(Mark one) | |
[x] | 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 |
Delaware | 77-0228183 | |||
(State or other jurisdiction of | (I.R.S. Employer | |||
incorporation or organization) | Identification Number) | |||
2700 N. First St., San Jose, CA | 95134 | |||
(Address of principal executive offices) | (Zip Code) |
Large Accelerated Filer | [X] | Accelerated filer [ ] | Non-accelerated filer [ ] | Smaller reporting company [ ] |
(Do not check if a smaller reporting company) | Emerging growth company [ ] |
Page | ||
Item 1. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 1. | ||
Item 1A. | ||
Item 2. | ||
Item 6. | ||
As of | |||||||
December 30, 2017 | September 30, 2017 | ||||||
(Unaudited) | |||||||
(In thousands) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 404,914 | $ | 406,661 | |||
Accounts receivable, net of allowances of $13,727 and $14,334 as of December 30, 2017 and September 30, 2017, respectively | 1,121,800 | 1,110,334 | |||||
Inventories | 1,079,638 | 1,051,669 | |||||
Prepaid expenses and other current assets | 46,345 | 47,586 | |||||
Total current assets | 2,652,697 | 2,616,250 | |||||
Property, plant and equipment, net | 635,000 | 640,275 | |||||
Deferred tax assets | 356,660 | 476,554 | |||||
Other | 114,223 | 114,284 | |||||
Total assets | $ | 3,758,580 | $ | 3,847,363 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 1,260,432 | $ | 1,280,106 | |||
Accrued liabilities | 121,001 | 116,582 | |||||
Accrued payroll and related benefits | 111,806 | 130,939 | |||||
Short-term debt, including current portion of long-term debt | 169,416 | 88,416 | |||||
Total current liabilities | 1,662,655 | 1,616,043 | |||||
Long-term liabilities: | |||||||
Long-term debt | 392,195 | 391,447 | |||||
Other | 202,142 | 192,189 | |||||
Total long-term liabilities | 594,337 | 583,636 | |||||
Contingencies (Note 5) | |||||||
Stockholders' equity | 1,501,588 | 1,647,684 | |||||
Total liabilities and stockholders' equity | $ | 3,758,580 | $ | 3,847,363 |
Three Months Ended | |||||||
December 30, 2017 | December 31, 2016 | ||||||
(Unaudited) | |||||||
(In thousands, except per share data) | |||||||
Net sales | $ | 1,744,800 | $ | 1,719,977 | |||
Cost of sales | 1,635,334 | 1,587,815 | |||||
Gross profit | 109,466 | 132,162 | |||||
Operating expenses: | |||||||
Selling, general and administrative | 63,603 | 65,140 | |||||
Research and development | 7,615 | 8,171 | |||||
Restructuring costs | 23,542 | 728 | |||||
Other | 918 | (533 | ) | ||||
Total operating expenses | 95,678 | 73,506 | |||||
Operating income | 13,788 | 58,656 | |||||
Interest income | 285 | 201 | |||||
Interest expense | (6,214 | ) | (5,267 | ) | |||
Other income, net | 3,230 | 1,257 | |||||
Interest and other, net | (2,699 | ) | (3,809 | ) | |||
Income before income taxes | 11,089 | 54,847 | |||||
Provision for income taxes | 165,999 | 9,983 | |||||
Net income (loss) | $ | (154,910 | ) | $ | 44,864 | ||
Net income (loss) per share: | |||||||
Basic | $ | (2.16 | ) | $ | 0.61 | ||
Diluted | $ | (2.16 | ) | $ | 0.58 | ||
Weighted average shares used in computing per share amounts: | |||||||
Basic | 71,605 | 73,554 | |||||
Diluted | 71,605 | 77,175 |
Three Months Ended | |||||||
December 30, 2017 | December 31, 2016 | ||||||
(Unaudited) | |||||||
(In thousands) | |||||||
Net income (loss) | $ | (154,910 | ) | $ | 44,864 | ||
Other comprehensive income (loss), net of tax: | |||||||
Change in foreign currency translation adjustments | (354 | ) | (2,156 | ) | |||
Derivative financial instruments: | |||||||
Change in net unrealized amount | (1,407 | ) | (2,169 | ) | |||
Amount reclassified into net income | 1,525 | 1,926 | |||||
Defined benefit plans: | |||||||
Changes in unrecognized net actuarial losses and unrecognized transition costs | (260 | ) | 1,060 | ||||
Amortization of actuarial losses and transition costs | 321 | 599 | |||||
Total other comprehensive loss | (175 | ) | (740 | ) | |||
Comprehensive income (loss) | $ | (155,085 | ) | $ | 44,124 | ||
Three Months Ended | |||||||
December 30, 2017 | December 31, 2016 | ||||||
(Unaudited) | |||||||
(In thousands) | |||||||
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES: | |||||||
Net income (loss) | $ | (154,910 | ) | $ | 44,864 | ||
Adjustments to reconcile net income (loss) to cash provided by operating activities: | |||||||
Depreciation and amortization | 29,623 | 28,972 | |||||
Stock-based compensation expense | 8,642 | 11,977 | |||||
Deferred income taxes | 163,173 | 1,477 | |||||
Other, net | (130 | ) | 644 | ||||
Changes in operating assets and liabilities, net of acquisitions: | |||||||
Accounts receivable | (11,156 | ) | (22,849 | ) | |||
Inventories | (28,293 | ) | (19,306 | ) | |||
Prepaid expenses and other assets | 4,103 | 1,614 | |||||
Accounts payable | 6,304 | 39,391 | |||||
Accrued liabilities | (8,916 | ) | (32,857 | ) | |||
Cash provided by operating activities | 8,440 | 53,927 | |||||
CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES: | |||||||
Purchases of property, plant and equipment | (48,533 | ) | (21,667 | ) | |||
Proceeds from sales of property, plant and equipment | 142 | 3,582 | |||||
Cash used in investing activities | (48,391 | ) | (18,085 | ) | |||
CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES: | |||||||
Proceeds from revolving credit facility borrowings | 899,000 | 208,400 | |||||
Repayments of revolving credit facility borrowings | (818,000 | ) | (233,400 | ) | |||
Net proceeds from stock issuances | 2,526 | 10,643 | |||||
Repurchases of common stock | (45,485 | ) | (13,623 | ) | |||
Holdback payment for a prior business combination | — | (2,262 | ) | ||||
Cash provided by (used in) financing activities | 38,041 | (30,242 | ) | ||||
Effect of exchange rate changes | 163 | 1,352 | |||||
Increase (decrease) in cash and cash equivalents | (1,747 | ) | 6,952 | ||||
Cash and cash equivalents at beginning of period | 406,661 | 398,288 | |||||
Cash and cash equivalents at end of period | $ | 404,914 | $ | 405,240 | |||
Cash paid during the period for: | |||||||
Interest, net of capitalized interest | $ | 12,352 | $ | 8,543 | |||
Income taxes, net of refunds | $ | 7,275 | $ | 5,593 | |||
Unpaid purchases of property, plant and equipment at the end of period | $ | 24,004 | $ | 34,015 |
As of | |||||||
December 30, 2017 | September 30, 2017 | ||||||
(In thousands) | |||||||
Raw materials | $ | 851,665 | $ | 834,694 | |||
Work-in-process | 101,777 | 106,914 | |||||
Finished goods | 126,196 | 110,061 | |||||
Total | $ | 1,079,638 | $ | 1,051,669 |
As of | |||||||
December 30, 2017 | September 30, 2017 | ||||||
Derivatives Designated as Accounting Hedges: | |||||||
Notional amount (in thousands) | $ | 84,867 | $ | 105,523 | |||
Number of contracts | 51 | 58 | |||||
Derivatives Not Designated as Accounting Hedges: | |||||||
Notional amount (in thousands) | $ | 283,598 | $ | 302,944 | |||
Number of contracts | 39 | 46 |
As of | |||||||
December 30, 2017 | September 30, 2017 | ||||||
(In thousands) | |||||||
Senior secured notes due 2019 | 375,000 | 375,000 | |||||
Non-interest bearing promissory notes | 20,611 | 19,863 | |||||
Total long-term debt | 395,611 | 394,863 | |||||
Less: Current portion of non-interest bearing promissory notes | 3,416 | 3,416 | |||||
Long-term debt | $ | 392,195 | $ | 391,447 |
• | accounts receivable and all supporting obligations, chattel paper, documents and instruments in respect thereof or relating thereto; |
• | deposit accounts; |
• | inventory; |
• | equity interests of the Company and the guarantors in their direct subsidiaries, subject to limited exceptions; intercompany debt at any time owing to the Company and the guarantors from a Canadian subsidiary; |
• | cash; |
• | accessions to, substitutions for, and all replacements, products, and cash and non-cash proceeds of the foregoing; and |
• | all books and records pertaining to the foregoing. |
Estimated Costs to Implement | Restructuring Expense for the three months ended December 30, 2017 | ||||||
(In thousands) | |||||||
Severance costs (approximately 2,900 employees) | $ | 27,700 | $ | 23,301 | |||
Other exit costs (will be recognized as incurred) | 7,300 | — | |||||
Total - Q1 FY18 plan | $ | 35,000 | $ | 23,301 | |||
Costs incurred for other plans | — | 241 | |||||
Total - all plans | $ | 35,000 | $ | 23,542 |
As of | |||||||
December 30, 2017 | September 30, 2017 | ||||||
(In thousands) | |||||||
Foreign currency translation adjustments | $ | 90,598 | $ | 90,952 | |||
Unrealized holding losses on derivative financial instruments | (94 | ) | (212 | ) | |||
Unrecognized net actuarial losses and transition costs for benefit plans | (13,885 | ) | (13,946 | ) | |||
Total | $ | 76,619 | $ | 76,794 |
Three Months Ended | |||||||
December 30, 2017 | December 31, 2016 | ||||||
(In thousands) | |||||||
Gross sales: | |||||||
IMS | $ | 1,428,847 | $ | 1,414,270 | |||
CPS | 356,729 | 351,074 | |||||
Intersegment revenue | (40,776 | ) | (45,367 | ) | |||
Net sales | $ | 1,744,800 | $ | 1,719,977 | |||
Gross profit: | |||||||
IMS | $ | 82,617 | $ | 102,637 | |||
CPS | 29,866 | 33,289 | |||||
Total | 112,483 | 135,926 | |||||
Unallocated items (1) | (3,017 | ) | (3,764 | ) | |||
Total | $ | 109,466 | $ | 132,162 |
(1) | For purposes of evaluating segment performance, management excludes certain items from its measure of gross profit. These items consist of stock-based compensation expense, amortization of intangible assets, charges or credits resulting from distressed customers and acquisition-related item. |
Three Months Ended | |||||||
December 30, 2017 | December 31, 2016 | ||||||
(In thousands) | |||||||
Net sales | |||||||
United States | $ | 314,808 | $ | 299,876 | |||
Mexico | 489,234 | 474,160 | |||||
China | 315,092 | 321,739 | |||||
Malaysia | 185,712 | 211,191 | |||||
Other international | 439,954 | 413,011 | |||||
Total | $ | 1,744,800 | $ | 1,719,977 |
Percentage of net sales represented by ten largest customers | 54 | % | 52 | % | |
Number of customers representing 10% or more of net sales | 2 | 2 |
Three Months Ended | |||||||
December 30, 2017 | December 31, 2016 | ||||||
(In thousands, except per share data) | |||||||
Numerator: | |||||||
Net income (loss) | $ | (154,910 | ) | $ | 44,864 | ||
Denominator: | |||||||
Weighted average common shares outstanding | 71,605 | 73,554 | |||||
Effect of dilutive stock options and restricted stock units | — | 3,621 | |||||
Denominator for diluted earnings per share | 71,605 | 77,175 | |||||
Net income (loss) per share: | |||||||
Basic | $ | (2.16 | ) | $ | 0.61 | ||
Diluted | $ | (2.16 | ) | $ | 0.58 |
Three Months Ended | |||||||
December 30, 2017 | December 31, 2016 | ||||||
(In thousands) | |||||||
Stock options | $ | 1,177 | $ | 550 | |||
Restricted stock units, including performance based awards | 7,465 | 11,427 | |||||
Total | $ | 8,642 | $ | 11,977 |
Three Months Ended | |||||||
December 30, 2017 | December 31, 2016 | ||||||
(In thousands) | |||||||
Cost of sales | $ | 2,448 | $ | 2,864 | |||
Selling, general and administrative | 6,164 | 8,840 | |||||
