2015, by input level as defined in Note 1, "Basis of Presentation and Accounting Policies," (in thousands):
The fair value of interest rate swaps and foreign currency forward contracts is determined using a market approach, which includes obtaining directly or indirectly observable values from third parties active in the relevant markets. The primary input in the fair value of the interest rate swaps is the relevant LIBOR forward curve. Inputs in the fair value of the foreign currency forward contracts include prevailing forward and spot prices for currency and interest rate forward curves. |
Income Taxes |
3 Months Ended |
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Jan. 02, 2016 | |
Income Tax Expense (Benefit), Continuing Operations [Abstract] | |
Income Taxes | Income Taxes Income tax expense for the three months ended January 2, 2016 and January 3, 2015 was $2.9 million and $3.0 million, respectively. The effective tax rates for the three months ended January 2, 2016 and January 3, 2015 were 16.5 percent and 11.4 percent, respectively. The change in the effective tax rate for the three months ended January 2, 2016 as compared to the three months ended January 3, 2015, was primarily due to an overall decrease in pretax earnings and decreased earnings in jurisdictions where the Company maintains valuation allowances. The Company’s effective tax rate will fluctuate with the geographic distribution of its worldwide earnings, the impact of tax audits, other discrete items and changes in tax laws. There were no additions to the amount of unrecognized tax benefits recorded for uncertain tax positions as of January 2, 2016 as compared to October 3, 2015. The Company recognizes accrued interest and penalties on uncertain tax positions as a component of income tax expense. The amount of interest and penalties recorded for the three months ended January 2, 2016 was not material. It is possible that one or more federal and state tax positions may be settled within the next 12 months. Settlement of these matters is not expected to have a material effect on the Company's consolidated results of operations, financial position and cash flows. The Company is not currently under examination by taxing authorities in the U.S. or any foreign jurisdictions in which the Company operates. The Company maintains valuation allowances when it is more likely than not that all or a portion of a net deferred tax asset will not be realized. During the three months ended January 2, 2016, the Company continued to record a full valuation allowance against its net deferred tax assets in certain jurisdictions within the AMER and EMEA segments, as it is more likely than not that these assets will not be fully realized based primarily on historical performance. The Company will continue to provide a valuation allowance against its net deferred tax assets in each of the applicable jurisdictions going forward until it determines it is more likely than not that the deferred tax assets will be realized. |
Earnings Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | Earnings Per Share The following is a reconciliation of the amounts utilized in the computation of basic and diluted earnings per share for the three months ended January 2, 2016 and January 3, 2015 (in thousands, except per share amounts):
For the three months ended January 2, 2016 and January 3, 2015, share-based awards for approximately 0.8 million and 0.6 million shares, respectively, were not included in the computation of diluted earnings per share because they were anti-dilutive. |
Stock-Based Compensation |
3 Months Ended |
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Jan. 02, 2016 | |
Share-based Compensation [Abstract] | |
Stock-Based Compensation | Share-Based Compensation The Company recognized $3.4 million and $3.7 million of compensation expense associated with share-based awards for the three months ended January 2, 2016 and January 3, 2015, respectively. The Company uses the Black-Scholes valuation model to determine the fair value of stock options and stock-settled SARs. The Company uses the fair value at the date of grant to value restricted stock units ("RSUs"). The Company uses the Monte Carlo valuation model to determine the fair value of performance stock units ("PSUs") at the date of grant. The PSUs are payable in shares and vest based on the relative total shareholder return of the Company's common stock as compared to companies in the Russell 3000 Index during a three year performance period. The number of shares that may be issued pursuant to PSUs ranges from zero to 0.2 million. The Company recognizes share-based compensation expense over the share-based awards' vesting period. |
Litigation |
3 Months Ended |
