The Company adopted Topic 606 at the beginning of fiscal 2019 using the modified retrospective method. The new standard resulted in a change to the timing of revenue recognition for a significant portion of the Company's revenue, whereby revenue is recognized over time, as products are produced, as opposed to at a point in time based upon shipping terms. As a result of the adoption of Topic 606, the following adjustments were made to the opening balances of the Company's Condensed Consolidated Balance Sheets (in thousands):



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

The cumulative effect of applying the new guidance in Topic 606 resulted in the Company increasing its fiscal 2019 opening Retained Earnings balance by $7.8 million due to certain customer contracts requiring revenue recognition over time. Contract assets in the amount of $76.4 million were recognized due to the recognition of revenue on an over time basis for some customers rather than at a specific point in time. Inventory declined $69.0 million primarily due to earlier recognition of costs related to the contracts for which revenue was recognized on an over time basis. The decline in other accrued liabilities is primarily due to the reclassification of deferred revenue to contract assets for prepayments associated with revenue recognized over time, partially offset by an increase in taxes payable associated with the increase in revenue recognized over time.



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



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



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

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

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

The Company generally enters into a master services arrangement that establishes the framework under which business will be conducted. These arrangements represent the master terms and conditions of the Company's services that apply to individual orders, but they do not commit the customer to work with, or to continue to work with, the Company nor do they obligate the

customer to any specific volume or pricing of purchases. Moreover, these terms can be amended in appropriate situations. Customer purchase orders are received for specific quantities with predominantly fixed pricing and delivery requirements. Thus, for the majority of our contracts, there is no guarantee of any revenue to the Company until a customer submits a purchase order. As a result, the Company generally considers its arrangement with a customer to be the combination of the master services arrangement and the purchase order. Most of the Company's arrangements with customers create a single performance obligation as the promise to transfer the individual manufactured product or service is capable of being distinct.

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

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

The Company does not allow for a general right of return. Net sales include amounts billed to customers for shipping and handling and out-of-pocket expenses. The corresponding shipping and handling costs and out-of-pocket expenses are included in cost of sales. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer, are excluded from net sales.

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



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



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

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

Contract Assets: For performance obligations satisfied at a point in time, billing occurs subsequent to revenue recognition, at which point the customer has been billed and the resulting asset is recorded within accounts receivable. For performance obligations satisfied over time as work progresses, the Company has an unconditional right to payment, which results in the recognition of contract assets. The following table summarizes the activity in the Company's contract assets during the nine months ended June 29, 2019 (in thousands):



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