Research and development | 30 | 273 | |||||
Total | $ | 8,642 | $ | 11,977 |
Number of Shares | Weighted- Average Exercise Price ($) | Weighted- Average Remaining Contractual Term (Years) | Aggregate Intrinsic Value of In-The-Money Options ($) | |||||||
(In thousands) | (In thousands) | |||||||||
Outstanding as of September 30, 2017 | 3,568 | 11.83 | 3.82 | 90,327 | ||||||
Granted | 200 | 38.45 | ||||||||
Exercised/Cancelled/Forfeited/Expired | (234 | ) | 12.43 | |||||||
Outstanding as of December 30, 2017 | 3,534 | 13.30 | 4.06 | 62,548 | ||||||
Vested and expected to vest as of December 30, 2017 | 3,530 | 13.29 | 4.06 | 62,519 | ||||||
Exercisable as of December 30, 2017 | 3,314 | 11.93 | 3.74 | 62,097 |
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 September 30, 2017 | 3,359 | 27.56 | 1.51 | 124,800 | ||||||
Granted | 694 | 35.86 | ||||||||
Vested/Forfeited/Cancelled | (699 | ) | 25.76 | |||||||
Outstanding as of December 30, 2017 | 3,354 | 29.65 | 1.69 | 102,465 | ||||||
Expected to vest as of December 30, 2017 | 2,521 | 28.83 | 1.65 | 77,002 |
1. | Integrated Manufacturing Solutions (IMS). Our IMS segment consists of printed circuit board assembly and test, final system assembly and test and direct-order-fulfillment. |
2. | Components, Products and Services (CPS). Components include interconnect systems (printed circuit board fabrication, backplane and cable assemblies and plastic injection molding) and mechanical systems (enclosures and precision machining). Products include memory, RF, optical and microelectronics solutions from our Viking Technology division, defense and aerospace products from SCI Technology, data storage solutions from our Newisys division and cloud-based manufacturing execution solutions from our 42Q division. Services include design, engineering, logistics and repair services. |
Three Months Ended | |||||||
December 30, 2017 | December 31, 2016 | ||||||
(In thousands) | |||||||
Net sales | $ | 1,744,800 | $ | 1,719,977 | |||
Gross profit | $ | 109,466 | $ | 132,162 | |||
Operating income | $ | 13,788 | $ | 58,656 | |||
Net income (loss) (1) | $ | (154,910 | ) | $ | 44,864 |
Three Months Ended | |||||||||||||
December 30, 2017 | December 31, 2016 | Increase/(Decrease) | |||||||||||
Industrial, Medical and Defense | $ | 795,642 | $ | 777,497 | $ | 18,145 | 2.3 | % | |||||
Communications Networks | 678,846 | 642,589 | 36,257 | 5.6 | % | ||||||||
Embedded Computing and Storage | 270,312 | 299,891 | (29,579 | ) | (9.9 | )% | |||||||
Total | $ | 1,744,800 | $ | 1,719,977 | $ | 24,823 | 1.4 | % |
• | Changes in customer demand and sales volumes for our vertically integrated system components and subassemblies; |
• | Changes in the overall volume of our business, which affect the level of capacity utilization; |
• | Changes in the mix of high and low margin products demanded by our customers; |
• | Parts shortages and extended parts lead times caused by high demand or natural disasters, and related operational disruption and inefficiencies; |
• | Greater competition in the EMS industry and pricing pressures from OEMs due to greater focus on cost reduction; |
• | Provisions for excess and obsolete inventory, including provisions associated with distressed customers; |
• | Levels of operational efficiency and production yields; |
• | Wage inflation and rising materials costs; |
• | Our ability to transition the location of and ramp manufacturing and assembly operations when requested by a customer in a timely and cost-effective manner. |
Estimated Costs to Implement | Restructuring Expense for the three months ended December 30, 2017 | ||||||
(In thousands) | |||||||
Severance costs (approximately 2,900 employees) | $ | 27,700 | $ | 23,301 | |||
Other exit costs (will be recognized as incurred) | 7,300 | — | |||||
Total - Q1 FY18 plan | $ | 35,000 | $ | 23,301 | |||
Costs incurred for other plans | — | 241 | |||||
Total - all plans | $ | 35,000 | $ | 23,542 |
Three Months Ended | |||||||
December 30, 2017 | December 31, 2016 | ||||||
(In thousands) | |||||||
Foreign exchange gains | $ | 1,528 | $ | 1,226 | |||
Other, net | 1,702 | 31 | |||||
Total | $ | 3,230 | $ | 1,257 |
Three Months Ended | |||||||
December 30, 2017 | December 31, 2016 | ||||||
(In thousands) | |||||||
Net cash provided by (used in): | |||||||
Operating activities | $ | 8,440 | $ | 53,927 | |||
Investing activities | (48,391 | ) | (18,085 | ) | |||
Financing activities | 38,041 | (30,242 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents | 163 | 1,352 | |||||
Increase (decrease) in cash and cash equivalents | $ | (1,747 | ) | $ | 6,952 |
As of | |||
December 30, 2017 | September 30, 2017 | ||
Days sales outstanding (1) | 58 | 55 | |
Inventory turns (2) | 6.1 | 6.2 | |
Days inventory on hand (3) | 59 | 59 | |
Accounts payable days (4) | 71 | 71 | |
Cash cycle days (5) | 46 | 43 |
(1) | Days sales outstanding (a measure of how quickly we collect our accounts receivable), or "DSO", is calculated as the ratio of average accounts receivable, net, to average daily net sales for the quarter. |
(2) | Inventory turns (annualized) are calculated as the ratio of four times our cost of sales for the quarter to average inventory. |
(3) | Days inventory on hand is calculated as the ratio of average inventory for the quarter to average daily cost of sales for the quarter. |
(4) | Accounts payable days (a measure of how quickly we pay our suppliers), or "DPO", is calculated as the ratio of 365 days divided by accounts payable turns, in which accounts payable turns is calculated as the ratio of four times our cost of sales for the quarter to average accounts payable. |
(5) | Cash cycle days is calculated as days inventory on hand plus days sales outstanding minus accounts payable days. |
• | accounts receivable and all supporting obligations, chattel paper, documents and instruments in respect thereof or relating thereto; |
• | deposit accounts; |
• | inventory; |
• | equity interests of Sanmina and the guarantors in their direct subsidiaries, subject to limited exceptions; intercompany debt at any time owing to Sanmina and the guarantors from a Canadian subsidiary; |
• | cash; |
• | accessions to, substitutions for, and all replacements, products, and cash and non-cash proceeds of the foregoing; and |
• | all books and records pertaining to the foregoing. |
• | intense competition among our customers and their competitors, leading to reductions in prices for their products and pricing pressures on us; |
• | failure of our customers' products to gain widespread commercial acceptance which could decrease the volume of orders customers place with us; |
• | changes in regulatory requirements affecting the products we build for our customers, leading to product obsolescence and potentially causing us to lose business; and |
• | recessionary periods in our customers' markets, including the currently depressed conditions in the oil and gas industry, which decrease orders from affected customers. |
• | our ability to replace declining sales from end-of-life programs with new business wins; |
• | conditions in the economy as a whole and in the industries we serve; |
• | fluctuations in components prices and component shortages or extended parts lead time caused by high demand, natural disaster or otherwise; |
• | timing of new product development by our customers, which creates demand for our services, but which can also require us to incur start-up costs relating to new tooling and processes; |
• | levels of demand in the end markets served by our customers; |
• | timing of orders from customers and the accuracy of their forecasts; |
• | inventory levels of customers, which if high relative to their normal sales volume, could cause them to reduce their orders to us; |
• | timing of new program ramps in which expenditures are made in anticipation of increased sales or for which low product yields and design changes can significantly impact profitability; |
• | customer product delivery requirements and shortages of components or labor; |
• | increasing labor costs in the regions in which we operate; |
• | mix of products ordered by and shipped to major customers, as high volume and low complexity manufacturing services typically have lower gross margins than more complex and lower volume services; |
• | degree to which we are able to utilize our available manufacturing capacity; |
• | customer insolvencies resulting in bad debt or inventory exposures that are in excess of our reserves; |
• | our ability to efficiently move manufacturing activities to lower cost regions; |
• | changes in our tax provision due to changes in our estimates of pre-tax income in the jurisdictions in which we operate, uncertain tax positions, and our ability to utilize our deferred tax assets; and |
• | political and economic developments in countries in which we have operations which could restrict our operations or increase our costs. |
• | the imposition of currency controls; |
• | changes in trade and tax laws that may result in our customers being subjected to increased taxes, duties and tariffs and reduce their willingness to use our services in countries in which we are currently manufacturing their products; |
• | compliance with U.S laws concerning trade, including the International Traffic in Arms Regulations (“ITAR”), the Export Administration Regulations (“EAR”), the Foreign Corrupt Practices Act (“FCPA”) and sanctions administered by the Office of Foreign Asset Controls (“OFAC”); |
• | rising labor costs; |
• | compliance with foreign labor laws, which generally provide for increased notice, severance and consultation requirements compared to U.S. laws; |
• | labor unrest, including strikes; |
• | difficulties in staffing due to immigration or travel restrictions imposed by national governments, including the U.S.; |
• | security concerns; |
• | political instability and/or regional military tension or hostilities; |
• | inflexible employee contracts or labor laws in the event of business downturns; |
• | coordinating communications among and managing our international operations; |
• | fluctuations in currency exchange rates, which may either increase or decrease our operating costs and for which we have significant exposure; |
• | changes in tax and trade laws that increase our local costs; |
• | exposure to heightened corruption risks; |
• | aggressive, selective or lax enforcement of laws and regulations by national governmental authorities; |
• | adverse rulings in regards to tax audits; and |
• | misappropriation of intellectual property. |
Period (1) | TOTAL NUMBER OF SHARES PURCHASED | AVERAGE PRICE PAID PER SHARE (2) | TOTAL NUMBER OF SHARES PURCHASED AS PART OF PUBLICLY ANNOUNCED PROGRAMS | MAXIMUM DOLLAR VALUE OF SHARES THAT MAY YET BE PURCHASED UNDER THE PROGRAMS (2) | |||||||||||
Month #1 | |||||||||||||||
October 1, 2017 through October 28, 2017 | — | $ | — | — | $ | 253,232,759 | |||||||||
Month #2 | |||||||||||||||