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Jan. 02, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Litigation [Text Block] | Litigation The Company is party to lawsuits in the ordinary course of business. Management does not believe that these proceedings, individually or in the aggregate, will have a material positive or adverse effect on the Company’s consolidated financial position, results of operations or cash flows. |
Reportable Segments |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reportable Segments | Reportable Segments Reportable segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or group, in assessing performance and allocating resources. The Company uses an internal management reporting system, which provides important financial data to evaluate performance and allocate the Company’s resources on a regional basis. Net sales for segments are attributed to the region in which the product is manufactured or the service is performed. The services provided, manufacturing processes used, class of customers serviced and order fulfillment processes used are similar and generally interchangeable across the segments. A segment’s performance is evaluated based upon its operating income (loss). A segment’s operating income (loss) includes its net sales less cost of sales and selling and administrative expenses, but excludes corporate and other expenses. Corporate and other expenses primarily represent corporate selling and administrative expenses, and restructuring and impairment charges, if any. These costs are not allocated to the segments, as management excludes such costs when assessing the performance of the segments. Inter-segment transactions are generally recorded at amounts that approximate arm’s length transactions. The accounting policies for the segments are the same as for the Company taken as a whole. Information about the Company’s three reportable segments for the three months ended January 2, 2016 and January 3, 2015 is as follows (in thousands):
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Guarantees |
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Guarantees [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Guarantees | Guarantees The Company offers certain indemnifications under its customer manufacturing agreements. In the normal course of business, the Company may from time to time be obligated to indemnify its customers or its customers’ customers against damages or liabilities arising out of the Company’s negligence, misconduct, breach of contract, or infringement of third party intellectual property rights. Certain agreements have extended broader indemnification, and while most agreements have contractual limits, some do not. However, the Company generally does not provide for such indemnities and seeks indemnification from its customers for damages or liabilities arising out of the Company’s adherence to customers’ specifications or designs or use of materials furnished, or directed to be used, by its customers. The Company does not believe its obligations under such indemnities are material. In the normal course of business, the Company also provides its customers a limited warranty covering workmanship, and in some cases materials, on products manufactured by the Company. Such warranty generally provides that products will be free from defects in the Company’s workmanship and meet mutually agreed-upon specifications for periods generally ranging from 12 months to 24 months. If a product fails to comply with the Company’s limited warranty, the Company’s obligation is generally limited to correcting, at its expense, any defect by repairing or replacing such defective product. The Company’s warranty generally excludes defects resulting from faulty customer-supplied components, design defects or damage caused by any party or cause other than the Company. The Company provides for an estimate of costs that may be incurred under its limited warranty at the time product revenue is recognized and establishes additional reserves for specifically identified product issues. These costs primarily include labor and materials, as necessary, associated with repair or replacement and are included in the Company's accompanying Condensed Consolidated Balance Sheets in "Other accrued liabilities." The primary factors that affect the Company’s warranty liability include the value and the number of shipped units and historical and anticipated rates of warranty claims. As these factors are impacted by actual experience and future expectations, the Company regularly assesses the adequacy of its recorded warranty liabilities and adjusts the amounts as necessary. Below is a table summarizing the activity related to the Company’s limited warranty liability for fiscal 2015 and for the three months ended January 2, 2016 (in thousands):
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Shareholders' Equity |
3 Months Ended |
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Jan. 02, 2016 | |
Stockholders' Equity Note [Abstract] | |