October 29, 2017 through November 25, 2017 | 1,019,114 | $ | 33.62 | 1,019,114 | $ | 218,968,631 | |||||||||
Month #3 | |||||||||||||||
November 26, 2017 through December 30, 2017 | — | $ | — | — | $ | 218,968,631 | |||||||||
Total | 1,019,114 | 1,019,114 |
(1) | All months shown are our fiscal months. |
(2) | Amounts do not include commission payable on shares repurchased. The total average price paid per share is a weighted average based on the total number of shares repurchased during the period. |
Exhibit Number | Description | |
31.1 | ||
31.2 | ||
32.1 (1) | ||
32.2 (1) | ||
101.INS | XBRL Instance Document | |
101.SCH | XBRL Taxonomy Extension Schema Document | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |
(1) | This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference in any filings under the Securities Act of 1933 or the Securities Exchange Act of 1934, whether made before or after the date hereof and irrespective of any general incorporation language in any filings. |
SANMINA CORPORATION | |||
(Registrant) | |||
By: | /s/ ROBERT K. EULAU | ||
Robert K. Eulau | |||
Chief Executive Officer (Principal Executive Officer) | |||
Date: | February 2, 2018 | ||
By: | /s/ DAVID R. ANDERSON | ||
David R. Anderson | |||
Executive Vice President and | |||
Chief Financial Officer (Principal Financial Officer) | |||
Date: | February 2, 2018 |
1. | I have reviewed this Quarterly Report on Form 10-Q of Sanmina Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report; |
4. | The Registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have: |
(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 |
5. | The Registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant's auditors and the audit committee of the Registrant's Board of Directors (or persons performing the equivalent functions): |
(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. |
Date: | February 2, 2018 | |
/s/ ROBERT K. EULAU | ||
Robert K. Eulau | ||
Chief Executive Officer (Principal Executive Officer) |
1. | I have reviewed this Quarterly Report on Form 10-Q of Sanmina Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report; |
4. | The Registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have: |
(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 |
5. | The Registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant's auditors and the audit committee of the Registrant's Board of Directors (or persons performing the equivalent functions): |
(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. |
Date: | February 2, 2018 | |
/s/ DAVID R. ANDERSON | ||
David Anderson | ||
Chief Financial Officer (Principal Financial Officer) |
1. | The Company's Quarterly Report on Form 10-Q for the period ended December 30, 2017, to which this Certification is attached as Exhibit 32.1 (the “Periodic Report”), fully complies with the requirements of Section 13(a) or Section 15(d) of the Exchange Act; and |
2. | The information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ ROBERT K. EULAU | |
Robert K. Eulau | |
Chief Executive Officer (Principal Executive Officer) |
1. | The Company's Quarterly Report on Form 10-Q for the period ended December 30, 2017, to which this Certification is attached as Exhibit 32.2 (the “Periodic Report”), fully complies with the requirements of Section 13(a) or Section 15(d) of the Exchange Act; and |
2. | The information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ DAVID R. ANDERSON | |
David R. Anderson | |
Chief Financial Officer (Principal Financial Officer) |
DEI Document - shares |
3 Months Ended | |
---|---|---|
Dec. 30, 2017 |
Jan. 29, 2018 |
|
Document and entity information [Abstract] | ||
Entity Registrant Name | Sanmina Corporation | |
Entity Central Index Key | 0000897723 | |
Document Type | 10-Q | |
Document Period End Date | Dec. 30, 2017 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q1 | |
Current Fiscal Year End Date | --09-29 | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 71,246,094 |
Condensed Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Thousands |
Dec. 30, 2017 |
Sep. 30, 2017 |
---|---|---|
Allowance for Doubtful Accounts | $ 13,727 | $ 14,334 |
Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | |
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Dec. 30, 2017 |
Dec. 31, 2016 |
|
Net sales | $ 1,744,800 | $ 1,719,977 |
Cost of sales | 1,635,334 | 1,587,815 |
Gross profit | 109,466 | 132,162 |
Operating expenses: | ||
Selling, general and administrative | 63,603 | 65,140 |
Research and development | 7,615 | 8,171 |
Restructuring costs | 23,542 | 728 |
Other | 918 | (533) |
Total operating expenses | 95,678 | 73,506 |
Operating income | 13,788 | 58,656 |
Interest income | 285 | 201 |
Interest expense | (6,214) | (5,267) |
Other income, net | 3,230 | 1,257 |
Interest and other, net | (2,699) | (3,809) |
Income before income taxes | 11,089 | 54,847 |
Provision for income taxes | 165,999 | 9,983 |
Net income (loss) | $ (154,910) | $ 44,864 |
Net income (loss) per share: | ||
Basic | $ (2.16) | $ 0.61 |
Diluted | $ (2.16) | $ 0.58 |
Weighted average shares used in computing per share amounts: | ||
Basic | 71,605 | 73,554 |
Diluted | 71,605 | 77,175 |
Condensed Consolidated Statement of Comprehensive Income (Loss) - USD ($) $ in Thousands |
3 Months Ended | |
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Dec. 30, 2017 |
Dec. 31, 2016 |
|
Net income (loss) | $ (154,910) | $ 44,864 |
Other comprehensive income (loss), net of tax: | ||
Change in foreign currency translation adjustments | (354) | (2,156) |
Derivative financial instruments: | ||
Change in net unrealized amount | (1,407) | (2,169) |
Amount reclassified into net income | 1,525 | 1,926 |
Defined benefit plans: | ||
Changes in unrecognized net actuarial losses and unrecognized transition costs | (260) | 1,060 |
Amortization of actuarial losses and transition costs | 321 | 599 |
Total other comprehensive loss | (175) | (740) |
Comprehensive income (loss) | $ (155,085) | $ 44,124 |
Note 1 Basis of Presentation |
3 Months Ended |
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Dec. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block] | Basis of Presentation The accompanying unaudited condensed consolidated financial statements of Sanmina Corporation (the “Company”) have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and note disclosures normally included in annual financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been omitted pursuant to those rules or regulations. The interim condensed consolidated financial statements are unaudited, but reflect all adjustments, consisting primarily of normal recurring adjustments, that are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended September 30, 2017, included in the Company's 2017 Annual Report on Form 10-K. The preparation of financial statements requires management to make estimates and assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates. Results of operations for the first quarter of 2018 are not necessarily indicative of the results that may be expected for other interim periods or for the full fiscal year. The Company operates on a 52 or 53 week year ending on the Saturday nearest September 30. Fiscal 2018 and 2017 are each 52-week years. All references to years relate to fiscal years unless otherwise noted. Recent Accounting Pronouncements Adopted In March 2016, the FASB issued ASU 2016-09 "Improvements to Employee Share-Based Payment Accounting (Topic 718)". This ASU addresses several aspects of accounting for share-based payment award transactions, including: (a) income tax consequences, (b) classification of awards as either equity or liabilities, and (c) classification in the statement of cash flows. The new standard is effective for the Company at the beginning of fiscal 2018, including interim periods within that reporting period, but early adoption is allowed. The Company adopted this ASU at the beginning of 2018 and recorded an increase to its deferred tax assets of $43 million, with a corresponding increase to retained earnings. This ASU is expected to increase the variability of the Company's provision for income taxes, the effect of which could be material. Additionally, this ASU allows companies to estimate the impact of stock award forfeitures at the grant date and reduce the amount of stock compensation expense recognized over the vesting period of the awards, or to account for forfeitures as they occur. The Company has elected to continue to estimate forfeitures at the grant date. Lastly, this ASU requires the cash effect of excess tax benefits to be classified as an operating cash outflow, as opposed to a financing cash outflow, on the statement of cash flows. Due to the Company’s net operating losses in the U.S., excess tax benefits have no cash impact on the Company's cash flows and therefore there was no impact to the Company’s consolidated statement of cash flows upon adoption of this ASU. In July 2015, the FASB issued ASU 2015-11, "Simplifying the Measurement of Inventory (Topic 330)". This ASU requires measurement of inventory at the lower of cost and net realizable value. Net realizable value is defined as estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Currently, inventory is generally measured at the lower of cost or market, except for excess and obsolete inventories which are carried at their estimated net realizable values. There was no impact to the Company upon adoption of this ASU at the beginning of 2018. Recent Accounting Pronouncements Not Yet Adopted In August 2017, the FASB issued ASU 2017-12, "Derivatives and Hedging (Topic 815): Targeted Improvements for Accounting For Hedging Activities", simplifying hedge accounting guidance and improving the financial reporting of hedging relationships by allowing an entity to better align its risk management activities and financial reporting for hedging relationships through changes to both designation and measurement for qualifying hedging relationships and the presentation of hedge results. This standard eliminates the requirement to separately measure and report hedge ineffectiveness, resulting in full recognition of the change in fair value that impact earnings in the same income statement line item that is used to present the earnings effect of the hedged item. In addition, the guidance allows more flexibility in the requirements to qualify for and maintain hedge accounting. This ASU is effective for the Company at the beginning of fiscal 2020 and early adoption is permitted. The Company is currently evaluating the potential impact of this ASU and when to adopt this ASU. In March 2017, the FASB issued ASU 2017-07, "Compensation-Retirement Benefits (Topic 715)". This ASU requires the service costs component of net periodic pension costs to be presented in the same line item as other compensation costs and all other components of net periodic pension costs to be presented in the income statement as nonoperating expenses. This ASU is effective for the Company at the beginning of fiscal 2019 and should be applied retrospectively. A practical expedient permits the use of estimates for applying the retrospective presentation requirements. The Company does not expect the impact of adopting this new accounting standard to be significant. In January 2017, the FASB issued ASU 2017-04, "Intangibles-Goodwill and Other (Topic 350)". This ASU simplifies the test for goodwill impairment by eliminating Step 2 of the goodwill impairment test which requires a hypothetical purchase price allocation to measure goodwill. A goodwill impairment loss will instead be measured at the amount by which a reporting unit's carrying value exceeds its fair value, not to exceed the carrying amount of goodwill allocated to that reporting unit. This ASU is effective for the Company at the beginning of fiscal 2021, but early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company is currently evaluating when to adopt this ASU. In January 2017, the FASB issued ASU 2017-01, "Business Combinations (Topic 805)". This ASU provides guidance to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The new standard is effective for the Company at the beginning of fiscal 2019, including interim periods within that reporting period, but early adoption is permitted. The Company is currently evaluating when to adopt this ASU. In November 2016, the FASB issued ASU 2016-18, "Statement of Cash Flows (Topic 230)". This ASU requires that the statement of cash flows explains the change during the period in the total of cash, cash equivalents and amounts generally described as restricted cash or restricted cash equivalents. Companies will also be required to reconcile such total to amounts on the balance sheet and disclose the nature of the restrictions. This ASU is effective for the Company at the beginning of fiscal 2019, including interim periods within that annual period, but early adoption is permitted. The Company is currently evaluating when to adopt this ASU, but does not expect the impact of adopting this new accounting standard to be significant. In October 2016, the FASB issued ASU 2016-16, "Intra-Entity Transfers of Assets Other Than Inventory (Topic 740)". This ASU simplifies the accounting for income tax consequences of intra-entity transfers of assets other than inventory by requiring recognition of current and deferred income tax consequences when such transfers occur. The new standard is effective for the Company at the beginning of fiscal 2019, including interim periods within that annual period, but early adoption is permitted. The Company is currently evaluating when to adopt this ASU, but does not expect the impact of adopting this new accounting standard to be significant. In February 2016, the FASB issued ASU 2016-02, "Leases: Amendments to the FASB Accounting Standards Codification (Topic 842)". This ASU requires the Company to recognize on the balance sheet the assets and liabilities for the rights and obligations created by leases with terms of more than twelve months. This ASU also requires disclosures enabling the users of financial statements to understand the amount, timing and uncertainty of cash flows arising from leases. The new standard is effective for the Company at the beginning of fiscal 2020, including interim periods within that reporting period. The Company expects the impact of adopting this new accounting standard to be material to its consolidated balance sheet, but is still evaluating the impact to its consolidated statement of income. In May 2014, the FASB issued ASU 2014-09, "Revenue from Contracts with Customers (Topic 606)," which supersedes the revenue recognition requirements in “Revenue Recognition (Topic 605).” This ASU requires an entity to recognize revenue when goods are transferred or services are provided to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASU also requires disclosures enabling users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The new standard is effective for the Company in fiscal 2019, including interim periods within that reporting period, using one of two prescribed transition methods. The Company has determined that the new standard will result in a change to the timing of revenue recognition for a significant portion of the Company's revenue stream, whereby revenue will be recognized "over time" as opposed to at a "point in time" upon physical delivery. The new standard could have a material impact to the Company's consolidated financial statements upon initial adoption, but the Company does not expect the effect of the new standard to materially impact its revenue or gross profit on a rollover basis in periods after adoption. The Company has not yet selected a transition method. |
Note 2 Inventories |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory, Net [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Text Block] | Inventories Components of inventories were as follows:
|
Note 3 Financial Instruments |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Instruments, Owned, at Fair Value [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivatives and Fair Value [Text Block] | Financial Instruments Fair Value Measurements Fair Value of Financial Instruments The fair values of cash equivalents (generally 10% or less 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. Fair Value Option for Long-term Debt As of December 30, 2017, the fair value of the Company's long-term debt, as estimated based primarily on quoted prices (Level 2 input), was approximately 2% higher than its carrying amount. The Company has elected not to record its long-term debt instruments at fair value. 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. Defined benefit plan assets are measured at fair value only in the fourth quarter of each year. Other financial assets and financial liabilities measured at fair value on a recurring basis include foreign exchange contracts and contingent consideration, neither of which were material as of December 30, 2017 or September 30, 2017. 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 unaudited condensed consolidated balance sheets. The amount that the Company had the right to offset under these netting arrangements was not material as of December 30, 2017 or September 30, 2017. 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. Derivative Instruments 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 certain Asian and European countries, Brazil, Israel and Mexico. The Company had the following outstanding foreign currency forward contracts that were entered into to hedge foreign currency exposures:
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 sales denominated in currencies other than those used to pay for materials and labor, (2) forecasted non-functional currency labor and overhead expenses, (3) forecasted non-functional currency operating expenses and (4) anticipated capital expenditures denominated in a currency other than the functional currency of the entity making the expenditures. 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 effective portion of the gain or loss on the derivative is recorded in Accumulated Other Comprehensive Income ("AOCI"), a component of equity, and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. The amount of gain (loss) recognized in Other Comprehensive Income ("OCI") on derivative instruments (effective portion), the amount of gain (loss) reclassified from AOCI into income (effective portion) and the amount of ineffectiveness were not material for any period presented herein. The Company enters into short-term foreign currency forward contracts to hedge currency exposures associated with certain monetary assets and liabilities denominated in non-functional currencies. These contracts have maturities of up to two months and are not designated as accounting hedges. Accordingly, these contracts are marked-to-market at the end of each period with unrealized gains and losses recorded in other income, net, in the unaudited condensed consolidated statements of operations. The amount of gains (losses) associated with these forward contracts were 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 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. In addition to the short-term contracts discussed above, the Company has a foreign currency forward contract that matures in 2020 and was entered into as a hedge of foreign currency exposure associated with a long-term promissory note issued in connection with a previous business combination. |
Note 4 Debt |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Text Block] | Debt Long-term debt consisted of the following:
Short-term debt The Company had a $375 million secured revolving credit facility (the "Cash Flow Revolver") that could be increased by an additional $125 million upon obtaining additional commitments from lenders then party to the Cash Flow Revolver or new lenders. The Cash Flow Revolver was to expire on May 20, 2020, but could be terminated by the lenders as early as March 4, 2019 if certain conditions existed at that time. As of December 30, 2017, there were $166 million of borrowings and $14 million of letters of credit outstanding under the Cash Flow Revolver. On February 1, 2018, the Company entered into an amended Cash Flow Revolver (the "Amended Cash Flow Revolver") that increased the amount available under the facility to $500 million and extended the term to February 1, 2023 provided the Company’s available liquidity is at least equal to the outstanding balance of the Company’s senior secured notes due 2019 during the six month period prior to the maturity date of such notes, which is June 1, 2019. Subject to satisfaction of certain conditions, including obtaining additional commitments from existing and/or new lenders, the Company may increase the revolver commitments under the Amended Cash Flow Revolver by up to an additional $200 million and/or add new term loan commitments of up to $375 million. The Company and certain subsidiary guarantors’ obligations under the Amended Cash Flow Revolver are secured by the following property of the Company and such guarantors, subject to certain exceptions:
The Amended Cash Flow Revolver requires the Company to comply with a minimum consolidated interest coverage ratio, measured at the end of each fiscal quarter, and at all times a maximum consolidated leverage ratio. The Amended Cash Flow Revolver contains customary affirmative covenants, including covenants regarding the payment of taxes and other obligations, maintenance of insurance, reporting requirements and compliance with applicable laws and regulations. Further, the Amended Cash Flow Revolver contains customary negative covenants limiting the ability of the Company and its subsidiaries, among other things, to incur debt, grant liens, make investments, make acquisitions, make certain restricted payments, repurchase its shares and sell assets, subject to certain exceptions. All of the Company’s outstanding borrowings under the Cash Flow Revolver as of February 1, 2018 became borrowings under the Amended Cash Flow Revolver as of February 1, 2018. As of December 30, 2017, certain foreign subsidiaries of the Company had a total of $71 million of short-term borrowing facilities, under which no borrowings were outstanding. Debt covenants The Company's Cash Flow Revolver requires the Company to comply with certain financial covenants. 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, paying dividends and redeeming or repurchasing capital stock and debt, subject to certain exceptions. The Company was in compliance with these covenants as of December 30, 2017. Additionally, the Company was in compliance with the Amended Cash Flow Revolver covenants as of February 1, 2018. |