Shareholders' Equity | Shareholders' Equity On August 20, 2015, the Board of Directors approved a stock repurchase program under which the Company is authorized to repurchase up to $30.0 million of its common stock during fiscal 2016. During the three months ended January 2, 2016, the Company repurchased 227,312 shares for approximately $8.5 million, at an average price of $37.23 per share. These shares were recorded as treasury stock. On August 13, 2014, the Board of Directors approved a stock repurchase program under which the Company was authorized to repurchase up to $30.0 million of its common stock during fiscal 2015. During the three months ended January 3, 2015, the Company repurchased 187,819 shares for approximately $7.3 million, at an average price of $38.81 per share. During fiscal 2015, the Company repurchased 745,227 shares for approximately $30.0 million, at an average price of $40.26 per share. These shares were recorded as treasury stock. |
Restructuring Costs |
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Restructuring Costs [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring Costs | Restructuring Costs Restructuring costs for the three months ended January 2, 2016, incurred primarily in the AMER segment, relate largely to the Company's closure of its manufacturing facility in Fremont, California as a result of the Company’s optimization of its capacity to meet customer demand due to changing end-market dynamics. The Company also recorded restructuring costs in the EMEA segment related to the partial closure of its Livingston, Scotland facility to align with reduced end-market demand, particularly in the oil and gas industry. These charges are recorded within "Restructuring charges" on the Condensed Consolidated Statements of Comprehensive Income. Restructuring liabilities are recorded within "Other accrued liabilities" on the Condensed Consolidated Balance Sheets. For the three months ended January 2, 2016, the Company incurred restructuring costs of $1.5 million, which consisted of $1.4 million of employee termination and severance costs, primarily related to the Company's workforce in Fremont and Livingston, and $0.1 million of other exit costs. Restructuring costs for the three months ended January 3, 2015 related to the relocation of manufacturing operations from Juarez, Mexico to Guadalajara, Mexico. For the three months ended January 3, 2015, the Company incurred restructuring costs of $1.7 million, which consisted of $1.5 million of moving and transition costs resulting from the relocation of manufacturing operations from Juarez to Guadalajara and $0.1 million of employee termination and severance costs related to the Company's former workforce in Juarez. In the three months ended January 2, 2016 and January 3, 2015, the Company did not recognize an income tax benefit for these restructuring costs due to tax losses in the jurisdiction where the restructuring costs occurred. The Company's restructuring accrual activity for the three months ended January 2, 2016 is included in the table below (in thousands):
The restructuring accrual balance is expected to be utilized by the end of fiscal 2016. Total fiscal 2016 restructuring costs are expected to be between $5.0 million and $7.0 million. |
New Accounting Pronouncements |
3 Months Ended |
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Jan. 02, 2016 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
New Accounting Pronouncements | New Accounting Pronouncements In November 2015, the Financial Accounting Standards Board (“FASB”) issued an accounting standard to simplify the presentation of deferred taxes. The new guidance requires that all deferred tax assets and liabilities, along with any related valuation allowance, be classified as noncurrent on the balance sheet, as opposed to being presented as current and non-current. This guidance is required to be adopted for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted, and the guidance may be applied either prospectively, for all deferred tax assets and liabilities, or retrospectively. The adoption of this guidance is not expected to have a material impact on the Company's Consolidated Financial Statements. In July 2015, the FASB issued amended guidance to simplify the subsequent measurement of inventory measured using first-in, first-out or average cost. The new standard replaces the current lower of cost or market test with a lower of cost and net realizable value test. Under the guidance, market could be replacement cost, net realizable value or net realizable value less an approximately normal profit margin. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. This guidance should be applied on a prospective basis and is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2016, with early adoption permitted. The Company is currently in the process of assessing the impact of the adoption of the new standard on its Consolidated Financial Statements. In April 2015, the FASB issued amended guidance that requires debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. Under the new guidance, the recognition and measurement of debt issuance costs is not affected. This guidance is effective for annual periods beginning on or after December 15, 2015, and interim periods within those fiscal years, with early adoption permitted. The adoption of this guidance is not expected to have a material impact on the Company's Consolidated Financial Statements. In May 2014, the FASB issued amended guidance for revenue recognition. The standard's core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under current guidance. This may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. In July 2015 the FASB approved a one-year deferral of the standard. The new standard will become effective retrospectively for annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Earlier application is permitted for annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company is currently in the process of evaluating the impact of the adoption of this guidance on its Consolidated Financial Statements. |
Basis Of Presentation And Accounting Policies (Policy) |
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Jan. 02, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis Of Presentation | Basis of Presentation The accompanying Condensed Consolidated Financial Statements included herein have been prepared by Plexus Corp. and its subsidiaries (together “Plexus” or the “Company”) without audit and pursuant to the rules and regulations of the United States (“U.S.”) Securities and Exchange Commission (“SEC”). In the opinion of the Company, the accompanying Condensed Consolidated Financial Statements reflect all adjustments, which include normal recurring adjustments necessary for the fair statement of the consolidated financial position of the Company as of January 2, 2016 and October 3, 2015, and the results of operations for the three months ended January 2, 2016 and January 3, 2015, and the cash flows for the same three month periods. Certain prior period amounts have been reclassified to conform to the current period presentation. The Company’s fiscal year ends on the Saturday closest to September 30. The Company also uses a “4-4-5” weekly accounting system for the interim periods in each quarter. Each quarter, therefore, ends on a Saturday at the end of the 4-4-5 period. Periodically, an additional week must be added to the fiscal year to re-align with the Saturday closest to September 30. The first quarter of fiscal 2015 included 14 weeks, all other fiscal quarters presented included 13 weeks. Certain information and footnote disclosures, normally included in financial statements prepared in accordance with generally accepted accounting principles, have been condensed or omitted pursuant to the SEC’s rules and regulations dealing with interim financial statements. However, the Company believes that the disclosures made in the Condensed Consolidated Financial Statements included herein are adequate to make the information presented not misleading. It is suggested that these Condensed Consolidated Financial Statements be read in conjunction with the Consolidated Financial Statements and notes thereto included in the Company’s 2015 Annual Report on Form 10-K. The Company’s reportable segments consist of the “Americas” (“AMER”), “Asia-Pacific” (“APAC”) and “Europe, Middle East, and Africa” (“EMEA”) segments. Refer to Note 9, "Reportable Segments," for further details on reportable segments. |
Cash And Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents include short-term, highly liquid investments and are classified as Level 1 in the fair value hierarchy described below. |
Fair Value Of Financial Instruments | Fair Value of Financial Instruments The Company holds financial instruments consisting of cash and cash equivalents, accounts receivable, certain deferred compensation assets held under trust arrangements, accounts payable, debt, derivatives, and capital lease obligations. The carrying values of cash and cash equivalents, accounts receivable, accounts payable, and capital lease obligations as reported in the Condensed Consolidated Financial Statements approximate fair value. Derivatives and certain deferred compensation assets held under trust arrangements are recorded at fair value. Accounts receivable are reflected at net realizable value based on anticipated losses due to potentially uncollectible balances. Anticipated losses are based on management’s analysis of historical losses and changes in customers’ credit status. The fair value of the Company’s long-term debt was $249.3 million and $250.2 million as of January 2, 2016 and October 3, 2015, respectively. The carrying value of the Company’s long-term debt was $250.0 million as of both January 2, 2016 and October 3, 2015. The Company uses quoted market prices when available or discounted cash flows to calculate the fair value of its debt. If measured at fair value in the financial statements, long-term debt (including the current portion) would be classified as Level 2 in the fair value hierarchy described below. Refer to Note 4, "Derivatives and Fair Value Measurements," for further details on derivatives. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (or exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The accounting guidance establishes a fair value hierarchy based on three levels of inputs that may be used to measure fair value. The input levels are: Level 1: Quoted (observable) market prices in active markets for identical assets or liabilities. Level 2: Inputs other than Level 1 that are observable, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability. Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the asset or liability. |
Inventories (Tables) |
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Inventory, Net [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Inventories | Inventories as of January 2, 2016 and October 3, 2015 consisted of (in thousands):
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Debt, Capital Lease Obligations and Other Financing Debt (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Debt And Capital Lease Obligations | Debt, capital lease obligations and other financing amounts outstanding at January 2, 2016 and October 3, 2015 are summarized below (in thousands):
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Derivatives And Fair Value Measurements (Tables) |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Fair Values Of Derivative Instruments | The tables below present information regarding the fair values of derivative instruments (as defined in Note 1, "Basis of Presentation and Accounting Policies,") and the effects of derivative instruments on the Company’s Condensed Consolidated Financial Statements:
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Schedule of Other Derivatives Not Designated as Hedging Instruments, Statements of Financial Performance and Financial Position, Location |
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Schedule Of The Effect Of Derivative On Accumulated Other Comprehensive Income |
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Reclassification out of Accumulated Other Comprehensive Income |
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Schedule Of Fair Value Measurements Using Input Levels Asset/(Liability) | The following table lists the fair values of liabilities of the Company’s derivatives as of January 2, 2016 and October 3, 2015, by input level as defined in Note 1, "Basis of Presentation and Accounting Policies," (in thousands):
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Earnings Per Share (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Reconciliation Of Amounts Utilized In Computation Of Basic And Diluted Earnings Per Share | The following is a reconciliation of the amounts utilized in the computation of basic and diluted earnings per share for the three months ended January 2, 2016 and January 3, 2015 (in thousands, except per share amounts):
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Reportable Segments(Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Financial Information About Company's Reportable Segments | Information about the Company’s three reportable segments for the three months ended January 2, 2016 and January 3, 2015 is as follows (in thousands):
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Guarantees (Tables) |
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Guarantees [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Schedule Of Limited Warranty Liability | Below is a table summarizing the activity related to the Company’s limited warranty liability for fiscal 2015 and for the three months ended January 2, 2016 (in thousands):
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Restructuring Costs (Tables) |
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Restructuring Costs [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Costs [Table Text Block] | The Company's restructuring accrual activity for the three months ended January 2, 2016 is included in the table below (in thousands):
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Basis Of Presentation And Accounting Policies (Details) - USD ($) $ in Millions |
Jan. 02, 2016 |
Oct. 03, 2015 |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Fair value of long-term debt | $ 249.3 | $ 250.2 |
Long-term Debt | $ 250.0 | $ 250.0 |
Inventories (Schedule Of Inventories) (Details) - USD ($) $ in Thousands |
Jan. 02, 2016 |
Oct. 03, 2015 |
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Inventory, Net [Abstract] | ||
Customer Deposits Related To Inventory | $ 60,000 | $ 64,300 |
Raw materials | 393,733 | 407,637 |
Work-in-process | 69,443 | 84,472 |
Finished goods | 86,325 | 77,262 |