Note 5 Commitments and Contingencies |
3 Months Ended |
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Dec. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies Disclosure [Text Block] | Contingencies From time to time, the Company is a party to litigation, claims and other contingencies, including environmental 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 December 30, 2017 and September 30, 2017, the Company had reserves of $37 million and $36 million, respectively, for environmental matters, warranty, litigation and other contingencies (excluding reserves for uncertain tax positions) which the Company believes are adequate. 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 unaudited condensed consolidated balance sheets. In January 2018, the Company received a notice of intent from a foreign government agency to bring a claim seeking up to $23 million asserting that the Company had been out of compliance from April 2015 through September 2016 with certain requirements of the Company’s exemption from goods and services tax on imported goods. Such claim, if formally made, could seek payment for allegedly unpaid goods and services tax. No formal claim has been brought to date. The Company believes it has good faith arguments in defense of its actions and has provided these arguments to the government agency. As a result the Company cannot, at this time, determine the outcome of this matter and has not provided a reserve for this matter as of the end of the first quarter of 2018. 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 December 30, 2017, 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 requires the Company's Canadian subsidiary to remediate certain environmental contamination at a site owned by the subsidiary between 1999 and 2006. As of December 30, 2017, the Company believes it has reserved a sufficient amount to satisfy anticipated future investigation and remediation costs at this site. Another such order demands that the Company and other alleged defendants remediate groundwater contamination at two landfills located in Northern California to which the Company may have sent wastewater in the past. The Company continues to investigate the allegations contained in this order and has reserved its estimated exposure for this matter as of December 30, 2017. However, there can be no assurance that the Company's reserve will ultimately be sufficient. In June 2008, the Company was named by the Orange County Water District in a suit alleging that its actions 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 within the plaintiff’s control. In April 2013, all claims against the Company were dismissed. The plaintiff appealed this dismissal and the appeals court reversed the judgment in August 2017. In November 2017, the California Supreme Court denied the Company’s petition to review this decision and in December 2017 the Court of Appeal remanded the case back to the Superior Court for further proceedings. A trial date has not yet been set. The Company intends to contest the plaintiff’s claims vigorously. Other Matters Two of the Company’s subsidiaries in Brazil are parties to a number of administrative and judicial proceedings for claims alleging that these subsidiaries failed to comply with certain bookkeeping and tax rules for certain periods between 2001 and 2011. These claims seek payment of social fund contributions and income and excise taxes allegedly owed by the subsidiaries, as well as fines. The subsidiaries believe they have meritorious positions in these matters and intend to continue to contest the claims. Other Contingencies One of the Company's most significant risks is the ultimate realization of accounts receivable and customer inventory exposures. This risk is partially mitigated by ongoing credit evaluations of, and frequent contact with, the Company's customers, especially its most significant customers, thus enabling the Company to monitor changes in business operations and respond accordingly. Customer bankruptcies also entail the risk of potential recovery by the bankruptcy estate of amounts previously paid to the Company that are deemed a preference under bankruptcy laws. |
Note 6 Restructuring |
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Dec. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities Disclosure [Text Block] | Restructuring For the first quarter of 2018, the Company adopted a consolidated restructuring plan to address the closure and/or relocation of three of its manufacturing facilities. The following table is a summary of restructuring costs associated with this plan:
Actions under the consolidated restructuring plan began in the first quarter of 2018 and are expected to occur through the first quarter of 2020. Cash payments of severance and other costs are expected to begin in the second quarter of 2018 and occur through the first quarter of 2020. As of December 30, 2017, accrued restructuring costs of $12 million were recorded in accrued liabilities and $11 million was recorded in other long-term liabilities on the condensed consolidated balance sheet. Of the $35 million expected restructuring costs, $24.6 million is attributable to the Company's IMS segment and $10.4 million is attributable to the Company's CPS segment. Of the $23.3 million of restructuring costs recorded in the first quarter of 2018, $19.5 million is attributable to the Company's IMS segment and $3.8 million is attributable to the Company's CPS segment. |
Note 7 Income Tax |
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Dec. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Tax Disclosure [Text Block] | Income Tax The Company estimates its annual effective income tax rate at the end of each quarterly period. The estimate takes into account the geographic mix of expected pre-tax income (loss), expected total annual pre-tax income (loss), enacted changes in tax laws, implementation of tax planning strategies and possible outcomes of audits and other uncertain tax positions. To the extent there are fluctuations in any of these variables during a period, the provision for income taxes may vary. On December 22, 2017, the U.S. Tax Cuts and Jobs Act (H.R. 1) (the “Tax Act”) was enacted into law. In accordance with ASC 740, Income Taxes, the Company is required to recognize the effect of the Tax Act in the period of enactment, which was the Company’s first quarter of fiscal 2018 that ended on December 30, 2017. The many changes in the Tax Act include a permanent reduction in the maximum federal corporate income tax rate from 35% to 21% effective as of January 1, 2018. The statutory federal income tax rate applicable for the Company's fiscal year ending September 29, 2018 is expected to be 24.5% based on a fiscal year blended rate calculation. Because of this reduction in rate, the Company was required to revalue its U.S. deferred tax assets and liabilities to the new rate in the Company's first quarter of 2018. The Tax Act also requires a mandatory deemed repatriation of undistributed earnings and profits, at the rate of either 15.5% for cash or 8% for non-liquid assets. As of the end of the first quarter of 2018, the Company has made reasonable estimates of the impact of the Tax Act and, in accordance with the SEC's Staff Accounting Bulletin No. 118, has recorded a provisional net income tax expense of approximately $162 million, which is comprised of $176 million for the remeasurement of the Company’s U.S deferred tax assets, zero for the mandatory deemed repatriation of undistributed earnings and profits, and a tax benefit of $14 million for the conversion to a territorial system. The Company’s actual remeasurement of deferred tax assets and liabilities may vary from the provisional amount because the Company's final analysis will be based on activities through the remainder of the fiscal year. During the remainder of 2018, the Company will continue to analyze the full effects of the Tax Act on the Company's financial statements. The final impact of the Tax Act may differ from the Company's estimate due to, among other things, additional regulatory guidance that may be issued, changes in the Company’s interpretations and assumptions, finalization of calculations of the impact of the Tax Act on foreign tax provisions and actions the Company may take as a result of the Tax Act, including the on-going evaluation of the Company's indefinite reinvestment assertions regarding undistributed earnings and profits. Although the Company currently does not expect to be impacted by the mandatory deemed repatriation provision of the Tax Act, due to the complexity of the Company’s international tax and legal entity structure, the Company will continue to analyze the earnings and profits and tax pools of the Company’s foreign subsidiaries to reasonably estimate the effects of the mandatory deemed repatriation provision of the Tax Act over the one-year measurement period. The Tax Act also includes provisions for Global Intangible Low-Taxed Income (“GILTI”), which imposes taxes on foreign income in excess of a deemed return on tangible assets of foreign corporations. These new provisions are effective for the Company in fiscal year 2019. This income will effectively be taxed at a 10.5% tax rate. Because of the complexity of the new provisions, the Company is continuing to evaluate how the provisions will be accounted for under U.S. generally accepted accounting principles whereby companies are allowed to make an accounting policy election of either (i) accounting for GILTI as a component of income tax expense in the period in which the Company is subject to the rules (the “period cost method”), or (ii) accounting for GILTI in the Company’s measurement of deferred taxes (the “deferred method”). Currently, the Company has not elected a method and will only do so after completing its analysis of the GILTI provisions of the Tax Act. The Company’s election method will depend, in part, on analyzing the Company’s global income to determine whether the Company expects to have future U.S. inclusions in its taxable income related to GILTI and, if so, the impact that is expected. However, at this time, regardless of the Company’s election method, the Company does not expect the impact of GILTI to be material to the Company’s tax rate or to incur additional cash taxes as a result of GILTI. The Company's provision for income taxes for the three months ended December 30, 2017 and December 31, 2016 was $166 million (1,497% of income before taxes) and $10 million (18% of income before taxes), respectively. Income tax expense for the first quarter of 2018 was almost entirely attributable to the estimated impact of the Tax Act, resulting in a net increase to income tax expense of approximately $162 million. During the first quarter of 2017, the Company recorded a discrete tax benefit resulting from the merger of two foreign entities, the surviving entity of which was, and continues to be, included in the Company’s U.S. federal consolidated tax group. This restructuring allowed the Company to recognize a U.S. deferred tax asset to reflect the federal deductibility of a foreign uncertain tax position that became recognizable upon the merger of the subsidiaries. |
Note 8 Stockholders' Equity |
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Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity Note Disclosure [Text Block] | Stockholder's Equity Accumulated Other Comprehensive Income Accumulated other comprehensive income, net of tax as applicable, consisted of the following:
Stock Repurchase Program During the three months ended December 30, 2017 the Company repurchased 1 million shares of its common stock for $34 million. The Company did not repurchase any of its common stock in the open market during the first quarter of 2017. As of December 30, 2017, subject to the limitations on stock repurchases contained in the Company's credit agreements, including the indenture governing the Company's senior notes due 2019, an aggregate of $219 million remains available under repurchase programs authorized by the Board of Directors, inclusive of programs authorized by the Board of Directors prior to 2017. In addition to the repurchases discussed above, the Company repurchased 304,000 and 453,000 shares of its common stock during the three months ended December 30, 2017 and December 31, 2016, respectively, in settlement of employee tax withholding obligations due upon the vesting of restricted stock units. The Company paid $11 million and $14 million, respectively, in conjunction with these repurchases. |
Note 9 Business Segment, Geographic and Customer Information |
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Segment Reporting Disclosure [Text Block] | Business Segment, Geographic and Customer Information ASC Topic 280, Segment Reporting, establishes standards for reporting information about operating segments, products and services, geographic areas of operations and major customers. Operating segments are defined as components of an enterprise for which separate financial information is available and evaluated regularly by the chief operating decision maker or decision making group in deciding how to allocate resources and in assessing performance. The Company's operations are managed as two businesses: Integrated Manufacturing Solutions (IMS) and Components, Products and Services (CPS). The Company's CPS business consists of multiple operating segments which do not meet the quantitative threshold for being presented as reportable segments. Therefore, financial information for these operating segments is presented in a single category entitled "CPS" and the Company has only one reportable segment - IMS. The following table presents revenue and a measure of segment gross profit used by management to allocate resources and assess performance of operating segments:
Net sales by geographic segment, determined based on the country in which a product is manufactured, were as follows:
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Note 10 Earnings Per Share |
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Earnings Per Share [Text Block] | Earnings Per Share Basic and diluted per share amounts are calculated by dividing net income by the weighted average number of shares of common stock outstanding during the period, as follows:
The Company reported a net loss of $155 million for the first quarter of 2018 and, as such, 4 million potentially dilutive securities have been excluded from the calculation of diluted earnings per share. |
Note 11 Stock-Based Compensation |
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Share-based Compensation [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Text Block] | Stock-Based Compensation Stock-based compensation expense was attributable to:
Stock-based compensation expense was recognized as follows:
As of December 30, 2017, an aggregate of 9.1 million shares were authorized for future issuance under the Company's stock plans, of which 6.9 million of such shares were issuable upon exercise of outstanding options and delivery of shares upon vesting of restricted stock units and 2.2 million shares of common stock were available for future grant. Stock Options Stock option activity was as follows:
The aggregate intrinsic value in the preceding table represents the total pre-tax intrinsic value of in-the-money options that would have been received by the option holders had all option holders exercised such options at the Company's closing stock price on the date indicated. As of December 30, 2017, unrecognized compensation expense of $4 million is expected to be recognized over a weighted average period of 1 year. Restricted Stock Units Activity with respect to the Company's restricted stock units was as follows:
As of December 30, 2017, unrecognized compensation expense of $48 million is expected to be recognized over a weighted average period of 2 years. Additionally, as of December 30, 2017, unrecognized compensation expense related to performance-based restricted stock units for which achievement of the performance criteria is not currently considered probable was $20 million. |
Accounting Policies (Policies) |
3 Months Ended |
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Dec. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Accounting [Text Block] | The accompanying unaudited condensed consolidated financial statements of Sanmina Corporation (the “Company”) have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and note disclosures normally included in annual financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been omitted pursuant to those rules or regulations. The interim condensed consolidated financial statements are unaudited, but reflect all adjustments, consisting primarily of normal recurring adjustments, that are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended September 30, 2017, included in the Company's 2017 Annual Report on Form 10-K. |
Use of Estimates, Policy [Policy Text Block] | The preparation of financial statements requires management to make estimates and assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates. Results of operations for the first quarter of 2018 are not necessarily indicative of the results that may be expected for other interim periods or for the full fiscal year. |
Fiscal Period, Policy [Policy Text Block] | The Company operates on a 52 or 53 week year ending on the Saturday nearest September 30. Fiscal 2018 and 2017 are each 52-week years. All references to years relate to fiscal years unless otherwise noted. |
New Accounting Pronouncements, Policy [Text Block] | Recent Accounting Pronouncements Adopted In March 2016, the FASB issued ASU 2016-09 "Improvements to Employee Share-Based Payment Accounting (Topic 718)". This ASU addresses several aspects of accounting for share-based payment award transactions, including: (a) income tax consequences, (b) classification of awards as either equity or liabilities, and (c) classification in the statement of cash flows. The new standard is effective for the Company at the beginning of fiscal 2018, including interim periods within that reporting period, but early adoption is allowed. The Company adopted this ASU at the beginning of 2018 and recorded an increase to its deferred tax assets of $43 million, with a corresponding increase to retained earnings. This ASU is expected to increase the variability of the Company's provision for income taxes, the effect of which could be material. Additionally, this ASU allows companies to estimate the impact of stock award forfeitures at the grant date and reduce the amount of stock compensation expense recognized over the vesting period of the awards, or to account for forfeitures as they occur. The Company has elected to continue to estimate forfeitures at the grant date. Lastly, this ASU requires the cash effect of excess tax benefits to be classified as an operating cash outflow, as opposed to a financing cash outflow, on the statement of cash flows. Due to the Company’s net operating losses in the U.S., excess tax benefits have no cash impact on the Company's cash flows and therefore there was no impact to the Company’s consolidated statement of cash flows upon adoption of this ASU. In July 2015, the FASB issued ASU 2015-11, "Simplifying the Measurement of Inventory (Topic 330)". This ASU requires measurement of inventory at the lower of cost and net realizable value. Net realizable value is defined as estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Currently, inventory is generally measured at the lower of cost or market, except for excess and obsolete inventories which are carried at their estimated net realizable values. There was no impact to the Company upon adoption of this ASU at the beginning of 2018. Recent Accounting Pronouncements Not Yet Adopted In August 2017, the FASB issued ASU 2017-12, "Derivatives and Hedging (Topic 815): Targeted Improvements for Accounting For Hedging Activities", simplifying hedge accounting guidance and improving the financial reporting of hedging relationships by allowing an entity to better align its risk management activities and financial reporting for hedging relationships through changes to both designation and measurement for qualifying hedging relationships and the presentation of hedge results. This standard eliminates the requirement to separately measure and report hedge ineffectiveness, resulting in full recognition of the change in fair value that impact earnings in the same income statement line item that is used to present the earnings effect of the hedged item. In addition, the guidance allows more flexibility in the requirements to qualify for and maintain hedge accounting. This ASU is effective for the Company at the beginning of fiscal 2020 and early adoption is permitted. The Company is currently evaluating the potential impact of this ASU and when to adopt this ASU. In March 2017, the FASB issued ASU 2017-07, "Compensation-Retirement Benefits (Topic 715)". This ASU requires the service costs component of net periodic pension costs to be presented in the same line item as other compensation costs and