Inventory, net | $ 549,501 | $ 569,371 |
Inventory (Narrative) (Details) - USD ($) $ in Millions |
Jan. 02, 2016 |
Oct. 03, 2015 |
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Customer Deposits Related To Inventory | $ 60.0 | $ 64.3 |
Debt, Capital Lease Obligations And Other Financing (Schedule Of Debt And Capital Lease Obligations) (Details) - USD ($) $ in Thousands |
Jan. 02, 2016 |
Oct. 03, 2015 |
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Debt Instrument [Line Items] | ||
Senior Notes, principal outstanding | $ 175,000 | $ 175,000 |
Debt and Capital Lease Obligations | 262,153 | 262,770 |
Current portion of long-term debt and capital lease obligations | (2,864) | (3,513) |
Long-term Debt, Capital Lease Obligations and other financing, net of current portion | 259,289 | 259,257 |
Revolving Credit Facility [Member] | ||
Debt Instrument [Line Items] | ||
Long-term Line of Credit | 75,000 | 75,000 |
Other Debt Obligations [Member] | ||
Debt Instrument [Line Items] | ||
Capital Lease Obligations | 3,897 | 4,560 |
Guadalajara [Member] | ||
Debt Instrument [Line Items] | ||
Capital Lease Obligations | $ 8,256 | $ 8,210 |
Derivatives and Fair Value Measurements (Schedule of Other Derivatives Not Designated as Hedging Instruments, Statements of Financial Performance and Financial Position, Location) (Details) - Not Designated as Hedging Instrument [Member] - USD ($) $ in Thousands |
Jan. 02, 2016 |
Oct. 03, 2015 |
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Derivatives, Fair Value [Line Items] | ||
Foreign Currency Contract, Asset, Fair Value Disclosure | $ 100 | $ 0 |
Forward Contracts [Member] | Prepaid Expenses and Other Current Assets [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Foreign Currency Contract, Asset, Fair Value Disclosure | 66 | 0 |
Forward Contracts [Member] | Other Current Liabilities [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Foreign Currency Contracts, Liability, Fair Value Disclosure | $ 29 | $ 0 |
Derivatives And Fair Value Measurements Derivatives and Fair Value Measurements (Schedule Of The Effect Of Derivatives On Accumulated Other Comprehensive Income) - Cash Flow Hedging [Member] - USD ($) $ in Thousands |
3 Months Ended | |
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Jan. 02, 2016 |
Jan. 03, 2015 |
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Interest Rate Swap [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Derivative Instruments, Gain (Loss) Recognized in Other Comprehensive Income (Loss), Effective Portion, Net | $ 257 | $ (310) |
Foreign Exchange Forward [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Derivative Instruments, Gain (Loss) Recognized in Other Comprehensive Income (Loss), Effective Portion, Net | $ 2,289 | $ (4,256) |
Income Taxes (Details) - USD ($) $ in Thousands |
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Jan. 02, 2016 |
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Income Tax Expense (Benefit), Continuing Operations [Abstract] | ||
Income tax expense | $ 2,854 | $ 2,962 |
Effective tax rates | 16.50% | 11.40% |
Earnings Per Share (Schedule Of Reconciliation Of Amounts Utilized In Computation Of Basic And Diluted Earnings Per Share) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
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Jan. 03, 2015 |
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Earnings Per Share [Line Items] | ||
Net income | $ 14,448 | $ 23,079 |
Basic weighted average common shares outstanding | 33,396 | 33,602 |
Dilutive effect of share-based awards outstanding | 666 | 837 |
Diluted weighted average shares outstanding | 34,062 | 34,439 |
Earnings per share, Basic | $ 0.43 | $ 0.69 |
Earnings per share, Diluted | $ 0.42 | $ 0.67 |
Stock Options [Member] | ||
Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of diluted earnings per share | 800 | 600 |
Guarantees (Details) $ in Thousands |
3 Months Ended | 12 Months Ended |
---|---|---|
Jan. 02, 2016
USD ($)
mo
|
Oct. 03, 2015
USD ($)
|
|
Limited warranty liability, beginning balance | $ 5,847 | $ 6,803 |
Accruals for warranties issued during the period | 424 | 1,742 |
Settlements (in cash or in kind) during the period | (637) | (2,698) |
Limited warranty liability, ending balance | $ 5,634 | $ 5,847 |
Minimum [Member] | ||
Product Warranty Specification Period | mo | 12 | |
Maximum [Member] | ||
Product Warranty Specification Period | mo | 24 |
Shareholders' Equity (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|
Jan. 02, 2016 |
Jan. 03, 2015 |
Oct. 03, 2015 |
Aug. 20, 2015 |
Aug. 13, 2014 |
|
Stockholders' Equity Note [Abstract] | |||||
Stock Repurchase Program, Authorized Amount | $ 30,000 | $ 30,000 | |||
Stock Repurchased During Period, Shares | 227,312 | 187,819 | 745,227 | ||
Repurchases of common stock | $ 8,463 | $ 7,289 | $ 30,000 | ||
Average price of repurchased shares | $ 37.23 | $ 38.81 | $ 40.26 |
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