all other components of net periodic pension costs to be presented in the income statement as nonoperating expenses. This ASU is effective for the Company at the beginning of fiscal 2019 and should be applied retrospectively. A practical expedient permits the use of estimates for applying the retrospective presentation requirements. The Company does not expect the impact of adopting this new accounting standard to be significant. In January 2017, the FASB issued ASU 2017-04, "Intangibles-Goodwill and Other (Topic 350)". This ASU simplifies the test for goodwill impairment by eliminating Step 2 of the goodwill impairment test which requires a hypothetical purchase price allocation to measure goodwill. A goodwill impairment loss will instead be measured at the amount by which a reporting unit's carrying value exceeds its fair value, not to exceed the carrying amount of goodwill allocated to that reporting unit. This ASU is effective for the Company at the beginning of fiscal 2021, but early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company is currently evaluating when to adopt this ASU. In January 2017, the FASB issued ASU 2017-01, "Business Combinations (Topic 805)". This ASU provides guidance to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The new standard is effective for the Company at the beginning of fiscal 2019, including interim periods within that reporting period, but early adoption is permitted. The Company is currently evaluating when to adopt this ASU. In November 2016, the FASB issued ASU 2016-18, "Statement of Cash Flows (Topic 230)". This ASU requires that the statement of cash flows explains the change during the period in the total of cash, cash equivalents and amounts generally described as restricted cash or restricted cash equivalents. Companies will also be required to reconcile such total to amounts on the balance sheet and disclose the nature of the restrictions. This ASU is effective for the Company at the beginning of fiscal 2019, including interim periods within that annual period, but early adoption is permitted. The Company is currently evaluating when to adopt this ASU, but does not expect the impact of adopting this new accounting standard to be significant. In October 2016, the FASB issued ASU 2016-16, "Intra-Entity Transfers of Assets Other Than Inventory (Topic 740)". This ASU simplifies the accounting for income tax consequences of intra-entity transfers of assets other than inventory by requiring recognition of current and deferred income tax consequences when such transfers occur. The new standard is effective for the Company at the beginning of fiscal 2019, including interim periods within that annual period, but early adoption is permitted. The Company is currently evaluating when to adopt this ASU, but does not expect the impact of adopting this new accounting standard to be significant. In February 2016, the FASB issued ASU 2016-02, "Leases: Amendments to the FASB Accounting Standards Codification (Topic 842)". This ASU requires the Company to recognize on the balance sheet the assets and liabilities for the rights and obligations created by leases with terms of more than twelve months. This ASU also requires disclosures enabling the users of financial statements to understand the amount, timing and uncertainty of cash flows arising from leases. The new standard is effective for the Company at the beginning of fiscal 2020, including interim periods within that reporting period. The Company expects the impact of adopting this new accounting standard to be material to its consolidated balance sheet, but is still evaluating the impact to its consolidated statement of income. In May 2014, the FASB issued ASU 2014-09, "Revenue from Contracts with Customers (Topic 606)," which supersedes the revenue recognition requirements in “Revenue Recognition (Topic 605).” This ASU requires an entity to recognize revenue when goods are transferred or services are provided to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASU also requires disclosures enabling users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The new standard is effective for the Company in fiscal 2019, including interim periods within that reporting period, using one of two prescribed transition methods. The Company has determined that the new standard will result in a change to the timing of revenue recognition for a significant portion of the Company's revenue stream, whereby revenue will be recognized "over time" as opposed to at a "point in time" upon physical delivery. The new standard could have a material impact to the Company's consolidated financial statements upon initial adoption, but the Company does not expect the effect of the new standard to materially impact its revenue or gross profit on a rollover basis in periods after adoption. The Company has not yet selected a transition method. |
Note 7 Income Tax Income Tax (Policies) |
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Dec. 30, 2017 | |
Income Statement [Abstract] | |
Income Tax, Policy [Policy Text Block] | On December 22, 2017, the U.S. Tax Cuts and Jobs Act (H.R. 1) (the “Tax Act”) was enacted into law. In accordance with ASC 740, Income Taxes, the Company is required to recognize the effect of the Tax Act in the period of enactment, which was the Company’s first quarter of fiscal 2018 that ended on December 30, 2017. The many changes in the Tax Act include a permanent reduction in the maximum federal corporate income tax rate from 35% to 21% effective as of January 1, 2018. The statutory federal income tax rate applicable for the Company's fiscal year ending September 29, 2018 is expected to be 24.5% based on a fiscal year blended rate calculation. Because of this reduction in rate, the Company was required to revalue its U.S. deferred tax assets and liabilities to the new rate in the Company's first quarter of 2018. The Tax Act also requires a mandatory deemed repatriation of undistributed earnings and profits, at the rate of either 15.5% for cash or 8% for non-liquid assets. As of the end of the first quarter of 2018, the Company has made reasonable estimates of the impact of the Tax Act and, in accordance with the SEC's Staff Accounting Bulletin No. 118, has recorded a provisional net income tax expense of approximately $162 million, which is comprised of $176 million for the remeasurement of the Company’s U.S deferred tax assets, zero for the mandatory deemed repatriation of undistributed earnings and profits, and a tax benefit of $14 million for the conversion to a territorial system. The Company’s actual remeasurement of deferred tax assets and liabilities may vary from the provisional amount because the Company's final analysis will be based on activities through the remainder of the fiscal year. During the remainder of 2018, the Company will continue to analyze the full effects of the Tax Act on the Company's financial statements. The final impact of the Tax Act may differ from the Company's estimate due to, among other things, additional regulatory guidance that may be issued, changes in the Company’s interpretations and assumptions, finalization of calculations of the impact of the Tax Act on foreign tax provisions and actions the Company may take as a result of the Tax Act, including the on-going evaluation of the Company's indefinite reinvestment assertions regarding undistributed earnings and profits. Although the Company currently does not expect to be impacted by the mandatory deemed repatriation provision of the Tax Act, due to the complexity of the Company’s international tax and legal entity structure, the Company will continue to analyze the earnings and profits and tax pools of the Company’s foreign subsidiaries to reasonably estimate the effects of the mandatory deemed repatriation provision of the Tax Act over the one-year measurement period. The Tax Act also includes provisions for Global Intangible Low-Taxed Income (“GILTI”), which imposes taxes on foreign income in excess of a deemed return on tangible assets of foreign corporations. These new provisions are effective for the Company in fiscal year 2019. This income will effectively be taxed at a 10.5% tax rate. Because of the complexity of the new provisions, the Company is continuing to evaluate how the provisions will be accounted for under U.S. generally accepted accounting principles whereby companies are allowed to make an accounting policy election of either (i) accounting for GILTI as a component of income tax expense in the period in which the Company is subject to the rules (the “period cost method”), or (ii) accounting for GILTI in the Company’s measurement of deferred taxes (the “deferred method”). Currently, the Company has not elected a method and will only do so after completing its analysis of the GILTI provisions of the Tax Act. The Company’s election method will depend, in part, on analyzing the Company’s global income to determine whether the Company expects to have future U.S. inclusions in its taxable income related to GILTI and, if so, the impact that is expected. However, at this time, regardless of the Company’s election method, the Company does not expect the impact of GILTI to be material to the Company’s tax rate or to incur additional cash taxes as a result of GILTI. |
Note 2 Inventories (Tables) |
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Inventory, Net [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Inventory, Current [Table Text Block] |
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Note 3 Financial Instruments (Tables) |
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Schedule of Notional Amounts of Outstanding Derivative Positions [Table Text Block] |
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Note 4 Debt (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-term Debt Instruments [Table Text Block] |
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Note 6 Restructuring and Related Activities (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Costs [Table Text Block] |
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Note 8 Stockholders' Equity (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block] |
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Note 9 Business Segment, Geographic and Customer Information (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reporting Information, by Segment [Table Text Block] |
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Schedule of Revenue from External Customers by Geographic Area [Table Text Block] |
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Note 10 Earnings Per Share (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block] |
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Note 11 Stock-Based Compensation (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Share-based Compensation Arrangements by Share-based Payment Award [Table Text Block] |
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Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Table Text Block] |
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Share-based Compensation, Stock Options, Activity [Table Text Block] |
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Schedule of Restricted Stock Units Award Activity [Table Text Block] |
|
Note 1 New Accounting Pronouncement (Details) $ in Millions |
3 Months Ended |
---|---|
Dec. 30, 2017
USD ($)
| |
Accounting Standards Update 2016-09 [Member] | |
Accounting Standard Update [Line Items] | |
Adjustments to Additional Paid in Capital, Income Tax Benefit from Share-based Compensation | $ 43 |
Note 2 Inventories (Details) - USD ($) $ in Thousands |
Dec. 30, 2017 |
Sep. 30, 2017 |
---|---|---|
Inventory, Net [Abstract] | ||
Raw materials | $ 851,665 | $ 834,694 |
Work-in-process | 101,777 | 106,914 |
Finished goods | 126,196 | 110,061 |
Total | $ 1,079,638 | $ 1,051,669 |
Note 3 Fair Value (Details) |
3 Months Ended |
---|---|
Dec. 30, 2017 | |
Additional Fair Value Elements [Abstract] | |
Cash Equivalents | 10.00% |
Long-term Debt Instrument Fair Value | 2.00% |
Note 3 Foreign Currency Forward Contract (Details) - Foreign Exchange Forward [Member] $ in Thousands |
3 Months Ended | |
---|---|---|
Dec. 30, 2017
USD ($)
|
Sep. 30, 2017
USD ($)
|
|
Derivatives Designated as Accounting Hedges: | ||
Derivative [Line Items] | ||
Derivative Notional Amount | $ 84,867 | $ 105,523 |
Number of contracts | 51 | 58 |
Maximum Length of Time Hedged | 12 months | |
Derivatives Not Designated as Accounting Hedges: | ||
Derivative [Line Items] | ||
Derivative Notional Amount | $ 283,598 | $ 302,944 |
Number of contracts | 39 | 46 |
Maximum Remaining Maturity | 2 months |
Note 4 Debt Schedule (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Dec. 30, 2017 |
Sep. 30, 2017 |
|
Debt Instrument [Line Items] | ||
Non-interest bearing promissory notes | $ 20,611 | $ 19,863 |
Total long-term debt | 395,611 | 394,863 |
Other Notes Payable, Current | 3,416 | 3,416 |
Long-term debt | 392,195 | 391,447 |
Secured Notes Due 2019 | ||
Debt Instrument [Line Items] | ||
Secured debt | $ 375,000 | $ 375,000 |
Debt Instrument, Maturity Date | Jun. 01, 2019 |
Note 4 Line of Credit Facility (Details) - USD ($) $ in Millions |
1 Months Ended | 3 Months Ended | |
---|---|---|---|
Feb. 02, 2018 |
Dec. 30, 2017 |
Feb. 01, 2018 |
|
Revolving Credit Facility | |||
Line of Credit Facility [Line Items] | |||
Maximum Borrowing Capacity | $ 375.0 | ||
Long-term Line of Credit | 166.0 | ||
Letters of Credit Outstanding, Amount | 14.0 | ||
Additional Credit Line | $ 125.0 | ||
Expiration Date | May 20, 2020 | ||
Amended Cash Flow Revolver [Member] | |||
Line of Credit Facility [Line Items] | |||
Subsequent Event, Date | Feb. 01, 2018 | ||
Foreign Line of Credit | |||
Line of Credit Facility [Line Items] | |||
Maximum Borrowing Capacity | $ 71.0 | ||
Long-term Line of Credit | $ 0.0 | ||
Subsequent Event [Member] | Amended Cash Flow Revolver [Member] | |||
Line of Credit Facility [Line Items] | |||
Maximum Borrowing Capacity | $ 500.0 | ||
Additional Credit Line | 200.0 | ||
Delayed Draw Term Loan | $ 375.0 | ||
Expiration Date | Feb. 01, 2023 |
Note 5 Contingencies (Details) - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Dec. 30, 2017 |
Jan. 17, 2018 |
Sep. 30, 2017 |
|
Loss Contingencies [Line Items] | |||
Contingent Liability | $ 37 | $ 36 | |
Goods and Services Tax for Imports [Member] | |||
Loss Contingencies [Line Items] | |||
Subsequent Event, Date | Jan. 17, 2018 | ||
Subsequent Event [Member] | Goods and Services Tax for Imports [Member] | |||
Loss Contingencies [Line Items] | |||
Possible Claim Contingency | $ 23 |
Note 8 Stockholders' Equity (Details) - USD ($) $ in Thousands |
Dec. 30, 2017 |
Sep. 30, 2017 |
---|---|---|
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | ||
Foreign currency translation adjustments | $ 90,598 | $ 90,952 |
Unrealized holding losses on derivative financial instruments | (94) | (212) |
Unrecognized net actuarial losses and transition costs for benefit plans | (13,885) | (13,946) |
Total | $ 76,619 | $ 76,794 |
Note 8 Stock Repurchase (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Dec. 30, 2017 |
Dec. 31, 2016 |
|
Stockholders' Equity Note [Abstract] | ||
Treasury Stock, Shares, Acquired | 1,000,000 | |
Treasury Stock, Value, Acquired, Cost Method | $ 34 | |
Stock Repurchase Program, Remaining Authorized Repurchase Amount | $ 219 | |
Shares Paid for Tax Withholding for Share Based Compensation | 304,000 | 453,000 |
Amount of Tax Withholding for Share-based Compensation | $ 11 | $ 14 |
Note 9 Revenue and Gross Profit by Segment (Details) $ in Thousands |
3 Months Ended | |||
---|---|---|---|---|
Dec. 30, 2017
USD ($)
|
Dec. 31, 2016
USD ($)
|
|||
Segment Reporting Information [Line Items] | ||||
Net sales | $ 1,744,800 | $ 1,719,977 | ||
Gross profit | $ 109,466 | 132,162 | ||
Number of Reportable Segments | 1 | |||
Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Gross profit | $ 112,483 | 135,926 | ||
Operating Segments | IMS | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 1,428,847 | 1,414,270 | ||
Gross profit | 82,617 | 102,637 | ||
Operating Segments | CPS | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 356,729 | 351,074 | ||
Gross profit | 29,866 | 33,289 | ||
Intersegment Eliminations | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | (40,776) | (45,367) | ||
Unallocated items (1) | ||||
Segment Reporting Information [Line Items] | ||||
Gross profit | [1] | $ (3,017) | $ (3,764) | |
|
Note 9 Segment Reporting by Geographic Segment (Details) $ in Thousands |
3 Months Ended | |
---|---|---|
Dec. 30, 2017
USD ($)
|
Dec. 31, 2016
USD ($)
|
|
Revenue from External Customer [Line Items] | ||
Net sales | $ 1,744,800 | $ 1,719,977 |
Percentage of net sales represented by ten largest customers | 54.00% | 52.00% |
Number of customers representing 10% or more of net sales | 2 | 2 |
United States | ||
Revenue from External Customer [Line Items] | ||
Net sales | $ 314,808 | $ 299,876 |
Mexico | ||
Revenue from External Customer [Line Items] | ||
Net sales | 489,234 | 474,160 |
China | ||
Revenue from External Customer [Line Items] | ||
Net sales | 315,092 | 321,739 |
Malaysia | ||
Revenue from External Customer [Line Items] | ||
Net sales | 185,712 | 211,191 |
Other international | ||
Revenue from External Customer [Line Items] | ||
Net sales | $ 439,954 | $ 413,011 |
Note 10 Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | |
---|---|---|
Dec. 30, 2017 |
Dec. 31, 2016 |
|
Weighted average shares used in computing per share amount: | ||
Net income (loss) | $ (154,910) | $ 44,864 |
Weighted average common shares outstanding | 71,605 | 73,554 |
Effect of dilutive stock options and restricted stock units | 0 | 3,621 |
Denominator for diluted earnings per share | 71,605 | 77,175 |
Net income (loss) per share: | ||
Basic | $ (2.16) | $ 0.61 |
Diluted | $ (2.16) | $ 0.58 |
Antidilutive Securities | 4,000 |
Note 11 Share-Based Compensation Arrangements (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Dec. 30, 2017 |
Dec. 31, 2016 |
|
Allocation of Recognized Period Costs [Line Items] | ||
Share-based Compensation | $ 8,642 | $ 11,977 |
Stock options | ||
Allocation of Recognized Period Costs [Line Items] | ||
Share-based Compensation | 1,177 | 550 |
Restricted stock units, including performance based awards | ||
Allocation of Recognized Period Costs [Line Items] | ||
Share-based Compensation | 7,465 | 11,427 |
Cost of sales | ||
Allocation of Recognized Period Costs [Line Items] | ||
Allocated Share-based Compensation Expense | 2,448 | 2,864 |
Selling, general and administrative | ||
Allocation of Recognized Period Costs [Line Items] | ||
Allocated Share-based Compensation Expense | 6,164 | 8,840 |
Research and development | ||
Allocation of Recognized Period Costs [Line Items] | ||
Allocated Share-based Compensation Expense | $ 30 | $ 273 |
Note 11 Shares Authorized for Future Issuance and Available for Grant (Details) shares in Millions |
Dec. 30, 2017
shares
|
---|---|
Shares Authorized for Future Issuance and Available for Grant [Abstract] | |
Capital Shares Reserved for Future Issuance | 9.1 |
Total number of stock options and unvested restricted stock units outstanding | 6.9 |
Number of Shares Available for Future Grant | 2.2 |
Note 11 Stock Options Outstanding Rollforward (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 12 Months Ended |
---|---|---|
Dec. 30, 2017 |
Sep. 30, 2017 |
|
Options Outstanding [Roll Forward] | ||
Outstanding, beginning | 3,568 | |
Granted | 200 | |
Exercised/Cancelled/Forfeited/Expired | (234) | |
Outstanding, ending | 3,534 | 3,568 |
Vested and Expected to Vest | 3,530 | |
Exercisable | 3,314 | |
Weighted Average Exercise Price [Abstract] | ||
Outstanding, beginning | $ 11.83 | |
Granted | 38.45 | |
Exercised/Cancelled/Forfeited/Expired | 12.43 | |
Outstanding, ending | 13.30 | $ 11.83 |
Vested and expected to vest | 13.29 | |
Exercisable | $ 11.93 | |
Weighted Average Remaining Contractual Term (Years) [Abstract] | ||
Outstanding | 4 years 22 days | 3 years 9 months 25 days |
Vested and Expected to Vest | 4 years 22 days | |
Exercisable | 3 years 8 months 26 days | |
Aggregate Intrinsic Value of In the Money Options [Abstract] | ||
Outstanding | $ 62,548 | $ 90,327 |
Vested and Expected to Vest | 62,519 | |
Exercisable | $ 62,097 |
Note 11 Restricted Stock Rollforward (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 12 Months Ended |
---|---|---|
Dec. 30, 2017 |
Sep. 30, 2017 |
|
Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | ||
Outstanding, beginning | 3,359 | |
Granted | 694 | |
Vested/Forfeited/Cancelled | (699) | |
Outstanding, ending | 3,354 | 3,359 |
Expected to vest | 2,521 | |
Weighted Average Grant Date Fair Value Restricted Stock [Abstract] | ||
Outstanding, beginning | $ 27.56 | |
Granted | 35.86 | |
Vested/Forfeited/Cancelled | 25.76 | |
Outstanding, ending | 29.65 | $ 27.56 |
Expected to vest | $ 28.83 | |
Weighted Average Remaining Contractual Term [Abstract] | ||
Outstanding | 1 year 8 months 7 days | 1 year 6 months 5 days |
Expected to vest | 1 year 7 months 24 days | |
Restricted Stock Non vested Aggregate Intrinsic Value [Abstract] | ||
Outstanding | $ 102,465 | $ 124,800 |
Expected to vest | $ 77,002 |
Note 11 Unrecognized Stock Based Compensation Expense (Details) $ in Millions |
3 Months Ended |
---|---|
Dec. 30, 2017
USD ($)
| |
Employee stock options | |
Unrecognized Compensation Cost and Weighted Average Period [Line Items] | |
Unrecognized compensation expense | $ 4 |
Weighted average period of recognition (years) | 1 year |
Restricted stock units | |
Unrecognized Compensation Cost and Weighted Average Period [Line Items] | |
Unrecognized compensation expense | $ 48 |
Weighted average period of recognition (years) | 2 years |
Performance Shares | |
Unrecognized Compensation Cost and Weighted Average Period [Line Items] | |
Unrecognized compensation expense | $ 20 |
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